Chrysler 2005 Annual Report Download - page 225

224 Fiat S.p.A. Financial Statements at December 31, 2005 - N otes to the Financial Statements
03 Fiat S.p.A.
Current assets
4. Inventories
This item consists of costs incurred in connection with the High-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 and
construction of two high-speed rail lines (Bologna-Florence and Turin-Milan; the latter is split up in the Turin-N ovara and N ovara-Milan lines).
At D ecember 31, 2005, contract prices for the works were the following: 4,297 million euros for the Bologna-Florence line, 4,547 million euros
for the Turin-N ovara line, and 2,062 million euros for the N ovara-Milan line. Fiat S.p.A. has entrusted the CAV.E.T. and CAV.TO.MI. consortia
with the design and execution of works, retaining responsibility for coordination and organisation, while project management was subcontracted.
The contract for the Turin-N ovara and N ovara-Milan lines was signed with the C AV.TO.MI. consortium on December 23, 2005.
Financing of the project is carried out by means of advances paid by T.A.V. S.p.A. to Fiat S.p.A., which then transfers to the two consortia
the net amounts after deducting its fee (about 3.6%).
The following items are included under Inventories:
Contract work in progress
This item, which totalled 104,838 thousand euros at December 31, 2005 (91,262 thousand euros at December 31, 2004), includes
cumulative costs for coordination, organisation, and project management work. It refers for 58,417 thousand euros (54,316 thousand euros
at December 31, 2004) to the Florence-Bologna line, for 40,862 thousand euros (35,124 thousand euros at December 31, 2004) to the
Turin-N ovara line and for 5,559 thousand euros to the N ovara-Milan line (1,822 thousand euros at December 31, 2004).The item presents
an increase in contract work in progress totalling 13,576 thousand euros with respect to the end of 2004.
Advances to suppliers
Advances totalled 8,326,205 thousand euros (7,053,457 thousand euros at December 31, 2004) and include advances paid to the Alta
Velocità Emilia Toscana - CAV.E.T. (3,358,681 thousand euros) and Alta Velocità Torino-Milano - CAV.TO.MI. Consortia (4,134,962 thousand
euros for the Turin-N ovara line and 832,562 thousand euros for the N ovara-Milan line).The portion of advances paid for work completion
totalled 8,011,033 thousand euros as of D ecember 31, 2005. O f this amount, the Bologna-Florence line accounted for 3,273,419 thousand
euros (2,835,931 thousand euros at D ecember 31, 2004), the Turin-N ovara line for 4,098,522 thousand euros (3,355,210 thousand euros
at D ecember 31, 2004), and the N ovara-Milan line for 639,092 thousand euros (221,882 thousand euros at December 31, 2004).
This item shows an increase of 1,272,748 thousand euros from December 31, 2004, mainly as a result of the advances paid to CAV.E.T. fo r
275,179 thousand euros, and to CAV.TO.MI. for 997,667 thousand euros (639,358 thousand euros for the Turin-N ovara line and 358,309
thousand euros for the N ovara-Milan line).
As explained further on, the item Advances on the liabilities side of the balance sheet includes contractual advances totalling 8,656,662
thousand euros paid by the client company Treno Alta Velocità – T.A.V. S.p.A.
Fiat S.p.A. provided T.A.V. S.p.A. with bank suretyships totalling 1,904,058 thousand euros (646,510 thousand euros for the Bologna-Florence
line, 788,545 thousand euros for the Turin-N ovara line, and 469,003 thousand euros for the N ovara-Milan line) as a guarantee for contractual
advances received and proper execution of work. Conversely, the C AV.E.T. consortium provided Fiat S.p.A. with bank suretyships totalling
621,646 thousand euros, as envisaged by contract.The CAV.TO.MI. consortium issued suretyships totalling 759,054 thousand euros for the
Turin-N ovara line and 450,975 thousand euros for the N ovara-Milan line.