2006 Annual Report - Fiat SpA

The following acquisitions were made in 2006 and mainly
relate to the purchase of minority interests in companies
in which the Group already held control:
■ On March 23, 2006, Fiat’s privileged “Series A” shares in
CNH Global N.V. were converted into 100 million new ordinary
shares of CNH Global N.V.; as a result, the Group increased its
holding from 84% to 90%. This operation did not lead
to significant effect in the Group’s consolidated financial
statements.
■ During the second quarter of 2006 Ferrari S.p.A. increased
its capital stock by the issue of 104,000 new shares, for use
in connection with its stock option plans. Fiat S.p.A.
subsequently acquired 93,600 of these newly-issued shares,
increasing its interest in the company to 56.4%.
■ On September 29, 2006, Fiat exercised its call option on
28.6% of the shares of Ferrari S.p.A., taking its holding from
56.4% to 85%. Fiat has a call option on a further 5% of Ferrari
shares, currently held by the Arab fund Mubadala Development
Company after the Fund had acquired 5,200 Ferrari newlyissued
shares from Fiat. The call option may be exercised
between January 1, 2008 and July 31, 2008.
■ On October 17, 2006, Ferrari acquired a 90% share in Ferrari
Financial Services AG.
The following divestitures of subsidiaries were made in 2006:
■ The procedure for the sale of the subsidiary Atlanet S.p.A.
to the British Telecom group was for the most part finalised
in the first quarter of 2006 on receiving the approval of the
Guarantor Authority for Competition and the Market; the
transaction was finally concluded with the sale of the Polish
and Brazilian businesses in the second half of 2006.
■ Fiat sold its investment in Sestrieres S.p.A. to Via Lattea
S.p.A. on June 29, 2006.
■ On August 30, 2006, Teksid S.p.A sold its holding in Société
Bretonne de Fonderie et Mecanique.
108 Fiat Group Consolidated Financial Statements at December 31, 2006 - Notes
■ On August 31, 2006, Fiat sold its holding in Banca Unione
di Credito (B.U.C.) to BSI (a company of the Generali Group).
■ On November 10, 2006, the subsidiary Comau Pico sold
its Autodie business to Mbtech Stuttgart.
■ Finally, on December 28, 2006, Fiat Auto and Crédit Agricole
completed the transaction for the creation of a 50/50 joint
venture, Fiat Auto Financial Services (“FAFS”), which will
handle Fiat Auto’s main financing activities in Europe (retail
auto financing, dealership financing, and long-term car rental
and fleet management). In particular:
– Synesis Finanziaria (a company held equally by Unicredito,
Banca Intesa, Capitalia, and San Paolo-IMI) held 51% interest
in Fidis Retail Italia (“FRI”), which was sold to Fiat Auto,
upon exercise of its call option, for 479 million euros. FRI, a
company controlling the Fiat Auto European retail financing
activities, subsequently changed its corporate name to Fiat
Auto Financial Services S.p.A. (“FAFS”);
– FAFS acquired other Fiat Auto subsidiaries currently active
in the European Fiat Auto dealer financing and renting
business;
– Fiat Auto sold to Sofinco, the wholly owned consumer credit
subsidiary of Crédit Agricole, 50% of the capital stock of
FAFS for a total cash consideration of 940 million euros
subject to usual price adjustment clauses;
– Crédit Agricole/Sofinco refinanced FAFS for the entire debt
with the Fiat Group and part of their debt to third parties.
For the Fiat Group these transactions resulted in a capital gain
of 463 million euros, an increase in cash of more than 3 billion
euros (including the repayment of intercompany loans) and a
reduction in net industrial debt by approximately 360 million
euros.
The effect on the Group’s assets and liabilities of the
mentioned acquisitions and divestitures of businesses are
described in Note 36.
In addition, the Group entered certain agreements during
the year that led to the need to reclassify the businesses
concerned as Assets and Liabilities held for sale. In particular:
■ The Fiat Group and Norsk Hydro reached an agreement on
December 6, 2006, for the sale of their interests in Meridian
Technologies Inc., 51% and 49% respectively, to a consortium
of investors headed by the Swiss holding company Estatia AG.
The total value of the transaction, subject to usual price
adjustment conditions, is worth approximately 200 million
Canadian dollars. The transaction is subject to the
authorisations from authorities (received in 2007) and to
the closing of the financing to the purchaser from financial
institutions.
■ On December 14, 2006, Fiat Auto and Tata Motors reached
an agreement for the establishment of an industrial joint
venture located at the Fiat plant at Ranjangaon, in India.
■ Fiat has reached on December 15, 2006, an agreement with
Pirelli Re Facility management for the sale of the subsidiary
Ingest Facility S.p.A. The sale will be carried out on the basis
of a total value of approximately 50 million euros subject to
usual price adjustments clauses and will be finalised after
antitrust authorisation have been received.
Other information
Certain reclassifications have been made to the balance sheet
reported in the published consolidated financial statements
at December 31, 2005 in arriving at that presented in these
financial statements as comparative figures. These
reclassifications have no effect on the net result or
stockholder’s equity. In particular:
■ Certain debt amounting to 519 million euros and previously
classified in the balance sheet at December 31, 2005 as Other
debt has been reclassified to Asset-backed financing in the
comparative balance sheet presented in these financial
statements, as it substantially relates to the securitisation
of receivables. This reclassification does not, however, alter
the total amount presented as Debt at that date.
■ Following a detailed analysis of the composition of its
balance sheet provisions, the Group has reclassified certain
pension funds previously included as Other provisions. This
resulted in a reclassification of a net liability balance of 31
million euros at December 31, 2005, of which 133 million euros
relates to the present value of the obligation and 102 million
euros to the fair value of the plan assets (the corresponding
figures at January 1, 2005 were 120 million euros and 86
million euros respectively).
Fiat Group Consolidated Financial Statements at December 31, 2006 - Notes 109