annual report - FIAT SpA

have been prepared in accordance with accounting principles generally accepted in the United States of America
(“US GAAP”). The following tables reconcile the loss and members’ deficit as published by Chrysler and the
corresponding balances prepared in accordance with International Financial Reporting Standards (“IFRS”), as
adopted by the Fiat Group, for the above-mentioned periods:
At
30 September
At
01/01-30/09/2010 (*)
2010(*) 10/06-31/12/2009 31 December 2009
Members
Members
(€ million) Profit/(loss)
Interest Profit/(loss)
Interest
Prepared in accordance with US GAAP (344) (2,816) (2,614) (2,936)
Reconciling items on:
Development costs 358 495 132 133
“VEBA Note” and “VEBA Trust’s Contribution” (22) 1,131 1,416 1,756
Pension funds and other post-retirement benefits - 662 - 634
Other minor adjustments 21 24 4 3
Prepared in accordance with IFRS
(*) Unaudited.
13 (504) (1,062) (410)
Main reconciling items refer to:
� Development costs: under US GAAP, all development costs are expensed as incurred. Under IFRS,
development costs for vehicle project production are capitalised as intangible assets if the development costs
can be measured reliably and the technical and economic feasibility of the product, volumes and pricing
support the view that the development expenditure will generate future economic benefits. Capitalised
development costs include direct and indirect costs that could be directly attributable to the development
process, incurred by Chrysler starting from 10 June 2009. These costs are subsequently amortised on a
straight-line basis over the production cycle.
� VEBA Note and VEBA Trust’s Contribution: the reconciling item includes differences in the accounting
treatment of the financial liability (“VEBA Note”) of Chrysler to the United Auto Workers’ Retiree Medical
Benefits Trust (the “VEBA Trust”) that results from the settlement of the cumulative post-employment benefits
due to certain retirees of the previous Chrysler (“Old CarCo LLC”, now in liquidation). The reconciling item also
includes the different valuation of the VEBA Trust’s contribution to Chrysler equity. Under US GAAP, the
settlement of the other post employment benefit obligation was recognised on 1 January 2010, as those
accounting principles do not recognise partial settlements. Under IFRS, a partial settlement of the other post
employment benefits obligation was recognised on 10 June 2009. The reconciliation adjustment results from
differences in fair value measurement of the VEBA note payable and equity consideration resulting from
different settlement dates on which the valuation was performed. The effect on equity resulting from the
different accounting treatment of the VEBA Note will reduce substantially over time, over the term of the Note,
with a corresponding entry to profit or loss for the period.
� Pension funds and other post-retirement benefits: under US GAAP, Chrysler immediately recognises actuarial
gains and losses for other post employment benefits plans which are short-term in nature and for which its
obligation is capped. For uncapped plans, Chrysler’s US GAAP accounting policy is to utilise the 10% corridor
approach. Unrealised actuarial gains and losses are recognised in accumulated other comprehensive loss, a
separate component of equity. Under IFRS, the company also applies the corridor approach. However under
IFRS, the cumulative actuarial gains and losses unrealised are not recognised in the balance sheet. Therefore,
a reconciliation adjustment is reflected to reverse unrealised actuarial net losses from equity and decrease the
provision.
For completeness, it is noted that having reached one of the predetermined so called Performance Events envisaged
in the Chrysler-Fiat strategic alliance agreements, on 10 January 2011 Fiat received without consideration an
additional interest of 5% in Chrysler, and therefore its total holding in Chrysler is currently equal to 25%. Further
details about the Fiat Group’s rights relating to the investment in Chrysler may be found in Note 29.
Non-current financial receivables
At 31 December 2010, non-current financial receivables of €40 million (€44 million at 31 December 2009) wholly
classified as Discontinued Operations were pledged as security for loans.
Fiat Group Consolidated Financial Statements at 31 December 2010 159