Chrysler 2007 Annual Report Download - page 306

Management believes that the funds and credit lines currently available, in addition to those funds that will be generated from
operating and funding activities, will enable the Group to satisfy its requirements resulting from its investing activities and its
working capital needs and to fulfil its obligations to repay its debts at their natural due date.
Currency risk
At December 31, 2007 Fiat S.p.A. has no significant receivables or payables balances or derivative financial instruments exposed to
risk resulting from changes in exchange rates.
Interest rate risk
Fiat S.p.A. satisfies its financial requirements through the Group’s centralised treasury management system.
In particular:
■Non-current financial payables consist of fixed rate loans granted by Fiat Finance S.p.A. (as discussed in Note 20). The change in
the fair value of these loans resulting from a hypothetical, instantaneous and unfavourable change of 10% in market interest rates
would have been approximately 58 million euros (51 million euros at December 31, 2006);
■Current financial receivables consist mostly of balances on current accounts and loans to the subsidiary Fiat Finance S.p.A.
(as discussed in Note 15), while Current financial payables consist mainly of liabilities for advances received on the sale of
receivables to banks (as discussed in Note 24). The remuneration and the cost of these items have been affected by the
performance in short-term interest rates. In connection with short-term transactions or those arranged with floating interest rates, a
hypothetical, instantaneous and unfavourable change of 10% in short-term interest rates would have led to a decrease in pre-tax
net financial income on an annual basis of approximately 3 million euros (5 million euros in 2006, when the Company essentially
had a net debt position).
Other risks relating to derivative financial instruments
As discussed in Note 7, Fiat S.p.A. holds certain derivative financial instruments whose value is linked to the trends in the price of
listed shares (equity swaps on Fiat shares). Although these transactions were entered into for hedging purposes, they do not
always qualify for hedge accounting under IFRS. As a result, fluctuations in their value could affect the company’s results.
The potential loss in fair value of derivative financial instruments held by the company at December 31, 2007, linked to changes in
the price of listed shares, which would arise in the case of a hypothetical, instantaneous and unfavourable change of 10% in the
underlying values, amounts to approximately 37 million euros (40 million euros at December 31, 2006).
Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements 305