Chrysler 2007 Annual Report Download - page 172

171Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes
The restructuring provision comprises the estimated amount of benefits payable to employees on termination in connection with
restructuring plans amounting to 230 million euros at December 31, 2007 (456 million euros at December 31, 2006), other costs for
exiting activities amounting to 51 million euros at December 31, 2007 (25 million euros at December 31, 2006) and other costs
totalling 27 million euros at December 31, 2007 (80 million euros at December 31, 2006).
The total balance at December 31, 2007 relates to corporate restructuring programs of the following Sectors (in millions of euros):
Fiat Group Automobiles 129 (137 at December 31, 2006); Agricultural and Construction equipment 55 (148 at December 31, 2006);
FPT Powertrain Technologies 29 (61 at December 31, 2006), Trucks and Commercial Vehicles 23 (49 at December 31, 2006);
Metallurgical Products 14 (18 at December 31, 2006); Components 8 (25 at December 31, 2006); Production Systems 28 (83 at
December 31, 2006); Other sectors 22 (40 at December 31, 2006).
The provision for other risks represents the amounts set aside by the individual companies of the Group principally in connection
with contractual and commercial risks and disputes. The more significant balances of these provisions are as follows:
(in millions of euros) At December 31, 2007 At December 31, 2006
Sales incentives 873 851
Legal proceedings and other disputes 740 630
Commercial risks 922 808
Environmental risks 72 95
Indemnities 58 49
Other reserves for risk and charges 568 535
Other risks 3,233 2,968
A description of these follows:
■ Sales Incentives - these provisions relate to sales incentives that are offered on a contractual basis to the Group’s dealer
networks, primarily on the basis of the dealers achieving a specific cumulative level of revenue transactions during the calendar
year. This provision is estimated based on the information available regarding the sales made by the dealers during the calendar
year. The provision also includes sales incentives such as cash rebates announced by the Group and provided by dealers to
customers, for which the dealers are reimbursed. The Group records these provisions when it is probable that the incentive will be
provided and the Group’s inventory is sold to its dealers. The Group estimates these provisions based on the expected use of these
rebates with respect to the volume of vehicles that has been sold to the dealers.
■ Legal proceedings and other disputes - this provision represents management’s best estimate of the liability to be recognised by
the Group with regard to:
− Legal proceedings arising in the ordinary course of business with dealers, customers, suppliers or regulators (such as contractual
or patent disputes).
− Legal proceedings involving claims with active and former employees.
− Legal proceedings involving different tax authorities.