Chrysler 2008 Annual Report Download - page 316

Contingent liabilities
In connection with significant asset divestitures carried out in prior years, Fiat S.p.A. directly or indirectly through its subsidiaries
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 contingent liabilities in
existence at the time of the sale, as well as 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 31 December 2008, potential obligations with
respect to these indemnities are approximately €816 million (approximately €808 million at 31 December 2007), net of provisions
set aside by the single companies. Certain other indemnifications have been provided 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.
Certain claims against Fiat S.p.A. for damages in relation to real estate properties sold in previous years are still pending. Given
this fact and the specific conditions of the related proceedings, the possible outcome of this situation cannot be reasonably
estimated and, therefore, the likelihood of any costs to be borne by the company cannot be determined.
28. Information on financial risks
The manner in which Fiat S.p.A. measures and manages financial risks are consistent with Group policy.
In particular, the categories of the major risks to which the company is exposed are set out below.
Credit risk
The maximum credit risk to which Fiat S.p.A. is theoretically exposed at 31 December 2008 is represented by the carrying amounts
stated for financial assets in the balance sheet and the nominal value of the guarantees provided as discussed in Note 26.
Amounts receivable at the balance sheet date are essentially due from Group companies, from the tax authorities and from T.A.V.
S.p.A. The risk on receivables from the latter company is limited to the margin earned by Fiat S.p.A. (of approximately 3.6%), since
a condition for the settlement of payables to consortium companies is the receipt of the amounts due from T.A.V. S.p.A.
Guarantees given are for the most part on behalf of Group companies.
There are no significant overdue balances.
Liquidity risk
Liquidity risk arises if the company is unable to obtain, at economical terms, the funding needed to carry out its operating
activities.
Fiat S.p.A. participates in the Group’s centralised treasury management and, as a result, the liquidity risks to which it is exposed
are strictly correlated to those which the Fiat Group is exposed to as a whole.
The two main determinants of the Group’s liquidity position are, on one side, the cash generated by or used in operating and
investing activities and, on the other, the maturity and renewal of debt or invested liquidity and market conditions.
Fiat S.p.A. Statutory Financial Statements at 31 December 2008 315