Chrysler 2000 Annual Report Download - page 42

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Report on Operations – Analysis of the Financial Position and Operating Results of the Fiat Group and Fiat S.p.A.
❚an increase in net intangible fixed assets (4,648 million euros),
due mainly to the consolidation of Case (approximately four
billion euros) and the goodwill resulting from the completion
of the tender offers for Toro Assicurazioni and Magneti Marelli
shares and the acquisition of the residual shares of Fraikin
and the Flexi-Coil Group (for a total of approximately 650
million euros).
Net deferred tax assets
At December 31, 2000, net deferred tax assets rose
to 1,007 million euros, from 574 million euros in 1999,
due mainly to provisions for risk reserves not deductible
for tax purposes in the period under examination.
The amount of net deferred tax assets includes prepaid
and deferred taxes set aside for the following temporary
differences: accelerated depreciation, capital gains reinvested
under a deferred tax treatment, inventories, taxed reserves
for risks and charges, and allowances for doubtful accounts
in excess of the percentage deductible for tax purposes.
A more detailed analysis of net deferred tax assets is provided
in the Notes to the Consolidated Financial Statements.
Reserves and allowances
At December 31, 2000, reserves and allowances totaled
20,891 million euros. They included the technical reserves of
the insurance companies (12,616 million euros), the reserve
for severance indemnities for employees in Italy (2,017 million
euros), the reserve for pensions and similar obligations (1,515
million euros), the warranty and technical support reserve
(1,008 million euros), and other reserves (3,735 million euros).
The increase of 4,692 million euros over the 16,199 million
euros reported at the end of 1999 is due to the higher
technical reserves of the insurance companies, which rose
by 2,323 million euros, reflecting a significant increase in
premium income; changes in the scope of consolidation
(by approximately 1 billion euros), largely due to the inclusion
of Case; and the extraordinary allowance for industrial
reorganization as well as other measures to strengthen
the asset base of several Group Sectors.
Net invested capital
The Group’s net invested capital at December 31, 2000 was
21,676 million euros, an increase of 2,878 million euros over
the end of 1999 (18,798 million euros).
Changes in the scope of consolidation, due largely to the
consolidation of Case and Flexi-Coil; the acquisition of the
equity interest in General Motors; and the increase in goodwill
resulting from the completion of the tender offers for Toro
Assicurazioni and Magneti Marelli produced an increase of
approximately 4,500 million euros in invested capital. If the
scope of consolidation had remained the same and the
greater volume of discounted trade receivables were excluded,
net invested capital would be approximately 470 million euros
lower than at the end of 1999.
On a comparable basis, the asset turnover rate declined from
3.3 in 1999 to 2.7 at the end of 2000.
The annualized return on invested capital, which is the ratio
of operating income plus investment income to average net
invested capital, was about 6%, which fell short of the 10%
value that was set in 2000 as the average cost of capital for
the Group, used for the calculation of value creation.
Net financial position of the Group
At December 31, 2000, the consolidated net financial
position of the Group showed net indebtedness of 6,467
million euros, 2,436 million euros more than at the beginning
of the fiscal year (net borrowings of 4,031 million euros).
The increase was due primarily to changes in the scope of
consolidation and to the tender offers for Toro Assicurazioni
and Magneti Marelli, which led to a total increase in net
debt of about 3.3 billion euros.
Net Invested Capital
(in millions of euros)
2000
21,676
19991998
18,798
13,700
consolidation scope
Comparable basis
4,498
17,178