in the First Half of 2004 99th Fiscal Year - FIAT SpA

FINANCIAL POSITION AND OPERATING PERFORMANCE
OF FIAT S.P.A.
Statement of Operations
The loss of Fiat S.p.A. in the first half of 2004 was 555 million
euros, compared with a loss of 159 million euros in the
corresponding period of the previous year.
A breakdown of its principal components is provided below:
(in millions of euros) 1st half 2004 1st half 2003
Investment income – 282
Adjustments (428) (224)
Net financial expenses (73) (93)
Cost of personnel and services, less revenues (55) (52)
Non-operating income (expenses) 1 (16)
Income taxes – (56)
Net result for the period (555) (159)
Investment income in the first half of 2003 consisted of
dividends, including the respective tax credits, paid by
subsidiaries and associated companies.
Adjustments, negative by 428 million euros, principally reflect
the writedown of the subsidiary Fiat Partecipazioni S.p.A. due to
the negative performance of the Automobile sector (483 million
euros), net of restoration of the value of Fiat Netherlands
Holding N.V. for 57 million euros.
In the first half of 2003 net adjustments reflected the writedown
of Fiat Netherlands Holding N.V. (93 million euros), Comau B.V.
(73 million euros) and Iveco N.V. (42 million euros).
Net financial expenses totaled 73 million euros (93 million euros
in the first half of 2003) and refer to interests and commissions
paid for the 3-billion-euro convertible facility that has a term of
three years.
The cost of personnel and services, less revenues, totaled 55
million euros (52 million euros in the first half of 2003). In
particular:
❚ The cost of personnel and services totaled 102 million euros,
compared with 113 million euros in the first half of 2003. The
Company's staff averaged 152 employees, compared with 173
in the first half of 2003.
❚ Revenues totaled 47 million euros, compared with 61 million
euros in the first half of 2003. They included royalties from
the license to use the Fiat trademark and fees for services
rendered by management personnel.
Net non-operating income amounted to 1 million euros.
In the first half of 2003 net non-operating expenses consisted
of commissions paid to Mediobanca for the postponement
of the commitments undertaken by Mediobanca itself in the
framework of the Ferrari contract.
Income taxes amounted to 56 million euros in the first half
of 2003.
19 Operating Performance and Financial Position of the Fiat Group and Fiat S.p.A.
in the First Half of 2004
Balance Sheet
The balance sheet of Fiat S.p.A. is summarized as follows:
(in millions of euros) At 6.30.2004 At 12.31.2003 Change
Fixed assets 6.964 7.404 (440)
Working capital (13) 77 (90)
Net invested capital 6.951 7.481 (530)
Stockholders' equity 4.860 5.415 (555)
Net financial position (2.091) (2.066) (25)
Fixed assets consist mainly of investments in the Group's
companies, which at June 30, 2004 totaled 6,856 million euros,
down from 7,282 million euros at December 31, 2003.
The net decrease of 426 million euros reflects the writedown
of Fiat Partecipazioni S.p.A. net of restoration of the value of
Fiat Netherlands Holding N.V.
Working capital includes payables to Tax Authorities, suppliers,
and employees of 39 million euros net of receivables, and
ordinary treasury stock of 26 million euros (4,384,019 shares,
or 0.54% of total stock, with a par value of 22 million euros).
Working capital decreased by 90 million euros compared
with December 31, 2003 due to lower receivables from Tax
Authorities for VAT.
Stockholders’ equity totaled 4,860 million euros at June 30,
2004, compared with 5,415 million euros at December 31, 2003.
The decrease of 555 million euros reflects the loss for the
period.
Net financial position at June 30, 2004 was negative by 2,091
million euros, compared with a net financial position negative
by 2,066 million euros at December 31, 2003.
In regard to the net worth and the financial position of Fiat
S.p.A., it should be noted that reimbursement of the main
portion of the share capital of the subsidiary Internazionale
Holding Fiat S.A., which was passed in June 2004, will be
finalized in the second half of 2004. This transaction will
generate a gain, compared to the book value of the equity
investment, that is almost in line with the loss incurred by
Fiat S.p.A. in the first half of 2004.