2006 Annual Report - Fiat SpA

Statement of Changes in Net Industrial Debt
(in millions of euros) 2006 2005
Net industrial debt at beginning of period (3,219) (9,447)
- Net income 1,151 1,419
- Amortisation and depreciation (net of vehicles sold under buy-back commitments) 2,639 2,392
- Change in provisions for risks and charges and other changes (474) (544)
Cash flows from (used in) operating activities during the period, net of change in working capital 3,316 3,267
- Change in working capital 679 92
Cash flows from (used in) operating activities during the period 3,995 3,359
- Investments in tangible and intangible assets (net of vehicles sold under buy-back commitments) (2,854) (2,636)
Cash flows from (used in) operating activities during the period, net of capital expenditures 1,141 723
- Net change in receivables from financing activities 149 409
- Change in scope of consolidation and other changes 106 2,285
Net cash flows from (used in) industrial activities excluding capital contributions and dividends paid 1,396 3,417
- Capital increases, dividends, and purchase/disposal of treasury stock (1) 2,971
- Translation exchange differences 51 (160)
Change in net industrial debt 1,446 6,228
Net industrial debt at end of period (1,773) (3,219)
During 2006 net industrial debt decreased by 1,446 million
euros, mainly due to the positive operating performance. Cash
flow generated by operating activities during the period was
positive by 3,995 million euros (679 million euros of which
attributable to the decrease in working capital), and more than
offset industrial capital expenditures of 2,854 million euros.
Furthermore, the collection of financial receivables from
associated companies and sold companies (Atlanet S.p.A.)
and of financial receivables from others generated 149 million
euros in positive cash flow.
46 Report on Operations Financial Review of the Group
During the fiscal year, the outlay connected with the
repurchase of 29% of Ferrari (total of 919 million euros) was
more than compensated by the proceeds (included in the item
Change in scope of consolidation and other changes), mainly
deriving from the transaction with Crédit Agricole
(approximately 360 million euros) the sale of B.U.C. – Banca
Unione di Credito (254 million euros), of Machen Iveco Holding
SA (which held a 51% shareholding in Ashok Leyland Ltd) for
88 million euros, of Atlanet S.p.A., Sestrieres S.p.A.,
Immobiliare Novoli S.p.A., IPI S.p.A. (total of 120 million euros)
and other minor companies.
Statement of Cash Flows by Activity Segment
2006 2005
Industrial Financial Industrial Financial
(in millions of euros) Consolidated Activities Services Consolidated Activities Services
A) Cash and cash equivalents at beginning of period 6,417 5,517 900 5,767 4.893 873
B) Cash flows from (used in) operating activities during the period:
Net result for the year 1,151 1,151 287 1,420 1,419 249
Amortisation and depreciation (net of vehicles sold
under buy-back commitments) 2,969 2,639 330 2,590 2,392 198
(Gains)/losses and other non-cash items (a) (568) (921) 66 (1,561) (1,923) 114
Dividends received 69 180 1 47 132 3
Change in provisions 229 251 (22) 797 816 (18)
Change in deferred income taxes (26) 12 (38) 394 438 (43)
Change in items due to buy-back commitments (b) (18) 4 (26) (85) (7) (74)
Change in working capital 812 679 136 114 92 13
Total 4,618 3,995 734 3,716 3,359 442
C) Cash flows from (used in) investment activities:
Investments in:
- Tangible and intangible assets (net of vehicles
sold under buy-back commitments) (3,789) (2,854) (935) (3,052) (2,636) (416)
- Investments (1,617) (1,633) (7) (67) (152) (33)
Proceeds from the sale of non-current assets 1,591 1,574 19 500 385 115
Net change in receivables from financing activities (876) 149 (1,025) (251) 409 (660)
Change in current securities 223 65 158 (159) (19) (140)
Other changes (c) 3,078 2,257 822 2.494 2,252 244
Total (1,390) (442) (968) (535) 239 (890)
D) Cash flows from (used in) financing activities:
Net change in financial payables and other financial
assets/liabilities (d) (1,730) (2,256) 526 (2,839) (3,159) 321
Increase in capital stock (d) 16 16 21 – – 119
Disposal of treasury stock 6 6 – – – –
Dividends paid (23) (23) (112) (29) (29) (88)
Total (1,731) (2,257) 435 (2,868) (3,188) (352)
Translation exchange differences (173) (102) (71) 337 214 123
E) Total change in cash and cash equivalents 1,324 1,194 130 650 624 27
F) Cash and cash equivalents at end of period 7,741 6,711 1,030 6,417 5,517 900
of which: cash and cash equivalents included among
Assets held for sale 5 5 – – – –
G) Cash and cash equivalents at end of period as reported
in the financial statements 7,736 6,706 1,030 6,417 5,517 900
(a) In 2005 this item included, among others, the unusual financial income of 858 million euros arising from the conversion of the Mandatory Convertible Facility and the gain of 878 million euros
realised on the sale of the investment in Italenergia Bis.
(b) The cash flows for the two periods generated by the sale of vehicles under buy-back commitments, net of the amount already included in the result, are included in operating activities for the
period in a single item which includes the change in working capital, capital expenditures, depreciation, gains and losses and proceeds from sales at the end of the contract term, relating to
assets included in “Property, plant and equipment”.
(c) The item Other changes includes, for approximately 3 billion euros, reimbursement of loans extended by the Group’s centralised cash management to the financial services companies of Fiat
Auto transferred to the FAFS joint venture. In 2005, the item included, for approximately 2 billion euros, the repayment of the loans granted by the Group’s centralised cash management to
the financial services companies sold by Iveco and, approximately 500 million euros, the effects of the unwinding of the joint ventures with General Motors.
(d) During 2005, the item Increase in capital stock was stated net of the repayment of the Mandatory Convertible Facility (3 billion euros) and of debt of approximately 1.8 billion euros connected
with the Italenergia Bis transaction, as neither of these gave rise to cash flows.
Report on Operations Financial Review of the Group 47