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

9 Reserves for risks and charges
(in millions of euros) At 6/30/2004 At 12/31/2003 Change
Reserve for pensions and similar obligations 1,545 1,503 42
Income tax reserves:
Current income tax reserve 78 98 (20)
Deferred income tax reserve 236 211 25
Total Income tax reserves 314 309 5
Other reserves:
Warranty reserve 825 791 34
Restructuring reserves 437 471 (34)
Various liabilities and risk reserves 2,361 2,216 145
Total Other reserves 3,623 3,478 145
Insurance policy liabilities and accruals 93 89 4
Total Reserves for risks and charges 5,575 5,379 196
The Deferred income tax reserve at June 30, 2004 includes deferred tax liabilities, net of Deferred tax assets, that have been offset
where possible by the individual companies. The net balance of the Deferred income tax reserve and Deferred tax assets posted
under other receivables is broken down as follows:
(in millions of euros) At 6/30/2004 At 12/31/2003 Change
Deferred income tax reserves 236 211 25
Deferred tax assets (1,850) (1,879) 29
Total (1,614) (1,668) 54
The net change with respect to December 31, 2003 shows net assets that are lower by 54 million euros. This change derives from use
of previously allocated deferred tax assets and new provisions for 82 million euros, net of foreign exchange effect for 18 million euros
and change in the scope of consolidation and other minor changes for 10 million euros.
The Various liabilities and risk reserves totaled 2,361 million euros at June 30, 2004 (2,216 million euros at December 31, 2003) and
represent provisions for contractual and commercial risks and litigation. The increase of 145 million euros with respect to December
31, 2003 is mainly attributable to the Automobile and Commercial Vehicles Sectors.
10 Payables
44 Fiat Group Consolidated Financial Statements and Notes at June 30, 2004
At 6/30/2004 At 12/31/2003
(in millions of euros) Trade Financial Other Total Trade Financial Other Total
Total Payables 11,838 21,987 11,524 45,349 12,588 22,034 11,618 46,240
Payables decreased from the amount at December 31, 2003 by 891 million euros. This change is mainly due to the decrease in Trade
payables for 750 million euros. The decrease mainly refers to the Automobile Sector, which in the first six months of 2004 witnessed
a leveling off in production levels that had significantly increased in the last quarter of 2003 due to the introduction of new models.
Financial payables include the bond convertible into 32,053,322 General Motors Corp. common stock (“Exchangeable GM”), at a
conversion price of 69.54 U.S. dollars per share, for the residual amount of 1,689 million dollars corresponding to 1,389 million euros.
At December 31, 2003, the bond amounted to 2,229 million dollars, equivalent to 1,765 million euros: the decrease, realized during
the first half of 2004, is due to the repurchase of 540 million dollars in bonds to be cancelled. Pursuant to the contractually envisaged
right of each bondholder to request early reimbursement of all or part of its bonds, with payment at July 9, 2004, reimbursement
for a total of 1,672 million dollars (with a countervalue of 1,375 million euros at the exchange rates applicable on June 30, 2004)
in bonds was requested in June 2004, and this amount was reimbursed on the aforesaid due date. It should be pointed out that, with
reference to the risk, implicit in the bond, of an increase in the General Motors share price above 69.54 U.S. dollars, a Total Return
Equity Swap agreement was put into place as described in Note 12.
Financial payables also include the 3 billion euro Mandatory Convertible facility stipulated in execution of the Framework
Agreement, dated May 27, 2002, with Capitalia, Banca Intesa, SanPaolo IMI and later Unicredito Italiano (the “Lending Banks”)