annual report - FIAT SpA

These amounts may be analyzed by line as follows:
(€ thousand) 31 December 2010 31 December 2009 Change
Contract work in progress 242,709 237,254 5,455
Florence-Bologna line 161,110 159,355 1,755
Novara-Milan line 81,599 77,899 3,700
Less: Progress payments for work completed 244,479 242,370 2,109
Florence-Bologna line 161,829 160,580 1,249
Novara-Milan line 82,650 81,790 860
Gross amount due to the customer 1,770 5,116 (3,346)
Florence-Bologna line 719 1,225 (506)
Novara-Milan line 1,051 3,891 (2,840)
Contract work in progress is measured on the basis of the stage of completion in relation to the sales price, which in
this case is the consideration contractually agreed for the activities directly carried out by Fiat S.p.A. Contract costs
relating to the contract revenue recognized totaled €97,258 thousand at 31 December 2010 (€95,589 thousand at 31
December 2009). Changes in contract work in progress have been recognized in the income statement under the item
other operating income (see Note 4). When the lines are contractually completed, the final contractual revenues for the
activities directly carried out are recognized in the income statement under other operating income, net of any decrease
in inventories. At the same time the accounts for inventories and amounts classified as advances are closed.
In 2009, the Secondary Final Test Certificate relating to the completion of residual work on the Turin-Novara line was
signed (the Principal Final Test Certificate, relating to approximately 94% of the total value of the line had already been
signed in 2006), representing the final contractual document for the work on the Turin-Novara line, and the project was
closed from an accounting perspective.
Net advances for work completed were as follows:
Advances received from customers Advances paid to suppliers Net advances for work completed
31
31
31
31
31
31
(€ thousand)
December 2010 December 2009 December 2010 December 2009 December 2010 December 2009
Florence-Bologna line 5,177,313 5,086,961 5,015,484 4,926,381 161,829 160,580
Novara-Milan line
Progress payments for
2,268,473 2,245,905 2,185,823 2,164,115 82,650 81,790
work completed 7,445,786 7,332,866 7,201,307 7,090,496 244,479 242,370
Advances relate to amounts received as down payments from the customer T.A.V. S.p.A. at the commencement of the
contracts, which are then recovered as the work progresses. Amounts were as follows:
Contractual advances received from customers Contractual advances paid to suppliers Net contractual advances
31
31
31
31
31
31
(€ thousand)
December 2010 December 2009 December 2010 December 2009 December 2010 December 2009
Florence-Bologna line 993 2,184 955 2,101 38 83
Novara-Milan line 7,914 19,630 7,713 18,964 201 666
Contractual advances 8,907 21,814 8,668 21,065 239 749
At 31 December 2010, bank guarantees and sureties totaling €907 million were given by Fiat S.p.A. to T.A.V. S.p.A.
against contractual advances received, performance of the work and withholding amounts on progress payments.
Under agreements entered into with the consortia mentioned and the institutions issuing the guarantees, €875 million
of the total represents direct liability of the consortia towards the issuing banks and insurance companies, with no joint
responsibility on the part Fiat S.p.A.
More specifically, €498 million in guarantees provided by Fiat S.p.A. to T.A.V. S.p.A. relate to the Bologna-Florence
line, €398 million to the Novara-Milan sub-line and €11 million to the Turin-Novara sub-line (two-year guarantees
issued on the final work subject to testing in 2009).
Indemnities assumed directly by the CAV.E.T. consortium amounted to €481 million, while those for the CAV.TO.MI.
consortium totaled €383 million for the Novara-Milan sub-line and €11 million for the Turin-Novara sub-line.
Release of these guarantees is generally linked to the formal testing (Final Test Certificates) required contractually for
acceptance of the work by the customer, except where other specific conditions have been stipulated.
Finally, for those lines where work was still in progress at year end (Bologna-Florence and Novara-Milan) the lines
were formally handed over to T.A.V. S.p.A. in 2009 and the high-speed line was opened to the public, following the
favorable technical opinion received from the Testing Commission. However, since at 31 December 2010 (as also at 31
Fiat S.p.A. – Statutory Financial Statements at 31 December 2010 302