Chrysler 2007 Annual Report Download - page 301

Net advances relating to work completed may be analysed as follows:
Net advances for
Advances received from customers Advances paid to suppliers work completed
(in thousands of euros) At December 31, 2007 At December 31, 2006 At December 31, 2007 At December 31, 2006 At December 31, 2007 At December 31, 2006
Florence-Bologna line 4,240,523 3,774,803 4,097,367 3,642,387 143,156 132,416
Turin-Novara line 4,659,581 4,552,834 4,477,806 4,372,832 181,775 180,002
Novara-Milan line 1,767,093 1,218,035 1,702,068 1,172,562 65,025 45,473
Progress payments for work completed 10,667,197 9,545,672 10,277,241 9,187,781 389,956 357,891
Advances relate to amounts received as down payments from the customer T.A.V. S.p.A. at the commencement of the contracts,
which are then recovered as the work progresses. The balance may be analysed as follows:
Contractual advances received from customers Contractual advances paid to suppliers Net contractual advances
(in thousands of euros) At December 31, 2007 At December 31, 2006 At December 31, 2007 At December 31, 2006 At December 31, 2007 At December 31, 2006
Florence-Bologna line 43,225 70,871 41,563 68,146 1,662 2,725
Turin-Novara line 1,101 3,486 1,065 3,358 36 128
Novara-Milan line 71,193 135,034 68,573 129,981 2,620 5,053
Contractual advances 115,519 209,391 111,201 201,485 4,318 7,906
Bank and insurance sureties amounting to a total of 1,257,000 thousand euros have been granted by Fiat S.p.A. to T.A.V. S.p.A. as
security against the contractual advances received, the performance of the work and the restriction represented by the guarantee
amounts withheld on progress payments. In accordance with the agreements reached with the consortia mentioned and the banks
issuing such guarantees, 1,211,141 thousand euros out of this total represents the risk towards the issuing banks and insurance
companies borne by the consortia themselves, with Fiat S.p.A. not having joint responsibility.
More specifically, the guarantees provided by Fiat S.p.A. to T.A.V. S.p.A. relate for 593,458 thousand euros to the Bologna-Florence
line, for 253,024 thousand euros to the Turin-Novara sub-line and for 410,518 thousand euros to the Novara-Milan sub-line.
In this respect the indemnities assumed directly by the consortium CAV.E.T. amount to 572,258 thousand euros, while for the
consortium CAV.TO.MI. these amount to 243,578 thousand euros for the Turin-Novara sub-line and 395,305 thousand euros for the
Novara-Milan sub-line.
Finally, in line with the contractual terms and with the prior approval of the testing commission given to RFI – Rete Ferroviaria
Italiana S.p.A., the Turin-Novara high speed line was opened to the public in February 2006 and in December 2006 the company
signed an agreement with T.A.V. S.p.A. for the acknowledgment of the substantial completion of the work on the line. The
performance of the contractual requirements agreed between the parties to arrive at the final approval of the work continued in
2007, leading to the release of bank guarantees amounting to a total of 657,124 thousand euros relating to the work to be subject to
the Principal Final Test (around 94% of the total).
Since, however, the steps for the final approval of the 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.
Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements300