2006 Annual Report - Fiat SpA

Changes that occurred in 2006 may be summarised as follows:
■ In May 2006, in order to re-balance the equity structure inside the Group, the capital stock of the subsidiaries Fiat Partecipazioni
S.p.A and Fiat Netherlands Holding N.V. was increased by 6,000,000 thousand euros and 121,126 thousand euros respectively.
■ In May 2006, Ferrari S.p.A. increased its capital stock through the issuance of 104,000 new shares servicing its stock option plans.
Fiat S.p.A. subsequently acquired 93,600 newly-issued shares of Ferrari S.p.A. for 26,713 thousand euros and sold 5,200 shares for
1,484 thousand euros, the latter as part of its agreements with Mubadala Development Company PJSC, bringing its interest therein
to 56.4%.
■ At the end of September 2006, Fiat S.p.A. exercised its call option and repurchased 28.6% of the capital stock of Ferrari S.p.A. from
Mediobanca S.p.A. (and the other members of the syndicate), increasing its interest therein from 56.4% to 85%. The call option was
part of the agreements signed with Mediobanca S.p.A. in connection with the sale in 2002 aimed at listing the Ferrari S.p.A. shares.
The above transaction led to an increase in the carrying amount of the investment equal to the purchase price of 892,555 thousand
euros, including related charges, net of the release of the provision of 23,256 thousand euros accrued in previous years against the
company’s obligation to Mediobanca S.p.A. which was subject to the latter’s execution of the listing of Ferrari S.p.A. shares (see
Note 24). The remaining rights agreed with Mediobanca S.p.A. have now ceased. Fiat has a call option exercisable from January 1,
2008 to July 31, 2008 on a further 5% of the Ferrari shares held by Mubadala Development Company at a pre-determined price of
303 euros per share (for a total of 122,776 thousand euros) less any dividend that may be distributed.
■ In December 2006, Fiat Netherlands Holding N.V. decreased its capital stock and transferred its 100% investment in Iveco S.p.A.
to its stockholders (Fiat S.p.A. and Fiat Partecipazioni S.p.A.) on the basis of their ownership percentage. Fiat S.p.A. thus obtained
519,871,290 Iveco S.p.A. shares, equal to 60.56% of the capital stock, at the same value as the previous carrying amount in the
financial statements of Fiat Netherlands Holding N.V. (approximately 1.245 euros per share). At the same time it decreased its
investment in Fiat Netherlands Holding N.V. by the same amount (647,476 thousand euros). Since the transaction involved directly
and indirectly wholly owned subsidiaries of Fiat S.p.A., carrying amounts were left unchanged throughout the operation. As a
result, the accumulated impairment losses recognised by Fiat S.p.A. in previous years due to the impairment losses related to
Iveco S.p.A. have not been adjusted.
Impairment losses and the reversals of impairment losses arise from the application of the cost method (see Note 2).
A full list of investments with the additional disclosures required by Consob in its communication no. DEM/6064293 of July 28,
2006 is attached.
Investments in other companies and the changes that occurred are set out below:
Disposals/
At Acquisitions/ Capital Fair value At
(in thousands of euros) % interest December 31, 2005 Capital increases reimbursements adjustments December 31, 2006
Mediobanca S.p.A. 1.84 227,107 13,544 27,605 268,256
Fin.Priv. S.r.l. 14.28 14,355 14,355
Consortium S.r.l. 2.76 19,530 (19,243) 287
Assicurazioni Generali S.p.A. 0.01 4,567 892 5,459
Total investments in other companies 260,992 18,111 (19,243) 28,497 288,357
264 Fiat S.p.A. Financial Statements at December 31, 2006 - Notes to the Financial Statements
The increase in the investments in Mediobanca S.p.A. and Assicurazioni Generali S.p.A. shown in the column Acquisitions/Capital
increases is the result of the winding up of Consortium S.r.l. and the consequent transfer to its shareholders of the shares that the
company held in Mediobanca S.p.A. and Assicurazioni Generali S.p.A. on the basis of their investments. The transfer prices were
determined on the basis of the market price of the shares.
Fiat S.p.A has measured its investments in Mediobanca S.p.A. and Assicurazioni Generali S.p.A. on the basis of the market price
of the shares at year end. This led to an increase in the carrying amount of the investments, recognised directly in equity at year end.
There are no entities in Investments in other companies for whose obligations Fiat S.p.A. has unlimited responsibility (article 2361,
paragraph 2 of the Italian civil code).
At December 31, 2005 and 2006 there were no investments given as security for financial or contingent liabilities.
14. Other financial assets
Other financial assets may be analysed as follows:
At At
(in thousands of euros) December 31, 2006 December 31, 2005 Change
Call option on Ferrari S.p.A. shares 10,032 – 10,032
Fees receivables for guarantees given 10,029 5,262 4,767
Debt securities 73 73 –
Total Other financial assets 20,134 5,335 14,799
The call option on Ferrari S.p.A. shares has been measured at the amount of the premium paid in October 2006 and relates to 5%
of the capital stock of Ferrari S.p.A. held by the Arab Mubadala Development Company PJSC fund. The option may be exercised
at a price of 303 euros per share from January 1, 2008 to July 31, 2008. It has been recognised at cost since its fair value cannot
be reliably measured.
Fees receivables for guarantees given are measured at the present value of the fees to be received in future years for guarantees
provided by the company (mainly for guaranteeing loans obtained by Group companies).
Debt securities consist of listed Italian State securities pledged to fund scholarship grants.
A breakdown of other financial assets by maturity date is as follows:
At At
(in thousands of euros) December 31, 2006 December 31, 2005
Other financial assets
due within one year 2,512 1,331
due after one year but within five years 17,578 3,044
due after five years 44 960
total 20,134 5,335
Fiat S.p.A. Financial Statements at December 31, 2006 - Notes to the Financial Statements 265