Chrysler 2009 Annual Report Download - page 209

208 FIAT GROUP
CONSOLIDATED
FINANCIAL
STATEMENTS
AT 31 DECEMBER
2009
NOTES
Other provisions26.
Changes in Other provisions are as follows:
At 31 At 31
December Release Other December
(€ million) 2008 Charge Utilisation to income changes 2009
Warranty provision 1,498 1,113 (1,096) (86) 50 1,479
Restructuring provision 279 254 (157) (15) (2) 359
Investment provision 48 - - - 2 50
Other risks 2,953 3,196 (2,976) (191) 115 3,097
Total Other provisions 4,778 4,563 (4,229) (292) 165 4,985
The effect of discounting provisions amounts to €10 million in 2009 and has been included in the Other changes as the positive effect of exchange rate
differences amounting to €170 million.
The warranty provision represents management’s best estimate of commitments given by the Group for contractual, legal or constructive obligations
arising from product warranties given for a specified period of time which begins at the date of delivery to the customer. This estimate has been calculated
considering past experience and specific contractual terms. This provision also includes management’s best estimate of the costs that are expected to be
incurred in connection with product defects that could result in a larger recall of vehicles. This provision for risks is developed through an assessment of
reported damages or returns on a case-by-case basis.
The restructuring provision comprises the estimated amount of benefits payable to employees on termination in connection with restructuring plans amounting
to €294 million at 31 December 2009 (€217 million at 31 December 2008), other costs for exiting activities amounting to €32 million at 31 December 2009
(€34 million at 31 December 2008) and other costs totalling €33 million at 31 December 2009 (€28 million at 31 December 2008).
The total balance at 31 December 2009 relates to restructuring programs of the following Sectors (in € million): Fiat Group Automobiles 101 (91 at 31 December
2008); Components 73 (65 at 31 December 2008); FPT Powertrain Technologies 63 (19 at 31 December 2008); Agricultural and Construction equipment 50
(17 at 31 December 2008); Trucks and Commercial Vehicles 17 (21 at 31 December 2008); Production Systems 15 (20 at 31 December 2008); Metallurgical
Products 9 (16 at 31 December 2008); other Sectors 31 (30 at 31 December 2008).
The provision for other risks represents the amounts set aside by the individual companies of the Group principally in connection with contractual and
commercial risks and disputes. The more significant balances of these provisions are as follows:
(€ million) At 31 December 2009 At 31 December 2008
Sales incentives 829 939
Legal proceedings and other disputes 743 729
Commercial risks 677 580
Environmental risks 71 77
Indemnities 53 61
Other reserves for risk and charges 724 567
Total Other risks 3,097 2,953