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Annual Report
Consolidated and Statutory
Financial Statements
at December 31, 2007
102nd fiscal year

Table of contents

  • Page 1
    Annual Report Consolidated and Statutory Financial Statements at December 31, 2007 102nd fiscal year

  • Page 2
    ... Statements at December 31, 2007 and motion for the allocation of the net income of the year. 2. Appointment of a Director pursuant to Article 2386 of the Italian Civil Code; related resolutions. 3. Authorisation for the purchase and disposal of own shares; related resolutions. 4. Incentive plan...

  • Page 3
    Intuition is intelligence exceeding the speed limit. Henry Bernstein

  • Page 4

  • Page 5
    ... and Innovation Human Resources Financial Review of the Group Corporate Governance 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 by Sector of Activity Fiat Group...

  • Page 6
    ... Auditors Chief Executive Officer Sergio Marchionne (4) Giorgio Giorgi Piero Locatelli Roberto Lonzar Directors Andrea Agnelli Roland ...July 24, 2007 in replacement of Hermann-Josef Lamberti Member of the Nominating and Corporate Governance Committee Member of the Internal Control Committee ...

  • Page 7
    ... markets in the commercial vehicles sector, and finalized an agreement with the Samotlor-NN industrial group to manufacture the Daily in Russia. FPT reached an agreement with Daimler Truck Group to supply about 80,000 engines a year. Magneti Marelli signed agreements in Russia, China, and India...

  • Page 8
    ... our Company in the regions where it operates. It has taught us that a development program has merit only if it is sustainable. In support of our business model, we confirm our commitment to grow in harmony with the communities Fiat serves, assuming responsibility for our actions in free markets. We...

  • Page 9
    All motion, of whatever nature, creates. Edgar Allan Poe

  • Page 10
    ... growth and respect 22 Research and Innovation 26 Human Resources 30 Financial Review of the Group 53 Corporate Governance 58 Stock Option Plans 60 Transactions among Group Companies and with Related Parties 61 Significant Events Occurring since the End of the Fiscal Year and Business Outlook

  • Page 11
    ...industrial debt in 2007, and closed the year with 0.4 billion euros net cash. â- All Group 2008 targets are confirmed , with revenues and net industrial cash position revised upwards. 2006 (11,836) (1,773) 2005 (18,523) (3,219) 0 Fiat Group Industrial Activities 10 Report on Operations 2007 at...

  • Page 12
    ... directly to operations during the fiscal year. (3) Total Assets at December 31, 2006 differ from the figure previously published due to the reclassification of 101 million euros described in the Notes to the Consolidated Financial Statements. Selected data by region Number of Companies 2007 2006...

  • Page 13
    12 Relazione sulla gestione ???????????????????????????

  • Page 14
    ... the Citelis range, designed for personal transport in urban areas and equipped with Euro 4/5 compliant and natural gas engines. In Spain, the Daily received the "Light Truck of the Year" award, while in Great Britain it was voted "Best Light Truck 2007" . Report on Operations 2007 at a glance 13

  • Page 15
    ... now equipped with upgraded engines and cabs. It celebrated its 35th anniversary of skid steer loader production and entered in the telehandlers business. 14 Report on Operations 2007 at a glance July On July 4, exactly 50 years after the launch of its historical predecessor, Fiat Group Automobiles...

  • Page 16
    ... the high end of the market. Magneti Marelli, Suzuki Motor Corporation and Maruti Suzuki India Limited signed an agreement for the establishment of a joint venture in India aimed at the production for the electronic control units for diesel engines. November The Fiat 500 was elected "Car of the Year...

  • Page 17
    ... during the year and illustrate objectives of and progress made on the Group's plan for the 2007-2010 period, which was presented to analysts and investors in November 2006. More information is available on the Group's institutional website www.fiatgroup.com. The Investor Relations section provides...

  • Page 18
    ...250 1.250 1.250 Institutional Investors outside EU Barclays Global Investors Reference price (*) per share at: (in euros) 12.28.07 12.29.06 12.30.05 12.30.04 12.30.03 Ordinary shares Preference shares Savings shares (*) Average weighted price of the last 10% of traded volumes (Source Reuter). 17...

  • Page 19
    ... to its customer and dealers mainly through Iveco Finance Holdings Ltd, a company 51% owned by the Barclays Group and 49% by Iveco. Components and Production Systems FPT Powertrain Technologies is the Sector which groups passenger car engine and transmission activities, the powertrain operations of...

  • Page 20
    ... 2007 2006 737 2007 2006 Net Revenues (in millions of euros) 11,196 9,136 Trading profit (in millions of euros) 2007 813 2006 546 2007 2006 Net Revenues (in millions of euros) 13,375 12,366 Trading profit (in millions of euros) 509 2007 2006 348 2007 2006 Report on Operations The Fiat Group and...

  • Page 21
    ...2007 2006 2007 Trading profit 2006 2007 Operating result 2006 2007 Total operating assets 2006 Fiat Group Automobiles Maserati Ferrari Agricultural and Construction Equipment (CNH) Trucks and Commercial Vehicles (Iveco) FPT Powertrain Technologies Components (Magneti Marelli) Metallurgical Products...

  • Page 22
    ...the Group's products and services. The social performance indicators cover such key aspects as labour practices, industrial relations, occupational health and safety, employee training and education, diversity and equal opportunities, human rights, society and product responsibility. The information...

  • Page 23
    ... will be available both in gasoline-fuelled and dual-fuel natural gas/gasoline versions. â- Dual Dry Clutch Transmission (DDCT) . Continuing the design work on a new family of transmissions that began in 2006, the Centro Ricerche Fiat concentrated its efforts on the actuation and control system for...

  • Page 24
    ... Navigation with Floating Car Data. Dynamic navigation based on an experimental Floating Car Data (FCD) system provides the driver with up-to-date route information that reflects actual traffic conditions. With this prototype system, now being tested in the Turin metropolitan area, each vehicle...

  • Page 25
    ... the year, significant achievements were made in the following areas: â- Innovative methods for products and processes . In 2007, new methods for the Fiat Group companies' products and processes were developed using a synergistic approach whose goal is to reduce time to market and build design and...

  • Page 26
    ...-Loop vehicle dynamics simulator used to test the electronic control unit for the Delphi Magneride active suspension system based on innovative dampening fluids. Elasis also provided support in developing the control system for the new dual clutch transmission. For CNH, the centre continued in 2007...

  • Page 27
    ... is essential to the business, although Fiat did not give up hiring managers from outside the Group (158 managers were hired in 2007). Industrial relations In 2007 a constant dialogue was maintained with trade unions and representatives of employees at the company level in order to find consensus...

  • Page 28
    ... Fiat Group Automobiles proprietary sales and dealer network in Europe, reorganization of Comau activities in France (sale of the engineering business and social plan at the Trappes plant), and termination of engine production at the CNH plant in Basildon (UK). Report on Operations Human Resources...

  • Page 29
    ... regard to safety at work; the definition of employment stabilisation paths for fixed-term and supply contract workers. Between October 2007 and January 2008, the labour unions called about 40 hours of strikes in support of their claims, with average participation by Group employees varying between...

  • Page 30
    bonus linked to profitability, since the "Trading Profit" target of the Fiat Group was met and topped in 2006. Outside Italy, the main collective bargaining negotiations held at the Company level in 2007 included the Company-level negotiations in France which, varying among the various Group ...

  • Page 31
    ... and the relevant figures for 2006 have consequently been reclassified. Fiat Services activities are organised in three service units: Transactional Processes (Finance and Payroll), Information and Communication Technology and Customs Services. 30 Report on Operations Financial Review of the Group

  • Page 32
    ... (Fiat Group Automobiles, Maserati, Ferrari) Agricultural and Construction Equipment (CNH - Case New Holland) Trucks and Commercial Vehicles (Iveco) Components and Production Systems (FPT, Magneti Marelli, Teksid, Comau) Other Businesses (Publishing and Communications, Holding companies and...

  • Page 33
    ...European automobile market compared to the previous year. On a comparable scope of operations, excluding the impact of the financial services operations that were transferred to the Fiat Group Automobiles Financial Services joint venture at the end of 2006, Sector revenues rose by 15%. 2007 saw the...

  • Page 34
    ... million euros, up 22.5% from 2006 as a result of higher sales volumes and improved pricing. In 2007 Iveco delivered a total of 211,700 vehicles, including 13,300 with buy back commitments, an increase of 16.6% from the previous year. Deliveries benefitted from the success of the Daily light vehicle...

  • Page 35
    ...Holding companies and Other companies, the figures reported in 2006 for the Services Sector, now Fiat Services. All business lines posted positive performances. The Lighting business, with its high-tech products and a high incidence of sales to third parties, posted significant increases in volumes...

  • Page 36
    ... (Fiat Group Automobiles, Maserati, Ferrari) Agricultural and Construction Equipment (CNH - Case New Holland) Trucks and Commercial Vehicles (Iveco) Components and Production Systems (FPT, Magneti Marelli, Teksid, Comau) Other Businesses (Publishing and Communications, Holding companies and...

  • Page 37
    ... the Fiat Group in 1993. â- Ferrari closed 2007 with a trading profit of 266 million euros, up 45.4% from 183 million euros in 2006. The improvement is mainly attributable to higher sales volumes and efficiency gains, offset in part by increased R&D expenses and unfavorable US dollar exchange rate...

  • Page 38
    ... euros compared to 2006. Higher sales volumes and efficiency gains compensated price pressures, increased raw material prices and industrial start-up costs for new products. Trading margin was 4.3%, in line with 2006. â- â- Comau closed 2007 with a trading loss of 23 million euros (reported...

  • Page 39
    ... 2006 2007 Operating result 2006 Fiat Group Automobiles 803 Maserati 24 Ferrari 266 Agricultural and Construction Equipment (CNH) 990 Trucks and Commercial Vehicles (Iveco) 813 FPT Powertrain Technologies 271 Components (Magneti Marelli) 214 Metallurgical Products (Teksid) 47 Production Systems...

  • Page 40
    ... equity swaps on Fiat shares. The improvement arising from lower net industrial debt was in part offset by expenses of 43 million euros recognised in relation to the accelerated redemption of CNH senior notes due in 2011. The financial component of costs for pension plans and other employee benefits...

  • Page 41
    ... financing activities performed by the financial services companies of Fiat Group Automobiles that were not conveyed to Fiat Group Automobiles Financial Services at the end of 2006. In 2007, the sale of non-current assets determined net proceeds of 735 million euros, which relate mainly to the sale...

  • Page 42
    ..., which is equal to the difference, at the date of signing the contract, between the sales price and the buy-back price and which is recognised over the term of the entire agreement. At December 31, 2007 trade receivables, other receivables and receivables from financing activities falling due...

  • Page 43
    ... Activities in part offset by growth in the investment portfolio of Financial Services companies as previously mentioned in the cash flow analysis. (in millions of euros) At 12.31.2007 At 12.31.2006 Debt: - Asset-backed financing - Other debt Debt included among Liabilities held for sale Current...

  • Page 44
    ... statement of cash flows present separately the consolidated data of the Group's Industrial Activities and Financial Services activities. The latter include the retail financing, leasing and rental companies of CNH - Case New Holland, Iveco and Fiat Group Automobiles. Starting from the end of 2006...

  • Page 45

  • Page 46

  • Page 47
    ... New Holland delivering particularly positive results. In 2007 Industrial Activities had Operating income of 2,874 million euros, compared with 1,737 million euros in 2006. The 1,137 million euro increase mainly reflects higher trading profit. 46 Report on Operations Financial Review of the Group

  • Page 48
    ... from 2006. 2007 2006 Change Fiat Group Automobiles Ferrari Agricultural and Construction Equipment (CNH - Case New Holland) Trucks and Commercial Vehicles (Iveco) Holding companies and Other companies (1) Total (1) These amounts refer to the banking activities performed by B.U.C. - Banca Unione di...

  • Page 49
    ... held for sale 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 payables: (*) - Current tax payables - Others...

  • Page 50
    ... the central cash management. At December 31, 2007, Cash and cash equivalents include 530 million euros (627 million euros at December 31, 2006) mainly relating to Financial Services companies, allocated to service the debt for securitisation structures and classified as Assetbacked financing. At...

  • Page 51
    ... of euros) 2007 2006 Net industrial debt at beginning of the year - Net result for the year - 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 year...

  • Page 52
    ... euros for vehicles under long-term renting operations. This activity was performed in 2007 by FAFS. (e) In 2006 the item Other changes included, for approximately 3 billion euros, reimbursement of loans extended by the Group's centralised cash management to the Financial Services companies of Fiat...

  • Page 53
    ...to the Group's Financial Services companies by central cash management companies (included among Other changes). â- Financing activities absorbed 1,125 million euros in cash. Funding requirements for the repayment of bonds and bank loans, the payment of dividends, the purchase of treasury stock and...

  • Page 54
    ...the definition and updating of the internal control system, the corporate governance model and the corporate structure, the issuance of a Code of Conduct applied throughout the Group, and setting forth the general policies for the management of human and financial resources, purchasing of factors of...

  • Page 55
    ...a person who has acquired several years of experience in the accounting and financial affairs at large companies may be appointed. 54 Report on Operations Corporate Governance In execution of this provision of the By-laws, at its meeting of April 23, 2007, the Board of Directors appointed the heads...

  • Page 56
    ... preparation of Company and Group strategies. The Nominating and Corporate Governance Committee and the Compensation Committee were created as a result of the splitting up, in the month of July 2007, of the pre-existing Nominating and Compensation Committee. Report on Operations Corporate Governance...

  • Page 57
    ... violations of the code of conduct, financial and/or accounting 56 Report on Operations Corporate Governance fraud against the company, oppressive behaviour towards employees or third parties, and complaints regarding bookkeeping, internal audits, and independent audits. The Procedure for the...

  • Page 58
    ...from his position as common representative of holders of savings shares. Additional information provided to the Stockholders Meeting on candidates and lists presented are still available in the Investor Relations section of the website www.fiatgroup.com. Report on Operations Corporate Governance 57

  • Page 59
    ...Fiat S.p.A. The stock option plans were adopted in view of further strengthening the involvement of the persons who hold key positions in pursuing objectives relating to the Company's and Group's operating performance. In the long term, these plans give these individuals an economic incentive linked...

  • Page 60
    ... on April 5, 2007, which provides certain managers of the Group and the Fiat S.p.A. Chief Executive Officer with the right to purchase a determined number of Fiat S.p.A. ordinary shares at the fixed price of 13.37 euros per share. In particular, the 10,000,000 options granted to employees and the...

  • Page 61
    ... or unusual, insofar as they are part of the normal business of Group companies. These transactions are regulated at market conditions taking into account the characteristics of the goods sold and the services provided. Information on transactions with related parties, including that required by...

  • Page 62
    ...Sumi Motherson Group signed an agreement for the creation of a joint venture in India aimed at the production of automotive components in the area of lighting and engine control systems. The joint venture's products will target the Indian market and local and international carmakers operating in the...

  • Page 63
    ... the year again without industrial debt, with a minimum of 1.5 billion euros of net cash on hand (excluding the impact of share buy-backs). While working on the achievement of these objectives, the Fiat Group will continue to implement its strategy of targeted alliances, in order to reduce capital...

  • Page 64

  • Page 65
    Speed is the form of ecstasy the technological revolution has bestowed on man. Milan Kundera 64 Relazione sulla gestione

  • Page 66
    Report on Operations Operating Performance by Sector of Activity 66 Fiat Group Automobiles - Fiat, Abarth, Alfa Romeo, Lancia and Fiat Professional 71 Maserati 72 Ferrari 73 Agricultural and Construction Equipment 76 Trucks and Commercial Vehicles 80 FPT Powertrain Technologies 82 Components 84 ...

  • Page 67
    ... year. The light commercial vehicle market in Western Europe expanded by 6.6% from 2006: demand rose by 8.1% in Italy and Germany, by 6.8% in Great Britain, and by 5.5% in France, while it remained virtually flat in Spain (-0.2%). The Sector performed very well in 2007 in terms of market share...

  • Page 68
    ...and light commercial vehicle market totalled 594,700 units, down 4.3% from 2006. However, Tofas (the local joint venture in which Fiat Group Automobiles has a 37.9% stake) reported a 9.4% sales increase and a total market share of 13.1%, up 1.3 percentage points from the previous year, supported by...

  • Page 69
    ... of the Fiat Group Automobiles product line and the bestowal of major international awards upon this company's models. The Fiat brand began 2007 with the presentation of the Bravo at the end of January. With this model, whose performance exceeded original sales targets, it reinforced its position in...

  • Page 70
    ... is consolidated on a line-by-line basis, and are focused on financing Fiat Group sales in Brazil, where the dealer network financing business reported a volume of 5,320 million euros in Report on Operations Fiat Group Automobiles 69 Services In 2007, Customer Services implemented organizational...

  • Page 71
    loans, up sharply from the 3,530 million euros reported in 2006 in connection with increased volumes and a better mix of sales to the network, and in Argentina, where it provides financing to end customers. In the supplier financing segment, Fidis, consistently with Company policy to reduce its ...

  • Page 72
    ...) Employees at year-end (number) (*) (**) Including restructuring costs and unusual income (expenses). Including R&D capitalised and charged to operations. 694 24 22 97 42 54 7,496 695 519 (33) (33) 82 32 46 5,734 649 Innovation and Products Major new developments took place at Maserati in 2007...

  • Page 73
    ... Financial Services, Ferrari offers its customers financial products for the purchase of its cars. This activity began at the end of 2006 in various European countries: Germany, Switzerland, France, Belgium, and Austria. These products have also been offered in Italy since January 2007, and started...

  • Page 74
    ... line with the unfavourable performance of the market, reported in North America. Highlights (in millions of euros) 2007 2006 Net revenues Trading profit Operating result (*) Investments in tangible and intangible assets - of which capitalised R&D costs Total R&D expenses (**) Employees at year-end...

  • Page 75
    ... innovation, in 2007 CNH continued to focus its efforts on the sales network and customer assistance. Case IH Agriculture expanded its "Service Max" program from Europe to North American customers. This 24-hour-a-day/7day-a-week service provides dealer back-up for after-sales support, technical...

  • Page 76
    ... customers financing, finance leases, operating leases, credit card management, rental programs for equipment and insurance products. Financial Services has separate retail underwriting and portfolio management groups servicing the Agricultural Equipment and Construction Equipment businesses. This...

  • Page 77
    ... of 0.5 percentage points from the previous year. Trucks and Commercial Vehicles Market by product segment _ 2.8 ton) (GVW > (in thousands of units) 2007 2006 % change France Germany Great Britain Italy Spain Other Western European Countries Western Europe 76 Report on Operations Iveco 224.8 278...

  • Page 78
    ... agreement that precedes the setting up of a joint-venture Sales Performance Trucks and Commercial Vehicles sold by Country (in thousands of units) 2007 2006 % change Sales Performance Trucks and Commercial Vehicles sold by Product Segment (in thousands of units) 2007 2006 % change France Germany...

  • Page 79
    ... presented the Citelis line to customers and the Italian press. This model is designed for personal transport in urban areas, with Euro 4/5 compliant and Innovation and Products In the second half of 2007, Iveco set up a centralised innovation management process in connection with the platforms...

  • Page 80
    ... Assistance continued working on three key factors in 2007: a) powerful but easy-to-use diagnostic tools, b) adequate dealer network assistance skills, c) roadside assistance service covering international heavy freight routes and greater territorial coverage for light vehicles. The Customer Service...

  • Page 81
    ... Fuso Bus & Truck Corporation with around 80,000 F1C 3.0 litre common rail diesel engines a year for eight years, starting in 2009. These engines will be used on a light commercial vehicle marketed in major markets, including Europe and Japan. Also in June 2007, SAIC Fiat Powertrain Hongyan Co. Ltd...

  • Page 82
    Innovation and Products Passenger & Commercial Vehicles In 2007, FPT continued to develop innovative powertrain systems, i.e. engines plus transmissions, for Fiat Group Automobiles. Work with spark ignition engines focused on the Fire family, where production of the 120 HP and 150 HP versions of the...

  • Page 83
    ...in product development included applications of the Pico Eco (in Brazil) and new injection systems for Lighting Revenues totalled 1,614 million euros in 2007, up 15.1% from 2006. Most of this increase was due to stronger Original Equipment sales. Volumes rose in all of the business line's 82 Report...

  • Page 84
    ... line's main customer Fiat Group Automobiles: the Bravo in Italy, the Grande Punto in Brazil, and the Fiat 500 in Poland. Sales to PSA and General Motors also rose. The business line's work on product development in 2007 focused on suspension products for Mercedes and Ford models, and on innovative...

  • Page 85
    ... accounted for using the equity method. This company recorded a 25.8% increase in volumes from 2006. Highlights (in millions of euros) 2007 2006 Net revenues Trading profit Operating result (*) Investments in tangible and intangible assets Total R&D expenses (**) Employees at year-end (number...

  • Page 86
    ... from the Mercosur and new markets (11% in China). 39% of all orders came from Fiat Group companies and 61% from other manufacturers. At December 31, 2007 the order backlog totalled 582 million euros, down 2% from 2006. For Service operations, in 2007 the 13% increase reported in the Mercosur area...

  • Page 87
    ... S.p.A. reported an average daily circulation of 308,000 copies in 2007, substantially in line with the previous year but with a different mix. Subscription sales dropped slightly, while other initiatives increased. Highlights (in millions of euros) 2007 2006 Net revenues Trading profit Operating...

  • Page 88

  • Page 89

  • Page 90
    ... at the coupon detachment date, excluding treasury shares. February 15, 2008 On behalf of the Board of Directors /s/ LUCA CORDERO DI MONTEZEMOLO Luca Cordero di Montezemolo Chairman Report on Operations Motion for Approval of the Financial Statements and Allocation of the 2007 Net Income 89

  • Page 91
    The virility of the idea lies not less in its power of breaking through contemporary thought than in its capacity for dominating subsequent movements. Okakura Kakuzo

  • Page 92
    ... Resolution No. 15519 of July 27, 2006 99 Consolidated Statement of Cash Flows pursuant to Consob Resolution No. 15519 of July 27, 2006 100 Notes to the Consolidated Financial Statements 205 Appendix I - The Companies of the Fiat Group 235 Appendix II - Information requested by Art. 149-duodecies of...

  • Page 93
    ... (4) (5) 2007 2006 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 investments Restructuring costs Other unusual income (expenses) Operating result Financial income (expenses...

  • Page 94
    ... December 31, 2007 At December 31, 2006 ASSETS Intangible assets Property, plant and equipment Investment property Investments and other financial assets: - Investments accounted for using the equity method - Other investments and financial assets Leased assets Defined benefit plan assets Deferred...

  • Page 95
    ... of euros) (continued) Note At December 31, 2007 At December 31, 2006 LIABILITIES Stockholders' equity: - Stockholders' equity of the Group - Minority interest Provisions: - Employee benefits - Other provisions Debt: - Asset-backed financing - Other debt Other financial liabilities Trade payables...

  • Page 96
    ... contract term, relating to assets included in Property, plant and equipment. (d) In 2006, the item Other changes included for an amount of approximately 3 billion euros the reimbursement of loans extended by the Group's centralised cash management to the financial services companies of Fiat Group...

  • Page 97
    ... 11,279 Consolidated Statement of Recognised Income and Expense (in millions of euros) 2007 2006 Gains (losses) recognised directly in the cash flow hedge reserve Gains (losses) recognised directly in reserve for fair value measurement of available-for-sale financial assets Exchange gains (losses...

  • Page 98
    ... of July 27, 2006 (in millions of euros) Note (1) (2) (3) (4) (5) 2007 of which Related parties (Note 35) 2006 of which Related parties (Note 35) Net revenues Cost of sales Selling, general and administrative costs Research and development costs Other income (expenses) Trading profit Gains (losses...

  • Page 99
    ... cash equivalents Total Current assets Assets held for sale TOTAL ASSETS LIABILITIES Stockholders' equity: - Stockholders' equity of the Group - Minority interest Provisions: - Employee benefits - Other provisions Debt: - Asset-backed financing - Other debt Other financial liabilities Trade payables...

  • Page 100
    ... 27, 2006 (in millions of euros) 2007 of which Related parties A) Cash and cash equivalents at beginning of the year as reported Cash and cash equivalents included as Assets held for sale B) Cash and cash equivalents at beginning of the year C) Cash flows from (used in) operating activities during...

  • Page 101
    ... and those carrying out financial activities are consolidated in the Group's financial statements, including an entity performing banking activities (disposed of in 2006 as described below). The investment portfolios of financial services companies are included in current assets, as the investments...

  • Page 102
    ... Statements. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date...

  • Page 103
    ... and construction equipment, related components, engines, and production systems) are recognised as an asset if and only if both of the following conditions are met: that development costs can be measured reliably and that technical feasibility of the product, volumes and pricing support the view...

  • Page 104
    .... Leased assets Leased assets include vehicles leased to retail customers by the 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...

  • Page 105
    ...-sale financial assets). Current financial assets include trade receivables, receivables from financing activities (retail financing, dealer financing, lease financing and other current loans to third parties), current 104 Fiat Group Consolidated Financial Statements at December 31, 2007...

  • Page 106
    ...by the Group for trading (originated loans and receivables), held-to-maturity securities and all financial assets for which published price quotations in an active market are not available and whose fair value cannot be determined reliably, are measured, to the extent that they have a fixed term, at...

  • Page 107
    ... in accordance with local conditions and practices in the countries in which the Group operates. The Group's obligation to fund defined benefit pension plans and the annual cost recognised in the income statement is determined on an actuarial basis using the projected unit credit method. The portion...

  • Page 108
    ...no. 296 of December 27, 2006 (the "2007 Finance Law") and subsequent decrees and regulations Treasury shares Treasury shares are presented as a deduction from equity. The original cost of treasury shares and the proceeds Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes 107

  • Page 109
    ... the date when the vehicles are made available to non-group dealers, or the delivery date in the case of direct sales. New vehicle sales with a buy-back commitment are not recognised at the time of delivery but are accounted for as operating leases when it is probable that the vehicle will be bought...

  • Page 110
    ...-current assets include property, plant and equipment, investment property, intangible assets (including goodwill), investments and other financial assets. Management reviews the carrying value of non-current assets held and used and Fiat Group Consolidated Financial Statements at December 31, 2007...

  • Page 111
    ... Group reports assets rented or leased to customers under operating leases as tangible assets. Furthermore, new vehicle "sales" with a buy-back commitment are not recognised as sales at the time of delivery but are accounted for as operating leases if it is probable that the vehicle will be bought...

  • Page 112
    ... to buy treasury stock to satisfy its obligations and those under which the employees of one Group company are granted rights to the shares of another (such as the parent company). The Group early adopted this interpretation and applied it to the stock option plan for which rights were granted...

  • Page 113
    ... from a global point of view, however, there is a concentration of credit risk in trade receivables and receivables from financing activities, in particular dealer financing and finance leases in the European Union market for the Fiat Group Automobiles and Trucks and Commercial Vehicles Sectors, and...

  • Page 114
    ...(66 companies, including 31 entities of Group Automobiles Financial Services "FAFS" group) are accounted for using the equity method, except for Fiat-GM Powertrain Polska S.p. Z.o.o., accounted for using proportionate consolidation. Condensed financial the interest rate risk on fixed rate loans and...

  • Page 115
    ... After Market Parts and Services business line, which operates at a worldwide level in the distribution of spare parts Net revenues Trading profit Operating result Result before taxes Net result 5,693 224 186 179 107 4,000 110 93 87 50 114 Fiat Group Consolidated Financial Statements at December...

  • Page 116
    ... on the closing of the financing to the purchaser from financial institutions. â- On December 28, 2007, the Group completed the steps being taken to establish an equal share joint venture with Tata Motors. On that date, therefore, the assets and liabilities of the Indian business of the Fiat Group...

  • Page 117

  • Page 118

  • Page 119
    ... as follows: (in millions of euros) 2007 2006 Sales of goods Rendering of services Contract revenues Rents on operating leases Rents on assets sold with a buy-back commitment Interest income from customers and other financial income of financial services companies Other Total Net revenues 53,742...

  • Page 120
    ...a gain of 5 million euros on the disposal of a 17% interest in the associate Servizio Titoli S.p.A., in which the Group maintains a 10% holding, and a gain of 4 million euros on the disposal of a Comau business in France. Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes 119

  • Page 121
    ...other financial charges from financial services companies included in Cost of sales for 756 million euros (897 million euros in 2006). Reconciliation to the income statement is provided at the foot of the following table. 120 Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes

  • Page 122
    ... services companies) totalled 564 million euros, decreasing from the 576 million euros in 2006 and includes net financial income of 70 million euros in 2007 (71 million euros in 2006), arising from the fair value measurement of the equity swaps on Fiat shares, relating to certain stock options plans...

  • Page 123
    ...), includes the Group's interest in the net result of the companies accounted for using the equity method for 210 million euros (125 million euros in 2006); for 25 million euros (31 million euros in 2006) the negative effect of the write-downs connected with the loss in value of financial assets net...

  • Page 124
    ... may be analysed as follows: At December 31, 2007 At December 31, 2006 (in millions of euros) Change Deferred tax assets Deferred tax liabilities Net deferred tax assets 1,892 (193) 1,699 1,860 (263) 1,597 32 70 102 Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes 123

  • Page 125
    ... of items recorded directly in equity amounting to 2 million euros; â- changes in the scope of consolidation due to the acquisition of I.T.C.A. group, Teksid Aluminum S.r.l. and of the After Market Parts & Services business, for an amount of 11 million euros; â- negative exchange differences and...

  • Page 126
    ... is taken by each company in the Group by assessing critically whether the conditions exist for the future recoverability of such assets on the basis of updated strategic plans, accompanied by the related tax plans. For this reason, the total theoretical future tax benefits arising from deductible...

  • Page 127
    .... As part of the buy-back programme announced on April 5, 2007 Fiat S.p.A. purchased approximately 11 million of treasury stock in 2008, up to the date of the publication of these consolidated financial statements; no significant difference would have arisen in the earnings per share figure reported...

  • Page 128
    ...shares are as follows: 2007 Ordinary shares Preference shares Saving shares Total Ordinary shares Preference shares Saving shares 2006 Total Profit attributable to each class of shares Weighted average number of shares outstanding Number of shares that would be issued from stock option plans Number...

  • Page 129
    ... 2006 Amortisation Impairment losses Divestitures Changes in the scope of consolidation Reclassified to Assets held for sale At December 31, 2007 Goodwill Trademarks and other intangible assets with indefinite useful lives - Development costs externally acquired - Development costs internally...

  • Page 130
    ... 2006 Additions Amortisation Impairment losses Divestitures Changes in the scope of consolidation Reclassified to Assets held for sale At December 31, 2007 Goodwill Trademarks and other intangible assets with indefinite useful lives - Development costs externally acquired - Development costs...

  • Page 131
    ... across the Sectors: (in millions of euros) At December 31, 2007 At December 31, 2006 Agricultural and Construction Equipment Ferrari Production Systems Component Trucks and Commercial Vehicles Metallurgical Products Fiat Group Automobiles Others & Holdings Goodwill net carrying amount 1,626 786...

  • Page 132
    ... Equipment Ferrari Production Systems 2% 2% 2% 11%-14% 10% 10% 2% 2% 2% 13%-14% 10% 9%-10% Management prepared budgeted data and plans for the determination of value in use on the basis of past performance and its expectations of market developments. This approach led to the recognition in 2007...

  • Page 133
    ...amount of Property, plant and equipment were as follows: (in millions of euros) At December 31, 2006 Additions Divestitures Change in the scope of consolidation Translation differences Reclassified to Assets held for sale Other changes At December 31, 2007 Land - Owned industrial buildings...

  • Page 134
    ...to Assets held for sale Other changes At December 31, 2006 Land - Owned industrial buildings - Industrial buildings leased under finance leases Total Industrial buildings - Owned plant, machinery and equipment - Plant, machinery and equipment leased under finance leases Total Plant, machinery and...

  • Page 135
    ... sale Other changes At December 31, 2007 (in millions of euros) Depreciation Divestitures Land - Owned industrial buildings - Industrial buildings leased under finance leases Total Industrial buildings - Owned plant, machinery and equipment - Plant, machinery and equipment leased under finance...

  • Page 136
    ...to Assets held for sale Other changes At December 31, 2006 Land - Owned industrial buildings - Industrial buildings leased under finance leases Total Industrial buildings - Owned plant, machinery and equipment - Plant, machinery and equipment leased under finance leases Total Plant, machinery and...

  • Page 137
    ... for sale Other changes At December 31, 2007 (in millions of euros) Additions Depreciation Divestitures Land - Owned industrial buildings - Industrial buildings leased under finance leases Total Industrial buildings - Owned plant, machinery and equipment - Plant, machinery and equipment leased...

  • Page 138
    ... was any reduction in value arising from technical obsolescence. This assessment led to the recognition of an impairment loss of 20 million euros (15 million euros in 2006), all of which was recorded in Trading profit. Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes 137

  • Page 139
    ... changes directly in equity Investments at cost Total Investments Non-current financial receivables Other securities Total Investments and other financial assets 1,930 34 68 2,032 78 104 2,214 1,719 288 71 2,078 97 105 2,280 138 Fiat Group Consolidated Financial Statements at December 31, 2007...

  • Page 140
    ... to the carrying value of investments accounted for using the equity method for the Group's share of the result for the year of the investee company for an amount of 210 million euros in 2007 (125 million euros in 2006). Write-downs also include, in 2007 and in 2006, any loss in value in investments...

  • Page 141
    ...' agreement. As a result the company is classified as an associate. In order to account for this investment using the equity method, reference was made to its most recent published financial statements being those for the third quarter of 2007, as those to be issued for financial year 2007 will...

  • Page 142
    ... euros in 2006). At December 31, 2007, non-current financial receivables of 51 million euros were pledged as security for loans obtained. 17. Leased assets The Group leases out assets, mainly its own products, as part of its financial services business. This item changed as follows in 2007 and 2006...

  • Page 143
    ... reversal of write-downs on items sold during the year were not significant. There were no inventories pledged as security at December 31, 2007 and 2006. The majority of amount due from customers for contract work relates to the Production Systems Sector and can be analysed as follows: (in millions...

  • Page 144
    ... financing activities include the following: (in millions of euros) At December 31, 2007 At December 31, 2006 Retail financing Finance leases Dealer financing Supplier financing Current financial receivables from jointly controlled financial services entities Financial receivables from companies...

  • Page 145
    ... companies), net of a decrease of 469 million euros arising from exchange rate differences (mainly connected with US dollars). Receivables from jointly controlled financial services entities include financial receivables due to Fiat entities by the FAFS group. Receivables from financing activities...

  • Page 146
    ... being classified as cash equivalents. In particular: (in millions of euros) At December 31, 2007 At December 31, 2006 Current securities available-for-sale Current securities for trading Total Current securities 156 135 291 90 134 224 Fiat Group Consolidated Financial Statements at December 31...

  • Page 147
    ... hedging commodity price risk is determined by using the discounted cash flow method, taking the market parameters at the balance sheet date (and in particular the future price of the underlying and interest rates). 146 Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes

  • Page 148
    ... from 105 million euros at December 31, 2006 to 188 million euros at December 31, 2007 is mostly due to changes in exchange rates and interest rates during the year, and to a higher positive fair value (67 million euros) arising from the equity swaps on Fiat S.p.A. ordinary shares. As this item...

  • Page 149
    ... hedges relating to the debt of the Group's financial companies. The policy of the Group for managing currency risk normally requires that future cash flows from trading activities which will occur for accounting purposes within the following twelve months, and from orders acquired (or contracts in...

  • Page 150
    ...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. 24. Assets and Liabilities held for sale At December 31, 2007...

  • Page 151
    ... and other financial assets Leased assets Deferred tax assets Inventories Trade receivables Receivables from financing activities Other receivables, Accrued income and prepaid expenses Cash and cash equivalents Total Assets Employee benefits Other provisions Other debt Trade payables Deferred tax...

  • Page 152
    ... net income for the year resulting from the annual financial statements of Fiat S.p.A. is allocated as follows: â- to the Legal Reserve, 5% of net income until this reserve reaches one fifth of the capital stock; to savings shares, a dividend of up to 0.31 euros per share; â- â- to the Legal...

  • Page 153
    ... from trading by the Italian Stock Exchange in accordance with their natural due date. The owners of the 65,509,168 outstanding warrants at that date were given the option to subscribe in January 2007 to Fiat S.p.A. ordinary shares in the ratio of one Fiat ordinary share at a price of 29.364 euros...

  • Page 154
    ... in operations (retained earnings and other reserves, equal in total, before the allocation of the net profits for the year, to 2,726 million euros, excluding gains and losses recognised directly in equity and minority interest). Fiat Group Consolidated Financial Statements at December 31, 2007...

  • Page 155
    ...2007 and at December 31, 2006, the following stock-based compensation plans relating to managers of Group companies or members of the Board of Directors of Fiat S.p.A. were in place. Stock Option plans linked to Fiat S.p.A. ordinary shares The Board of Directors of Fiat S.p.A. approved certain stock...

  • Page 156
    ...which was given on April 5, 2007) an eight year stock option plan, which provides certain managers of the Group and the Fiat S.p.A. Chief Executive Officer with the right to purchase a determined number of Fiat S.p.A. ordinary shares at the fixed price of 13.37 euros per share. In particular, the 10...

  • Page 157
    ...financial statements at December 31, 2006 for the reasons explained in the footnote to the preceding table, to which reference should be made. The average price of Fiat S.p.A. ordinary shares during the year was 19.742 euros per share. As discussed under Significant accounting policies, in the case...

  • Page 158
    ...fair market value being equal to the average of the highest and lowest sale price of a CNH Global N.V. common share on the last trading day of the New York Stock Exchange preceding the start of each quarter. Stock options granted as a result of such an election vest immediately, but shares purchased...

  • Page 159
    ... average closing price of CNH common shares on the New York Stock Exchange for the thirty-day period preceding the date of grant. Beginning in 2006, CNH entities no longer issued CNH Long-Term Incentive ("LTI") awards, as discussed below, and begun to issue awards under plans providing performance...

  • Page 160
    ... the end of the 3-year performance cycle, any earned awards will be satisfied equally with cash and CNH common shares as determined at the beginning of the performance cycle, for minimum, target, and maximum award levels. Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes 159

  • Page 161
    ...' plan 2006 Equity incentive plan Option life (years) Expected volatility of CNH Global N.V. shares (%) Expected dividend yield (%) Risk-free interest rate (%) 5 44.56 1.1 4.3 4 38.3 1.0 4.4 5 71.0 1.3 4.8 3.25 34.7 1.3 4.5 160 Fiat Group Consolidated Financial Statements at December 31, 2007...

  • Page 162
    ... fair values of stock options awarded by CNH for the years ended December 31, 2007, and 2006 were as follows: (in USD) 2007 2006 Directors' Plan Equity incentive plan 21.66 12.65 14.61 5.78 The total cost recognised in the 2007 income statement for all share-based compensation linked to CNH...

  • Page 163
    ... arising from cash-settled share-based payment transactions at fair value at each reporting date and at the date of settlement; the changes in the fair value of these liabilities are recognised in the income statement for the period. At December 31, 2007 and 2006, the Group measured the fair...

  • Page 164
    ...equal to 10% of the capital stock is reached; â- maximum purchase price not being higher/lower than 10% of the reference price reported on the Stock Exchange on the day before the purchase is made; â- the maximum number of shares purchased daily not exceeding 20% of the total daily trading volume...

  • Page 165
    ...rendered his service and includes this cost by destination in Cost of sales, Selling, general and administrative costs and Research and development costs. In 2007, these expenses totalled 1,243 million euros (1,161 million euros in 2006). 164 Fiat Group Consolidated Financial Statements at December...

  • Page 166
    ... at the balance sheet date of short-term employee benefits payable by the Group within twelve months after the end of the period in which the employees render the related service. In 2007 and in 2006 changes in Other provisions for employees and in Other long-term employee benefits are as follows...

  • Page 167
    ... benefits and other long-term employee benefits are calculated on the basis of the following assumptions: At December 31, 2007 in % Italy USA UK Other Italy USA At December 31, 2006 UK Other Discount rate Future salary increase Inflation rate Increase in health care costs Expected return on plan...

  • Page 168
    ... and insurance plans granted to employees of the Group working in the United States and Canada. These plans generally cover all employees retiring on or after reaching the age of 55 who have had at least 10 years of service. Until December 31, 2006 these plans were fully unfunded; starting in 2007...

  • Page 169
    ... recognised in the income statement for Post-employment benefits are as follows: Employee severance indemnity (in millions of euros) 2007 2006 2007 Pension Plans 2006 Health care plans 2007 2006 2007 Other 2006 Current service cost Interest costs Expected return on plan assets Net actuarial losses...

  • Page 170
    ... to finance the North American health care plans. Plan assets for Post-employment benefits and Health-care 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. Plan assets...

  • Page 171
    ... arising from product warranties given for a specified period of time which begins at the date of delivery to the customer. This estimate has been calculated considering, past experience and specific contractual terms. 170 Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes

  • Page 172
    ... business with dealers, customers, suppliers or regulators (such as contractual or patent disputes). âˆ' Legal proceedings involving claims with active and former employees. âˆ' Legal proceedings involving different tax authorities. Fiat Group Consolidated Financial Statements at December 31, 2007...

  • Page 173
    ... Group in connection with divestitures carried out in 2007 and prior years. These liabilities primarily arise from indemnities relating to contingent liabilities in existence at the time of the sale, as well as those covering any breach of the representations and warranties provided in the contract...

  • Page 174
    ... Global Medium Term Note (GMTN Program): a maximum of 15 billion euros may be used under this Program, of which notes of approximately 5 billion euros have been issued to date; the Program is guaranteed by Fiat S.p.A. The issuer taking part in the program is, among others, Fiat Finance & Trade Ltd...

  • Page 175
    ...the Irish Stock Exchange. The Group intends to repay the issued bonds in cash at due date by utilising available liquid resources. At December 31, 2007, the Group also had unused committed credit lines expiring after 2008 of approximately 2 billion euros. In addition, the companies in the Group may...

  • Page 176
    ... or the related future cash flows. The amount is calculated using the interest rates stated in Note 19, suitably adjusted to take account of the Group's current creditworthiness. At December 31, 2007 the Group has outstanding financial lease agreements for certain property, plant and equipment whose...

  • Page 177
    ... millions of euros) At December 31, 2007 At December 31, 2006 Liquidity (a): - Cash and cash equivalents - Cash and cash equivalents included as Assets held for sale - Securities held for trading (Current securities) Current financial receivables (Receivables from financing activities) (b): - from...

  • Page 178
    ... term, the balance represents the remaining lease instalments yet to be recognised in income plus the repurchase price. The carrying amount of Other payables is considered in line with their fair value at the balance sheet date. Fiat Group Consolidated Financial Statements at December 31, 2007...

  • Page 179

  • Page 180

  • Page 181
    ... 3,817 million euros (3,400 million euros at December 31, 2006) and associated financial service companies (Iveco Financial Services, controlled by Barclays) for 869 million euros (661 million euros at December 31, 2006). 180 Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes

  • Page 182
    ... years (in millions of euros) Total Total Future minimum lease payments under operating lease agreements 64 122 128 314 82 172 180 434 In 2007, the Group has recorded costs for lease payments for 67 million euros (71 million euros in 2006). Contingent liabilities As a global company...

  • Page 183
    ..., Iveco provides financial services to its customers and dealers mainly through Iveco Finance Holdings Ltd., a company 51% owned by the Barclays group and 49% by Iveco. The FPT Powertrain Technologies Sector manufactures and sells car engines and transmissions. Starting from 2006 the Sector also...

  • Page 184
    ... Trading profit include, respectively, Interest income and other financial income and Interest expenses and other financial expenses of financial services companies in Net revenues and Cost of Sales of the Sector. Sector Assets are operating assets used by the Sector in its business and are directly...

  • Page 185
    ... FIAT Group 2007 Total net revenues Net revenues intersegment Net revenues from third parties Trading profit Unusual income (expenses) Operating result Financial income (expenses) Result from investments Result before taxes Income taxes Result from continuing operations Other information Capital...

  • Page 186
    ..., Holdings and eliminations FIAT Group At December 31, 2007 Sector operating assets Sector operating assets held-for-sale Investments Unallocated Group assets: - Tax assets - Receivables from financing activities, Non-current Other receivables and Securities of industrial companies - Cash and cash...

  • Page 187
    ..., Holdings and eliminations FIAT Group At December 31, 2006 Sector operating assets Sector operating assets held-for-sale Investments Unallocated Group assets: - Tax assets - Receivables from financing activities, Non-current Other receivables and Securities of industrial companies - Cash and cash...

  • Page 188
    ...321 299 48 4,312 34. Information on financial risks The Group is exposed to the following financial risks connected with its operations: â- credit risk, regarding its normal business relations with customers and dealers, and its financing activities; â- liquidity risk, with particular reference...

  • Page 189
    ... extending the loan payment terms by one year and rescheduling, at the same time, the maturity of payments due on the credit lines provided to Banco CNH and all other financial services participants in the program. In 2007, the Brazilian government announced a new debt relief program that allowed...

  • Page 190
    ... of business planning. â- â- â- Details as to the repayment structure of the Group's financial assets and debt are provided in Notes 19 and 28, which are entitled respectively Current receivables and Debt. Management believes that the funds and credit lines currently available, in addition...

  • Page 191
    ... with trade receivables or payables denominated in a currency different from the money of account of the company itself. In addition, in a limited number of cases, it may be convenient from an economic point of view or it may be required under local market conditions, for companies to obtain finance...

  • Page 192
    ... the impact is assessed in terms of cash flows). The fixed rate financial instruments used by the Group consist principally of part of the portfolio of the financial services companies (basically customer financing and financial leases) and part of debt (including subsidised loans and bonds). The...

  • Page 193
    ..., the Group holds certain derivative financial instruments whose value is linked to the price of listed shares and stock market indices (principally Equity swaps on Fiat shares). Although theses transactions were entered into for hedging purposes, they do not qualify for hedge accounting under IFRS...

  • Page 194
    ... companies Other related parties Total related parties Effect on Total (in millions of euros) Other investments and non current financial assets Inventories Trade receivables Current receivables from financing activities Other current receivables Asset-backed financing Other debt Trade payables...

  • Page 195
    ...of euros) 2007 2006 Tofas-Turk Otomobil Fabrikasi Tofas A.S., for the sale of motor vehicles Società Europea Veicoli Leggeri-Sevel S.p.A., for the sale of engines, other components and production systems Fiat Group Automobiles Financial Services S.p.A. for the sale of motor vehicles Iveco Fiat-Oto...

  • Page 196
    ... the sales of motor vehicles, production systems and components, including engines and gearboxes, and the provision of services, to the following companies: (in millions of euros) 2007 2006 Iveco Finance Holdings Ltd. (a subsidiary of the Barclays group), for the sale of industrial vehicles leased...

  • Page 197
    ...These costs consist of compensation for Executives with strategic responsibilities who were already working for the Group in 2006 and continue with the Group at present, as well as for management personnel who took on key responsibilities in 2007. 196 Fiat Group Consolidated Financial Statements at...

  • Page 198
    ... Operations (After Market Parts and Services business line) following its acquisition of 60,54% of Concordia Finance S.A., leading to the recognition of a goodwill for 37 million euros. This goodwill continues to be recognised in the balance sheet at December 31, 2007 since the acquired company...

  • Page 199
    ... sheet of the Group at the same date: Effect of the line-by-line consolidation of the Ergom group Fiat Group balance sheet including the Ergom group (in millions of euros) Fiat Group balance sheet Non current assets Current assets Assets held for sale Total assets Stockholders' equity Debt Other...

  • Page 200
    ... Fiat India (in millions of euros) Non current assets Cash and cash equivalents Other current assets Total assets Debt Other liabilities Total liabilities 343 16 233 592 111 261 372 3 2 133 138 - 133 133 124 8 70 202 32 61 93 215 6 27 248 79 65 144 Fiat Group Consolidated Financial Statements...

  • Page 201
    ... Telecom group was for the most part finalised in the first quarter of 2006 on receiving the approval of the Italian Guarantor Authority for Competition and the Market; the transaction was finally concluded with the sale of the Polish and Brazilian business in the second half of the year. â- Fiat...

  • Page 202
    ...a line-by-line basis, and those that relate to the business of financing the final customer (the retail business), which was previously headed by the associate Fidis Retail Italia. Total sales of consolidated subsidiaries of which B.U.C. FAFS (in millions of euros) Non current assets Cash and cash...

  • Page 203
    ... (6,741 million euros in 2006). An analysis of the average number of employees by category is provided as follows: 2007 2006 Managers White-collar Blue-collar Average number of employees 2,365 53,888 123,348 179,601 2,432 54,351 116,943 173,726 202 Fiat Group Consolidated Financial Statements at...

  • Page 204
    ...Sumi Motherson Group signed an agreement for the creation of a joint venture in India aimed at the production of automotive components in the area of lighting and engine control systems. The joint venture's products will target the Indian market and local and international carmakers operating in the...

  • Page 205

  • Page 206
    ... as in accordance with IAS 14 - Segment reporting. The information provided for each company includes: name, registered office, country and capital stock stated in the original currency. The percentage of Group consolidation and the percentage held by Fiat S.p.A. or its subsidiaries are also shown...

  • Page 207
    ... SA Clickar Assistance S.R.L. Customer Services Centre S.r.l. Easy Drive S.r.l. Fiat Auto Argentina S.A. (business Fiat Group Automobiles) Fiat Auto Dealer Financing SA Fiat Auto Poland S.A. Fiat Auto Var S.r.l. Fiat Automobil Vertriebs GmbH Fiat Automobiles S.p.A. Fiat Automotive Finance Co. Ltd...

  • Page 208
    ... on a line-by-line basis (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights Fiat Group Automobiles Ireland Ltd. Fiat Group Automobiles Japan K.K. Fiat Group Automobiles Maroc S.A. Fiat Group Automobiles...

  • Page 209
    ...line-by-line basis (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights... Nyon Wiesbaden Slough Berkshire Englewood Cliffs Paris Italy Switzerland Germany United Kingdom U.S.A. France 40,000,000 250,000 500,...

  • Page 210
    ... office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights â- Agricultural and Construction Equipment CNH Global N.V. Banco CNH Capital S.A. Bli Group Inc. Blue Leaf I.P . Inc. Case Brazil Holdings Inc. Case Canada Receivables, Inc. Case...

  • Page 211
    ... Canada Ltd. CNH CNH CNH CNH CNH CNH CNH CNH CNH CNH CNH CNH CNH CNH Capital Insurance Agency Inc. Capital LLC Capital plc Capital RACES LLC Capital Receivables LLC Capital U.K. Ltd Componentes, S.A. de C.V. Danmark A/S Deutschland GmbH Engine Corporation Europe Holding S.A. Financial Services...

  • Page 212
    ... 89.33 53.60 Case Equipment Holdings Limited Case Equipment Holdings Limited Case Equipment Holdings Limited New Holland Excavator Holdings LLC CNH Global N.V. CNH Australia Pty Limited CNH Capital Australia Pty Limited CNH Capital LLC CNH America LLC CNH Europe Holding S.A. CNH Latin America Ltda...

  • Page 213
    ...España S.L. (business Trucks and Commercial Vehicles) Iveco Est Sas Iveco France Iveco Holdings Limited Watford Dandenong Leudelange Unterschliessheim Turin Groot Kloten Cordoba Vienna Nuremberg Watford Vysoke Myto Glostrup Madrid Hauconcourt Vénissieux Watford Italy Brazil France Germany Hungary...

  • Page 214
    ... office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights Iveco International Trade Finance S.A. Iveco Investitions GmbH Iveco L.V.I. S.a.s. Iveco Latin America Ltda (business Trucks and Commercial Vehicles) Iveco Limited (business Trucks...

  • Page 215
    ...consolidated on a line-by-line basis (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights S.C.I. La Méditerranéenne Vitrolles France 248,000 EUR 100.00 Seddon Atkinson Vehicles Ltd Société Charolaise...

  • Page 216
    ... on a line-by-line basis (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights Iveco España S.L. (business FPT Powertrain Technologies) Iveco Latin America Ltda (business FPT Powertrain Technologies) Iveco...

  • Page 217
    ... Magneti Marelli Exhaust Systems Polska Sp. z o.o. Magneti Marelli France S.a.s. People's Rep.of China Brazil 9,500,000 7,554,539 USD BRL 99.99 89.99 Magneti Marelli Powertrain S.p.A. 100.000 Magneti Marelli After Market Parts and Services S.p.A. 100.000 Magneti Marelli Holding S.p.A. 99.628 99...

  • Page 218
    ...Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights Magneti Marelli Guangzhou Motor Vehicle Instruments Co. Limited Guangzhou Magneti Marelli Hellas A.E. Athens Magneti Marelli Magneti Marelli Magneti Marelli France SAS Magneti Marelli Holding...

  • Page 219
    ... sale. Canada Germany Brazil United Kingdom France U.S.A. India 100 1,330,000 29,312,653 103,165,056 11,900,000 21,457 161,935,020 CAD EUR BRL USD EUR USD INR 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Luton Trappes Southfield Pune 218 Appendix I The Companies of the Fiat Group

  • Page 220
    Subsidiaries consolidated on a line-by-line basis (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights Comau Pico Holdings Corporation Comau Pico Iaisa S.de R.L. de C.V. Comau Pico Mexico S.de R.L. de C.V. ...

  • Page 221
    ... S.A. 0.006 Fiat Finance S.p.A. 99.993 Fiat Finance Canada Ltd. 0.007 Fiat Finance S.p.A. 100.000 Fiat Services S.p.A. 99.997 Fiat Finance S.p.A. 60.526 Fiat S.p.A. 39.474 Fiat S.p.A. 100.000 Fiat Services S.p.A. 100.000 Fiat Services S.p.A. 100.000 220 Appendix I The Companies of the Fiat Group

  • Page 222
    ... a line-by-line basis (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights Fiat Information & Communication Services società consortile per azioni Turin Italy 800,000 EUR 98.03 Fiat Netherlands Holding...

  • Page 223
    ...) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights Isvor Fiat Società consortile di sviluppo e addestramento industriale per Azioni Turin Italy 300,000 EUR 99.22 (*) ITS GSA FiatGroup France S.A.S. (*) ITS-GSA...

  • Page 224
    ... line-by-line basis (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights New Holland Kobelco Construction Machinery S.p.A. 0.535 Fiat Servizi per l'Industria S.c.p.a. 0.502 Fiat Finance S.p.A. 0.449 Isvor Fiat...

  • Page 225
    ...00 FC France S.A. FGA Stock SA Fiat Auto Contracts Ltd Fiat Auto Financial Services (Wholesale) Ltd. Fiat Auto Financial Services Limited Fiat Bank GmbH Fiat Bank Polska S.A. Fiat Credit Belgio S.A. Fiat Credit Hellas Commercial S.A. of Vehicles Fiat Distribuidora Portugal S.A. Fiat Finance Holding...

  • Page 226
    ... office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights Fidis Finance Polska Sp. z o.o. Fidis Insurance Consultants SA Fidis Leasing GmbH Fidis Leasing Polska Sp. z o.o. Fidis Nederland B.V. Fidis Retail Financial Services (Ireland...

  • Page 227
    ...-controlled entities accounted for using the equity method (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights â- Agricultural and Construction Equipment Case Mexico S.A. de C.V. Case Special Excavators...

  • Page 228
    Subsidiaries accounted for using the equity method (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights F .A. Austria Commerz GmbH Fiat Auto Egypt Industrial Company SAE Fiat Auto Egypt S.A.E. Fiat Auto S.A. ...

  • Page 229
    ... Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights â- Holding companies and Other companies Centro Studi sui Sistemi di Trasporto-CSST S.p.A. Cromos Consulenza e Formazione S.r.l. in liquidation European Engine Alliance EEIG Fiat (China) Business...

  • Page 230
    ... Company M.R. Fire Fighting International S.A. Las Vegas Brasov U.S.A. Romenia 20,000 35,000,000 USD RON 100.00 75.88 OOO "CABEKO" Saveco Partecipazioni S.r.l. â- FPT Powertrain Technologies Nizhniy Novgorod Turin Russia Italy 3,500,000 50,000 RUB EUR 51.00 100.00 Iveco Motors of China...

  • Page 231
    ... at cost (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights â- Components Automotive Lighting Japan K.K. KohoKu-Ku-Yokohama Fast Buyer Middle East A.S. Bursa Magneti Marelli Automotive Components (India...

  • Page 232
    ...Ferrari Financial Services AG 49.000 â- Agricultural and Construction Equipment Al-Ghazi Tractors Ltd CNH Capital Europe S.a.S. Employers Health Initiatives LLC Kobelco Construction Machinery Co. Ltd. New Holland Finance Ltd Rathell Farm Equipment Company Inc. â- Trucks and Commercial Vehicles...

  • Page 233
    ... companies accounted for using the equity method (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights Iveco Uralaz Ltd. Otoyol Sanayi A.S. V.IVE.RE Gruppo Europeo di Interesse Economico â- FPT Powertrain...

  • Page 234
    Associated companies valued at cost (continued) Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights â- Trucks and Commercial Vehicles Sotra S.A. Trucks & Bus Company Zastava-Kamioni D.O.O. â- Components Abidjan ...

  • Page 235
    Name Registered office Country Capital stock % of Group consoliCurrency dation Interest held by % interest held % of voting rights Other companies valued at cost â- Agricultural and Construction Equipment Polagris S.A. â- Trucks and Commercial Vehicles Pikieliszki Lithuania 1,133,400 ...

  • Page 236
    ... Emittenti" issued by Consob, reports the amount of fees charged in 2007 for the audit and audit related services provided by the Audit Firm and by entities that are part of the Audit Firm network. (in thousands of euros) Service provider Fiat Group entity 2007 fees Audit Deloitte & Touche...

  • Page 237
    ..., paragraphs 3 and 4, of Italian Legislative Decree no. 58 of February 24 1998, that: the administrative and accounting procedures for the preparation of the consolidated financial statements for the 2007 fiscal year: - are adequate with respect to the company structure and - have been effectively...

  • Page 238

  • Page 239
    The energetic and successful man is he who succeeds in transforming his wish fancies into reality. Sigmund Freud

  • Page 240
    Fiat S.p.A. Financial Statements at December 31, 2007 240 Financial Review of Fiat S.p.A. 244 Income Statement 245 Balance Sheet 246 Statement of Cash Flows 247 Statement of Changes in Stockholders' Equity 248 Income Statement pursuant to Consob Resolution No. 15519 of July 27, 2006 249 Balance ...

  • Page 241
    ... by the European Union, and with the provisions issued in implementation of Article 9 of Legislative Decree no. 38/2005. Operating performance In 2007, the Parent Company reported a net income of 2,069 million euros, 274 million euros lower than in 2006. The company's Income Statement is summarised...

  • Page 242
    ... million euros (26 million euros in 2006) was essentially the remuneration for the tax loss related to the 2007 fiscal year brought into the Fiat Group Italian tax consolidation by Fiat S.p.A. to offset taxable income reported by other Group's Italian companies. Financial Review of Fiat S.p.A. 241

  • Page 243
    ...by the Company and the purchase of treasury stock. A breakdown of net debt is reported in the following table: (in millions of euros) At December 31, 2007 At December 31, 2006 Current financial receivables, cash and cash equivalents Current financial payables Non-current financial payables Net debt...

  • Page 244
    ... the current account with Fiat Finance S.p.A. and receivables from the subsidiary Fiat Netherlands Holding N.V. represented by the fair value of the above mentioned stock-option related equity swaps on Fiat S.p.A. shares. Current financial payables mainly consisted of payables to factoring companies...

  • Page 245
    ... Statement (in euros) (*) Note (1) (2) (3) (4) (5) (6) (7) 2007 2006 Dividends and other income from investments Reversal of impairment losses (impairment losses) of investments Gains (losses) on the disposal of investments Other operating income Personnel costs Other operating costs Financial...

  • Page 246
    ... tax liabilities Total Non-current liabilities Current liabilities Provisions for employee benefits and other current provisions Trade payables Current financial payables Other payables Total Current liabilities Liabilities held for sale TOTAL STOCKHOLDERS' EQUITY AND LIABILITIES (9) (10) (11...

  • Page 247
    ...net Total D) Cash flows from (used in) financing activities: Change in current financial receivables Change in non-current financial payables Change in current financial payables Proceeds from the increase in capital stock Purchase of treasury stock Sale of treasury stock Dividend distribution Total...

  • Page 248
    ... Establishment of a reserve for the purchase of treasury stock Purchases of treasury stock Sale of treasury stock Net changes in Income (expenses) recognised directly in equity Valuation of stock option plans Net result Balances at December 31, 2007 Capital stock 6,377,257 6 Additional paid-in...

  • Page 249
    ... (Note 28) 2006 of which Related parties (Note 28) Dividends and other income from investments Reversal of impairment losses (impairment losses) of investments Gains (losses) on the disposal of investments Other operating income Personnel costs Other operating costs Financial income (expenses...

  • Page 250
    ... tax liabilities Total Non-current liabilities Current liabilities Provisions for employee benefits and other current provisions Trade payables Current financial payables Other payables Total Current liabilities Liabilities held for sale TOTAL STOCKHOLDERS' EQUITY AND LIABILITIES (9) (10) (11...

  • Page 251
    ...net Total D) Cash flows from (used in) financing activities: Change in current financial receivables Change in non-current financial payables Change in current financial payables Proceeds from the increase in capital stock Purchase of treasury stock Sale of treasury stock Dividend distribution Total...

  • Page 252
    ...the Fiat Group, holding investments, either directly or indirectly through sub-holdings, in the capital of the parent companies of business Sectors in which the Fiat Group operates. The head office of the company is in Turin, Italy. The financial statements of Fiat S.p.A. are prepared in euros which...

  • Page 253
    ... and rewards incidental to the ownership of an asset are classified as operating leases. Lease payments under an operating lease are recognised as an expense on a straightline basis over the lease term. 252 Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements

  • Page 254
    ...with banks, units with liquidity funds and other highly traded securities that are readily convertible to cash and which are subject to an insignificant risk of changes in value. The liability relating to financial guarantee contracts is included in Non-current financial payables. The term financial...

  • Page 255
    ... in market prices. In accordance with the conditions of IAS 39, derivative financial instruments qualify for hedge accounting only when, at the inception of the hedge, there is formal designation and 254 Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements

  • Page 256
    ... in the income statement as a cost when incurred. Defined benefit plans are based on the employees' working lives and on the salary or wage received by the employee over a pre-determined period of service. The scheme underlying the employee severance indemnity of the Italian Group companies (the TFR...

  • Page 257
    .... The expense related to the reversal of discounting pension obligations for defined benefit plans are reported separately as part of the Group's financial expense. The liability for obligations arising under defined benefit plans and due on termination of the employment contract represents the...

  • Page 258
    ... 2007 for at least another three year period. Fiat S.p.A. acts as the consolidating company in this programme and calculates a single taxable base for the group of companies taking part, thereby enabling benefits to be realised from offsetting taxable income and tax losses in a single tax return...

  • Page 259
    ...is required to buy treasury stock to satisfy its obligations and those under which the employees of a Group company are granted rights to the shares of another (such as the parent company). Fiat S.p.A. started applying this interpretation to the new stock option plan for which rights were granted in...

  • Page 260
    ...those of the companies of which it is the Parent. Reference should therefore be made to the note on Risk Management included as part of the Notes to the Consolidated Financial Statements of the Fiat Group as well as to Note 27. Other information The notional costs for stock option plans included in...

  • Page 261

  • Page 262

  • Page 263
    ...: (in thousands of euros) 2007 2006 Dividends distributed by subsidiaries: - FGI - Fiat Group International S.A. (formerly IHF-Internazionale Holding Fiat S.A.) - Fiat Partecipazioni S.p.A. - Fiat Netherlands Holding N.V. - Ferrari S.p.A. - Fiat Finance S.p.A. - Business Solutions S.p.A. - Itedi...

  • Page 264
    ... which is available for reversal in future years amounts to 2,707,000 thousand euros at December 31, 2007, as reported in Note 11. Considerations similar to those for Fiat Group Automobiles S.p.A. in 2007 were made in 2006 with regard to the investments in Iveco S.p.A. and Fiat Netherlands Holding...

  • Page 265
    ... the year of the fees due to Fiat S.p.A. for the activities performed directly by the company (management, coordination and organisation) as part of the agreements signed with Treno Alta Velocità - T.A.V. S.p.A. (see Note 25). Other revenues and income from Group companies mostly relates to rental...

  • Page 266
    ... for 4,636 thousand euros; â- the cost accounted in the year for a special defined benefit plan, amounting to 1,672 thousand euros in 2006 (including the component recognized in financial expenses). Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements 265

  • Page 267
    ... operating costs Other operating costs can be analysed as follows: (in thousands of euros) 2007 2006 Costs for services rendered by Group companies Costs for services rendered by third parties Compensation component of stock option plans Leases and rentals Purchase of goods Depreciation of property...

  • Page 268
    ... of euros) 2007 2006 Financial expenses with Group companies: - Interest expense from Fiat Finance S.p.A. current account - Interest expense from Fiat Finance S.p.A. loans - Commissions and other charges payable to Intermap (Nederland) B.V. - Fiat Finance S.p.A. service commissions - Interest...

  • Page 269
    ... the Company entered into in prior years to hedge the risk of an increase in the Fiat share price above the exercise price of stock options granted in 2004 and 2006 to the Chief Executive Officer (see Note 18). At December 31, 2007 the equity swaps have a notional amount of 219,853 thousand euros...

  • Page 270
    ... in Italy and the income taxes reported in the financial statements is as follows: (in thousands of euros) 2007 2006 Theoretical income taxes Tax effect of permanent differences Taxes relating to prior years Unrecognised net deferred tax assets Current and deferred income tax recognised in...

  • Page 271
    ... ensure that the conditions for their future realisation exist, through the use of updated strategic business plans and the related tax plans. As a consequence, the total theoretical future tax benefits arising from deductible temporary differences (6,632 thousand euros at December 31, 2007 and 165...

  • Page 272
    ... of trademarks that had not been finalised at year end, which are therefore not amortised. Amortisation of intangible assets is recognised under Other operating costs in the income statement (Note 6). Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements 271

  • Page 273
    ...euros) At December 31, 2005 Additions Amortisation (Decreases) and Other changes At December 31, 2006 Concessions, licences and similar rights... 676 221 - 221 - (121) (121) (20) 16 (4) 1,798 (1,026) 772 272 Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements

  • Page 274
    ... to purchase items of property, plant and equipment of a significant amount. There are no buildings charged as collateral or whose use is restricted. Depreciation of property, plant and equipment is recognised under Other operating costs in the income statement (Note 6). Fiat S.p.A. Financial...

  • Page 275
    ... the year: Reversal of imp. losses (Impairment losses)/ Adjustments to fair value (in thousands of euros) At December 31, 2006 Acquisitions/ Capital increases Disposals/ Capital reimbursements At December 31, 2007 Investments in subsidiaries Investments in other companies Total Investments...

  • Page 276
    ... (in thousands of euros) % interest At December 31, 2006 Acquisitions/ Capital increases Disposals/ Capital reimbursements Rev. of imp. losses/ (Imp. losses) At December 31, 2007 Fiat Partecipazioni S.p.A. - Gross carrying amount - Accumulated impairment losses Fiat Netherlands Holding N.V. - Gross...

  • Page 277
    ... were made in 2007 as part of an overall objective of re-balancing the financial positions within the Group also taking into account the planned operating cash flow and capital expenditure needs: - the subsidiary Fiat Partecipazioni S.p.A. made a distribution of 2,050,000 thousand euros to its sole...

  • Page 278
    ... investment until its sale was equal to 46,209 thousand euros. â- Investments in other companies, insofar as they are non-current financial assets that are not held for trading, are recognised at fair value which, for listed companies, corresponds to the market prices of the shares at year end. In...

  • Page 279
    ...future years for guarantees provided by the company (mainly for guaranteeing loans obtained by Group companies). Debt securities consist of listed Italian State securities pledged to fund scholarship grants. A breakdown of other financial assets by maturity date is as follows: (in thousands of euros...

  • Page 280
    ... follows: At December 31, 2007 At December 31, 2006 (in thousands of euros) Change Current account with Fiat Finance S.p.A. Loan to Fiat Finance S.p.A. Amounts due from Fiat Netherlands Holding N.V. (formerly Intermap Nederland B.V.) for derivative financial instruments Other receivables due from...

  • Page 281
    ... deposits in euros in the company's bank current accounts. The carrying amount of Cash and cash equivalents is deemed to be in line with their fair value. The credit risk relating to Cash and cash equivalents is insignificant since the counterparties are leading national and international banks. 18...

  • Page 282
    ... for the year resulting from the annual financial statements of Fiat S.p.A. is to be allocated as follows: â- to the legal reserve, 5% of profit for the year until this reserve reaches one fifth of the capital stock; to savings shares, a dividend of up to 0.31 euros per share; â- â- to the...

  • Page 283
    ...-in capital reserve is established if a company issues shares at a price exceeding their nominal value. This reserve may not be distributed until the legal reserve has reached one fifth of capital stock. 282 Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements

  • Page 284
    ... by Fiat S.p.A. in terms of the results achieved (retained earnings and other reserves, before allocation of the net profits for the year, equal in total to 4,177,245 thousand euros, excluding gains and losses recognised directly in equity). Fiat S.p.A. Financial Statements at December 31, 2007...

  • Page 285
    ... equal to 10% of the capital stock is reached; â- the maximum purchase price may not be higher/lower than 10% of the reference price reported on the Stock Exchange on the day before the purchase is made; â- the maximum number of shares purchased daily may not exceed 20% of the total daily trading...

  • Page 286
    ... plans based on Fiat S.p.A. shares and relating to managers employed by Fiat S.p.A. (see Note 5) and 36,753 thousand euros arising from stock option plans based on Fiat S.p.A. shares and relating to the Chief Executive Officer (see Note 6); Fiat S.p.A. Financial Statements at December 31, 2007...

  • Page 287
    ... in "management development programmes" and executive Directors of Fiat S.p.A. with the right to purchase a determined number of Fiat S.p.A. ordinary shares at a fixed price (strike price). These rights may be exercised over a fixed period of time from the vesting date to the expiry date of the plan...

  • Page 288
    ...560,000 shares. This right is subject to achieving certain pre-determined profitability targets (Non-Market Conditions or "NMC"). The contractual terms of the plan are as follows: Strike price (euro) Number of options granted Vesting portion Plan Grant date Expiry date Vesting date Stock Option...

  • Page 289
    ... year stock option plan (subject to approval by the Stockholders Meeting, which was given on April 5, 2007), which provides certain managers of the Group and the Chief Executive Officer of Fiat S.p.A. with the right to purchase a determined number of Fiat S.p.A. ordinary shares at the fixed price...

  • Page 290
    ... accounting policies, in the case of share-based payments the Company applies IFRS 2 to all stock options granted after November 7, 2002, which had not yet vested at January 1, 2005, namely the July 2004 and November 2006 stock option plans. Fiat S.p.A. Financial Statements at December 31, 2007...

  • Page 291
    ...based on the employees' remuneration and years of service. The obligations relate both to active employees and to retirees. The company provides post-employment benefits under defined contribution and/or defined benefit plans. 290 Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the...

  • Page 292
    ... the balance sheet date are included in the item Other payables (see Note 25). The company recognises the contribution cost for the year on the basis of the service rendered by the employee in the item Personnel costs (see Note 5). In the case of post-employment benefits the company's obligation is...

  • Page 293
    ...income statement for post-employment benefits are as follows: Employee severance indemnity (in thousands of euros) 2007 2006 2007 Other 2006 2007 Total 2006 Service cost - Current service cost - Net actuarial (gains) losses recognised during the year Net loss on reduction Total current service cost...

  • Page 294
    ... value of the obligation for post-employment benefits are as follows: Employee severance indemnity (in thousands of euros) 2007 2006 2007 Other 2006 2007 Total 2006 Present value of obligation at the beginning of the year Current service cost Interest costs Actuarial (gains) losses arising during...

  • Page 295
    ... 31, 2007 At December 31, 2006 Change Financial payables to Group companies Financial guarantee contracts Total Non-current financial liabilities 2,800,000 9,388 2,809,388 2,800,000 10,029 2,810,029 - (641) (641) Financial payables to Group companies relate to the euro loans due beyond one year...

  • Page 296
    ... of benefits (see Note 19) to be paid to a former Chief Executive Officer and employees that left the company. An analysis of Other non-current liabilities by due date is as follows: (in thousands of euros) At December 31, 2007 At December 31, 2006 Other non-current liabilities due within one year...

  • Page 297
    .... TO.MI. in relation to the work performed over the latter part of the year (see Note 14). Trade payables are due within one year and their carrying amount at the balance sheet date is deemed to approximate their fair value. 296 Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the...

  • Page 298
    ... euros) At December 31, 2007 At December 31, 2006 Change Financial payables to Group companies: - Current account with Fiat Finance S.p.A. - Loan from Fiat Finance S.p.A. - Payables to Group companies for derivative financial instruments - Accrued interest expense Total Financial payables to Group...

  • Page 299
    ...to employees and Social security payables at December 31, 2007 also include the amounts linked to reaching annual targets, yet to be settled at that date. Advances This item consists of the difference between inventories and progress payments and contractual advances received from the customer Treno...

  • Page 300
    ... 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 126,267 thousand euros at December, 31 2007 (116,060 thousand euros at December 31, 2006...

  • Page 301
    ... remaining works are still in progress, which when given would lead to the release of the residual bank guarantees, the contract had not yet been closed from an accounting standpoint at December 31, 2007. 300 Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements

  • Page 302
    ... on behalf of Group companies on Billets de Trésorerie issued (Fiat Finance and Trade Ltd S.A. 35,900 thousand euros), medium- to long-term loans granted by banks (38,365 thousand euros) and the rental payments relating to buildings included in the property securitisation transactions carried...

  • Page 303
    ...part of an agreement signed on June 22, 2005 with a pool of national and international banks headed by Citibank International, Fiat S.p.A. has provided guarantees on the use of a three-year credit facility of 1 billion euros granted to Fiat Finance S.p.A. and other Group companies. On August 7, 2007...

  • Page 304
    ... of capital stock of Teksid, the share of the accounting net equity at the exercise date. â- Contingent liabilities In connection with significant asset divestitures carried out in prior years, Fiat S.p.A. directly or indirectly through its subsidiaries provided indemnities to purchasers with...

  • Page 305
    ... the funds generated by or used in operating and investing activities and on the other the debt lending period and its renewal features or the liquidity of the funds employed and market terms and conditions. The Group has adopted a series of policies and procedures whose purpose is to optimise the...

  • Page 306
    ... euros in 2006, when the Company essentially had a net debt position). Other risks relating to derivative financial instruments As discussed in Note 7, Fiat S.p.A. holds certain derivative financial instruments whose value is linked to the trends in the price of listed shares (equity swaps on Fiat...

  • Page 307
    ... income 2007 2006 2007 Personnel Costs 2006 Other operating costs 2007 2006 Financial income (expenses) 2007 2006 Banco CNH Capital S.A. Business Solutions S.p.A. CNH Global N.V. Comau S.p.A. Editrice La Stampa S.p.A. Elasis S.c.p.A. eSPIN S.p.A. Ferrari S.p.A. Fiat Argentina S.A. Fiat Group...

  • Page 308
    ... 2007 2006 2007 Personnel Costs 2006 Other operating costs 2007 2006 Financial income (expenses) 2007 2006 Sirio S.c.p.A. Teksid S.p.A. Fiat Finance North America Inc. C.R.F. Società Consortile per Azioni Fiat Group Automobiles Belgium S.A. Other Group companies Total Group companies Other related...

  • Page 309
    ... of euros) Other fin. assets. Trade recs. Current fin. recs. Other current recs. Employee provisions Non-curr. fin. pays. Trade pays. Current fin. pays. Other pays. Other related parties Total Group companies and other related parties Total line item Percentage of line item At December 31, 2006...

  • Page 310
    ...Fiat Automoveis S.A., Fiat Finance Canada Ltd and other minor), property rental payments (Fiat Group Automobiles S.p.A. and its subsidiaries) and credit facilities; â- management of current accounts, granting of loans, obtaining of short- and medium-term loans and financial assistance (Fiat Finance...

  • Page 311
    ... 2005, the net financial position of Fiat S.p.A. at December 31, 2007 is as follows: (in thousands of euros) At December 31, 2007 At December 31, 2006 Change Cash and cash equivalents Current financial receivables: - from Group companies - from Third parties Non-current financial payables: - due to...

  • Page 312
    ... euros. The company intends to continue its share buy-back programme throughout 2008 and the Board of Directors intends to submit to the next Annual Stockholders Meeting the renewal of the related authority. Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements...

  • Page 313
    ... information required by Consob (communication no. DEM/6064293 of July 28, 2006) â- Subsidiaries Capital (in euros) Result for the last fiscal year (euro) Stockholders' Equity (euro) % owned by Fiat S.p.A. Book value (in euros) Company and registered office Number of shares Fiat Partecipazioni...

  • Page 314
    List of investments (continued) Company and registered office Capital (in euros) Result for the last fiscal year (euro) Stockholders' Equity (euro) % owned by Fiat S.p.A. Number of shares Book value (in euros) Teksid S.p.A. - Turin At 12.31.06 â- contribution to Fiat Partecipazioni S.p.A. At 12.31...

  • Page 315
    ...Company and registered office Capital (in euros) Result for the last fiscal year (euro) Stockholders' Equity (euro) % owned by Fiat S.p.A. Number of shares Book value (in euros) Elasis-Società Consortile per Azioni Pomigliano d'Arco At 12.31.06 At 12.31.07 Fiat Information & Communication Services...

  • Page 316
    ... of investments in subsidiaries and associated companies with additional information required by Consob (communication no. DEM/6064293 of July 28, 2006) â- Other companies Company and registered office % owned by Fiat S.p.A. Number of shares Book value (in euros) Mediobanca S.p.A. - Milan At 12.31...

  • Page 317
    ... Executive Officer has the right to receive, in case of termination of the office held, a sum payable over twenty years, the amount of which, after 10 years, may not be greater than five times the fixed portion of his annual compensation. The relevant accrual posted by Fiat S.p.A. in 2007 amounted...

  • Page 318
    ... of Ferrari shares on the stock market. (6) Prices expressed in US dollars. February 15, 2008 On behalf of the Board of Directors /s/ LUCA CORDERO DI MONTEZEMOLO Luca Cordero di Montezemolo Chairman Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements 317

  • Page 319
    ... by Consob, reports the amount of fees charged in 2007 for the audit and audit related services provided by the Audit Firm. No services were provided in 2007 by entities that are part of the Audit Firm network. Service provider 2007 fees Audit Attestations Other services Total Deloitte & Touche...

  • Page 320
    ...-bis, paragraphs 3 and 4, of Italian Legislative Decree no. 58 of February 24 1998, that: the administrative and accounting procedures for the preparation of the Statutory Financial Statements for the 2007 fiscal year: - are adequate with respect to the company structure and - have been effectively...

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    Auditors' Reports Auditors' Reports 321

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    ... the consolidated financial statements present fairly the financial position of the Fiat Group as of December 31, 2007, and the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the...

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    ..., 2007. In our opinion, the financial statements present fairly the financial position of Fiat S.p.A. as of December 31, 2007, and the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union...

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    Reports of the Board of Statutory Auditors Reports of the Board of Statutory Auditors 325

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    ..."the consolidated financial statements present fairly the financial position of the Fiat Group as of December 31, 2007, and the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the...

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    ...transactions, the Board of Directors mentions in the Notes to the Financial Statements that numerous transactions involving the sale of goods and the provision of services took place between the Company, other Group companies and/or related parties. The Report on Operations further states that these...

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    ... Fiat Group for the fiscal year 2007, for a fee of 172,000 euros. â- Audit activities connected to due diligence procedures, for a fee of 36,900 euros. We confirmed that the Group actually complies with the Corporate Governance Code and that its various aspects were discussed in the Annual Report...

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    ... acknowledge that during the fiscal year, the company assessed the effective independence of the independent directors, and we confirm that the principles and procedures for assessment were fairly applied in accordance with Article 3 Section 5 of the Corporate Governance Code. We confirmed our own...

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    Items on the Agenda and Related Reports and Motions Items on the Agenda and Related Reports and Motions 331

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    ... the Financial Statements for the fiscal year ended December 31, 2007, and we propose that the net income for the year of 2,068,858,902 euros be allocated as follows: 103,442,945 euros to the Legal Reserve; to Stockholders a dividend of: âˆ' 0.40 euros per ordinary share, equal to approximately...

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    ... Company, waiving the requirements contained in Article 2390 of the Italian Civil Code. Kindly note that Mr. Carron's term of office will expire together with that of the entire Board of Directors on the date of the 2009 Stockholders Meeting called to approve the 2008 financial statements. February...

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    ... shares, equal to 2.58% of the capital stock, while other Group companies do not own Fiat shares. The maximum and minimum purchase price per share will be directly related to the market quotations and namely to the reference price posted on the Stock Exchange on the day before the intended purchase...

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    ... of financial instruments enables the Company to attract and retain executives that hold key positions in the business, while at the same time involving them in pursuing objectives relating to the Group's operating performance. These plans also give these individuals an economic incentive linked to...

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    ... equal annual quotas (pro rated if assigned during the year). The right of exercise will be subject to the achievement of annual performance criteria and to the permanence of an employment agreement with the Group until the date of approval of the 2010 Consolidated Financial Statements, excepting...

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    ...latter amount is currently completely covered by shares owned by the Company. Detailed information on these plans is provided in the disclosure document issued in September 2007, which is available in the Investor Relations section of the website www.fiatgroup.com, in the Report on Operations and in...

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    Graphic design Atelier Roger Pfund, Communication visuelle sa Genève, Switzerland Editorial Coordination Frenda Advertising Turin, Italy Print Stamperia Artistica Nazionale Trofarello (TO), Italy Printed in Italy March 2008 Printed on ecological and recycled paper Fedrigoni Symbol Freelife

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    Fiat S.p.A. Corporate Headquarters Via Nizza 250 10126 Turin - Italy Tel. +39 011 00.63088 Fax +39 011 00.63798 [email protected] www.fiatgroup.com