annual report - FIAT SpA

elates to the restructuring programs of the following sectors (in € million): Fiat Group Automobiles 88; Components
48; Fiat Powertrain 17; Production Systems 10; Metallurgical Products 7; other sectors 32.
The restructuring provision classified as Discontinued Operations comprises at 31 December 2010 the estimated
amount of benefits payable to employees on termination in connection with restructuring plans totalling €43 million,
other costs for exiting activities amounting to €1 million and other costs totalling €49 million; the total balance at 31
December 2010 relates to restructuring programs of the sectors FPT Industrial (€53 million), Agricultural and
Construction Equipment (€24 million) and Trucks and Commercial Vehicles (€16 million).
The restructuring provision at 31 December 2009 comprised the estimated amount of benefits payable to employees
on termination in connection with restructuring plans amounting to €294 million, other costs for exiting activities
amounting to €32 million and other costs totalling €33 million. Taken overall the balance related to the restructuring
programs in the following sectors (in € million): Fiat Group Automobiles 101, Components 73; Agricultural and
Construction Equipment 50, FPT Powertrain Technologies 63, Trucks and Commercial Vehicles 17; Production
Systems 15; Metallurgical Products 9; other sectors 31.
The provision for other risks represents the amounts set aside by the individual companies of the Group principally in
connection with contractual and commercial risks and disputes. The more significant balances of these provisions are
as follows:
At 31 December 2010 At 31 December 2009
(€ million)
Continuing Discontinued
Operations Operations Total Total
Sales incentives 378 637 1,015 829
Legal proceedings and other disputes 535 252 787 743
Commercial risks 277 431 708 677
Environmental risks 33 38 71 71
Indemnities 60 - 60 53
Other reserves for risk and charges 739 82 821 724
Total Other risks 2,022 1,440 3,462 3,097
A description of these follows:
� Sales incentives - this provision relates to sales incentives that are offered on a contractual basis to the Group’s
dealer networks, primarily on the basis of that dealers will achieve a specific cumulative level of sales
transactions during the calendar year. This provision is estimated based on the information available regarding
the sales made by the dealers during the calendar year. The provision also includes sales incentives such as
cash rebates announced by the Group and provided by dealers to customers, for which the dealers are
reimbursed. The Group records this provision when it is probable that the incentive will be provided and the
Group’s inventory is sold to its dealers. The Group estimates this provision based on the expected use of these
rebates with respect to the volume of vehicles that has been sold to the dealers.
� Legal proceedings and other disputes - this provision represents management’s best estimate of the liability to
be recognised by the Group with regard to:
Legal proceedings arising in the ordinary course of business with dealers, customers, suppliers or
regulators (such as contractual or patent disputes).
Legal proceedings involving claims with active and former employees.
Legal proceedings involving different tax authorities.
None of these provisions is individually significant. Each Group company recognises a provision for legal
proceedings when it is deemed probable that the proceedings will result in an outflow of resources. In
determining their best estimate of the probable liability, each Group company evaluates their legal proceedings
on a case-by-case basis to estimate the probable losses that typically arise from events of the type giving rise
to the liability. Their estimate takes into account, as applicable, the views of legal counsel and other experts,
the experience of the Group and others in similar situations and the Group’s intentions with regard to further
action in each proceeding. Fiat’s consolidated provision combines these individual provisions established by
each of the Group’s companies.
� Commercial risks - this provision includes the amount of obligations arising in connection with the sale of
products and services such as maintenance contracts. An accrual is recorded when the expected costs to
complete the services under these contracts exceed the revenues expected to be realised.
Fiat Group Consolidated Financial Statements at 31 December 2010 188