2006 Annual Report - Fiat SpA

Consolidated Balance Sheet
pursuant to Consob Resolution No. 15519 of July 27, 2006
of which of which
Related Related
At December parties At December parties
(in millions of euros) Note 31, 2006 (Note 35) 31, 2005 (Note 35)
ASSETS
Intangible assets (13) 6,421 – 5,943 –
Property, plant and equipment (14) 10,540 – 11,006 –
Investment property (15) 19 – 26 –
Investments and other financial assets: (16) 2,280 58 2,333 79
- Investments accounted for using the equity method 1,719 – 1,762 –
- Other investments and financial assets 561 58 571 79
Leased assets (17) 247 – 1,254 –
Defined benefit plan assets (26) 11 – – –
Deferred tax assets (11) 1,860 – 2,104 –
Total Non-current assets 21,378 22,666
Inventories (18) 8,447 24 7,881 38
Trade receivables (19) 4,944 377 4,969 203
Receivables from financing activities (19) 11,743 191 15,973 73
Other receivables (19) 2,839 145 3,084 34
Accrued income and prepaid expenses (20) 247 – 272 –
Current financial assets: 637 – 1,041 –
- Current investments 31 – 31 –
- Current securities (21) 224 – 556 –
- Other financial assets (22) 382 – 454 –
Cash and cash equivalents (23) 7,736 – 6,417 2
Total Current assets 36,593 39,637
Assets held for sale (24) 332 – 151 –
TOTAL ASSETS 58,303 62,454
LIABILITIES
Stockholders’ equity: (25) 10,036 – 9,413 –
- Stockholders’ equity of the Group 9,362 – 8,681 –
- Minority interest 674 – 732 –
Provisions: 8,611 – 8,698 –
- Employee benefits (26) 3,761 – 3,950 –
- Other provisions (27) 4,850 – 4,748 –
Debt: (28) 20,188 734 25,761 365
- Asset-backed financing 8,344 396 10,729 212
- Other debt 11,844 338 15,032 153
Other financial liabilities (22) 105 – 189 –
Trade payables (29) 12,603 1,005 11,777 621
Other payables (30) 5,019 45 4,821 41
Deferred tax liabilities (11) 263 – 405 –
Accrued expenses and deferred income (31) 1,169 – 1,280 –
Liabilities held for sale (24) 309 – 110 –
TOTAL STOCKHOLDERS’ EQUITY AND LIABILITIES 58,303 62,454
92 Fiat Group Consolidated Financial Statements at December 31, 2006
Notes to the Consolidated
Financial Statements
Principal activities
Fiat S.p.A. is a corporation organised under the laws of the
Republic of Italy. Fiat S.p.A. and its subsidiaries (the “Group”)
operate in more than 190 countries. The Group is engaged
principally in the manufacture and sale of automobiles,
agricultural and construction equipment and commercial
vehicles. It also manufactures other products and systems,
principally automotive-related components, metallurgical
products and production systems. In addition, it is involved
in certain other sectors, including publishing and
communications and service operations, which represent
a small portion of its activities. The head office of the Group
is located in Turin, Italy.
The consolidated financial statements are presented in euros,
the Group’s functional currency.
Significant accounting policies
Basis of preparation
The 2006 consolidated financial statements have been
prepared in accordance with the International Financial
Reporting Standards (the “IFRS”) issued by the International
Accounting Standards Board (“IASB”) and adopted by the
European Union. The designation “IFRS” also includes all
valid International Accounting Standards (“IAS”), as well as
all interpretations of the International Financial Reporting
Interpretations Committee (“IFRIC”), formerly the Standing
Interpretations Committee (“SIC”).
The Fiat Group adopted IFRS on January 1, 2005 when
European Union Regulation No. 1606 of July 19, 2002 came
into effect. The information required by IFRS 1 – First-time
Adoption of International Financial Reporting Standards on
the effects of transition to IFRS was included in the Appendix
to the Consolidated Financial Statements at December 31,
2005, to which reference should be made.
The financial statements are prepared under the historical cost
convention, modified as required for the valuation of certain
financial instruments.
Format of the financial statements
The Fiat Group presents an income statement using a
classification based on the function of expenses within the
Group (otherwise known as the “cost of sales” method), rather
than based on their nature, as this is believed to provide
information that is more relevant. The format selected is that
used for managing the business and for management reporting
purposes and is consistent with international practice in the
automotive sector.
In an income statement in which the classification of expenses
is based on their function, the result from trading operations
is reported specifically as part of the Operating result and
separate from the income and expense resulting from the
non-recurring operations of the business, such as gains and
losses on the sale of investments, restructuring costs and any
other unusual income or expense that are not considered part
of normal trading operations. By doing this, it is believed that
the Group’s actual performance from normal trading
operations may be measured in a better way, while disclosing
specific details of unusual income and expenses.
The definition of unusual income and expenses adopted
by the Group differs from that provided in the Consob
Communication of July 28, 2006, under which unusual and
abnormal transactions are those which, because of their
significance or importance, the nature of the parties involved,
the object of the transaction, the methods of determining the
transfer price or the timing of the event (close to the year end),
may give rise to doubts regarding the accuracy/completeness
of the information in the financial statements, conflicts of
interest, the safeguarding of an entity’s assets or the protection
of minority interests.
For the balance sheet, a mixed format has been selected
to present current and non-current assets and liabilities, as
permitted by IAS 1. In more detail, both companies carrying
out industrial activities and those carrying out financial
activities are consolidated in the Group’s financial statements,
including an entity performing banking activities (disposed
of in 2006 as described below). The investment portfolios of
financial services companies are included in current assets,
as the investments will be realised in their normal operating
cycle. Financial services companies, though, obtain funds only
Fiat Group Consolidated Financial Statements at December 31, 2006 - Notes 93