Chrysler 2007 Annual Report Download - page 182

181Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes
Operating lease contracts
The Group enters into operating lease contracts for the right to use industrial buildings and equipments with an average term of 10-20
years and 3-5 years, respectively. The total future minimum lease payments under non-cancellable lease contracts are 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
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 with a diverse business portfolio, the Group is exposed to numerous legal risks, particularly in the areas of
product liability, competition and antitrust law, environmental risks and tax matters. The outcome of any current or future
proceedings cannot be predicted with certainty. It is therefore possible that legal judgments could give rise to expenses that are
not covered, or not fully covered, by insurers’ compensation payments and could affect the Group financial position and results. At
December 31, 2007, contingent liabilities estimated by the Group amount to approximately 200 million euros (approximately 220
million euros at December 31, 2006), for which no provisions have been recognised since an outflow of resources is not considered
to be probable. Furthermore, contingent assets and expected reimbursement in connection with these contingent liabilities for
approximately 20 million euros have been estimated but not recognised.
Instead, when it is probable that an outflow of resources embodying economic benefits will be required to settle obligations and
this amount can be reliably estimated, the Group recognises specific provision for this purpose.
Furthermore, in connection with significant asset divestitures carried out in prior years, the Group provided indemnities to
purchasers with the maximum amount of potential liability under these contracts generally capped at a percentage of the purchase
price. These liabilities primarily relate to potential liabilities arising from breach of representations and warranties provided in the
contracts and, in certain instances, environmental or tax matters, generally for a limited period of time. At December 31, 2007,
potential obligations with respect to these indemnities are approximately 866 million euros (approximately 860 million euros at
December 31, 2006), against which provisions of 58 million euros (49 million euros December 31, 2006) have been made, classified
as Other provisions. The Group has provided certain other indemnifications that do not limit potential payment; it is not possible to
estimate a maximum amount of potential future payments that could result from claims made under these indemnities.
In February 2006, Fiat received a subpoena from the SEC with respect to a formal investigation entitled
In the Matter of Certain
Participants in the Oil for Food Program
. Under this subpoena, the Group was required to provide the SEC with documents relating
to certain Fiat-related entities, including certain CNH subsidiaries and Iveco, regarding matters relating to the United Nations Oil-
for-Food Program (the “OFF Program”). A substantial number of companies were mentioned in the "Report of the Independent
Inquiry Committee into the United Nations Oil-for-Food Programme" issued in October 2005 (the “Report”). The Report alleged that
these companies engaged in transactions under the OFF Program that involved inappropriate payments. Fiat provided documents
and other information to the SEC which have, to some extent, been shared by the SEC with the United States Department of
Justice (“DOJ").
Fiat subsequently began settlement discussions with the SEC and DOJ. The SEC initially communicated that in order to settle the
allegations it would require disgorgement of profits relating to the applicable contracts, interest on such amounts, and the
imposition of a civil fine. The DOJ has communicated that in order to settle the allegations it would require signature of a deferred