Chrysler 2007 Annual Report Download - page 300

The item relates to contracts for the high speed railway project signed by Fiat S.p.A. with Treno Alta Velocità - T.A.V. S.p.A.
(which was in turn engaged by F.S. S.p.A.), for the operational engineering and construction of two lines (Bologna-Florence and
Turin-Milan, the latter divided into two sub-lines: Turin-Novara and Novara-Milan). At December 31, 2007, the contractual amounts
(including additional work and monetary adjustments) total 4,711 million euros for the Bologna-Florence line, 4,666 million euros
for the Turin-Novara sub-line and 2,280 million euros for the Novara-Milan sub-line.
As part of such project, Fiat S.p.A., as the general contractor, engaged CAV.E.T. and CAV.TO.MI. for the engineering and construction
activities, retaining all work coordination, organisational and management activities. Contract work in progress therefore reflects
the fees earned by Fiat S.p.A. in the form of a percentage (roughly 3.6%) of the contractual amounts, for the activities directly
carried out. The work is paid through progress payments made by T.A.V. S.p.A. to Fiat S.p.A. based on the stage of completion of
the works and advance payments, which Fiat S.p.A. then pays over to CAV.E.T. and CAV.TO.MI. net of its contractual percentage
earned.
These amounts may be analysed by line as follows:
At At
(in thousands of euros) December 31, 2007 December 31, 2006 Change
Contract work in progress 381,649 352,879 28,770
- Florence-Bologna line 140,212 129,754 10,458
- Turin-Novara line 181,463 179,703 1,760
- Novara-Milan line 59,974 43,422 16,552
Less: Progress payments for work completed 389,956 357,891 32,065
- Florence-Bologna line 143,156 132,416 10,740
- Turin-Novara line 181,775 180,002 1,773
- Novara-Milan line 65,025 45,473 19,552
Gross amount due to the customer 8,307 5,012 3,295
- Florence-Bologna line 2,944 2,662 282
- Turin-Novara line 312 299 13
- Novara-Milan line 5,051 2,051 3,000
Contract work in progress is measured on the basis of the stage of completion in relation to the sales price, which in this case is
the consideration contractually agreed for the activities directly carried out by Fiat S.p.A. Contract costs relating to the contract
revenue recognised total 126,267 thousand euros at December, 31 2007 (116,060 thousand euros at December 31, 2006). Changes in
contract work in progress have been recognised in the income statement under the item Other operating income (see Note 4).
When the lines are contractually completed, the final contractual revenue for the activities directly carried out will be recognised in
the income statement under Other operating income, net of any decrease in inventories. At the same time the accounts for
inventories and amounts classified as advances will be closed.
Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements 299