Chrysler 2007 Annual Report Download - page 173

172 Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes
None of these provisions is individually significant. Each Group company recognises a provision for legal proceedings when it is
deemed probable that the proceedings will result in an outflow of resources. In determining their best estimate of the probable
liability, each Group company evaluates their legal proceedings on a case-by-case basis to estimate the probable losses that
typically arise from events of the type giving rise to the liability. Their estimate takes into account, as applicable, the views of legal
counsel and other experts, the experience of the Group and others in similar situations and the Group’s intentions with regard to
further action in each proceeding. Fiat’s consolidated provision aggregates these individual provisions established by each of the
Group’s companies.
■ Commercial risks - this provision includes the amount of obligations arising in connection with the sale of products and services
such as extended warranty agreements and maintenance contracts. An accrual is recorded when the expected costs to complete
the services under these contracts exceed the revenues expected to be realised. This provision also includes management’s best
estimate of the costs that are expected to be incurred in connection with product defects that could result in a larger recall of
vehicles. This provision for risks is developed through an assessment of reported damages or returns on a case-by-case basis.
■ Environmental risks - based upon currently available information, the reserve represents management’s best estimate of the
Group’s possible environmental obligations. Amounts included in the estimate comprise direct costs to be incurred in connection
with environmental obligations associated with current or formerly owned facilities and sites. This provision also includes costs
related to claims on environmental matters.
■ Indemnities - the reserve for indemnities relates to contractual indemnities provided by the 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 and, in
certain instances, environmental or tax matters. These provisions were determined estimating the amount of the expected outflow
of resources, taking into consideration the relevant level of probability of occurrence.
28. Debt
A breakdown of debt and an analysis by due date is as follows:
At December 31, 2007 At December 31, 2006
Due between Due between
Due within one and Due beyond Due within one and Due beyond
(in millions of euros) one year five years five years Total one year five years five years Total
Asset-backed financing 4,070 2,707 43 6,820 4,542 3,767 35 8,344
- Bonds 431 4,101 2,534 7,066 547 5,160 1,590 7,297
- Borrowings from banks 1,559 993 170 2,722 1,590 1,609 150 3,349
- Payables represented by securities 149 14 – 163 282 33 – 315
- Other 809 155 216 1,180 656 173 54 883
Total Other debt 2,948 5,263 2,920 11,131 3,075 6,975 1,794 11,844
Total Debt 7,018 7,970 2,963 17,951 7,617 10,742 1,829 20,188
The item Asset-backed financing represents the amount of financing received through both securitisation and factoring
transactions which do not meet IAS 39 derecognition requirements and is recognised as an asset in the balance sheet under the
item Current receivables (Note 19).