annual report - FIAT SpA

(€ million)
Allowance for receivables regarding:
At
31 December
2009 Provision
Use and
other
changes
Reclassified to
Discontinued
Operations
At
31 December
2010
Retail financing 230 192 (91) (310) 21
Finance leases 80 22 1 (94) 9
Dealer financing 90 52 (27) (89) 26
Supplier financing 4 - (2) - 2
Other 46 - (2) - 44
Total allowance on Receivables from financing
activities 450 266 (121) (493) 102
Finance lease receivables mainly relate to Discontinued Operations and refer to vehicles of the Trucks and
Commercial Vehicles and Agricultural and Construction Equipment sectors leased out under finance lease
arrangements. The interest rate implicit in the lease is determined at the commencement of the lease for the whole
lease term. The average interest rate implicit in total finance lease receivables varies depending on prevailing market
interest rates. The item may be analysed as follows stated gross of an allowance of €103 million at 31 December
2010 (€80 million at 31 December 2009):
(€ million)
due
within
one year
due
between
one and
five years
At 31 December 2010 At 31 December 2009
due
beyond
five years Total
due
within
one year
due
between
one and
five years
due
beyond
five years Total
Receivables for future minimum
lease payments 540 674 100 1,314 560 731 76 1,367
Less: unrealised interest income (54) (82) (20) (156) (61) (104) (12) (177)
Present value of future minimum
lease payments 486 592 80 1,158 499 627 64 1,190
No contingent rents were recognised as finance leases during 2010 or 2009 and unguaranteed residual values at 31
December 2010 and 2009 are not significant.
Receivables for dealer financing are typically generated by sales of vehicles and are generally managed under dealer
network financing programs as a component of the portfolio of the financial services companies. These receivables
are interest bearing, with the exception of an initial limited, non-interest bearing period. The contractual terms
governing the relationships with the dealer networks vary from sector to sector and from country to country, although
payment terms range from two to six months.
The fair value of receivables from financing activities classified as Continuing Operations at 31 December 2010
amounts to approximately €2,869 million, and the fair value of receivables from financing activities classified as
Discontinued Operations at 31 December 2010 amounts to approximately €11,090 million. At 31 December 2009 the
overall fair value of Receivables from financing activities was €12,876 million. These fair values have been calculated
using a discounted cash flow method based on the following discount rates, adjusted where necessary to take
account of the specific insolvency risk of the underlying financial instrument.
(In %) EUR USD GBP CAD AUD BRL PLN
Interest rate for six months 1.23 0.46 1.05 1.46 5.18 11.62 4.16
Interest rate for one year 1.51 0.78 1.51 1.78 5.20 12.04 4.43
Interest rate for five years 2.56 2.22 2.67 2.61 5.89 12.21 5.47
Other current assets
At 31 December 2010, Other current assets classified as Continuing Operations mainly consist of Other tax
receivables for VAT and other indirect taxes of €765 million, Receivables from employees of €44 million and Accrued
income and prepaid expenses of €118 million; Other current assets also included an amount of €88 million due from
the tax authorities relating to eco-incentives in Italy; the Group will be able to recover this balance by offsetting it
against future payments due to the tax authorities.
At 31 December 2010, Other current assets classified as Discontinued Operations mainly consist of Other tax
receivables for VAT and other indirect taxes of €474 million, Receivables from employees of €22 million and Accrued
income and prepaid expenses of €158 million.
Fiat Group Consolidated Financial Statements at 31 December 2010 163