2006 Annual Report - Fiat SpA

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The wheel that keeps turning won't rust. Ancient Greek proverb Report on Operations 10 The Fiat Group 11 Highlights – Group 13 Highlights by Sector 14 Stockholders 16 Sustainability Report 17 Research and Innovation 21 Human Resources 24 Financial Review of the Group 49 Corporate Governance 53 Stock Options Plans 55 Transactions among Group Companies and with Related Parties 56 Significant Events Occurring since the End of the Fiscal Year and Business Outlook 59 Operating Performance by Sector of Activity 83 Motion for Approval of the Financial Statements and Allocation of the 2006 Net Income
The Fiat Group The Fiat Group performs automotive manufacturing and financial service activities in more than 190 countries. Below is a description of how the Group is currently structured, as a result of its refocusing on the automotive business. Reporting of Group activities was redefined by Business Areas as follows: Automobiles Fiat Auto produces and sells automobiles (Fiat, Alfa Romeo and Lancia brands) and light commercial vehicles (Fiat Light Commercial Vehicles brand). The Sector’s main financing activities in Europe were grouped into Fiat Auto Financial Services, a 50-50 joint venture established at the end of 2006 with Crédit Agricole. The Sector is represented by Fiat Auto S.p.A. and its subsidiaries. On February 1, 2007, Fiat Auto S.p.A. changed name to “Fiat Group Automobiles S.p.A.”, and four new companies were formed at the same time, 100% owned by Fiat Group Automobiles S.p.A.: “Fiat Automobiles S.p.A.”, “Alfa Romeo Automobiles S.p.A.”, “Lancia Automobiles S.p.A.” and “Fiat Light Commercial Vehicles S.p.A.”. The operations and the personnel will remain at Fiat Group Automobiles S.p.A. The Fiat Group also controls Maserati and Ferrari. They produce luxury sports cars that excel for their exclusive characteristics, technology and performance. Agricultural and Construction Equipment CNH – Case New Holland operates in the field of tractors and agricultural equipment through the Case IH and New Holland brands and in the construction equipment business through the Case and New Holland brands. Its financial services provide support to its end customers and dealers. Trucks and Commercial Vehicles Iveco designs, produces and sells a complete line of commercial vehicles under the Iveco brand, buses under the Irisbus brand, and fire-fighting and special purpose vehicles under the Iveco, Astra and Magirus brands. In addition, Iveco provides a wide range of financing services to its customer and dealers mainly through Iveco Finance Holdings Ltd, a company 51% owned by the Barclays Group and 49% by Iveco. 10 Report on Operations The Fiat Group Components and Production Systems Fiat Powertrain Technologies (FPT) is the Sector which groups all passenger car engine and transmission activities. Fiat regained control over these activities in May 2005 following termination of the Master Agreement with General Motors. Starting in 2006, the Sector also includes the powertrain operations of Iveco and of the Centro Ricerche Fiat (Fiat Research Centre). Within the framework of its technological development projects, FPT coordinates Elasis’ powertrain activities. Magneti Marelli produces components for lighting systems, exhaust systems, suspensions and shock absorbers, engine control units, and electronic systems. Teksid supplies engine blocks, cylinder heads and other cast-iron components for engines; cast-iron components for transmissions, gearboxes and suspensions; and magnesium bodywork components. Comau produces industrial automation systems for the automotive industry in the areas of product and process engineering, logistics and management, manufacturing, installation, production start-up and maintenance. Other Businesses This area includes the Services Sector (Business Solutions) and the Publishing and Communications Sector, engaged in the following businesses: ■ Services in the areas of personnel administration and administrative and corporate finance consulting, mainly provided to Group companies. As of January 1, 2007, Business Solutions’ activities were transferred to Fiat Services S.p.A., a company that will provide services exclusively to the Fiat Group (starting from 2007 Fiat Services will be included among Holding companies & Other companies). The Business Solutions Sector will therefore no longer be represented. ■ The La Stampa daily newspaper and Publikompass, a company that sells advertising space for multimedia customers. Other Businesses also include Holding companies and Other companies. Highlights – Group (in millions of euros) 2006 2005 Net revenues 51,832 46,544 Trading profit 1,951 1,000 Operating result 2,061 2,215 Income before taxes 1,641 2,264 Net result for the year 1,151 1,420 Attributable to: - Equity holders of the parent 1,065 1,331 - Minority interests 86 89 Basic earnings per ordinary and preference share (in euros) (1) 0.789 1.250 Basic earnings per savings share (in euros) (1) 1.564 1.250 Normalised basic earnings per ordinary and preference share (in euros) (2) 0.828 1.250 Normalised basic earnings per savings share (in euros) (2) 0.983 1.250 Diluted earnings per ordinary and preference share (in euros) (1) 0.788 1.250 Diluted earnings per savings share (in euros) (1) 1.563 1.250 Investments in tangible and intangible assets 3,789 3,052 - of which: Capitalised R&D costs 813 656 R&D expenses (3) 1,598 1,558 Total Assets 58,303 62,454 Net debt 11,836 18,523 - of which: Net industrial debt 1,773 3,219 Stockholders’ equity before minority interest 10,036 9,413 Group interest in stockholders’ equity 9,362 8,681 Employees at year-end (number) 172,012 173,695 (1) For additional information on the calculation of basic and diluted earnings per share see Note 12 of the Notes to the Consolidated Financial Statements. (2) Normalised earnings per share have been calculated excluding the effects arising from the assignment of prior period dividends to savings shares. (3) This amount includes capitalised R&D costs and costs charged directly to operations during the fiscal year. Selected data by region Number of Number of Number of Number of R&D Revenues Companies Employees Facilities Centres (in millions of euros) 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 Italy 146 155 75,751 77,070 52 56 50 52 14,851 13,078 Europe excluding Italy 285 280 42,904 43,376 56 58 32 32 20,298 18,518 North America 76 80 11,714 12,572 25 28 15 17 6,315 6,048 Mercosur 31 40 30,877 29,132 20 20 10 10 5,416 4,364 Other regions 99 99 10,766 11,545 27 27 9 9 4,952 4,536 Total 637 654 172,012 173,695 180 189 116 120 51,832 46,544 Report on Operations Highlights – Group 11
Page 1 and 2: Annual Report Consolidated and Stat
Page 3 and 4: But it does move. Galileo Galilei
Page 5: Letter from the Chairman and the Ch
Page 9 and 10: Stockholders Financial communicatio
Page 11 and 12: in 2003, and now the Panda Hydrogen
Page 13 and 14: The meeting with the EWC Selected C
Page 15 and 16: Revenues by Business Area (in milli
Page 17 and 18: The breakdown of trading profit by
Page 19 and 20: Investment income was 156 million e
Page 21 and 22: If working capital is restated to i
Page 23 and 24: Financial Services Revenues (in mil
Page 25 and 26: Statement of Changes in Net Industr
Page 27 and 28: strategic consistency, economic fea
Page 29 and 30: The Board of Directors, at its meet
Page 31 and 32: There can be no motion without some
Page 33 and 34: Fiat Auto - Fiat, Alfa Romeo, Lanci
Page 35 and 36: Maserati Operating Performance In 2
Page 37 and 38: Trucks and Commercial Vehicles Ivec
Page 39 and 40: Fiat Powertrain Technologies Operat
Page 41 and 42: Metallurgical Products - Teksid Pro
Page 43 and 44: Motion for Approval of the Financia
Page 45 and 46: Consolidated Income Statement (*) (
Page 47 and 48: Statement of Changes in Stockholder
Page 49 and 50: partially from the market: the rema
Page 51 and 52: Measurement Investments in unconsol
Page 53 and 54: charges for risk provisions and wri
Page 55 and 56: Union market for the Fiat Auto and
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Composition and principal changes I
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Net financial expenses in 2006 (exc
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Year of expiry Total at December Be
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The net carrying amount of Intangib
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14. Property, plant and equipment I
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In 2005 Changes in accumulated depr
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esulting in a reduction of 1,213 mi
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Receivables from financing activiti
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(the residual debt of the Exchangea
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The reconciliation of the number of
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A summary of outstanding stock opti
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Under the CNH EIP, performance-base
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26. Provisions for employee benefit
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Changes in the present value of Pos
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■ Commercial risks - This provisi
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31, 2006 (872 million euros at Dece
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Fidis Retail Italia (FRI) All the r
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Other and Magneti Business elimina-
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Credit risk The maximum credit risk
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The increase over the prior year re
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■ Current trade receivables of 78
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The book value at the disposal date
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198 Appendix The Companies of the F
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Subsidiaries consolidated on a line
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% of Group % of consoli- Interest %
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Subsidiaries accounted for using th
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234 Financial Review of Fiat S.p.A.
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(*) (*) Income Statement Balance Sh
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Income Statement pursuant to Consob
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When an impairment loss on assets s
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Provisions The company recognises p
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4. Other operating income Other ope
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Net income from derivative financia
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12. Property, plant and equipment T
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15. Other non-current assets At Dec
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Regarding changes in 2005, the Mand
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A summary of outstanding stock opti
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The amounts recognised in the Incom
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The item Payables to Group companie
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These relate to: ■ guarantees of
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Counterparty Other Current Other No
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32. Significant non-recurring trans
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Fees paid to Members of the Board o
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Financial statement format Fiat S.p
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Deferred tax assets Reclassificatio
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Reconciliation of net profit (loss)
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B. Employee benefits The employees
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Auditors’ Reports Auditors’ Rep
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Reports of the Board of Statutory A
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that numerous transactions involvin
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Motion for Approval of the Financia
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Motion to amend Articles 9, 11, 12,
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Stockholders Meeting and will be ef
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Graphic design Atelier Roger Pfund,
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2006 Annual Report - Fiat SpA

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