Chrysler 2006 Annual Report Download - page 143

Fiat S.p.A. Financial Statements at December 31, 2006 - Notes to the Financial Statements 283Fiat S.p.A. Financial Statements at December 31, 2006 - Notes to the Financial Statements282
Advances
This item consists of the difference between inventories and progress payments and contractual advances received from
the customer Treno Alta Velocità – T.A.V. S.p.A. for contract work in progress and is made up as follows:
(in thousands of euros) At December 31, 2006 At December 31, 2005 Change
Contract work in progress 352,879 308,503 44,376
Less: Progress payments for work completed 357,891 319,389 38,502
Gross amount due to the customer 5,012 10,886 (5,874)
Contractual advances 7,906 11,068 (3,162)
Total Advances 12,918 21,954 (9,036)
The item relates to contracts for the high speed railway project signed by Fiat S.p.A. with Treno Alta Velocità - T.A.V. S.p.A. (which was in
turn engaged by F.S. S.p.A.), for the operational engineering and construction of two lines (Bologna-Florence and Turin-Milan, the latter
divided into two sub-lines: Turin-Novara and Novara-Milan). At December 31, 2006, the contractual amounts (including additional work
and monetary adjustments) total 4,386 million euros for the Bologna-Florence line, 4,588 million euros for the Turin-Novara sub-line and
2,212 million euros for the Novara-Milan sub-line.
As part of such project, Fiat S.p.A., as the general contractor, engaged CAV.E.T. and CAV.TO.MI. for the engineering and construction
activities, retaining all work coordination, organisational and management activities. Contract work in progress therefore reflects the fees
earned by Fiat S.p.A. in the form of a percentage (roughly 3.6%) of the contractual amounts, for the activities directly carried out. The
work is paid through progress payments made by T.A.V. S.p.A. to Fiat S.p.A. based on the stage of completion of the works and advance
payments, which Fiat S.p.A. then pays over to CAV.E.T. and CAV.TO.MI. net of its contractual percentage earned.
These amounts may be analysed by line as follows:
(in thousands of euros) At December 31, 2006 At December 31, 2005 Change
Contract work in progress 352,879 308,503 44,376
-Florence-Bologna line 129,754 119,697 10,057
- Turin-Novara line 179,703 164,039 15,664
- Novara-Milan line 43,422 24,767 18,655
Less: Progress payments for work completed 357,891 319,389 38,502
-Florence-Bologna line 132,416 124,835 7,581
- Turin-Novara line 180,002 169,202 10,800
-Novara-Milan line 45,473 25,352 20,121
Gross amount due to the customer 5,012 10,886 (5,874)
- Florence-Bologna line 2,662 5,138 (2,476)
- Turin-Novara line 299 5,163 (4,864)
- Novara-Milan line 2,051 585 1,466
Contract work in progress is measured on the basis of the stage of completion in relation to the sales price, which in this case is the
consideration contractually agreed for the activities directly carried out by Fiat S.p.A. Contract costs relating to the contract revenue
recognised total 116,060 thousand euros at December, 31 2006 (104,838 thousand euros at December 31, 2005). Changes in contract
work in progress have been recognised in the Income Statement under the item Other operating income (see Note 4). When the lines
are contractually completed, the final contractual revenue for the activities directly carried out will be recognised in the Income
Statement under Other operating income, net of any decrease in inventories. At the same time the accounts for inventories and
amounts classified as advances will be closed.
The item Payables to Group companies for derivative financial instruments consists of the fair value of the hedging derivative
financial instruments outstanding at December 31, 2006 and the fair value of the equity swap on Fiat shares taken out with leading
banks by Intermap (Nederland) B.V. under instruction from Fiat S.p.A. to hedge the risk of a rise in the share price above the
exercise price of the stock options granted to the company’s Chief Executive Officer in 2006, as described in Note 8, to which
reference should be made for additional information. The fair value of this equity swap has been calculated on the basis of the
market price at the Balance Sheet date.
Advances on factored receivables relate to IRES receivables.
Current financial payables are denominated in euros. Their carrying amount is deemed to be in line with their fair value.
27. Other payables
At December 31, 2006, other payables amount to 361,247 thousand euros, an increase of 110,991 thousand euros over
December 31, 2005. The balance may be analysed as follows:
At At
(in thousands of euros) December 31, 2006 December 31, 2005 Change
Advances 12,918 21,954 (9,036)
Other payables:
- Intercompany payables
- Consolidated VAT 160,957 117,028 43,929
- Consolidated IRES tax 154,910 97,926 56,984
- Other intercompany payables 3,211 425 2,786
-Total intercompany payables 319,078 215,379 103,699
-Social security payables 1,353 1,717 (364)
- Consolidated VAT payables to third parties (former Group companies) 13,928 – 13,928
- Current amounts payable to employees, directors and statutory auditors 6,802 6,359 443
-Payables to stockholders of Toro Assicurazioni S.p.A., Magneti Marelli S.p.A.
and Comau S.p.A. for public offerings 864 864 –
- Dividends payable 246 248 (2)
-Other 200 898 (698)
Total other payables 342,471 225,465 117,006
Tax payables:
- VAT payable –––
- Taxes withheld on payments to employees and independent contractors 3,422 2,322 1,100
- Tax payable 1,627 – 1,627
- Other 739 428 311
Total tax payables 5,788 2,750 3,038
Accrued expenses and deferred income 70 87 (17)
Total Other liabilities 361,247 250,256 110,991