in the First Half of 2003 98th Fiscal Year - FIAT SpA

OPERATING PERFORMANCE AND FINANCIAL POSITION
OF FIAT S.P.A.
Operating Performance
The loss of Fiat S.p.A. in the first half of 2003 was 159 million
euros, compared with a net income of 654 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 2003 1st half 2002
Investment income 282 290
Adjustments (224) –
Net financial expenses (93) (9)
Cost of personnel and services, less revenues (52) (62)
Net extraordinary income (expenses) (16) 628
Income taxes (56) (193)
Net result (159) 654
Investment income of 282 million euros is in line with the result
of the first half of 2002. It consists of dividends, including the
respective tax credits, paid by subsidiaries and associated
companies.
The adjustments of 224 million euros largely reflect writedowns
in the book value of the following subsidiaries: Fiat Netherlands
Holding N.V. following the losses recorded by the subsidiary
CNH (93 million euros), Comau B.V. (73 million euros) and Iveco
N.V. (42 million euros).
Net financial expenses totaled 93 million euros (9 million euros
in the first half of 2002) 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
52 million euros (62 million euros in the first half of 2002).
In particular:
❚ The cost of personnel and services came to 113 million euros,
compared with 114 million euros in the first half of 2002. The
Company’s staff averaged 173 employees, compared with 211
in the first half of 2002.
❚ Revenues totaled 61 million euros, compared with 52 million
euros in the first half of 2002. They included royalties from
the license to use the Fiat trademark and fees for services
rendered by management personnel.
Net extraordinary expenses amounted to 16 million euros and
included commissions owed to Mediobanca for the future listing
of Ferrari S.p.A. shares. In the first half of 2002 net extraordinary
income represented the capital gain, net of expenses incurred,
upon sale of 34% of Ferrari S.p.A. to Mediobanca S.p.A.
Income taxes totaled 56 million euros, compared with 193 million
euros in the first half of 2002. These amounts do not include the
tax credits on dividends listed under “investment income”.
17 Operating Performance and Financial Position of the Fiat Group and Fiat S.p.A.
in the First Half of 2003
Financial Position
The balance sheet of Fiat S.p.A. is summarized as follows:
(in millions of euros) 6/30/2003 12/31/2002 Change
Fixed assets 9,409 8,144 1,265
Working capital (96) (169) 73
Net invested capital 9,313 7,975 1,338
Stockholders’ equity 5,775 5,934 (159)
Net borrowings 3,538 2,041 1,497
Fixed assets consist mainly of investments in the Group’s
companies, which at June 30, 2003 totaled 9,324 million euros,
up from 8,050 million euros at December 31, 2002.
The net increase of 1,274 million euros largely reflects the
amounts subscribed for the rights offering of Fiat Netherlands
Holding N.V. (1,382 million euros) for the 74% investment held
by Fiat S.p.A. and Comau B.V. (100 million euros), net of the
writedowns previously described.
Working capital includes payables to Tax Authorities, suppliers,
and employees of 112 million euros net of receivables, and
ordinary treasury stock of 16 million euros (2,330,420 shares,
or 0.54% of total stock, with a par value of 12 million euros).
Working capital increased by 73 million euros compared with
December 31, 2002 due to higher tax credits.
Stockholders’ equity totaled 5,775 million euros at June 30,
2003, compared with 5,934 million euros at December 31, 2002.
The decrease of 159 million euros reflects the loss for the
period.
Net borrowings totaled 3,538 million euros. They increased by
1,497 million euros from December 31, 2002, mainly due to the
investments in equity holdings previously described.