annual report - FIAT SpA

Operating lease contracts
The Group has entered operating lease contracts for the right to use industrial buildings and equipment with an
average term of 10-20 years and 3-5 years, respectively. At 31 December 2010 the total future minimum lease
payments under non-cancellable lease contracts are as follows:
(€ million)
due within
one year
due
between
one and
five years
Continuing Operations Discontinued Operations
due
beyond
five years Total
due within
one year
due
between
one and
five years
due
beyond
five years Total
Future minimum lease payments
under operating lease agreements 34 91 99 224 41 71 46 158
The total future minimum lease payments under non-cancellable lease contracts at 31 December 2009 were as
follows:
(€ million)
due within
one year
due between
one and five years
At 31 December 2009
due beyond
five years Total
Future minimum lease payments under operating lease
agreements 77 171 154 402
During 2010, the Group has recorded costs for lease payments of €48 million in Profit/(loss) from Continuing
Operations, and of €45 million in Profit/(loss) from Discontinued Operations. During 2009, the Group recorded costs
for lease payments of €107 million.
Contingent liabilities
As a global company with a diverse business portfolio, the Group is exposed to numerous legal risks, particularly in
the areas of product liability, competition and antitrust law, environmental risks and tax matters. The outcome of any
current or future proceedings cannot be predicted with certainty. It is therefore possible that legal judgments could
give rise to expenses that are not covered, or not fully covered, by insurers’ compensation payments and could affect
the Group’s financial position and results. At 31 December 2010, contingent liabilities estimated by the Group in
connection with Continuing Operations amount to approximately €131 million (approximately €111 million at 31
December 2009), for which no provisions have been recognised since an outflow of resources is not considered to be
probable. Furthermore, contingent assets and expected reimbursement in connection with these contingent liabilities
for approximately €17 million (€20 million at 31 December 2009) have been estimated but not recognised. With
respect to Discontinued Operations, at 31 December 2010 contingent liabilities estimated by the Group amount to
approximately €36 million for which no provisions have been recognised since an outflow of resources is not
considered to be probable.
Instead, when it is probable that an outflow of resources embodying economic benefits will be required to settle
obligations and this amount can be reliably estimated, the Group recognises specific provisions for this purpose.
Furthermore, in connection with significant asset divestitures carried out in prior years, the Group provided indemnities
to purchasers with the maximum amount of potential liability under these contracts generally capped at a percentage
of the purchase price. These liabilities, all relating to Continuing Operations, refer principally to potential liabilities
arising from possible breaches of representations and warranties provided in the contracts and, in certain instances,
environmental or tax matters, generally for a limited period of time. At 31 December 2010, potential obligations with
respect to these indemnities were approximately €859 million (approximately €879 million at 31 December 2009).
Against these obligations, provisions of €60 million (€52 million 31 December 2009) have been made which are
classified as Other provisions. The Group has provided certain other indemnifications that do not limit potential
payment; it is not possible to estimate a maximum amount of potential future payments that could result from claims
made under these indemnities.
The question relating to the participation of certain Fiat Group companies, belonging to the CNH and Iveco sectors, in
the Oil-for-Food program was concluded in 2008 through two settlement agreements signed with the SEC and
US Department of Justice (DOJ). The Fiat Group closed the matter with these authorities by executing a settlement
agreement in 2008. This settlement agreement with the DOJ requires the Fiat Group (and, after the Demerger, the
Fiat Industrial Group) to satisfy certain obligations such as continuing its cooperating with the DOJ and maintaining an
adequate Foreign Corrupt Practices Act prevention program.
Since January 2011, Iveco is subject to an investigation being conducted by the European Commission into certain
business practices of the leading manufacturers of commercial vehicles in the European Union in relation to possible
anti-competitive behaviour. The investigation covers several Member States of the European Union. The Group is
cooperating fully with the European Commission and, since the investigation is at a very preliminary stage, it is not
possible to assess the effects that the investigation may have on the Group, if any.
Fiat Group Consolidated Financial Statements at 31 December 2010 197