Chrysler 2013 Annual Report Download - page 314

313
Fiat S.p.A. Statutory
Financial Statements
at 31 December 2013
Current service costs for employees are recognized in the income statement under personnel costs (see Note 5) and for the Chief Executive
Officer under other operating costs (see Note 6). The associated interest costs are recognized in the income statement under financial
income/(expense) (see Note 7).
As defined benefit plan liabilities are measured on an actuarial basis, the recognized value of those liabilities is sensitive to the underlying
assumptions. The principal assumptions used in calculation of trattamento di fine rapporto (leaving entitlement or “TFR” in Italy) are the discount
rate, average rate of annual departures and maximum retirement age.
The discount rate used in measurement of the TFR liability is based on the current yield for investment grade fixed income securities of
equivalent maturity and amount as the expected future payments. For 2013, the average discount rate, which reflected the estimated timing
and amount of future plan payments, was 2.49%. The average duration of the TFR liability at year end was 4.39 years. The average annual rate
of departures, based on the Group’s prior experience, was estimated at 8.30%. The maximum retirement age was based on current legislation.
Maintaining all other assumptions unchanged, a 100 basis point increase or decrease in the discount rate would result in a €197 thousand
decrease or a €233 thousand increase, respectively, in the estimated value of the TFR liability.
The Company’s estimate of timing of future TFR payments is as follows: €1,213 thousand in 2014, €585 thousand in 2015, €420 thousand
in 2016, €496 thousand in 2017, €364 thousand in 2018 and €1,545 thousand for 2019 through 2024.
Other long-term employee benefits
At 31 December 2013, this item totaled €1,041 thousand (€1,640 thousand at 31 December 2012). That amount represents benefits payable
to employees who have completed a determined length of service based on a supplemental company agreement. Actuarial gains and losses
on the associated liability are recognized in the income statement in the period in which they arise.
Provisions for stock option and stock grant plans
At 31 December 2013, this item totaled €123,216 thousand and represented the liability arising from the obligation, following the demerger of
activities to Fiat Industrial S.p.A. in January 2011, to deliver Fiat Industrial S.p.A. (now CNH Industrial N.V.) common shares to service a portion
of the Company’s stock option and stock grant plans.
Changes in provisions for stock option and stock grant plans for the year were as follows:
(€ thousand)
31 December
2012
Fair value
adjustment Utilizations Other changes
31 December
2013
Provisions for stock option and stock grant plans 124,947 796 (2,138) (389) 123,216
In accordance with IFRS 2 and IAS 39, these liabilities were recognized at fair value upon initial recognition. In relation to the 2004 and 2006
stock option plans for the CEO and the 2006 stock option plan for managers, the calculation of fair value assumes a strike price equivalent to
the par value of Fiat Industrial shares at the balance sheet date. Subsequent to initial recognition, changes in fair value are recognized through
the income statement. In 2013, changes in fair value resulted in recognition, through the income statement, of a €796 thousand increase
in the liability with a corresponding increase in the value of the investment in CNH Industrial (see Note 11). Finally, utilizations during the year
(€2,138 thousand) related to CNH Industrial shares sold following the exercise of 285,000 options under the November 2006 stock option
plan for managers.