Chrysler 2005 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ... call, at 1:00 p.m. to resolve on the following: Agenda 1. Statutory and Consolidated Financial Statements at December 31, 2005, and Report on Operations; related resolutions. 2. Appointment of the Board of Directors after determining the number of its Members and their fees. 3. Appointment of the...

  • Page 3
    ...the Chief Executive Officer Report on Operations The Fiat Group Highlights - Group Highlights by Sector Stockholders Sustainability Report Research and Innovation Human Resources Financial Review of the Group Corporate Governance Stock Option Plans Transactions among Group Companies and with Related...

  • Page 4
    Board of Directors and Control Bodies Board of Directors Chairman Vice Chairman Chief Executive Officer Directors Luca Cordero di Montezemolo John Elkann (3) Board of Statutory Auditors Statutory Auditors Cesare Ferrero - Chairman Giuseppe Camosci (1) (3) Giorgio Ferrino Alternate Auditors ...

  • Page 5
    ... to match realistic demand and market conditions. In Autos we have put in place a fully market-oriented organization, unbundling the brands: Fiat, Lancia and Alfa Romeo now face the customer on their own, while sharing key functions such as manufacturing, quality and safety. Everything is driven...

  • Page 6
    ... result will be supported by the full-year contribution of new models already rolled out. These will be joined in coming months by other new models, as we implement our aggressive product renewal plan calling for the launch of 20 new cars and the restyling of 23 current models between 2005 and 2008...

  • Page 7

  • Page 8
    ... Report Research and Innovation Human Resources Financial Review of the Group Corporate Governance 46 48 49 53 73 Stock Option Plans Transactions among Group Companies and with Related Parties Significant Events Occurring since the End of the Fiscal Year and Business Outlook Operating Performance...

  • Page 9
    ... shock absorbers, engine control units, Automobiles Fiat Auto produces and sells automobiles under the Fiat, Alfa Romeo and Lancia brands and light commercial vehicles under the Fiat brand. It provides financing services to its dealers and suppliers and rental services to its customers. The Sector...

  • Page 10
    ... of vehicles sold under buy-back commitments) of which: Capitalised R&D costs R&D expenses Total assets Net debt of which: Net industrial debt Stockholders' equity before minority interest Group interest in stockholders' equity Employees at year-end (number) (2) Effective January 1, 2005, the Fiat...

  • Page 11
    ... 2005, up 2% from 45.6 billion euros in 2004. All automotive Sectors posted improvements, apart from a slight decrease (-0.8%) at Fiat Auto as a recovery in car sales volumes in the last quarter was insufficient to offset the trend of the first nine months, when sales slowed down ahead of new model...

  • Page 12
    ... Operating result 2005 2004 Total operating assets 2005 2004 Fiat Auto Maserati Ferrari Fiat Powertrain Technologies Agricultural and Construction Equipment (CNH) Commercial Vehicles (Iveco) Components (Magneti Marelli) Metallurgical Products (Teksid) Production Systems (Comau) Services (Business...

  • Page 13
    ... Group's institutional website www.fiatgroup.com. The Investor Relations section provides historical financial data, institutional presentations, periodic publications, and real time updates on Fiat stock. Fiat stockholders may also contact: For holders of Fiat shares: Toll-free telephone number in...

  • Page 14
    ... Inv. Co. International Institutional Investors Italian Institutional Investors Other stockholders (*) Including 0.4% of treasury stock held by Fiat S.p.A. (*) 30.46% 6.08% 5.58% 3.80% 2.73% 2.38% 2.28% approx. 12.5% approx. approx. 10% 24% Highlights per share (in euros) 2005 2004 Earnings per...

  • Page 15
    ... development also lightens the impact of products on the environment. At the same time, the number of plants which have received ISO 14001 certification increased, from 84 in 2004 to 89 in 2005. In addition, the Environmental Management System has been extended to many more manufacturing sites...

  • Page 16
    ... Multijet engine, currently in production at Fiat Powertrain Technologies plants and developed from C.R.F. innovations and patents; The "EuroCarBody Award" for 2005 - Recognition went to the outstanding work performed by the Fiat Auto and Centro Ricerche Fiat project team in developing, planning and...

  • Page 17
    ... research/innovation system's value chain and of promoting local development: Spark ignition Multiair engine.The work of the Centro Ricerche Fiat on optimising the performance of the original UNIAIR electronic valve control technology in terms of feasibility and costs has made it possible to extend...

  • Page 18
    ... made in the following areas: Biomechanics.The Elasis Biomechanics Centre developed simulation methods for the crash tests called for by international regulatory requirements and rating systems.This work has extended the range of experimental tests that can be simulated, and ensured that simulations...

  • Page 19
    ... businesses of Iveco, C.R.F. and Elasis.These organisational changes will enable Fiat Powertrain Technologies to take an integrated approach to the management of multiple cutting-edge research and engineering centres, with the resulting benefit of gaining a significant advantage in the development...

  • Page 20
    ...Benefits Fund).This tool was also used in the administrative, technical and sales departments and affected mainly office staff and middle managers whose workload had decreased due to a reduction in sales volumes and ongoing organisational changes. At the end of 2005, the number of employees in Fiat...

  • Page 21
    ... to company results. The agreement with the unions also included new rules regarding the contract for apprentices, providing the option of extending the use of apprenticeship contracts to assembly line workers who perform relatively simple tasks. As part of the bargaining process, the national trade...

  • Page 22
    ... comprised certain financial services companies of Iveco operating in France, Germany, Italy, Switzerland and the United Kingdom. As of that date, Iveco Finance Holdings was deconsolidated and accounted for by using the equity method. At the end of 2005, the Fiat Group acquired Enel's share of the...

  • Page 23
    ... Other Businesses. FINANCIAL REVIEW OF THE GROUP OPERATING PERFORMANCE OF THE GROUP (in millions of euros) 2005 2004 Net revenues Cost of sales Selling, general and administrative costs Research and development costs Other income (expenses) Trading profit Gains (losses) on the disposal of equity...

  • Page 24
    ...Automobiles (Fiat Auto, Maserati, Ferrari and Fiat Powertrain Technologies) Agricultural and Construction Equipment (CNH) Commercial Vehicles (Iveco) Components and Production Systems (Magneti Marelli,Teksid and Comau) Other Businesses (Services, Publishing and Communications, Holding companies and...

  • Page 25
    ... product lines, particularly heavy and light vehicles. Moreover, the volumes reflect vehicles billed, while, under the new IFRS, only rental revenues can be reported for vehicles sold with a buy-back commitment, with the total rent being equal to the difference between the sale price and the buy...

  • Page 26
    ...materials costs through higher sales prices contributed to the improved performance, more than offsetting lower volume in the Magnesium Business Unit (-6.8%). Comau had revenues of 1,573 million euros in 2005. The 8.1% reduction from 2004 reflected the transfer of Comau's European service activities...

  • Page 27
    ...Automobiles (Fiat Auto, Maserati, Ferrari and Fiat Powertrain Technologies) Agricultural and Construction Equipment (CNH) Commercial Vehicles (Iveco) Components and Production Systems (Magneti Marelli,Teksid and Comau) Other Businesses (Services, Publishing and Communications, Holding companies and...

  • Page 28
    ... to benefit from the restructuring and cost-reduction plans implemented mainly in its North American operations. Other Businesses The combined trading loss reported by the Other Businesses amounted to 179 million euros, 77 million euros worse than in the prior year. (in millions of euros) 2005 2004...

  • Page 29
    ...from industrial, distribution and marketing efficiencies. In 2005, trading loss of Holding companies, Other companies and Eliminations increased by 76 million euros, from a trading loss of 154 million euros in 2004 to a loss of 230 million euros in 2005, mainly due to a reduction in revenues related...

  • Page 30
    ... the rise in interest rates (particularly in the dollar zone). Financial expenses include the interest cost component of pension plans and other employee benefits, totalling 146 million euros in 2005 (127 million euros in the previous year). Report on Operations Financial Review of the Group 29

  • Page 31
    ... financial income of 858 million euros was booked in 2005 relating to the capital increase of September 20, 2005 following the conversion of the Mandatory Convertible Facility.The income represents the difference between the subscription price of the shares and their stock market price at the date...

  • Page 32
    ...from the sale of non-current assets amounted to 500 million euros, of which 73 million euros from the sale of equity investments, 115 million euros mainly resulting from vehicles sold under longterm leases (financial services companies), and 312 million euros from the sale by industrial companies of...

  • Page 33
    ..., and the related increase in the loans provided to the dealer network and end-customers, were offset by the reduction in factoring activities with Fiat Auto suppliers and the collection of other financial receivables. Working capital, net of the items connected with sales of vehicles with buy-back...

  • Page 34
    ... the net debt of the Fiat Group and more than offset foreign currency translation differences (mainly referring to debt of financial services companies denominated in dollars and reais). (in millions of euros) At 12.31.2005 At 12.31.2004 Debt - Asset-backed financing - Other debt Other financial...

  • Page 35
    ... Activities. The sub-consolidated financial statements of Industrial Activities also include companies that operate centralised cash management activities, that is which raise financial resources on the market and finance Group companies without providing financial services support to third parties...

  • Page 36
    ... gain on the sale to EDF of the equity investment in Italenergia Bis (878 million euros). Financial Services Revenues (in millions of euros) 2005 2004 % change Fiat Auto Agricultural and Construction Equipment (CNH) Commercial Vehicles (Iveco) Holding companies and Other companies Total (1) These...

  • Page 37
    ... euros in 2004. In particular: the decrease reported by Fiat Auto's Financial Services (in 2005, its trading profit was 60 million euros, compared with 65 million euros in 2004) was mainly due to the contraction in financing to suppliers and the previously mentioned change in scope of consolidation...

  • Page 38
    ... equivalents Total Current assets (2) Assets held for sale (2) TOTAL ASSETS Total assets adjusted for asset-backed financing transactions Stockholders' equity Provisions - Employee benefits - Other provisions Debt - Asset-backed financing - Other debt Other financial liabilities Trade payables Other...

  • Page 39
    ...Asset-backed financing." The net debt of financial services companies at December 31, 2005 was 672 million euros lower than at December 31, 2004.This decrease is mainly attributable to the sale of the Iveco financial services companies within the context of the Barclays transaction, partly offset by...

  • Page 40
    ... 2005 Net industrial debt at beginning of period Net income Amortisation and depreciation (net of vehicles sold under buy-back commitments) Change in provisions for risks and charges and other changes Cash flows from (used in) operating activities during the period, net of change in working capital...

  • Page 41
    ...Change in working capital Total C) Cash flows from (used in) investment activities: Investments in: - Tangible and intangible assets (net of vehicles sold under buy-back commitments) - Equity investments Proceeds from the sale of non-current assets Net change in receivables from financing activities...

  • Page 42
    ... (416 million euros), largely connected with vehicles to be used in long-term leasing operations and the temporary investment of funds, net of the disposal of assets (mainly the sale of vehicles leased out under operating leases); cash generated by operations and financing activities during the year...

  • Page 43
    ... internal control model, issuance of a Code of Conduct adopted by the Group, and elaboration of the general policies for the management of human and financial resources, purchasing of factors of production, and communication. Furthermore, coordination of the Group 42 Report on Operations Corporate...

  • Page 44
    ... directly, indirectly, or on behalf of third parties with the Company, its executive directors and managers with strategic responsibilities, its controlling companies or subsidiaries, or with parties otherwise related to the Company. At its meeting held on February 28, 2006, the Board of Directors...

  • Page 45
    ... was defined in 1999, partly in order to receive the changes made to the Corporate Governance Code, the Board adopted the "Guidelines for the Internal Control System," which came into effect on January 1, 2003. Essential parts of the Internal Control System are the Code of Conduct that replaced the...

  • Page 46
    ... term expires on the date of the stockholders meeting that approves the 2005 financial statements. In addition to the positions respectively held as Chairman of the Board of Statutory Auditors and statutory auditor at the controlling companies IFI S.p.A. and IFIL S.p.A., Cesare Ferrero also holds...

  • Page 47
    ... stock market. Options granted as part of Stock Options Plans on Fiat shares and outstanding at December 31, 2005 are shown in the next page. Options granted to Board Members are instead shown in a specific table in the Notes to the Financial Statements. 46 Report on Operations Stock Options Plans

  • Page 48
    ... sold in 2005 Number of shares held at 12.31.2005 First name and last name Description of investments Luca Cordero di Montezemolo Sergio Marchionne Cesare Ferrero Fiat ordinary Fiat ordinary Fiat ordinary 19,172 - 1 - 220,000 - - - - 19,172 220,000 1 Report on Operations Stock Options Plans...

  • Page 49
    ...and Trade Ltd.), credit lines (CNH Global N.V., CNH Capital America LLC, CNH Capital Canada Ltd., NH Credit Company LLC and other minor companies) and payment obligations under building rental contracts (Fiat Auto S.p.A. and its subsidiaries). In addition, a $1 billion direct credit line is in place...

  • Page 50
    ... 15, 2013, whose price was set on February 7, 2006 at face value.The Notes, which were issued by Fiat Finance and Trade Ltd. Société Anonyme, a wholly-owned subsidiary of Fiat S.p.A., have been admitted to listing on the Irish Stock Exchange and were rated Ba3 by Moody's Investors Service, BB- by...

  • Page 51
    ... line that will make advanced generation petrol-powered engines able to respond quickly to changes in demand, and the new M40 transmission for light commercial vehicles of Sevel Val di Sangro; - an investment of approximately 33 million euros earmarked for research and development specifically...

  • Page 52
    ... order to reduce capital commitments, and share investments and risks. Efforts will be made to complement Fiat's advanced technological resources with better quality, commercial distribution and customer service capabilities. Report on Operations Transactions among Group Companies and with Related...

  • Page 53

  • Page 54
    ...Vehicles Components Metallurgical Products Production Systems Services Publishing and Communications Automobiles Agricultural and Construction Equipment Commercial Vehicles Engines, Components and Production Systems Other Businesses Services Publishing and Communications Report on Operations...

  • Page 55
    ... offset in part by gains in France (+2.6%), Germany (+1.6%) and Spain (+0.9%). Outside Western Europe, demand was off sharply in Poland (-26.5%), while the Brazilian market continued on its growth track, with demand rising by 9.1%. The Western European market for light commercial vehicles posted an...

  • Page 56
    ... of Fiat-branded cars through Tata's dealers in India; and another in Russia with Severstal Auto for the assembly in Russia of the Fiat Palio and Fiat Albea using CKD kits manufactured in Turkey by Tofas. In February 2006, industrial cooperation with Severstal was extended to Fiat Doblò models...

  • Page 57
    .... As part of its effort to round out its model line, Fiat launched the Croma, a new entry in the medium-high segment.This car, which is notable for its high levels of performance and comfort, was brought to market in May 2005. It was very well received by customers, with over 27,000 orders by the...

  • Page 58
    ... their sales and customer support network enabled these two companies to end 2005 with a portfolio of more than 39,000 contracts (+14% compared with 2004).Their rental fleet also increased, rising to 144,500 vehicles at the end of 2005, or 3% more than a year earlier. Financial Services In 2005...

  • Page 59
    ...' Cup and, racing as part of the Vitaphone team, the FIA GT Team Cup. In July 2005, the Maserati MC12 scored a prestigious victory at the Spa 24 Hours Race. In the eight major markets in which Maserati operates, demand in the key Coupé and Spyder market segments contracted by 8.4% and 15...

  • Page 60
    ... a convertible in just a few seconds. As a result, it offers the driver both the characteristic qualities of an open car and the functional advantages of a coupé. Powered by a 540-HP 12-cylinder engine, the Superamerica is also the fastest convertible in the world. Report on Operations Ferrari 59

  • Page 61
    ... to operations. Innovation and Products Currently, the operating arm of Fiat Powertrain Technologies is its Product Line Passenger & Commercial Vehicles (FPT-P&CV) Division. Working with Fiat Auto, its largest customer, FPT-P&CV designs and builds innovative powertrain systems for Fiat, Lancia...

  • Page 62
    ...equipment increased 8% worldwide, with sales growth posted in Latin America (+18%), in North America (+15%) and in Western Europe (+4%). In 2005, CNH benefited from the rising demand, increasing its total shipments of construction equipment at a rate consistent with that of the overall market in the...

  • Page 63
    ... emissions standards. Improved product quality and reliability should lead to future reductions in warranty costs and create wider appreciation of CNH products. Case IH and New Holland are also responding to customer interest in the use of bio-fuels and fuel efficiency. In 2005 its brands have led...

  • Page 64
    ...field sales and service managers. Case Construction Equipment revamped its Dealer Advisory Council in order to better focus on specific issues. Financial Services Operations have increasingly focused their actions on the sale of Sector's products, by providing support to dealers and end customers in...

  • Page 65
    ... in the United Kingdom (-0.4 percentage points) and Germany (+0.6 percentage points). Commercial Vehicles Market (GVW ≥ 2,8 tons) (in thousands of units) 2005 2004 % change France Germany United Kingdom Italy Spain Other Western European Countries Western Europe 194.0 238.1 196.6 122.6 118.5 239...

  • Page 66
    ... the vehicle's life, Sales Performance Commercial Vehicles sold by Product Segment (in thousands of units) 2005 2004 % change France Germany United Kingdom Italy Spain Other Western European Countries Western Europe Eastern Europe Rest of the World Total units sold Associated companies Grand total...

  • Page 67
    ... for from that date using the equity method. In 2005, Iveco Finance provided funding for 23.4% of all of the vehicles sold by the Sector. The pool of long-term rental vehicles managed by the Transolver Services companies numbered 3,116 units at the end of 2005. 66 Report on Operations Iveco

  • Page 68
    ... growth, booking major orders for new car models which will make it possible to diversify the customer portfolio even further. Highlights of the performance of each business unit are outlined below. Highlights (in millions of euros) 2005 2004 Net revenues Trading profit Operating result (*) 4,033...

  • Page 69
    ... model and on Volkswagen and Ford vans and light trucks. In China, an order was received for the new applications with the 1.7 Nanjing-Fiat engine. Motorsport Magneti Marelli participates in the major motorsport championships as a technical partner. In 2005, it supplied electronic control systems...

  • Page 70
    ...light vehicles. In Brazil, production of a significant number of products, including those previously manufactured by the former General Motors foundries, was transferred to the Sector's plants in 2005. Highlights (in millions of euros) 2005 2004 Net revenues Trading profit/(loss) Operating result...

  • Page 71
    .... By contrast, a number of countries in Asia and Eastern Europe have shown a sharp rise in investments, often through joint ventures between Western car manufacturers and local partners. Comau continued to restructure its business portfolio, with the transfer of its European service activities to...

  • Page 72
    ...sale of companies operating on the non-captive market (in particular the sale of WorkNet, a temporary employment agency). Facility Management:Through Ingest Facility S.p.A., the unit handles regular and extraordinary maintenance of industrial and non-industrial buildings. Administration: During 2005...

  • Page 73
    ... (the daily La Stampa and other publishing products). Highlights (in millions of euros) 2005 2004 Net revenues Trading profit Operating result (*) 397 16 13 20 846 407 11 9 2 849 Investments in tangible and intangible assets Employees at year-end (number) (*) Including restructuring costs and...

  • Page 74
    ...019,671 euros to partially cover the losses carried forward, which consequently amount to 726,080,851 euros. Turin, February 28, 2006 Board of Directors By: Luca Cordero di Montezemolo Chairman Report on Operations Motion for Approval of the Financial Statements and Allocation of Net Income 73

  • Page 75

  • Page 76
    ... Statement of Changes in Stockholders' Equity 80 147 N otes to Consolidated Financial Statements Appendix 1 - Transition to International Financial Reporting Standards (IFRS) 171 Appendix II - The Companies of the Fiat Group Fiat Group Consolidated Financial Statements at D ecember 31, 2005...

  • Page 77
    ... Group Consolidated Income Statement (in millions of euros) N ote (1) (2) (3) (4) (5) 2005 2004 N et revenues Cost of sales Selling, general and administrative costs Research and development costs O ther income (expenses) 46,544 39,624 4,513 1,364 ( 43) 45,637 39,121 4,701 1,350 (415) 50 150...

  • Page 78
    ...928 4 ,3 0 4 624 Provisions: - Employee benefits - Other provisions (26) (27) (28) 8,698 3 ,9 1 9 4 ,7 7 9 7,290 3 ,6 8 2 3 ,6 0 8 D ebt: - Asset-backed financing - Other debt 25,761 1 0 ,2 1 0 1 5 ,5 5 1 32,191 1 0 ,1 7 4 2 2 ,0 1 7 O ther financial liabilities Trade payables O ther payables...

  • Page 79
    ...of the contract term, relating to assets included in Property, plant and equipment. In this line are stated the effects on the Group's net assets resulting from the sale and purchase of consolidated companies, included as part of the Scope of consolidation in the N otes to the Consolidated Financial...

  • Page 80
    Statement of Changes in Stockholders' Equity Capital stock Treasury stock Capital reserves Revenue reserves Income (expense) recognised directly in equity Minority interest (in millions of euros) Total Balances at J anuary 1, 2004 Cover of Fiat S.p.A. fiscal 2003 loss by Additional paid-in ...

  • Page 81
    ... by SIGN IFIC AN T ACCO UN TIN G PO LICIES Basis of preparation The 2005 consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (the "IFRS") issued by the International Accounting Standards Board ("IASB") and endorsed by the European...

  • Page 82
    ... in current assets, as the investments will be realised in their normal operating cycle. Financial services companies, though, obtain funds only partially from the market: the remaining are obtained from Fiat S.p.A. through the Group's treasury companies (included in industrial companies), which...

  • Page 83
    ... and construction equipment, related components, engines, and production systems) are recognised as an asset if and only if all of the following conditions are met: the development costs can be measured reliably and the technical feasibility of the product, volumes and pricing support the view that...

  • Page 84
    ...are expensed on a straight-line basis over the lease terms. Group's leasing companies under operating lease agreements. They are stated at cost and depreciated at annual rates of between 15% and 25%. Investment property Real estate and buildings held in order to obtain rental income are carried at...

  • Page 85
    ... for trading financial assets are measured at fair value.W hen market prices are not available, the fair value of available-for-sale financial assets is measured using appropriate valuation techniques e.g. discounted cash flow analysis based on market information available at the balance sheet date...

  • Page 86
    ... Fiat Group sells a significant part of its financial, trade and tax receivables through either securitisation programs or factoring transactions. A securitisation transaction entails the sale of a portfolio of receivables to a securitisation vehicle.This special purpose entity finances the purchase...

  • Page 87
    ...accordingly. Equity compensation plans The Group provides additional benefits to certain members of senior management and employees through equity compensation plans (stock option plans). In accordance with IFRS 2 - Share-based 86 Fiat Group Consolidated Financial Statements at D ecember 31, 2005...

  • Page 88
    ... cost of product warranties at the time of sale to dealer networks or to the end customer. Revenues from the sale of extended warranties and maintenance contracts are recognised over the period during which the service is provided. Fiat Group Consolidated Financial Statements at D ecember 31, 2005...

  • Page 89
    ... Expenses which are directly attributable to the financial services businesses, including the interest expense related to the financing of financial services businesses as a whole and charges for risk provisions and write-downs, are reported in cost of sales. Earnings per share Basic earnings per...

  • Page 90
    ... risk in trade receivables and receivables from financing activities, in particular dealer financing and finance leases in the European Union market for the Fiat Auto and Commercial Vehicles Sectors, and in N orth America for the Agricultural and Construction Equipment Sector. Financial assets are...

  • Page 91
    ..., forward contracts and currency options. Interest rate exposures are usually hedged by interest rate swaps and, in limited cases, by forward rate agreements. Counterparties to these agreements are major international financial institutions with high credit ratings. Information on the fair value of...

  • Page 92
    ... D ecember 31, 2005 operating in France, Germany, Italy, Switzerland and the United Kingdom. As of that date, Iveco Finance H oldings Limited was no longer consolidated on a line-by-line basis, but accounted for using the equity method. Acquisitions and divestitures of businesses affected the Group...

  • Page 93
    ... FO RMATIO N Specific sections of the Report on operations provide information on significant events which have occurred since the balance sheet date and on transactions between Group companies and with related parties. 92 Fiat Group Consolidated Financial Statements at D ecember 31, 2005 - N otes...

  • Page 94
    ... as follows: (in millions of euros) 2005 2004 Revenues from: Sales of goods Rendering of services Contract revenues Rents on operating leases Rents on assets sold with a buy-back commitment Interest and other financial income from financial services companies O ther 41,013 2,346 1,285 397...

  • Page 95
    ... and other income from licences and know-how), net of miscellaneous operating costs which cannot be allocated to specific functional areas, such as post-employment benefits for retired former employees (health care service costs), indirect taxes and duties, and accruals for various provisions. The...

  • Page 96
    ... its arbitration claim, Fiat sold its holding of 24.6% of the share capital of Italenergia Bis S.p.A. to ED F on September 9, 2005 at a price of 1,147 million euros. O n the same date, the Citigroup loan granted in September 2002 for the same amount was reimbursed, and the banks that had acquired 14...

  • Page 97
    ... the European operations of Fiat Auto H oldings B.V., and by an effect of 79 million euros resulting from the sale, of 51% of the interest in Iveco Finance H oldings Limited to Barclays Mercantile Business Finance Ltd. in 2004. 96 Fiat Group Consolidated Financial Statements at D ecember 31, 2005...

  • Page 98
    ... to the difference between the subscription price of 10.28 euros per share and the market value of 7.337 euros per share at the subscription date, net of accessory costs.This operation led to an increase in capital stock of 1,459 million euros and in other equity reserves of 682 million euros. 10...

  • Page 99
    ... ( 3) 504 ( 83) ( 104) Current and deferred income tax recognised in the financial statements, excluding IRAP IRAP Income taxes recorded in financial statements (current and deferred income taxes) 728 116 844 98 Fiat Group Consolidated Financial Statements at D ecember 31, 2005 - N otes to the...

  • Page 100
    ... is mainly due to the above-mentioned realisation of 277 million euros in deferred tax assets related to the gain on the termination of the Master Agreement with General Motors. Fiat Group Consolidated Financial Statements at D ecember 31, 2005 - N otes to the Consolidated Financial Statements 99

  • Page 101
    ... earnings of subsidiaries since the Group is able to control the timing of the distribution of these reserves and it is probable that they will not be distributed in the foreseeable future. 100 Fiat Group Consolidated Financial Statements at D ecember 31, 2005 - N otes to the Consolidated...

  • Page 102
    ... 33, the dilutive effects of the Mandatory Convertible Facility have not been included in the determination of earnings per share for 2004, as there was a net loss in the period. Fiat Group Consolidated Financial Statements at D ecember 31, 2005 - N otes to the Consolidated Financial Statements 101

  • Page 103
    ... acquired Total Advances and intangible assets in progress 6 6 - - - - - - - - - - Total accumulated amortisation and impairment of Intangible assets 2,417 689 120 (125) (31) 178 102 Fiat Group Consolidated Financial Statements at D ecember 31, 2005 - N otes to the Consolidated...

  • Page 104
    ... the Systems, Pico and Service cash-generating units in Comau. The principal assumptions made in determining value in use of cash-generating units regard the discount rate and the growth rate. In particular, the Group uses discount rates which reflect current market assessments of the time value of...

  • Page 105
    ... unit. D evelopment costs recognised as assets are attributed to cash generating units and are tested for impairment together with the related tangible fixed assets, using the discounted cash flow method in determining their recoverable amount. 14. Property, plant and equipment In 2005 changes in...

  • Page 106
    ... ecember 31, 2005 Land O wned industrial buildings Industrial buildings leased under finance leases Total Industrial buildings O wned plant, machinery and equipment Plant, machinery and equipment leased under finance leases Total Plant, machinery and equipment Assets sold with a buy-back commitment...

  • Page 107
    ... of 32 million euros relating to the reclassification of certain properties and industrial buildings of CN H , no longer in use, to Assets held for sale, as the consequence of the restructuring process taking place over the past few years following the acquisition of the Case group. At D ecember 31...

  • Page 108
    ... 125 million euros arising from the equity method valuation of the investment in the associate Iveco Finance H oldings Limited, no longer consolidated on a line-by-line basis following the sale by the Fiat Group of 51% of the company to Barclays Mercantile Business Finance Ltd. D isposals and other...

  • Page 109
    ...interest Amount Fidis Retail Italia S.p.A. Iveco Finance H oldings Limited Kobelco Construction Machinery Co. Ltd. Rizzoli Corriere della Sera MediaGroup S.p.A. CN H Capital Europe S.a.S. Turk Traktor Ve Z iraat Makineleri A.S. Immobiliare N ovoli S.p.A. LBX Company LLC Al-Ghazi Tractors Ltd. N ew...

  • Page 110
    ... from consolidating Leasys S.p.A. on a line-by-line basis. The Group leases out assets, mainly its own products, as part of its financial services business. Minimum lease payments from non-cancellable operating leases amount to 420 million euros, at D ecember 31, 2005 (415 million euros at D ecember...

  • Page 111
    ... to date Less: Progress billings 382 2,550 ( 2,168) W ork in progress, net of advances on contract work 382 At D ecember 31, 2005, retentions by customers on progress billings amount to 9 million euros (1 million euros at D ecember 31, 2004). 110 Fiat Group Consolidated Financial Statements at...

  • Page 112
    ... (in millions of euros) At D ecember 31, 2005 At D ecember 31, 2004 Retail financing Finance leases D ealer financing Supplier financing Receivables from banking activities Financial receivables from companies under joint control, associates and unconsolidated subsidiaries O ther 6,655 716 6,804...

  • Page 113
    ... finance lease receivables vary depending on prevailing market interest rates. Receivables for dealer financing are typically generated by sales of vehicles and are generally managed under dealer network financing programs as a component of the portfolio of the financial services companies.These...

  • Page 114
    ... be in line with their fair value at the date. 20.Accrued income and prepaid expenses The item Accrued income and prepaid expenses consists mainly of prepaid insurance premiums and rent. 21. Current securities At D ecember 31, 2005, current securities consist of short-term or marketable securities...

  • Page 115
    ... date and the discounted cash flow method. the fair value of equity swaps is determined using market prices and market interest rates at the balance sheet date. The overall decrease in O ther financial assets from 851 million euros at D ecember 31, 2004 to 454 million euros at D ecember 31, 2005...

  • Page 116
    ... amount of derivatives embedded in certain bonds with a return linked to stock market indices or inflation rates, as well as the notional amount of the related hedging derivatives. There are no significant cases at the date of preparing these financial statements in which hedging exceeds the hedged...

  • Page 117
    ... the debt related to securitisations classified in the item Asset-backed financing. The credit risk associated with Cash and cash equivalents is limited, as contracts are entered into with primary national and international financial institutions. 116 Fiat Group Consolidated Financial Statements at...

  • Page 118
    ...translation into euros of the financial statements of subsidiaries denominated in other currencies (921 million euros). Capital stock At D ecember 31, 2005, the capital stock of Fiat S.p.A. is as follows: (number of shares) At D ecember 31, 2005 At D ecember 31, 2004 Shares issued and fully paid...

  • Page 119
    ... for the capital increases servicing the stock option plans (28 million euros) have been revoked, as the Board of D irectors resolved on J une 26, 2003 to use ordinary treasury stock to be purchased for this purpose. 118 Fiat Group Consolidated Financial Statements at D ecember 31, 2005 - N otes to...

  • Page 120
    ...31, 2005, the following stock-based compensation plans relating to managers of Fiat Group companies or members of the Board of D irectors of Fiat S.p.A. were in place. Stock Option plans linked to Fiat S.p.A. ordinary shares The Board of D irectors of Fiat S.p.A. approved certain stock option plans...

  • Page 121
    ... two former employees have ceased. O n March 27, 2003, the Board adopted a resolution to grant to the Chief Executive O fficer Mr. Giuseppe Morchio a number of options to purchase Fiat S.p.A. ordinary shares at a fixed price.The exercise rights of this plan vested over period of time starting on...

  • Page 122
    Contractual terms of the plan are as follows: Strike price (euros) N o of options vested Plan Grant date Expiry date Vesting date Vesting portion Stock O ptions J uly 2004 J uly 26, 2004 J anuary 1, 2011 6.583 10,670,000 J une J une J une J une 1, 2005 1, 2006 1, 2007 1, 2008 22.2% 22...

  • Page 123
    ... fair market value determined as indicated in the next paragraph. Stock options granted vest immediately upon grant, but the shares purchased under the option cannot be sold for six months following the date of grant. N o directors receive benefits upon termination of their service as directors. The...

  • Page 124
    ... stock earned under this plan, CN H issued an equivalent number of common shares to individuals who remained employed by CN H as of the vesting date for the restricted shares. In 2004 a new performance-vesting long-term incentive award was granted to selected key employees and executive officers...

  • Page 125
    ... extent to the company's listing process. Cash-settled share-based payments Certain entities of the Fiat Powertrain Technologies Sector have agreed with a number of employees a total of four cash-settled share-based payment defined Stock Appreciation Rights (SAR) plans. Under these plans, the 54...

  • Page 126
    ... in the income statement for the period. At D ecember 31, 2005, the Group measured the fair value of the liabilities generated by these plans using the binomial method based on the following market data: GM $1 2/3 share Fiat S.p.A. ordinary share Closing price Expected volatility (%) Expected...

  • Page 127
    ... Agreement with General Motors on February 13, 2005, the Group reacquired the shares in Fiat Auto H oldings B.V. held until then by minorities and at D ecember 31, 2005 fully owns the company. 126 Fiat Group Consolidated Financial Statements at D ecember 31, 2005 - N otes to the Consolidated...

  • Page 128
    ... relate both to active employees and to retirees. Group companies provide post-employment benefits under defined contribution and/or defined benefit plans. In the case of defined contribution plans, the company pays contributions to publicly or privately administered pension insurance plans...

  • Page 129
    ...settled to retiree employees and, shall be partially paid in advance if certain condition are met.This defined benefit post-employment plan is unfunded. Pension plans The item Pension Plans consists principally of the obligations of Fiat Group companies operating in the United States (mainly to the...

  • Page 130
    ... in the income statement for Post-employment benefits are as follows: Employee severance indemnity (in millions of euros) Pension Plans 2004 H ealth care plans 2004 O ther 2004 2005 2005 2005 2005 2004 Current service cost Interest costs Less: Expected return on plan assets N et actuarial...

  • Page 131
    ...Closing fair value of plan assets Plan assets for Post-employment benefits mainly consist of listed equity instruments and fixed income securities; plan assets do not include treasury stock of Fiat S.p.A. or properties occupied by Group companies. 130 Fiat Group Consolidated Financial Statements...

  • Page 132
    ... time which begins at the date of delivery to the customer.This estimate has been calculated considering, past experience and specific contractual terms. The restructuring provision comprises the estimated amount of benefits payable to employees on termination in connection with restructuring plans...

  • Page 133
    ... been issued to date under this program. Issuers taking part in the program are Fiat Finance & Trade Ltd. S.A. (for an amount outstanding of 5,426 million euros), and Fiat Finance Canada Ltd. (for an amount outstanding of 100 million euros). Convertible bonds: these represent the residual debt, 15...

  • Page 134
    ... Investors Service. The major bond issues outstanding at D ecember 31, 2005 are the following: Face value of outstanding bonds (in millions) O utstanding amount (in millions of euros) Currency Coupon Maturity Euro Medium Term N otes: Fiat Finance & Trade Fiat Finance Canada Fiat Finance & Trade...

  • Page 135
    ... the quoted market price of financial instruments, if available, or the related future cash flows.The amount is calculated using the interest rates stated in N ote 19, suitably adjusted to take account of the Group's current creditworthiness. 134 Fiat Group Consolidated Financial Statements at...

  • Page 136
    ... euros (65 million euros at D ecember 31, 2004) is included in the item Property, plant and equipment (N ote 14). Payables for finance leases included in the item Total other debt amount to 145 million euros at D ecember 31, 2005 (120 million euros at D ecember 31, 2004) and are analysed as follows...

  • Page 137
    ... sold 51% of FRI's shares and, as a result, the relative control, to Synesis Finanziaria S.p.A., an Italian company held equally by the four Banks, at the price of 370 million euros, based upon the binding agreements signed by the parties at that time.The sale contract calls for Put and Call options...

  • Page 138
    ... year subsequent to signing the contract. Fiat holds a call option that allows it to repurchase the Ferrari shares at any time before J une 30, 2006, except during the five months subsequent to the presentation of an IPO application to the competent authorities.The option exercise price is equal to...

  • Page 139
    ...mainly connected with the sales of receivables to companies of the Iveco Finance H oldings Limited group, which from J une 1, 2005 are no longer consolidated on a line-by-line basis. O perating lease contracts The Group enters into operating lease contracts for the right to use industrial buildings...

  • Page 140
    ...systems and related products for the automotive industry. The Metallurgical Products Sector (Teksid) produces components for engines, cast-iron transmissions, and magnesium bodywork components. Fiat Group Consolidated Financial Statements at D ecember 31, 2005 - N otes to the Consolidated Financial...

  • Page 141
    ... the debt of financial services companies. As a result, the unallocated Group debt represents the debt of the industrial companies. Magneti Marelli Business Comau Solutions O ther and Itedi eliminations (in millions of euros) Fiat Auto Maserati Ferrari FPT CN H Iveco Teksid FIAT Group 2005...

  • Page 142
    ... eliminations FIAT Group At D ecember 31, 2005 Sector operating assets Investments Unallocated Group assets: Tax assets Receivables from financing activities, N on-current O ther receivables and Securities of industrial companies Cash and cash equivalents, Current securities and O ther financial...

  • Page 143
    ... eliminations FIAT Group At D ecember 31, 2004 Sector operating assets Investments Unallocated Group assets: Tax assets Receivables from financing activities, N on-current O ther receivables and Securities of industrial companies Cash and cash equivalents, Current securities and O ther financial...

  • Page 144
    ...exposed to financial risks connected with its operations: credit risk, regarding its normal business relations with customers and dealers, and its financing activities; liquidity risk, with particular reference to the availability of funds and access to the credit market and to financial instruments...

  • Page 145
    ...local costs incurred in Poland regarding products sold in the euro area; - USD /BRL and EUR/BRL, relating to Brazilian manufacturing operations and the related import and export flows, for which the company is a net exporter in US dollars. The trading flows exposed to changes in these exchange rates...

  • Page 146
    ... services companies (basically customer financing and financial leases) and part of debt (including subsidised loans and bonds). The potential loss in fair value of fixed rate financial instruments (including the effect of interest rate derivative financial instruments) held at D ecember 31, 2005...

  • Page 147
    02 Fiat Group 35. O ther information The income statement includes personnel costs for 6,158 million euros in 2005 (6,167 million euros in 2004). An analysis of the average number of employees by category is provided as follows: 2005 2004 Average number of employees Managers W hite-collar Blue-...

  • Page 148
    Appendix 1 Transition to International Financial Reporting Standards (IFRS) Appendix 1 Transition to International Financial Reporting Standards (IFRS) 147

  • Page 149
    ..., together with the related explanatory notes. This information has been prepared as part of the Group's conversion to IFRS and in connection with the preparation of its 2005 consolidated financial statements in accordance with IFRS, as adopted by the European Union. FIRST-TIME AD O PTIO N O F IFRS...

  • Page 150
    ... ASSETS Stockholders' equity Provisions: Employee benefits Other provisions 1,503 (1,550) (211) 6,501 1,224 (203) - 14,790 - 36,709 1 0 ,5 8 1 2 6 ,1 2 8 D ebt: Asset-backed financing Other debt Total N on-current liabilities Trade payables O thers payables Short-term financial payables 22,110...

  • Page 151
    ... Trade receivables Receivables from financing activities O ther receivables Accrued income and prepaid expenses Current financial assets: Current equity investments Current securities Other financial assets Financial assets not held as fixed assets Financial lease contracts receivable Financial...

  • Page 152
    ... J anuary 1, 2004 At D ecember 31, 2004 Stockholders' Equity under Italian GAAP D evelopment costs Employee benefits Business combinations Revenue recognition - sales with a buy-back commitment Revenue recognition - other Scope of consolidation Property, plant and equipment W rite-off of deferred...

  • Page 153
    ... - fair value measurement of investments and securities Treasury stock Adjustments to the valuation of investments in associates O ther adjustments E F M N P 292 (327) 55 (32) (152) 43 ( 121) 342 (180) 160 (26) (135) (1) 160 152 Appendix 1 Transition to International Financial Reporting...

  • Page 154
    ... 1, 2004 At D ecember 31, 2004 Revenue recognition - sales with a buy-back commitment Scope of consolidation - SCD R Sales of receivables O ther adjustments D F Q 38 (924) 3,563 1 95 (789) 2,130 33 2,678 1,469 Appendix 1 Transition to International Financial Reporting Standards (IFRS) 153

  • Page 155
    ... at amortised cost to O ther financial assets - change in balance sheet format from Securities - change in balance sheet format from O ther receivables - guarantee deposits arising from securitisations of dealer financing free period Reclassifications from trade receivables of dealer financing free...

  • Page 156
    ... 31, 2004 Employee benefits O ther adjustments B 2 8 (110) 7 ( 103) 10 Current securities Reclassifications (...funds and highly liquid debt securities to Receivables for financing activities - change in balance sheet format from Financial...International Financial Reporting Standards (IFRS) 155

  • Page 157
    ... for employee pensions and similar obligations - change in balance sheet format 1,503 1,432 1,503 1,432 Adjustments (in millions of euros) At J anuary 1, 2004 At D ecember 31, 2004 Employee benefits B 1,224 964 1,224 964 156 Appendix 1 Transition to International Financial Reporting...

  • Page 158
    ...financial assets, investments provision- change in balance sheet format (1,503) (47) ( 1,550) (1,432) (17) ( 1,449) Adjustments (in millions of euros) At J anuary 1, 2004 At D ecember 31, 2004 Revenue recognition - sales with a buy-back commitment Reserves for risks and charges - vehicle sales...

  • Page 159
    ...J anuary 1, 2004 At D ecember 31, 2004 Revenue recognition - sales with a buy-back commitment Scope of consolidation O ther adjustments D F 1,851 42... financing activities - measurement at amortised cost to O ther financial assets - change in balance sheet format - derivatives to O ther financial ...

  • Page 160
    ... Selling, general and administrative costs Research and development costs O ther income (expenses) O perating result 22 409 (4) 50 150 Trading Profit Gains (losses) on the disposal of equity investments 496 (243) ( 966) (641) Result of equity Investments N on-operating income (expenses) 8 (863...

  • Page 161
    ...) for rental companies included in Financial Services from Selling, general and administrative costs - change in income statement format from O ther income (expenses) - change in income statement format to Financial income (expenses) for interest costs on defined benefit plans from Financial income...

  • Page 162
    ... (121) 72 (148) (114) (5) ( 142) Gains (losses) on the disposal of equity investments Reclassifications (in millions of euros) 2004 from N on-operating income (expenses) - change in income statement format 154 154 Appendix 1 Transition to International Financial Reporting Standards (IFRS) 161

  • Page 163
    ...) 2004 to Cost of sales for renting companies included in Financial Services from Cost of sales for interest costs on defined benefit plans to Cost of sales - interest compensation to financial services on dealer free period from Financial income (expenses) - change in income statement format 36...

  • Page 164
    ... D evelopment costs Under Italian GAAP applied research and development costs may alternatively be capitalised or charged to operations when incurred. Fiat Group has mainly expensed R&D costs when incurred. IAS 38 - Intangible Assets requires that research costs be expensed, whereas the plan assets...

  • Page 165
    ... - sales with a buy-back commitment Under Italian GAAP , the Group recognised revenues from sales of products at the time title passed to the customer, which was generally at the time of shipment. For contracts for vehicle sales with a buy-back commitment at a specified price, a specific reserve...

  • Page 166
    ... operator and other financial investors in the formation of "Società di Commercializzazione e D istribuzione Ricambi S.p.A." ("SCD R"), a company whose principal activity is the purchase of spare parts from Fiat Auto for resale to end customers. At that date Fiat Auto and its subsidiaries sold...

  • Page 167
    ... to their working condition. Under Italian GAAP , Fiat revalued certain Property, Plant and Equipment to amounts in excess of historical cost, as permitted or required by specific laws of the countries in which the assets were located.These revaluations were credited to stockholders' equity and the...

  • Page 168
    ..., the accounting treatment adopted under Italian GAAP was in compliance with IAS 39. In this context, as mentioned in the consolidated financial statements as of D ecember 31, 2003, Fiat was party to a Total Return Equity Swap contract on General Motors shares, in order to hedge the risk implicit in...

  • Page 169
    .... Furthermore, with specific reference to the securitisation of retail loans and leases originated by the financial services companies, the net present value of the interest flow implicit in the instalments, net of related costs, had been recognised in the income statement. Under IFRS: of...

  • Page 170
    ...such adjustments on stockholders' equity and on net income is not material. In particular, it refers mainly to the reversal of the gains arising from the related securitisation transactions on the retail portfolio of receivables of financial service companies, realised under Italian GAAP and not yet...

  • Page 171

  • Page 172
    ... significant equity investments of the Group is provided below. The companies on this list have been classified according to percentage of ownership, method of consolidation and type of business.The information provided for each company includes: name, registered office, country and capital stock...

  • Page 173
    ...Registered office Country Capital stock Currency % of Group consolidation Interest held by % interest held % of voting rights Controlling company Parent Company Fiat S.p.A. Turin Italy 6,377,257,130 EUR - - - - Subsidiaries consolidated on a line-by-line basis Automobiles Fiat Auto Holdings...

  • Page 174
    ... Credit Danmark A/S Fidis Dealer Services B.V. Fidis Faktoring Polska Sp. z o.o. Fidis Finance Polska Sp. z o.o. Fidis Hungary KFT Fidis Renting Italia S.p.A. Fidis S.p.A. Finplus Renting S.A. Inmap 2000 Espana S.L. International Metropolitan Automotive Promotion (France) S.A. Italian Automotive...

  • Page 175
    ...00 100.00 Fiat Partecipazioni S.p.A. Maserati S.p.A. 100.000 100.000 Agricultural and Construction Equipment CNH Global N.V. Austoft Industries Limited Banco CNH Capital S.A. Bli Group Inc. Blue Leaf I.P. Inc. Case Brazil Holdings Inc. Case Canada Receivables, Inc. Case Credit Australia Investments...

  • Page 176
    ...line-by-line basis (continued) % of Group consolidation % of voting rights Name Registered office Country Capital stock Currency Interest held by % interest held Case Europe S.a.r.l. Case Harvesting Systems GmbH Case India Limited Case International Marketing Inc. Case LBX Holdings Inc. Case...

  • Page 177
    ... Holding Limited CNH Baumaschinen GmbH CNH America LLC CNH Capital America LLC Case Equipment Holdings Limited San Mauro Torinese Italy Basildon Antwerp New Delhi Berlin Oklahoma City Calgary Saratov United Kingdom Belgium India Germany U.S.A. Canada Russia Appendix II The Companies of the Fiat...

  • Page 178
    ... office Country Capital stock Currency Interest held by % interest held Shanghai New Holland Agricultural Machinery Corporation Limited Shanghai People's Rep.of China 35,000,000 USD 50.34 CNH Asian Holding Limited 60.000 Powertrain Technologies Fiat Powertrain Technologies S.p.A. Fiat...

  • Page 179
    ... office Country Capital stock Currency Interest held by % interest held IVC Véhicules Industriels S.A. Iveco Argentina S.A. Iveco Austria GmbH Iveco Bayern GmbH Iveco Contract Services Limited Iveco Danmark A/S Iveco España S.L. Iveco Est Sas Iveco Eurofire (Holding) GmbH Iveco Fiat...

  • Page 180
    ... GmbH Magneti Marelli Holding S.p.A. Automotive Lighting Reutlingen GmbH Magneti Marelli Holding U.S.A. Inc. Automotive Lighting Reutlingen GmbH Automotive Lighting Reutlingen GmbH Fiat Polska Sp. z o.o. Grasbrunn-Neukerferloh Germany Llinares del Valles Saint Denis Spain France 25,565 9,153...

  • Page 181
    02 Fiat Group Subsidiaries consolidated on a line-by-line basis (continued) % of Group consolidation % of voting rights Name Registered office Country Capital stock Currency Interest held by % interest held Automotive Lighting Rear Lamps Italia S.p.A. Automotive Lighting Reutlingen GmbH ...

  • Page 182
    ... rights Name Registered office Country Capital stock Currency Interest held by % interest held Magneti Marelli Poland S.A. Magneti Marelli Powertrain GmbH Magneti Marelli Powertrain (Shanghai) Co. Ltd. Magneti Marelli Powertrain S.p.A. Magneti Marelli Powertrain U.S.A. LLC Magneti Marelli...

  • Page 183
    ... e Comercio Ltda. Comau Estil Unl. Comau India Private Limited COMAU Ingest Sverige AB Comau Pico Expatriate, Inc. Comau Pico Holdings Corporation Comau Pico Iaisa S.de R.L. de C.V. Comau Pico Inc. Comau Pico Mexico S.de R.L. de C.V. Comau Pico of Canada Inc. Comau Pico Pitex S.de R.L. C.V. Comau...

  • Page 184
    ...-line basis (continued) % of Group consolidation % of voting rights Name Registered office Country Capital stock Currency Interest held by % interest held Comau Russia OOO Comau SA Body Systems (Pty) Ltd. Comau SA Press Tools and Parts (Pty) Ltd. Comau SA Properties (Pty) Ltd. Comau Service...

  • Page 185
    ... voting rights Name Registered office Country Capital stock Currency Interest held by % interest held Ingest Facility S.p.A. ITS GSA FiatGroup France S.A.S. ITS-GSA Deutschland GmbH ITS-GSA U.K. Limited KeyG Consulting S.p.A. PDL Services S.r.l. Risk Management S.p.A. Sadi Brasil Ltda. Sadi...

  • Page 186
    ... di sviluppo e addestramento industriale per Azioni Fiat Financas Brasil Ltda Fiat Finance and Trade Ltd Fiat Finance Canada Ltd. Fiat Finance Luxembourg S.A. Fiat Finance North America Inc. Fiat Ge.Va. S.p.A. Fiat Information & Communication Services società consortile per azioni Nova Lima...

  • Page 187
    ... consolidated on a line-by-line basis (continued) % of Group consolidation % of voting rights Name Registered office Country Capital stock Currency Interest held by % interest held Fiat Netherlands Holding N.V. Fiat Partecipazioni S.p.A. Fiat Partecipazioni (U.K.) Limited Fiat Polska Sp...

  • Page 188
    Subsidiaries consolidated on a line-by-line basis (continued) % of Group consolidation % of voting rights Name Registered office Country Capital stock Currency Interest held by % interest held Isvor Fiat Società consortile di sviluppo e addestramento industriale per Azioni Turin Italy ...

  • Page 189
    ... Business Solutions S.p.A. eSPIN S.p.A. Fast-Buyer S.p.A. Fiat Media Center S.p.A. Fiat Powertrain Technologies S.p.A. Itedi-Italiana Edizioni S.p.A. Maserati S.p.A. Orione-Consorzio Industriale per la Sicurezza e la Vigilanza PDL Services S.r.l. Risk Management S.p.A. Sisport Fiat S.p.A. Automotive...

  • Page 190
    ...200,000 35,000 EUR ROL EUR BGL HUF BGL EUR EEK RUR ROL LTT 40.00 40.00 40.00 40.00 39.83 40.00 40.00 40.00 40.00 40.00 40.00 Iveco International Trade Finance S.A. s.c. Afin Romania S.A. Afin Leasing AG Afin Leasing AG Afin Leasing AG Afin Bulgaria EAD Afin Leasing AG Afin Leasing AG Afin Leasing AG...

  • Page 191
    ....95 41.95 CNH Global N.V. CNH Engine Corporation CNH America LLC CNH Global N.V. 50.000 50.000 50.000 50.000 Commercial Vehicles GEIE V.IV.RE Haveco Automotive Transmission Co. Ltd. Iveco Fiat - Oto Melara Società consortile r.l. Naveco Ltd. Transolver Finance Establecimiento Financiero de Credito...

  • Page 192
    ...90 CNH America LLC CNH Canada, Ltd. CNH America LLC CNH America LLC CNH America LLC CNH America LLC CNH Canada, Ltd. CNH America LLC CNH America LLC 100.000 75.500 96.739 91.000 68.614 100.000 62.923 87.474 100.000 Commercial Vehicles Altra S.p.A. F. Pegaso S.A. Financière Pegaso France S.A. Iveco...

  • Page 193
    02 Fiat Group Subsidiaries accounted for using the equity method (continued) % of Group consolidation % of voting rights Name Registered office Country Capital stock Currency Interest held by % interest held Metallurgical Products Teksid of India Private Limited Company in liquidation ...

  • Page 194
    Name Registered office Country Capital stock Currency % of Group consolidation Interest held by % interest held % of voting rights Subsidiaries valued at cost Automobiles Fiat Auto Espana Marketing Instituto Agrupacion de Interes Economico Fiat Auto Marketing Institute (Portugal) ACE Nuove ...

  • Page 195
    ...Registered office Country Capital stock Currency Interest held by % interest held Production Systems Comau (Shanghai) International Trading Co. Ltd. Comau U.K. Limited Consorzio Fermag in liquidation Synesis Shanghai Telford Rome Modugno People's Rep.of China United Kingdom Italy Italy 200,000...

  • Page 196
    Subsidiaries valued at cost (continued) % of Group consolidation % of voting rights Name Registered office Country Capital stock Currency Interest held by % interest held Nuove Iniziative Finanziarie 4 S.r.l. Orione-Consorzio Industriale per la Sicurezza e la Vigilanza Turin Turin Italy ...

  • Page 197
    ... Fiat Group Name Registered office Country Capital stock Currency % of Group consolidation Interest held by % interest held % of voting rights Associated companies accounted for using the equity method Automobiles Fidis Bank G.m.b.H. Fidis Retail Italia S.p.A. GM-Fiat Worldwide Purchasing...

  • Page 198
    Associated companies accounted for using the equity method (continued) % of Group consolidation % of voting rights Name Registered office Country Capital stock Currency Interest held by % interest held Production Systems Gonzalez Production Systems Inc. G.P. Properties I L.L.C. Pontiac ...

  • Page 199
    02 Fiat Group Name Registered office Country Capital stock Currency % of Group consolidation Interest held by % interest held % of voting rights Associated companies valued at cost Automobiles Car City Club S.r.l. Consorzio per la Reindustrializzazione Area di Arese S.r.l. in liquidation ...

  • Page 200
    Associated companies valued at cost (continued) % of Group consolidation % of voting rights Name Registered office Country Capital stock Currency Interest held by % interest held Holding companies and Other companies Agenzia Internazionalizzazione Imprese Torino S.r.l. in liquidation Alcmena...

  • Page 201
    ... office Country Capital stock Currency % of Group consolidation Interest held by % interest held % of voting rights Other companies valued at cost Agricultural and Construction Equipment Polagris S.A. Pikieliszki Lithuania 1,133,400 LTT 9.27 CNH Polska Sp. z o.o. 11.054 Commercial Vehicles...

  • Page 202

  • Page 203

  • Page 204
    03 Fiat S.p.A. Financial Statements at D ecember 31, 2005 204 207 Financial Review of Fiat S.p.A. Transition to International Financial Reporting Standards (IFRS) by Fiat S.p.A. 211 214 216 Balance Sheet Income Statement N otes to the Financial Statements Fiat S.p.A. Financial Statements at D ...

  • Page 205
    ...CIAL REVIEW O F FIAT S.P .A. The following tables, described and commented on below, have been prepared from the company's statutory financial statements at D ecember 31, 2005, to which reference should be made. Pursuant to the provisions of the Italian civil code, the statutory financial statements...

  • Page 206
    ... 4,466 975 Total net invested capital Stockholders' equity N et debt (N et liquid funds) 4,738 7,689 ( 2,951) Fixed assets refer mainly to equity investments in the principal Group companies, in which Fiat S.p.A. holds a controlling interest. The net decrease in fixed assets of 290 million euros...

  • Page 207
    03 Fiat S.p.A. Stockholders' equity at D ecember 31, 2005 totalled 7,689 million euros.The increase of 3,223 million euros with respect to D ecember 31, 2004 is due to the capital increase of resolved by the Board of D irectors on September 15, 2005 and subscribed by the financing banks to offset ...

  • Page 208
    ... connection with share capital increases which are deferred and amortised under Italian GAAP are deducted directly from the proceeds of the increase and debited to stockholders' equity under IFRS. 2 .Valuation of investments in other companies not held as current assets In the financial statements...

  • Page 209
    ... 1, 2005 will therefore lead to the recognition of the excess of the stock market price of the investment over its carrying value at that date, with a net positive impact on stockholders' equity. Amounts received from the customer during the performance of the contract are treated as financial...

  • Page 210
    ...IFRS 2 - Share-based Payment, the full fair value amount of stock options at the grant date is reflected in the income statement on a straight-line basis over the period from the grant date to the vesting date, with the offsetting credit recognised directly in equity. Changes in fair value after the...

  • Page 211
    ... a difference in stockholders' equity will and not in contrast with the general principles set forth in the Italian law governing financial statements. In particular, taking into account the restrictions under Italian law, Fiat S.p.A. maintained that IAS 39 was applicable only in part and only in...

  • Page 212
    ...989 35,831,465 2,887,128 4,766,873 Total Property, plant and equipment Land and buildings Plant and machinery O ther assets 34,477,620 1,925,748 4,330,833 40,734,201 (note 3) Total Financial fixed assets Investments in: Subsidiaries O ther companies Total investments O ther securities 43,485,466...

  • Page 213
    ...CH ARGES RESERVE FO R EMPLOYEE SEVERAN CE IN D EMN ITIES PAYABLES Borrowings from banks Advances Trade payables Payables to subsidiaries (* ) Payables to controlling company Taxes payable Social security ...year Amounts due beyond one year 212 Fiat S.p.A. Financial Statements at D ecember 31, 2005

  • Page 214
    ... 11,556,908,382 TOTAL GUARAN TEES GRAN TED CO MMITMEN TS Commitments related to supply contracts Commitments related to derivative financial instruments O ther commitments TOTAL CO MMITMEN TS TOTAL MEMO RAN D UM ACCO...840,325 21,917,748,707 Fiat S.p.A. Financial Statements at D ecember 31, 2005 213

  • Page 215
    03 Fiat S.p.A. Income Statement 2005 ( in euros) 2004 (in euros) VALUE O F PRO D UCTIO N Revenues from sales and services Change in contract work in progress O ther income and revenues (note 15) 20,169,500 13,575,898 11,702,535 45,447,933 (note 16) 59,775,406 ...

  • Page 216
    ... D EX PEN SES IN CO ME (LO SS) BEFO RE TAX ES Income taxes, current and deferred tax assets and liabilities (note 20) 1,120,944,540 501,847,225 278,827,554 223,019,671 (278,441,579) (949,100,522) N ET IN CO ME (LO SS) Fiat S.p.A. Financial Statements at D ecember 31, 2005 215

  • Page 217
    ...are booked when the work is actually delivered and accepted by customers. Treasury stock Treasury stock is valued at the lower of its purchase cost (calculated using the LIFO method in annual instalments) and its market value, or 216 Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes...

  • Page 218
    ... the suretyships and other unsecured guarantees granted for financings, bonds, credit lines, commercial paper and other financial instruments of subsidiaries and others are posted for the reimbursement value of these notes at the balance sheet date. The O ther unsecured guarantees include the amount...

  • Page 219
    ... a single tax return. Each company participating in the tax consolidation program Financial income and expenses Financial income and expenses are recorded on an accrual basis. Costs relating to the sale of receivables of any type (with and without recourse) and nature (trade, financial, other) are...

  • Page 220
    ...This item reflects the costs incurred in connection with ongoing administrative procedures required to register trademarks. W ith respect to D ecember 31, 2004 it showed a net increase of 36 thousand euros to 221 thousand euros at D ecember 31, 2005. Fiat S.p.A. Financial Statements at D ecember 31...

  • Page 221
    ...) ( 3,285) ( 2,751) N et change D epreciation taken in 2005 was computed using the following rates: D epreciation rates Buildings Plant and machinery Furniture Equipment Vehicles 3% 10% 12% 20% 25% 220 Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes to the Financial Statements

  • Page 222
    ... of euros) Company name and registered office % owned by Fiat S.p.A. 2004 Book value Acquisitions Capital increases Capital reimbursements D isposals Revaluations (W ritedowns) 2005 Book value Subsidiaries Fiat Partecipazioni S.p.A. - Turin Fiat N etherlands H olding N .V. - Amsterdam (N etherlands...

  • Page 223
    ... of subsidiaries and associated companies and, for publicly traded companies, a comparison between book value and market value. The following illustrate the value adjustments to financial fixed assets: The revaluation of the equity investment in Fiat N etherlands H olding N .V. reflects the partial...

  • Page 224
    ... 2426, Section 3 of the Italian Civil Code, that the book value of the investment in Fiat N etherlands H olding N .V. at D ecember 31, 2005 was 127 million euros higher than the portion of the company's stockholders' equity owned, determined after making the adjustments required by the accounting...

  • Page 225
    ... 4. Inventories This item consists of costs incurred in connection with the H igh-Speed Railway Project. Fiat, as general contractor, has signed contracts with Treno Alta Velocità - T.A.V. S.p.A. (which, in turn, had received the order from F.S. S.p.A. - Italian Railways) for the executive design...

  • Page 226
    ... IRES sold to Group companies Receivables for IRES transferred in relation to the national tax consolidation program for fiscal 2005 H igher consolidated Group VAT receivables Miscellaneous items ( 208,006) ( 30,894) 10,868 33,859 7,841 ( 186,332) N et change Fiat S.p.A. Financial Statements at...

  • Page 227
    ....These shares are held to cover, on a generic basis, the commitments undertaken in connection with stock option plans for employees. At D ecember 31, 2005, the exercise prices of said stock options were higher than the carrying value of the treasury stock. 226 Fiat S.p.A. Financial Statements at...

  • Page 228
    ... the market value at D ecember 30, 2005, the value of treasury stock would be equal to 31,764 thousand euros. Financial receivables This item totalled 3,058,299 thousand euros at D ecember 31, 2005, compared with 2,320,581 thousand euros at the end of 2004. This item consists of a fixed rate (4.41...

  • Page 229
    ... shares; all with a par value of 5 euros each. W ith reference to the capital stock, it should be mentioned that: O n September 24, 2002 a pool of banks (see N ote 12) extended a Mandatory Convertible Facility to Fiat S.p.A. for 3 billion euros due on September 20, 2005. According to the conditions...

  • Page 230
    ... the capital increases servicing the stock option plans (28 million euros) have been revoked, as the Board of D irectors resolved on J une 26, 2003 to use ordinary treasury stock to be purchased for this purpose. Additional paid-in capital At D ecember 31, 2005, additional paid-in capital amounted...

  • Page 231
    ... to treasury stock valuation reserve Transfer of part of treasury stock valuation reserve to reserve for purchase of treasury shares following writedown of treasury stock Allocation to additional paid-in capital of the value of unexercised option rights sold on the stock market Capital increase from...

  • Page 232
    ...) for the listing on the stock market of Ferrari S.p.A. shares which were sold to Mediobanca in 2002, expenses for bonuses to be paid to employees for the achievement of objectives (3,620 thousand euros), expenses for the retirement of personnel in consequence of corporate restructuring plans (4,115...

  • Page 233
    ...the N ovara-Milan line. T.A.V. S.p.A. has been provided with bank suretyships to secure these advances and proper execution of work for a total of 1,904,058 thousand euros, as described more exhaustively in N otes 4 and 14. 232 Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes to the...

  • Page 234
    ... payables to subsidiaries Financial payables at D ecember 31, 2005 included amounts payable to subsidiaries for their VAT credits, which they transferred to Fiat S.p.A. under the consolidated VAT filing system. Trade payables reflect the purchase of administrative and general services. Payables for...

  • Page 235
    ...employees for fees to be paid Payables to employees who left the Company Payables to stockholders of Toro Assicurazioni S.p.A., Magneti Marelli S.p.A. and Comau S.p.A. for public... Total accrued expenses 234 Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes to the Financial Statements

  • Page 236
    ... Controle Motor Ltda 3,248 thousand euros, Iveco Latin America Ltda 2,178 thousand euros), bond issues (Fiat Finance and Trade Ltd 5,426,621 thousand euros, Fiat Finance Canada Ltd. 100,000 thousand euros, Fiat Finance Luxembourg S.A. 14,571 thousand euros), credit lines (CN H Capital America LLC...

  • Page 237
    ... in the share price above the exercise price of the 10,670,000 stock options granted to Mr. Marchionne.The risk of a significant increase in the Fiat share price above the exercise price for these options (6.583 euros) has been covered through the aforementioned "Total Return Equity Swap" agreement...

  • Page 238
    ... use of the Fiat trademark and to services rendered by management personnel of Fiat S.p.A. at the main Group companies. The decrease over 2004 is due to lower bills for the license to use the trademark. Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes to the Financial Statements 237

  • Page 239
    ... to 11,702 thousand euros in 2005 and include 2,262 thousand euros in rental income from buildings owned by Fiat S.p.A. and leased to Group companies, 6,454 thousand euros in fees paid by miscellaneous companies for services performed by employees or coordinated and continuing collaborators of...

  • Page 240
    ... 2004 mainly due to lower wage and salary and social security contributions and lower provisions set aside for employee bonuses.The Company's average number of staff decreased from 151 employees in 2004 (83 managers, 63 clerical staff, and 5 blue collar workers) to 133 employees in 2005 (63 managers...

  • Page 241
    ... Group companies: Fiat Finance and Trade Ltd Fiat France S.A. Fiat Partecipazioni S.p.A. Banco CN H Capital S.A. F.M.A. - Fabbrica Motori Automobilistici S.r.l. Fiat Auto S.p.A. Ingest Facility S.p.A. N ew H olland Credit Company LLC Fiat Finance Luxembourg S.A. Fiat Auto Financial Services Limited...

  • Page 242
    ...securities among current assets other than equity investments This item amounted to 1,612 thousand euros in 2005, for a change of the same amount with respect to 2004. It reflects the partial restoration of value of treasury stock, which are discussed at N ote 6. Fiat S.p.A. Financial Statements at...

  • Page 243
    .... O n the other hand, in 2004 there was a net tax credit of 278,442 thousand euros, mainly due to the recognition of deferred tax assets of 277,000 thousand euros, as previously discussed at N ote 5. 242 Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes to the Financial Statements

  • Page 244
    ... Purchases Reclassifications H istorical Upward H istorical Upward Total cost adjustments cost adjustments cost adjustments Gross value at the end of fiscal year Intangible fixed assets Start-up and expansion costs: Cost of capital increase to 3,082.13 million euros (Board Resolution...

  • Page 245
    ... gross value at end of period Property, plant and equipment Land and buildings Plant and machinery 102 - 102 - 102 Financial fixed assets Investments in: Subsidiaries - - 102 38,576 - - 38,576 244 Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes to the Financial Statements

  • Page 246
    ... at end of fiscal year Financial fixed assets Investments in: Subsidiaries O ther companies 7,472,239 - 957,542 (9,615) (526,753) 7,893,413 - 7,472,239 957,542 - ( 9,615) ( 526,753) 7,893,413 Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes to the Financial Statements 245

  • Page 247
    ... book value at end of period Financial fixed assets Investments in: Subsidiaries O ther companies 12,683,475,444 126,725,012 27,900,031 (7,893,412,506) 41,933 2,123,212 36,411,284 38,576,429 - 12,810,200,456 27,900,031 ( 7,893,412,506) 41,933 2,123,212 36,411,284 38,576,429 246 Fiat...

  • Page 248
    ... subsidiaries and associated companies required under Art. 2427, Section 5, of the Italian Civil Code and additional information specified in the Consob communication of February 23, 1994 Subsidiaries included in financial fixed assets Result for Capital Company and registered office (in euros) the...

  • Page 249
    03 Fiat S.p.A. List of investments (continued) Result for the last fiscal year Company and registered office (in euros) (in euros) Stockholders' equity (in euros) % owned by Fiat S.p.A. N umber of shares Total book value (in euros) Business Solutions S.p.A. - Turin At 12/31/04 Capital contribution...

  • Page 250
    List of investments (continued) Result for the last fiscal year Company and registered office (in euros) (in euros) Stockholders' equity (in euros) % owned by Fiat S.p.A. N umber of shares Total book value (in euros) Fiat Media Center S.p.A. - Turin At 12/31/04 Transfer from other companies - 6,977...

  • Page 251
    03 Fiat S.p.A. List of investments in other companies and additional information specified in the Consob communication of February 23, 1994 O ther companies included in financial fixed assets % owned by Company and registered office Fiat S.p.A. N umber of shares Total book value (in euros) ...

  • Page 252
    .../31/04 Sale Revaluation for partial restoration of book value 0.45 4,384,019 (52,311) 6.025 6.025 26,413,308 (315,169) 1,611,797 5.00 21,920,095 At 12/31/05 0.34 4,331,708 6.397 27,709,936 ° ) 31,764,415 5.00 21,658,540 °) Based on market prices on D ecember 30, 2005 Fiat S.p.A. Financial...

  • Page 253
    ...event of distribution would be included in the Company's taxable income, and: Revaluation reserve under Law N o. 74 of 2/11/52 Extraordinary reserve 20,052,596 953,046 453,070,328 97,675,103 266,350,533 252 Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes to the Financial Statements

  • Page 254
    ...(Article 2426, Section 5 of the Italian Civil Code). (* * ) For uses of reserves no longer existing at D ecember 31, 2005, reference is made to the schedule of changes in stockholders' equity (note 9). Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes to the Financial Statements 253

  • Page 255
    ... - term financial assets B. Cash flow - operating activities Income (loss) for the fiscal year D epreciation and amortisation Losses (gains) on disposals of fixed assets Income from reimbursement of principal IH F - Internazionale H olding Fiat S.p.A. W ritedowns (revaluations) of equity investments...

  • Page 256
    ... Compensation channelled to IFIL Investments S.p.A Compensation for the office of Statutory Auditor, held until J une 8, 2005, in the subsidiary Atlanet. Compensation for the office of Chairman of the Board of Statutory Auditors in Fiat Auto. 3) 4) 5) 6) 7) 8) 9) Fiat S.p.A. Financial Statements...

  • Page 257
    ... shares only upon satisfaction of the profitability targets, whose amount and reference period are defined in advance. Turin, February 28, 2006 The Board of D irectors By: Luca Cordero di Montezemolo Chairman 256 Fiat S.p.A. Financial Statements at D ecember 31, 2005 - N otes to the Financial...

  • Page 258
    Auditors' Reports Auditors' Report 257

  • Page 259
    ...accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. We conducted our audit in accordance with the Auditing Standards recommended by CONSOB, the Italian Regulatory Commission for Companies and the Stock Exchange.Those standards require that we plan and...

  • Page 260
    ...the Italian Regulatory Commission for Companies and the Stock Exchange.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting...

  • Page 261

  • Page 262
    Reports of the Board of Statutory Auditors Reports of the Board of Statutory Auditors 261

  • Page 263
    ... each individual company as required under the pertinent legal systems. Consequently, as allowed under Article 41, Section 3 of Legislative Decree No. 127 of April 9, 1991, the Board of Statutory Auditors did not review these results and information and the consolidated financial statements, except...

  • Page 264
    ... are able to report specific information on the subjects listed below. We attended the meetings of the Board of Directors, where we received detailed information on the Company's business and on the main operating, financial and asset transactions carried out or in the process of being carried out...

  • Page 265
    ... 14, 2005, December 16, 2005 and January 30, 2006, respectively, Marco Bava, a Fiat stockholder, filed four complaints pursuant to Article 2408 of the Italian Civil Code.These complaints, which, in each case, were filed shortly before meetings of the Company's Board of Directors, were addressed to...

  • Page 266
    ... and Significant Accounting Policies," at the subsection "Reserves for risks and charges and employee severance indemnities." The notes to the consolidated financial statements specifically showed how the costs to carry out corporate reorganization and restructuring plans were "provided in...

  • Page 267

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    Other Items on the Agenda and Related Reports and Motions Other Items on the Agenda and Related Reports and Motions 267

  • Page 269
    ... the Statutory Financial Statements at December 31, 2005. We also submit for your approval a motion to allocate the net income of 223,019,671 euros to partially cover the losses carried forward, which consequently amount to 726,080,851 euros. Turin, February 28, 2006 Board of Directors By: Luca...

  • Page 270
    ... conflicts of Stockholders, The term of the Board of Directors expires on the date of the Stockholders Meeting that approves the financial statements at December 31, 2005. The Stockholders Meeting is accordingly asked to: determine the number of members of the Board of Directors, from a minimum of...

  • Page 271
    ... three years have not been partners or directors of a rating agency that currently is or during the last three years has been in charge of assigning a rating to the Company, a subsidiary of the Company or a company that, even if jointly with others, controls the Company; g) are not and during the...

  • Page 272
    ... determination of the relevant fees Stockholders, The term of the Board of Statutory Auditors expires on the date of the Stockholders Meeting that approves the financial statements at December 31, 2005. Thus, you are being asked to appoint a new Board of Statutory Auditors that, pursuant to Article...

  • Page 273
    ...the structure of 272 Other Items on the Agenda and Related Reports and Motions the Company or the Group changes. Beginning in 2007, it will be adjusted according to the increase in the ISTAT cost of living index. As part of the Group auditing plan, which is attached to the motion for the engagement...

  • Page 274
    ...Article 161, after consulting the board of auditors. The meeting ... which the directors have proposed to you as the external auditors of the Company for the fiscal...terms of the scheduling and procedures to be applied for a complete and adequate auditing plan, in line...Related Reports and Motions 273

  • Page 275
    ... connected with Fiat shares. Such a plan would be offered to a maximum of 200 Company and Group managers who have a significant impact on business results. The participation of these employees in this plan may be conditioned on their achieving individual results and/or Group operating and financial...

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    Graphic design Robilant Associati - Milan, Italy Editorial Coordination: Micrograf - Turin, Italy Printed by: Arti Grafiche Giacone - Turin, Italy Printed in Italy May 2006 Printed on Fedrigoni Symbol Freelife recycled and environmentally friendly paper

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