Chrysler 2011 Annual Report Download - page 156

155
Consolidated
Financial Statements
at 31 December 2011
Scope of consolidation
Fiat Demerger and Discontinued Operations
During 2010, the Group initiated and completed a strategic project to separate the Agricultural and Construction Equipment (CNH
– Case New Holland sector) and Trucks and Commercial Vehicles (Iveco sector) activities, as well as the “Industrial & Marine”
business line of FPT Powertrain Technologies (FPT Industrial sector), from the Automobile and Automobile-related Components and
Production Systems activities, which include the sectors Fiat Group Automobiles, Maserati, Ferrari, Magneti Marelli, Teksid, Comau
and the “Passenger & Commercial Vehicles” business line of FPT Powertrain Technologies (“Fiat Powertrain”). The separation of those
businesses, in the form of their demerger from Fiat S.p.A. and transfer to Fiat Industrial S.p.A. (the “Demerger” – a Scissione Parziale
Proporzionale pursuant to Article 2506-bis of the Italian Civil Code), resulted in the creation of the Fiat Industrial Group (consisting of
CNH, Iveco and FPT Industrial – the “Discontinued Operations”) on 1 January 2011. From that date until the date of the consolidation of
Chrysler, which is discussed below, Fiat Group consisted of Fiat Group Automobiles, Maserati, Ferrari, Magneti Marelli, Fiat Powertrain,
Teksid and Comau (the “Continuing Operations”).
Since the Demerger became highly probable in December 2010, in accordance with IFRS 5 – Non-current Assets held for Sale and
Discontinued Operations the businesses transferred to Fiat Industrial were qualified and presented as Discontinued Operations in the
consolidated Financial Statements at 31 December 2010. Details of the methods used may be found in the Note – Fiat Demerger and
Discontinued Operations, in the Consolidated financial statements at 31 December 2010. Key financial and income statement data for
Discontinued Operations for the year ended at 31 December 2010 are presented in Note 23.
Further, as the Demerger is considered a “business combination involving entities or businesses under common control”, it is outside
the scope of application of IFRS 3 and IFRIC 17. It has accordingly been accounted for in the consolidated financial statements of Fiat
Group in this Annual report without adjusting the carrying amounts of assets and liabilities.
Consolidated entities
The consolidated financial statements of the Fiat Group at 31 December 2011 include Fiat S.p.A. and 302 consolidated subsidiaries in
which Fiat S.p.A., directly or indirectly, has a majority of the voting rights, and over which it exercises control or from which it is able to
derive benefit by virtue of its power to govern their corporate financial and operating policies.
During 2011 there were the following main changes in the scope of consolidation, in addition to those relating to the above mentioned
Demerger:
TCA Tecnologia em Componentes Automotivos SA, a subsidiary in the Fiat Group Automobiles sector located in the Brazilian state
of Pernambuco, was consolidated on a line-by-line basis from 1 January 2011.
Comau (Kunshan) Automation Co. Ltd., a subsidiary in the Comau sector, was established during the first quarter of 2011 and is
consolidated on a line-by-line basis.
On 24 May 2011, Fiat acquired an additional 16% (on a fully-diluted basis1) of the capital of Chrysler Group LLC, (“Chrysler Group” or
“Chrysler”) increasing its interest to 46% (on a fully-diluted basis). As a result of the potential voting rights associated with options that
became exercisable on that date, Fiat was deemed to have acquired control of Chrysler for purposes of consolidation under IAS 27
– Consolidated and Separate Financial Statements. Accordingly, Chrysler has been consolidated on a line-by-line basis by Fiat with
effect from that date. Subsequently, on 21 July 2011 Fiat completed the purchase of the 6.031% and 1.508% fully-diluted ownership
interests in Chrysler held by the U.S. Treasury and the Canadian Government respectively. As a result of these transactions, at 31
December 2011 Fiat holds 53.5% of Chrysler’s outstanding equity (on a fully-diluted basis). The acquisition of control of Chrysler and
the acquisition of the additional non-controlling interests are discussed below in the paragraph – Investment in Chrysler.
On 29 June 2011, the acquisition of a 50% interest in VM Motori group was finalised; this is a joint venture with General Motors in
the Fiat Powertrain sector specialising in the production of auto engines, industrial engines and spare parts. The interest has been
consolidated using the equity method from that date.
(1) This percentage gives effect to the dilution of the Class A membership interests held by all members (including Fiat) arising from the occurrence of the final
Performance Event (or “Class B Event”) contemplated by the Chrysler Group Amended and Restated LLC Operating Agreement (the “Ecological Event”). The
additional interest without giving effect to the final Class B Event is 17.23%, which will be diluted to 16% upon the occurrence of the Ecological Event.