01-Relazione UK 2004 - FIAT SpA

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01-Relazione UK 2004 - FIAT SpA Powered By Docstoc
					                               Annual Report
Consolidated and Statutory Financial Statements
                         at December 31, 2003




                                98th Fiscal Year
                        Annual Report at December 31, 2003




Stockholders’ Meeting   Stockholders are invited to attend the ordinary and extraordinary
                        meeting of stockholders to be held at the Fiat Historical Center
                        in Turin, via Chiabrera 20, at 1:00 p.m. on May 8, 2004 on the
                        first call, on May 10 on the second call for the extraordinary
                        session only, and on May 11 on the second call for the ordinary
                        session and on the third call for the extraordinary session,
                        to resolve on the following

             Agenda     1. Consolidated and Statutory Financial Statements
                           at December 31, 2003 and Report on Operations;
                           pertinent and related resolutions.
                        2. Coverage of Directors’ civil liability in connection with
                           their office.
                        3. Motion to amend the Articles of Association and
                           pertinent resolutions connected to:
                          ❚ the enactment of Legislative Decrees 6/2003 and 37/2004
                            (reform of corporate law);
                          ❚ reduction of the minimum required equity interest
                            needed to submit a list of candidates for the Company
                            Board of Statutory Auditors;
                          ❚ amount of expenses borne by the Company to
                            safeguard common interests of holders of preference
                            and savings shares.




                        Fiat S.p.A.
                        Head Office: 250 Via Nizza, Turin, Italy
                        Paid-in capital: 4,918,113,540 euros
                        Entered in the Turin Company Register
                        Fiscal Code: 00469580013
                                  Contents


     Stockholders’ Meeting                                          65   Fiat Group – Consolidated Financial Statements
        Agenda                                                           at December 31, 2003
                                                                    66       Balance Sheet
     Board of Directors and Control Bodies
                                                                    71       Statement of Operations
 4   Report on Operations                                           73       Notes to the Consolidated Financial Statements
 4      Overview                                                   119       Annex to the Notes to the Consolidated
 7      The Fiat Group                                                       Financial Statements
 8      Highlights of Results                                      120         The Companies of the Fiat Group
 9      Financial and Operating Highlights by Sector
                                                                   145   Fiat S.p.A. – Financial Statements at December 31, 2003
10      Stockholders
                                                                   146       Balance Sheet
12      Fiat Group Relaunch Plan
                                                                   149       Statement of Operations
13      Products and Services
                                                                   151       Notes to the Financial Statements
15      Innovation and Technology
17      Environment                                                189   Auditors’ Reports
18      Human Resources
                                                                   191   Reports of the Board of Statutory Auditors
20      Analysis of the Financial Position and Operating Results
        of the Fiat Group and Fiat S.p.A.                          195   Other Items on the Agenda and Related Reports
35      Process of Transition to International                           and Motions
        Accounting Standards (IAS/IFRS)                            195      Coverage of Directors’ Civil Liability
37      Corporate Governance                                       196      Motion to Amend the Articles of Association
41      Stock Option Plans                                                  and pertinent Resolutions
42      Transactions among Group Companies and
        with Related Parties
44      Significant Events occurring Since the End
        of the Fiscal Year and Business Outlook
45      Operating Performance – Sectors of Activity
46         Automobiles
50         Agricultural and Construction Equipment
53         Commercial Vehicles
56         Ferrari and Maserati
58         Components
59         Production Systems
60         Metallurgical Products
61         Services
62         Publishing and Communications
63      Motion to Cover the Loss for Fiscal 2003




                                                                   This report has been translated into English from the original
                                                                   version in Italian.
                                                                   In case of doubt the Italian version prevails.
Board of Directors and Control Bodies


Board of Directors


                     Chairman     Umberto Agnelli (1)

        Chief Executive Officer   Giuseppe Morchio (1)



                     Directors    Angelo Benessia (2)
                                  Luca Cordero di Montezemolo
                                  Flavio Cotti (1)
                                  John Elkann
                                  Luca Garavoglia (2)
                                  Franzo Grande Stevens (1) (3)
                                  Hermann Josef Lamberti (1)
                                  Sergio Marchionne (2)
                                  Daniel John Winteler

                                  (1) Member of the Nominating and Compensation Committee
                                  (2) Member of the Audit Committee
                                  (3) Secretary of the Board




Board of Statutory Auditors

            Statutory Auditors    Cesare Ferrero – Chairman
                                  Giuseppe Camosci
                                  Giorgio Ferrino


            Alternate Auditors    Giorgio Giorgi
                                  Natale Ignazio Girolamo
                                  Piero Locatelli




External Auditors                 Deloitte & Touche S.p.A.
                                  4




                                   Report on Operations




   Overview
   Dear Stockholders,

   The 2003 results were a net loss of 1.9 billion euros,           at year-end are the first tangible benefits of the actions undertaken
compared with 4.2 billion euros a year earlier. The progress        for the industrial and financial relaunch of the Fiat Group.
we have made underscores that we are on the way to recovery
                                                                        The gains made are all the more significant considering
and confirms the effectiveness of the tools we have chosen.         that, in 2003, the Fiat Group underwent the most profound
     The 2003 fiscal year can be divided into two distinct          transformation in its history while confronting major external
periods: the first nine months, during which the Group’s            challenges.
performance was penalized by the consequences of the                    The Company’s financial and industrial crisis was tackled in
difficult situation encountered in 2002, but reflected a            an international environment characterized by weak economic
significant improvement in cost containment, and the closing        growth, political instability and intensified competition.
quarter, when all indicators of the operating and financial
                                                                         The Group, working with determination to overcome these
performance showed clear signs of a turnaround, as the              challenges, adopted a clear strategy focused on relaunching
Group began to benefit from the introduction of new models.         its automotive businesses. This approach won the full support
This improvement enabled us to begin 2004 with strong               of the Group’s lending banks and, more generally, the entire
momentum, which is reflected in the results for the first           Italian business establishment.
three months of the current year.
                                                                        The painful but necessary choice to dispose of some of the
   The sizable reduction in operating and net loss and the          Group’s operations, coupled with a capital increase and other
improvement in the result before taxes and net financial position   financial transactions, generated over 9 billion euros in liquidity.
                                    5            Report on Operations   Overview




   The definition and implementation of the Relaunch Plan                    To improve our businesses cost competitiveness, we
and the early introduction of new products marked the first             will complete our previously announced plans to restructure
concrete steps in the process of streamlining the Group’s               our manufacturing organization, while remaining mindful
corporate organization and relaunching its businesses.                  of the social impact of each of our actions.
                                                                            The environment in which we expect to operate in
                              * * *                                     the months ahead continues to be characterized by mixed
                                                                        prospects. While the global economy is expected to grow
                                                                        by 4%, driven mainly by growth in the United States and
     In 2004, the Group’s Sectors are continuing the process
                                                                        Southeast Asia, the gains will be significantly smaller in
of industrial restructuring and rationalization that is already
                                                                        Europe, and in Italy in particular.
underway, while working hard to improve their profitability.
                                                                           As a result, the automotive markets are expected to
     The entire Group is committed to the success of this effort.
It is a difficult and challenging job that will require Fiat to find    hold relatively steady or undergo little changes, which will
structural solutions for any open industrial and commercial             cause carmakers to pursue very aggressive sales strategies.
issues. The Group’s Sectors and companies will be supported
in their endeavors by two main factors.
                                                                                                      * * *
    The first one is a strong balance sheet, with a liquidity
of approximately 7 billion euros.
                                                                            During the first three months of 2004, demand for
    The second is the operating tools that are available today          automobiles and commercial vehicles in the markets where
to help all Sectors across the board accelerate the achievement
                                                                        the Group operates showed virtually no change from the
of improved results. These tools include: the individual Sector
                                                                        previous year, but shipments of agricultural equipment were
growth plans resulting from the overall Relaunch Plan; a
                                                                        up significantly in North America. Within this framework,
stronger senior management team; the vast number of new
                                                                        the results for the first quarter confirm that the upward trend
projects (more than 800) that are being implemented under
                                                                        that started late in 2003 is continuing.
the Relaunch Plan; and the powerful lever of technological
innovation, which is benefiting from the new stimulus provided              Consequently, we can confirm the goals for the current
by increased R&D spending. Suffice it to say that in this area          year as stated in the Relaunch Plan: operating breakeven
alone Fiat plans to invest about 8 billion euros in four years.         for the Group, a further reduction in Fiat Auto’s losses and
                                                                        better operating results than in 2003 from all other Sectors.
    In 2004, the Group’s operations will also fully benefit
from the introduction of new models and the positive
momentum that they will generate for all of the product lines
                                                                            Turin, March 26, 2004
of the automotive Sectors — Fiat Auto primarily, but also
CNH and Iveco. Other positive factors include the synergies
generated through industrial cooperation projects, the close
collaborative relationship established with suppliers and the
renewed confidence that the Company is currently enjoying,
especially in Italy.                                                        Umberto Agnelli
                                                                            Chairman
    We remain firmly committed to working with unflagging
determination along the guidelines set out in the Relaunch Plan
to achieve its objectives.
    We will continue our efforts to renew our product range
and improve our distribution organizations, investing 9 billion             Giuseppe Morchio
euros in four years. In addition, we will further strengthen our            Chief Executive Officer
management organization by pursuing a strategy of bringing
in top level executives from outside the Group as well as
leveraging the competencies available inside.
    We believe that people, with their wealth of knowledge and
their personal commitment, are the most important resource to
rely on as we work to build a new Fiat for the twenty-first century.
Fiat Panda Car of Year 2004   Ferrari F2003-GA 2003 World Champion
                                  7           Report on Operations




                                  The Fiat Group




The Fiat Group’s automotive manufacturing and service activities     – Commercial Vehicles
serve customers in more than 190 countries around the globe.         Iveco S.p.A. is the lead company of the Commercial Vehicles
Below is a description of how the Group is currently structured,     Sector. This Sector designs, produces and sells complete lines
after its refocusing on the automotive business carried out in       of commercial vehicles (Iveco and Seddon Atkinson brands),
2003.                                                                busses (Iveco and Irisbus brands), firefighting vehicles (Camiva,
                                                                     Iveco and Magirus brands) and diesel engines (Iveco Motors
Automotive Activities                                                brand). The Sector provides a full range of financial services.

They account for 77% of total sales (before intercompany
eliminations) and 71% of net invested capital.                       Other Industrial Sectors
They include the following business lines:                           These Sectors include Components, Production Systems and
                                                                     Metallurgical Products. Their products and areas of business
                                                                     are listed below:
– Automobiles
                                                                     ❚ Automotive modules and components for lighting systems,
The Group’s automobile operations are managed primarily by
                                                                       exhaust systems, suspensions and shock absorbers, and
its Automobile Sector, which includes Fiat Auto Holdings B.V.
                                                                       engine control units.
and its subsidiaries. The Sector markets automobiles under
the Fiat, Lancia and Alfa Romeo brands and light commercial          ❚ Industrial automation systems for the automotive industry in
vehicles under the Fiat brand.                                         the areas of product and process engineering, logistics and
                                                                       management, manufacturing, installation, production startup
The Automobile Sector provides financing services to its               and maintenance.
dealers and suppliers and offers motorists a comprehensive
line of mobility services.                                           ❚ Engine blocks, cylinder heads and other components for cast-iron
Ferrari and Maserati are also part of the Fiat Group. They             engines; cast-iron components for transmissions, gearboxes
produce luxury sports cars that excel for their exclusive              and suspensions; and magnesium bodywork components.
characteristics, technology and performance.
                                                                     Other non Industrial Sectors
– Agricultural and Construction Equipment                            These Sectors, which include Services and Publishing and
                                                                     Communications, engage in the following businesses:
This Sector, which is led by CNH Global N.V., is active in the
field of tractors and agricultural equipment through the Case        ❚ Services in the areas of personnel administration, temporary
IH, New Holland and Steyr brands and in the construction               staffing, facility management, administrative and corporate
equipment business through the Case, FiatAllis, Fiat Kobelco,          finance consulting, information and communication technology,
Kobelco, New Holland Construction and O&K brands. The                  purchasing, and e-procurement.
Sector’s financial services provide support to end customers         ❚ Publication of the La Stampa newspaper, and sale of advertising
and to its dealers.                                                    space for multimedia customers through Publikompass.
                                     8            Report on Operations




                                      Highlights of Results


Financial and operating highlights of the Fiat Group

(in millions of euros)                                                                  2003         2002        2001         2000          1999

Consolidated revenues                                                                 47,271      55,649      58,006      57,555         48,123
Operating result                                                                        (510)       (762)        318          855           788
EBITDA                                                                                 1,950      (1,341)      3,408        5,125         3,836
EBIT                                                                                    (319)     (3,955)        528        2,073         1,482
Result before taxes                                                                   (1,298)     (4,817)       (497)       1,050         1,024
Net result before minority interest                                                   (1,948)     (4,263)       (791)         578           506
Group interest in net result                                                          (1,900)     (3,948)       (445)         664           353


Net financial position positive/(negative)                                            (3,028)     (3,780)     (6,035)      (6,467)       (4,031)
Stockholders’ equity before minority interest                                          7,494       8,679      13,607      15,209         14,767
Group interest in stockholders’ equity                                                 6,793       7,641      12,170      13,320         12,874


Net invested capital                                                                  10,522      12,459      19,642      21,676         18,798
Operating cash flow (Operating result plus depreciation and amortization)              1,759       1,852       3,198        3,907         3,142
Cash flow (Net result before minority interest plus depreciation and amortization)      321       (1,649)      2,089        3,630         2,860
Investments in fixed assets                                                            2,011       2,771       3,438        3,236         2,712
Research and development                                                               1,747       1,748       1,817        1,725         1,406


Operating result/net revenues (ROS)                                                    (1.1%)      (1.4%)      0.5%         1.5%           1.6%
Operating result/average net invested capital (ROI)                                    (4.4%)      (4.7%)      1.5%         4.2%           4.8%
Net result before minority interest/net revenues                                       (4.1%)      (7.7%)      (1.4%)       1.0%           1.1%
Net result/Group interest in average stockholders’ equity (ROE)                       (26.3%)     (39.9%)      (3.5%)       5.1%           2.7%
Capital expenditures/depreciation                                                       1.15        1.37        1.50         1.28          1.31
Number of employees                                                                  162,237     186,492    198,764     223,953         221,319




                                                                           Statistical data by geographical region

                                                                                                Number of   Number of   Number of      Number of
                                                                                                Companies   Employees    Facilities   R&D Centers

                                                                           Italy                     199      73,553           56             48
                                                                           Europe excluding Italy 326         44,870           66             33
                                                                           North America             103      12,835           30             13
                                                                           Mercosur                   46      21,980           17              8
                                                                           Other regions             103       8,999           23              7
                                                                           Total                     777    162,237           192           109
                                                  9                  Report on Operations




                                                   Financial and Operating Highlights by Sector


                                                                                                                                                                                 Net result before
                                                                                            Net revenues             Operating result                           EBIT             minority interest

                                                                                  2003               2002           2003           2002           2003           2002           2003           2002
                                                                           (in millions       (in millions   (in millions   (in millions   (in millions   (in millions   (in millions   (in millions
                                                                              of euros)          of euros)      of euros)      of euros)      of euros)      of euros)      of euros)      of euros)

Automobiles (Fiat Auto)                                                      20,010             22,147            (979)        (1,343)       (1,607)         (2,214)       (2,058)        (2,739)
Agricultural and Construction Equipment (CNH)                                  9,418            10,513             229            163             99            165           (192)          (211)
Commercial Vehicles (Iveco)                                                    8,440              9,136             81            102             (84)         (409)          (258)          (493)
Ferrari and Maserati                                                           1,261              1,208             32              70            31              44              2             22
Components (Magneti Marelli)                                                   3,206              3,288             32             (16)           (41)         (348)            (90)         (435)
Production Systems (Comau)                                                     2,293              2,320               2          (101)          (122)          (247)          (164)          (302)
Metallurgical Products (Teksid)                                                   844             1,539             12              27            (56)         (137)            (91)         (214)
Aviation (FiatAvio) (*)                                                           625             1,534             53            210             33            183             13            116
Insurance (Toro Assicurazioni) (**)                                            1,654              4,916             44            147               1          (203)            52                9
Services (Business Solutions)                                                  1,816              1,965             45              67            11           (140)            (20)         (119)
Publishing and Communications (Itedi)                                             383               360             10               3              9              1              1             (5)
Miscellaneous and Eliminations                                                (2,679)            (3,277)            (71)           (91)       1,407            (650)           857            108
Total for the Group                                                          47,271             55,649            (510)          (762)          (319)        (3,955)       (1,948)        (4,263)



                                                                                               Cash flow         Capital expenditures          Net invested capital        Number of employees

                                                                                  2003               2002           2003           2002           2003           2002          2003           2002
                                                                           (in millions       (in millions   (in millions   (in millions   (in millions   (in millions
                                                                              of euros)          of euros)      of euros)      of euros)      of euros)      of euros)

Automobiles (Fiat Auto)                                                       (1,096)            (1,780)        1,100           1,116         1,806           1,254       44,563          49,544
Agricultural and Construction Equipment (CNH)                                     258               330            217            431         4,148           5,140       26,825          28,528
Commercial Vehicles (Iveco)                                                         46               (70)          210            587         1,310           1,582       31,511          38,113
Ferrari and Maserati                                                                86                99           193            176            229            142         2,968           2,896
Components (Magneti Marelli)                                                        83             (245)           148            148            540            524       19,879          20,716
Production Systems (Comau)                                                       (108)             (238)            18              20           205            163       17,375          18,186
Metallurgical Products (Teksid)                                                    (43)            (121)            56              78           194            250         7,556           7,368
Aviation (FiatAvio) (*)                                                             55              185             33            130               –           618               –         5,049
Insurance (Toro Assicurazioni) (**)                                                 68                56              –             14              –           652               –         3,098
Services (Business Solutions)                                                       10               (77)             7             14            (31)          478         7,113           7,900
Publishing and Communications (Itedi)                                                   8              3              3              3            19              40           874            923
Miscellaneous and Eliminations                                                    954               209             26              54        2,102           1,616         3,573           4,171
Total for the Group                                                               321            (1,649)        2,011           2,771       10,522          12,459       162,237        186,492
(*) Data for the Aviation Sector are shown until the date of its sale (July 1, 2003).
(**) Data for the Insurance Sector are shown until the date of its sale (May 2, 2003).
                                             10             Report on Operations




                                             Stockholders


Financial communications                                                                   Average monthly trading volume (in millions of shares)
                                                                                    400
The Group pursues a policy of open communication with
individual and institutional investors. In the course of the year, its                                                                               Ordinary
investor relations program offers presentations, live or through                    350
                                                                                                                                                     Preference
conference call, after the regular publication of Group results or                                                                                   Savings
other events requiring direct communications with the market. In
addition, the program includes several seminars, which furnish a                    300
more in-depth understanding of the operating performance and
strategies of the principal Group Sectors, and numerous meetings
and roadshows, which permit more direct contact between the                         250
financial community and the Group’ senior management.

                                                                                    200
For holders of Fiat shares:

      Toll-free telephone number in Italy:              800-804027                  150
      Website:               www.fiatgroup.com
      E-mails:               investor.relations@geva.fiatgroup.com
                             serviziotitoli@fiatgroup.com                           100


For holders of ADRs:                                                                50

      Toll-free telephone number in the USA and Canada: 800 900 11 35
      Outside the USA and Canada:                       781 575 43 28                0
      Website:                   www.adr.com
                                                                                           01/03 02/03 03/03 04/03 05/03 06/03 07/03 08/03 09/03 10/03 11/03 12/03


         Performance of FIAT stock with respect to MIBTEL index and Eurostoxx Auto since January 1, 2003 (1/1/03=100)

140




120




100




80




60
            Fiat ordinary shares
            MIBTEL
            Eurostoxx Auto
40




20
        01/2003     02/2003        03/2003        04/2003    05/2003      06/2003    07/2003     08/2003       09/2003      10/2003      11/2003      12/2003

In 2003 the financial markets recovered significantly from their levels in 2002.    In the first part of 2003, Fiat stock was impacted by the heavy losses
During the first quarter of 2003, stock prices fell due to the instability caused   reported for 2002. However, presentation of the Relaunch Plan by the new
by the conflict in Iraq and the uncertain prospects of economic recovery,           management in June 2003 and the successful subscription of the capital
which were more than offset by the general improvement that followed in             increase generated enough investor confidence as to permit stabilization
the remainder of the year. In this context, the period of difficulty and great      of the stock price in the second half of 2003.
change faced by the Fiat Group affected its stock price, which suffered more
than that of its competitors.
                                        11             Report on Operations    Stockholders




     Minimum and maximum monthly price (in euros)                              Stockholder base at December 31, 2003
     Fiat ordinary shares
10

 9
                                                                               Other stockholders                                                                   IFIL
8

 7
                                                                                                                                                                Generali
6
                                                                                                                                                                 Group
 5
                                                                               Italian
4                                                                              institutional                                                              Libyan Arab
                                                                               investors                                                               Foreign Inv. Co.
 3

2
                                                                                                                                                            Mediobanca

 1                                                                             International                                                               Sanpaolo IMI
                                                                               institutional investors                                                          Group
0

     01/03 02/03 03/03 04/03 05/03 06/03 07/03 08/03 09/03 10/03 11/03 12/03




     Fiat preference shares                                                    Ordinary shares                                                           800,417,598
10                                                                             IFIL                                                                             30.06%
 9                                                                             Generali Group                                                                    2.76%
8                                                                              Libyan Arab Foreign Inv. Co.                                                      2.70%
 7                                                                             Mediobanca                                                                        2.39%
6                                                                              Sanpaolo IMI Group                                                                2.07%
 5                                                                             International institutional investors                                            16.26%
4                                                                              Italian institutional investors                                                  10.76%
 3                                                                             Other stockholders                                                               33.00%
2

 1

0

     01/03 02/03 03/03 04/03 05/03 06/03 07/03 08/03 09/03 10/03 11/03 12/03
                                                                               Highlights per share (in euros)                         2001            2002        2003


                                                                               Cash flow per share (**)                              3.856          (2.911)      0.407
     Fiat savings shares
                                                                               Earnings per share                                    (0.841)        (6.660)      (2.412)
10
                                                                               Dividend per share (*)
 9
                                                                                  ordinary and preference shares                     0.310                 –          –
8                                                                                 savings shares                                     0.465                 –          –
 7

6                                                                              Stockholders’ equity
                                                                               per share at 12/31                                  22.462          13.489        8.623
 5

4
                                                                               Official price per share                           12.28.01         12.30.02     12.30.03
 3
                                                                                  ordinary shares                                  17.921            7.704       6.142
2
                                                                                  preference shares                                12.267            4.348       3.704
 1                                                                                savings shares                                   11.459            4.183       3.957
0                                                                              (*) Reflects the distribution of earnings attributable to the respective year.
     01/03 02/03 03/03 04/03 05/03 06/03 07/03 08/03 09/03 10/03 11/03 12/03   (**) Net result plus depreciation and amortization.
                                   12           Report on Operations




                                    Fiat Group Relaunch Plan


In June, the Company presented its Industrial and Financial            ❚ Cash generation: Over 9 billion euros were generated
Relaunch Plan. This four-year plan, which lays the basis for full        from disposals and a capital increase.
recovery of the Group by focusing the scope of its activity and        ❚ Operating breakeven: The positive performance of the
industrial mission on the automotive business, enabled the               fourth quarter points in the right direction.
Company to adopt decisive measures to resolve problems
and accelerate the return to growth.                                   ❚ Corporate structure: A major effort made to streamline the
                                                                         Group structure, including the disposals completed during
The Plan, which includes detailed operational plans for each
                                                                         the year, will reduce the number of Group companies from
of the individual Sectors, set forth the following fundamental
                                                                         over 900 in 2002 to about 600 by the end of 2004.
Group guidelines:
                                                                       ❚ Structural cost reduction: Eight of the 12 plants slated for
❚ Improving cash-flow generation and profitability is the top
                                                                         closure have already been shut down or are in the process of
  priority;
                                                                         being shut down, and staff levels have decreased as expected.
❚ A major effort must be made in the areas of product
                                                                       ❚ Margin improvement: New product launches have been
  development, innovation and marketing by launching new
                                                                         accelerated, and the average age of the product line has
  models, investing heavily in technology and strengthening
                                                                         been lowered.
  the distribution networks;
❚ The cost structure must be made highly competitive by                In addition, newly established cross-sector teams have been
  rationalizing the Group’s product design and engineering             active for several months with the aim of increasing Group
  operations, streamlining its manufacturing organization,             synergies and accelerating the achievement of results. These
  increasing efficiency and strongly supporting the                    teams work in the purchasing, productivity, quality, overhead,
  development of professional competencies among                       and commercial areas. Their purpose is to assist the Company
  the engineering, marketing and distribution staff.                   in focusing on the principal variables of the statement of
                                                                       operations and ensure the exchange of best practices.
Results for the full year enabled the Company to confirm its
                                                                       Consequently, the strength of the Group is greater than the
commitment to meeting the objectives of the Relaunch Plan,
                                                                       sum of strengths of the individual Sectors.
which are:
                                                                       Thanks to these teams, a vast number of new projects were
❚ Achieve operating breakeven in 2004 at the Group level.
                                                                       launched at the Operating Sectors and Business Units. Over 800
❚ Achieve a 4% return on sales by 2006 (5.5 percentage points          projects were being implemented at the end of 2003 and are
  higher than in 2002).                                                expected to produce concrete improvements in the 2004 results.
❚ Generate positive operating cash-flow (operating result              The projects promote the dissemination of an entrepreneurial
  plus depreciation and amortization) in 2005.                         spirit in the Group, enhance the transparency of expectations,
The Group has already reached many of its stated objectives            and, ultimately, maximize the possibilities for success.
while work in other areas is progressing in line with                  The number of projects and people involved in the turnaround
expectations:                                                          effort has been growing steadily.
                                    13            Report on Operations




                                     Products and Services


Fiat Auto                                                                comprised the TNF-A series, with which New Holland has
                                                                         redefined the concept of orchard tractors, and the VM and VL
Products. In 2003 Fiat Auto accelerated its efforts to extend and
                                                                         grape harvesters. The latter are a new generation of highly
strengthen its product range, especially in the second half of the
                                                                         flexible machines that can handle a wide variety of terrain and
year. It was able to move up the launch of no less than four new
                                                                         offer extensive operational scope, as they can be used not only
models: the Fiat Panda city car, the Fiat Idea compact MPV, the
                                                                         for harvesting but also for all other vineyard operations.
high-end compact Lancia Ypsilon and the Alfa GT sport coupé.
These attractive and innovative new cars were accompanied by             The same principle of operational flexibility underlies the Case
face-liftings of the Fiat Punto, the Alfa 156 and the Alfa 166.          IH AFX combine harvester, which introduces the single rotor
                                                                         system for both threshing and separation.
Although they differ in conception and use, the new models
all bring technical and stylistic innovation to their respective         These products brought CNH an extraordinary number of
categories. This was enthusiastically welcomed by the public,            awards in Europe and America in 2003.
which ensured the immediate commercial success of the                    With more than 40 new product launches in the construction
vehicles, and by the media. The new cars received in fact                equipment segment, CNH demonstrated that it is one of the
numerous awards: from the prestigious “Car of the Year” award            most vibrant and aggressive competitors in the sector. Fiat
received by Fiat Panda along with another seven titles, to the           Kobelco, the brand created in mid-2002 to strengthen CNH’s
prizes won by Lancia Ypsilon (3) and the new Alfa 156 (2).               position in the world construction equipment market, presented
One of the keys to the strategy for strengthening the Fiat,              a range of excavators with renewed cabins, hydraulics and,
Lancia and Alfa Romeo brands is technological innovation.                above all, engines.
In 2003 this focus led to the introduction of the 1.3 liter Multijet     The Case brand extended its product portfolio with the
16-valve engine, a small, compact turbodiesel that represents            introduction of the TX series of telescopic handlers and new
the second generation of common rail engines and extends                 excavators and wheel loaders.
the benefits of this technology to the much broader public
of compact car owners.
                                                                         Services. In 2003 CNH developed initiatives aimed at
                                                                         strengthening customer relationships, working to monitor
Services. In keeping with Fiat Auto’s long-time principle of             customer satisfaction and improve its communication tools.
providing customers with a complete mobility service rather              This led to the introduction of new instruments to measure
than just a means of transport, in 2003 the company                      product satisfaction and delivery quality with dealers in selected
strengthened its range of integrated services, especially in the         areas of Europe, and to the development of the “Voice of the
infomobility sector. It also boosted its rental operations, where        Market” program, which performs a similar function and is
Fiat Auto works through Savarent and Leasys (the latter jointly          scheduled to begin operating this year.
owned with ENEL), which are active in long-term rentals, and             In line with the CNH Identity Project, last year visitors were for
Targarent, which operates in the short-term hire segment.                the first time able to experience a unified CNH environment
Moreover, in 2003 Savarent expanded its services to include              created within the stands devoted to individual brands at the
a less expensive product, Soft Rent, with the aim of reaching            Intermat and Agritechnica trade fairs.
private customers.

                                                                         Iveco
Ferrari and Maserati                                                     Products. In the heavy vehicles segment, Iveco introduced the
In 2003 Ferrari confirmed its position of excellence not only on         Stralis Active Day and Active Time, which join the Stralis Active
the racetrack, where the Formula 1 team won the Drivers’ and             Space launched in 2002. The new models meet the needs of
Constructors’ world championships for the fourth and fifth               customers operating short and medium-distance routes.
consecutive years respectively, but also in markets all over the         The intermediate range was strengthened with the introduction
world. Maserati introduced the Quattroporte, its flagship saloon         of the New Eurocargo. The launch began in February and was
with a 400-horsepower V8 engine, which combines the qualities            completed by the end of 2003. Since 2002 the Eurocargo has
of a luxury executive automobile with the authentic grand                been the European leader in the segment.
touring spirit.
                                                                         Irisbus also introduced a wide variety of new models in 2003,
                                                                         including the Evadys touring busses and the smaller Midys. In
CNH Global                                                               the intercity bus sector, the company introduced the 10.6 meter
                                                                         version of the Ares, which is now available in a broad variety
Products. In the agricultural equipment segment, the renewal             of lengths up to a maximum of 15 meters.
of the product line led to the introduction of highly innovative
products. These included the mid-horsepower New Holland                  Last year also saw the launch of the Europolis electric bus.
TSA tractor, which is equipped with the revolutionary Fast Steer         During the year Eurofire introduced three new models of rescue
technology, designed to facilitate turnaround. Other innovations         vehicle: a 37-meter ladder truck, a new articulated ladder truck
                                  14           Report on Operations   Products and Services




and an aerial platform with a maximum reach of 27 meters,             more than 220,000 parts, the Vehicle Off Road (VOR) delivery
both with computer-controlled stabilization systems.                  system, which can guarantee delivery of spare parts within
In addition, in 2003 Iveco responded to new demand for                twelve hours anywhere in Europe and the “Vetrina Ricambi”
decontamination vehicles, delivering a prototype to the Italian       (Spare Parts Window), an Internet tool that provides an online
Fire Department. The company also continued its search for            view of the entire stock of a particular dealer and optimizes
ever greater performance for airport fire-fighting equipment          the transfer of information flows to the RAMSES spare parts
                                                                      management system, which made it possible to reduce dealer
with the introduction of an 8x8 version of the Dragon range.
                                                                      stocks by 3%.
                                                                      An important feature of 2003 was the program for dealer
Services. In 2003 Iveco paid special attention to the                 skill enhancement, which qualified dealers to handle the new
development of all of its Customer Service activities. On one         technologies now found in vehicles. This was facilitated with
front, the company developed a series of new products (ranging        the development of new diagnostic tools, such as the all-new
from guarantee extensions to planned maintenance programs)            E.A.S.Y. system.
that help preserve vehicle values over time. On another, it           Another part of this activity was the innovative DEEC project,
reinforced all of its spare part procurement and delivery             in which each dealer will have an “expert diagnostician” in
systems. These include a single “virtual warehouse” stocking          constant contact with the Iveco technical center.
                                    15           Report on Operations




                                    Innovation and Technology


Overall, approximately 13,000 people at 109 centers in Italy              accidents resulting from fog and, if they occur, minimize their
and abroad worked on the Group’s research and development                 consequences. In critical situations, “Safety Cars” equipped
projects in 2003. Total R&D expenditures came to 1,747 million            with innovative systems will guide the other vehicles at a safe
euros, or 4% of manufacturing revenues.                                   speed.
Efforts continued during the year to strengthen and rationalize         ❚ LED taillamp technology. The Fiat Research Center
the Group companies’ pursuit of innovation. In particular,                demonstrated the feasibility of its patented LED (Light
cooperation between the Fiat Research Center (FRC) and Elasis             Emitting Diode) technology by developing a 7 mm thick
was more intense than ever, ensuring that the two research                taillamp unit that is expected to offer a number of advantages
facilities can interact more effectively and achieve a greater            over conventional components, including minimum thickness,
degree of synergy. This commitment led to several projects                low cost for both the device and for the system as a whole,
to which each center contributes its own unique skills.                   and greater design freedom.
                                                                        ❚ Diesel particulate filter. Using DPFs, or Diesel Particulate
                                                                          Filters, brings particulate emissions of diesel engines to levels
Fiat Research Center
                                                                          similar to those of their spark ignition counterparts. Together
In 2003, the Fiat Research Center and its staff of around 950             with Fiat-GM Powertrain, the Fiat Research Center has
employees achieved results which had a significant impact on              developed a filter system that, unlike the designs currently
product and process innovation, helping improve the Group                 in use, requires no maintentance or additives, and makes full
companies’ industrial competitiveness.                                    use of the MultiJet powerplant’s potential.
Thanks to its research, the FRC transferred over 250 deliverables
to clients during the year and earned a number of awards,
                                                                        Elasis
including:
                                                                        Elasis, with a staff of more than 800 employees, operates in
❚ The award received at the 32nd Barcelona International Motor
                                                                        the field of research on automotive products and processes,
  Show for the Center’s highly innovative UNIAIR electronic
                                                                        and is provided with sophisticated testing equipment and
  valve control technology.
                                                                        computer-aided design tools. It is thus a basic asset for a
❚ The “Oscar Masi” award for industrial innovation assigned             Group pursuing a strategy of continuous innovation.
  to the “Gasdriver” vehicle. This vehicle, which combines a
                                                                        Being able to participate in projects enjoying national or EU
  robotized transmission, natural gas-powered engine and                funding (where 16 grant applications representing a total value
  an electric motor/generator, was voted best product in the            of 83 million euros were submitted in 2003) helps Elasis
  “Energy technologies for sustainable development” category.           cooperate with the public research system. It also stimulates
Scientific output was particularly prolific, as witnessed by the 97     the development of the basic knowledge which is essential
patents filed during the year. With these additions, the number         for effective applied research.
of active patents held by the Fiat Research Center rose to 891.         In this context, Elasis takes part in the initiatives sponsored and
The major achievements of 2003 are reviewed below:                      approved by the Italian Ministry of Education, Universities and
                                                                        Research. In 2003, Elasis thus joined with the Ministry and the
❚ 90 HP 1.3-liter 16-valve diesel engine. The Fiat Research             Campania regional administration in setting up the Naples
  Center contributed to the development of a new version                Materials Science Center (Distretto Tecnologico sui Materiali).
  of the small Multijet diesel powerplant which was specifically
  designed to increase maximum torque by 17% and power                  Exploiting its know-how and ability to integrate design,
  output by 28%, all while complying with the future Euro 4             experimentation, and technological skills, Elasis is developing
  emissions limits. The new engine will be taken into                   a new concept of highly versatile automobile.
  consideration for future applications on mid-size and small           In 2003, Elasis continued to develop methods for extending
  cars of the Fiat Group.                                               its Virtual Product Development (VDP) capabilities. Among
❚ Fiat Seicento Hydrogen. The second version of the hydrogen-           significant achievements, Elasis simulated all of the crash tests
  powered Seicento was developed with fundings from the                 called for by current European regulatory requirements, and
  Italian Ministry of the Environment. Road tests on the vehicle        developed a virtual reality facility where researchers can go
  confirmed the new fuel cell propulsion system’s high                  through all the motions of disassembling a car.
  efficiency.                                                           For its work on vehicles, Elasis is investigating innovative
                                                                        architectures that will serve as the building blocks for new
❚ Infonebbia fog warning system. The Fiat Research Center
                                                                        products with versatile interior layouts, all-wheel drive systems,
  and ANAS, the Italian national highway administration,
                                                                        modular chassis frames and highly accessible body shells.
  promoted the “Integrated Traffic Safety” project based
  on cooperation between smart vehicles and highways. This              In powerplant design, Elasis continued to expand the know-how
  project will set up two development test sites equipped               it can bring to bear on small-displacement spark ignition
  with Intelligent Transportation Systems (ITS) and a mini-fleet        engines, reducing their fuel consumption and exhaust
  of vehicles. The objective: help the driver, prevent traffic          emissions. In particular, introducing innovations such as the
                                    16           Report on Operations   Innovation and Technology




two-ring piston and a new valve actuation control on several
versions of the FIRE engine significantly reduced on-vehicle fuel
consumption. Significant progress was also made in optimizing
NVH (Noise, Vibration and Harshness) and in developing new
manual and robotized transmissions.
Elasis also continued to hone its skills – and make major
investments – in the electronic control systems that are playing
an increasingly vital role in today’s cars. During the year, Elasis
wrapped up many of these skills in a single package with its
development of a one-of-a-kind simulation bench – a true
“virtual car” – that slashes the time needed to fine-tune control
systems and debug on-board electronics.
The full benefits of engineering research can only be achieved
by leveraging the power of an advanced ICT system. This is why
Elasis has deployed an ICT function capable of supporting
engineering activities and generating research in the area.
During the year, for example, a knowledge management portal
was set up in order to capitalize on the center’s store of
engineering knowledge.
Elasis’s work is by no means restricted to vehicle research, but
also addresses the many mobility and traffic safety issues that         joint research initiatives with public agencies and infrastructure
revolve around the automobile. As part of this wider purview,           operators. Major projects of this kind saw Elasis partnered with
the center’s research also focuses on experimental materials,           the Province of Milan, the Province of Perugia, the Municipality
technologies and telematics systems. Similarly, Elasis strives to       of Salerno and Southern Italy’s highway concessionaire
broaden its understanding of safety-related problems through            Autostrade Meridionali.
                                   17           Report on Operations




                                    Environment


In 2003, the Fiat Group Sectors put a range of products on
the market whose environmental impact was lower than ever
before in all three key areas of fuel economy, emissions control
and efficiency. Corresponding improvements were made in
manufacturing processes. For both products and processes,
these achievements stem from the kind of innovation that can
only be made possible by continuing research.
The Group’s research work, so essential to developing effective,
competitive technologies, is spearheaded by the Fiat Research
Center, Elasis, and the Center for the Study of Transportation
Systems.
Major achievements and initiatives in 2003 are detailed in
the Environmental Report, submitted together with the
Fiat Group’s Annual Report for the twelfth year running. A
few of the highlights of the past year are illustrated below:
❚ Traditional Engines. Product engineering work was completed
  on the 1.3-liter 16-valve Multijet diesel engine, which already
  meets Europe’s future emissions limits. The new powerplant
  has been installed on innovative cars such as the Ypsilon, Idea
  and Panda.                                                           ❚ Production processes. The Fiat Research Center continued to
  Iveco started testing of its new V-6, V-12 and V-16 diesel             work with Sectors on dry machining process that will reduce
  engines, as well as its new Cursor engine for the US market,           cutting fluid usage, thus bringing down costs and improving
  which also complies with the upcoming Euro 4 standards. The            environmental performance. For its part, the Fiat Research
  new medium Eurocargo truck was also introduced in 2003.                Center stepped up its testing of alternative fibers which will
  This unit’s new Tector engine, which boasts low emissions and          make a major contribution to reducing overall vehicle weight.
  fuel consumption, has been developed in 3-, 4- and 6-cylinder        ❚ Ongoing process improvements. Thanks to the extension
  configurations for application on agricultural and construction        of the Group’s environmental management systems and
  equipment, also with the aim of meeting the new standard               the continuous improvement programs implemented at its
  requirements of the US market.                                         production processes, 2003 witnessed further increases in our
❚ Natural Gas-Powered Vehicles. NGVs continued to gain                   waste recycling performance, with the percentage of waste
  ground, thanks in no small measure to the Group’s foresight            sent to controlled landfills dropping yet again. Volatile organic
  in providing buyers with the most complete lineup of natural           compound (VOC) solvent emissions from Fiat Auto, CNH and
  gas vehicles on the market today. This range was further               Iveco paint shops were also reduced.
  extended in 2003 with the introduction of the Punto Natural
  Power, while production of the ultra-low emissions 6-cylinder
  Tector and Cursor engines designed for busses and                    Overview of the main environmental achievements of the Fiat
  city-dwelling trucks also got under way.                             Group’s Italian industrial facilities over more than a decade
                                                                                                              1991        2002        2003
❚ Agricultural and Construction Equipment. New Holland
  and Case used common platforms to renew almost half of               Recycled waste                       61.0%       77.8%      82.8%
  the models in the two makers’ ranges of agricultural and             Waste to controlled landfills        37.0%        7.6%        7.4%
  construction equipment. All of the new machines are significantly    Solvent emissions
                                                                       from paint shops (g/m2)               144.0        77.4       72.4
  more compatible with the environment than their predecessors.
  Renewal of both ranges will be completed in 2004.
❚ Electric and Hybrid Propulsion Systems. In 2003, earlier
  prototype vehicles were joined by the new Panda
  “Hydrogen”. Further advances were also made in public
  transit applications, where trials are now being carried out
  on two new fuel cell-powered busses in Turin and Madrid.
                                  18           Report on Operations




                                   Human Resources


At December 31, 2003, the Group had 162,237 employees,                Management Review. The development of internal resources is
compared with 186,492 at the end of 2002.                             ensured by the management review process. More than 7,000
The Group hired approximately 11,500 new employees in                 employees have gone through this process, which is designed
2003 — approximately 3,400 in Italy and approximately 8,100           to provide a quantitative and qualitative analysis of their
in other countries.                                                   management skills.
A total of approximately 22,700 employees (10,200 in Italy            People Satisfaction. The survey cycle launched in October 2002
and 12,500 in other countries) left the Company.                      was completed in 2003. Improvement programs based on this
Business acquisitions and disposals resulted in a net decrease        survey are being implemented by the Sectors and operating
of 13,100 employees. The largest reductions stemmed from              companies.
the disposals of FiatAvio S.p.A., the Toro Assicurazioni Group,
                                                                      Professional Development and Training. In 2003, the Group
Fraikin and Fidis Retail Italia.
                                                                      invested 95 million euros (2% of its total payroll) in training and
                                                                      professional development programs designed to support the
                                                                      operations of its companies around the world. About 71,000
Organizational and Management Changes
                                                                      employees received training and development support.
All Sectors continued to work on streamlining their
                                                                      Isvor Fiat, which acts as the corporate university of the Fiat
organizations and making them responsive to changes
                                                                      Group, also offers its services to noncaptive clients. In 2003,
in the business environment.
                                                                      Isvor Fiat provided training, consulting and professional support
The priority specifically assigned to the deployment of
                                                                      programs representing a total of 29,200 classroom days.
an effective corporate governance system resulted in the
establishment, at the senior management level, of an Internal         An additional 37,800 employees were enrolled in 340 courses
Audit Function by Fiat S.p.A. and the Group’s operating               and received a total of 798,000 hours of distance- and open-
companies.                                                            learning support.
The definition and implementation of the Group Relaunch Plan          Fiat Grants and Scholarships. The Fiat Grants and Scholarships
required the strengthening of the Business Development and            Program, which was created in 1996 and is available to the
Strategies Department and the establishment of a Corporate            children of active Group employees both in Italy and abroad,
Initiatives Function by Fiat S.p.A. Responsibilities similar to       is continuing with considerable success.
those entrusted to the Corporate Initiatives Function were also       In 2003, Fiat awarded 545 grants, including 183 to students
established at the Sector level.                                      in Italy and 362 to students in other countries (*), at a total cost
An important chapter of the Relaunch Plan deals with the              of 978,000 euros.
strategic objective of increasing the Group’s competitiveness
                                                                      (*) Brazil, France, Poland, Spain and the United States.
by strengthening its management organization. In 2003, Fiat
S.p.A. and the Sector parent companies hired more than 90
management employees from outside the Group, including
seven who were selected to fill senior management positions.          INDUSTRIAL RELATIONS
In addition, the Group worked to enhance the value of its
                                                                      Most of the activity in the area of industrial relations involved
management personnel by advancing to key positions executives
                                                                      managing the restructuring programs launched in 2002 and
who showed that they possessed the requisite skill sets.
                                                                      updated in 2003 to make them consistent with the objectives
                                                                      of the Fiat Group Relaunch Plan. Staff reductions were carried
                                                                      out through the social shock-absorber programs available under
                                                                      existing laws and through social impact plans, most of which
ENHANCING THE VALUE OF HUMAN RESOURCES                                agreed with the unions, that cushion the impact of downsizing
The high skill level possessed by the Group’s staff is                measures on Group employees.
demonstrated by the large number of professionals it includes         In Italy, Fiat Auto and certain Magneti Marelli and Comau
(25,269 in total, 42% of whom work outside Italy).                    factories stopped using the “Cassa Integrazione Straordinaria”
Hiring Qualified Resources. In 2003, the Group hired a total of       (Special Temporary Layoff Benefits Fund) within the authorized
about 400 recent college graduates. In addition, it was deeply        12-month period. A portion of the employees covered by the
involved in the Automotive Engineering School at Turin’s              Cassa Integrazione Straordinaria returned to work, except for
                                                                      about 500 employees from the Fiat Auto plant in Arese for
Politecnico University and provided support for its activities.
                                                                      whom the Ministry of Labor granted authorization to use the
Students are expected to begin graduating from this specialized
                                                                      Cassa Integrazione Straordinaria until December 31, 2004. The
degree program in 2004.
                                                                      remaining redundancies left the Companies under mobility
Leadership. The program used to assess and develop                    allowance, the so-called “mobilità di accompagnamento alla
leadership became operational in 2003. About 800 managers             pensione”, i.e. long-term unemployment benefit for workers
participated in the assessment phase and were provided with           who are expected to reach retirement age during their mobility
feedback about their leadership style.                                benefit period.
                                    19           Report on Operations   Human Resources




Mobility allowances were also used to achieve the downsizing            which was renewed after about four months of negotiations,
targets set forth in the staff restructuring plans of the other         was signed by Federmeccanica, an organization representing
Group Sectors. One of the tools that can be used in this area           metalworking businesses, and all of the unions (FIM-CISL, UILM-
is long-term mobility allowances. These allowances, which were          UIL and FISMIC), except for FIOM CGIL, which refused to sign.
made available under a law enacted in April 2003, are provided          The new contract, which covers about 70,000 Group employees
over a longer period than regular mobility benefits. A total of         in Italy, sets wages for two years and work rule provisions for
2,400 employees of Fiat Group companies and 181 Teksid                  four years. Under this agreement, employees were granted
employees were eligible for coverage under this benefit                 monthly wage increases averaging 90 euros before taxes (45
program.                                                                euros on July 1, 2003, 24 euros on February 1, 2004 and 21
Outside Italy, staff redundancies were handled primarily through        euros on December 1, 2004). The incremental compensation
programs developed with the agreement of local trade unions.            for the first six months of 2003 was set at 220 euros before taxes,
The companies involved were: Irisbus (closure of a plant in             payable in two lump-sum installments (115 euros in June 2003
Mataró, near Barcelona, and of the Ikarus factory in Hungary);          and 105 euros in January 2004). When fully implemented in
CNH (restructuring of the Berlin facility and definition of a social    2005, the contract package will have an impact on labor costs
impact program for the closure of the Crepy factory in 2004);           of about 5% (about 2% in 2003 and 2.4% in 2004).
Magneti Marelli (staff reductions at the Magneti Marelli Lighting       FIOM’s refusal to sign led it to adopt a posture of ongoing
plant in Cannock, UK); and Comau (completion of the                     unrest. This resulted in several strikes, but they were joined
redundancy procedure for Comau Estil).                                  by only a limited percentage of workers. The same low
                                                                        participation occurred when strikes were called to protest
As required under the applicable EU Directive, restructuring
issues, especially those that have a transnational impact, were         redundancy agreements.
the subject of information and consultation with the members            Outside Italy, the main labor agreements included the signing
of the Fiat Group European Works Council at the meeting of              of annual collective contracts by most Fiat Group companies
the Restricted Committee in mid-March 2003 and at the annual            operating in France. These contracts provide for annual wage
meeting on November 6 and 7, 2003. On that occasion, the                increases of about 2%. In Poland, where staff compensation did
Company provided extensive information about its Relaunch               not change in 2002, the employees of Fiat Auto received a wage
Plan, particularly with regard to its impact on employment levels       increase of about 3%. In Brazil, Fiat Automoveis SA-FIASA and
and the measures that will be used to handle redundancies.              the local labor unions reached an agreement in June on the
In Italy, collective bargaining negotiations focused on the             payment of an annual bonus tied to company results and
National Collective Labor Agreement for Metalworking                    negotiated a wage increase that is payable in advance of
Employees, which expired in December 2002. The new contract,            the renewal of the industry-wide labor agreement.
                                     20           Report on Operations




                                     Analysis of the Financial Position and Operating Results
                                     of the Fiat Group and Fiat S.p.A

INTRODUCTION                                                             and Operating Results by Activity Segment” broken
                                                                         down according to Industrial Activities, Financial Activities,
The Industrial and Financial Relaunch Plan based on refocusing
                                                                         and Discontinuing Operations.
the Fiat Group on automotive industrial activities was approved
in June 2003.
Significant measures were taken to restore balance to the
financial structure of the Group, among which are the capital            FINANCIAL POSITION AND OPERATING RESULTS
increase carried out in July 2003 at Fiat S.p.A., subscription of        OF THE FIAT GROUP
which generated an influx of new stockholders’ equity of                 Operating Performance
1,836 million euros, and the sale of activities not considered
                                                                         Although it continued to operate in a difficult environment
strategic.
                                                                         characterized by market stagnation and appreciation of the
Consistently with this strategy, the most important transactions         euro, the Group improved its own economic indicators in line
modifying the scope of consolidation are reviewed below:                 with the targets set in the Relaunch Plan. Losses decreased
❚ In the first quarter of 2003, Iveco sold the activities of Fraikin     significantly, particularly in terms of the performance of
                                                                         continuing operations – those activities that are destined to
  to Eurazeo. The operations of Fraikin, which specializes in the
                                                                         remain within the scope of consolidation. The results achieved
  long-term vehicle leasing business, were deconsolidated as
                                                                         by the Group reflected the major cost savings deriving from the
  of the beginning of 2003.
                                                                         measures envisaged in the Relaunch Plan and the gains realized
❚ In the first quarter of 2003, Business Solutions sold                  upon disposal of activities, although it had to face the negative
  approximately 56% of IPI S.p.A. to the Zunino Group. IPI               effect of restructuring expenses and writedowns, as well as other
  S.p.A., which was deconsolidated as of January 1, 2003,                non-operating expenses and provisions.
  operates in the field of large property improvement,                   Highlights of Group operating performance are illustrated
  management, and sales.                                                 below. For a more detailed analysis, see the section
❚ Fiat Auto Holdings’ retail financing activities in Brazil were         “Operating Performance – Sectors of Activity”.
  sold to the Itaù banking group at the end of March 2003
  and deconsolidated from that date.
                                                                         Net Revenues
❚ The agreement to sell the Toro Assicurazioni Group to
                                                                         Fiat Group net revenues, including changes in contract work
  the DeAgostini Group was signed on May 2, 2003 and the                 in progress, totaled 47,271 million euros, reflecting a 15.1%
  relevant operations were deconsolidated as of the same date.           decrease from the previous year, largely due to the disposal
❚ On May 27, 2003, as part of the agreement signed by Fiat               of activities. If continuing operations alone are considered –
  and Capitalia, Banca Intesa, Sanpaolo IMI and Unicredito on            excluding the revenues of businesses sold in 2003 from the
  March 11, 2003, and following approval by the competent                values for both fiscal years – the reduction would have been
  authorities, the first part of the transaction for the sale by Fiat    7.3%. The negative foreign exchange effect caused by
  to the Banks of a majority interest (51%) of Fidis Retail Italia       appreciation of the euro against other currencies and
  was concluded. Fidis Retail Italia is the company that controls        contraction in the volumes of Fiat Auto were the principal
  the European activities of Fiat Auto Holdings in the field of          causes of this change.
  retail consumer financing for automobile purchases.                    Revenues broken down by Sector are illustrated below:
  The sale to Fidis Retail Italia of the equity investments in           ❚ Fiat Auto reported revenues of 20,010 million euros for 2003,
  the other financial companies covered by the agreement                   9.6% less than the 22,147 million euros reported in 2002 due
  was finalized in October 2003, with the sole exception of                to the contraction in sales volumes and disposal of retail
  the company active in the United Kingdom.                                financing activities (decrease of approximately 8% on a
❚ In execution of the contract signed on July 1, 2003 and                  comparable basis). Fiat Auto sold a total of approximately
  after having met the conditions precedent, the sale of the               1,700,000 automobiles and light commercial vehicles, down
  aerospace activities of FiatAvio S.p.A. to Avio Holding S.p.A.,          8.8% from 2002.
  a company 70% owned by The Carlyle Group and 30% by                      In Western Europe, where 1,179,000 units were sold, the
  Finmeccanica S.p.A., was finalized. Said activities were                 decrease was 9.4% with respect to the previous year. The
  deconsolidated effective from the date of the agreement.                 main causes for this downturn were persistent softness on
                                                                           its principal markets, growing competitive pressures, and
Please note that Iveco has valued the activities of Naveco, the
                                                                           anticipation leading up to the introduction of new products.
50-50 joint venture with the Yueijin Group, according to the
                                                                           The new models came onto the market only at the end of
equity method since January 1, 2003. This investment was
                                                                           2003 and thus the benefits deriving from their sale were
previously consolidated using the proportional method.
                                                                           only marginal. On the major Western European markets,
To provide clearer information on the Group’s operating                    decreases were reported in France (-16.3%) and in Italy
performance, the financial figures are illustrated and                     (-11.5%), in contrast with the positive performance of
commented in the following chapter, “Financial Position                    sales in Great Britain and especially Spain (+14.8%).
                                                21                Report on Operations           Analysis of the Financial Position and Operating Results
                                                                                                 of the Fiat Group and Fiat S.p.A




   Outside Western Europe, sales volumes expanded markedly                                          Iveco sold approximately 146,000 units, down 9.6% from the
   in Poland (+15.9%), stimulated by the strong surge in                                            previous year. In Western Europe, unit sales were down sharply
   demand. In Brazil, annual sales fell by 11.3% with respect to                                    in Italy (-13.6%), caused by the strong contraction in demand
   2002, largely on account of market softness, although demand                                     following the end of “Tremonti bis” law tax incentives, in
   and Sector sales recovered sharply in the last quarter of 2003.                                  Great Britain (-14.9%) and in Germany (-6.7%), in contrast with
                                                                                                    a slight increase in France, which went against the negative
❚ In 2003 CNH posted revenues of 9,418 million euros, -10.4%
                                                                                                    market trend, and in Spain. The Sector maintained its
  compared with the 10,513 million euros reported in the
                                                                                                    leadership in the Western European market for medium range
  previous year, in consequence of the negative foreign
                                                                                                    vehicles thanks to introduction of the New Eurocargo model.
  exchange effect caused by the weakening of the dollar
  against the euro. On a comparable exchange basis, revenues                                     ❚ Ferrari and Maserati reported revenues of 1,261 million euros
  would have been largely unchanged from the previous year,                                        for the year, up 4.4% from the previous year notwithstanding
  insofar as the higher revenues from agricultural equipment                                       the negative foreign exchange effect. The improvement is
  sales were offset by the reduction in revenues from                                              attributable to higher sales volumes for Ferrari models, while
  construction equipment.                                                                          Maserati sales suffered from the contraction in demand for
  Excluding the foreign exchange effect, revenues in the                                           spider models in the United States.
  agricultural equipment segment improved thanks to the sales                                    ❚ Magneti Marelli ended the year with revenues of 3,206 million
  of new products. In particular, sales of combine harvesters                                      euros; the 2.5% decrease with respect to the previous year
  were strong on the principal markets, with a positive effect on                                  stemmed mainly from the foreign exchange effect. On a
  market shares compared with the previous year.                                                   comparable basis, revenues would have been 3.4% higher,
  On a comparable exchange basis, revenues in the                                                  reflecting the positive performance of the Engine Control unit,
  construction equipment segment have continued to decrease                                        mainly as a result of the introduction of the diesel system, and
  due to lower sales in Western Europe and Latin America,                                          of the Lighting unit thanks to new products.
  partly connected to unfavorable market conditions, and in
                                                                                                 ❚ Comau posted revenues of 2,293 million euros, almost the
  North America where the decrease was smaller due to a
                                                                                                   same as in the previous year. In North America, thanks to the
  recovery in the sales of heavy equipment.
                                                                                                   backlog of outstanding orders at the beginning of the year,
❚ Iveco had revenues of 8,440 million euros in 2003, down by                                       the Sector was able to record an increase in work completion
  7.6% from the 9,136 million euros reported in 2002, caused by                                    which made it possible to offset most of the negative effect
  the disposal of activities and deconsolidation of Naveco. On                                     caused by the weakening of the dollar. Contract work in
  a comparable basis, revenues would have been virtually the                                       Europe and the maintenance activities of Comau Service
  same as in 2002.                                                                                 confirmed the levels reported for 2002.




                                                                                                                             2003                                           2002
                                                                                                   Continuing       Discontinuing                     Continuing    Discontinuing
(in millions of euros)                                                       Consolidated          Operations         Operations       Consolidated   Operations      Operations

Net revenues                                                                      47,271             44,498               2,949            55,649       48,026            8,051
Cost of sales                                                                     40,830             38,468               2,538            48,619       41,949            7,098
Gross operating result                                                              6,441              6,030                 411             7,030        6,077             953
Overhead                                                                            4,748              4,509                 239             5,782        5,192             590
Research and development                                                            1,747              1,724                  23             1,748        1,694               54
Other operating income (expenses)                                                    (456)               (511)                55              (262)         (539)           277
Operating result                                                                     (510)               (714)               204              (762)      (1,348)            586
Investment income (expenses) (*)                                                     (156)                (79)                (46)            (690)         (261)           (360)
Non-operating income (expenses) (**)                                                  347                359                  (12)          (2,503)      (2,267)            (236)
EBIT                                                                                 (319)               (434)               146            (3,955)      (3,876)             (10)
Financial income (expenses)                                                          (979)            (1,067)                 88              (862)      (1,094)            232
Result before taxes                                                                (1,298)            (1,501)                234            (4,817)      (4,970)            222
Income taxes                                                                          650                541                 109              (554)         (699)           145
Net result of normal operations                                                    (1,948)            (2,042)                125            (4,263)      (4,271)              77
Result of intersegment equity investments                                                –                 90                   –                –           (14)            (14)
Net result before minority interest                                                (1,948)            (1,952)                125            (4,263)      (4,285)              63
Group interest in net result                                                       (1,900)                                                  (3,948)
(*) This item includes investment income (expenses) as well as writedowns and upward adjustments in equity investments valued by the equity method.
(**) The 2003 figure of Continuing Operations includes 1,742 million euros in net gains on the disposal of Discontinuing Operations.
                                                  22                Report on Operations     Analysis of the Financial Position and Operating Results
                                                                                             of the Fiat Group and Fiat S.p.A




❚ Teksid, with revenues of 844 million euros, reported a sharp                               included in the operating result, totaled 1,747 million euros.
  decrease with respect to the 1,539 million euros reported in                               This amount, virtually unchanged from fiscal 2002, reflects the
  the previous year, due to the sale on September 30, 2002                                   effects of changes in the scope of consolidation and the negative
  of the Aluminum Business Unit. On a comparable                                             effect of changes in currency conversion rates. If these effects
  consolidation basis and excluding the negative foreign                                     were excluded, the Group would have posted higher R&D
  exchange effect, revenues would have increased by 3.7%                                     outlays deriving from higher expenses at Fiat Auto, as part of its
  thanks to higher volumes in the Magnesium Business Unit,                                   strategy to renew its product range, and at Ferrari and Maserati,
  largely in consequence of demand from the SUV segment                                      which further increased its commitment to innovation.
  particularly in the United States, and in the Cast Iron                                    The operating result broken down by Sector is illustrated below:
  Business Unit.
                                                                                             ❚ Fiat Auto reduced its operating loss from 1,343 million euros
❚ Business Solutions reported revenues of 1,816 million euros,
                                                                                               in fiscal 2002 to 979 million euros in 2003. On a comparable
  down 7.6% from the previous year. In addition to the effect
                                                                                               basis – excluding from both years the results of the financial
  of disposals, this result reflected the slowdown in the services
                                                                                               companies that were sold – the reduction in losses totaled
  market and the refocusing of Sector activities on Fiat Group
                                                                                               468 million euros. This improvement is the result of savings
  companies.
                                                                                               on product costs and overhead deriving from the cost
❚ Itedi reported revenues of 383 million euros, 6.4% higher                                    reduction plan and industrial synergies generated by the
  than in fiscal 2002. This improvement derived from higher                                    alliance with General Motors; on the other hand, the Sector
  advertising revenues, brand-stretching initiatives, and sales                                suffered from the negative effects of lower volumes and
  of the weekly “Specchio,” which offset the decrease                                          higher research and development costs.
  stemming from lower daily newspaper sales.                                                   Finally, the annual result realized only marginal benefits
                                                                                               from the new products that were introduced on the market
                                                                                               in the final months of the year.
Operating Result
                                                                                             ❚ CNH posted operating income of 229 million euros in
The operating result reflected a reduction in losses, which                                    2003, up from the 163 million euros reported for 2002,
decreased from 762 million euros in 2002 to 510 million euros                                  notwithstanding the negative foreign exchange effect
in 2003. The improvement is even more evident if the                                           stemming from appreciation of the euro. The Sector result
performance of Continuing Operations alone is considered,                                      improved markedly thanks to improved margins on new
which reported a 634 million euros decrease in operating loss                                  products, higher sales prices, and cost savings realized
(from a loss of 1,348 million euros in 2002 to a loss of 714 million                           through the integration plans with Case and the Relaunch
euros in 2003). The recovery accelerated over the course of the                                Plan.
year, reflecting the efficiency gains realized through                                         These factors more than compensated for the negative
implementation of the Relaunch Plan.                                                           impact of volumes and product mix, the costs associated
During 2003, research and development outlays, which are                                       with the introduction of new products, and higher social
posted directly to the statement of operations and thus                                        security and medical costs for its employees.




                                                                                                                                                  Revenues
(in millions of euros)                                                                                                               2003               2002   Change

Automobiles (Fiat Auto)                                                                                                           20,010           22,147      (2,137)
Agricultural and Construction Equipment (CNH)                                                                                      9,418           10,513      (1,095)
Commercial Vehicles (Iveco)                                                                                                        8,440            9,136        (696)
Ferrari and Maserati                                                                                                               1,261            1,208         53
Components (Magneti Marelli)                                                                                                       3,206            3,288         (82)
Production Systems (Comau)                                                                                                         2,293            2,320         (27)
Metallurgical Products (Teksid)                                                                                                      844            1,539        (695)
Aviation (FiatAvio) (*)                                                                                                              625            1,534        (909)
Insurance (Toro Assicurazioni) (**)                                                                                                1,654            4,916      (3,262)
Services (Business Solutions)                                                                                                      1,816            1,965        (149)
Publishing and Communications (Itedi)                                                                                                383                360       23
Miscellaneous and Eliminations                                                                                                     (2,679)          (3,277)      598
Total                                                                                                                             47,271           55,649      (8,378)
(*) Revenues for the Aviation Sector are shown until the date of its sale (July 1, 2003).
(**) Revenues for the Insurance Sector are shown until the date of its sale (May 2, 2003).
                                                  23                 Report on Operations           Analysis of the Financial Position and Operating Results
                                                                                                    of the Fiat Group and Fiat S.p.A




❚ Iveco closed fiscal 2003 with operating income of 81 million                                      ❚ Business Solutions reported operating income of 45 million
  euros, against income of 102 million euros in the previous                                          euros for 2003. The decrease from the 67 million euros in
  year, which included the positive result of sold activities. On                                     operating income reported for 2002 is mainly attributable
  a comparable basis, it would have posted a slight decrease:                                         to changes in the scope of consolidation. On a comparable
  the Sector was negatively impacted by a contraction in                                              basis, operating income would have shown an improvement
  volumes connected to the difficult market situation, and                                            of 6 million euros thanks to cost savings.
  an unfavorable foreign exchange effect. Iveco responded                                           ❚ Itedi had operating income of 10 million euros in 2003, up
  to these negative factors by significantly reducing                                                 sharply from the 3 million euros reported for 2002, thanks
  manufacturing costs and overhead.                                                                   to higher revenues, efficiency measures in all business areas,
❚ Ferrari and Maserati reported operating income of 32 million                                        and lower paper costs.
  euros. The Sector did not achieve the level of the previous
  year (operating income of 70 million euros) due to high
  research and development costs for new products and the                                           EBIT (Earnings Before Interest and Taxes)
  negative foreign exchange effect, which offset the                                                Group EBIT was -319 million euros, compared with -3,955 million
  improvement in mix realized with the Ferrari models.                                              euros for 2002. The major reduction in losses, which totaled
❚ Magneti Marelli reported a significant improvement in its                                         3,636 million euros, stemmed from the sharp improvement in
  operating result, moving from an operating loss of 16 million                                     non-operating items, due to lower expenses and higher gains
  euros in 2002 to operating income of 32 million euros in 2003,                                    realized on disposals, and the result of equity investments, in
  benefiting in particular from materials costs and overhead                                        addition to the reduced operating loss.
  containment measures.                                                                             The change in EBIT was influenced by the following items:
❚ Comau posted operating income of 2 million euros, realizing                                       The result of equity investments was -156 million euros,
  a significant improvement from the operating loss of 101                                          compared with a negative balance of 690 million euros for the
  million euros reported for 2002, which had been caused                                            previous year, which included the losses incurred by marking
  mainly by the high costs incurred on several important                                            to market equity securities portfolios held by the insurance
  contracts in Europe.                                                                              companies, which were sold at the beginning of May 2003.
❚ Teksid closed fiscal 2003 with operating income of 12 million                                     The improvement in continuing operations alone totaled 182
  euros, compared with operating income of 27 million euros in                                      million euros and was realized thanks to better results of certain
  2002, which included the operating income of the Aluminum                                         companies valued according to the equity method, in particular
  Business Unit. If this factor were excluded, the Sector would                                     Italenergia Bis.
  have realized an improvement of 2 million euros mainly thanks                                     Net non-operating income totaled 347 million euros, reflecting
  to cost cutting measures and increases in volumes, which                                          a significant improvement from the negative balance of 2,503
  were partially reduced by the negative impact of product                                          million euros for 2002, which had been caused by particularly
  mix and foreign exchange effects.                                                                 high restructuring expenses and writedowns, as well as a




                                                                                                                                                    Operating Result
(in millions of euros)                                                                                                                      2003               2002    Change

Automobiles (Fiat Auto)                                                                                                                     (979)            (1,343)     364
Agricultural and Construction Equipment (CNH)                                                                                               229                163        66
Commercial Vehicles (Iveco)                                                                                                                   81               102        (21)
Ferrari and Maserati                                                                                                                          32                 70       (38)
Components (Magneti Marelli)                                                                                                                  32                (16)      48
Production Systems (Comau)                                                                                                                     2               (101)     103
Metallurgical Products (Teksid)                                                                                                               12                 27       (15)
Aviation (FiatAvio) (*)                                                                                                                       53               210       (157)
Insurance (Toro Assicurazioni) (**)                                                                                                           44               147       (103)
Services (Business Solutions)                                                                                                                 45                 67       (22)
Publishing and Communications (Itedi)                                                                                                         10                  3         7
Miscellaneous and Eliminations                                                                                                               (71)               (91)      20
Total                                                                                                                                       (510)              (762)     252
(*) Operating Result for the Aviation Sector is shown until the date of its sale (July 1, 2003).
(**) Operating Result for the Insurance Sector is shown until the date of its sale (May 2, 2003).
                                     24           Report on Operations   Analysis of the Financial Position and Operating Results
                                                                         of the Fiat Group and Fiat S.p.A




negative balance resulting from disposals. The figure for 2003           Result for the Fiscal Year
is broken down as follows:
                                                                         The Group’s loss before taxes was 1,298 million euros,
❚ Balance of net gains/losses on disposals, totaling a positive          compared with a loss of 4,817 million euros in fiscal 2002;
  1,747 million euros, composed primarily of the gains from              this result reflected the previously mentioned net improvement
  the disposals of FiatAvio S.p.A. (1,258 million euros net of           in EBIT.
  transaction costs), the Toro Assicurazioni Group (390 million
                                                                         Net financial expenses totaled 979 million euros in
  euros net of transaction costs), the retail financing activities
                                                                         2003, compared with 862 million euros in 2002. When
  of Fiat Auto in Brazil (103 million euros), and the company
                                                                         the performance of continuing operations alone is considered,
  IPI (15 million euros). The principal loss is represented by
                                                                         the balance of net financial expenses in 2003 showed an
  that incurred upon disposal of Fraikin (-24 million euros),
                                                                         improvement of 27 million euros with respect to the same
  in addition to the loss of 210 million euros that had been
                                                                         period in 2002. This is mainly attributable to the lower average
  booked at the end of 2002.
                                                                         indebtedness for the period and reduction in the level of
❚ Restructuring expenses of 658 million euros; these expenses            interest rates in Europe and the United States, which were
  are represented by the costs incurred or determined                    partially offset by the greater impact in 2003 of foreign
  according to plans for personnel laid off with long-term               exchange losses and an increase in bank commissions.
  unemployment benefits, severance incentives, and writedown             Fiscal 2002 was also favorably influenced by the positive
  of property, plant and equipment and intangible fixed assets           effects stemming from hedging of interest rate risks.
  according to the Relaunch Plan presented at the end of June
                                                                         Net income taxes for the year totaled 650 million euros,
  2003. Restructuring expenses include expenses and provisions
                                                                         compared with a credit of 554 million euros in 2002. The
  that refer mainly to Fiat Auto (259 million euros), CNH (142
                                                                         income taxes due for fiscal 2003 include: 125 million euros
  million euros), Comau (98 million euros) and Magneti Marelli
                                                                         (141 million euros in 2002) for IRAP, the regional tax on
  (50 million euros).
                                                                         production activities in Italy; 31 million euros (192 million euros
❚ A total of -215 million euros in other extraordinary writedowns        in 2002) for other current taxes; and deferred tax liabilities of
  of activities, stemming from evolution in the market outlook           494 million euros (887 million euros in deferred tax assets in
  of certain businesses, particularly in regard to the depreciation      2002). The income taxes for 2003 include utilization of tax
  of property, plant, and equipment at Fiat Auto.                        prepayments previously set aside in view of the realization of
❚ A total of -501 million euros in extraordinary provisions to           capital gains on the disposal of the Toro Assicurazioni Group
  reserves for future risks and charges, other expenses and              and FiatAvio S.p.A., which were subsequently realized.
  prior period expenses, net of other non-operating income               The consolidated net loss before minority interest was 1,948
  and prior period income. These include expenses and                    million euros, down sharply from the loss of 4,263 million euros
  provisions connected to the contract for the sale of the               in 2002.
  Electronic Systems activities of Magneti Marelli which was
                                                                         The Group’s interest in net loss was 1,900 million euros,
  carried out in the past fiscal year, damages stemming from
                                                                         compared with a loss of 3,948 million euros in fiscal 2002.
  the flood at the Termoli plant, and residual commitments
                                                                         As a result of the Group’s interest in net loss, there was a
  connected to investments in the telecommunications field.
                                                                         net loss per share of 2.412 euros, compared with a net loss
❚ Prior-period tax liabilities of 26 million euros.                      per share of 6.66 euros in 2002.
In 2002, the balance of non-operating income and expenses
included restructuring expenses mainly stemming from the
industrial restructuring plan of Fiat Auto and its effects on other
Group Sectors; writedowns of assets carried out on the basis of
changed market outlooks and consequent new business plans,
and extraordinary provisions to reserves for future risks and
charges. Furthermore, certain disposals had caused losses,
such as the sale of the investment in General Motors at market
prices, disposals of the Teksid Aluminum Business Unit, the
Electronic Systems Business Unit of Magneti Marelli, and
adjustment of the book value of the Iveco Fraikin Business
at its presumable disposal value. These losses were partially
offset by the gains stemming mainly from the sales of 34%
of Ferrari, 14% of Italenergia Bis, the AfterMarket activity
of Magneti Marelli, and the investment in Europ Assistance.
                                               25                Report on Operations          Analysis of the Financial Position and Operating Results
                                                                                               of the Fiat Group and Fiat S.p.A




Balance Sheet                                                                                   ❚ Current liabilities include those to be settled in the normal
The financial structure shows items on both the assets                                            course of business, liabilities held primarily for trading
and liabilities side, with a breakdown between current                                            purposes, and those due within twelve months of the
and non-current assets and liabilities. Specifically:                                             year-end or which cannot be renegotiated in that period.
                                                                                                The following analysis provides the information necessary
❚ In addition to cash and securities, current assets include
                                                                                                for correlation with the principal items characteristic of
  assets held for sale or consumption in the normal course
                                                                                                the industrial activities, such as working capital and net
  of business and thus comprise assets generated by financial
                                                                                                invested capital.
  services, including assets under financial lease. Current assets
  also include amounts which are expected to be received                                        For a more complete analysis of these items, please see
  within twelve months of the year-end.                                                         the Notes to the Consolidated Financial Statements.

(in millions of euros)                                                                                                               At 12.31.2003        At 12.31.2002
❚ ASSETS
Intangible fixed assets                                                                                                                    3,724                5,200
   Intangible fixed assets                                                                                                                 1,322                1,600
   Goodwill                                                                                                                                2,402                3,600
Property, plant and equipment                                                                                                              9,675               12,106
   Property, plant and equipment                                                                                                           8,761               10,521
   Operating leases                                                                                                                          914                1,585
Financial fixed assets                                                                                                                     3,950                6,638
Investments on behalf of life insurance policyholders who bear the risk                                                                        –                6,930
Financial receivables held as fixed assets                                                                                    (*)             29                   48
Deferred tax assets                                                                                                                        1,879                3,499
Total Non-Current Assets                                                                                                                  19,257               34,421
Net inventories (1)                                                                                                                        6,912                7,050
Trade receivables                                                                                                                          4,553                5,784
Other receivables                                                                                                                          3,081                3,351
Financial assets not held as fixed assets                                                                                                    120                6,094
Finance lease contracts receivable                                                                                            (*)          1,797                2,947
Financial receivables from others                                                                                             (*)         10,750               18,411
Securities                                                                                                                    (*)          3,789                1,507
Cash                                                                                                                          (*)          3,211                3,489
Total Current Assets                                                                                                                      34,213               48,633
Trade accruals and deferrals                                                                                                                 407                  579
Financial accruals and deferrals                                                                                              (*)            386                  661
❚ TOTAL ASSETS                                                                                                                            54,263               84,294

❚ LIABILITIES AND STOCKHOLDERS’ EQUITY
Stockholders’ equity                                                                                                                       7,494                8,679
   Stockholders’ equity of the Group                                                                                                       6,793                7,641
   Minority interest                                                                                                                         701                1,038
Deferred income tax reserves                                                                                                                 211                1,236
Reserves for risks and charges                                                                                                             5,168               15,390
Reserves for employee severance indemnities                                                                                                1,313                1,609
Policy liabilities and accruals where the investment risk is borne by policyholders                                                            –                7,000
Long-term financial payables                                                                                                  (*)         15,418               20,613
Total Non-Current Liabilities                                                                                                             22,110               45,848
Trade payables                                                                                                                            12,588               13,267
Other payables                                                                                                                             3,170                4,771
Short-term financial payables (2)                                                                                             (*)          6,616                8,310
Total Current Liabilities                                                                                                                 22,374               26,348
Trade accruals and deferrals                                                                                                               1,329                1,499
Financial accruals and deferrals                                                                                              (*)            956                1,920
❚ TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                              54,263               84,294

❚ NET FINANCIAL POSITION                                                                                                      (*)          (3,028)             (3,780)
(1) Net of advances received for contract work in progress (8,448 million euros at December 31, 2003 and 8,227 million euros at December 31, 2002).
(2) The item includes the 1,765-million-euro exchangeable bond payable in 2004.
                                   26           Report on Operations   Analysis of the Financial Position and Operating Results
                                                                       of the Fiat Group and Fiat S.p.A




Intangible Fixed Assets                                                Net Deferred Tax Assets
Intangible fixed assets (start-up and expansion costs, goodwill,       Net deferred tax assets (deferred tax assets net of deferred
construction in progress and others) amount to 3,724 million           tax reserve) totaled 1,668 million euros at December 31, 2003,
euros, 1,476 million euros less than the 5,200 million euros           compared with 2,263 million euros at the end of 2002. The
reported at the end of 2002. Over half of the decrease is              decrease with respect to 2002 amounted to 595 million euros,
attributable to the disposals of activities carried out during         mainly attributable to the utilization of tax prepayments whose
2003, as well as to the reduction in value of goodwill due to          recovery was primarily connected to the realization of capital
changes in foreign exchange rates.                                     gains on the disposal of equity investments, which occurred
The investments made during the fiscal year, for a total of            in 2003.
527 million euros (603 million euros in 2002), were almost totally
offset by amortization for the period, which totaled 519 million
euros (595 million euros in 2002).                                     Working Capital
                                                                       The Group’s working capital increased by 639 million euros
                                                                       to a negative 2,134 million euros, up from the negative 2,773
Property, Plant and Equipment
                                                                       million euros reported at the end of 2002. On a comparable
Property, plant and equipment totaled 9,675 million euros              basis the increase would have been 872 million euros.
(12,106 million euros at December 31, 2002). The decrease
                                                                       The following table illustrates the composition of working
(-2,431 million euros) largely reflects the changes in the scope
of consolidation (sale of Fraikin, FiatAvio S.p.A., and the Toro       capital in the two fiscal years:
Assicurazioni Group), variations in foreign exchange rates and
writedowns during the year.                                            (in millions of euros)                 At 12.31.2003   At 12.31.2002   Change
Overall investments in fixed assets totaled 2,011 million euros        Net inventories                              6,912           7,050      (138)
(2,771 million euros in 2002), including those in long-term leases
                                                                       Trade receivables                            4,553           5,784     (1,231)
which declined by 486 million euros, from 844 million euros in
                                                                       Trade payables                             (12,588)        (13,267)      679
2002 to 358 million euros in 2003. This reduction is mainly
                                                                       Other receivables / (payables)              (1,011)         (2,340)    1,329
attributable to the disposal of Fraikin, while investments net
                                                                       Working capital                             (2,134)         (2,773)      639
of long term leases were impacted by the deconsolidation of
FiatAvio S.p.A., the Toro Assicurazioni Group, and the Teksid
Aluminum Business Unit.                                                An analysis of the changes affecting the main components
In 2003 depreciation of property, plant and equipment totaled          of working capital is provided below.
1,750 million euros (2,019 million euros in 2002).
                                                                       Net inventories (raw materials, finished products, and work
At December 31, 2003, accumulated depreciation and
                                                                       in progress), net of advances received for contract work in
writedowns totaled 17,366 million euros, corresponding to
                                                                       progress, totaled 6,912 million euros, against 7,050 million euros
64% of gross fixed assets, compared with approximately 60%
                                                                       at December 31, 2002. The decrease is mainly attributable to
at the end of 2002.
                                                                       changes in the scope of consolidation during the fiscal year
                                                                       (principally the sale of FiatAvio S.p.A.). On a comparable basis,
Financial Fixed Assets                                                 inventories were 389 million euros higher due to the increase in
Financial fixed assets totaled 3,950 million euros, compared           Fiat Auto stock connected with the introduction of new models.
with 6,638 million euros at December 31, 2002. The significant         Trade receivables totaled 4,553 million euros, 1,231 million
reduction of 2,688 million euros is mainly due to the effect of the    euros less than the 5,784 million euros reported at the end of
deconsolidation of the Toro Assicurazioni Group, which was only        2002. The change in the scope of consolidation entailed a
partially offset by the increase mainly stemming from the equity       reduction of 1,106 million euros.
investments in Fidis Retail Italia (49% held by the Automobile
                                                                       Trade payables totaled 12,588 million euros compared with the
Sector following the sale of 51% of the stake) and Naveco (which
                                                                       13,267 million euros at December 31, 2002. The decrease of 679
was consolidated according to the proportional method until
                                                                       million euros is entirely attributable to changes in the scope of
2002).
                                                                       consolidation.
                                                                       The negative balance of other receivables/(payables), which
Financial Assets not held as Fixed Assets                              also includes trade accruals and deferrals, improved from -2,340
Financial assets not held as fixed assets totaled 120 million          million euros at December 31, 2002 to -1,011 million euros. The
euros, 5,974 million euros less than the 6,094 million euros at the    lower negative balance by 1,329 million euros includes 715
end of 2002, following disposal of the Toro Assicurazioni Group        million euros stemming from changes in the scope of
and consequent deconsolidation of its activities.                      consolidation.
                                          27               Report on Operations   Analysis of the Financial Position and Operating Results
                                                                                  of the Fiat Group and Fiat S.p.A




On a comparable consolidation basis, the change of 614 million                    Stockholders’ Equity
euros is mainly attributable to higher receivables from Tax                       Consolidated stockholders’ equity totaled 7,494 million euros
Authorities and to the payment made in favor of the CAV.TO.MI                     (8,679 million euros at December 31, 2002). The reduction
Consortium for reimbursement of the cash collateral of 250                        reflects the net loss for the period (1,948 million euros),
million euros that the Consortium had paid to Fiat S.p.A. in 2002                 distributed dividends (15 million euros), and the decrease
while waiting for the issuance of the contractual suretyships,                    caused by changes in foreign exchange rates (decrease of
which were subsequently issued.                                                   862 million euros), which were only partially offset by the capital
                                                                                  increases carried out (1,860 million euros). The remaining
                                                                                  decrease of 220 million euros was mainly due to the sale of
Reserves
                                                                                  IPI and the Toro Assicurazioni Group corresponding to the
Reserves totaled 6,481 million euros, compared with 16,999                        minority interest.
million euros at December 31, 2002. The net reduction stems                       The stockholders’ equity of the Group was 6,793 million euros,
from the disposals carried out during the year, particularly the                  against 7,641 million euros at December 31, 2002.
deconsolidation of insurance policy liabilities and accruals (9,508
million euros) and of the reserve for employee severance
indemnities of companies that were sold in 2003. The decrease                     Net Financial Position
of this reserve is also attributable to the utilization connected to
staff reductions resulting from restructuring plans.                              The net financial position, i.e. net indebtedness (financial
                                                                                  payables and related accruals and deferrals, net of cash and
At December 31, 2003, the reserves mainly included: income tax                    securities) minus financial receivables, totaled -3,028 million
reserves (98 million euros), warranty reserves (791 million euros),               euros at December 31, 2003, reflecting an improvement of 752
restructuring reserves (471 million euros), reserves for pensions                 million euros compared with the negative net financial position
(1,503 million euros), reserves for employee severance                            of 3,780 million euros at December 31, 2002.
indemnities (1,313 million euros), and reserves for other risks and
charges (2.216 million euros).                                                    During the fiscal year, the net resources generated by disposals
                                                                                  and the capital increase concluded in August more than offset
                                                                                  the financial and operating requirements (loss for the fiscal year
Net Invested Capital                                                              and increase in working capital).
Net invested capital totaled 10,522 million euros, compared                       (in millions of euros)                 At 12.31.2003   At 12.31.2002   Change
with 12,459 million euros at December 31, 2002. About half of
                                                                                  Financial payables                         (22,034)        (28,923)    6,889
the 1,937-million-euro decrease was due to the previously
                                                                                  Accrued financial expenses                    (593)            (785)     192
mentioned disposals of lines of business. On a comparable
                                                                                  Prepaid financial expenses                      85             118        (33)
basis, the reduction is mainly attributable to a decrease in fixed
                                                                                  Cash                                         3,211           3,489      (278)
assets (foreign exchange effect and writedowns) which was
                                                                                  Securities                                   3,789           1,507     2,282
partially offset by the abovementioned increase in working
                                                                                  Net Indebtedness                           (15,542)        (24,594)    9,052
capital.
                                                                                  Financial receivables and lease
The following table illustrates the composition of net invested                   contracts receivable                       12,576           21,406     (8,830)
capital at the end of 2003 and 2002:                                              Accrued financial income                       301             543      (242)
                                                                                  Deferred financial income                     (363)         (1,135)      772
(in millions of euros)               At 12.31.2003     At 12.31.2002    Change
                                                                                  Net Financial Position                      (3,028)         (3,780)      752
Intangible fixed assets                        3,724         5,200      (1,476)
Property, plant and equipment                  9,675        12,106      (2,431)
Financial fixed assets                         3,950         6,638      (2,688)   At December 31, 2003 the financial payables included:
Investments on behalf of life insurance                                           ❚ bonds for 9,610 million euros;
policyholders who bear the risk                   –          6,930      (6,930)
Financial assets not held as fixed assets       120          6,094      (5,974)   ❚ the five-year-bond issued at the beginning of 2002 and
Deferred tax assets                            1,879         3,499      (1,620)     exchangeable for 32,053,422 General Motors shares ($2,229
Reserves                                    (6,692)        (18,235)    11,543       million – equal to 1,765 million euros). It should be noted,
Policy liabilities and accruals where the                                           however, that each bondholder has the right to request early
investment risk is borne by policyholders         –         (7,000)      7,000      reimbursement, with payment on July 9, 2004, of all or part
Working capital                             (2,134)         (2,773)       639       of his bonds pursuant to the terms and conditions envisaged
Net invested capital                        10,522          12,459      (1,937)     in the issue prospectus.
                                     28         Report on Operations        Analysis of the Financial Position and Operating Results
                                                                            of the Fiat Group and Fiat S.p.A




❚ borrowings from banks for a total of 9,384 million euros. This            The receivables illustrated in the preceding table are net of sale
  amount includes, among others, the mandatory convertible                  with or without recourse, as follows:
  facility (3 billion euros) and the loan by Citigroup (lead
                                                                                                                         At 12.31.2003                      At 12.31.2002
  manager of a restricted pool of banks), secured by the
                                                                                                           Trade   Financial                  Trade   Financial
  agreements with EDF as part of the Italenergia Bis transaction            (in millions of euros)   receivables receivables      Total receivables receivables      Total
  (approximately 1,150 million euros).                                      With recourse              1,387              –    1,387       1,686             –    1,686
For a more detailed analysis of the above items, and more                   Without recourse           2,598          740      3,338       2,767          306     3,073
specifically as regards bonds, please see the Notes to the
Consolidated Financial Statements.
Financial receivables and lease contracts receivable at
                                                                                                                        * * *
December 31, 2003 include financial receivables from the
dealer network totaling 2,020 million euros (1,904 million
euros at December 31, 2002).                                                The Group is continuing to operate in compliance with the
                                                                            targets agreed upon with the lending banks under the
The aggregate total of Group receivables from the dealer                    mandatory convertible facility agreement in terms of reducing
network is illustrated as follows.                                          its net financial position to 3 billion euros and reducing gross
(in millions of euros)                      At 12.31.2003   At 12.31.2002
                                                                            indebtedness to 23.6 billion euros.
                                                                            At December 31, 2003, gross indebtedness totaled 22.5 billion
Trade receivables                                 1,208           1,818
                                                                            euros, while net financial position (approximately 3,028 million
Financial receivables                             2,020           1,904
                                                                            euros) was substantially in line with the agreed target without
Total receivables from the dealer network         3,228           3,722
                                                                            using, as allowed by the agreements with the lending banks,
                                                                            the previously mentioned Citigroup loan (approximately 1,150
Receivables from the dealer network are typically generated                 million euros) to reduce the net financial position itself.
by sales of vehicles and are generally managed under dealer                 At December 31, 2003 the rating assigned to the Fiat Group
network financing programs as a typical component of                        by the leading rating agencies was “non investment grade”.
the portfolio of the financial services companies. These                    Therefore, if this situation persists, in July 2004 the banks may
receivables are interest bearing, with the exception of                     proceed in advance with the conversion of the debt into
an initial limited, non-interest bearing installment payment                capital for an amount up to 2 billion euros.
period. On the consolidated financial statements, the
interest-bearing portion of the receivables is classified as
a financial receivable and thus included in the net financial               Consolidated Statement of Cash Flows
position, while the non-interest bearing portion is classified              At December 31, 2003, the Group had 3,211 million euros
as a trade receivable (and thus excluded from the net                       in cash and bank deposits, or 278 million euros less than the
financial position).                                                        3,489 million euros at the end of 2002.
The contractual terms governing the relationships with                      Securities that represent temporary investments rose from
the dealer networks vary from Sector to Sector and from                     1,507 million euros to 3,789 million euros; it therefore resulted
country to country. However, these receivables are collected                that Group investments immediately disposable rose by
in approximately two to four months on average.                             approximately 2,004 million euros to 7,000 million euros.
The receivables from the dealer network illustrated in                      The cash flows used in operating activities in 2003 totaled
the preceding table are net of allowances for doubtful                      1,947 million euros (compared with the cash flows of 1,053
accounts totaling 313 million euros at December 31, 2003                    million euros provided in fiscal 2002).
(333 million euros at December 31, 2002), computed on the                   Cash flow during 2003 principally reflected an increase in
basis of historical statistical analyses and updated according              working capital that, on a comparable consolidation basis,
to evolutions in market trends. During 2003, 27 million euros               absorbed a total of 872 million euros in cash, compared
were allocated to reserves, and 46 million euros were used.                 with a decrease, and consequent generation of cash flows,
At December 31, 2003, the Group held guarantees totaling                    of 1,828 million euros in 2002.
over 2 billion euros as security for these receivables.
                                                 29               Report on Operations            Analysis of the Financial Position and Operating Results
                                                                                                  of the Fiat Group and Fiat S.p.A




Investment activities generated positive cash flow of 2,897                                       The net reduction in financial receivables, which reflected
million euros in 2003, compared with 2,096 million euros                                          less financings granted to associated companies as well as a
generated in fiscal 2002.                                                                         reduction in the portfolio of activities, generated 1,146 million
Investment flows during the year were determined by the                                           euros in available funds, as compared with 2,456 million euros
benefits generated by disposals of assets and equity                                              in available funds generated in 2002.
investments that, net of acquisitions of equity investments,                                      Other changes, equal to 3,226 million euros in fiscal 2003, mainly
totaled 3,955 million euros (net of the cash of sold/acquired                                     refer to the repayment of the financing disbursed by centralized
companies), compared with a positive balance of 2,668 million                                     cash management to companies that are no longer included in
euros in 2002.                                                                                    the scope of consolidation (principally Fidis Retail Italia).




(in millions of euros)                                                                                                                            2003               2002                  2001

A) Cash at January 1                                                                                                                            3,489               2,133                 1,997
B) Cash flows provided by (used in) operating activities:
   Net result before minority interest                                                                                                         (1,948)             (4,263)                 (791)
   Amortization and depreciation                                                                                                                2,269               2,614                 2,880
   Net change in reserve for employee severance indemnities                                                                                      (136)                 (70)                 (77)
   Change in deferred income taxes                                                                                                                422                (884)                 (588)
   Gains on disposals                                                                                                                          (1,873)                124             (1,749)
   Revaluations and writedowns of equity investments                                                                                              177                 525                  372
   Impairment                                                                                                                                     424                 991                     –
   Change in current assets and liabilities:
       Trade receivables                                                                                                                          125                 423                  583
       Net inventories                                                                                                                           (389)              1,325                  (164)
       Trade payables                                                                                                                                6               (104)                1,605
       Other payables, receivables, accruals and deferrals (1)                                                                                   (614)                184                  609
       Reserve for income taxes and other reserves                                                                                               (287)                545                  (413)
       Changes in the scope of consolidation and others                                                                                          (123)               (357)                 168
   Total                                                                                                                                       (1,947)              1,053                 2,435
C) Total cash flows provided by (used in) investment activities:
   Investments in:
       Fixed assets                                                                                                                            (2,011)             (2,771)            (3,438)
       Equity investments                                                                                                                        (212)               (563)            (1,524)
       Intangible assets and deferred charges                                                                                                    (488)               (518)                 (473)
   Investment grants                                                                                                                              134                  90                  100
   Proceeds from the sale of fixed assets                                                                                                       4,167               3,231                 2,652
   Net change in financial receivables                                                                                                          1,146               2,456                  (189)
   Change in securities                                                                                                                        (3,065)               (175)                  (15)
   Change in securities of insurance companies net of policy liabilities and accruals                                                                –                430                   (97)
   Other changes                                                                                                                                3,226                  (84)                 (33)
   Total                                                                                                                                        2,897               2,096             (3,017)
D) Total cash flows provided by (used in) financing activities:
   Increase in borrowings                                                                                                                       1,989             12,047                  8,561
   Repayment of borrowings                                                                                                                     (6,178)             (9,392)            (6,057)
   Net change in short-term borrowings                                                                                                          1,134              (5,358)            (1,140)
   Increase in capital stock                                                                                                                    1,860               1,215                     –
   Purchase of treasury stock                                                                                                                      (18)                (77)                (266)
   Dividends paid                                                                                                                                  (15)              (228)                 (380)
   Total                                                                                                                                       (1,228)             (1,793)                 718
E) Total change in cash                                                                                                                          (278)              1,356                  136
F) Cash at December 31                                                                                                                          3,211               3,489                 2,133
(1) In 2002, this item does not include payment of the balance of assets and liabilities contributed by Fiat Auto to the Fiat-GM Powertrain joint venture, which was posted at the item
    “Changes in the scope of consolidation and others.”
                                    30           Report on Operations   Analysis of the Financial Position and Operating Results
                                                                        of the Fiat Group and Fiat S.p.A




The principal applications of funds during the year consisted of:       The holding companies (Fiat S.p.A., IHF-International Holding
                                                                        Fiat S.A., Fiat Partecipazioni S.p.A., Fiat Netherlands Holding
❚ 2,011 million euros in fixed assets (2,771 million euros in
                                                                        N.V.) were classified under Industrial Activities.
  2002), including investments in vehicles to be leased on a long-
  term basis for 358 million euros (844 million euros in 2002). A       The sub-consolidated financial statements of the Industrial
  significant portion of the decrease is attributable to the sale of    Activity segment also includes companies that operate
  Fraikin (long-term vehicle leasing business) and FiatAvio S.p.A.      centralized cash management activities, i.e. that raise financial
❚ 488 million euros in intangible fixed assets (518 million euros       resources on the market and finance Group companies, without
  in 2002).                                                             providing financial services to others.

❚ A total increase of 3,065 million euros in securities subscribed      When the sub-consolidated figures for the various activities
  to as a temporary and immediately disposable investment               were identified, the relative goodwill was allocated to the
  for the cash generated by the sale of assets made in 2003.            activities themselves.
Financing activities absorbed 1,228 million euros, compared             The transactions relating to the sale of receivables executed
with 1,793 million euros absorbed in 2002.                              at market conditions between the industrial and financial
                                                                        companies of the Group are posted as financial receivables and
In 2003, the absorption of cash flows was mainly attributable
                                                                        payables under Financial Activities. The portion of these items
to the net reimbursement of loans totaling 4,189 million euros –
                                                                        that, according to the last contractual relationship established
which also includes reclassification under payables due within
                                                                        with others, is still of a commercial nature, insofar as it does not
the year of the exchangeable bond of 1,765 million euros
                                                                        yield interest, was reclassified directly in the sub-consolidated
(generation of 2,655 million euros in resources in 2002) – which
                                                                        results of Financial Activities under trade receivables and
was offset by the increase of 1,134 million euros in short-term
                                                                        payables.
payables, although this was due to the previously mentioned
reclassification (absorption of 5,358 million euros in resources in     The discontinuing operations include the activities that were
2002), and the capital increases for a total of 1,860 million euros,    deconsolidated following the sales concluded during fiscal
including the capital increase of 1,836 million euros at Fiat S.p.A.    2003 (Toro Assicurazioni Group, Fraikin, IPI, FiatAvio S.p.A.,
                                                                        Fidis Retail Italia, and the Brazilian retail financing activities),
                                                                        and the remaining financial company which is active in the
Financial Position and Operating Results by Activity Segment            United Kingdom and is still to be sold to Fidis Retail Italia.
The following analyses of the statement of operations and
the balance sheet illustrate the contribution made to the
                                                                        Operating Performance by Activity Segment
consolidated results by the Group’s continuing operations,
broken down by “Industrial Activities” and “Financial Activities,”
(which include the Fiat Auto, CNH and Iveco companies that
                                                                        Industrial Activities
operate retail financing, leasing and rental businesses) and the
activities that were sold or whose sale was pending in 2003             The net revenues for Industrial Activities, including changes in
(discontinuing operations).                                             contract work in progress, totaled 43,380 million euros, for a
The figures for discontinuing operations were classified in             decrease of 7% with respect to the previous year. This decrease
accordance with the provisions of Paragraph 3, Article 39 of            was caused in particular by the negative foreign exchange
Legislative Decree no. 127/91, in view of the significance of           effect, the lower volumes of Fiat Auto, and the reduction in
the changes in the composition of the Group that occurred               Teksid revenues, which in 2002 included the revenues of the
in 2003 or are pending.                                                 Aluminum Business Unit until its disposal in September 2002.
                                                                        The operating result for Industrial Activities in 2003 was a
                                                                        loss of 938 million euros, reflecting a significant improvement
Principles of Analysis
                                                                        from the operating loss of 1,585 million euros reported in the
The classification between Industrial and Financial Activities          previous year, thanks to a lower operating loss at Fiat Auto
(for continuing operations only) was realized by defining               and improved results at CNH, Magneti Marelli, and Comau.
specific sub-consolidated financial statements according to
the normal business performed by each Group company.                    In 2003 EBIT for Industrial Activities was -476 million euros,
                                                                        compared with -4,169 million euros in 2002.
The equity investments held by companies belonging to an                The change reflected a better operating result, the improved
activity segment in companies included in another segment               results of equity investments and, in particular, the positive
were valued according to the equity method.                             balance of non-operating items due to gains realized on
To avoid skewing the operating result of normal operations              disposals, which were partially reduced by expenses and
to be represented here, the effect of this valuation on the             provisions to reserves for restructuring, writedowns and
statement of operations is illustrated under the item “Result           other non-operating expenses and provisions, compared
of intersegment equity investments.”                                    with an extremely negative balance in fiscal 2002.
                                                   31                 Report on Operations            Analysis of the Financial Position and Operating Results
                                                                                                      of the Fiat Group and Fiat S.p.A




Financial Activities                                                                                   Discontinuing Operations
Financial Activities generated net revenues of 1,870 million                                           The net revenues of discontinuing operations totaled 2,949
euros in 2003, approximately 19% lower than the 2,305 million                                          million euros in 2003 and included the first six months of
euros generated in 2002.                                                                               2003 for FiatAvio S.p.A. (623 million euros, compared with
The reduction in revenues is mainly attributable to lower interest                                     1,499 million euros in 2002), the first four months of 2003 for
rates, portfolio selection policies, and the negative effect of the                                    the Toro Assicurazioni Group (1,654 million euros compared
strengthening of the euro against the dollar. Disposals in the                                         with 4,916 million euros in 2002), the revenues of the companies
mobility services segment of the Automobile Sector also had                                            sold to Fidis Retail Italia during the year and the one that is still
a negative impact, which was partially offset by consolidation                                         to be sold (617 million euros compared with 739 million euros
by the Commercial Vehicles Sector for the entire year of a                                             in 2002), and the first quarter of the Brazilian retail financing
company that operates in the field of financing sales outside                                          activities of Fiat Auto (55 million euros compared with 349
Western Europe.                                                                                        million euros in 2002). Furthermore, fiscal 2002 included
The result before taxes of normal Financial Activities (which                                          the revenues of IPI (31 million euros) and Fraikin (517 million euros).
does not include the impact of the result of equity investments                                        The operating income of discontinuing operations in 2003
owned by the financial companies in industrial companies)                                              totaled 204 million euros, consisting of: six months of FiatAvio
totaled -22 million euros, compared with +180 million euros                                            S.p.A. (54 million euros compared with 218 million euros in
in fiscal 2002.                                                                                        2002), the first four months of 2003 for the Toro Assicurazioni
This decrease is mainly attributable to a lower result from                                            Group (35 million euros compared with 108 million euros in
equity investments, in particular the company Leasys, and                                              2002), the operating income of the companies sold to Fidis
higher net non-operating expenses, which amounted to 119                                               Retail Italia during the year and the one that is still to be sold
million euros (positive balance of 35 million euros in 2002)                                           (108 million euros compared with 142 million euros in 2002),
and derive in particular from revision of the operating and                                            and the first quarter of the Brazilian retail financing activities
organizational processes of the rental companies of the                                                of Fiat Auto (7 million euros against 77 million euros in 2002).
Automobile Sector, and the residual loss caused by the                                                 Furthermore, fiscal 2002 included the operating income of
sale of Fraikin.                                                                                       IPI (21 million euros) and Fraikin (20 million euros).




                                                                                                                           2003                                                                 2002
                                                                                   Industrial        Financial    Discontinuing                           Industrial       Financial    Discontinuing
(in millions of euros)                                       Consolidated          Activities        Activities     Operations     Consolidated           Activities       Activities     Operations

Net revenues                                                      47,271            43,380             1,870             2,949           55,649            46,624             2,305           8,051
Cost of sales                                                     40,830            37,985             1,235             2,538           48,619            41,230             1,622           7,098
Gross operating result                                              6,441            5,395               635               411             7,030            5,394               683             953
Overhead                                                            4,748            4,186               323               239             5,782            4,778               414             590
Research and development                                            1,747            1,724                   –               23            1,748            1,694                  –              54
Other operating income (expenses)                                    (456)             (423)              (88)               55             (262)             (507)              (32)           277
Operating result                                                     (510)             (938)             224               204              (762)           (1,585)             237             586
Investment income (expenses) (*)                                     (156)               (16)             (63)              (46)            (690)             (282)                3            (360)
Non-operating income (expenses) (**)                                  347               478              (119)              (12)          (2,503)           (2,302)               35            (236)
EBIT                                                                 (319)             (476)               42              146            (3,955)           (4,169)             275              (10)
Financial income (expenses)                                          (979)           (1,003)              (64)               88             (862)             (999)              (95)           232
Result before taxes                                                (1,298)           (1,479)              (22)             234            (4,817)           (5,168)             180             222
Income taxes                                                          650               486                55              109              (554)             (751)               52            145
Net result of normal operations                                    (1,948)           (1,965)              (77)             125            (4,263)           (4,417)             128               77
Result of intersegment investments                                        –              13              (326)                 –                –              141              (286)            (14)
Net result before minority interest                                (1,948)           (1,952)             (403)             125            (4,263)           (4,276)             (158)             63
(*) This item includes investment income (expenses) as well as writedowns and upward adjustments in non-intersegment equity investments valued using the equity method.
(**) The 2003 figure for Industrial Activities includes 1,766 million euros in net gains on disposals of assets, while the figure for Financial Activities includes a net loss on disposals
     of 24 million euros.
                                               32                  Report on Operations          Analysis of the Financial Position and Operating Results
                                                                                                 of the Fiat Group and Fiat S.p.A




Balance Sheet by Activity Segment

                                                                                                               At 12.31.2003                                               At 12.31.2002
                                                                                    Industrial      Financial Discontinuing                      Industrial     Financial Discontinuing
(in millions of euros)                                             Consolidated     Activities      Activities  Operations Consolidated          Activities     Activities  Operations

❚ ASSETS
Intangible fixed assets                                                 3,724         3,600             124               –         5,200             4,242         157            801
   Intangible fixed assets                                              1,322         1,293              29               –         1,600             1,340          31            229
   Goodwill                                                             2,402         2,307              95               –         3,600             2,902         126            572
Property, plant and equipment                                           9,675         8,750             925               –        12,106             9,450       1,179          1,477
   Property, plant and equipment                                        8,761         8,742              19               –        10,521             9,450          60          1,011
   Operating leases                                                       914             8             906               –         1,585                 –       1,119            466
Financial fixed assets                                                  3,950         5,119             713               –         6,638             7,912         692          3,053
Investments on behalf of life insurance
policyholders who bear the risk                                             –            –               –                –         6,930              –             –           6,930
Financial receivables held as fixed assets                   (*)           29           28               1                –            48             46             1               1
Deferred tax assets                                                     1,879        1,794              81                4         3,499          3,192           187             120
Total Non-Current Assets                                               19,257       19,291           1,844                4        34,421         24,842         2,216          12,382
Net inventories (1)                                                     6,912        6,878              34                          7,050          6,423            37             590
Trade receivables                                                       4,553        4,294             525               6          5,784          3,946         1,371           1,059
Other receivables                                                       3,081        2,801             476               –          3,351          2,371           663             507
Financial assets not held as fixed assets                                 120          120               –               –          6,094            143             –           5,956
Finance lease contracts receivable                           (*)        1,797            –           1,797               –          2,947              –         1,462           1,485
Financial receivables                                        (*)       10,750       10,545           8,272             752         18,411         15,003         9,968           6,990
   Financial receivables from others                                   10,750        2,086           7,917             747         18,411          2,456         9,479           6,476
   Intersegment financial receivables                                       –        8,459             355               5              –         12,547           489             514
Securities                                                   (*)        3,789        3,670             119               –          1,507            386           338             783
Cash                                                         (*)        3,211        3,121              77              13          3,489          2,746           153             590
Total Current Assets                                                   34,213       31,429          11,300             771         48,633         31,018        13,992          17,960
Trade accruals and deferrals                                              407          347              40              24            579            402            64             117
Financial accruals and deferrals                             (*)          386          417              22               –            661            414            51             196
❚ TOTAL ASSETS                                                         54,263       51,484          13,206             799         84,294         56,676        16,323          30,655

❚ LIABILITIES AND STOCKHOLDERS’ EQUITY
Stockholders’ equity                                                    7,494         7,493           1,851             32          8,679             8,351       1,504          3,676
Deferred income tax reserves                                              211           135              76              –          1,236               940         148            148
Reserves for risks and charges                                          5,168         4,996             159             13         15,390             5,532         314          9,716
Reserves for employee severance indemnities                             1,313         1,304               9              –          1,609             1,437           9            163
Policy liabilities and accruals where the
investment risk is borne by policyholders                                   –            –                –              –          7,000              –              –          7,000
Long-term financial payables                                 (*)       15,418       14,495            2,581            304         20,613         17,742          4,321          2,019
   Financial payables to others                                        15,418       14,480              634            304         20,613         17,378          1,216          2,019
   Intersegment financial payables                                          –           15            1,947              –              –            364          3,105              –
Total Non-Current
Liabilities                                                            22,110       20,930            2,825            317         45,848         25,651          4,792         19,046
Trade payables                                                         12,588       12,827              103             10         13,267         12,503            459            883
Other payables                                                          3,170        3,042              235             11          4,771          3,546            246          1,187
Short-term financial payables (2)                            (*)        6,616        5,495            7,683            295          8,310          4,855          8,798          4,738
   Financial payables to others                                         6,616        5,150            1,187            279          8,310          4,220          1,954          2,136
   Intersegment financial payables                                          –          345            6,496             16              –            635          6,844          2,602
Total Current Liabilities                                              22,374       21,364            8,021            316         26,348         20,904          9,503          6,808
Trade accruals and deferrals                                            1,329        1,165              141             25          1,499          1,145            205            149
Financial accruals and deferrals                             (*)          956          532              368            109          1,920            625            319            976
❚ TOTAL LIABILITIES AND
  STOCKHOLDERS’ EQUITY                                                 54,263       51,484          13,206             799         84,294         56,676        16,323          30,655

❚ NET FINANCIAL POSITION                                     (*)        (3,028)      (2,741)           (344)            57          (3,780)           (4,627)    (1,465)         2,312
(1) Net of advances received for contract work in progress (8,448 million euros at December 31, 2003 and 8,227 million euros at December 31, 2002).
(2) The item includes the 1,765-million-euro exchangeable bond payable in 2004.
                                          33           Report on Operations        Analysis of the Financial Position and Operating Results
                                                                                   of the Fiat Group and Fiat S.p.A




Breakdown of net indebtedness and net financial position by Activity Segment

                                                                                                 At 12.31.2003                                           At 12.31.2002
                                                                      Industrial      Financial Discontinuing                 Industrial      Financial Discontinuing
(in millions of euros)                                 Consolidated   Activities      Activities  Operations Consolidated     Activities      Activities  Operations

Financial payables net of intersegment activities         (22,034)    (11,531)         (9,909)          (594)    (28,923)     (10,050)        (12,630)        (6,243)
Accrued financial expenses                                    (593)       (416)          (171)             (6)      (785)         (555)          (108)           (122)
Prepaid financial expenses                                      85          68             17               –        118            63             19              36
Cash                                                        3,211       3,121              77             13       3,489        2,746             153            590
Securities                                                  3,789       3,670             119               –      1,507           386            338            783
Net Indebtedness                                          (15,542)     (5,088)         (9,867)          (587)    (24,594)       (7,410)       (12,228)        (4,956)
Financial receivables and lease contracts receivable       12,576       2,114           9,715            747     21,406         2,502         10,942           7,962
Accrued financial income                                      301         298               3               –        543           351             32            160
Deferred financial income                                     (363)        (65)          (195)          (103)     (1,135)          (70)          (211)           (854)
Net Financial Position                                      (3,028)    (2,741)           (344)            57      (3,780)       (4,627)        (1,465)         2,312



Cash and cash equivalents collected by the centralized cash                        (from 3,132 million euros at December 31, 2002 to 6,791
management during its activity have been recorded in the item                      million euros at December 31, 2003).
Financial payables net of intersegment activities in the Industrial
                                                                                   When the changes in the Group’s financial structure over
Activities column. However, funds that were transferred to other
                                                                                   the year are analyzed, it must be remembered that:
Activities, and in particular Financial Activities, were posted net
of the relative intersegment relationships, as shown in the table                  ❚ deconsolidation of the sold companies (Discontinuing
below.                                                                               Operations) caused a reduction in net indebtedness of
                                                                                     approximately 4.4 billion euros with respect to December
During 2003, the Group strengthened its financial structure                          31, 2002;
by reducing net indebtedness (financial payables net of                            ❚ Industrial Activities show a net indebtedness of
intersegment activities, cash and marketable securities)                             approximately 5.1 billion euros, down from the 7.4 billion
from 24,594 million euros to 15,542 million euros.                                   euros in the previous year in consequence of the proceeds
Cash and marketable securities increased by a total of 2,004                         from disposals and the capital increase at Fiat S.p.A., net
million euros. At December 31, 2002 the balance included                             of operating requirements during the period;
cash and marketable securities of companies that have been                         ❚ Financial Activities show a reduction in the financed portfolio
sold (the Toro Assicurazioni Group in particular). If cash                           and corresponding indebtedness. This reduction is partially
and marketable securities of Industrial Activities alone are                         due to the effects of conversion of the portfolios denominated
considered (as stated previously, Industrial Activities include                      in currencies other than the euro and partially reflects an
companies that operate centralized cash management activities                        actual reduction in the outstanding balance of financing,
for the Group), the increase amounted to 3,659 million euros                         in consequence of lower levels of activity.




                                                                                                 At 12.31.2003                                           At 12.31.2002
                                                                      Industrial      Financial Discontinuing                 Industrial      Financial Discontinuing
(in millions of euros)                                 Consolidated   Activities      Activities  Operations Consolidated     Activities      Activities  Operations

Short-term financial payables to others                     6,616       5,150           1,187            279       8,310        4,220           1,954          2,136
Long-term financial payables to others                     15,418     14,480              634            304     20,613        17,378           1,216          2,019
(Intersegment financial receivables)                             –     (8,459)           (355)             (5)         –      (12,547)           (489)           (514)
Intersegment financial payables                                  –        360           8,443             16           –           999          9,949          2,602
Financial payables net of
intersegment activities                                    22,034     11,531            9,909            594     28,923        10,050         12,630           6,243
                                      34          Report on Operations    Analysis of the Financial Position and Operating Results
                                                                          of the Fiat Group and Fiat S.p.A




FINANCIAL POSITION AND OPERATING PERFORMANCE                              million euros by the net gain realized on the sale of 34% of
OF FIAT S.P.A.                                                            Ferrari S.p.A. to Mediobanca S.p.A.
                                                                          Income taxes totaled 61 million euros, resulting from cancellation
Statement of Operations                                                   of the net deferred tax assets set aside in previous years, as
                                                                          there is no reasonable certainty that they will be recovered
The net loss of the Parent Company for the fiscal year as resulting       in subsequent fiscal years.
from the Statement of Operations was 2,359 million euros,                 For the same reason, tax prepayments on the tax loss for
compared with a net loss of 2,053 million euros in fiscal 2002.           the fiscal year were not counted.
The following table contains a breakdown of this result:                  Income taxes in 2002 were represented by 55 million euros
                                                                          in prepaid income taxes to be recovered.
(in millions of euros)                               2003         2002

Investment income                                     400         278
                                                                          Balance Sheet
Adjustments                                        (2,379)     (2,866)
Net financial expenses                               (169)         (26)   The following table illustrates highlights of the Balance Sheet
Cost of personnel and services, less revenues        (130)       (126)    of the Parent Company:
Non-operating income (expenses)                        (20)       632
                                                                          (in millions of euros)                               At 12/31/2003 At 12/31/2002
Income taxes                                           (61)         55
Net result                                         (2,359)     (2,053)    Fixed assets                                                7,404        8,144
                                                                          Working capital                                                77         (169)
                                                                          Total net invested capital                                  7,481        7,975
Net investment income totaled 400 million euros. It consists of           Stockholders’ equity                                        5,415        5,934
dividends, including the respective tax credits, paid by subsidiaries     Net Financial Position                                     (2,066)      (2,041)
and associated companies.
A breakdown of the dividends received in 2003 and 2002 is
provided in the Notes to the Financial Statements of Fiat S.p.A.          Fixed assets consist mainly of investments in the Group’s
                                                                          principal companies. The total value at December 31, 2003 was
Adjustments totaled 2,379 million euros in 2003 and principally           7,282 million euros, for a net decrease of 768 million euros since
reflect the writedowns in the book value of the subsidiaries Fiat         December 31, 2002.
Partecipazioni S.p.A. (formerly Sicind S.p.A.) due to the negative
performance of the Automobile Sector (1,210 million euros), Fiat          The principal increases involved the subscription of capital
Netherlands Holding N.V. due to losses at the subsidiaries Iveco          increases at Fiat Partecipazioni S.p.A. (formerly Sicind S.p.A.)
and CNH (1,000 million euros), and Magneti Marelli Holding S.p.A.         (100 million euros), Comau B.V. (100 million euros) and CNH
(144 million euros).                                                      (“preference shares”) subsequently contributed to Fiat
In 2002, the adjustments were mainly accounted for by Fiat                Netherlands Holding N.V. (1,382 million euros).
Partecipazioni S.p.A. (1,189 million euros), Fiat Netherlands             The decreases mainly stem from a total of 2,374 million euros
Holding N.V. (732 million euros), Comau B.V. (350 million euros),         in writedowns of the subsidiaries Fiat Partecipazioni S.p.A., Fiat
Sicind S.p.A. (291 million euros), and Iveco N.V. (280 million euros).    Netherlands Holding N.V. and Magneti Marelli Holding S.p.A.

Net financial expenses totaled 169 million euros, against 26              Working capital consists of receivables from and payables to Tax
million euros in 2002, representing an increase of 143 million            Authorities, trade receivables and payables, and receivables
euros, mainly due to the increase in average indebtedness                 from and payables to employees for 49 million euros, and ordinary
caused by investments in equity interests.                                treasury stock for 28 million euros (4,384,019 shares). It shows an
                                                                          increase of 246 million euros with respect to December 31, 2002,
The cost of personnel and services, less revenues, totaled 130            primarily in consequence of reimbursement of the 250 million
million euros (126 million euros in 2002). In particular, the cost        euros in cash collateral paid in 2002 by the CAV.TO.MI. consortium
of personnel and services totaled 243 million euros, compared             as security for the issuance of contractually agreed suretyships.
with 221 million euros in 2002. The 22-million-euro increase stems
mainly from higher costs related to personnel who left the                Stockholders’ equity totaled 5,415 million euros at December
Company. The average number of employees was 167 (including               31, 2003, for a decrease of 519 million euros since the end of
15 seconded to the principal companies of the Group),                     2002. The changes are the net result of the capital increase
compared with 210 employees in 2002 (including 16 seconded                resolved by the Board of Directors on June 26, 2003 (1,836
employees). Revenues totaled 113 million euros, or an increase            million euros) and the net loss for the year (2,359 million euros).
of 18 million euros over the previous fiscal year. They included          Net financial position at the end of 2003 was negative by 2,066
royalties from the right to use the Fiat trademark, computed as           million euros, against 2,041 million euros in the previous year.
a percentage of the sales of the individual Group companies,              It includes the Convertible Facility of 3 billion euros granted by
and fees for services rendered by management personnel.                   a pool of banks which expires in September 2005, as described
Net non-operating expenses totaled 20 million euros and                   in detail in the specific section of the Notes to the Financial
largely comprised commissions paid to Mediobanca for the                  Statements of Fiat S.p.A. The worsening stems mainly from the
postponement of the commitments undertaken by Mediobanca                  previously described investments in equity holdings, which were
itself in the framework of the Ferrari contract mentioned in Note         partially offset by the amounts collected for the capital increase.
14 of the Financial Statements of Fiat S.p.A. (16 million euros).         An analysis of cash flows is provided at the end of the Notes to
In 2002, net non-operating income was represented for 630                 the Financial Statements of S.p.A.
                                     35           Report on Operations




                                     Process of Transition to International Accounting
                                     Standards (IAS/IFRS)

Following the coming into force of European Regulation No.               incurred; other research and development costs will continue
1606 dated July 2002, EU companies traded on EU regulated                to be recorded in the statement of operations, when they are
markets are required to adopt IAS/IFRS in the preparation of             incurred.
their 2005 consolidated financial statements.
Commencing with the first half of 2003, the Fiat Group set               Other intangible fixed assets
up an IAS/IFRS implementation program with working groups
which operated first at a parent company level and then at               In contrast to current Italian laws, under IAS 38 the majority
the level of principal operating companies. Reviews were                 of start-up and expansion costs are recorded in the statement
conducted of the IAS/IFRS in force and the principal changes             of operations when they are incurred. Start-up and expansion
present in the proposals for the revision of those standards,            costs related to increases in capital stock, financing transactions
which to date have not been finalized.                                   and similar transactions are recorded as a reduction of either
                                                                         the related reserves in stockholders’ equity or of the financing
As at the end of 2003:                                                   issued.
❚ the principal differences between the accounting principles            Changes to the present IAS 38 introduce the concept of
  currently followed by the Fiat Group, in compliance with               intangible fixed assets with an indefinite useful life which,
  the laws relating to financial statements interpreted and              accordingly, will no longer be subject to amortization; this
  integrated in accordance with Italian accounting principles,           principle also extends to goodwill deriving from business
  and the applicable provisions of IAS/IFRS were identified;             combinations. These intangible fixed assets should be subject
❚ an action plan was formulated that was aimed at identifying            to annual impairment tests on the smallest group of assets that
  the steps required to adapt the Group’s corporate processes            generates cash inflows which are largely independent of other
  and information systems so as to render them capable of                cash inflows (cash generating unit), comparing the carrying
  supplying the information necessary for the preparation of the         amount to the related market value or “value in use”.
  Group’s 2005 consolidated financial statements in accordance
  with IAS/IFRS, and to permit the processing of the information
                                                                         Writedown of assets
  related to 2004, to be presented for comparative purposes.
                                                                         If not stated otherwise in individual applicable accounting
Based on the results of the work performed, the principal
                                                                         standards, IAS/IFRS require assessment of whether assets are
differences that will have an effect on consolidated stockholders’
                                                                         impaired in the presence of indications which lead to the
equity as at January 1, 2004, restated in accordance with the
                                                                         belief that this problem may exist.
new accounting standards, and on the future economic results
are set out below.                                                       The methods provided for determining recoverability of
                                                                         the carrying amount are more specific than those currently in
                                                                         force in Italy, where, however, only the concept of permanent
General principles                                                       impairment in value is observed. On the contrary, under IAS the
                                                                         impairment in value (not necessarily permanent) is determined
The adoption of the new body of accounting standards will
                                                                         by comparing the carrying amount to the higher of the net
involve a reassessment not only of the accounting valuation
                                                                         selling price and the value in use of the asset (or a group of
criteria, but also of the format of the financial statements and
                                                                         assets – or cash generating units).
the contents of the related notes.
As regards the principles of recognition and measurement of
financial statement components, the most significant changes             Revenue recognition
relate to the following:                                                 In relation to the new general principles set out above (transfer
❚ replacement of the principle of the transfer of risks and benefits     of risks and benefits), various examples of contracts which set
  in respect of the recording and reversal of certain transactions       out the recognition of revenue were analyzed. The most
  at the time of transfer of ownership, giving prevalence to the         significant difference relates to revenues deriving from vehicle
  substance of the transaction over its legal form;                      sales with a buyback option, which are currently recognized in
                                                                         full at the time of formal transfer of ownership of the vehicle.
❚ use of alternative valuation criteria to historical cost (where        In accordance with IAS, these sales should be recorded as
  expressly requested), such as fair value (particularly for financial   operating leases.
  instruments) and present value (for medium-long term reserves).

                                                                         Financial instruments
Capitalization of development costs
                                                                         IAS 32 and 39 provide that companies classify financial
Development costs which meet the conditions set out in IAS 38            instruments, as a function of their destination, in different
must be capitalized, whereas at present they are for the most            categories than that provided by the laws in force in Italy. The
part recognized in the statement of operations when they are             basis of recognition, measurement and valuation of financial
                                   36            Report on Operations   Process of Transition to International Accounting
                                                                        Standards (IAS/IFRS)




instruments will derive from that classification and, accordingly,      in accordance with a specific actuarial method (“Project Unit
in certain cases could be substantially different from the              Credit Method”). As a consequence of the adoption of the
present basis.                                                          above-mentioned accounting standard, the employee severance
                                                                        indemnity (TFR) recorded in the financial statements of Italian
In accordance with these standards, derivative financial
                                                                        subsidiaries must be recalculated.
instruments are also financial assets and liabilities which must
be recorded in the balance sheet, in contrast to that set forth
by Italian accounting principles, which provide that they should
                                                                        Reserves for risks and charges
be recorded in the memorandum accounts, except in certain
circumstances in which they should be recorded in the balance           In accordance with IAS 37, reserves for risks and charges are
sheet.                                                                  only recorded when there is a present obligation, as a result
The overall effect of the adoption of these standards could             of a past event, which may be legal, contractual or derive from
vary depending on the way in which they are introduced into             the company’s declarations or actions which result in valid
European law and the likelihood of additional changes being             expectations by the parties involved (constructive obligations).
made by the IASB. However, at present it is expected that               Certain reserves which are at present recorded, in accordance
potentially significant effects on gross indebtedness may derive        with the Italian laws in force, may not satisfy all of the conditions
from the different accounting treatment of receivables and bills        provided by IAS for their recognition. Furthermore, in accordance
discounting transactions, in particular those with recourse and         with IAS 37 accruals are recorded at the value represented by
securitization.                                                         the best estimate of the amount that the company would pay
                                                                        to settle the obligation and, where the effect of the time value
                                                                        of money is material, the estimated cost should be discounted
Employee benefits                                                       to present value, a technique not contemplated by current
IAS 19 sets out the method of accounting for employee benefits          Italian laws.
and, accordingly, the Group dedicated a specific working group
to the analysis of labor legislation, in Italy and abroad, in order
                                                                        Consolidated financial statements
to identify any differences with current principles. In particular,
with regard to post-employment defined benefit programs,                In the first financial statements prepared in accordance with
IAS 19 requires that the obligation accrued to the balance              IAS/IFRS, at the transition date, the principles of consolidation
sheet date be projected into the future, in order to estimate           set forth in IAS 27 will be applied. These principles differ from
the amount to be paid upon termination of employment,                   those presently set forth by Italian law particularly in respect of
and subsequently the present value should be determined                 the consolidation of subsidiaries that carry out dissimilar activities.
                                   37           Report on Operations




                                   Corporate Governance


The Fiat Group adopted and abides by the Corporate                     its executive directors, its controlling companies or subsidiaries,
Governance Code of Italian listed companies, which is                  or kinship ties to the executive directors of these companies
mentioned as a model in the regulations issued by Borsa                such as to compromise their independent judgment.
Italiana (Italian Stock Exchange) on corporate governance.
                                                                       The Board of Directors recently confirmed that the directors
Furthermore, as an issuer of financial instruments listed on           Angelo Benessia, Flavio Cotti, Luca Garavoglia, Hermann-Josef
various international markets, including the New York Stock            Lamberti, and Sergio Marchionne satisfied these requirements
Exchange, Fiat adopted a system of corporate governance                of independence.
in line with the principles of international best practice and
                                                                       The presence of five independent directors amply satisfies
in particular United States laws, which were recently updated
                                                                       the requirements envisaged in the recommendations of the
by the Sarbanes-Oxley Act.
                                                                       Corporate Governance Code.
An Annual Report on Corporate Governance is prepared
in accordance with the Regulations of the Borsa Italiana               Some of the current directors also hold positions at other listed
and United States laws regulating foreign issuers. This report         companies or of a significant interest. Excluding the positions
is available in the section “Investor Relations” on the website        held by executive directors at the Fiat Group, the most
“www.fiatgroup.com,” although extensive excerpts from it               significant are as follows:
are reproduced in the paragraphs that follow.                          ❚ Umberto Agnelli: Chairman of Giovanni Agnelli e C. Sapa,
Section III “US Corporate Governance Standards” of said                  Chairman of IFI S.p.A., Director of Mediobanca S.p.A. and
report specifically deals with the main differences between              Worms & Cie
the corporate governance model we adopted and the one                  ❚ Angelo Benessia: Vice Chairman of RCS Quotidiani S.p.A.
that US issuers of listed securities are required to comply with.
                                                                       ❚ Luca Cordero di Montezemolo: Director of Tod’s S.p.A.,
Frequent reference will also be made to the current Articles             Merloni Elettrodomestici S.p.A., Unicredit Banca d’Impresa
of Association, to which major revisions are proposed both               S.p.A., and Pinault Printemps Redoute
in consequence of the recent reform of corporate law and the
most recent trends in corporate governance. When relevant,             ❚ Flavio Cotti: Chairman of the Advisory Board of Credit Suisse
the amendments that will be submitted for consideration                  Group
by the Stockholders’ Meeting will be illustrated together              ❚ John Elkann: Director of Giovanni Agnelli e C. Sapa,
with the currently applicable rules envisaged in the Articles            IFI S.p.A. and Exor Group
of Association.
                                                                       ❚ Luca Garavoglia: Chairman of Davide Campari Milano S.p.A.
                                                                       ❚ Franzo Grande Stevens: Chairman of P. Ferrero & C. S.p.A.
Board of Directors                                                       and Juventus S.p.A., Director of IFI S.p.A., IFIL S.p.A., Davide
As envisaged in the Articles of Association, the number of               Campari Milano S.p.A., IPI S.p.A., Pininfarina S.p.A., RCS
members of the Board of Directors ranges from nine to fifteen.           Mediagroup S.p.A, Toro Assicurazioni S.p.A., Banca del
The Stockholders’ Meeting held on May 13, 2003 set the                   Piemonte, Banca Sella and Exor Group
number of members of the Board of Directors at eleven for              ❚ Hermann-Josef Lamberti: Member of the Managing Board
fiscal years 2003, 2004, and 2005, and they shall remain in office
                                                                         of Deutsche Bank AG, Director of Eurex Deutschland,
until the date of the Stockholders’ Meeting that will be called
                                                                         Euroclear Bank S.A. and Schering AG
to approve the 2005 Annual Report.
                                                                       ❚ Sergio Marchionne: Chairman of Lonza Group AG, Chief
The current members are comprised by three executive
                                                                         Executive Officer of SGS S.A., Director of Serono S.A.
directors and eight non-executive directors – that is, who do not
hold delegated authority or perform executive functions in the         ❚ Daniel J. Winteler: Director of IFIL S.p.A., Worms & Cie,
Company or the Group – five of whom are independent.                     ClubMed and Juventus S.p.A.
The executive directors are the Chairman, the Chief Executive          The Company’s Articles of Association do not envisage
Officer, and the director Luca Cordero di Montezemolo, who,            special rules for the appointment of Directors or nomination
although he does not hold specific positions in accordance with        of candidates. Nevertheless, the majority stockholder has
the Articles of Association, is defined as an executive director       made it a rule to comply with the recommendations set
insofar as he is the head of the Ferrari-Maserati sector, in which     forth in this respect by the Corporate Governance Code.
he holds the most important corporate positions with broad             Consequently, also on the occasion of the Stockholders’
powers.                                                                Meeting of May 13, 2003 which appointed the new Board
The requirements for qualifying as independent directors,              of Directors, it deposited the nominations and curricula vitae
which were recently tightened under both Italian and United            of the candidates ten days before the date of the first call
States law, are reviewed annually and based on the absence             for the Stockholders’ Meeting.
of investment in or economic relationships with the Company,
                                    38           Report on Operations   Corporate Governance




Delegation of Powers and Responsibilities in                            According to the proposed amendment, the directors with
the Board of Directors                                                  delegated powers report at Board meetings on the general
In accordance with the Company’s Articles of Association                operating performance and business outlook of the company
(Article 18), the representation of the company is invested,            and the most significant transactions carried out by the
severally, in those directors who hold corporate offices. As in         company or its subsidiaries. Furthermore, the Board examines
the past, the Board of Directors adopted a model for delegation         the strategic, industrial, and financial plans, assesses the
of broad operating powers to the Chairman and Chief Executive           adequacy of the organizational, administrative, and accounting
Officer, severally, authorizing them to perform all ordinary and        structure of the company, and, on the basis of the reports
extraordinary acts that are consistent with the Company’s               of the bodies with delegated powers, its general operating
purpose and not reserved by law or otherwise delegated or               performance. Every director must report to the Board of
reserved to the Board of Directors itself. In practice, the             Directors and Board of Statutory Auditors all interests that
Chairman coordinates the activities of the Board of Directors           he might have directly or on behalf of others in a specific
and exercises strategic guidance, while the Chief Executive             transaction of the company.
Officer is responsible for executive management.                        In 2003 the Board met thirteen times to examine and vote on
The Board defined the “Guidelines for Significant Transactions          resolutions regarding operating performance in the various
and Transactions with Related Parties,” by which it reserved            Sectors of activity, quarterly reports, strategic relaunch plan,
the right to examine and approve in advance any transaction             capital increase, budget, motions regarding the organizational
of significance in the balance sheet, economic and financial            structure, significant transactions and transactions with related
figures, including the most significant transactions with related       parties submitted by the executive directors, appointments
parties, and decided to subject all transactions with related           of company officers, the activity of the Audit Committee, and
parties to special criteria of substantial and procedural fairness.     motions submitted by the Nominating and Compensation
Therefore, decisions regarding significant transactions are             Committee, determining the compensation for executive
excluded from the mandate granted to executive directors.               directors, upon approval by the statutory auditors. The
The term “significant transactions” refers to those transactions        documents containing the information useful for discussion
that in and of themselves require the company to inform the             were sent to the directors and statutory auditors in the days
market thereof, in accordance with rules established by                 preceding the meetings, with the exception of urgent or
regulatory authorities.                                                 particularly confidential matters.
When the Company needs to execute significant transactions,
the bodies with delegated powers shall provide the Board of
Directors reasonably in advance with a summary analysis of the          Committees
strategic consistency, economic feasibility, and expected return        The Board established the Nominating and Compensation
for the Company.                                                        Committee and the Audit Committee, while it has not yet found
Decisions regarding the most significant transactions with              it necessary to establish a Committee for the nomination of
related parties are also excluded from the mandate granted              directors, having previously entrusted the Chairman with the
to executive directors, while all transactions with related parties     task of coordinating the submission of proposals and nominees.
shall comply with special criteria of substantial and procedural
fairness and the Board of Directors shall be informed thereof.
                                                                        Nominating and Compensation Committee
The principle of group decision making, to be adopted in
                                                                        The Board of Directors established an internal Nominating and
significant cases, is also subject to a wide ranging process
                                                                        Compensation Committee that is comprised of the following
of review by the boards of directors of the Group companies
aimed at redefining the structure of authority granted to the           five directors, three of whom are non-executive directors, with
respective executive directors.                                         two of these in turn being independent directors: Umberto
                                                                        Agnelli (Chairman), Flavio Cotti, Franzo Grande Stevens,
The Company’s Articles of Association (Article 15) prescribe that       Hermann Josef Lamberti, and Giuseppe Morchio. The basic
the Board of Directors must meet at least once quarterly and that       rules governing the composition, duties, and functioning of
on those occasions the directors with delegated powers report
                                                                        the Committee are envisaged in the Charter of the Nominating
to the Board of Directors and the Board of Statutory Auditors
                                                                        and Compensation Committee.
on the activities performed in the exercise of their powers, on
the most significant transactions carried out by the company or         The Committee expresses its opinions on proposals regarding
its subsidiaries, and on those that represent potential conflicts       the general compensation policies applicable to senior
of interest. One of the proposed amendments to the Articles             management and appointment of the executive directors at
of Association would modify this clause pursuant to the newly           the principal subsidiaries. It participates in the definition and
amended provisions of Article 2381 of the Italian Civil Code,           elaboration of stock option plans to be submitted for approval
which received the recommendations of the Corporate                     by the Board of Directors and makes proposals to the Board,
Governance Code with which Fiat already complied.                       in the absence of the interested parties, on the individual
                                     39           Report on Operations   Corporate Governance




compensation of the Chairman, Chief Executive Officer, and the           and the Internal Control Compliance Officer shall participate
other directors with particular duties.                                  at Committee meetings.
In 2003, the Nominating and Compensation Committee met                   The directors who hold corporate posts, the external auditors,
five times to discuss the submission to the Board of Directors           the Chief Accounting Officer, and possible other parties shall
of motions concerning the definition of compensation and                 participate at Committee meetings on invitation by the
stock option plans for the Group’s senior managers and                   Committee Chairman. The Committee shall meet in the
new appointments at the Group’s Parent Company and for                   absence of the directors who hold corporate posts at least
corporate posts at the lead companies of the various Sectors.            twice each fiscal year.
The compensation of directors, as decided by the Stockholders’           The Committee met seven times in 2003. Its most significant
Meeting of May 13, 2003, consists of a fixed fee of 50,000 euros         activities included review of the organizational position of the
annually, attendance compensation of 3,000 euros for every               Internal Audit function, which now reports directly to the Chief
board or committee meeting attended, and the proportional                Executive Officer, with the head of this function now being
amount of the premium of the insurance policy covering civil             vested with the title of Internal Control Compliance Officer
liability resulting from legal and contractual obligations inherent      and Compliance Officer pursuant to the Compliance Program
in the office of director.                                               envisaged in Legislative Decree no. 231/2001, and responsibility
                                                                         for reviewing proposals to renew the contract of the external
The Board of Directors, with the approval of the Board of
                                                                         auditors, the rules for commissioning work from entities
Statutory Auditors, granted the Chairman and Chief Executive             other than the external auditors and parties related to them
Officer a fixed compensation pursuant to Article 2389 of the             (non-audit services), and the procedures for implementation
Italian Civil Code. Furthermore, as compensation that varies             of the Disclosures & Controls Procedures in application of
according to performance, the Chief Executive Officer was                the Sarbanes Oxley Act. During the first quarter of 2004,
granted stock options whose exercise is partially subject to             the Committee met twice.
satisfaction of predetermined profitability targets by specific dates.
                                                                         This Committee is comprised by three independent Directors:
Detailed information on the compensation of directors and                A. Benessia (Chairman), L. Garavoglia, and S. Marchionne.
the stock options is provided in the Notes to the Financial
Statements of Fiat S.p.A.                                                The Internal Control Compliance Officer is appointed by the
                                                                         Board of Directors and is not subject to the jurisdiction of
                                                                         operating managers but instead reports solely to the Chief
Internal Control System and Audit Committee                              Executive Officer, the Committee, and the Board of Statutory
                                                                         Auditors.
In 1993 Fiat published a Code of Ethics, and in May 1999 it
adopted an Internal Control System based on a model derived              At present, the Internal Control Compliance Officer is the
from the COSO Report. The Board of Directors then decided to             head of the Internal Audit function and relies upon the services
disseminate an “Internal Control System Policy” and establish            performed by Fiat Revi, a highly skilled and capable consortium
an Audit Committee.                                                      company that carries out internal audit within the Group.

In 2002 a more detailed Charter of the Audit Committee was               An essential part of the Internal Control System, in addition to
drafted and subsequently approved by the Board of Directors.             the Code of Conduct that replaced the Code of Ethics in 2002,
The “Guidelines for the Internal Control System” were also               is the Compliance Program which was adopted following the
drafted to receive the changes made to the Corporate                     Board resolution of February 28, 2003 pursuant to the “Norms
Governance Code. These guidelines came into effect on                    Governing the Administrative Liability of Legal Entities”
                                                                         envisaged in Legislative Decrees no. 231/2001 and no. 61/2002.
January 1, 2003.
                                                                         The Compliance Program of the Fiat Group, which was drafted
The Audit Committee must be comprised of at least three
                                                                         in conformity with the guidelines prepared by Confindustria
independent directors. The mission of the Committee is to
                                                                         (the Federation of Italian Industries), is comprised of a General
assist the Board of Directors in discharging its own duties by
                                                                         Part and two Special Parts (Offenses Committed in Relations
providing it with advice and proposals concerning: the reliability
                                                                         with Public Agencies, and White Collar Crimes). A Compliance
of the accounting system and financial information; the Internal
                                                                         Officer function was established pursuant to Legislative Decree
Control System; the choice and supervision of the work of the
                                                                         no. 231/2001, with the mission of promoting effective and
external auditors; and supervision of the activities of internal
                                                                         proper implementation of the Program, including monitoring
auditors.
                                                                         of corporate conduct and the right to be constantly informed
The Committee shall meet on convocation by its Chairman                  about significant activities. Group companies are steadily
whenever he deems it appropriate, but at least once every                adopting compliance programs in conformity with the rules
six months, or whenever the Chairman of the Board of                     and general principles envisaged in the compliance program
Statutory Auditors or the Internal Control Compliance Officer            of the Parent Company after identifying their respective
so request. The Chairman of the Board of Statutory Auditors,             sensitive processes and the specific procedures to be
or another of its members duly empowered by the Chairman,                implemented at each individual company.
                                     40           Report on Operations   Corporate Governance




Handling of Confidential Information                                     parties attending a Stockholders’ Meeting and provide clear
                                                                         and unambiguous rules, without limiting or in any way
In 2002, an internal procedure for handling “confidential
                                                                         hampering the right of individual stockholders to voice their
information” was adopted. This procedure was disseminated
                                                                         opinions and demand explanations about items on the Agenda.
by means of a special organization announcement by the Chief
Executive Officer. It lists the different types of confidential
information, defines the functions and responsibilities of those         Board of Statutory Auditors
who are charged with handling such information, and explains
the rules that govern the disclosure of price-sensitive news and         The Board of Statutory Auditors is comprised of three Statutory
the steps that should be followed when handling and publishing           Auditors and three Alternates, all of whom, as required by the
such information. The purpose of this procedure is to prevent            Articles of Association (Article 19), must be entered in the
potential leaks of confidential information. It imposes the              Auditors’ Register and have at least three years’ experience
penalties that the Code of Conduct provides for employees                as chartered accountants. Furthermore, they may not hold
who violate confidentiality rules and makes clear that the same          the position of statutory auditor in more than five other listed
level of compliance with its provisions and the same prudent             companies, with the exception of the controlling companies
behavior is expected of the Directors and Statutory Auditors.            and subsidiaries of Fiat S.p.A.

In compliance with the provisions issued by the Italian Stock            In accordance with the Company’s Articles of Association
Exchange, a code of conduct was also adopted for disclosure              and as allowed under the Consolidated Law on Financial
by relevant persons of “internal dealing” transactions. The              Intermediation, properly organized minority groups may
                                                                         appoint one Statutory Auditor. According to the Articles of
envisaged deadlines and quantities, which are lower than those
                                                                         Association, the minimum equity interest needed to submit
prescribed in the Italian Stock Exchange provisions, require
                                                                         a slate of candidates is 3%. The purpose of this threshold is to
prompt reporting by relevant persons – defined in the annex
                                                                         ensure that the candidates being proposed are supported by a
to the Internal Dealing Regulation – of individual transactions
                                                                         group of minority stockholders that is sufficiently representative
whose countervalue exceeds 80,000 euros and those whose
                                                                         and authoritative. Thus far, the minority stockholders have
aggregate amount exceeds 15,000 euros on a monthly basis.
                                                                         not availed themselves of this right. Nevertheless, Fiat believes
No internal dealing transactions were reported in the last
                                                                         that the independence of its control body is ensured by the
twelve months.
                                                                         requirements of independence and professionalism prescribed
                                                                         by law and by the Company’s Articles of Association as well as
Relations with Stockholders and Investors                                the unblemished professional reputation that the members of
                                                                         the Board of Statutory Auditors have always enjoyed.
One of the Company’s principal concerns is to establish
and maintain an ongoing dialogue with its stockholders and               However, in recognition of the recent greater fragmentation
institutional investors. To that end, Fiat created specific entities     of share ownership and to facilitate the nomination of
that are responsible for managing these relationships.                   candidates by minority stockholders, among the amendments
                                                                         to the Articles of Association, a motion is submitted to the
The Group organizes frequent meetings and conference calls               Stockholders’ Meeting to reduce the minimum required equity
with institutional investors and analysts and uses its website           interest to 1% for submission of a slate of candidates.
(www.fiatgroup.com), which was thoroughly revised in February
2004, to disseminate publicly and in real time the material              In accordance with the Articles of Association, the slates of
discussed on those occasions.                                            candidates must be deposited at the registered office of the
                                                                         company at least ten days before the scheduled date of the
The website is also used to disseminate institutional information,       Stockholders’ Meeting on its first call and be accompanied by
present periodic operating and financial information and news            statements certifying satisfaction of the requirements prescribed
of special transactions, the calendar for corporate events,              by law and the Articles of Association and that they are not
and all documents pertaining to corporate governance.                    ineligible or incompatible, on penalty of rejection of those slates.
During 2003, meetings and conference calls were organized in
order to provide periodic operating and financial information
and illustrate the Relaunch Plan and capital increase.
In addition, a toll-free number (800-804027) and two e-mail
addresses (serviziotitoli@fiatgroup.com and
investor.relations@geva.fiatgroup.com) are available to
anyone seeking additional information regarding transactions
that affect stockholders.
Regulations were adopted in 2000 to ensure that
Stockholders’ Meetings run in an orderly and efficient fashion.
These Regulations define the rights and obligations of all
                                                41                Report on Operations




                                                 Stock Option Plans


Thus far, the Board has approved Stock Option Plans offered                                       A total of 1,045,943 options were granted in 2003, to purchase
to about 900 managers of the Group’s Italian and foreign                                          a corresponding number of shares within 2010. For the first
companies who are qualified as “Direttore” or have been                                           three years their exercise is subject to limits, which include
included in the Management Development Program for                                                the achievement of predetermined objectives. In consideration
high-potential managers. Plan regulations share these                                             of the options previously granted under the aforesaid plans
common features:                                                                                  and that have since expired upon termination of employment,
❚ Options are granted to individual managers on the basis                                         a total of 12,697,743 option rights corresponding to the same
  of objective parameters that take into account the level                                        number of shares represent treasury stock to be assigned to
  of responsibility assigned to each person and his or her                                        the holders of options pursuant to the conditions envisaged
  performance.                                                                                    in the specific Regulations.
❚ If employment is terminated or an employee’s relationship                                       In addition, the Board of Directors resolved to grant
  with the Group is otherwise severed, options that are not                                       Mr. Giuseppe Morchio, as the only variable portion of his
  exercisable become null and void. However, vested options                                       compensation as Chief Executive Officer, options for the
  may be exercised within 30 days from the date of termination,                                   purchase of 13,338,076 Fiat ordinary shares at the price of
  with certain exceptions.                                                                        5.623 euros per share, exercisable from March 27, 2004 to
❚ The option exercise price, which is determined based on                                         March 27, 2010. In each of the first five years, he accrues the
  the average stock market price for the month preceding                                          right to purchase a maximum of 20% of the total. Two-thirds
  the option grant, can vary as a result of transactions affecting                                of the options that will vest between March 27, 2005 and March
  the Company’s capital stock. It must be paid in cash upon                                       27, 2008 will be exercisable only if certain predetermined
  the purchase of the underlying shares.                                                          profitability targets are reached during the reference period.
❚ The options are normally exercisable starting one year                                          The table below summarizes the information on options granted
  after they are granted and for the following eight years,                                       to employees outstanding at December 31, 2003:
  but during the first four years, exercise is limited to annual
  tranches, which may be accumulated, of no more than 25%
  of the total granted.


                                                                                                                             2003                                                      2002
                                                                                  Number              Average        Market price           Number               Average       Market price
                                                                                  of shares   exercise price (*)                            of shares    exercise price (*)

Options outstanding on 1/1                                                   15,791,700                  18.8                 7.7       12,608,500                 24.41             17.92
Options granted during the year                                                1,045,943                 6.69               6.69          6,420,000                11.32             11.32
Expired options                                                                4,139,900                     –                  –         3,236,800                     –                    –
Options outstanding on 12/31                                                 12,697,743                16.46                6.14        15,791,700                  18.8                7.7
Options exercisable on 12/31                                                   5,537,925               20.45                6.14          3,784,575                25.86                7.7
(*) Following the capital increases in January 2002 and July 2003, the exercise prices were adjusted by applying the factors calculated by Borsa Italiana, in the amount of 0.98543607 and
    0.93167321, respectively.
                                                 42                Report on Operations




                                                 Transactions among Group Companies
                                                 and with Related Parties

Transactions among Group companies, whether they are                                               ❚ Purchase of support and consulting services provided by Fiat
made to support vertical manufacturing integration or to                                             Gesco S.p.A. (taxation and administration), Fiat Ge.Va. S.p.A.
provide services, are carried out at terms that, considering                                         (financial services) and Fiat International S.p.A. (international
the quality of the goods or services involved, are competitive                                       relations).
with those available in the marketplace.
                                                                                                   ❚ Purchase of inspection and internal auditing services from
The specific mission of a Group Sector is to provide services                                        Fiat Revi S.c.r.l.
to other members of the Group through companies which,
                                                                                                   ❚ Purchase of information technology services provided by
because of their specialized nature, are able to achieve
                                                                                                     Global Value S.p.A.
continuous improvements in quality and economies of scale.
                                                                                                   ❚ Purchase of external relations services provided by Fiat I&CS S.r.l.
Within this framework, the main transactions between
the Parent Company, Fiat S.p.A., and its subsidiaries and                                          ❚ Purchase of office space, personal and real property
associated companies are summarized below:                                                           maintenance services provided by Ingest Facility S.p.A.,
                                                                                                     and other general services provided by Fiat Servizi per
❚ Licensing of the right to use the Fiat trademark,
                                                                                                     l’Industria S.c.p.a.
  for a consideration based on a percentage of sales,
  to Fiat Auto S.p.A. (0.5%).                                                                      ❚ Purchase of personnel training services provided by
                                                                                                     Isvor Fiat S.c.p.A.
❚ Services provided by Fiat management personnel to Fiat Auto
  S.p.A., Iveco S.p.A., Teksid S.p.A., Magneti Marelli Holding                                     ❚ Purchase of automobiles from Fiat Auto S.p.A.
  S.p.A., Fiat Engineering S.p.A., Comau S.p.A., and other                                         Among transactions with related parties that must be
  Group companies.                                                                                 mentioned, legal professional consultancy services rendered
❚ Grant of suretyships and guarantees in connection with the                                       by Franzo Grande Stevens to Fiat S.p.A. for 317 thousand
  issuance of billets de trésorerie (Fiat France S.A.), bonds                                      euros, and to Fiat Partecipazioni S.p.A. for 599 thousand
  and lines of credit (Fiat Finance and Trade Ltd, Fiat Finance                                    euros, consultancy services by Luigi Arnaudo to Fiat S.p.A.
  Luxembourg S.A., Fiat Auto Financial Services Limited,                                           for 40 thousand euros, and professional services by the
  and New Holland Credit Company LLC); and to secure bank                                          Benessia-Maccagno law firm, in connection with the equity
  loans (Fiat Auto S.p.A., Teksid S.p.A., Fiat Partecipazioni S.p.A.                               investment in Italenergia Bis, for 2.5 million euros.
  (formerly Sicind S.p.A.), Fiat Automoveis S.A., Banco CNH                                        All the transactions involving intra-Group deliveries of
  Capital S.A., Case LLC, and other Group companies), and
                                                                                                   goods and services that are part of the regular operations
  payment obligations under building rental contracts (Ingest
                                                                                                   of the companies involved are discussed in other sections
  Facility S.p.A., Fiat Auto S.p.A., Isvor Fiat S.c.p.A., Editrice La
                                                                                                   of this Report (Note 21 – Other Information).
  Stampa S.p.A., Fiat Automobil Vertriebs GmbH, International
  Metropolitan Automotive Promotion (France) S.A., Fiat Motor                                      Based on the information received from the various Group
  Sales Ltd, and other Group companies).                                                           companies, there were no atypical or unusual transactions
                                                                                                   during the year. Extraordinary transactions among Group
❚ Rental of buildings to Ingest Facility S.p.A. and Fiat I&CS S.r.l.
                                                                                                   companies or with related parties that occurred during the
❚ Loans granted to and received from Fiat Ge.Va. S.p.A.                                            year are reviewed in the following page:




Interests held by Directors and Statutory Auditors (Article 79 of Consob Regulations, Resolution No. 11971 of 5/14/1999)
(number of shares)
                                                                                                               Number of                                              Number of
                                                                                                            shares held at   Number of shares   Number of shares   shares held at
First name and last name                                                Description of Investments             12.31.2002      bought in 2003       sold in 2003      12.31.2003
Luca Cordero di Montezemolo                                             Fiat ordinary                        (1)    11,984             7,188                               19,172
John Philip Elkann                                                      Fiat ordinary                                 300                  –                300                    –
Cesare Ferrero                                                          Fiat ordinary                                   1                  –                  –                   1
Paolo Fresco                                                            Fiat ordinary                              211,452             5,650                  –     (2)   217,102
Gabriele Galateri di Genola                                             Fiat ordinary                                2,750                 –                  –           (3) 2,750
                                                                        Fiat preference                               440                  –                  –            (3)   440
Felix George Rohatyn                                                    Fiat ordinary                                1,000                 –                  –           (2) 1,000
(1) shares held at February 28, 2003, date of his appointment.
(2) shares held at February 28, 2003, when he left the office.
(3) indirectly owned through his spouse, shares held at April 12, 2003, when he left the office.
                                   43            Report on Operations   Transactions among Group Companies and with Related Parties




❚ In April 2003, CNH Global carried out a capital increase                by October 31, 2004. In consequence of this capital increase,
  of $2 billion by issuing 8,000,000 Convertible Series A                 the share owned by Fiat Partecipazioni S.p.A. in Fiat Auto
  Preference Shares at the price of $250 per share, which                 Holdings B.V. rose to 90%.
  were fully subscribed by Fiat Group companies through                 The following actions were taken in 2003 as part of the
  the conversion into capital of financial payables owed to             corporate and legal streamlining programs:
  them by CNH Global N.V. The shares for the aforesaid
                                                                        ❚ in the Commercial Vehicles Sector, the lead company for
  capital increase, which are vested with ordinary voting rights,
                                                                          all the companies belonging to the sector is Iveco S.p.A.
  benefit from specific dividend rights and are convertible
                                                                          after the equity investments previously owned by Iveco N.V.
  into 100,000,000 common shares.
                                                                          were transferred to it;
  If all the shares are converted, the equity investment of             ❚ in the Production Systems Sector, the lead company for
  Fiat S.p.A. in CNH Global N.V., through the subsidiary Fiat             all the companies belonging to the sector is Comau S.p.A.
  Netherlands Holding N.V., will increase from 85.1% to 91.7%.            after certain of the equity investments previously owned by
❚ In April 2003, Fiat Auto Holdings B.V. approved a capital               Comau B.V. were transferred to it;
  increase of up to 5 billion euros. An initial quota of 3 billion      ❚ Fiat Netherlands Holding N.V., Iveco N.V., and Comau B.V.
  euros was subscribed by Fiat Partecipazioni S.p.A., while               were merged at the same time as the previously described
  stockholders may subscribe to the remaining 2 billion euros             transactions were carried out.
                                     44           Report on Operations




                                     Significant Events Occurring Since the End
                                     of the Fiscal Year and Business Outlook

SIGNIFICANT EVENTS OCCURRING SINCE THE END                               An important development involves work to update the
OF THE FISCAL YEAR                                                       measures taken to comply with the requirements of the
                                                                         previous and now repealed privacy law and make them
The most significant transactions completed by the Fiat Group
                                                                         consistent with the changes contained in Legislative Decree
during early months of 2004 are reviewed below.
                                                                         196/2003. More specifically, the planning paper on safety has
❚ In February 100% of the interest held in Fiat Engineering              undergone the upgrade process that is inherent in the nature
  S.p.A. was sold to Maire Investimenti S.p.A. At the same time          of this constantly evolving document, which is designed to
  Fiat Partecipazioni S.p.A. subscribed to a capital increase in         ensure the achievement of a steadily rising level of safety.
  Maire Investimenti S.p.A. and now owns 30% of its capital.
  On said 30% interest, both parties hold call and put options
  that are exercisable within three years at a predetermined             BUSINESS OUTLOOK
  price.                                                                 The forecast for 2004 calls for the global economy to grow,
❚ Fiat signed an agreement to sell 65 million ordinary shares            driven by expansion in the United States and Southeast Asia.
  of Edison S.p.A., representing Fiat’s direct stake in Edison.          However, the growth rates projected for Italy and the rest of
  Fiat retains its 24.6% interest in Italenergia Bis, the controlling    Europe are significantly lower. Consequently, the Group will
  entity of Edison. The transaction does not change any of the           be faced with market demand that will expand slightly in the
  future strategic options of the Fiat Group.                            United States but hold relatively steady in most other countries,
                                                                         and with aggressive competition from other carmakers.
❚ The following new products were introduced during the first
  quarter of 2004:                                                       In this environment, all of the Group’s Sectors will strive to
                                                                         achieve significant gains in profitability. They will pursue this
  Fiat Auto chose the 74th International Geneva Motor Show               goal by following the guidelines set out in the Relaunch Plan,
  for the worldwide introduction of several Fiat-brand models,           by restructuring and by streamlining their manufacturing
  including the on-road and off-road versions of the gasoline-           operations. At the same time, they will be making major
  and diesel-powered Panda 4X4, the new Fiat Multipla with               investments in renewing their product range and improving
  updated styling, and the Trepiùno, a small car that serves as          their distribution networks.
  a styling and technological laboratory for the development
                                                                         The Group will continue to strengthen its management
  of future microcars.
                                                                         organization by pursuing a strategy of bringing in top
  Alfa Romeo staged the worldwide launch of the Alfa                     professionals from the outside and leveraging the competencies
  Crosswagon, a sporty and elegant all-wheel-drive car                   available inside.
  capable of handling off-road driving conditions.
                                                                         While taking into account the current business outlook,
  Lancia presented to buyers worldwide its Musa, a new                   management aims at achieving the objectives of the Relaunch
  compact MPV for motorists who want to enjoy good                       Plan: operating break-even at Group level, a further reduction of
  taste but are unwilling to give up convenience.                        Fiat Auto’s losses and better operating results than in 2003 from
                                                                         all other Sectors.
45    Report on Operations




Operating Performance — Sectors of Activity
                                              46                     Report on Operations




                                               Automobiles — Fiat Auto

Highlights
   (in millions of euros)                        2003                 2002            2001
   Net revenues                              20,010                 22,147        24,440
   Operating result                             (979)                (1,343)         (549)
   EBIT (*)                                   (1,607)                (2,214)       (1,061)
   Net result before
   minority interest                          (2,058)               (2,739)        (1,442)
   Cash flow (net result +
   depreciation and amortization)             (1,096)                (1,780)        (292)
   Capital expenditures                        1,100                  1,115        1,331
   Research and development                      939                    861          870
   Net invested capital                        1,806                  1,254        2,340
   Number of employees                       44,563                 49,544        55,174
   (*) It includes non-operating income and expenses



Revenues by geographical
region of destination

Employees by geographical
region

                              0                               50%                         100%

                                  Italy         Rest of Europe                 Rest of the world




Sales performance                                                                                  Fiat Auto’s share of the Western European market for light
                                                                                                   commercial vehicles reflected the same downward trend that
In 2003, the weakness in the overall economy continued to have
                                                                                                   shaped overall demand, falling by 1.4 percentage points to
an impact on the automobile market.
                                                                                                   11.2%, the same level as in 2001.
The Western European market for automobiles contracted by
1.2% compared with 2002, as a gain of 4.3% in Spain was offset                                     Fiat Auto sold a total of about 1.7 million vehicles, or 8.8%
by a 6.4% drop in France. Demand held relatively steady in                                         less than in 2002.
Great Britain (+0.5%), Germany (-0.4%) and Italy (-1.2%). Outside                                  In Western Europe, unit sales were down 9.4%, due mainly to
Western Europe, shipments were up sharply in Poland (+16.3%)                                       the continuing and pervasive weakness that characterized
but continued to fall in Brazil (-3.2%).                                                           market demand and the fact that new models (Fiat Panda, Fiat
                                                                                                   Idea, Lancia Ypsilon and Alfa GT) were not introduced until
In Western Europe, shipments of light commercial vehicles
                                                                                                   late in 2003 and at the beginning of 2004. These new models
(slightly more than 1.7 million units) were down 2.0% from 2002.
                                                                                                   are showing good potential in terms of market penetration
Demand was down 17.4% in Italy but showed healthy increases
                                                                                                   and appeal to customers.
in Great Britain (+15.3%) and Spain (+8.8%). Outside Western
Europe, the best gain occurred in Poland (+20.5%).
Fiat Auto’s share of the Western European automobile market                                        Sales Performance – Automobiles and Light
declined to 7.4%, or 0.7 percentage points less than in 2002.                                      Commercial Vehicles
The trend was the same in Italy, where market share was 28%,                                       (in thousands of units)              2003       2002    % change
down 2.2 percentage points compared with 2002. In Brazil and                                          France                           82.0        98.0      (16.3)
Poland, market share held at 25.2% and 17.8%, respectively.                                           Germany                         118.8       122.8         (3.3)
                                                                                                      Great Britain                    92.3        91.0         1.4
Automobile Market                                                                                     Italy                           671.2       758.7      (11.5)
(in thousands of units)                                2003              2002        % change         Spain                            76.3        66.5       14.8
   France                                          2,003               2,139              (6.4)       Rest of Western Europe          138.8       165.2      (16.0)
   Germany                                         3,174               3,188              (0.4)    Western Europe                    1,179.4    1,302.2         (9.4)
   Great Britain                                   2,586               2,572               0.5     Poland                              70.3        60.7       15.9
   Italy                                           2,251               2,280              (1.2)    Brazil                             317.7       358.0      (11.3)
   Spain                                           1,380               1,322               4.3     Rest of the world                  128.1       139.2         (8.0)
Western Europe                                  14,146                14,323              (1.2)    Total units sold                  1,695.5    1,860.1         (8.8)
Poland                                                 353               303             16.3      Associated companies                83.0        49.8       66.5
Brazil                                             1,195               1,235              (3.2)    Grand total                       1,778.5    1,909.9         (6.9)
                                   47           Report on Operations   Fiat Auto




The overall decrease in the number of cars sold in Western             In Turkey, the Tofas associated company strengthened its
Europe is the net result of varying performances in the individual     position as Turkey’s preeminent carmaker in 2003 and
countries. More specifically, unit sales decreased significantly       significantly broadened its product line, introducing a 1.3
in France (-16.3% compared with 2002) but showed gains in              Multijet engine for the locally-produced Palio and Albea car
Great Britain (+1.4%), a marked improvement over the 2002              models. Furthermore, the Fiat Stilo and Punto were launched
trend, and Spain (+14.8%).                                             on the Turkish market.
The overall trend was down in Italy (-11.5%) and Brazil (-11.3%),
but the Polish operations bucked the trend, posting a gain of
                                                                       Product innovation
15.9% compared with 2002.
In 2003, Fiat Auto continued to refocus and integrate the              In 2003, Fiat Auto continued to pursue the strategy launched
Sector’s international presence, placing special emphasis              in previous years to upgrade its model lineup and increase its
on such major markets as Latin America, China and Turkey.              competitiveness.
In Brazil, despite a business climate characterized by increasing      The success of this approach was demonstrated by the
competitiveness and a further decrease in demand, Fiat Auto            introduction and market launch of four new models that
retained market leadership for the third consecutive year with         should enable Fiat Auto to strengthen its presence in Europe.
a share of 25.3% (cars and light commercial vehicles combined).        These models are the new Fiat Panda, a city car honored
During the year, the Sector launched the new Palio, which              with the prestigious 2004 Car of the Year award; the Fiat
received the prestigious Carro do año (Car of the Year) award;         Idea compact MPV; the elegant Lancia Ypsilon; and the Alfa
introduced the Adventure version of the Doblò; and entered             Romeo GT, a grand tourer five-seat coupé. Other noteworthy
into an agreement with GM Mexico to distribute in Mexico               products include the Kamal, an SUV concept car, and the 8C
Fiat-brand cars that are manufactured in Brazil.                       Competizione, a luxurious high-performance sports car.
                                                                       Innovations in the area of engines include: introduction of
In Argentina, the deep slump of 2002 was followed by steady
                                                                       the 1.3 16V Multijet diesel engine, which complies with the
signs of improvement in 2003, with demand up a strong 41%
                                                                       Euro 4 emission standards, for the Punto and the Ypsilon;
year-over-year. In this environment, Fiat increased its market
                                                                       development of diesel powerplants, which are scheduled to go
share to a level above 10%.
                                                                       into production during the first half of 2004, for the Doblò and
In China, Fiat Auto’s joint venture with the Yueijin Motor Group       Panda; launch of the Punto bi-power; upgrades to make the
increased the level of sales, which reached 37,200 units               engines in the Doblò Panorama, Multipla and Punto passenger
compared with 23,700 units in 2002. During 2003 the product            transports compliant with EOBD standards; introduction of a 1.4
line, which comprised the Fiat Palio and Albea, was expanded           16V powerplant for the Ypsilon, Idea and Punto and of 1.9 16V
with the introduction of the Palio Weekend and of models with          diesel 140 bhp and 1.4 16V Fire 90 bhp engines for the Stilo,
automatic transmission.                                                whose 2004 Model Year was launched in the last quarter of 2003.
                                   48            Report on Operations   Fiat Auto




Major upgrades were also done by Alfa Romeo on its current              leadership of the Italian market, with a 23% share. Savarent
product line, particularly on the GTV/Spider (2.0 JTS and               achieved a gain in sales volume of about 5% and increased
240-bhp 3.2 V6 24-valve gasoline engines), the 156 and 166              its penetration of rental companies that use Fiat Auto vehicles
(175-bhp 2.4 JTD 20V Multijet engine). A new 100-bhp 1.9 JTD            to about 28%.
engine was also introduced on the Alfa 147.                             At the end of 2003, the Sector’s rental fleet numbered 134,000
In addition, Alfa Romeo now offers new automatic Sportronic             vehicles, or 9% more than a year earlier.
(166 diesel) and robotized Selespeed (147 and 156 GTA)
                                                                        Fiat Auto’s operations in the area of mobility services
transmissions.
                                                                        continued to work on streamlining and improving their business
                                                                        performance, introducing new bConnect Voice products and
Financial and service activities                                        an OBN system, and expanding the Clickar website.
                                                                        Noteworthy transactions completed in 2003 included:
At the end of March 2003, as part of its streamlining effort, Fiat
Auto sold its Brazilian consumer credit and leasing operation           ❚ In February, Fidis sold 50.1% of In Action S.r.l. to the Cos
to the Itaù bank. This transaction was followed, in May 2003,             Group;
by the signing of an agreement with several large Italian credit        ❚ In October, Fidis bought a 40% interest in its Targa Assistance
institutions covering the sale of a 51% interest in Fidis Retail          S.r.l. subsidiary from Europ Assistance Trade.
Italia S.p.A., which holds equity investments in companies that
                                                                        The Sector’s financing and service operations generated
provide consumer credit and leasing services to customers
                                                                        revenues of 1,339 million euros in 2003, compared with 2,236
in Italy and other European countries.
                                                                        million euros in 2002. The main reasons for this decrease are:
In 2003, financing support provided to the distribution network         a change in the scope of consolidation resulting from the asset
and suppliers totaled more than 20 billion euros, or 14% less           disposals mentioned above; the sale to ACI of a 50% interest
than in 2002. The programs implemented to streamline the                in Targasys in late December 2002; and a drop in revenues
loan portfolio and make it more profitable and focused on               caused by a contraction in business volume that was influenced
providing support for the Sector’s sales organization, which            by market trends and a marketing strategy focused on helping
produced a contraction of the scope of operations, coupled              the operations servicing sales networks, suppliers and outside
with a drop in production and a decrease in orders are the              car buyers improve the quality of their loan portfolios.
main reasons for this decline.                                          Operating income totaled 196 million euros (313 million euros
The renting operations focused on strengthening their presence          in 2002). This decrease is attributable almost entirely to changes
at the local level and improving the profitability of new               in the scope of consolidation, since virtually all of the reduction
contracts, even at the cost of forfeiting volume increases.             in revenues generated by continuing activities was offset by
Leasys, a joint venture of Fiat Auto and Enel, retained the             cost savings.
                                  49           Report on Operations   Fiat Auto




Income before taxes of normal operations declined to 23
million euros (285 million euros in 2002), owing in part to
extraordinary charges due to the operational and
organizational processes revision undertaken by the Sector’s
renting companies.


Results for the year
The loss reported by Fiat Auto at year-end, though still high,
narrowed by 27% with respect to 2002 (operating loss of 979
million euros in 2003 against an operating loss of 1,343 million
euros in 2002). This reduction was achieved despite a 9.6%
contraction in consolidated revenues (20,010 million euros
in 2003), an 8.8% drop in unit sales and a 9% increase in R&D
outlays which amounted to 939 million euros in 2003. This
result was made possible by cost reductions and the positive
effect of new models that were introduced in the last few
months of the year. The net loss for the year shrank to
2,058 million euros from a loss of 2,739 million euros in 2002.
This improvement reflects gains in operating profitability
and lower net non-operating expenses (531 million euros
in 2003, compared with 796 million euros in 2002), which
included about 259 million euros in restructuring charges.
The road to recovery set out in the Relaunch Plan, which was
presented in June to the financial community and comprises
actions to improve the profitability and strengthen the financial
structure of the Company, is still long and calls for the
achievement of operating breakeven in 2005 and bottom-line
breakeven in 2006. Nevertheless, we can confirm that the target
of reversing the negative trend was met in 2003 and our uphill
journey has began.
                                              50                 Report on Operations




                                               Agricultural and Construction Equipment — CNH

Highlights
   (in millions of euros)                        2003             2002          2001
   Net revenues                       9,418                   10,513        10,777
   Operating result                     229                      163           209
   EBIT (*)                              99                      165           122
   Net result before minority interest (192)                    (211)         (291)
   Cash flow (net result +
   depreciation and amortization)       258                      330            262
   Capital expenditures                 217                      431            615
   Research and development             229                      300            341
   Net invested capital               4,148                    5,140          6,597
   Number of employees               26,825                   28,528         28,127
   (*) It includes non-operating income and expenses



Revenues by geographical
region of destination

Employees by geographical
region

                              0                         50%                         100%

                                  Italy         Rest of Europe           Rest of the world




Sales performance                                                                            Growth strategies
In the agricultural equipment segment, the market as a whole                                 In 2003 profit improvement initiatives continued with higher
expanded by approximately 7% in 2003 as compared to 2002,                                    than expected results, thanks in particular to the contribution
thanks to growth in North America (approximately +19%), with                                 of newly introduced products, and lower sales, administrative,
increased demand for tractors in all ranges. These increases                                 and research and development costs. Streamlining of the
were offset by lower demand for combine harvesters in North                                  production structure continued: the number of plants was
America and in Western Europe.                                                               reduced to 45, thanks in part to reallocation of certain
                                                                                             production units. Further economies of scale were obtained
Compared with 2002, the Sector posted a significant increase
                                                                                             through streamlining the pool of suppliers, a new logistics
in sales of combine harvesters in its principal markets, while
                                                                                             organization, and a reduction in the number of spare parts
also improving its market share in North America and Western
                                                                                             warehouses.
Europe, despite tractor sales remaining below the levels
posted in the previous year, mainly due to the limited
availability of certain new models.                                                          Product innovation
The market for construction equipment (up 9%) expanded                                       Implementation of common platforms for agricultural and
in North America (approximately +9%) and Asia, while it                                      construction equipment continued in 2003 with the introduction
contracted in Latin America (approximately -19%) and                                         of the new line of Case IH MXU and New Holland TS-A high-
Western Europe (approximately -2%). In Western Europe,                                       powered multifunction tractors. The percentage of agricultural
the contraction can be attributed to lower demand in the                                     equipment updated between 2001 and 2003 rose to 80%.
light equipment segment, while the demand for heavy                                          In 2003, 64% of the revenues from agricultural equipment sales
equipment remained essentially unchanged.                                                    (30% in 2002), and 66% of the revenues in the construction
Construction equipment sales were impacted both by lower                                     equipment segment (53% in 2002) were derived from products
demand and efforts to reduce company and dealer inventory                                    developed on common platforms after integration with Case.
levels. In North America the decrease was smaller, thanks to                                 During the first half of the year, CNH won nine prizes at the
the positive performance of heavy equipment, while sales                                     most important European specialized trade fairs. More awards
volumes increased in the rest of the world (+7%).                                            were received in the second half of the year, with a total of 25
In Western Europe, the initial problems connected with                                       prizes accumulated, 9 for tractors, 7 for combine harvesters,
integration of the Fiat-Hitachi and Fiat-Kobelco sales networks                              and 4 for grape harvesters.
also contributed to the contraction, following formation of                                  Another 15 prizes were awarded to CNH in North America for
Fiat Kobelco Construction Machinery S.p.A. in the second                                     New Holland and Case IH products, including 6 for combine
half of 2002.                                                                                harvesters and 3 for tractors.
                                  51           Report on Operations   CNH




Financial activities                                                  in the previous fiscal year: higher revenues generated by the
                                                                      sale of agricultural equipment were offset by lower revenues
During 2003 CNH Capital continued to focus on supporting
                                                                      reported by the construction equipment segment.
the CNH dealer network and its customers. In Europe, CNH
Capital Europe, the company operated in partnership with              Operating income totaled 229 million euros in 2003 against
BNP Paribas Lease Group (BPLG), continued to grow as                  163 million euros in 2002 (respectively USD 259 million in 2003
envisaged without causing an increase in the indebtedness             and USD 154 million in 2002). These results benefited from the
of CNH.                                                               effects of measures taken to improve profitability under the
In 2003 CNH financial activities posted revenues of 549 million       Relaunch Plan and profit contributions from new products,
euros, compared with 680 million euros in 2002. If expressed          which were partially offset by higher costs for the introduction
in dollars, the accounting currency of the Sector, the decrease       of new products in the agricultural equipment segment
would have been approximately 3%. The decrease in revenues            (especially in Europe) and an unfavorable mix on certain
was primarily caused by lower average receivables balances            markets for construction equipment.
related to the successful completion of asset-backed
securitization transactions, lower yields on some on-book             The Sector formulated a plan to integrate the operations
portfolios due to reduced market interest rates and lower             of the Case and New Holland businesses at the time of the
operating lease revenues.                                             merger. In 2002 and again in 2003, plans were expanded.
                                                                      Through year-end 2002, our cumulative merger-related profit
Income before taxes totaled 116 million euros, compared
                                                                      improvements totaled approximately USD 600 million as
with 89 million euros in 2002. The improvement, which
                                                                      compared to the base levels of revenues and costs incurred
amounted to USD 48 million when expressed in that currency,
                                                                      in the combined equipment operations for the full year 1999.
is attributable to improved margins on interest and the
improved quality of the portfolio under management,                   We believe that the continuation of these actions through 2006
achieved in part thanks to the continued reduction of the             will result in additional savings of approximately USD 650
“non-core,” high-risk portfolio.                                      million, bringing the total for the period from 2000 to 2006 to
                                                                      USD 1,250 million. These actions represent improvements as
                                                                      compared with the base levels of revenues and costs incurred
Results for the year                                                  by CNH for the full year 2002. This estimate is not based on
In 2003, CNH had revenues of 9,418 million euros (USD 10,654          any assumption of an appreciable increase in industry volumes
million), compared with 10,513 million euros (USD 9,928 million)      from 2002 levels.
in 2002. On a comparable exchange rate basis and when                 In the year ended December 31, 2003, we achieved USD 225
expressed in dollars, the accounting currency of the Sector,          million of the USD 650 million of additional profit improvements
2003 revenues were substantially in line with those recorded          expected by 2006.
52   Report on Operations   CNH




                            Depreciation and amortization for the period totaled 450
                            million euros (541 million euros in 2002), of which 141 million
                            euros for the amortization of goodwill connected with the
                            acquisition of Case.
                            In 2003 the net loss was 192 million euros, of which 198
                            million euros were allocated to the Sector, compared with the
                            net loss of 211 million euros in 2002, of which 220 million euros
                            were allocated to the Sector.
                            Cash flow was a positive 258 million euros, compared with
                            330 million euros in 2002.
                                              53                  Report on Operations




                                              Commercial Vehicles — Iveco

Highlights
   (in millions of euros)                       2003               2002            2001
   Net revenues                       8,440                       9,136          8,650
   Operating result                       81                        102            271
   EBIT (**)                             (84)                      (409)            46
   Net result before minority interest (258)                       (493)          (123)
   Cash flow (net result +
   depreciation and amortization)         46                         (70)         287
   Capital expenditures (*)             210                         587           718
   Research and development             212                         239           215
   Net invested capital               1,310                       1,582         1,979
   Number of employees               31,511                      38,113        35,340
   (*) Vehicles under long-term rentals             28               331            348
   (**) It includes non-operating income and expenses


Revenues by geographical
region of destination

Employees by geographical
region

                               0                           50%                         100%

                                   Italy       Rest of Europe               Rest of the world




Sales performance                                                                               Against this general background, new registrations of heavy
In 2003, Western European demand for commercial vehicles                                        vehicles (GVW ≥ 16 tons) grew to 216,200 units, or 1.2% more
(GVW ≥ 2.8 tons) decreased to about 952,100 units, or 0.6%                                      than in 2002. The best gains occurred in Great Britain (+11.4%),
less than in 2002 (about 957,500 units), as sharp drops in Italy                                Germany (+6.1%) and Spain (+4.4%). Demand was significantly
(-15.6%, caused in part by the expiration of the investment                                     lower in France (-9.5%) and Italy (-8.0%), but was generally up
incentives provided by the Tremonti Bis Law) and France (-6.0%)                                 in all of the remaining markets.
were offset by widespread gains in other markets.                                               Iveco sold 146,437 vehicles worldwide (-6.8% on a comparable
New registrations of light commercial vehicles (GVW between                                     basis). The Sector’s licensees shipped approximately 49,600
2.8 and 6 tons) held relatively steady at 661,600 units. The                                    units (+32.1%). In Western Europe, Iveco sold about 119,300
decrease of 0.1% from 2002 (about 662,000 units) is the net                                     vehicles, or 7.4% less than in 2002.
result of sizable demand drops in Italy (-17.5%) and France                                     Unit sales were down in Italy, Germany and Great Britain,
(-3.6%) and growth in all other main markets, especially Spain                                  but increased in France and Spain.
(+12.8%) and Great Britain (+8.5%).                                                             Iveco’s share of the Western European market for vehicles with
Demand for medium vehicles (GVW between 6.1 and 15.9 tons)                                      a curb weight of more than 2.8 tons declined to 11.5% (1.3
decreased again, falling to 74,300 units (-9.2% compared with                                   percentage points less than in 2002), due mainly to weak demand
2002). Shipments were down in all European markets.
                                                                                                in Italy, where, however, Iveco was able to hold its penetration at
                                                                                                30.5%. The Sector’s market share decreased by one percentage
Commercial Vehicles Market (GVW ≥ 2.8 tons)
                                                                                                point both in the heavy-vehicle segment (from 12.3% to11.3%)
(in thousands of units)                             2003              2002        % change
                                                                                                and the light-vehicle segment (from 10.8% to 9.8%), but held at
 France                                            158.5            168.7               (6.0)   27.4% in the medium-vehicle segment (-2.7 percentage points
 Germany                                           211.0            207.3                1.8
                                                                                                in a market that contracted by 9.2%). In this environment, Iveco
 Great Britain                                     165.6            153.6                7.8
                                                                                                was able to retain the leadership of the Western European
 Italy                                             117.7            139.5             (15.6)
                                                                                                market, owing in part to the launch of the New Eurocargo,
 Spain                                              94.6             86.9                8.9
                                                                                                which garnered more than 61% of the Italian market.
Western Europe                                     952.1            957.5               (0.6)
                                                                                                The Irisbus Group sold a total of 8,307 vehicles (-1.5%), for
Commercial Vehicles Market (GVW ≥ 2.8 tons)                                                     an overall market share in Western Europe of more than 25%.
(in thousands of units)                             2003              2002        % change      Iveco produced 379,000 diesel engines, or 4.9% more than
Heavy                                              216.2            213.7               1.2     in 2002, when production totaled 361,200 units. Shipments
Medium                                              74.3             81.9              (9.2)    to noncaptive customers and other Fiat Group Sectors
Light                                              661.6            662.0              (0.1)    accounted for 61% of total output (+3 percentage points
Western Europe                                     952.1            957.5              (0.6)    with respect to 2002).
                                     54           Report on Operations   Iveco




In China, Naveco, a 50-50 joint venture with the Yueijin Group,          revenues show a year-over-year gain of 180 million euros
produced and sold about 14,700 light vehicles (approximately             (+37.8%), 154 million euros of which are attributable to the
+1%) and the C.B.C. joint venture (busses) sold about 4,600 units.       consolidation for the full year of net revenues generated by
                                                                         Iveco International Trade & Finance, a company that offers sales
In Turkey, the Otoyol licensee sold about 4,400 units (+6,9%)
                                                                         financing to customers in Eastern Europe and the Middle East.
and Ashok Leyland, Iveco’s Indian licensee, manufactured
                                                                         Operating income fell to about 7 million euros (18 million
and shipped 45,150 units (+38%).
                                                                         euros in 2002 on a comparable basis). The main reason for this
In 2003, Iveco continued to expand its portfolio of maintenance          decrease is a shortfall in revenues. This shortfall had a negative
and repair services. It had a total of about 40,000 contracts in force   impact on the operating performance of the Transolver Finance
at the end of 2003, or 2.5% more than at December 31, 2002.              and Iveco Service companies, which, as stated above, signed
                                                                         fewer new contracts than in 2002.
                                                                         The loss before taxes of normal operations amounted to
Financial and service activities                                         about 43 million euros (loss of 183 million euros in 2002). On
In 2003, the finance companies of the Iveco Finance Group,               a comparable consolidation basis and excluding the impact
which provide financing and leasing services to support the              of the loss incurred in connection with the Fraikin disposal
sales of Iveco products in Western Europe, signed 22,533                 (210 million euros), these operations would have been
contracts to finance sales of new commercial vehicles (34,000            profitable by 3 million euros. The result for 2003 was affected
                                                                         by an increase in non-operating charges, chief among
in 2002) and 7,587 contracts for used commercial vehicles,
                                                                         them the remaining loss on the disposal of Fraikin.
busses, trailers and semitrailers, for a total of 30,120 new
transactions. Iveco Finance provided funding for 22% of the
                                                                         Sales Performance – Units Sold by Country
vehicles sold by the Sector (29.4% in 2002). A total of 103,345
financing contracts were outstanding at the end of 2003                  (in thousands of units)                               2003            2002      % change

(105,700 at December 31, 2002) with a total net value of 2,312             France                                            17.8             17.6              1.1
million euros (about 2,600 million euros at the end of 2002).              Germany                                           14.0             15.0             (6.7)
The pool of rental vehicles operated by the Transolver Services            Great Britain                                     13.8             16.2           (14.9)
companies numbered about 4,600 units at the end of 2003,                   Italy                                             38.3             44.3           (13.6)
with 1,530 new contracts signed during the year. The decrease              Spain                                             14.8             14.7              0.8
in business volume and the contraction of the vehicle pool with          Western Europe                                     119.3            128.8             (7.4)
respect to the previous year (equal to about 37,000 units) reflect       Eastern Europe                                       9.7              9.5              1.6
changes in the Sector’s scope of consolidation following the             Rest of the world (*)                               17.5             23.6           (26.0)
sale of Fraikin at the beginning of the year.                            Total units sold (**)                              146.4            161.9             (9.6)
                                                                         Associated companies                                49.6             37.5            32.1
The Sector’s operations that provide rental and financing
                                                                         Grand total                                        196.0            199.4             (1.7)
services to retail customers generated aggregate net revenues
                                                                         (*) Naveco (50-50 joint venture) consolidated proportionally in 2002 and by the equity
of 655 million euros in 2003 (1,005 million euros in 2002, when              method in 2003.
Fraikin was included). Restated on a comparable basis, net               (**) On a comparable consolidation basis the change is -6.8%.
                                   55           Report on Operations   Iveco




Product innovation and investments                                     Operating income totaled 81 million euros (73 million euros
                                                                       on a comparable consolidation basis and excluding the
The salient events in Iveco’s product innovation and
                                                                       consolidation of European Engine Alliance S.c.r.l.), down from
development in 2003 were the commercial launches of new
                                                                       102 million euros in 2002 (77 million euros on a comparable
products in the heavy-vehicle segment (Stralis AT/AD, which,
                                                                       basis), for a year-over-year decrease of slightly less than 5%.
coming after the introduction of the Stralis AS at the end of
                                                                       This result was achieved in an environment characterized by
2001, rounded out the Sector’s line of road vehicles) and
                                                                       fierce competition in Western Europe that caused revenues
medium-vehicle segment (New Eurocargo, which represents
                                                                       to decrease, and by unfavorable foreign exchange rates
a styling and technical evolution of the Eurocargo, which
                                                                       (especially for the British pound). Iveco responded to these
was again the market leader in 2003). These new products
                                                                       negative factors by significantly reducing manufacturing
accounted for the lion’s share of the revenues generated in
                                                                       costs and overhead, which enabled it to hold the decrease
the second half of 2003. Most of the development work dealt
                                                                       in profitability to the level stated above.
with the design of the new Stralis AC (which will complete
                                                                       Depreciation and amortization amounted to 304 million euros
Iveco’s line of heavy vehicles by extending the Stralis concept
                                                                       (423 million euros in 2002). On a comparable basis, there was
to the quarry and construction-site vehicles slated for market
                                                                       virtually no change from the 2002 figure (296 million euros).
introduction in September 2004); with product-line optimization
projects; and with early studies focused on identifying the            The net loss decreased to 258 million euros (loss of 493 million
technical solutions that must be adopted to comply with the            euros in 2002). On a comparable consolidation basis, the loss
upcoming Euro 4 emissions standards. At the beginning of 2003,         is 34 million euros less than in 2002, when the figure included
Iveco received at its Madrid plant the Truck of the Year 2003          the recognition of a 210-million-euro writedown related to
award for the Stralis AS. The Sector also continued to develop         the sale of Fraikin.
new families of engines configured for different types of
applications (automotive, agriculture, power generation, marine
and railroads). Also in this area, Iveco has virtually completed
its investment program for the NEF line of engines and is              Sales Performance – Units Sold by Product Segment
continuing to fund the expansion of production capacity for            (in thousands of units)                           2003    2002   % change
2.3-liter F1 engines.                                                  Heavy                                             32.9    31.6       4.2
                                                                       Medium                                            19.3    24.6     (21.5)
                                                                       Light                                             81.5    91.6     (11.0)
Results for the year
                                                                       Busses (*)                                         8.6     8.8       (2.1)
In 2003, Iveco’s net revenues totaled 8,440 million euros.             Divisions (**)                                     4.0     5.3     (23.8)
This figure is 7.6% less than in 2002 in absolute terms,               Total units sold                                 146.4   161.9       (9.6)
but represents virtually no change when viewed on a                    (*) Irisbus + Iveco’s Bus Division.
comparable consolidation basis.                                        (**) Astra, Defense and Firefighting Vehicles.
                                                  56             Report on Operations




                                                  Ferrari and Maserati

Highlights
   (in millions of euros)                          2003            2002        2001
   Net revenues                        1,261                     1,208        1,058
   Operating result                       32                        70           62
   EBIT (*)                               31                        44           62
   Net result before minority interest     2                        22           47
   Cash flow (net result +
   depreciation and amortization)         86                        99          123
   Capital expenditures                  193                       176          125
   Research and development              130                        94           81
   Net invested capital                  229                       142          122
   Number of employees                 2,968                     2,896        2,566
   (*) It includes non-operating income and expenses



Ferrari S.p.A. – Car sales
by geographical region

Maserati S.p.A. – Car sales
by geographical region

                              0                            50%                    100%

                                  Italy                   Rest of Europe

                                  United States           Rest of the world




Operating performance                                                                    Last year saw Maserati’s return to the race track with the
                                                                                         Vodafone-Maserati single marque trophy. The return to
In 2003 Ferrari’s Formula 1 successes were accompanied by
                                                                                         competition will be completed with the racing version of
an increase in revenues notwithstanding the weakness of the                              the MC12 Stradale, which derives from the MC12 Stradale
dollar.                                                                                  project developed in the course of 2003. This racing version
Racing operations once again saw excellent performances in                               will begin competing in the FIA-GT Grand Tourer
F1, where the team won the Constructors’ and Drivers’ world                              championship in 2004.
championships for the fifth and fourth consecutive years                                 Sales to end customers totaled 7,077 units (6% down on
respectively.                                                                            the 2002 figure of 7,536). Of these, Ferrari accounted for 4,238
As regards industrial operations, 2003 saw the presentation                              (in line with 2002) and Maserati 2,839 (against 3,300 in 2002,
                                                                                         a decline of 14%).
of the 360 Challenge Stradale model, a new sports version
of the F360 Coupé for which the order book was full by the                               Sales to the Ferrari network, which amounted to 4,440 units,
end of 2003. At the beginning of 2004 the Ferrari 612 Scaglietti,                        confirmed the United States as the principal market, with 1,400
which will replace the 456 in the Grand Tourer segment, made                             units (+16%). A total of 2,401 units were sold in Europe, where
its debut at the Detroit Motor Show.                                                     Germany once again confirmed its position as the largest
                                                                                         European market (second in absolute terms for worldwide sales)
Sales of Maserati models were affected mainly by the                                     with 661 units, a fall of 3%. Italian customers purchased 520
contraction in the Spider segment, especially in the US market.                          units, in line with 2002.
The Quattroporte model met with considerable success at                                  Sales to the Maserati network totaled 2,900 units in 2003,
the Frankfurt International Motor Show in September and                                  compared with 3,567 in 2002, a drop of 19%.
during road-shows organized in major European cities. The                                The most important markets were the United States (876 units,
Quattroporte was also presented in the USA and Japan,                                    -25%), Germany (467 units, -21%), Great Britain (300 units, -30%)
where it met with similar success.                                                       and Italy (361 units, -10%).
                                  57           Report on Operations   Ferrari and Maserati




Results for the year
At the consolidated Ferrari/Maserati level
revenues amounted to 1,261 million euros,
compared with 1,208 million euros in 2002
(an increase of 4.4%).
At 32 million euros, operating income was
lower than the 2002 figure of 70 million
euros as a result of high expenditure on
research and development and the negative
impact of exchange rate movements, which
offset the improved mix on Ferrari models.
Capital expenditures amounted to 193
million euros and research and
development outlays totaled 130 million
euros, compared with 176 million euros and
94 million euros respectively in 2002. These
figures provided further confirmation of the
Sector’s commitment to development and
innovation.
                                              58                 Report on Operations




                                               Components — Magneti Marelli

Highlights                                                                                     the brand and leveraging the market position of products,
   (in millions of euros)                        2003             2002            2001         while at the same time re-affirming the company’s fundamental
   Net revenues                       3,206                      3,288          4,073          unity.
   Operating result                       32                        (16)           (74)        Against this background, it is important to note that all the
   EBIT (*)                              (41)                     (348)           208          business units booked a significant number of orders in 2003,
   Net result before minority interest (90)                       (435)             82         testifying to customers’ renewed confidence in Magneti
   Cash flow (net result +                                                                     Marelli’s capacity for technological innovation.
   depreciation and amortization)         83                    (245)            289           Orders for direct injection systems, which are the new
   Capital expenditures                 148                      148             240           frontier in engine control units, were particularly significant.
   Research and development             158                      162             227           The most noteworthy new product lines include the AFS
   Net invested capital                 540                      524           1,073           lighting system, at its first application ever, and Flex Fuel
   Number of employees               19,879                   20,716          24,228           (a combined petrol and alcohol combustion system), again
   (*) It includes non-operating income and expenses                                           developed in-house for the Fiat Auto, Ford and VW customers.


Revenues by geographical
                                                                                               Results for the year
region of destination

Employees by geographical
                                                                                               In 2003 Magneti Marelli posted consolidated net revenues
region                                                                                         of 3,206 million euros; on a comparable consolidation and
                                                                                               exchange rate basis this represents an increase of 3.4% on the
                              0                         50%                           100%
                                                                                               previous year. This improvement, which was achieved despite
                                  Italy         Rest of Europe             Rest of the world   weak market conditions, is attributable to an increase in orders
                                                                                               booked by certain businesses, in particular the engine control
                                                                                               unit with the introduction of the diesel system, and the lighting
Operating performance                                                                          area thanks to new applications.
In 2003 the production of cars and light commercial vehicles                                   Operating income of 32 million euros (compared with an
increased by 1.2% over the previous year at the global level,                                  operating loss of 16 million euros in 2002) reflects the cost
with production volumes reaching 57.8 million units.                                           structure improvement measures implemented by the Sector
Performance varied across countries and geographical areas.                                    in all areas of activity.
The increase was mainly concentrated in the Asian countries                                    Significant cost-cutting measures were adopted in the materials
and Eastern Europe, with China and Turkey in particular                                        and structures area. This made it possible, against a background
exceeding 2002 output levels by 30%. Output in the rest of                                     of weak volumes, to restore operating profitability.
the world was adversely affected by the general fall-off in sales.
                                                                                               Depreciation and amortization of 173 million euros (compared
The Western European markets for cars and light commercial                                     with 190 million euros in 2002) and research and development
vehicles registered an overall contraction of 1.4% (with 16.2                                  expenditures of 158 million euros (162 million euros in 2002)
million vehicles manufactured). Most of the major European                                     amounted to 10% of revenues.
countries saw their production levels decline, including Italy,
                                                                                               The net loss of 90 million euros (compared with a loss of 435
which registered a fall of 9.4%. The sole exception was Spain,
                                                                                               million euros in 2002 as a result of signification depreciation
where output increased by 4.6%.
                                                                                               and amortization of tangible and intangible assets) was in part
Last year saw a recovery in the activities of Magneti Marelli,
                                                                                               determined by provisions connected with restructuring plans
which, having completed the portfolio selection process it has
                                                                                               that have been launched.
been conducting over the last few years, embarked on a new
phase of consolidation and business growth.                                                    Cash flow, which amounted to 83 million euros (-245 million
The priority guidelines include a strong customer focus in all                                 euros in 2002) continued to be affected by restructuring
activities of the Sector and a firm emphasis on strengthening                                  charges.
                                              59                 Report on Operations




                                               Production Systems — Comau

Highlights                                                                                    area (down about 43% as a result of lower volumes and the
   (in millions of euros)                        2003             2002           2001         strengthening of the euro against the dollar) and the decrease
   Net revenues                       2,293                      2,320         2,218          in new orders on the European market, which was only partly
   Operating result                       2                       (101)            60         offset by those booked on new markets.
   EBIT (*)                            (122)                      (247)            30         Overall, 66% of the orders for contract work were acquired in
   Net result before minority interest (164)                      (302)           (36)        Europe and 26% in the NAFTA area, with the remaining 8%
   Cash flow (net result +                                                                    coming from Brazil and new markets (South Africa and China).
   depreciation and amortization)      (108)                    (238)            27
   Capital expenditures                  18                       20             38           Orders for contract work can be broken down as follows: 19%
   Research and development              17                       17             22           from Fiat Group companies (17% in 2002) and 81% from other
   Net invested capital                 205                      163            378           automotive manufacturers (83% in 2002).
   Number of employees               17,375                   18,186         17,243           At December 31, 2003, the order book for contract work
   (*) It includes non-operating income and expenses                                          amounted to 1,038 million euros, a decline of about 14% on
                                                                                              the previous year (the figure for December 31, 2002 was 1,210
                                                                                              million euros). This can be attributed mainly to the fall-off in
Revenues by geographical
region of destination                                                                         contract business in the NAFTA area, which was penalized by
                                                                                              the depreciation of the dollar against the euro and the fact
Employees by geographical
region                                                                                        that progress on contracts outpaced new orders.
                                                                                              In 2003, maintenance services operations (Comau Service),
                              0                         50%                          100%
                                                                                              were substantially in line with the previous year, with revenues
                                  Italy         Rest of Europe            Rest of the world   of about 630 million euros, 54% of which from companies
                                                                                              in the Fiat Group and 46% from non-captive customers
                                                                                              (an increase with respect to 2002).
Operating performance
In 2003 the Sector’s reference market continued to be adversely
                                                                                              Results for the year
affected by a climate of uncertainty and by the financial
difficulties experienced by most automotive manufacturers, both                               Overall, the consolidated income statement for 2003 shows
of which curbed capital investment. New investments focused                                   revenues of 2,293 million euros, broadly in line with those of
on the rationalization of existing plants with a view to increasing                           the previous year (2,320 million euros). Revenues for contract
reutilization, flexibility and capacity utilization. Automotive                               work were again in line with those of the previous year, both
manufacturers reduced capital spending in absolute terms                                      in Europe and in the NAFTA area, where the faster progress
and increased the competitive pressure on suppliers.                                          on contracts (up 12.5%) made it possible to offset almost all of
                                                                                              the negative impact of the depreciation of the dollar (-18.5%).
In Europe the situation remained stable, with all automotive
                                                                                              Revenues from maintenance services were also unchanged
manufacturers applying strong pressure on prices.
                                                                                              with respect to 2002.
In the United States, the overall downward trend in capital
                                                                                              Operations broadly broke even on a consolidated basis (income
spending continued for most of 2003.
                                                                                              of 2 million euros, about 0.1% of revenues), an improvement
The strengthening of the euro against the dollar gave
                                                                                              on the negative result of the previous year (a loss of 101 million
Japanese and Korean suppliers an advantage over their
                                                                                              euros, or -4.4% of revenues), which was affected by heavy losses
European counterparts. The contraction in demand and
                                                                                              resulting from cost overruns on important contracts in Europe.
the financial situation of the major automotive manufacturers
also gave rise to a downward pressure on prices, which                                        The net result for 2003 showed a loss of 164 million euros,
is expected to continue in the near future.                                                   a marked improvement on the previous fiscal year which
                                                                                              recorded a loss of 302 million euros. The result for 2003 was
In South America, where a number of countries are still in the
                                                                                              affected by net extraordinary charges of 124 million euros
grip of economic crises, the slowdown in new investment was
                                                                                              incurred during the year, mainly as a result of significant
accentuated. Finally, in the emerging markets, Russia and, to
                                                                                              restructuring and redundancy programs in a number of
an even greater degree, China both showed significant signs
                                                                                              countries (“lay-off with long-term unemployment benefits”
of economic recovery that should confirm the investment                                       agreements in Italy, the “plan social” in France, and
growth projections for 2004 and subsequent years.                                             reorganization in the UK). Extraordinary provisions for
In 2003 new orders for contract work came to about 1.4 billion                                transactions still in progress at the end of the year for
euros, a decrease of about 22% on the previous year as a result                               the disposal of certain operations were another
of the decline in the value of new orders in the NAFTA                                        contributory factor.
                                              60                 Report on Operations




                                               Metallurgical Products — Teksid

Highlights                                                                                      Teksid nevertheless maintained a significant sales effort
   (in millions of euros)                        2003             2002           2001           in order to guarantee high levels of activity in its plants,
   Net revenues                         844                      1,539         1,752            acquiring contracts for Japanese and Korean manufacturers
   Operating result                       12                        27             15           in China, for General Motors in Brazil and for Caterpillar in
                                                                                                Mexico and consolidating its relations with Renault and PSA
   EBIT (*)                              (56)                     (137)           (67)
                                                                                                in Europe and Italy.
   Net result before minority interest (91)                       (214)         (125)
                                                                                                As part of the restructuring plan, the Crescentino plant
   Cash flow (net result +
   depreciation and amortization)        (43)                     (121)          (16)           (Italy) reviewed its production strategy and by the end
   Capital expenditures                   56                        78          151             of 2004 will increase its focus on the manufacture of
   Research and development                7                        21            27            components for light vehicles. Other significant restructuring
   Net invested capital                 194                        250          788             measures were introduced at the SBFM and Funfrap plants
   Number of employees                7,556                      7,368       13,827             in France and Portugal respectively.
   (*) It includes non-operating income and expenses                                          ❚ For the Magnesium Business Unit (Meridian), the marked
                                                                                                predominance of the North American market, which in
                                                                                                2003 accounted for 81% of revenues (compared with 83.2%
Revenues by geographical
region of destination                                                                           in 2002), was confirmed, as was the focus on serving
                                                                                                customers outside the Fiat Group, with the Group accounting
Employees by geographical
region
                                                                                                for just 6.4% of the total in 2003 (6.1% in 2002).
                                                                                                In spite of the increased volumes (up 8.1%), revenues were
                              0                         50%                          100%       penalized by exchange rate movements and decreased
                                  Italy         Rest of Europe            Rest of the world
                                                                                                by 4.1%.
                                                                                                Of particular significance in 2003 were the launch of
                                                                                                production at the UK plant (a branch of Meridian
Operating performance                                                                           Technologies Inc.) with the aim of serving all local customers’
                                                                                                needs, and the creation of SMMC, a joint venture in China
The recovery experienced to varying degrees in the world                                        focusing on production for local manufacturers and, in the
economy in 2003 was not fully reflected in the automotive                                       medium term, on exports to the United States.
markets where the Sector operates.
The light vehicles market owes its slight growth (+1.2%,
compared with +4.1% in 2002) entirely to the emerging                                         Results for the year
markets (especially Asia), which more than offset the decline                                 In 2003 the Sector posted revenues totaling 844 million
in Western Europe, the NAFTA area and South America.                                          euros, a decline of 3.6% on 2002 on a comparable basis (i.e.
After excellent performance in 2002 (when growth came to 9%),                                 disregarding the Aluminum Business Unit, which was sold
the market for heavy commercial vehicles expanded by just 1.7%                                in September 2002). With adjustments to offset the adverse
in 2003 as a result of limited growth in the Asian markets (which                             effects of the changes in the exchange rate scenario, revenues
had boosted the levels for 2002), the virtual stability of the                                would have increased by 3.7% on 2002. The portion (87%)
Western European markets and the sharp contraction in the                                     of revenues generated by “non-captive” customers showed
NAFTA area. Teksid responded to the problems associated                                       no change on the previous year.
with the limited growth in volumes and unfavorable exchange                                   The Sector posted operating income of 12 million euros for
rate developments by continuing its aggressive restructuring                                  the year. On a comparable basis the enhanced profitability
plan. The plan, which was launched in 2002, involves both the                                 (up 2 million euros) can be attributed to the positive impact
Cast Iron Business Unit and the Magnesium Business Unit                                       of the higher volumes and the efficiency gains resulting from
and is aimed at bringing production structures and income                                     the rationalization of staff structures and production units,
generating capacity back into line in all production plants,                                  which more than offset the adverse effects of exchange rate
even under current market conditions.                                                         movements and the product mix. The restructuring plan and
                                                                                              prudential provisions against the potential impairment of some
The situation for the individual Business Units was as follows:
                                                                                              assets generated net non-operating expenses of 62 million
❚ Although production volumes increased by 2.2% over the                                      euros (compared with 156 million euros in 2002). These are
  previous year, the Cast Iron Business Unit saw a reduction                                  the principal component of the net loss for the year of 91
  of 4.4% in revenues as a result of exchange rate movements.                                 million euros (compared with a loss of 214 million euros in 2002).
                                             61        Report on Operations




                                              Services — Business Solutions

Highlights                                                                    ❚ Engineering and Facility Management: this unit experienced
  (in millions of euros)                        2003    2002       2001         the greatest degree of business portfolio restructuring,
  Net revenues                       1,816             1,965      1,805         with the disposal of IPI S.p.A. and Fiat Engineering S.p.A.,
  Operating result                       45               67         73         the latter in February 2004. Facility Management activity
                                                                                in civil and industrial sites is also worthy of note, as is the
  EBIT (*)                               11             (140)       608
                                                                                extraordinary maintenance activity carried out by Ingest
  Net result before minority interest (20)              (119)       497
                                                                                Facility S.p.A. Turnover amounted to 624 million euros
  Cash flow (net result +
  depreciation and amortization)         10               (77)      567         (73% non-captive) and still includes the revenues of Fiat
  Capital expenditures                    7                14        32         Engineering.
  Net invested capital                  (31)             478        648       ❚ Administration and Procurement: with Fiat Gesco S.p.A.,
  Number of employees                7,113             7,900      7,171         this unit provides management and back office services
  (*) It includes non-operating income and expenses                             within the Group, creating important synergies. The services
                                                                                provided include the activities of SADI S.p.A. (customs), Fast
                                                                                Buyer S.p.A. (traditional and online purchasing) and Risk
Revenues by business unit                                                       Management S.p.A. (management of insurable Group risks).
                                                                                Revenues for 2003 totaled 333 million euros, 73% of which
                                                                 34%
                                                                                from “captive” customers.
 Human Resources                                                              ❚ I.C.T. – Information and Communication Technology: the
                                                                 4%             main activity in this unit is Global Value, a joint venture with
 Engineering &
 Facility Management                                             17%            IBM that provides technology infrastructure management
 Administration                                                  12%            and software application development services for the Group
 and Procurement
 I.C.T. - Information and
                                                                                and the external market. During the year some Sectors of
                                                                 33%
 Communication Technology                                                       the Group made significant investments, especially in SAP,
 Diversified Services                                                           in which Global Value’s operational structures were involved.
                                                                                eSPIN S.p.A., a competence center active in a number of
Operating performance                                                           specific areas of innovation, most notably in the online
                                                                                application and management of business processes, is also
In 2003 the business services market experienced a significant
                                                                                part of this unit.
slowdown, in line with market, economic and financial difficulties
                                                                                The unit posted revenues of about 600 million euros in 2003,
that had a widespread impact on all the main fields of activity.
                                                                                with Fiat Group companies accounting for 62% of them.
Uncertainty over the future prospects for the economy
prompted companies to reduce investment in IT, in which                       ❚ The operation of ski lift and cable car facilities at Sestrieres
overall spending fell for the first time in years. Outsourcing of               generated revenues of 21 million euros.
company activities also decelerated markedly, while projects
to outsource a number of government functions failed to reach
                                                                              Results for the year
the operational stage. Even more traditional services, such as
training and temporary employment services, recorded only                     Revenues for the Sector totaled 1,816 million euros in 2003,
modest growth rates, considerably lower than in previous years.               a decline of 7.6% compared with the previous year, mainly as
                                                                              a result of changes in the scope of consolidation in 2003 (sale
In this market context, and consistently with the Fiat Group’s                of IPI and real estate operations). Other factors influencing
policy of focusing on its core businesses, the Sector engaged                 the fall in revenues were the overall contraction in the services
in a strategic repositioning that favored service-sharing activity            market and the refocusing of Sector companies on activities
within the Group and was supported by effectiveness and                       within the Group.
efficiency gains achieved through the Relaunch Plan.
                                                                              Operating income amounted to 45 million euros, compared
The Sector’s operating performance, by business unit, is set                  with 67 million euros the previous year. On a comparable basis,
out below.                                                                    however, the result represents an improvement of 6 million
❚ Human Resources: this unit provides payroll and human                       euros. Results from equity investments and, most notably, net
  resource management (H.R. Services S.p.A.), training                        non-operating expenses of 29 million euros resulting in part
  (Isvor Knowledge System S.p.A.) and temporary employment                    from restructuring, generated a net loss of 20 million euros.
  (WorkNet S.p.A.) services. Aggregate revenues totaled 231                   This was a marked improvement on the loss of 119 million
  million euros, of which 73% were from “non-captive”                         euros reported in 2002, which reflected extraordinary provisions
  customers, especially for training and temporary employment                 for the writedown of the UMTS licence.
  services. With regard to temporary employment services,
  the restructuring process continued at WorkNet.
                                              62                Report on Operations




                                               Publishing and Communications — Itedi

Highlights                                                                             September: graced with a new graphic layout, an innovative
   (in millions of euros)                        2003            2002        2001      format and covering a wider range of events and trends,
   Net revenues                                    383            360        347       the magazine is now retailed together with the paper at
   Operating result                                 10               3         (2)     30 eurocents over the newsstand price.
   EBIT (*)                                          9               1         (4)     Revenues from the sale of newspapers and other publishing
   Net result before minority interest               1              (5)        (6)     products totaled some 76 million euros in 2003. This was an
   Cash flow (net result +                                                             increase of 1 million euros over 2002, as sales of Specchio
   depreciation and amortization)                    8              3          1       and successful brand stretching efforts offset the dropoff
   Capital expenditures                              3              3          6       in sales volumes.
   Net invested capital                             19             40         49       Advertising revenues amounted to 92 million euros, roughly
   Number of employees                             874            923        934       5.7% less than in 2002, and now account for 57% of Editrice
   (*) It includes non-operating income and expenses                                   La Stampa’s total revenues (copies and advertising).
                                                                                       Publikompass S.p.A. booked advertising billings in excess
Revenues by business unit                                                              of 307 million euros, an increase of 7.4% over 2002 that was
                                                                                       partly due to new licensing agreements.
                              0                          50%                    100%   Trends in advertising sales varied according to the business
                                  Newspaper publishing         Advertising             segments where the Company operates. Sales of advertising
                                                                                       space with Publikompass’s newspaper clientele rose by 3.7%,
                                                                                       an increase fueled by billings from new additions to the
                                                                                       customer base. Without the latter, the year’s performance
Operating performance
                                                                                       would have been similar to 2002, with a rise of only 0.1%.
In 2003, sales of Italian newspapers averaged over 5.8 million                         Even this figure, however, was better than the market average.
copies a day, a figure that was substantially unchanged since                          Periodicals posted a gain of around 5%, substantially in line
the previous year.                                                                     with 2002 on a comparable basis. Billings from radio and
By the year-end, the Italian advertising market had grown by                           television advertising rose by approximately 40%, thanks
3.3%. Demand for print advertising improved by a marginal                              to an influx of business from new broadcasters in 2003.
0.2% after two difficult years that saw volumes shrink by 2.9%
in 2001 and 7.1% in 2002. Performance by the various media
                                                                                       Results for the year
was far from uniform, with newspapers losing another 0.5%
(or 1.3%, if the free press is left out of the picture), while                         Itedi posted net revenues of around 383 million euros in 2003,
periodicals upped their advertising by 1.5%.                                           an increase over the previous years’ 360 million euros achieved
                                                                                       thanks to additions in the pool of newspapers whose advertising
Editrice La Stampa S.p.A. reported an average daily circulation
                                                                                       space is managed by the Sector, sales of Specchio, and the
of 358,000 copies in 2003, down from 384,000 copies in 2002.
                                                                                       year’s brand stretching initiatives.
This decrease reflected lower newsstand sales, a reduction in
                                                                                       Operating income was 10 million euros, as against 3 million
subscriptions and the fact that several joint marketing
                                                                                       euros in 2002. This significant improvement stemmed from
arrangements with other papers were discontinued during the
                                                                                       the Sector’s across-the-board efforts to increase efficiency
year. From the promotional standpoint, La Stampa sharpened
                                                                                       and rationalize costs, the better margins achieved with
its strategic focus on brand stretching measures designed to
                                                                                       the new newspaper clients, and the lower paper costs.
increase newsstand sales of high-quality products leveraging
                                                                                       Depreciation and amortization totaled 7 million euros,
the paper’s brand name. Thus, popular works of history,
                                                                                       down from 8 million euros in 2002.
geography and literature, music CDs and sports DVDs all
                                                                                       After two years in the red, Itedi posted a net income of
appeared alongside the La Stampa masthead on Italy’s
                                                                                       1 million euros (5 million euro loss in 2002) and this despite
newsstands. Efforts to boost the newspaper readership base
                                                                                       a heavy tax burden (IRAP, the regional tax on production
also continued (distribution to students).
                                                                                       activities, in particular).
In May 2003, the Sogno d’Estate [summer dream] competition                             Cash flow amounted to 8 million euros, a 5-million-euro
was launched. The supplement Specchio was redesigned in                                increase over 2002.
                                       63         Report on Operations




                                       Motion to Cover the Loss for Fiscal 2003


Dear Stockholders,
The Statutory Financial Statements at December 31, 2003
show a loss of 2,358,789,924 euros. We propose that this loss
be fully covered through recourse to the following items of
stockholders’ equity.

Retained earnings                                           763,109,624
Additional paid-in capital                                  278,962,232
  Other reserves                                            1,103,939,820
  - Extraordinary reserve                     112,253,587
  - Reserve for purchase of treasury shares   971,955,430
  - Out-of-period income reserve under
    Art. 55 of Presidential Decree No. 917
    of December 22, 1986 (Art. 18 of Law
    No. 675 of August 12, 1977)                 1,914,925
  - Reserve for capital grants under
    Art. 102 of Presidential Decree
    No.1523 of June 30, 1967                   17,693,098
  - Reserve for capital grants
    under Regional Law 19/84                     122,780
Legal reserve                                               212,778,248
Total                                                       2,358,789,924


After said utilization the legal reserve amounts to 446,561,763,
and the allocation of 1 billion euros to the reserve for purchase
of treasury shares, approved by the Stockholders’ Meeting of
May 13, 2003, is reduced to 28,044,570 euros, equal to the
Treasury stock valuation reserve.




Turin, March 26, 2004




The Board of Directors
By:




Umberto Agnelli
Chairman
65




Fiat Group — Consolidated Financial Statements
             at December 31, 2003




Fiat S.p.A.
Head Office: 250 Via Nizza, Turin, Italy
Paid-in Capital: 4,918,113,540 euros
Entered in the Turin Company Register
Fiscal Code: 00469580013
                                        66                   Fiat Group    Consolidated Financial Statements at December 31, 2003




                                        Consolidated Balance Sheet
                                        ❚ ASSETS


(in millions of euros)                                                                                    December 31, 2003           December 31, 2002

AMOUNTS DUE FROM STOCKHOLDERS FOR
SHARES SUBSCRIBED BUT NOT CALLED                                                                                         –                           1
FIXED ASSETS
Intangible fixed assets                                                   (note 1)
Start-up and expansion costs                                                                            144                           77
Research, development and advertising expenses                                                           22                           18
Industrial patents and intellectual property rights                                                     406                          416
Concessions, licenses, trademarks and similar rights                                                    347                          467
Goodwill                                                                                                151                          229
Intangible assets in progress and advances                                                              246                          263
Other intangible assets                                                                                 157                          359
Differences on consolidation                                                                          2,251                         3,371
Total                                                                                                               3,724                        5,200
Property, plant and equipment                                             (note 2)
Land and buildings                                                                                    2,736                         3,801
Plant and machinery                                                                                   3,393                         3,721
Industrial and commercial equipment                                                                   1,504                         1,511
Other assets                                                                                          1,314                         2,095
Construction in progress and advances                                                                   728                          978
Total                                                                                                               9,675                      12,106
Financial fixed assets                                                    (note 3)
Investments in:
   unconsolidated subsidiaries                                                                          435                          558
   associated companies                                                                               3,202                         2,722
   other companies                                                                                      257                          682
Total Investments                                                                                                   3,894                        3,962
Receivables from
   others:
        due within one year                                                                               4                           19
        due beyond one year                                                                              25                           28
   Total Receivables from others                                                                         29                           47
Total Receivables                                                                                                       29                          47
Other securities                                                                                                        56                       2,445
Treasury stock                                                                                                           –                         231
Finance lease contracts receivable                                                                                  1,797                        2,947
Investments where the investment risk is borne by policyholders
and those related to pension plan management                                                                             –                       6,930
Total                                                                                                               5,776                      16,562
TOTAL FIXED ASSETS                                                                                                 19,175                      33,868
CURRENT ASSETS
Inventories                                                               (note 4)
Raw materials and supplies                                                                            1,099                         1,248
Work in progress and semifinished products                                                              944                         1,082
Contract work in progress                                                                             4,077                         5,293
Finished goods and merchandise                                                                        4,052                         3,830
Advances to suppliers                                                                                 5,188                         3,824
Total                                                                                                              15,360                      15,277
                                       67                         Fiat Group    Consolidated Financial Statements at December 31, 2003




                                       Consolidated Balance Sheet


(in millions of euros)                                                                                         December 31, 2003           December 31, 2002

CURRENT ASSETS (continued)
Receivables                                                                    (note 5)
Trade receivables:
   due within one year                                                                                     3,733                         5,248
   due beyond one year                                                                                        25                           60
Total Trade receivables                                                                                                  3,758                        5,308
Receivables from unconsolidated subsidiaries:
   due within one year                                                                                        73                           54
   due beyond one year                                                                                         3                            –
Total Receivables from unconsolidated subsidiaries                                                                           76                          54
Receivables from associated companies:
   due within one year                                                                                       764                          472
Total Receivables from associated companies                                                                                764                          472
Other receivables:
   due within one year                                                                                     3,268                         3,817
   due beyond one year                                                                                     1,647                         2,983
Total Other receivables                                                                                                  4,915                        6,800
Total                                                                                                                    9,513                      12,634
Financial assets not held as fixed assets                                      (note 6)
Investments
   in other companies                                                                                         32                          810
Total Investments                                                                                             32                          810
Other securities                                                                                           3,845                         6,769
Treasury stock                                                                                                32                           22
Financial receivables
   Receivables from unconsolidated subsidiaries:
        due within one year                                                                                  475                          348
        due beyond one year                                                                                   46                          163
   Total Financial receivables from unconsolidated subsidiaries                                              521                          511
   Receivables from associated companies:
        due within one year                                                                                  413                          912
        due beyond one year                                                                                  231                          401
   Total Financial receivables from associated companies                                                     644                         1,313
   Receivables from others:
        due within one year                                                                                6,488                         9,216
        due beyond one year                                                                                3,097                         7,371
   Total Financial receivables from others                                                                 9,585                     16,587
Total Financial receivables                                                                                             10,750                      18,411
Total                                                                                                                   14,659                      26,012
Cash                                                                           (note 7)
Bank and post office accounts                                                                              3,195                         3,454
Checks                                                                                                         9                           11
Cash on hand                                                                                                   7                           24
Total                                                                                                                    3,211                        3,489
TOTAL CURRENT ASSETS                                                                                                    42,743                      57,412
ACCRUED INCOME AND PREPAID EXPENSES                                            (note 8)
Other accrued income and prepaid expenses                                                                    793                         1,240
TOTAL ACCRUED INCOME AND PREPAID EXPENSES                                                                                  793                        1,240
❚ TOTAL ASSETS                                                                                                          62,711                      92,521
                                        68                      Fiat Group     Consolidated Financial Statements at December 31, 2003




                                            Consolidated Balance Sheet
                                            ❚ LIABILITIES AND STOCKHOLDERS’ EQUITY


(in millions of euros)                                                                                        December 31, 2003            December 31, 2002

STOCKHOLDERS’ EQUITY                                                          (note 9)
Stockholders’ equity of the Group
Capital stock                                                                                             4,918                         3,082
Additional paid-in capital                                                                                  279                         2,327
Legal reserve                                                                                               659                           659
Treasury stock valuation reserve                                                                             32                           253
Retained earnings and other reserves                                                                      2,805                         5,268
Net loss                                                                                                 (1,900)                        (3,948)
Total                                                                                                                   6,793                         7,641
Minority interest                                                                                                         701                         1,038
TOTAL STOCKHOLDERS’ EQUITY                                                                                              7,494                         8,679
RESERVES FOR RISKS AND CHARGES                                               (note 10)
Reserve for pensions and similar obligations                                                              1,503                         1,459
Income tax reserves                                                                                         309                         1,435
Other reserves                                                                                            3,478                         4,127
Insurance policy liabilities and accruals                                                                    89                         9,605
Policy liabilities and accruals, where the investment risk is borne
by policyholders, and those related to pension plan management                                                –                         7,000
TOTAL RESERVES FOR RISKS AND CHARGES                                                                                    5,379                       23,626
RESERVE FOR EMPLOYEE SEVERANCE INDEMNITIES                                   (note 11)                                  1,313                         1,609
PAYABLES                                                                     (note 12)
Bonds:
   due within one year                                                                                    1,034                         1,853
   due beyond one year                                                                                    8,576                         9,020
Total Bonds                                                                                                             9,610                       10,873
Convertible bonds:
   due within one year                                                                                    1,765                              –
   due beyond one year                                                                                        –                         2,125
Total Convertible bonds                                                                                                 1,765                         2,125
Borrowings from banks:
   due within one year                                                                                    2,697                         4,482
   due beyond one year                                                                                    6,687                         8,558
Total Borrowings from banks                                                                                             9,384                       13,040
Other financial payables:
   due within one year                                                                                      809                           961
   due beyond one year                                                                                      155                           248
Total Other financial payables                                                                                            964                         1,209
Advances:
   due within one year                                                                                    2,877                         3,603
   due beyond one year                                                                                    6,272                         5,707
Total Advances                                                                                                          9,149                         9,310
Trade payables:
   due within one year                                                                                  11,733                      12,056
   due beyond one year                                                                                       36                            96
Total Trade payables                                                                                                   11,769                       12,152
Notes payable:
   due within one year                                                                                      224                           973
   due beyond one year                                                                                        1                           664
Total Notes payable                                                                                                       225                         1,637
Payables to unconsolidated subsidiaries
   due within one year                                                                                       68                            63
Total Payables to unconsolidated subsidiaries                                                                               68                           63
                                    69         Fiat Group     Consolidated Financial Statements at December 31, 2003




                                    Consolidated Balance Sheet


(in millions of euros)                                                                       December 31, 2003           December 31, 2002

PAYABLES (continued)
Payables to associated companies:
   due within one year                                                                     842                         1,107
Total Payables to associated companies                                                                   842                        1,107
Taxes payable:
   due within one year                                                                     833                         1,279
   due beyond one year                                                                      28                           24
Total Taxes payable                                                                                      861                        1,303
Social security payable:
   due within one year                                                                     283                          311
   due beyond one year                                                                       4                            2
Total Social security payable                                                                            287                          313
Other payables:
   due within one year                                                                   1,288                         1,729
   due beyond one year                                                                      28                          327
Total Other payables                                                                                   1,316                        2,056
TOTAL PAYABLES                                                                                        46,240                      55,188
ACCRUED EXPENSES AND DEFERRED INCOME                        (note 13)
Other accrued expenses and deferred income                                               2,285                         3,419
TOTAL ACCRUED EXPENSES AND DEFERRED INCOME                                                             2,285                        3,419
❚ TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                          62,711                      92,521
                                       70                    Fiat Group   Consolidated Financial Statements at December 31, 2003




                                       Consolidated Balance Sheet
                                       ❚ MEMORANDUM ACCOUNTS (note 14)


(in millions of euros)                                                                                   December 31, 2003           December 31, 2002

GUARANTEES GRANTED
Unsecured guarantees
Suretyships
   on behalf of associated companies                                                                    10                           22
   on behalf of others                                                                               3,050                         1,616
Total Suretyships                                                                                                  3,060                        1,638
Guarantees of notes
   on behalf of others                                                                                 259                          315
Total Guarantees of notes                                                                                            259                          315
Other unsecured guarantees
   on behalf of associated companies                                                                   295                          352
   on behalf of others                                                                               2,780                         3,021
Total Other unsecured guarantees                                                                                   3,075                        3,373
Total Unsecured guarantees                                                                                         6,394                        5,326
Secured guarantees
   on behalf of others                                                                                  36                          316
Total Secured guarantees                                                                                               36                         316
TOTAL GUARANTEES GRANTED                                                                                           6,430                        5,642
COMMITMENTS
   Commitments related to derivative financial instruments                                         20,798                      38,535
   Commitments to purchase property, plant and equipment                                               329                          494
   Other commitments                                                                               10,350                          9,884
TOTAL COMMITMENTS                                                                                                 31,477                      48,913
THIRD-PARTY ASSETS HELD BY THE GROUP                                                                               1,923                        2,032
GROUP ASSETS HELD BY THIRD PARTIES                                                                                 4,496                      20,757
OTHER MEMORANDUM ACCOUNTS                                                                                            380                          267
❚ TOTAL MEMORANDUM ACCOUNTS                                                                                       44,706                      77,611
                                         71          Fiat Group   Consolidated Financial Statements at December 31, 2003




                                         Consolidated Statement of Operations


(in millions of euros)                                                           2003                       2002                     2001

VALUE OF PRODUCTION                                (note 15)
Revenues from sales and services                                              48,346                      55,427                   57,575
Change in work in progress, semifinished
and finished products inventories                                                700                        (816)                       7
Change in contract work in progress                                           (1,075)                       222                      431
Additions to internally produced fixed assets                                    688                       1,107                    1,069
Other income and revenues:
   revenue grants                                                   52                          47                           79
   other                                                          1,637                      2,105                         2,166
Total Other income and revenues                                                1,689                       2,152                    2,245
TOTAL VALUE OF PRODUCTION                                                     50,348                      58,092                   61,327
COSTS OF PRODUCTION                                (note 16)
Raw materials, supplies and merchandise                                       28,392                      30,289                   31,255
Services                                                                       8,505                       9,890                    9,835
Leases and rentals                                                               367                        468                      487
Personnel:
   salaries and wages                                             4,707                      5,457                         5,862
   social security contributions                                  1,249                      1,365                         1,551
   employee severance indemnities                                  244                         256                          315
   employee pensions and similar obligations                       185                         100                          122
   other costs                                                     303                         376                          319
Total Personnel costs                                                          6,688                       7,554                    8,169
Amortization, depreciation and writedowns:
   amortization of intangible fixed assets                         519                         595                          593
   depreciation of property, plant and equipment                  1,750                      2,019                         2,287
   writedown of fixed assets                                        35                           3                            8
   writedown of receivables among
   current assets and cash                                         278                         366                          538
Total Amortization, depreciation and writedowns                                2,582                       2,983                    3,426
Change in raw materials, supplies
and merchandise inventories                                                       81                          38                     (110)
Provisions for risks                                                           1,163                       1,138                    1,038
Other provisions                                                                  17                          30                        6
Other operating costs                                                          1,028                       1,304                    1,309
Expenses of financial services companies                                         668                       1,115                     904
Insurance claims and other insurance costs                                     1,367                       4,045                    4,690
TOTAL COSTS OF PRODUCTION                                                     50,858                      58,854                   61,009
DIFFERENCE BETWEEN THE
VALUE AND COSTS OF PRODUCTION                                                   (510)                       (762)                    318
FINANCIAL INCOME AND EXPENSES                      (note 17)
Investment income from:
   unconsolidated subsidiaries                                        –                          4                           79
   associated companies                                               1                          1                            1
   other companies                                                  21                         151                          184
Total Investment income                                                           22                        156                      264
Other financial income:
   from receivables held as fixed assets:
       from others                                                    3                          2                            2
       from securities held as fixed assets
       other than equity investments                                  –                        156                          253
       from securities held as current assets
       other than equity investments                               119                         147                          301
                                        72                  Fiat Group   Consolidated Financial Statements at December 31, 2003




                                        Consolidated Statement of Operations


(in millions of euros)                                                                  2003                       2002                    2001

FINANCIAL INCOME AND EXPENSES (continued)
Other financial income (continued)
   Other income from:
       unconsolidated subsidiaries                                           8                         25                           11
       associated companies                                                  7                         23                           22
       others                                                            1,367                      1,866                         1,599
   Total Other income                                                    1,382                      1,914                         1,632
Total Other financial income                                                          1,504                       2,219                   2,188
Interest and other financial expenses from:
   unconsolidated subsidiaries                                               3                          2                            3
   associated companies                                                      6                          2                           10
   others                                                                2,480                      3,042                         3,119
Total Interest and other financial expenses                                           2,489                       3,046                   3,132
TOTAL FINANCIAL INCOME AND EXPENSES                                                    (963)                       (671)                   (680)
ADJUSTMENTS TO FINANCIAL ASSETS                           (note 18)
Revaluations of:
   equity investments                                                      91                          68                          204
   financial fixed assets other than equity investments                      –                          –                           38
   securities held in current assets other
   than equity investments                                                 14                           7                           12
Total Revaluations                                                                      105                          75                    254
Writedowns of:
   equity investments                                                     263                         809                          577
   financial fixed assets other than equity
   investments                                                               1                         84                          128
   securities held in current assets other
   than equity investments                                                   8                         45                           28
   financial receivables                                                     5                         18                           15
Total Writedowns                                                                        277                        956                     748
TOTAL ADJUSTMENTS TO FINANCIAL ASSETS                                                  (172)                       (881)                   (494)
EXTRAORDINARY INCOME AND EXPENSES                         (note 19)
Income:
   gains on disposals                                                    1,826                      1,081                         1,515
   other income                                                           191                         154                          130
Total Income                                                                          2,017                       1,235                   1,645
Expenses:
   losses on disposals                                                     50                       1,239                           56
   taxes relating to prior years                                           26                          79                           18
   other expenses                                                        1,594                      2,420                         1,212
Total Expenses                                                                        1,670                       3,738                   1,286
TOTAL EXTRAORDINARY INCOME AND EXPENSES                                                 347                      (2,503)                   359
LOSS BEFORE TAXES                                                                    (1,298)                     (4,817)                   (497)
Income taxes                                              (note 20)                     650                        (554)                   294
LOSS BEFORE MINORITY INTEREST                                                        (1,948)                     (4,263)                   (791)
Minority interest                                                                        48                        315                     346
NET LOSS                                                                             (1,900)                     (3,948)                   (445)
                                    73                    Fiat Group   Consolidated Financial Statements at December 31, 2003




                                    Notes to the Consolidated Financial Statements
                                    at December 31, 2003
FORM AND CONTENT OF THE CONSOLIDATED FINANCIAL                         the I.A.S.B., reference should be made to the specific section
STATEMENTS                                                             in the Report on Operations.
The 2003 consolidated financial statements have been                   In order to obtain a true and fair representation of the financial
prepared in accordance with the rules contained in Italian             position and results of operations of the Group, taking into
Legislative Decree No. 127 dated April 9, 1991, which fulfilled        account their functional integration, the financial companies
the Fourth and Seventh EC Directives. The significant events           that provide services to the industrial Sectors and the insurance
which occurred after the end of the fiscal year described in the       companies have been consolidated on a line-by-line basis.
Report of Operations are an integral part of the notes to the          As a result, adjustments to the balance sheet and statement
consolidated financial statements.                                     of operations format have been made in applying Article 32
The consolidated financial statements include the financial            of Legislative Decree No. 127/91, which provides for changes to
statements of Fiat S.p.A., the Parent Company, and of all Italian      be made to obtain a more clear, true and correct representation
and foreign subsidiaries that constitute the Fiat Group (“Fiat”        of the financial position and results of operations.
or “The Group”), in which Fiat S.p.A. holds directly or indirectly
more than 50% of the voting capital and/or has de facto control
                                                                       Principles of consolidation
over operations. The companies in which the Parent Company
holds, directly or indirectly, control jointly with other partners,    Assets and liabilities, and revenues and expenses, of
are normally accounted for using the equity method. The same           subsidiaries consolidated on a line-by-line basis are included
is true for the associated companies in which the Group                in the consolidated financial statements, regardless of the
exercises a significant influence.                                     percentage of ownership. Carrying values of investments are
                                                                       eliminated against the subsidiaries’ related stockholders’ equity.
Certain insignificant subsidiaries, including those acquired for
                                                                       The portion of stockholders’ equity and results of operations
resale, which total less than 0.3% in 2003 (0.5% in 2002 and 0.6%
                                                                       attributed to minority interests are disclosed separately. When
in 2001) of total consolidated revenues and for which it is not
                                                                       losses pertaining to minority interests exceed the value of their
practicable to obtain the necessary information on a timely
                                                                       share of the relevant capital stock, the excess, or deficit, is
basis without disproportionate expense, have been excluded
                                                                       charged to the Group, unless the minority stockholders are
from consolidation. This exclusion does not affect the assertion
                                                                       expressly committed to reimbursing the losses, in which case
that the consolidated financial statements are a true and fair
                                                                       the excess is recorded as an asset in the consolidated financial
representation of the financial position and results of operations
                                                                       statements. If no such commitment is in place, should income
of the Group. Furthermore, the subsidiary BUC – Banca Unione
                                                                       be realized in the future, the minority interests’ share of that
di Credito, as allowed by law, has been excluded from the
                                                                       income will be attributed to the Group, up to the amount
scope of consolidation inasmuch as it has non-homogeneous
                                                                       necessary to recover the losses previously attributed to the
operations and is accounted for using the equity method.
                                                                       Group.
The composition of the Fiat Group underwent several
                                                                       Differences arising from the elimination of investments
significant changes in 2003 that are discussed in detail in
                                                                       (since 1994) against the related stockholders’ equity of
the following section “Major divestitures during the year”.
                                                                       the investment at the date of acquisition are allocated to the
                                                                       assets and liabilities of the company being consolidated, up
                                                                       to the limit of their current value. The residual value, if positive,
                                                                       is capitalized as an asset, “Differences on consolidation”,
PRINCIPLES OF CONSOLIDATION AND SIGNIFICANT                            and is amortized on the straight-line basis over the estimated
ACCOUNTING POLICIES                                                    period of recoverability. Negative residual amounts are recorded
The consolidated financial statements have been prepared               as a component of stockholders’ equity, “Consolidation reserve”
from the statutory financial statements of the Group’s single          (or as a liability, “Consolidation reserve for future risks and
companies or consolidated Sectors approved by the Boards               charges”, when due to a forecast of unfavorable economic
                                                                       results).
of Directors and adjusted, where necessary, by the directors
of the companies to conform with Group accounting principles           Intercompany profits and losses are eliminated net of related
and to eliminate tax-driven adjustments. The Group’s accounting        tax effects, together with all intercompany receivables, payables,
principles respect the requirements set forth by Legislative           revenues and expenses arising on transactions within the Group.
Decree No. 127 of April 9, 1991, interpreted and supplemented          Exceptions are the gross margins on intercompany sales of plant
by the Italian accounting principles issued by the National            and equipment produced and sold at prices in line with market
Boards of Dottori Commercialisti and of Ragionieri and, where          conditions, in which case such eliminations would be effectively
there are none and not at variance, by those laid down by the          irrelevant and not cost-beneficial.
International Accounting Standards Board (I.A.S.B.).                   Also subject to elimination are guarantees, commitments and
As regards the transition to International Accounting Standards        risks relating to companies included in the scope of
“International Financial Reporting Standards IFRS” issued by           consolidation.
                                   74                     Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                       Notes to the Consolidated Financial Statements




The balance sheets of foreign subsidiaries are translated into         Property, plant and equipment
euros by applying the exchange rates in effect at year end. The        Property, plant and equipment are recorded at purchase or
statements of operations of foreign subsidiaries are translated        construction cost. These values are adjusted where specific laws
using the average exchange rates for the year. In the financial        of the country in which the assets are located allow or require
statements of subsidiaries operating in high-inflation countries       revaluation, in order to reflect, even if only partially, changes
(cumulative inflation in excess of 100% in three years),               in the purchasing power of the currency. Cost also includes
accounting principles for hyperinflationary economies are used.        financing expenses incurred during the construction period
Exchange differences resulting from the translation of opening         for specific loans, where significant.
stockholders’ equity at current exchange rates and at the              Depreciation is provided on a straight-line basis at rates that
exchange rates used at the end of the previous year, as well as        reflect the estimated useful life of the related assets.
differences between net income expressed at average exchange
                                                                       When, at the balance sheet date, property, plant and equipment
rates and expressed at current exchange rates, are reflected in
                                                                       show a permanent impairment in value below their carrying
the stockholders’ equity caption “Cumulative translation
                                                                       value, such assets are written down to the lower value,
adjustments”.
                                                                       according to the method indicated above for intangible assets.
The exchange rates used are summarized in Note 23.
                                                                       Ordinary repairs and maintenance expenses related to property,
                                                                       plant and equipment are charged to the statement of
                                                                       operations in the year in which they are incurred, while
                                                                       maintenance expenses which increase the value of property,
OTHER INFORMATION                                                      plant and equipment are capitalized and depreciated over
The following information is presented in the Report on                the estimated useful lives of the assets.
Operations:                                                            Capital investment grants related to investments in property,
❚ Significant events occurring since the end of the fiscal             plant and equipment are recorded as deferred income when
  year and business outlook;                                           collection becomes certain and credited to income over the
                                                                       useful life of the related asset.
❚ Transactions among Group Companies and with related
  parties;                                                             Properties held by insurance companies to cover policy liabilities
                                                                       and accruals are stated at acquisition cost and adjusted by the
❚ Statement of cash flows;                                             compulsory law on revaluations imposed on Italian companies;
❚ Transition to International Accounting Standards.                    however, the carrying amounts do not exceed market value.
                                                                       Depreciation is determined based on the useful life and
                                                                       expected recovery value.
Accounting principles
                                                                       The revaluation of assets allowed by Law No. 342/2000, which
Balance sheet                                                          effected only a very few Italian companies of the Group, was
Fixed assets                                                           reversed in the consolidated financial statements, for purposes
                                                                       of giving preference to the uniformity and comparability of the
Intangible fixed assets                                                accounting principles.
Intangible assets and deferred charges expected to benefit
future periods are recorded at cost, adjusted by amortization
calculated on a straight-line basis over the period to be              Financial fixed assets
benefited. In particular, goodwill and differences on                  Financial fixed assets include investments in unconsolidated
consolidation are amortized over a period of no more than              subsidiaries, associated companies and other companies,
20 years, taking into account their expected period of recovery.       financial receivables held for investment purposes, treasury
In general, the Group periodically reviews that the carrying value     stock and other securities.
of such assets is not higher than the estimated recovery value,
                                                                       Investments in unconsolidated subsidiaries, in companies
in relation to their use or realization, as determined by reference
                                                                       in which Fiat exercises joint control with other partners and
to the most recent corporate plans. In cases in which there is a
                                                                       in associated companies (those in which Fiat exercises, directly
permanent impairment in the estimated recovery value that is
                                                                       or indirectly, a significant influence) are normally accounted for
lower than carrying value, appropriate writedowns are recorded.
                                                                       using the equity method. This method is not used in cases in
The costs of researching and developing new products and/or            which the investor no longer exercises significant influence over
processes are mainly included in the results of operations in the      the investee, in which case the cost is considered to be the
period in which such costs are incurred in line with the principle     value of the investment taken from the prior year’s financial
of prudence and with international practice in the Automotive          statements.
industry.
                                                                       Investments in other companies are valued at cost. In the event
Goodwill is recorded as an asset when acquired for                     of a permanent impairment in value, a specific allowance is
consideration.                                                         provided as a direct reduction of the asset account.
                                   75                     Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                       Notes to the Consolidated Financial Statements




Financial receivables are recorded at estimated realizable value.      Treasury stock consists of Fiat S.p.A. shares bought back by
                                                                       Fiat Ge.Va. S.p.A. and by Fiat; it is valued at the lower of cost
Securities are recorded at cost, including additional direct
                                                                       or market, cost being determined on a Last-In First-Out (LIFO)
charges. In the event of permanent impairment, a valuation
                                                                       basis. A specific reserve for treasury stock is also recorded under
allowance is provided as a direct reduction of the securities.
                                                                       the stockholders’ equity of the Group for the same amount.
However, in the balance sheet at December 31, 2002, securities
held by the insurance companies as investments for the benefit
of those insured under life insurance policies, where the insured
                                                                       Reserves for risks and charges and employee severance
parties bear the risk (relating to index-linked and unit-linked
                                                                       indemnities
policies), and as investments in the management of pension
funds, were presented under a separate caption and valued              The reserves for risks and charges include provisions to cover
at market price, as set forth by the specific regulations of the       losses or liabilities likely to be incurred but uncertain as to the
insurance industry in Italy.                                           amount or as to the date on which they will arise.

Treasury stock held as fixed assets is recorded at purchase            In particular, the reserve for pensions and similar obligations
cost, including any writedowns resulting from a permanent              includes provisions for long-service or other bonuses (including
impairment in its value. A specific reserve for treasury stock         pension funds required by some countries in which the Group
is also recorded under stockholders’ equity of the Group for           operates), payable to employees and former employees under
the same amount.                                                       contractual agreements or by law, determined on an actuarial
                                                                       basis, where applicable.
Financial fixed assets include finance lease contracts receivables,
recorded at cost. The related depreciation is calculated,              Restructuring reserves include the costs to carry out corporate
according to the financial method, based on the life of the            reorganization and restructuring plans and are provided in the
lease and the related risk in managing such contracts.                 year the company formally decides to commence such plans
                                                                       and the relative costs can be reasonably estimated.
                                                                       The policy liabilities and accruals of insurance companies are
Current assets
                                                                       determined according to the procedures and rules issued by
Inventories of raw materials, semifinished products, finished          the regulatory agencies in each country in which the individual
goods and contract work in progress completed within the               subsidiaries operate. In particular, unearned property and
fiscal year are valued at the lower of cost or market, cost being      liability premiums are recognized on the pro-rata basis over
determined on a First In-First-Out (FIFO) basis. The valuation         the period of the policy. The reserve for unpaid property and
of inventories includes the direct costs of materials, labor and       liability losses and unpaid adjustment expenses has been
variable and fixed indirect costs. Provision is made for obsolete      calculated on the basis of reasonable estimates of the “latest
and slow-moving raw materials, finished goods, spare parts             cost” of the claims, analytically and for groups of particular risks,
and other supplies based on their expected future use and              following adequate statistical and actuarial methods. The policy
realizable value.                                                      liabilities and accruals for unpaid losses on life insurance claims
Work in progress on long-term contracts is valued based on             are calculated on an actuarial basis, accompanied by an opinion
the stage of completion and is recorded gross of advance               by a qualified actuary on the congruity of the amount. Finally,
payments received from customers. Eventual losses on such              as previously described, the policy liabilities and accruals
contracts are fully recorded when they become known.                   against investments made for the benefit of those insured
Receivables are recorded at estimated realizable value. Any            under life insurance policies, where the insured parties bear the
unearned interest included in the nominal value of financial           risk (related to index-linked and unit-linked policies), and those
receivables has been deferred to future periods. Receivables           deriving from the management of pension funds are presented
sold to third parties with recourse or without recourse (including     under a separate caption, as set forth by the specific regulations
those sold as part of securitization transactions) are eliminated      of the insurance industry in Italy.
from receivables and disclosed in the memorandum accounts.             The reserve for employee severance indemnities comprises
Receivables denominated in foreign currency are translated at          liability for severance indemnities that Italian companies accrue
the exchange rate in effect at year end. Resulting exchange
                                                                       each year end for employees, as determined in accordance with
gains and losses are included in the statement of operations.
                                                                       labor legislation. In particular, the liability includes a portion of
Other receivables also include deposits to guarantee the               the employee’s annual salary and is indexed for inflation in
securitization transactions of trade receivables (securitization       accordance with Italian rules.
refers to particular programs of discounting trade receivables
without recourse, with a collateral deposit as a guarantee).
                                                                       Payables
Current assets also include investments and securities acquired
as short-term investments which are valued at the lower of cost        Payables are recorded at face value; the portion of interest
or market, cost being determined on a Last-In First-Out (LIFO)         included in the nominal amount is deferred until future periods
basis.                                                                 in which it is earned. Accounts payable denominated in foreign
                                    76                     Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                        Notes to the Consolidated Financial Statements




currency are translated at the exchange rate in effect at year          financial assets and liabilities in and off-balance sheet and, in
end. Resulting exchange gains and losses are included in the            particular, states that derivative financial instruments should be
statement of operations.                                                valued at fair value. Taking into account the restrictions under
                                                                        Italian law and the evolution of the law now underway, the
Taxes payable includes the tax charge for the current year
                                                                        Group maintains, consistently with Consob rulings, that IAS
recorded in the statement of operations.
                                                                        39 is immediately applicable only in part and only in reference
                                                                        to the designation of derivative financial instruments as
Accruals and deferrals                                                  “hedging” or “non-hedging instruments” and with respect
                                                                        to the symmetrical accounting of the result of the valuation of
Accruals and deferrals are determined using the accrual method
                                                                        the derivative hedging instrument and the result attributable
based on the income and expense to which they relate.
                                                                        to the hedged item (“hedge accounting”). The transactions
                                                                        which, according to the Group’s policy for risk management, are
Securitization of financial receivables                                 able to meet the conditions stated by the accounting principle
                                                                        for hedge accounting treatment are designated as hedging
The Fiat Group has programs for discounting financial                   transactions; the others although set up for the purpose of
receivables originated by the financial services companies              managing risk (inasmuch as the Group’s policy does not permit
using securitization transactions. This discounting of financial        speculative transactions), have been designated as “trading”.
receivables calls for the sale without recourse of a portfolio
of financial receivables to a non-Group securitization vehicle.         Details of the accounting treatment adopted are as follows.
This company finances the purchase of the portfolio by issuing          For foreign exchange instruments designated as hedges,
securities which it backs (Asset Backed Securities). The securities     the premium (or discount, representing the difference between
issued are divided into two types having different characteristics:     the spot exchange rate at the inception of the contract and
the first is placed on the market, occasionally subdivided by           the forward exchange rate) is recorded in the statement of
various classes of ratings, and subscribed to by investors; the         operations, in Financial income and expenses, in accordance
second, the reimbursement of which is subordinated to the first,        with the accrual method. Differences between the value of such
is subscribed to by the seller. The risk for the seller is limited      instruments using the exchange rates at inception and those
to the portion of the securities which it has subscribed. At the        at year end are also included in the statement of operations
end of each accounting period, therefore, such securities are           to offset the exchange effects of the items being hedged. In
evaluated in relation to the performance of the receivables             particular, for contracts put into place to hedge the exchange
sold and may be written down on the basis of this evaluation.           risk of future transactions that are considered highly probable,
These securities are recorded in Financial receivables.                 the effects of the alignment with the year-end exchange rate
Lastly, these sales without recourse require the immediate              are deferred until the year in which the underlying transactions
recognition of the present value of the future margin implicit          are recorded.
in the receivables sold, net of discounting costs. This net value       For interest rate instruments designated as hedges, the interest
is included in the Value of production since it relates to revenues     rate differential is included in the statement of operations, in
arising out of the normal operations of the financial services
                                                                        Financial income and expenses, in accordance with the accrual
companies (to this end, the financial income of such companies
                                                                        method, offsetting the effects of the hedged transaction.
is included in revenues from sales and services, as described
in the relevant note).                                                  Derivative financial instruments hedging interest rate
                                                                        fluctuations that are designated as trading instruments are
                                                                        valued at market value and the differential, if negative
                                                                        compared to the contractual value, is recorded in the statement
Memorandum accounts                                                     of operations as Financial income and expenses, in accordance
                                                                        with the concept of prudence.
Derivative financial instruments
                                                                        The same prudent principle is followed in recording derivative
Financial instruments used to hedge exchange and interest rate
                                                                        financial instruments to manage trading risks (for example
fluctuations and, in general, changes in the assets and liabilities,
                                                                        equity swaps) that do not meet the conditions for hedge
are presented in Note 14. Derivative financial instruments are
                                                                        accounting treatment.
recorded at inception in the memorandum accounts at their
notional contract amount.
Beginning in 2001 the Fiat Group adopted – to the extent that
it is consistent and not in contrast with general principles set        Statement of Operations
forth in the Italian law governing financial statements – the
international accounting standard IAS 39 “Financial Instruments:        Revenue recognition
Recognition and Measurement”, applicable beginning January              Revenues from sales and services are recognized on the accrual
1, 2001. Such principle covers the accounting treatment of all          basis net of returns, discounts, allowances and rebates.
                                    77                     Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                        Notes to the Consolidated Financial Statements




Revenues from sales of products are recognized at the moment            Income taxes
title passes to the customer, which is generally at the time of         Income taxes currently payable are provided for in accordance
shipment. Under contracts for vehicle sale and buy-back at a            with the existing legislation of the countries in which the Group
specified price, a specific reserve for future risks and charges        operates.
is set aside based on the difference between the guaranteed
                                                                        Deferred tax liabilities or deferred tax assets are determined on
residual value and the estimated realizable value of the used
                                                                        all the temporary differences between the consolidated assets
asset, taking into account the probability that such option will
                                                                        and liabilities and the corresponding amounts for purposes
be exercised; this reserve is set up at the time of the initial sale
                                                                        of taxation, including those deriving from the most significant
and adjusted periodically over the period of the contract.
                                                                        consolidation adjustments. As allowed by the applicable
Revenues from services are recorded when they are performed.            Accounting Principles, deferred tax assets are also recorded
Revenues from long-term contracts are recognized using the              to account for the tax benefit of tax loss carryforwards whenever
percentage of completion method.                                        the specific conditions for future recoverability are met.
Revenues from sales and services include income from                    In particular, deferred tax assets have only been recorded
the normal business of the financial services companies.                if there is a reasonable certainty of their future recovery.
                                                                        Deferred tax liabilities are not recorded if it is unlikely that
Revenues also include amounts received from financing leases,
                                                                        a future liability will arise.
net of depreciation, and income from company assets on
operating leases.                                                       Deferred tax assets and liabilities are offset if they refer to
                                                                        the same company and to taxes which can be compensated.
With regard to the Insurance Sectors insurance premiums
                                                                        The balance from offsetting the amounts is recorded in
are recognized on an accrual basis.
                                                                        Other receivables in current assets, if a deferred tax asset,
                                                                        and in the Deferred tax reserve, if a deferred tax liability.
Costs
Costs are recognized on an accrual basis.
Research and development costs are principally charged to the           MAJOR DIVESTITURES DURING THE YEAR
statement of operations in the period in which they are incurred.       As described in the Report on Operations, the Group carried
Research-related revenue grants provided by the Government              out significant divestitures during the year which are reviewed
or the EU are credited to the statement of operations when              below:
collection becomes certain.
                                                                        ❚ The agreement to sell Toro Assicurazioni to the DeAgostini
Advertising and promotion expenses are charged to the                     Group was signed on May 2, 2003. The conditions precedent
statement of operations in the year incurred.                             stated in the agreement for the issuance of the requisite
Estimated product warranty costs are charged to the statement             authorization by the competent authorities have since been
of operations at the time the sale is recorded.                           met, making the transaction effective as of the date of the
                                                                          signing of the agreement. The sale price was 2,378 million
The Costs of production include the interest and expenses in              euros, with a net gain of 390 million euros. The Sector’s
the normal course of business of the financial services companies,        operations were therefore deconsolidated as of the same
as well as insurance claims and other technical costs of the              date (May 2003). The sales proceeds were collected on July
insurance companies.                                                      30, 2003, concurrently with the official transfer of the Toro
                                                                          Assicurazioni shares.

Financial income and expenses                                           ❚ On May 27, 2003, as part of the agreement signed by Fiat
                                                                          and Capitalia, Banca Intesa, SanPaolo IMI and Unicredito
Financial income and expenses are recorded on an accrual                  on March 11, 2003, and following approval by the competent
basis.                                                                    authorities, the first part of the transaction was concluded
Income and expenses resulting from derivative financial                   upon the sale of the majority interest (51%) and the
instruments, as well as relevant year-end exchange differences,           consequent deconsolidation of Fidis Retail Italia, the company
are included in the statement of operations in accordance with            which controls the European activities of Fiat Auto Holdings
the above mentioned policies disclosed under memorandum                   in the field of retail consumer financing for automobile
                                                                          purchases. The sale was finalized in October 2003 upon
accounts.
                                                                          the deconsolidation and transfer to Fidis Retail Italia of
Costs relating to the factoring of receivables and notes                  the holdings in the other financial companies covered by
of any type (with recourse, without recourse, securitization)             the agreement, with the sole exception of the company
and nature (trade, financial, other) are charged to the statement         operating in the United Kingdom. Additional information
of operations on an accrual basis.                                        on the contract details is presented in Note 3.
                                   78                     Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                       Notes to the Consolidated Financial Statements




❚ In execution of the contract dated July 1, 2003 and after            ❚ Also in the first quarter of 2003, Business Solutions sold the
  having met the conditions precedent, the sale of the                   Zunino group the approximate 56% stake in IPI S.p.A., which
  aerospace activities of FiatAvio S.p.A. to Avio Holding S.p.A.,        was deconsolidated as from the beginning of the year.
  a company 70% owned by The Carlyle Group and 30%                     ❚ Following the agreements signed in December 2002, the
  by Finmeccanica S.p.A., was finalized. Such activities were            Automobile Sector concluded the sale of Fiat Auto Holdings’
  therefore deconsolidated beginning July 2003. The sale                 retail financing activities in Brazil to the Itaù banking group at
  price was 1,509 million euros, realizing a net gain of 1,258           the end of March 2003 and the activities were deconsolidated
  million euros.                                                         from that date. The sale price was 247 million euros, realizing
Furthermore:                                                             a net gain of 103 million euros.
❚ In the first quarter of 2003, Iveco sold the activities of           The effects of the above sales on the statement of operations
  Fraikin, a company specializing in long-term vehicle leasing,        and balance sheet are analyzed in detail as “Discontinuing
  to Eurazeo. The sale price was 307 million euros, realizing          Operations” in the Analysis of the Financial Position and
  a net loss of 24 million euros. The activities sold were             Operating Results of the Fiat Group and Fiat S.p.A., included
  deconsolidated as of the beginning of the year.                      in the Report on Operations.
                                        79                   Fiat Group     Consolidated Financial Statements at December 31, 2003
                                                                            Notes to the Consolidated Financial Statements




COMPOSITION, PRINCIPAL CHANGES AND OTHER INFORMATION


Fixed assets
1 Intangible fixed assets
                                                            Net of                              Change in                   Foreign     Disposals     Net of
                                                       amortization                           the scope of    Reclassi-   exchange     and Other amortization
(in millions of euros)                                  12/31/2002    Additions Amortization consolidation    fications      effects     changes 12/31/2003

Start-up and expansion costs                                    77        107            (37)           3            3           (4)          (5)       144
Research, development and advertising expenses                  18          16            (8)           1           (2)           –           (3)        22
Industrial patents and intellectual property rights           416           44         (106)          (11)        100           (44)           7        406
Concessions, licenses, trademarks and similar rights          467           45           (85)         (52)         44           (46)         (26)       347
Goodwill                                                      229           14           (17)         (41)           –          (22)         (12)       151
Intangible assets in progress and advances                    263         160              –            (3)      (153)            –          (21)       246
Other intangible assets                                       359         116            (91)        (218)           8           (1)         (16)       157
Differences on consolidation                                3,371           25         (175)         (529)           –        (409)          (32)     2,251
Total Intangible fixed assets                               5,200         527          (519)         (850)           –        (526)        (108)      3,724


Intangible fixed assets are shown net of writedowns of 614 million euros (559 million euros at December 31, 2002) of which 579 million
euros (545 million euros at December 31, 2002) relate to Goodwill and Differences on consolidation. Writedowns made in 2003
amount to 55 million euros (559 million euros in 2002) and are included in the Disposals and Other changes column.
Start-up and expansion costs at December 31, 2003 consist of deferred plant start-up costs and corporate formation costs of 60
million euros (53 million euros at December 31, 2002) and capital increase costs of 84 million euros (24 million euros at December 31,
2002). Additions during the year include 88 millions euro for the capital increase costs of Fiat S.p.A. for 57 million euros, Fiat Auto
Holdings B.V. for 17 million euros, CNH Global N.V. for 12 million euros and other minor companies for 2 million euros.
Other intangible assets include additions during the year mainly for the capitalization of license acquisition costs for the development
of technologies and products incurred by FiatAvio S.p.A. for 68 million euros (relating to the first six months of the year) and other
deferred charges benefiting future periods by Fiat Auto for 27 million euros.
Differences on consolidation amount to 2,251 million euros at December 31, 2003, and include the net goodwill (net of amortization
and writedowns, as described below) on the acquisition of the Case Group and other CNH Group companies for 2,013 million euros,
the Irisbus Group for 46 million euros, Meridian Technologies Inc. for 25 million euros, certain Components Sector companies for
20 million euros, certain Production Systems Sector companies for 46 million euros and other minor companies for 32 million euros.
Differences on consolidation also include goodwill deriving from Tender Offers for the shares of Magneti Marelli Holding S.p.A. for
18 million euros, as well as goodwill from the CNH Global N.V. capital increase effected in 2000 for 51 million euros.
As regards the amounts recorded in Goodwill and Differences on consolidation, amortization is charged over periods ranging from
five to twenty years, on the basis of the expected recoverability of these amounts. At the end of the year, however, specific reviews
were conducted to verify whether such amounts are recoverable by considering the existing prospects of earnings. From the
analyses performed, taking into consideration the changed market conditions, the restructuring plans initiated by certain Sectors
of the Group and the consequent impact on the business plans of various Sectors, permanent impairments in value were identified
at December 31, 2003 that gave rise to writedowns totaling 38 million euros (533 million euros at December 31, 2002).
                                      80                     Fiat Group       Consolidated Financial Statements at December 31, 2003
                                                                              Notes to the Consolidated Financial Statements




2 Property, plant and equipment
                                                Net of                              Change in                  Foreign     Disposals        Net of Accumulated
                                           depreciation                           the scope of   Reclassi-   exchange     and Other    depreciation depreciation
(in millions of euros)                      12/31/2002    Additions Depreciation consolidation   fications      effects     changes     12/31/2003 12/31/2003

Land and buildings                              3,801           60         (150)         (730)        36         (121)         (160)        2,736         1,903
Plant and machinery                             3,721         305          (613)         (118)       288           (92)         (98)        3,393         7,492
Industrial and commercial equipment             1,511         475          (623)            3        306           (49)        (119)        1,504         6,297
Other assets                                    2,095         480          (364)         (507)          6          (78)        (318)        1,314         1,674
Construction in progress and advances             978         691              –          (65)      (636)          (37)        (203)          728             –
Total Property, plant and equipment            12,106       2,011         (1,750)      (1,417)          –        (377)         (898)        9,675        17,366


Property, plant and equipment include revaluations required or allowed by national laws, which, net of related accumulated
depreciation, amount to 231 million euros at December 31, 2003 and 288 million euros at December 31, 2002.
No interest expenses were capitalized in 2003 or in 2002.
The Change in the scope of consolidation shows a negative amount of 1,417 million euros owing to the sale of the Toro Assicurazioni
Group (-582 million euros), Fraikin (-514 million euros) and FiatAvio S.p.A. (-326 million euros), as well as a positive balance due to the
inclusion and exclusion of other minor companies in consolidation (5 million euros).
Reclassifications refer to a reduction in construction in progress and advances on purchases of property, plant and equipment
existing at the end of the prior year which were reclassified at the time they were effectively acquired and put into operation.
Disposals and Other changes, which has a negative balance of 898 million euros, include, in the Land and buildings category,
160 million euros relating in part to the sale of non-strategic properties. Furthermore, this item includes the writedowns recorded
during the year. In fact, as with intangible fixed assets, the estimated recoverable amounts of property, plant and equipment were
analyzed, in terms of the value in use or realizable value, based upon the most recently updated company plans, which take into
consideration the changed market conditions and the restructuring plans initiated by certain Sectors of the Group. As a result of
those analyses, property, plant and equipment were written down by 351 million euros (227 million euros in 2002), detailed by Sector
as follows: Automobiles 312 million euros, Commercial Vehicles 6 million euros, Metallurgical Products 16 million euros, Components
7 million euros, and other minor companies 10 million euros. This item also comprises disposals relating to assets on operating leases
of 289 million euros.
Other assets include vehicles on operating leases for 914 million euros at December 31, 2003 (1,585 million euros at December 31,
2002), mainly relating to long-term leases. The reduction of 671 million euros includes 466 million euros due to the sale of Fraikin.
The depreciation rates used are determined on the basis of the estimated useful lives of the assets and are listed below:

                                                                                                                                              Depreciation rates

Land and and buildings                                                                                                                        3%     –      9%
Plant and machinery                                                                                                                           8%     –     21%
Industrial and commercial equipment                                                                                                         16%      –     28%
Other assets                                                                                                                                11%      –     25%
                                    81                     Fiat Group     Consolidated Financial Statements at December 31, 2003
                                                                          Notes to the Consolidated Financial Statements




3 Financial fixed assets
Investments
                                                                                             Change in    Acquisitions      Foreign     Disposals
                                                         Value at   Equity in    Equity in the scope of             and   exchange     and Other       Value at
(in millions of euros)                                12/31/2002    earnings       losses consolidation Capitalizations      effects     changes    12/31/2003

Unconsolidated subsidiaries                                 558          16         (150)           (14)             7          (28)          46         435
Associated companies                                      2,722          74          (45)          536              29          (59)         (55)      3,202
Other companies                                             682            1           (5)        (491)             11            –           59         257
Total Investments                                         3,962          91         (200)           31              47          (87)          50       3,894


Equity in earnings and Equity in losses include the Group’s share of the income or the loss of companies accounted for using the
equity method. With regard to the companies accounted for at cost, Equity in losses includes the loss in value recorded in the year.
Change in the scope of consolidation (increase of 31 million euros) can be analyzed as follows:
❚ Investments in unconsolidated subsidiaries (-14 million euros): the decrease is due to the line-by-line consolidation of the
  companies B.D.C. & Co. Société en Commandite Simple (-8 million euros), New City Car S.A. (-2 million euros) and other minor
  companies (-4 million euros).
❚ Investments in associated companies (536 million euros): the caption includes the effects consequent to the exclusion from the
  scope of consolidation of the companies now accounted for using the equity method and the investments held by companies that
  were sold during the year. The change particularly refers to: Fidis Retail Italia S.p.A. (376 million euros), Naveco Ltd. (122 million
  euros), IPI S.p.A. (16 million euros), Toro Targa Assicurazioni S.p.A. (15 million euros), Transolver Finance Establecimiento Financiero
  de Credito S.A. (12 million euros), Fidis Bank G.m.b.H. (3 million euros), IN ACTION S.r.l. (2 million euros), the company Atla S.r.l.
  owned by FiatAvio S.p.A. (-4 million euros), investments held by IPI S.p.A. (-5 million euros) and other minor companies (-1 million
  euros).
❚ Investments in other companies (-491 million euros): the decrease is mainly due to the exclusion from the scope of consolidation
  of Capitalia S.p.A. (-481 million euros), Toro Assicurazioni Group holding, and other minor companies (-10 million euros).
Acquisitions and Capitalizations (47 million euros) refer principally to the following acquisitions and capitalizations:
❚ Investments in unconsolidated subsidiaries (7 million euros): capitalization of the company Cofap Companhia Fabricadora
  de Pecas LTDA (5 million euros) and other minor companies (2 million euros).
❚ Investments in associated companies (29 million euros): capitalizations of the companies CNH Capital Europe S.A.S. (10 million
  euros), Toro Targa Assicurazioni S.p.A. (9 million euros), Mako Elektrik Sanay Ve Ticaret A.S. (4 million euros) and other minor
  companies (6 million euros).
❚ Investments in other companies (11 million euros): acquisitions of the companies Gas Turbine Technologies S.p.A. (6 million euros),
  IPSE 2000 S.p.A. (3 million euros) and other minor companies (2 million euros).
Disposals and Other changes, which show an increase of 50 million euros, refer principally to:
❚ Investments in unconsolidated subsidiaries (46 million euros): line-by-line consolidation of Atlanet S.p.A. (56 million euros) and
  other minor companies (-10 million euros).
❚ Investments in associated companies (-55 million euros): sale of the companies: E.D.M. S.r.l. (-8 million euros), Johnson Matthey
  Argentina S.A. (-3 million euros) and other companies (-44 million euros).
❚ Investments in other companies (59 million euros): the increase, net of minor variations for -6 million euros, is due to the
  subscription of the Edison S.p.A. capital increase, equal to 65 million euros, through the conversion of the option rights subscribed
  to in 2002.
                                      82                 Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                      Notes to the Consolidated Financial Statements




Investments held at December 31, 2003, by type of consolidation method, are analyzed as follows:

(in millions of euros)                                                                                        At 12/31/2003            At 12/31/2002

Investments accounted for using the equity method                                                                   3,539                    3,161
Investments valued on a cost basis:
   listed companies                                                                                     158                     581
   unlisted companies                                                                                   197                     220
Total Investments valued at cost                                                                                      355                      801
Total Investments                                                                                                   3,894                    3,962


Investments accounted for using the equity method: the increase (378 million euros) is due to the equity method of valuation for the
companies Fidis Retail Italia S.p.A. (372 million euros) and Naveco Ltd. (102 million euros), the foreign exchange effect (-87 million
euros) and other minor changes (-9 million euros).
Investments valued on a cost basis: the decrease (423 million euros) in listed companies is mainly due to the exit of Capitalia S.p.A.
(-481 million euros), a Toro Assicurazioni Group holding, the inclusion of Edison S.p.A. shares (65 million euros) and other minor
changes (-7 million euros). The reduction in unlisted companies valued at cost (-23 million euros) is the result of the sale of the
investment in Johnson Matthey Argentina S.A. (-3 million euros), the exclusion of Atla S.r.l., a company held by FiatAvio S.p.A.
(-4 million euros), certain Toro Assicurazioni Group companies (-3 million euros) and other companies (-13 million euros).
The principal investments in unconsolidated subsidiaries are the following:

                                                                                                              At 12/31/2003            At 12/31/2002
(in millions of euros)                                                                                    %        Amount         %         Amount

Unconsolidated subsidiaries:
BUC-Banca Unione di Credito                                                                           100.0           340      100.0           361
Leasys S.p.A.                                                                                          51.0             36      51.0           112
Other unconsolidated subsidiaries (minor amounts)                                                                       59                      85
Total                                                                                                                 435                      558


As allowed by law, the above companies have not been consolidated either because their operations are so dissimilar (BUC – Banca
Unione di Credito) or because it would not have been possible to obtain the necessary information for their consolidation on a timely
basis without disproportionate expense or because their operations are not significant. Such companies show a negative net financial
position of 297 million euros (164 million euros at December 31, 2002).
As regards the investment in Leasys S.p.A., this company is subject to joint control with the other partner, even though the Fiat Group
holds 51% of capital stock; like the other principal jointly controlled companies, the investment is accounted for using the equity
method.
                                                83              Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                             Notes to the Consolidated Financial Statements




Investments in associated companies are as follows:

                                                                                                                     At 12/31/2003           At 12/31/2002
(in millions of euros)                                                                                           %        Amount        %         Amount

Associated companies:
Fiat-GM Powertrain B.V.                                                                                       50.0         1,172      50.0         1,189
Italenergia Bis S.p.A                                                                                         24.6           512      24.6           481
Fidis Retail Italia S.p.A. (*)                                                                                49.0           372        –               –
Tofas Turk Otomobil Fabrikasi A.S.                                                                            37.9           156      37.9           136
Sevel S.p.A.                                                                                                  50.0           118      50.0           125
Kobelco Construction Machinery Co. Ltd.                                                                       20.0           103      20.0           107
Naveco Ltd. (**)                                                                                              50.0           102        –               –
Rizzoli Corriere della Sera MediaGroup S.p.A. (formerly H.d.P. S.p.A.)                                         9.8             99     10.1            98
Consolidated Diesel Company                                                                                   50.0             54     50.0            59
Jiangsu Nanya Auto Co. Ltd.                                                                                   50.0             54     50.0            55
Société Europeenne de Vehicules Legers du Nord-Sevelnord Société Anonyme                                      50.0             49     50.0            47
New Holland HFT Japan Inc.                                                                                    50.0             32     50.0            42
Global Value Services S.p.A.                                                                                  50.0             36     50.0            38
CBC-Iveco Ltd.                                                                                                50.0             40     50.0            37
CNH Capital Europe S.A.S.                                                                                     49.9             45     50.0            30
Turk Traktor Ve Ziraat Makineleri A.S.                                                                        37.5             33     37.5            30
IPI S.p.A. (*)                                                                                                10.0             16       –               –
LBX Company LLC                                                                                               50.0             15     50.0            20
New Holland Trakmak Traktor A.S.                                                                              37.5             14     37.5            14
Transolver Finance Establecimiento Financiero de Credito S.A. (*)                                             50.0             14       –               –
Toro Targa Assicurazioni S.p.A. (*)                                                                           49.0             13       –               –
AL-Ghazi Tractors Ltd.                                                                                        43.2             12     43.2            13
Hua Dong Teksid Automotive Foundry Co. Ltd.                                                                   50.0              7     50.0            12
New Holland de Mexico S.A. de C.V.                                                                            50.0              6     50.0            22
Other associated companies (minor amounts)                                                                                   128                     167
Total                                                                                                                      3,202                   2,722
(*) Company consolidated line-by-line in 2002
(**) Company consolidated proportionally in 2002



The above list also comprises certain companies under joint control, the most important of which are Fiat-GM Powertrain B.V.,
Sevel S.p.A. and Société Europeenne de Vehicules Legers du Nord-Sevelnord Société Anonyme and Naveco Ltd. Such companies
carry a negative net financial position of 1,093 million euros (2,480 million euros at December 31, 2002).


Fiat-GM Powertrain B.V.
Fiat-GM Powertrain B.V. is an industrial joint venture for the manufacture of engines and gears for cars that was set up in the second
half of 2001 between Fiat and General Motors Corporation (General Motors) under the well-known strategic alliance. The key figures
taken from the financial statements of Fiat-GM Powertrain, drawn up in accordance with the accounting principles of the Group for
the valuation of the investment using the equity method at December 31, 2003 and 2002 are as follows:

(in millions of euros)                                                                                               At 12/31/2003           At 12/31/2002

Balance sheet data
Fixed assets                                                                                                               3,250                   3,416
Total assets                                                                                                               6,611                   6,681
Financial payables                                                                                                        (1,452)                 (1,695)
Stockholders’ equity                                                                                                       2,344                   2,377
                                   84                     Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                       Notes to the Consolidated Financial Statements




(in millions of euros)                                                                                               2003               2002

Statement of operations data
Net sales                                                                                                          6,598               6,624
Operating income                                                                                                     296                280
Net income                                                                                                           180                131


In view of the strictly industrial nature of the joint venture and in order to achieve a reading of its industrial performance that is
consistent with the past, commencing in 2001 and during the period in which the industrial convergence and the relative synergies
is being implemented (estimated at less than three years), the Group’s share of the results of the company is included in the consolidated
statement of operations as a split between the operating/industrial component and the other non-operating components. In particular,
the Group’s share of the operating result of the company (147 million euros in 2003, 143 million euros in 2002 and 47 million euros in
the second half of 2001), determined by the transfer pricing policy adopted, is included in the consolidated statement of operations
as an adjustment to the cost of the products purchased from the joint venture, whereas the share of the result in the other non-operating
components is allocated to the respective principal captions, without effect on the total net result recorded by the Group. As far
as Fiat-GM Powertrain's balance sheet is concerned, with regard to the debt position, there are no commitments or guarantees
provided by Fiat.


Italenergia Bis
With reference to the investment in Italenergia Bis S.p.A., during the second half of 2002, the Fiat Group sold a 14% holding
to certain other stockholders of the company (Banca Intesa, IMI Investimenti and Capitalia, hereinafter the “Banks”) for 548 million
euros, realizing a gain of 189 million euros. The related sales contracts and the contemporaneous agreements with another
stockholder of Italenergia Bis (Electricité de France, hereinafter “EDF”) provide, among other things, that:
❚ By virtue of an option acquired in respect of EDF (the so-called EDF Put), Fiat may elect, between March and April 2005, to sell
  the shares it still holds in Italenergia Bis (223,151,568 shares, equal to 24.6%,) to EDF, at a price corresponding to the value of the
  investment, as estimated on the basis of the valuations performed by three experts appointed for that purpose. That price, less a
  premium of 127 million euros, payable only in the event the option is exercised, may not be less than a minimum (floor) of 1,147
  million euros, or 5.141698 euros per share.
❚ In connection with the EDF Put, the Banks (in addition to the put agreements negotiated independently with EDF for their
  respective initial holdings in Italenergia Bis) obtained a so-called “tag along/drag along” agreement from Fiat, and Fiat arranged a
  symmetrical Put/Call contract with EDF (conditional upon the prior exercise of the EDF Put by Fiat) that gives rise to two scenarios:
    a) Fiat independently exercises the EDF Put on its own 24.6% holding and in this case:
   – The Banks exercise the “tag along” under which the Banks each sell their own 4.66% holding to Fiat under the same price
     conditions as the EDF Put (valuation at fair market value, minimum floor of 5.141698 euros per share). Fiat, in turn, sells the
     acquired shares to EDF, making use of the put clauses in the Put/Call arranged with EDF.
   – The corresponding “drag along” allows Fiat to reacquire the Banks’ shares in any case and to surrender them to EDF which
     in turn has, by means of the call clauses in the Put/Call, the right to ask Fiat to acquire and surrender the shares. In substance,
     by means of the call, EDF may (providing that Fiat exercised the EDF Put, which is a condition for the Put/Call) acquire the
     entire original Fiat investment.
   b) Fiat does not independently exercise the EDF Put on its own 24.6% holding and in this case:
   – The individual Banks, separately, have the right to request Fiat to exercise its Put on EDF which allows the Banks to exercise
     the “tag along”, as described above, and to realize a gain.
   – Fiat may elect not to exercise the EDF Put, as instead requested, and the Banks have the right to ask that Fiat purchase from
     the same Banks their respective 4.66% holdings at the lower of the price determined pursuant to the EDF Put, in accordance
     with the same criteria and procedures agreed with EDF, and 6.5 euros per share.
   – Fiat does not have a call right on the Banks’ holdings which were sold to the Banks definitively.
 In conclusion, the 14% holding in Italenergia Bis sold by Fiat is subject to Put options exercisable in 2005 by each of the Banks.
Nevertheless, the effects of the sale were considered final and the resulting gain realized in the previous year, in that Fiat had
contemporaneously stipulated a put option with EDF that will give it the right, in the event that the Banks ask to purchase said
shares, to sell them in turn to EDF at the same price conditions as the EDF Put.
                                   85                     Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                       Notes to the Consolidated Financial Statements




Fidis Retail Italia (FRI)
With reference to the associated company Fidis Retail Italia S.p.A. (“FRI”), this company was set up to take over the European
activities of the Automobile Sector in the area of consumer financing for retail automobile purchases. To this end, those activities,
performed by the various companies operating in the different countries in Europe, were gradually sold to FRI, after obtaining the
necessary authorizations from the local regulatory agencies. As envisaged by the Framework Agreement signed on May 27, 2002 by
Fiat and the “Money Lending Banks” (Capitalia, Banca Intesa, SanPaolo IMI and later Unicredito Italiano), on May 27, 2003, the Fiat
Group sold 51% of FRI’s shares and, as a result, the relative control, to Synesis Finanziaria S.p.A. an Italian company held equally by
the four Banks, at the price of 370 million euros. This transaction led to a loss of 15 million euros that had already been set aside in a
specific reserve for risks in the consolidated financial statements at December 31, 2002, based upon the binding agreements signed
by the parties at that time. The sale contract calls for Put and Call options that can be summarized as follows:
❚ Call Option by Fiat to purchase 51% of Fidis Retail Italia, held by Synesis Finanziaria, exercisable twice a year (in January and July)
  up to January 31, 2006 at a price increased prorata temporis over the sales price plus additional payments less any distributions.
❚ Synesis Finanziaria’s right to ask Fiat to exercise the above purchase option on 51% of Fidis Retail Italia in the event of which,
  by January 31, 2006, there is a change in control of Fiat or Fiat Auto (also through the sale of a substantial part of the companies
  owned by Fiat Auto or one of its brands Fiat, Alfa and Lancia) as set forth in the relative stockholders agreement between Fiat,
  Synesis Finanziaria and the four money lending banks.
❚ So-called “tag along” option on behalf of Synesis Finanziaria if the same events referred to in the preceding point occur after
  January 31, 2006.
❚ So-called “drag along” option on behalf of Fiat Auto in the event of the sale of the investment after January 31, 2006.
As a result of the transaction, FRI was deconsolidated and has repaid all the loans it previously obtained from the centralized treasury
department of the Group.
Lastly, it should be mentioned that previous to the negotiations with the four Money Lending Banks, the control of FRI had been
offered to General Motors, which, as established by the Master Agreement, had the “Right of First Refusal”.
Investments in other companies are as follows:

(in millions of euros)                                                                                       At 12/31/2003      At 12/31/2002

Other companies:
Other listed companies                                                                                               158                581
Other unlisted companies                                                                                               99               101
Total                                                                                                                257                682


Other listed companies principally comprise shares of Mediobanca S.p.A. for 93 million euros (93 million euros in 2002) and Edison
S.p.A. for 65 million euros.
Had the portfolio of the major listed stocks at December 31, 2003 been valued at fair value based on market prices, it would have
been approximately 59 million euros higher than the carrying value in the financial statements (approximately 286 million euros lower
than the carrying value at December 31, 2002).
No fair values have been determined for the Other unlisted companies as this type of calculation would require a significant effort
which would outweigh the benefits of obtaining such information.
                                           86              Fiat Group        Consolidated Financial Statements at December 31, 2003
                                                                             Notes to the Consolidated Financial Statements




Receivables

                                                                                                   At 12/31/2003                                                     At 12/31/2002
                                                                                      Of which                                                           Of which
                                                      Due within    Due beyond     due beyond                        Due within      Due beyond       due beyond
(in millions of euros)                                 one year        one year        5 years             Total      one year          one year          5 years             Total

Receivables from others                                        4            25                2              29              19                28               2               47
Total Receivables                                              4            25                2              29              19                28               2               47


Financial receivables held as fixed assets are shown net of the allowances for doubtful accounts of 5 million euros (4 million euros
at December 31, 2002), with a provision of 1 million euros during the year 2003.
Financial receivables recorded in the financial statements at December 31, 2003 and 2002 approximate their fair values which have
been calculated using the present value method, based on a discount rate which reflects market conditions, the duration and the
risk of insolvency.


Other securities

(in millions of euros)                                                                                                              At 12/31/2003 At 12/31/2002            Change

Other securities                                                                                                                               56          2,445           (2,389)


Other securities are shown in the financial statements net of the allowance for doubtful accounts of 32 million euros (2 million euros
at December 31, 2002). The writedown refers to the adjustment of the securities to estimated realizable value.
Other securities at December 31, 2002 principally included marketable government securities and bonds held by the insurance
companies for 2,311 million euros.
At December 31, 2003, the carrying values are substantially in line with fair value.


Treasury stock

                                                                                                                                    At 12/31/2003                    At 12/31/2002
                                                                                                                       Number                 Cost       Number                Cost
                                                                                                                       of shares       (in millions      of shares      (in millions
                                                                                                                    (thousands)           of euros)   (thousands)          of euros)

Fiat S.p.A. shares held by subsidiaries:
    Ordinary                                                                                                                   –                 –       15,838               222
    Savings                                                                                                                    –                 –         1,085                 9
Total Treasury stock                                                                                                           –                 –       16,923               231


At December 31, 2003, no treasury stock is recorded under fixed assets (see Note 6 – Financial assets not held as fixed assets).
Treasury stock at December 31, 2002 was entirely held by the companies in the Toro Assicurazioni Group.


Finance lease contracts receivable

                                                                                                                                                                      Accumulated
                                                                                                         Foreign       Change in         Disposal                   amortization and
                                                      Net amount                      Financial        exchange      the scope of       and Other     Net amount        writedowns
(in millions of euros)                                 12/31/2002      Additions    amortization          effects   consolidation         changes      12/31/2003        12/31/2003

Finance lease contracts receivable                        2,947          1,112           (528)             (31)         (1,485)             (218)        1,797              1,036


Finance lease contracts receivable refer to vehicles sold by the Automotive Sectors under finance leases. The reduction of 1,150
million euros compared to December 31, 2002 is principally due to the Change in the scope of consolidation following the sale
of the majority interest in Fidis Retail Italia.
Finance lease contracts receivable do not include vehicles on operating leases, which are included under Property, plant and
equipment.
                                      87                      Fiat Group      Consolidated Financial Statements at December 31, 2003
                                                                              Notes to the Consolidated Financial Statements




Investments where the investment risk is borne by policyholders and those related to pension plan management

(in millions of euros)                                                                                                           At 12/31/2003 At 12/31/2002        Change

Investments where the investment risk is borne by policyholders
and those related to pension plan management                                                                                                –         6,930         (6,930)


Investments for the benefit of life insurance policyholders, where the policyholders bear the risk, and pension plan assets, at
December 31, 2002 referred to the Toro Assicurazioni Group.



Current assets
4 Inventories
                                                                                                                 At 12/31/2003                                 At 12/31/2002
(in millions of euros)                                                                  Gross       Allowance             Net           Gross     Allowance             Net

Raw materials and supplies                                                             1,306            (207)          1,099           1,382           (134)         1,248
Work in progress and semifinished products                                               966              (22)           944           1,102            (20)         1,082
Contract work in progress                                                              4,077                –          4,077           5,293              –          5,293
Finished goods and merchandise                                                         4,482            (430)          4,052           4,279           (449)         3,830
Advances to suppliers                                                                  5,188                –          5,188           3,824              –          3,824
Total Inventories                                                                     16,019            (659)        15,360           15,880           (603)        15,277
Advance payments on contract work in progress                                         (8,448)               –         (8,448)         (8,227)             –         (8,227)
Net inventories                                                                        7,571            (659)          6,912           7,653           (603)         7,050


Movements in the inventory allowance accounts during the year were as follows:

                                                                                                                                      Foreign     Change in
                                                                                                           At         Use and       exchange the scope of                At
(in millions of euros)                                                                             12/31/2002       provisions         effects consolidation     12/31/2003

Allowance for inventory writedowns                                                                       603               93              (9)          (28)           659


Inventories of 15,360 million euros at December 31, 2003 (15,277 million euros at December 31, 2002) increased by 83 million euros
compared to the prior year. Advance payments received from customers against contract work in progress amount to 8,448 million
euros (8,227 million euros at December 31, 2002) and are recorded in Payables (Note 12). Inventories, net of such advance payments
received from customers, amount to 6,912 million euros (7,050 million euros at December 31, 2002). Advances to suppliers principally
regard the amounts paid by the Fiat S.p.A. to the consortiums involved in the T.A.V. project. Contract work in progress decreased
mainly as a result of the Change in the scope of consolidation.



5 Receivables
An analysis of receivables by due date is as follows:

                                                                                                 At 12/31/2003                                                 At 12/31/2002
                                                                Due         Due       Of which                           Due             Due        Of which
                                                              within     beyond    due beyond                          within         beyond     due beyond
(in millions of euros)                                      one year    one year       5 years           Total       one year        one year        5 years           Total

Trade receivables                                            3,733           25             3          3,758           5,248               60             4          5,308
Receivables from unconsolidated subsidiaries                      73          3             –              76              54               –             –             54
Receivables from associated companies                             764         –             –            764             472                –             –            472
Other receivables from:
   Employees                                                      33          2             –              35              36               3             –             39
   Tax authorities                                           1,413          137             –          1,550           1,639             146              –          1,785
   Social security agencies                                       14          –             –              14              22               –             –             22
   Others                                                    1,808         1,508            9          3,316           2,120           2,834              8          4,954
Total Other receivables                                      3,268         1,647            9          4,915           3,817           2,983              8          6,800
Total Receivables                                            7,838         1,675           12          9,513           9,591           3,043             12         12,634
                                      88                 Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                      Notes to the Consolidated Financial Statements




An analysis of receivables by type is as follows:

                                                                                                    At 12/31/2003                                 At 12/31/2002
(in millions of euros)                                                         Trade       Other            Total          Trade         Other            Total

Trade receivables                                                             3,758            –          3,758           5,308              –          5,308
Receivables from unconsolidated subsidiaries                                     53           23              76              54             –             54
Receivables from associated companies                                           742           22            764             422             50            472
Other receivables from:
   Employees                                                                      –           35              35               –            39             39
   Tax authorities                                                                –       1,550           1,550                –        1,785           1,785
   Social security agencies                                                       –           14              14               –            22             22
   Other                                                                          –       3,316           3,316                –        4,954           4,954
Total Other receivables                                                           –       4,915           4,915                –        6,800           6,800
Total Receivables                                                             4,553       4,960           9,513           5,784         6,850          12,634
of which:
   Receivables included in working capital                                    4,553       3,081           7,634           5,784         3,351           9,135
   Deferred tax assets                                                            –       1,879           1,879                –        3,499           3,499


Trade receivables decreased by 1,231 million euros resulting from reductions of 1,106 million euros due to changes in the scope
of consolidation and 125 million euros due to current operations.
Trade receivables are shown net of allowances for doubtful accounts of 476 million euros at December 31, 2003 (549 million euros
at December 31, 2002). Movements in the allowance accounts during the year are as follows:

                                                                                                                         Use and    Change in
                                                                                               At                           other the scope of              At
(in millions of euros)                                                                 12/31/2002      Provisions        changes consolidation      12/31/2003

Allowances for doubtful accounts                                                             549              86            (109)          (50)           476


Receivables from tax authorities principally refer to VAT and income taxes receivable from the Italian tax authorities and include
the tax credit relating to the advance payments of income tax on employee severance indemnities paid by Italian companies.
The portion of interest accrued on that receivable relating to the current year is recorded in Financial income and expenses.
“Other receivables from others” include deferred tax assets of 1,879 million euros (3,499 million euros at December 31, 2002),
accounted for in accordance with the accounting policies described previously. Additional information on these assets is provided
in Note 10 - Reserves for risks and charges, under Deferred income tax reserve.




6 Financial assets not held as fixed assets
Investments
Investments in other companies amount to 32 million euros at December 31, 2003 (810 million euros at December 31, 2002) and show
a decrease of 778 million euros, mainly due to the sale of the Toro Assicurazioni Group.


Other securities

(in millions of euros)                                                                                              At 12/31/2003 At 12/31/2002        Change

Italian government securities                                                                                                55         2,968          (2,913)
Other securities                                                                                                          3,790         3,801              (11)
Total Other securities                                                                                                    3,845         6,769          (2,924)
of which:
   held by insurance companies                                                                                              186         6,102          (5,916)


Italian government securities also include securities issued by other public entities and guaranteed by the Italian government.
                                        89                   Fiat Group      Consolidated Financial Statements at December 31, 2003
                                                                             Notes to the Consolidated Financial Statements




At December 31, 2003, Other securities include short-term bonds and commercial paper (1,480 million euros) and highly rated
liquidity funds of leading international banks (2,365 million euros) in which mainly the treasury management companies of the
Group had made temporary and highly liquid investments of available cash resources that arose mainly as a result of the significant
divestitures by the Group. Additional liquidity in the form of bank accounts and cash is included in Cash (3,211 million euros-Note 7).
At December 31, 2002, Other securities comprised securities with a broad market issued by debtors with a high credit rating
and mainly held by the insurance companies to cover, for the most part, policy liabilities and accruals.
The securities portfolio of 3,845 million euros at December 31, 2003 (6,769 million euros at December 31, 2002) approximates
fair value.


Treasury stock

                                                                                                                               At 12/31/2003                    At 12/31/2002
                                                                                                                   Number                Cost       Number                Cost
                                                                                                                   of shares      (in millions      of shares      (in millions
                                                                                                                (thousands)          of euros)   (thousands)          of euros)

Fiat S.p.A. shares held by Fiat S.p.A. and subsidiaries:
   Ordinary                                                                                                         4,969                 32          2,530                22
Total Treasury stock                                                                                                4,969                 32          2,530                22


Treasury stock consists of 4,969,034 Fiat ordinary shares held by Fiat S.p.A. and Fiat Ge.Va. S.p.A. and amounts to 32 million euros,
net of writedowns recorded during the year totaling 5 million euros.


Financial receivables

                                                                                                At 12/31/2003                                                   At 12/31/2002
                                                               Due        Due        Of which                         Due               Due         Of which
                                                             within    beyond     due beyond                        within           beyond      due beyond
(in millions of euros)                                     one year   one year        5 years           Total     one year          one year         5 years             Total

Receivables from unconsolidated subsidiaries                  475           46             –            521            348               163               –             511
Receivables from associated companies                         413          231             –            644            912               401               –          1,313
Receivables from others                                     6,488         3,097         422           9,585          9,216            7,371             935          16,587
Total Financial receivables                                 7,376         3,374         422         10,750        10,476              7,935             935         18,411


Financial receivables amounting to 10,750 million euros at December 31, 2003 (18,411 million euros at December 31, 2002), net
of allowances for doubtful accounts of 316 million euros (523 million euros at December 31, 2002), decreased by 7,661 million euros
compared to the end of the prior year. Such reduction is mainly due to the change in the scope of consolidation (6,183 million euros)
particularly as a result of the sale of the retail financing activities of the Automobile Sector.
Movements in the allowance accounts during the year are as follows:

                                                                                                                                    Use and    Change in
                                                                                                          At                          Other the scope of                  At
(in millions of euros)                                                                            12/31/2002     Provisions         changes consolidation         12/31/2003

Allowances for doubtful accounts                                                                        523            188              (115)          (280)             316


The fair value of Financial receivables would be approximately 10,800 million euros at December 31, 2003 (18,454 million euros at
December 31, 2002). The fair value of financial receivables was determined in accordance with the method indicated in Note 3 -
Financial fixed assets – Receivables.
Receivables from associated companies of 644 million euros at December 31, 2003 (1,313 million euros at December 31, 2002)
decreased by 669 million euros due to loan repayments.
Financial receivables from others amount to 9,585 million euros at December 31, 2003 (16,587 million euros at December 31, 2002),
of which 7,914 million euros at December 31, 2003 (15,615 million euros at December 31, 2002) consist of financing granted to retail
customers as well as dealer networks and suppliers. As regards the receivables from the dealer networks, reference can be made to
the information provided in the Report on operations – Analysis of the Financial Position and Operating Results of the Fiat Group
and Fiat S.p.A., with regard to the note on the Net Financial Position. The reduction in Financial receivables from others of 7,002
                                       90                 Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                       Notes to the Consolidated Financial Statements




million euros compared to the end of 2002 is mainly due to the change in the scope of consolidation. Financial receivables from
others also include the net value of subordinated securities of 214 million euros (602 million euros at December 31, 2002) subscribed
to as part of the securitization of financial receivables; the reduction of 388 million euros is chiefly due to the change in the scope of
consolidation following the sale of Fidis Retail Italia.




7 Cash
(in millions of euros)                                                                                         At 12/31/2003          At 12/31/2002

Bank and post office accounts                                                                                        3,195                  3,454
Checks                                                                                                                    9                    11
Cash on hand                                                                                                              7                    24
Total Cash                                                                                                           3,211                  3,489


Cash recorded in the financial statements at December 31, 2003 and 2002 is in line with the fair value at the same dates.




8 Accrued income and prepaid expenses
(in millions of euros)                                                                                         At 12/31/2003          At 12/31/2002

Other Accrued income and prepaid expenses:
   Commercial accrued income
       Accrued interest and commissions                                                                    5                    30
       Other                                                                                              14                    43
   Total Commercial accrued income                                                                                       19                    73
   Commercial prepaid expenses
       Interest                                                                                           39                     9
       Other                                                                                             349                    497
   Total Commercial prepaid expenses                                                                                   388                    506
   Financial accrued income                                                                                            301                    543
   Financial prepaid expenses                                                                                            85                   118
Total Accrued income and prepaid expenses                                                                              793                  1,240


Financial accrued income mainly includes day-to-day interest earned on securities and derivative financial instruments.
                                        91                           Fiat Group      Consolidated Financial Statements at December 31, 2003
                                                                                     Notes to the Consolidated Financial Statements




9 Stockholders’ equity
Statement of changes in Stockholders’ equity of the Group
                                                                                                                                                  Retained
                                                                                                                    Treasury                earnings, Other
                                                                                           Additional                  stock    Cumulative        reserves,
                                                                                             paid-in       Legal   valuation     translation       Net loss
(in millions of euros)                                                     Capital stock      capital    reserve     reserve   adjustments     for the year     Total

Balance at December 31, 2000                                                      2,753       1,636        659           50           370          7,852      13,320
Dividends paid (0.620 euros per ordinary and preference
share and 0.775 euros per savings share)                                              –            –          –           –              –           (352)      (352)
Foreign exchange translation adjustments                                              –            –          –           –           (342)             –       (342)
Change in treasury stock in portfolio                                                 –            –          –        232               –           (232)         –
Other minor changes                                                                   –            –          –           –              –            (11)       (11)
Net loss                                                                              –            –          –           –              –           (445)      (445)
Balance at December 31, 2001                                                      2,753       1,636        659         282              28         6,812      12,170
Capital stock increase as resolved on December 10, 2001                            329          691           –           –              –              –      1,020
Dividends paid (0.310 euros per ordinary and preference
share and 0.465 euros per savings share)                                              –            –          –           –              –           (198)      (198)
Foreign exchange translation adjustments                                              –            –          –           –        (1,407)              –     (1,407)
Change in treasury stock in portfolio                                                 –            –          –         (29)             –             29          –
Other minor changes                                                                   –            –          –           –              –              4          4
Net loss                                                                              –            –          –           –              –         (3,948)    (3,948)
Balance at December 31, 2002                                                      3,082       2,327        659         253         (1,379)         2,699       7,641
Capital stock increase as resolved on June 26, 2003                               1.836            –          –           –              –              –      1.836
Fiat S.p.A. fiscal 2002 loss covered by Additional paid-in capital                    –      (2,053)          –           –              –         2,053           –
Allocation of the value of unopted rights sold
on the market to Additional paid-in capital                                           –            5          –           –              –              –          5
Foreign exchange translation adjustments                                              –            –          –           –           (802)             –       (802)
Change in treasury stock in portfolio                                                 –            –          –       (221)              –           221           –
Other minor changes                                                                   –            –          –           –              –             13        13
Net loss                                                                              –            –          –           –              –         (1,900)    (1,900)
Balance at December 31, 2003                                                      4,918         279        659          32         (2,181)         3,086      6,793




Capital stock
Capital stock, fully paid-in, amounts to 4,918 million euros at December 31, 2003 and consists of 983,622,708 shares as follows:
❚ 800,417,598 ordinary shares;
❚ 103,292,310 preference shares;
❚ 79,912,800 savings shares;
all with a par value of 5 euros each.
Compared to December 31, 2002, capital stock increased by 1,836 million euros, corresponding to 367,197,108 ordinary shares.
Such shares were issued in a ratio of three new ordinary shares for every five shares of any class of stock outstanding, at the price
of 5 euros, following the execution of the capital stock increase in August 2003 voted by the Board of Directors on June 26, 2003.
The capital stock increase was effected on the basis of the mandate given by the Extraordinary Stockholders’ Meeting on September
12, 2002. This Meeting authorized the Board of Directors to increase capital stock, by September 11, 2007, in one or more times, up
to a maximum of 8 billion euros, of which 3 billion euros is to be reserved, with reference to the mandatory convertible facility (Note
12), according to paragraph 7 of article 2441 of the Italian Civil Code, to the banks identified in the same resolution, in the event the
facility is not paid at an earlier date, with subscription and payment of the newly issued ordinary shares to be achieved exclusively by
compensating the Banks’ receivables for principal up to a maximum total of 3 billion euros.
It should be pointed out that when the capital increase voted by the Board of Directors on December 10, 2001 was perfected in
February 2002, 65,820,600 warrants were issued for the purchase in January 2007 of one ordinary share, always with a par value of 5
euros, at the price of euro 29.448 each, for every four warrants. In execution of the resolution passed on June 26, 2003, up to the
limits established in the mandate by the stockholders’ meeting, in order to implement the capital increase, the Company purchased
                                   92                    Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                      Notes to the Consolidated Financial Statements




311,432 “FIAT warrants on ordinary shares 2007” and 2,100,000 “option rights” for cancellation. Accordingly, on the basis of the
resolutions passed by the Board of Directors Meetings on December 10, 2001 and June 26, 2003, the capital stock could ultimately
be increased against payment for a maximum of 82 million euros, thus reaching 5 billion euros, through the issue of a maximum of
16,377,292 ordinary shares of par value 5 euros each, on February 1, 2007, following the exercise of outstanding “FIAT warrants on
ordinary shares 2007”.
Again with reference to the “FIAT warrants on ordinary shares 2007”, Fiat reserved the right to pay the warrant holders in cash,
starting on January 2, 2007, in lieu of the shares to be issued (shares in exchange for warrants), for the difference between the
arithmetic average of the official market price of Fiat ordinary shares in December 2006 and the warrant exercise price, unless
this difference exceeds the maximum amount set and previously communicated by Fiat, in which case the holder of the warrants
may opt to subscribe to the shares in exchange for warrants.
The resolutions regarding the capital increase to service the stock option plans (28 million euros) have been revoked since the
Board of Directors decided on June 26, 2003 to use ordinary treasury stock to be bought back for this purpose.


Additional paid-in capital
Additional paid-in capital at December 31, 2003 amounts to 279 million euros, with a reduction of 2,048 million euros compared to
December 31, 2002 following its utilization to cover the loss for fiscal 2002 (2,053 million euros) as voted by the Stockholders’ Meeting
held May 13, 2003. The reduction was partly compensated by the proceeds from the sale of the option rights on the 2003 capital
increase that were not exercised and which were sold on the market as set forth in art. 2441, paragraph 3 of the Italian Civil Code,
net of the amount paid for the option rights and the warrants purchased to execute the board resolution passed on June 26, 2003.


Legal reserve
The legal reserve amounts to 659 million euros at December 31, 2003 and did not change in respect of December 31, 2002.
At December 31, 2003, the legal reserve exceeds one-fifth of capital stock.


Cumulative translation adjustments
Cumulative translation adjustments show a negative change of 802 million euros compared to December 31, 2002 mainly due
to the effect of the weakness of the U.S. dollar and the Polish zloty against the euro.


Retained earnings and Other reserves
Retained earnings and Other reserves include, in addition to the undistributed earnings of the consolidated companies,
also monetary revaluation reserves and other reserves in suspension of taxes.
                                       93                       Fiat Group       Consolidated Financial Statements at December 31, 2003
                                                                                 Notes to the Consolidated Financial Statements




Reconciliation to Stockholders’ equity and Net loss of the Parent company Fiat S.p.A.

                                                                                                            Stockholders’            Net Stockholders’            Net
                                                                                                                equity at          Result    equity at          Result
(in millions of euros)                                                                                        12/31/2003            2003   12/31/2002            2002

Statutory financial statements of Fiat S.p.A.                                                                     5,415           (2,359)       5,934          (2,053)
Elimination of the carrying values of consolidated investments and the related
dividend income recorded in the statutory financial statements of Fiat S.p.A.                                    (7,143)            (254)      (7,909)           (175)
Elimination of writedowns against consolidated investments recorded by Fiat S.p.A.                                     –          2,371             –          2,844
Equity and results of operations of consolidated companies                                                        8,598           (1,634)       9,799          (4,704)
Consolidation adjustments:
   Elimination of intra-Group dividends                                                                                –              (92)          –            (836)
   Elimination of intra-Group profit and losses from sales of investments                                              –              25            –             766
   Elimination of intra-Group profit and losses in inventories,
   investments, property, plant and equipment and other adjustments                                                  (77)             43         (183)            210
Consolidated financial statements                                                                                 6,793           (1,900)       7,641          (3,948)


Minority interest
The minority interest in stockholders’ equity of 701 million euros (1,038 million euros at December 31, 2002) refers mainly to the
following companies consolidated on a line-by-line basis:

                                                                                                                            At 12/31/2003                At 12/31/2002
                                                                                                                               (% held by                   (% held by
                                                                                                                                  minority                     minority
                                                                                                                            stockholders)                stockholders)

Italian companies:
Ferrari S.p.A.                                                                                                                      44.0                         44.0
Teksid S.p.A.                                                                                                                       19.5                         33.5
IPI S.p.A.                                                                                                                              –                        34.1
Foreign companies:
Fiat Auto Holdings B.V.                                                                                                             10.0                         20.0
Iveco Ford Truck Ltd.                                                                                                                   –                        15.2
CNH Global N.V.                                                                                                                     14.9                         14.7


The reduction in the minority interest percentage ownership in Fiat Auto Holdings B.V. is due to the recapitalization of 5 billion euros
resolved by the Stockholders’ Meeting of Fiat Auto Holdings B.V. held April 23, 2003 and subscribed to by Fiat Partecipazioni S.p.A.
(the direct parent company of Fiat Auto Holdings B.V.) for 3 billion euros, whereas General Motors has not as yet subscribed to its
share of the capital increase, as described in Note 14.
In accordance with the accounting policies described previously, the losses pertaining to General Motors, the minority stockholder
in Fiat Auto Holding B.V. (Automobile Sector), were allocated to General Motors up to the value of its share of capital stock, and the
excess, or deficit, that arose starting from the third quarter of 2002, was charged to the Group (204 million euros in 2003 and 296
million euros in 2002).
                                       94                       Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                             Notes to the Consolidated Financial Statements




10 Reserves for risks and charges
(in millions of euros)                                                                       At 12/31/2003              At 12/31/2002                Change

Reserve for pensions and similar obligations                                                       1,503                      1,459                      44
Income tax reserves:
   Current income tax reserve                                                           98                      199                       (101)
   Deferred income tax reserve                                                         211                    1,236                     (1,025)
Total Income tax reserves                                                                            309                      1,435                  (1,126)
Other reserves:
   Warranty reserve                                                                    791                      841                        (50)
   Restructuring reserves                                                              471                      731                      (260)
   Various liabilities and risk reserves                                             2,216                    2,555                      (339)
Total Other reserves                                                                               3,478                      4,127                    (649)
Insurance policy liabilities and accruals                                                             89                      9,605                  (9,516)
Policy liabilities and accruals where the investment risk is borne
by policyholders and those related to pension plan management                                          –                      7,000                   (7,000)
Total Reserves for risks and charges                                                               5,379                     23,626                 (18,247)



Reserve for pensions and similar obligations
The reserve includes provisions for pensions and similar obligations determined on an actuarial basis, where applicable, and payable
to employees and former employees according to contractual agreements or by law.


Income tax reserves
The Deferred income tax reserve at December 31, 2003 includes deferred tax liabilities, net of deferred tax assets, which have been
offset where possible by the individual companies. The Deferred income tax reserve, net of Deferred tax assets recorded under
Other receivables from others, is composed as follows:

(in millions of euros)                                                                       At 12/31/2003              At 12/31/2002                Change

Deferred income tax reserve                                                                          211                      1,236                  (1,025)
Deferred tax assets                                                                               (1,879)                     (3,499)                 1,620
Total                                                                                             (1,668)                     (2,263)                   595


The net change of 595 million euros compared to December 31, 2002 derives mainly from the reversal of deferred tax assets for
which the recovery was mainly connected to the realization of gains on the sales of investments that took place during 2003.
The Deferred income tax reserve, net of Deferred tax assets recorded under Other receivables from others, can be analyzed as follows:

(in millions of euros)                                                                                                  At 12/31/2003           At 12/31/2002

Deferred tax liabilities for:
  Accelerated depreciation                                                                                     492                        682
  Deferred tax on gains                                                                                        493                        382
  Capital investment grants                                                                                     18                         13
  Other                                                                                                        684                        896
Total Deferred tax liabilities                                                                                                1,687                   1,973
Deferred tax assets for:
  Taxed reserves for risks and charges                                                                       (1,021)                    (1,301)
  Inventories                                                                                                  (126)                      (158)
  Taxed allowances for doubtful accounts                                                                         (86)                     (189)
  Pension funds                                                                                                (289)                      (221)
  Adjustments to financial assets                                                                            (2,056)                    (1,062)
  Other                                                                                                        (680)                      (804)
Total Deferred tax assets                                                                                                    (4,258)                 (3,735)
Theoretical tax benefit connected to tax loss carryforwards                                                                  (4,313)                 (3,646)
Adjustments for assets whose recoverability is not reasonably certain                                                         5,216                   3,145
Total Deferred income tax reserve, net of Deferred tax assets                                                                (1,668)                 (2,263)
                                    95                   Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                      Notes to the Consolidated Financial Statements




As disclosed in the accounting policies, in recording Deferred tax assets, each company in the Group critically evaluated whether the
conditions existed for the future recoverability of such assets on the basis of updated strategic plans, accompanied by the related tax
plans. For this reason, the total theoretical future tax benefits deriving from positive temporary differences (4,258 million euros) and
tax loss carryforwards (4,313 million euros) have prudently been reduced for a total of 5,216 million euros.
In particular, the Deferred income tax reserve net of Deferred tax assets includes 1,259 million euros (1,478 million euros at December
31, 2002) of tax benefits connected to tax loss carryforwards. However, a further tax benefit connected to tax loss carryforwards of
3,054 million euros (2,168 million euros at December 31, 2002) has not been recorded in the financial statements.
Deferred taxes have not been provided on the undistributed earnings of subsidiaries since no transactions are expected to be
entered into that would warrant their taxation.
Deferred taxes of 72 million euros (127 million euros at December 31, 2002) have not been provided on temporary differences
relating to reserves and provisions in suspension of taxes, since they are not expected to be used in a manner which would warrant
their taxation.


Other reserves
Restructuring reserves amount to 471 million euros at December 31, 2003 (731 million euros at December 31, 2002) and are related
to the corporate restructuring programs of the following Sectors (in millions of euros): Automobile 160 (320 at December 31, 2002),
Agricultural and Construction Equipment 83 (218 at December 31, 2002), Commercial Vehicles 75 (83 at December 31, 2002),
Metallurgical Products 24 (2 at December 31, 2002), Components 64 (59 at December 31, 2002), Production Systems 54
(2 at December 31, 2002), Services 8 (19 at December 31, 2002), Other Sectors 3 (28 at December 31, 2002).
The Various liabilities and risk reserves amount to 2,216 million euros at December 31, 2003 (2,555 million euros at December 31,
2002) and represent the amounts set aside by individual companies of the Group principally in connection with contractual and
commercial risks and disputes. The decrease of 339 million euros compared to December 31, 2002 is the result of a combination
of ordinary provisions of 661 million euros, extraordinary provisions of 289 million euros, decreases for the effect of foreign exchange
differences of 64 million euros and decreases for utilizations of 1,225 million euros.




11 Reserve for employee severance indemnities
                                                                                                                                   Use
                                                                                                           At                and Other           At
(in millions of euros)                                                                             12/31/2002   Provisions     changes   12/31/2003

Reserve for employee severance indemnities                                                             1,609         244         (540)      1,313


The total reserve for employee severance indemnities amounts to 1,313 million euros at December 31, 2003 (1,609 million euros
at December 31, 2002) and includes the severance indemnities accrued at year-end in favor of the employees of the companies
in accordance with legal requirements. The Use and Other changes column comprises the change in the scope of consolidation
(160 million euros) due to the deconsolidation of the Toro Assicurazioni Group, FiatAvio S.p.A. and Fidis Retail Italia.
                                              96                            Fiat Group       Consolidated Financial Statements at December 31, 2003
                                                                                             Notes to the Consolidated Financial Statements




12 Payables
Payables may be analyzed by due date as follows:

                                                                                                                  At 12/31/2003                                             At 12/31/2002
                                                                             Due            Due       Of which                         Due            Due        Of which
                                                                           within        beyond    due beyond                        within        beyond     due beyond
(in millions of euros)                                                   one year       one year     five years           Total    one year       one year      five years          Total

Bonds                                                                      1,034         8,576          3,804           9,610        1,853          9,020          3,243         10,873
Convertible bonds                                                          1,765               –             –          1,765             –         2,125               –         2,125
Borrowings from banks                                                      2,697         6,687            115           9,384        4,482          8,558            300         13,040
Other financial payables                                                     809           155             34             964          961              248            50         1,209
Advances (*)                                                               2,877         6,272               –          9,149        3,603          5,707               –         9,310
Trade payables                                                           11,733              36              –        11,769        12,056              96              –        12,152
Notes payable                                                                224              1              –            225          973              664             –         1,637
Payables to unconsolidated subsidiaries                                       68               –             –              68           63               –             –            63
Payables to associated companies                                             842               –             –            842        1,107                –             –         1,107
Taxes payable                                                                833             28              2            861        1,279              24              –         1,303
Social security payable                                                      283              4              –            287          311               2              –           313
Other payables                                                             1,288             28              –          1,316        1,729              327             –         2,056
Total Payables                                                           24,453         21,787          3,955         46,240        28,417        26,771           3,593         55,188
(*) of which Advance payments on contract work in progress totals 8,448 million euros at December 31, 2003 (8,227 million euros at December 31, 2002)



Payables may be analyzed by type as follows:

                                                                                                                  At 12/31/2003                                             At 12/31/2002
(in millions of euros)                                                      Trade      Financial         Other            Total       Trade      Financial          Other           Total

Bonds                                                                           –        9,610               –          9,610             –       10,873                –        10,873
Convertible bonds                                                               –        1,765               –          1,765             –         2,125               –         2,125
Borrowings from banks                                                           –        9,384               –          9,384             –       13,040                –        13,040
Other financial payables                                                        –          964               –            964             –         1,209               –         1,209
Advances                                                                        –              –        9,149           9,149             –               –        9,310          9,310
Trade payables                                                           11,769                –             –        11,769        12,152                –             –        12,152
Notes payable                                                                   9          216               –            225            17         1,620               –         1,637
Payables to unconsolidated subsidiaries                                       21             47              –              68           24             39              –            63
Payables to associated companies                                             789             48              5            842        1,074              17             16         1,107
Taxes payable                                                                   –              –          861             861             –               –        1,303          1,303
Social security payable                                                         –              –          287             287             –               –          313            313
Other payables                                                                  –              –        1,316           1,316             –               –        2,056          2,056
Total Payables                                                           12,588         22,034        11,618          46,240        13,267        28,923          12,998         55,188


The decrease in Payables (8,948 million euros) compared to December 31, 2002 is mainly due to the following:
❚ a decrease in Trade payables of 679 million euros, including 685 million euros for the change in the scope of consolidation;
❚ a decrease in Financial payables of 6,889 million euros due to the change in the scope of consolidation (3,836 million euros mainly
  as a result of the sale of Fidis Retail Italia) and the effect of foreign exchange rates.
❚ a decrease in Other payables of 1,380 million euros mainly due to the change in the scope of consolidation of 1,076 million euros.
Financial payables total 22,034 million euros at December 31, 2003 (28,923 million euros at December 31, 2002). Financial payables
due within one year amount to 6,616 million euros at December 31, 2003 (8,310 million euros at December 31, 2002) and their
carrying values approximate fair value as a consequence of the short-term maturity.
                                    97                     Fiat Group      Consolidated Financial Statements at December 31, 2003
                                                                           Notes to the Consolidated Financial Statements




The portion of medium and long-term Financial payables due beyond one year amounts to 15,418 million euros at December 31,
2003 (20,613 million euros at December 31, 2002). The scheduled maturities are:

(in millions of euros)                                                               2005        2006        2007        2008   Thereafter      Total

Medium and long-term financial payables due beyond one year                        7,443       2,955         643         424        3,953    15,418


The fair value of medium and long-term Financial payables due beyond one year would be approximately 397 million euros lower
than the carrying value at December 31, 2003 (at December 31, 2002, fair value would have been approximately 2,169 million euros
lower than the carrying value). The fair values of such financial payables take into account the current market cost of funding with
similar maturities, and, for bonds, their market prices.
The interest rates and the nominal currencies of medium and long-term financial payables, including the current portion of 2,757
million euros at December 31, 2003 (4,807 million euros at December 31, 2002) are as follows:

                                                                                     Less    From 5%    From 7.5%   From 10%       Greater
(in millions of euros)                                                            than 5%     to 7.5%      to 10%    to 12.5%   than 12.5%      Total

Euro and euro-zone currencies                                                      7,853       6,330          78           3           5     14,269
U.S. dollar                                                                          554         591         848           –           1      1,994
Japanese yen                                                                         304           –           –           –           –        304
Brazilian real                                                                        32         580          42           2         194        850
British pound                                                                        101         581           –           –           –        682
Canadian dollar                                                                       74           –           –           –           –         74
Other                                                                                  –           1           –           1           –          2
Total 2003 medium and long-term debt                                               8,918       8,083         968           6         200     18,175
Total 2002 medium and long-term debt                                              15,257       9,116         754          31         262     25,420


Financial payables with nominal rates in excess of 12.5% relate principally to companies operating in Brazil.
Medium and long-term financial payables include financing of approximately 1,150 million euros secured from Citigroup and a
small group of banks that is guaranteed by the EDF put option (refer to the EDF Put described in Note 3) held by the Fiat Group
on its remaining investment (24.6%) in Italenergia Bis and the shares in the same Italenergia Bis pledged by Fiat.
Financial payables secured by mortgages and other liens on property, plant and equipment amount to 1,234 million euros at
December 31, 2003 (1,447 million euros at December 31, 2002).
At December 31, 2003, the Group has an unused “committed” line of credit available mainly denominated in U.S. dollars for an
equivalent amount of more than 2,000 million euros (approximately 3,700 million euros at December 31, 2002). The decrease can
principally be ascribed to the maturity of a syndicated credit line of 1 billion U.S. dollars, in addition to the effects of the translation
of the credit lines in their original currencies to euros.


Bonds
Bonds, including convertible bonds, amount to 11,375 million euros (12,998 million euros at December 31, 2002) and can be analyzed
by year of maturity as follows:

(in millions of euros)                                                   2004        2005        2006        2007        2008       Other       Total

EMTN                                                                       98      1,426       2,351         181         228        2,769     7,053
Convertible bonds                                                       1,765          –           –           –           –            –     1,765
Other bonds                                                               936        489           –         100           –        1,032     2,557
Total bonds                                                             2,799      1,915       2,351         281         228        3,801    11,375


The bonds issued by the Fiat Group are governed by different terms and conditions according to the following types of bonds:
❚ Euro Medium Term Note (EMTN Program): these notes have been issued under a program that is utilized for approximately 7
  billion euros and guaranteed by Fiat S.p.A. Issuers taking part in the program are Fiat Finance & Trade Ltd. S.A. (for an amount
  outstanding of 6,824 million euros), Fiat Finance North America Inc. (for an amount outstanding of 148 million euros) and Fiat
  Finance Canada Ltd. (for an amount outstanding of 81 million euros).
❚ Convertible bonds: this is a single bond convertible into 32,053,322 General Motors Corp. common stock (“Exchangeable GM”)
  at a conversion price of 69.54 U.S. dollars per share with coupon interest at 3.25% and maturing on January 9, 2007 for a face value
                                  98                     Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                      Notes to the Consolidated Financial Statements




  of 2,229 million U.S. dollars, equivalent to 1,765 million euros. The subscribers to the Exchangeable GM bond will have the right
  to ask for early redemption of the bond in cash at its face value with payment on July 9, 2004. The investors may exercise this right
  during the period which starts 30 business days prior to July 9, 2004 and ends 15 business days prior to July 9, 2004. With reference
  to the risk, implicit in the bond, of an increase in the General Motors share price above 69.54 U.S. dollars, a Total Return Equity
  Swap agreement was put into place as described in Note 14.
❚ Other bonds: these refer to the following issues:
  – Bonds issued by Fiat Finance & Trade Ltd. S.A. with coupon interest at 3.75% and maturing March 31, 2004 for an amount
    of 1,000 million euros and an amount outstanding of 936 million euros.
  – Bonds issued by Fiat Finance & Trade Ltd. S.A. with coupon interest at 1.5% and maturing June 27, 2005 for an amount
    of 40 billion Japanese yen, equal to 296 million euros.
  – Bonds issued by Case New Holland Inc. (“CNH Inc.”) with coupon interest at 9.25% and maturing August 1, 2011 for an amount
    of 1,050 million U.S. dollars, equivalent to 831 million euros; the bond indenture contains a series of financial covenants that are
    common in the American high yield bond market.
  – Bonds issued by Case LLC. and Case Credit Corp. for a total amount outstanding of 624 million U.S. dollars, equivalent to 494
    million euros.
The prospectuses, the offering circular or their abstracts relating to the aforementioned principal bond issues are available on the
Group’s website at www.fiatgroup.com under “Shareholders and Investors – Financial Publications”.
The majority of the bonds issued by the Group contain commitments (“covenant”) by the issuer and in some cases by Fiat, as the
guarantor, that, in international practice, are common for bond issues of this type when the issuers are in the same industrial segment
in which the Group operates, such as, in particular: (the so-called negative pledge clause which requires that the benefit of any real
present or future guarantees given as collateral on the assets of the issuer and/or Fiat, on other bonds and other credit instruments
should be extended to these bonds, to the same degree, (ii) the so-called pari passu clause, on the basis of which obligations cannot
be undertaken which are senior to the bonds issued, (iii) the obligation of providing periodical disclosure, (iv) for some of the bond
issues, the so-called cross-default clauses whereby the bonds become immediately due and payable when certain defaults arise in
respect of other financial instruments issued by the Group and (v) other clauses generally present in issues of this type.
The bonds issued by Case New Holland Inc. (“CNH Inc.”) with coupon interest at 9.25% and maturing on August 1, 2011 for an
amount of 1,050 million U.S. dollars, equivalent to 831 million euros, contain, moreover, financial covenants common to the high yield
American bond market which place restrictions, among other things, on the possibility of the issuer and certain companies of the
CNH group to secure new debt, pay dividends or buy-back treasury stock, realize certain investments, conclude transactions with
associated companies, give collateral on its assets, conclude sale and leaseback transactions, sell certain fixed assets or merge with
other companies and financial covenants which impose a maximum limit on further indebtedness by the CNH group companies
which can not exceed a specific ratio of cash flows to dividend payments and financial expenses. Such covenants are subject to
various exceptions and limitations and, in particular, some of these would no longer be binding should the bonds be assigned
an investment grade rating by Standard & Poor’s Rating Services and/or Moody’s Investors Service.
                                                 99                              Fiat Group         Consolidated Financial Statements at December 31, 2003
                                                                                                    Notes to the Consolidated Financial Statements




The major bond issues outstanding at December 31, 2003 are the following:

                                                                                                                                                                                         Amount
                                                                                                                                                                                     outstanding
(in millions)                                                 Currency                     Face value                        Coupon                        Maturity                      in euros

Euro Medium Term Notes:
Fiat Fin. North America                                          USD                               69                       5.020%                 Oct. 19, 2004                              55
Fiat Fin. North America                                           EUR                             100                       5.125%                 Feb. 21, 2005                              70
Fiat Finance & Trade                                              EUR                             155                      Indexed                   July 5, 2005                            155
Fiat Finance & Trade                                              EUR                             130                      Indexed                   July 5, 2005                            130
Fiat Finance & Trade                                              EUR                             500                       6.125%                  Aug, 1, 2005                             500
Fiat Finance & Trade                                              EUR                             300                       6.125%                  Aug, 1, 2005                             300
Fiat Finance & Trade                                             GBP                              125                       7.000%                 Oct. 19, 2005                             170
Fiat Finance & Trade (1)                                          EUR                          1,700                        5.750%                 May 25, 2006                           1,700
Fiat Finance Canada                                               EUR                             100                       5.800%                 July 21, 2006                              81
Fiat Finance & Trade (1)                                          EUR                             500                       5.500%                 Dec. 13, 2006                             500
Fiat Finance & Trade (1)                                          EUR                          1,000                        6.250%                 Feb. 24, 2010                          1,000
Fiat Finance & Trade (1)                                          EUR                          1,300                        6.750%                 May 25, 2011                           1,300
Fiat Finance & Trade (1)                                          EUR                             617                              (2)                            (2)                        617
Others (3)                                                                                                                                                                                   475
Total Euro Medium Term Notes                                                                                                                                                              7,053
Convertible bonds:
Fiat Fin. Luxembourg (4)                                         USD                           2,229                        3.250%                   July 9, 2004                         1,765
Total Convertible bonds                                                                                                                                                                   1,765
Other bonds:
Fiat Finance & Trade (1)                                          EUR                          1,000                        3.750%                 Mar. 31, 2004                             936
Fiat Finance & Trade                                              JPY                         40,000                        1.500%                June 27, 2005                              296
CASE LLC                                                         USD                              243                       7.250%                  Aug, 1, 2005                             193
CASE CREDIT Corp.                                                USD                              127                       6.750%                 Oct. 21, 2007                             100
CNH Inc.                                                         USD                           1,050                        9.250%                  Aug. 1, 2011                             831
CASE LLC                                                         USD                              254                       7.250%                 Jan. 15, 2016                             201
Total Other bonds                                                                                                                                                                         2,557
Total bonds                                                                                                                                                                             11,375
(1) Bonds listed on the “Mercato Obbligazionario Telematico” of the Italian stock exchange (EuroMot). Furthermore, the majority of the bonds issued by the Fiat Group are also listed on
    the Luxembourg stock exchange.
(2) “Fiat Step-Up Amortizing 2001-2011” bonds repayable at face value in five equal annual installments each for 20% of the total issued“ (617 million euros) due beginning from the sixth
    year (November 7, 2007) by reducing the face value of each bond outstanding by one-fifth. The last installment will be repaid on November 7, 2011. The bonds pay coupon interest
    equal to: 4.40% in the first year (Nov. 7, 2002), 4.60% in the second year (Nov. 7, 2003), 4.80% in the third year (Nov. 7, 2004), 5.00% in the fourth year (Nov. 7, 2005), 5.20% in the fifth
    year (Nov. 7, 2006), 5.40% in the sixth year (Nov. 7, 2007), 5.90% in the seventh year (Nov. 7, 2008), 6.40% in the eighth year (Nov. 7, 2009), 6.90% in the ninth year (Nov. 7, 2010), 7.40%
    in the tenth year (Nov. 7, 2011).
(3) Bonds with amounts outstanding equal to or less than the equivalent of 50 million euros.
(4) Bonds convertible into General Motors Corp. common stock.



The Fiat Group intends to repay the issued bonds in cash at maturity by utilizing available liquid resources. To this end, available
liquidity (Cash and Other securities in Current assets) at the end of 2003 totals 7 billion euros. The Fiat Group also has available
unused committed credit lines for more than 2 billion euros.
Moreover, the companies in the Fiat Group may from time to time buy back bonds on the market that were issued by the Group also
for purposes of their cancellation. Such buy-backs, if made, will depend upon market conditions, the financial situation of the Group
and other factors which could affect such decisions.


Mandatory Convertible facility
Medium and long-term financial payables also include the 3 billion euros Mandatory Convertible facility stipulated in execution of
the Framework Agreement, dated May 27, 2002, with Capitalia, Banca Intesa, SanPaolo IMI and Unicredito Italiano (Money Lending
Banks) for the purpose of providing the Fiat Group with the financial support it needs to implement its strategic and industrial plans.
The facility was secured on September 24, 2002 from a syndicate of banks, including the Money Lending Banks, in which BNL, Monte
dei Paschi di Siena, ABN Amro, BNP Paribas, Banco di Sicilia and Banca Toscana (hereinafter “the Banks”) also participated. The
main features of the Mandatory Convertible facility are listed in the following paragraphs.
                                               100                          Fiat Group        Consolidated Financial Statements at December 31, 2003
                                                                                              Notes to the Consolidated Financial Statements




The facility has a term of three years and expires on September 16, 2005 and is repayable with a new issue of Fiat S.p.A. ordinary
shares. Moreover, Fiat may elect to repay the facility in cash at an earlier date, even partially, every six months, provided that, even
after repayment, its rating is at least equal to investment grade level. Any residual liability for principal will be repaid with Fiat S.p.A.
ordinary shares, which the Banks have agreed to underwrite and offer pre-emptively to all Fiat stockholders. The issue price per share
will be the average of 14.4409 euros (the adjusted value compared to the original value of 15.50 euros in accordance with the rules
established by the AIAF – Italian Association of Financial Analysts – following the Fiat S.p.A. capital increase) and the average stock
market price in the last three or six months, depending on the case, preceding the repayment date. The same formula will also be
applied in the event of an earlier repayment date.
The capital stock increase should be approved at the expiration of the three-year term of the facility, for an amount equal to the
outstanding balance of the facility.
Conditions giving rise to an earlier expiration date of the facility include the occurrence of an event that creates a serious crisis for the
company, such as the request for a court-appointed administrator or other proceedings of composition with creditors, a bankruptcy
filing, or one of the causes of business dissolution set forth in the previous Article 2448 now Article 2484 of the Italian Civil Code.
In addition, the Banks in the facility arrangement have the right to demand early repayment of the entire amount of the facility
and proceed with the conversion of the debt into capital in the following cases:
❚ Fiat Group companies have not fulfilled their duty to repay liquid and current financial obligations of an aggregate amount
  of more than 1 billion euros;
❚ the independent auditors have issued a negative opinion on the consolidated financial statements, unless new auditors,
  who must have accepted the assignment within 30 days, issue a favorable opinion no later than 60 days thereafter;
❚ Fiat becomes the target of a take-over bid in accordance with Articles 106 and 107 of the Consolidated Law on Financial
  Intermediation.
Lastly, the Banks also have the right but not the obligation to demand early repayment of a portion of the amount of the facility, up
to a maximum of 2 billion euros, after 24 months have elapsed from the signing of the agreement (and, therefore, beginning from
July 26, 2004), in the event that the Group’s debt is not rated “investment grade” by at least one of the leading international rating
agencies and, after 18 months have elapsed from the signing of the agreement (January 26, 2004), in the event that the level of net
and/or gross financial indebtedness (respectively in the definitions of “Net financial position” and “Financial payables” used by the
Group and detailed in the Report on Operations) is more than 20% higher than the corresponding level established by the Financial
Objectives stipulated in the facility agreement.
The aforementioned Financial Objectives refer, in particular, to the reduction of net indebtedness in the Net Financial Position to
less than 3 billion euros by the date the Board of Directors approves the 2002 annual financial statements and the maintenance of
that level until the expiration of the facility. Pursuant to the agreement, the proceeds are considered which are generated by the
transactions related to the sale of the investment in Italenergia Bis S.p.A., including those connected with the Citigroup facility of
1,150 million euros, described previously, and the financial effects arising from binding contracts for the sale of assets (investments,
companies, plant and equipment, etc.), comprising those not yet executed. The agreement also states that gross indebtedness must
be reduced by 12 billion euros, compared to March 31, 2002, by the date the Board of Directors approves the 2002 annual financial
statements and must be maintained at less than 23.6 billion euros until the expiration of the facility.
The Group confirms its observance of the Financial Objectives established with the Money Lending Banks in the Mandatory
Convertible facility agreement in terms of reducing the net indebtedness position to 3 billion euros and reducing gross
indebtedness to 23.6 billion euros.
At December 31, 2003, the ratings assigned to the Group by the major rating agencies are the following:

                                                                                                                                            Short-term   Medium-term

Moody’s Investors Service (*)                                                                                                              Not Prime        Ba3
Standard & Poor’s Rating Services (*)                                                                                                           B           BB-
Fitch Ratings                                                                                                                                   B            BB
(*) For purposes of the Mandatory Convertible facility, the most important rating agencies are Standard & Poor’s and Moody’s.



The ratings of the Group represented in the table refer to the non-investment grade category.
Should this condition persist, beginning from July 26, 2004, the Banks will have the right but not the obligation to demand early
repayment of the facility and proceed with the conversion of the debt into capital for an amount of up to 2 billion euros.
                                       101              Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                     Notes to the Consolidated Financial Statements




13 Accrued expenses and deferred income
(in millions of euros)                                                                                       At 12/31/2003            At 12/31/2002

Commercial accrued expenses:
   Accrued interest and commissions                                                                     71                      54
   Other                                                                                               504                     516
Total Commercial accrued expenses                                                                                    575                      570
Commercial deferred income:
   Interest                                                                                             62                      76
   Other                                                                                               692                     853
Total Commercial deferred income                                                                                     754                      929
Financial accrued expenses                                                                                           593                      785
Financial deferred income                                                                                            363                    1,135
Total Accrued expenses and deferred income                                                                         2,285                    3,419


Financial accrued expenses include interest expense on financial payables for the portion relating to the current year.
Financial deferred income includes deferred interest income on the portfolio of the financial services companies. The change
from December 31, 2002 is principally due to the change in the scope of consolidation for 751 million euros.




14 Memorandum accounts
Guarantees granted

(in millions of euros)                                                                                       At 12/31/2003            At 12/31/2002

Guarantees granted
Unsecured guarantees
Suretyships:
   on behalf of associated companies                                                                    10                      22
   on behalf of others                                                                               3,050                    1,616
Total Suretyships                                                                                                  3,060                    1,638
Guarantees of notes:
   on behalf of others                                                                                 259                     315
Total Guarantees of notes                                                                                            259                      315
Other unsecured guarantees:
   on behalf of associated companies                                                                   295                     352
   on behalf of others                                                                               2,780                    3,021
Total Other unsecured guarantees                                                                                   3,075                    3,373
Total Unsecured guarantees                                                                                         6,394                    5,326
Secured guarantees
   on behalf of others                                                                                  36                     316
Total Secured guarantees                                                                                               36                     316
Total Guarantees granted                                                                                           6,430                    5,642
                                      102                  Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                        Notes to the Consolidated Financial Statements




At December 31, 2003, Guarantees granted by the Group total 6,430 million euros (5,642 million euros at December 31, 2002),
detailed as follows:
❚ suretyships total 3,060 million euros (1,638 million euros at December 31, 2002. The increase of 1,422 million euros mainly refers
  to guarantees that are still being provided to third parties which had previously been granted for the debt of companies in the
  Fiat Group that are now controlled by Fidis Retail Italia, which was deconsolidated.
❚ Other unsecured guarantees of 3,075 million euros (3,373 million euros at December 31, 2002) include commitments for receivables
  and bills discounted with recourse in the amount of 2,203 million euros (2,518 million euros at December 31, 2002). The receivables
  and bills discounted with recourse refer to trade receivables and other receivables for 2,144 million euros (2,505 million euros at
  December 31, 2002) and financial receivables for 59 million euros (13 million euros at December 31, 2002). The volume of
  receivables discounted with recourse in 2003 was 15,341 million euros (20,743 million euros in 2002).
Although not included in the memorandum accounts, receivables and bills discounted by the Group without recourse having due
dates beyond December 31, 2003 amount to 9,852 million euros (in 2002, 13,794 million euros with due dates beyond December 31,
2002). Receivables and bills discounted without recourse refer to trade receivables and other receivables for 4,638 million euros (4,537
million euros at December 31, 2002) and financial receivables for 5,214 million euros (9,257 million euros at December 31, 2002). The
discounting of financial receivables principally refers to securitization transactions involving accounts receivables from the final (retail)
customers of the financial services companies. The accounting treatment for securitization transactions is disclosed in the Accounting
Principles. The volume of receivables and bills discounted without recourse in 2003 was 33,298 million euros (30,502 million euros in
2002).
In summary, the discounted receivables and bills at December 31, 2003 are as follows:

                                                                                                        At 12/31/2003                                 At 12/31/2002
                                                                                  Trade                                         Trade
                                                                            Receivables                                   Receivables
                                                                             and Other      Financial                      and Other      Financial
(in millions of euros)                                                      Receivables   Receivables           Total     Receivables   Receivables           Total

With recourse                                                                   2,144             59          2,203           2,505             13          2,518
Without recourse                                                                4,638         5,214           9,852           4,537         9,257          13,794


The Parent Company and certain of its subsidiaries are involved in various legal actions and disputes. However, the settlement of
such actions and disputes should not give rise to significant losses or liabilities which have not already been set aside in specific risk
reserves.


Commitments

(in millions of euros)                                                                                                  At 12/31/2003                 At 12/31/2002

Commitments related to derivative financial instruments                                                                     20,798                         38,535
Commitments to purchase property, plant and equipment                                                                           329                           494
Other commitments                                                                                                           10,350                          9,884
Total Commitments                                                                                                           31,477                         48,913


Commitments amount to 31,477 million euros at December 31, 2003 (48,913 million euros at December 31, 2002) and include
derivative financial instruments of 20,798 million euros at December 31, 2003 (38,535 million euros at December 31, 2002).
In particular, the following transactions exist at December 31, 2003:
❚ contracts to hedge foreign exchange risks of 4,830 million euros (7,590 million euros at December 31, 2002);
❚ contracts to hedge interest rate exposure of 14,142 million euros (27,361 million euros at December 31, 2002);
❚ contracts for combined hedging of foreign exchange and interest rate risks of 848 million euros (2,480 million euros at December
  31, 2002).
❚ equity swaps for 978 million euros (1,104 million at December 31, 2002).
The decrease in the nominal amounts of the above derivative financial contracts compared to December 31, 2002 is largely due
to extraordinary transactions during the period which led to the deconsolidation of outstanding positions and the early closing
of certain loans and the relative hedges.
                                     103                    Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                         Notes to the Consolidated Financial Statements




These transactions, reflecting the notional principal amount, are not subject to risks that may derive from the non-fulfillment by
the counterparties insofar as the contracts are entered into with several primary national and international financial institutions.
Approximately 48% of the contracts outstanding at December 31, 2003 will expire during 2004 and the remainder in the period 2005-
2022, of which 13% will expire after 2008. The consolidated statement of operations includes the effects both of the contracts that
expired in 2003 and the provisions for the contracts expiring after December 31, 2003, as stated in the Accounting Policies.
The Group’s financial policy attaches particular importance to the management and control of financial risks that can significantly
impact profits. The Group has adopted a series of guidelines regarding the management of exchange rate and interest rate
exposure. The policy allows derivative financial instruments to be used only for managing exchange and interest rate risks connected
to balance sheet flows and assets and liabilities, and not for speculative purposes.
In 2003, foreign exchange risk management followed the aforementioned policy and maintained the character of selective risk
management. The reduction in exchange exposure, substantially originating from the positive balance between exports and imports,
was based on the expected trend in exchange rates and the need to hedge the exchange levels of reference without completely
foregoing the benefits deriving from a favorable trend in the rates. Again this year, the management of exchange risks was based
principally on a combination of currency options.
In 2003, the management of interest rate exposure also followed the aforementioned guidelines which state that derivative financial
instruments should be used to reach a fixed exposure level and minimize financing costs, and to ensure a correct matching of
financing and investments by the financial services companies.
The derivative financial instruments principally relate to foreign exchange forward contracts, currency swaps and currency options or,
as regards interest rate risks, interest rate swaps, forward rate agreements and options on interest rates, as well as interest rate and
currency swaps for the combined management of currency and interest rate risks.
A comparison of the carrying values and the fair values of derivative financial instruments by contract type is set forth below:

                                                                                                      At 12/31/2003                       At 12/31/2002
                                                                                Carrying       Fair                   Carrying     Fair
(in millions of euros)                                                             value      value      Difference      value    value      Difference

Foreign exchange risk management instruments                                         (3)        59              62         75     118              43
Interest rate risk management instruments                                          138         319            181        107      343             236
Foreign exchange and interest rate risk management instruments                     174         176               2         99       84             (15)
Equity swaps                                                                         (1)       439            440           –       23             23
Total                                                                              308         993            685        281      568             287


The fair value of these derivative financial instruments was estimated based on year-end market prices for instruments with similar
characteristics and maturities.
The changes in the financial statement amounts for foreign exchange transactions and for combined foreign exchange and interest
rate transactions can mainly be ascribed to a different mix of the outstanding transactions at the end of the year compared to the
prior year, in addition to the trend of the euro/U.S. dollar exchange rate. The fair value of the equity swaps is the result of the
positive trend in the General Motors share price.
The difference between the “Carrying value” and “Fair Value” is mainly due to the accounting principles adopted for the valuation of
the financial instruments designated as hedges. As disclosed in the Accounting Policies, it is not possible to completely adopt IAS 39
under current Italian law since all derivative financial instruments would have to be recorded at fair value in the financial statements,
including those designated as hedges. The latter, instead, have been valued symmetrically with the underlying hedged item.
Therefore, where the hedged item has not been adjusted to fair value in the financial statements, the hedging financial instruments
have also not been adjusted. Similarly, where the hedged item has not yet been recorded in the financial statements (hedging of
future flows), the valuation of the hedging instrument at fair value is deferred.
At December 31, 2003, the integral adoption of IAS 39 would have had an effect on the balance sheet, on the one hand, for the
adjustment of derivative financial instruments to arrive at fair value with a positive effect of 685 million euros (a positive effect of 287
million euros at December 31, 2002), and, on the other hand, for the adjustment of the hedged balance sheet items (mainly payables)
with a net negative effect (due to the trend in interest rates) of 262 million euros (405 million euros at December 31, 2002) and, for the
part relating to the hedging of future flows, a lower accumulated value of reserves in stockholders’ equity of 22 million euros (188
million euros at December 31, 2002), net of the amount set aside for deferred income taxes. The integral adoption of IAS 39 would
have led to positive effects on the net result for the year of approximately 272 million euros, net of tax charges.
With particular regard to the previously mentioned equity swap agreements, the amount at December 31, 2003 of 978 million euros
includes, for 916 million euros, the notional amount of the equity swaps stipulated at the same time as the sale of the General Motors
                                   104                   Fiat Group    Consolidated Financial Statements at December 31, 2003
                                                                       Notes to the Consolidated Financial Statements




shares and which was put into place to hedge the risk, implicit in the Exchangeable bonds described previously, of an increase in
the General Motors share price above the conversion price (Note 12). It also comprises the equity swaps stipulated to hedge the risk
of an increase in the Fiat share price above the exercise price of the stock options assigned to Mr. Giuseppe Morchio as described in
the following paragraphs.
With regard to the equity swaps on General Motors shares, in fact, the Exchangeable bonds issued at the start of 2002 are
convertible into the same number of General Motors shares as once held by the Fiat Group (32,053,422 shares). The option exercise
price implicit in the bonds coincides with the pre-sale unit carrying value, in U.S. dollars, of the General Motors shares in the
consolidated financial statements of Fiat, prior to the sale made in 2002, of 69.54 U.S. dollars per share. Accordingly, at the time the
bonds were issued the risk of an increase in the General Motors share price above 69.54 U.S. dollars per share was covered by the
shares held by Fiat. At the time of the sale of the General Motors shares by Fiat in December 2002, in order to hedge the above-
mentioned risk implicit in the Exchangeable bonds, Fiat contemporaneously stipulated with the bank acquiring the shares a “Total
Return Equity Swap” derivative contract (hereinafter “Equity Swaps”) relating to the same number of General Motors shares and
having the following main characteristics:
❚ In line with the expiry of the Exchangeable bonds, at maturity, Fiat will settle with the counterparty bank the price variances
  between the initial General Motors share price (36.11 U.S. dollars per share) and the final share price, cashing in on a positive share
  price performance or paying for a negative performance.
❚ Throughout the duration of the bonds, Fiat will pay the counterparty variable interest applied on the notional value of the contract
  (equal to the sale price of 1,157 million U.S. dollars).
❚ Any dividends distributed by General Motors on the sold shares will be repaid to Fiat by the counterparty.
❚ As a guarantee for the payment of the above-mentioned variance, if negative, Fiat deposited a remunerated amount in an account
  with the bank. Such collateral will be adjusted in relation to the relative exposure of the two parties and at December 31, 2003
  amounts to 183 million euros (221 million euros at December 31, 2002).
❚ At the closing of the Equity Swaps, Fiat will not possess any rights to repurchase the sold shares.
❚ The Equity Swaps can be settled at an earlier date, in whole or in part, at any time.
In accordance with accounting principles, the aforementioned Equity Swaps, despite being entered into for hedging purposes,
cannot be treated in hedge accounting and accordingly is defined as a trading derivative financial instrument. It follows that, in
accordance with the principle of prudence, if during the period of the contract General Motors shares perform positively, the positive
fair value of the instrument is not recorded in the statement of operations; if, instead, the performance is negative, the negative fair
value of the instrument is recorded immediately as a cost within financial expenses. At December 31, 2003, the Equity Swaps have
a positive fair value of 439 million euros (23 million euros at December 31, 2002), that has not been recorded in the financial
statements.
As regards the Equity Swaps on Fiat shares, the Board of Directors resolved in 2003 to assign options to Mr. Giuseppe Morchio, as
the only variable component of his compensation for the post of CEO, for the purchase of 13,338,076 Fiat ordinary shares at a price
of euro 5.623 per share, which can be exercised from March 27, 2004 to March 27, 2010. The right to purchase a maximum amount of
20% of the total matures in each of the first five years. Two-thirds of the options that will mature from March 27, 2005 to 2008 can be
exercised only upon reaching preestablished profit objectives during the period of reference. The risk of a significant increase in the
Fiat share price above the exercise price of these options is covered, with reference to 3,338,076 shares, by treasury stock in portfolio,
whereas with reference to the remaining 10,000,000 shares, the aforementioned “Total Return Equity Swap” agreement was put into
place with a reference price of 6.173 euro per share and expiring on August 31, 2004. In accordance with accounting principles, the
aforementioned Equity Swaps, despite being entered into for hedging purposes, cannot be treated in hedge accounting and
accordingly is defined as a trading derivative financial instrument. It follows that, in accordance with the principle of prudence, if
during the period of the contract the Fiat shares perform positively, the positive fair value of the instrument is not recorded in the
statement of operations; if, instead, the performance is negative, the negative fair value of the instrument is recorded immediately
as a cost within financial expenses. At December 31, 2003, the Equity Swaps have a negative fair value of 1 million euros that has
therefore been recorded in the financial statements.
Other commitments amounted to 10,350 million euros at December 31, 2003 (9,884 million euros at December 31, 2002) and include
commitments for the execution of works in the amount of 8,011 million euros (7,718 million euros at December 31, 2002) under the
contracts between Fiat S.p.A., as General Contractor, and Treno Alta Velocità T.A.V. S.p.A. for the design and construction of a high-
speed railway lines between Bologna - Florence and Turin - Milan. The increase of 293 million euros compared to December 31, 2002
relates principally to the agreements reached during 2003 regarding the Florence-Bologna section, concerning alterations to the
network (28 million euros), urgent improvement work (26 million euros) and monetary adjustments (46 million euros) and agreements
relating to the Turin-Novara sub-line, concerning alterations (129 million euros) and monetary adjustments (64 million euros). Fiat
                                   105                    Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                       Notes to the Consolidated Financial Statements




S.p.A. in turn assigned the design and construction of these works to the CAV.E.T. and CAV.TO.MI consortiums. In order to guarantee
the contractual advances and the proper execution of the works, Fiat S.p.A. granted bank suretyships to T.A.V. S.p.A. totaling 1,566
million euros. Similarly, as called for by the contract, the CAV.E.T. and CAV.TO.MI consortiums granted bank suretyships to Fiat S.p.A.
for 617 million euros and 889 million euros, respectively. Consequently, the guarantees granted are substantially covered by the
guarantees received.


Other commitments and important contractual rights
Relations with General Motors
Although they are not included in the memorandum accounts, the following comments are intended to summarize the options
held by the Fiat Group deriving from the relationships with General Motors. On the basis of the Agreement (“Master Agreement”)
signed on March 13, 2000, by which 20% of the Automobile Sector was sold to General Motors, the Fiat Group had reserved itself
a Put option at fair market value with General Motors on its remaining investment in Fiat Auto Holdings B.V. (80% in 2000, now 90%
following the capital increase later described), exercisable during the period between January 24, 2004 and July 24, 2009. General
Motors has claimed that the sale of certain financial activities by Fiat Auto and the recapitalization of Fiat Auto Holdings, put into
place by Fiat, violate the Master Agreement and, as a result, the Put option. Fiat maintains that the two transactions are entirely
legitimate and do not violate the Master Agreement nor other rights held by General Motors. Fiat considers the Put binding
and exercisable according to the clauses of the Master Agreement. On October 26, 2003, Fiat and General Motors announced
agreements regarding the strategic alliance in progress. A first agreement (“Amendment”) pushes back the period in which the
Put option can be exercised by one year. The new period in which the Put option can be exercised goes from January 24, 2005
to July 24, 2010. The second agreement (“Standstill Agreement”) precludes the parties from bringing legal action regarding the
Master Agreement until December 15, 2004, preserving their respective rights.
As for the aforementioned recapitalization of Fiat Auto Holdings, the Stockholders’ Meeting of this company held on April 23, 2003
resolved a recapitalization plan for 5 billion euros offering its stockholders the possibility of paying for their share of the capital
increase over a period of 18 months. Fiat, during the year, subscribed to the recapitalization for 3 billion euros, whereas General
Motors has not yet subscribed to its share of the capital increase and stated that at this time it does not plan to participate.
Consequently, the current percentage ownership of Fiat in Fiat Auto Holdings rose to 90%. For purposes of completing the
disclosure, it should be pointed out that the Master Agreement (Section 8.07) calls for certain residual options in favor of General
Motors in the event of a change in the control of Fiat following the purchase of more than 50% of Fiat’s voting rights by another party
or several parties in concert among each other. In this very remote eventuality, General Motors would have the right to demand that
Fiat exercise the Put option on Fiat’s investment in Fiat Auto Holdings, if the change in control was hostile, or, even if it was not
hostile, to sell its investment in Fiat Auto Holdings to Fiat at a price equal to fair market value or, up to July 24, 2004, at 2.4 billion
U.S. dollars, if higher. Such eventuality is considered extremely unlikely partly in view of the onerous obligations that would be
placed upon the acquirer of control on the basis of the laws on takeover bids.
Lastly, it should be pointed out that Fiat and General Motors have stated that discussions are underway to redefine the structure of
the strategic alliance so that the parties might continue their industrial cooperation in constructive terms and settle unresolved issues.
At the present time, it is not possible to determine what if any effects the discussions could have on the assets and liabilities reflected
in the consolidated financial statements.


Ferrari
A summary is presented below of the rights arising from the purchase of 34% of the capital stock of Ferrari S.p.A. for 775 million
euros by Mediobanca S.p.A., within the framework of a consortium set up for the acquisition and placement of the Ferrari shares. Fiat
realized a gain of 671 million euros on this sale, net of selling expenses. The sale contract sets out the following principal elements:
❚ Mediobanca assumed the responsibility of sole Global Coordinator in charge of coordinating and leading the consortium.
❚ Mediobanca cannot sell its Ferrari shares to another group in the automobile industry as long as the Fiat Group maintains a 51%
  controlling interest in Ferrari. Barring certain specific assumptions, the Fiat Group can not reduce its investment in Ferrari below
  51% until the end, depending on the case, of the third or fourth year subsequent to signing the contract.
❚ Fiat holds a call option that allows it to repurchase the Ferrari shares at any time before June 30, 2006 (the original date of June 30,
  2005 was extended by one year during the course of 2003, by virtue of the payment of a premium of 16 million euros), except
  during the five months subsequent to the presentation of an IPO application to the competent authorities. The option exercise
  price is equal to the original price at which the shares were sold plus interest during the period based on the BOT yield plus 4%.
❚ Mediobanca, moreover, does not hold any put option to resell the purchased Ferrari shares to Fiat, even in the event that the IPO
  does not occur or is not completed.
                                   106                    Fiat Group    Consolidated Financial Statements at December 31, 2003
                                                                        Notes to the Consolidated Financial Statements




❚ Fiat may share, in declining percentages, in any gain realized by Mediobanca and the other members of the consortium in the
  event of an IPO.


Ixfin
At the end of 2003 the Fiat Group signed an agreement with the Ixfin group which had previously purchased Magneti Marelli
Sistemi Elettronici from the Mekfin group, to which Fiat had sold that business in 2002. Ixfin Magneti Marelli Sistemi Elettronici is
considered as a strategic supplier of both Fiat Auto and other automotive groups that were formerly customers of Magneti Marelli.
In order that Ixfin Magneti Marelli Sistemi Elettronici could regularly meet the commitments undertaken with its customers and
pursue development strategies for its business, a decision was taken to sign the aforementioned agreement, in the context of
which, besides obtaining a series of guarantees:
❚ Magneti Marelli Holding S.p.A. signed a contract for the beneficial interest in the shares of Ixfin Magneti Marelli Sistemi Elettronici,
  valid until December 31, 2004, by which it is entitled to the voting rights and all the other administrative rights;
❚ Fiat Netherland Holding (at one time a Magneti Marelli Sistemi Elettronici stockholder and therefore a creditor company for
  the balance of the sale price) acquired a Call option (transferable) from the Ixfin group that is exercisable at any time up to
  December 31, 2004 for the purchase of Ixfin Automotive, the direct parent company of Ixfin Magneti Marelli Sistemi Elettronici,
  or, alternatively, Ixfin Magneti Marelli Sistemi Elettronici itself. The purchase price of the opted shares is 45 million euros.
  Furthermore, in the event the Call option is exercised, Fiat Netherland Holding will assume the debt that the group of sellers
  has with Ixfin Magneti Marelli Sistemi Elettronici and with the other companies that would be acquired for a total of 53 million
  euros. The price that would eventually be paid in total if the Call option is exercised would thus be equal to 98 million euros.


Teksid
Teksid S.p.A. is the object of a Put and Call contract with the partner Norsk Hydro concerning the subsidiary Meridian Technologies
Inc. (held 51% by the Teksid Group and 49% by the Norsk Hydro Group). In particular, should there be a strategic deadlock in the
management of the company (namely in all those cases in which a unanimous vote in favor is not reached by the directors on the
board as regards certain strategic decisions disciplined by the contract between the stockholders), the following rights would arise:
❚ Put Option of Norsk Hydro with Teksid on the 49% holding: the sale price would be commensurate with the initial investment
  made in 1998, revalued pro rata temporis, net of dividends paid.
❚ Call Option of Teksid with Norsk Hydro on the 49% holding (exercisable whenever Norsk Hydro renounces its right to exercise the
  Put Option described above): the sale price would be the higher value between the initial investment made by Norsk Hydro in
  1998, calculated according to the criteria expressed previously, and 140% of the Fair Market Value (in this regard, an increase of 2%
  per year is established in the event the option is exercised from the start of 2008 until 2013, thus up to 150% of the relative value).
It should be pointed out that so far the conditions that would give rise to the strategic deadlock are considered to be quite remote.
Fiat S.p.A. is subject to a put contract with Renault (in reference to the original investment of 33.5% in Teksid, now 19.52%).
In particular, Renault would acquire the right to exercise a sale option on the treasury stock to Fiat, in the following cases:
❚ in the event of nonfulfilment in the application of the protocol of the agreement and admission to receivership or any other
  redressment procedure:
❚ in the event Renault’s investment in Teksid falls below 15% or Teksid decides to invest in a structural manner outside the foundry
  sector:
❚ should Fiat be the object of the acquisition of control by another car manufacturer.
The exercise price of the option is established as follows:
❚ for 6.5% of the share capital of Teksid, the initial investment price increased pro rata temporis;
❚ for the remaining amount of share capital of Teksid, the share of the accounting net equity.
                                                107                             Fiat Group    Consolidated Financial Statements at December 31, 2003
                                                                                              Notes to the Consolidated Financial Statements




End-of-life vehicles
In September 2000, the European Union issued Directive 2000/53/CE relative to end-of-life vehicles. This Directive, among other
things, provides that, in the future, vehicle manufacturers will have to bear all, or a significant part of, the costs arising from the
collection, treatment and recovery of end-of-life vehicles. The above Directive is currently being introduced into the national
legislation of the individual member states and will be applicable for all vehicles placed on the market starting from July 2002;
beginning January 2007 all vehicles on the market will be covered, even those placed before July 2002. The Directive was introduced
in Italy in June 2003 and in the major markets (Germany, the Netherlands, Belgium, France, Spain, Slovenia, Portugal, Austria and
Norway). Fiat Auto is pursuing a strategy aimed at zero service cost for the manufacturer by promoting networks for the disposal of
the vehicles or taking part in networks set up by other competitors, which, in the majority of cases, is made possible by the creation
of a process that is economically self-sustained by the recovery value of the spare parts. Consequently, no liabilities are recognized
for the Group.


Group assets held by third parties
Group assets held by third parties amount to 4,496 million euros at December 31, 2003 (20,757 million euros at December 31, 2002),
a decrease of 16,261 million euros. They include securities deposited with banks and other financial institutions totaling 1,042 million
euros (17,558 million euros at December 31, 2002). Such securities in 2002 were primarily held by the Toro Assicurazioni Group. This
item also includes tangible fixed assets, products and goods of some Automotive Sectors held by outside suppliers for processing
totaling 3,454 million euros (3,199 million euros at December 31, 2002).




15 Value of production
Revenues from sales and services and Change in contract work in progress
Revenues from sales and services and Change in contract work in progress amount to 47,271 million euros in 2003 compared to
55,649 million euros in 2002. They include revenues from sales and services of 48,346 million euros (55,427 million euros in 2002)
and the change in contract work in progress of -1,075 million euros (222 million euros in 2002).
For comments on these items, refer to the Report on operations.
The Fiat Group is divided into business sectors and operates in various geographical areas. The distribution by business sector
of Revenues from sales and services and Change in contract work in progress (net of intra-Group transactions) is as follows:

(in millions of euros)                                                                                                                               2003           2002            2001

Revenues from sales and services and Change in contract work in progress by operating sector
Automobiles                                                                                                                                       19,839         21,908      24,177
Agricultural and Construction Equipment                                                                                                            9,410         10,502      10,762
Commercial Vehicles                                                                                                                                8,206          8,816        8,120
Ferrari and Maserati (*)                                                                                                                           1,250          1,194        1,040
Components                                                                                                                                         2,087          2,085        2,438
Production Systems                                                                                                                                 1,756          1,763        1,510
Metallurgical Products                                                                                                                               735          1,411        1,429
Aviation (**)                                                                                                                                        625          1,532        1,632
Insurance (***)                                                                                                                                    1,654          4,834        5,369
Services                                                                                                                                           1,019          1,005             762
Publishing and Communications                                                                                                                        372            346             334
Other companies                                                                                                                                      318            253             433
Total Revenues from sales and services and Change in contract work in progress                                                                    47,271         55,649      58,006
(*)   The Ferrari and Maserati Sector figures are presented separately beginning from 2002. The corresponding figures for 2001, previously included under “Other companies”, were
      consequently reclassified.
(**) The Aviation Sector’s revenues are included up to the date of sale (July 1, 2003).
(***) The Insurance Sector’s revenues are included up to the date of sale (May 2, 2003).
                                     108                    Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                         Notes to the Consolidated Financial Statements




Net revenues by area of destination may be analyzed as follows:

(in millions of euros)                                                                                                 2003         2002     2001

Revenues from sales and services and Change in contract work in progress by destination
Italy                                                                                                               16,381        20,120   19,954
Europe (excluding Italy)                                                                                            18,884        21,072   22,541
North America                                                                                                        5,920         7,411    7,531
Mercosur                                                                                                             2,595         3,268    4,221
Other areas                                                                                                          3,491         3,778    3,759
Total Revenues from sales and services and Change in contract work in progress                                      47,271        55,649   58,006


Other income and revenues

(in millions of euros)                                                                                                 2003         2002     2001

Revenue grants                                                                                                          52            47       79
Capital gains                                                                                                          187           290      383
Prior period income                                                                                                    423           518      476
Investment grants                                                                                                       78           114       93
Other income                                                                                                           949         1,183    1,214
Total Other income and revenues                                                                                      1,689         2,152    2,245


Capital gains from the sale of fixed assets of 187 million euros (290 million euros in 2002) mainly relate to disposals of non-strategic
activities as a consequence of the policy to reduce invested capital. The gains realized on the sale of non-strategic buildings total
157 million euros (159 million euros in 2002).




16 Costs of production
Costs of production amount to 50,858 million euros (58,854 million euros in 2002), a decrease of 13.6% compared to 2002. On a
comparable consolidation basis, the reduction would be 5.3%. The main components of this item and the changes that occurred
during the period can be described as follows:


Raw materials, supplies and merchandise
Raw materials, supplies and merchandise amount to 28,392 million euros, a decrease of 6.3% compared to 2002 (-5.2% on
a comparable consolidation basis). Raw materials, supplies and merchandise as a percentage of revenues, on a comparable
consolidation basis, would be 63% (62.5% in 2002).


Services
Services amount to 8,505 million euros, a decrease of 14% compared to 2002 (-7.8% on a comparable consolidation basis). This
amount is equal to 18% of revenues (17.8% in 2002). On a comparable consolidation basis, the percentage of services expenses to
revenues would be 18.4% (18.7% in 2002). Services include advertising costs, external information technology and telecommunication
service costs, external maintenance costs and transportation costs.


Personnel
Personnel costs consist of the following:

(in millions of euros)                                                                                                 2003         2002     2001

Salaries and wages                                                                                                   4,707         5,457    5,862
Social security contributions                                                                                        1,249         1,365    1,551
Employee severance indemnities                                                                                         244           256      315
Employee pensions and similar obligations                                                                              185           100      122
Other costs                                                                                                            303           376      319
Total Personnel costs                                                                                                6,688         7,554    8,169
                                       109                        Fiat Group      Consolidated Financial Statements at December 31, 2003
                                                                                  Notes to the Consolidated Financial Statements




Personnel costs amount to 6,688 million euros in 2003, a decrease of 11.5% compared to 2002, mostly due to the effects of the
change in the scope of consolidation. On a comparable consolidation basis, the decrease would be 5%. Personnel costs are equal
to 14.1% of revenues (13.6% in 2002). Personnel costs as a percentage of revenues, on a comparable consolidation basis, would be
14.5% (14.3% in 2002).
An analysis of the average number of employees by category is provided as follows:

                                                                                2003                                   2002                                   2001
                                              Companies      Companies                 Companies      Companies               Companies      Companies
                                             consolidated consolidated                consolidated consolidated              consolidated consolidated
                                                      on a       by the                        on a       by the                      on a       by the
                                               line-by-line proportional                line-by-line proportional              line-by-line proportional
                                                     basis      method          Total         basis      method        Total         basis      method        Total

Average number of employees
   Managers                                       2,948               –        2,948        3,483              2      3,485        3,500             39      3,539
   White-collar                                  60,407               –     60,407         67,487           114      67,601       69,299         1,823      71,122
   Blue-collar                                  110,887               –    110,887       118,999            320     119,319     135,945          3,566     139,511
Total                                           174,242               –    174,242       189,969            436     190,405     208,744          5,428     214,172


The average number of employees in 2003 is equal to 174,242, a decrease of 16,163 employees compared to 2002. That reduction
is partly due to employees who left the Group, also in connection with employee reduction plans, and partly to the change in the
scope of consolidation mainly as a result of the sale of FiatAvio S.p.A., the Toro Assicurazioni Group, the Fraikin activities and the
retail financing activities of the Automobile Sector.
In 2003, there are no companies accounted for using the proportional method owing to the accounting of Naveco by the equity
method (in 2002 this company was consolidated by the proportional method) and the deconsolidation of the companies held by
FiatAvio S.p.A.


Provisions for risks
Provisions for risks of 1,163 million euros in 2003 (1,138 million euros in 2002) relate to the vehicle warranty reserve for 490 million
euros in 2003 (435 million euros in 2002), mainly in the Automotive Sectors, and to other reserves connected with industrial risks
for 673 million euros (703 million euros in 2002).


Other operating costs

(in millions of euros)                                                                                                               2003          2002       2001

Losses on sale of fixed assets                                                                                                        47             86       137
Prior period expenses                                                                                                                226           297        198
Indirect and other taxes                                                                                                             147           229        260
Sundry expenses                                                                                                                      608           692        714
Total Other operating costs                                                                                                        1,028         1,304       1,309



Insurance claims and other insurance costs
Insurance claims and other insurance costs amount to 1,367 million euros in 2003 (4,045 million euros in 2002). The decrease from
2002 is due to the sale of the Toro Assicurazioni Group.




17 Financial income and expenses
Investment income
(in millions of euros)                                                                                                               2003          2002       2001

Dividends                                                                                                                             12           103        102
Tax credit on dividends                                                                                                                5            22        112
Gains on sale of investments held in current assets                                                                                    5            31         50
Total Investment income                                                                                                               22           156        264
                                       110                      Fiat Group    Consolidated Financial Statements at December 31, 2003
                                                                              Notes to the Consolidated Financial Statements




Investment income includes income from associated companies of 1 million euros (1 million euros in 2002) and from other companies
of 21 million euros (151 million euros in 2002), with a reduction of 130 million euros compared to 2002 due to the change in the scope
of consolidation owing to the sale of the Toro Assicurazioni Group (56 million euros).
Dividends were mainly received from minority investments valued at cost. This item included 68 million euros in 2002 for dividends
received on General Motors shares.
The Gains on sale of investments held in current assets decreased by 26 million mainly on account of the change in the scope
of consolidation due to the sale of the Toro Assicurazioni Group.

Other financial income
The following analysis of “Other financial income” and “Interest and other financial expenses” present the amounts shown in the
related captions on the statement of operations and also the amounts of income and expenses of the Group’s financial companies
presented in the captions on the statement of operations under “Revenues from sales and services” and “Interest and other
expenses of financial services companies”, respectively. The last line in the table shows “Other financial income” and “Interest
and other financial expenses” as presented on the statement of operations, excluding the financial activities.

(in millions of euros)                                                               2003                           2002                        2001

Other financial income from:
receivables held as fixed assets from others                                           3                              2                           2
securities held as fixed assets other than equity investments                          –                            156                         253
securities held as current assets other than equity investments                      119                            147                         301
Other income from:
   unconsolidated subsidiaries                                                8                            25                            11
   associated companies                                                      34                            38                            22
   others:
      bank and other interest                                     266                           264                            302
      customer interest and lease income                        1,166                         2,010                          2,154
      discounts and other income                                   81                           124                            284
      income from derivative financial instruments              1,132                         1,603                          1,075
      foreign exchange gains, net                                  47                             –                              –
   Total from others                                                      2,692                         4,001                          3,815
Total Other income                                                                 2,734                           4,064                       3,848
Total Other financial income                                                       2,856                           4,369                       4,404
of which:
   Other financial income, excluding financial services companies                  1,504                           2,219                       2,188



Interest and other financial expenses

(in millions of euros)                                                               2003                           2002                        2001

Interest and other financial expenses from:
unconsolidated subsidiaries                                                             3                              2                          3
associated companies                                                                    6                              2                         10
others:
   bond interest                                                             681                          769                            625
   bank interest                                                             558                          656                            799
   interest on trade and other payables                                       18                           71                             63
   interest on notes payable                                                  49                          106                            202
   interest on other financial payables                                      185                          273                            343
   discounts and other expenses                                              534                          635                            511
   expenses from derivative financial instruments                          1,115                        1,492                          1,255
   losses on sale of securities                                                8                           44                             78
   foreign exchange losses, net                                                –                          111                            147
Total Interest and other financial expenses - others                               3,148                           4,157                       4,023
Total Interest and other financial expenses                                        3,157                           4,161                       4,036
of which:
   Interest and other financial expenses, excluding financial services companies   2,489                           3,046                       3,132
                                        111                      Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                              Notes to the Consolidated Financial Statements




Other financial income of 2,856 million euros in 2003 (4,369 million euros in 2002), when shown net of Interest and other financial
expenses of 3,157 million euros (4,161 million euros in 2002) results in a net negative balance of 301 million euros (a net positive
balance of 208 million euros in 2002). The decrease in the net balance of 509 million euros derives almost entirely from the
deconsolidation of the Toro Assicurazioni Group, FiatAvio S.p.A. and the retail activities of Fiat Auto and Fraikin.
Foreign exchange gains, net, of 47 million euros (foreign exchange losses, net, of 111 million euros in 2002), represent the balance
between foreign exchange gains of 2,519 million euros in 2003 (2,446 million euros in 2002) and foreign exchange losses of 2,472
million euros in 2003 (2,557 million euros in 2002).
The Losses on sale of securities amounts to 8 million euros in 2003 and include losses of 6 million euros on the sale of investments
not held as fixed assets.
Discounts and other expenses includes receivables discounting and securitization expenses of 280 million euros in 2003 (261 million
euros in 2002).




18 Adjustments to financial assets
(in millions of euros)                                                                              2003                    2002             2001

Revaluations:
   Equity investments                                                                    91                      68                    204
   Financial fixed assets other than equity investments                                   –                       –                    38
   Securities held in current assets other than equity investments                       14                       7                    12
Total Revaluations                                                                                  105                      75              254
Writedowns:
   Equity investments                                                                   263                     809                    577
   Financial fixed assets other than equity investments                                   1                      84                    128
   Securities held in current assets other than equity investments                        8                      45                    28
   Financial receivables                                                                  5                      18                    15
Total Writedowns                                                                                    277                     956              748
Total Adjustments to financial assets                                                              (172)                   (881)             (494)


Revaluations and Writedowns of equity investments also include the share of the earnings and losses of companies accounted
for using the equity method.
Revaluations of equity investments of 91 million euros in 2003 include the share of the earnings of the following companies
(in millions of euros): BUC-Banca Unione di Credito 11, other companies of CNH Global N.V. 24, companies in the Automobile
Sector 20, other companies 36.
Revaluations of equity investments of 68 million euros in 2002 included the share of the earnings of the following companies
(in millions of euros): other companies of CNH Global N.V. 33, companies in the Automobile Sector 15, other companies 20.
Writedowns of equity investments of 263 million euros in 2003 (809 million euros in 2002) include the share of the losses of the
companies valued using the equity method and the permanent impairments in value of the companies valued at cost, for the
following (in millions of euros): Italenergia Bis S.p.A. 24 (211 in 2002), Atlanet S.p.A. 56 (31 in 2002), other companies of CNH Global
N.V. 9 (5 in 2002), companies in the Automobile Sector 112 (81 in 2002), companies of the Toro Assicurazioni Group for the first four
months 48 (198 in 2002), other companies 14.
In 2002, Writedowns also referred to Capitalia S.p.A., a Toro Assicurazioni Group holding for 124 million euros, Lingotto S.p.A.
for 30 million euros, Trucks & Bus Company for 17 million euros, other companies for 112 million euros.
                                          112              Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                        Notes to the Consolidated Financial Statements




19 Extraordinary income and expenses
(in millions of euros)                                                                        2003                    2002                 2001

Extraordinary income
Gains on disposals of investments and other fixed assets                                    1,826                   1,081                1,515
Other income:
   Prior period income                                                             32                        8                    51
   Other income                                                                   159                     146                     79
Total Other income                                                                            191                     154                  130
Total Extraordinary income                                                                  2,017                   1,235                1,645
Extraordinary expenses
Losses on disposal of investments and other fixed assets                                       (50)                 (1,239)                 (56)
Taxes relating to prior years                                                                  (26)                    (79)                 (18)
Other expenses:
   Extraordinary provisions to reserves                                          (585)                   (980)                   (483)
   Other extraordinary expenses                                                  (969)                  (1,400)                  (713)
   Prior period expenses                                                          (40)                     (40)                   (16)
Total Other expenses                                                                       (1,594)                  (2,420)              (1,212)
Total Extraordinary expenses                                                               (1,670)                  (3,738)              (1,286)
Total Extraordinary income and expenses                                                       347                   (2,503)                359


Gains on disposals of investments and other fixed assets amount to 1,826 million euros in 2003 (1,081 million euros in 2002). They
include the gains on the following (in millions of euros): sale of Toro Assicurazioni Group 427 (390 million euros net of the expenses
and provisions connected with the transaction, classified as other extraordinary expenses), sale of the Automobile Sector’s Retail
financing activities in Brazil 103, sale of the 55.95% investment in IPI S.p.A. 15, sale of the 50.1% investment in IN ACTION S.r.l. 8,
sale of FiatAvio S.p.A. 1,266 (1,258 net of the expenses connected with the transaction), sales of other minor investments 7.
Gains on disposals of investments and other fixed assets amounted to 1,081 million euros in 2002. They included the gains on the
following (in millions of euros): sale of 34% di Ferrari S.p.A. 714 (671 million euros net of the expenses associated with the transaction,
classified as extraordinary expenses), sale of the After Market business of Magneti Marelli 26, sale of 14% of Italenergia Bis S.p.A. 189,
sale of the investment in Europ Assistance Holding S.A. 83, sale of 50% of Targasys S.r.l. a S.U. 36, sale of the residual stock of Sinport
Sinergie Portuali S.p.A. 14, sales of other minor investments 19.
Other extraordinary income of 159 million euros (146 million euros in 2002) refers to nonrecurring income of the individual companies
of the Group mainly for the release of extraordinary reserves that proved in excess of requirements.
Losses on disposals of investments and other fixed assets amount to 50 million euros in 2003 (1,239 million euros in 2002). In 2002
the item included losses on the following (in millions of euros): sale of General Motors shares 1,049, sale of the Aluminum Business
Unit of Teksid 24 (100 including the net provisions and expenses associated with the sale, classified as extraordinary expenses),
sale of the Electronic Systems Business Unit of Magneti Marelli 150 (of which 36 arose at the time of sale and 114 afterwards from
post-sales price adjustments and later settlement agreements), sale of Viasat S.p.A. 3, other investments 13.
Taxes relating to prior years amount to 26 million euros in 2003 (79 million euros in 2002).
Other extraordinary expenses amounting to 1,594 million euros in 2003 (2,420 million euros in 2002) include principally expenses
and provisions for risks in relation to corporate restructuring transactions of 658 million euros, other extraordinary writedowns of
assets on the basis of changes in market prospects and the consequent new business plans of 215 million euros. They also include
additional extraordinary expenses and provisions for future risks and charges totaling 721 million euros, of which the most significant
are: provisions for the remaining commitments connected with the IPSE initiative (47 million euros), expenses and provisions recorded
in reference to relations existing with the Ixfin Group (53 million euros), incidental costs and other provisions connected with the sale
of the Toro Assicurazioni Group (37 million euros), incidental costs and other provisions connected with other sales which took place
in 2003 and in prior years (102 million euros), damages caused by flooding at the Termoli factory (71 million euros) and, lastly,
commissions paid to Mediobanca for the extension of the commitments undertaken by Mediobanca itself under the “Ferrari”
contract described in Note 14 (16 million euros). Other extraordinary expenses also include prior years’ expenses of 40 million euros.
Other extraordinary expenses of 2,420 million euros in 2002 included principally expenses and provisions for risks in relation
to corporate restructuring transactions of 1,026 million euros, other extraordinary writedowns of assets on the basis of changes in
                                        113                       Fiat Group     Consolidated Financial Statements at December 31, 2003
                                                                                 Notes to the Consolidated Financial Statements




the market prospects and the consequent new business plans of 216 million euros and on the basis of the estimated realizable
value indicated in the subsequently signed agreement for the sale of the Fraikin business of 210 million euros. They also included
additional extraordinary expenses and provisions for future risks and charges totaling 968 million euros, of which the most significant
are: expenses and provisions recorded for permanent impairments in value on investments in the telecommunications sector (95
million euros), those recorded in respect of the sales contract for the Aluminum Business Unit of Teksid (76 million euros), and those
related to the incidental charges associated with the sale of Ferrari S.p.A. (43 million euros).
Other extraordinary expenses by Business Sector are as follows (in millions of euros): Automobile 711 (853 in 2002), Agricultural and
Construction Equipment 142 (18 in 2002), Commercial Vehicles 170 (466 in 2002), Metallurgical Products 67 (149 in 2002), Components
86 (363 in 2002), Production Systems 140 (144 in 2002), Services 31 (202 in 2002) and Other Sectors and Companies 247 (225 in 2002).




20 Income taxes
Income taxes recorded in the consolidated statement of operations in 2003, 2002 and 2001 are as follows:

(in millions of euros)                                                                                 2003                    2002                 2001

Current taxes:
   IRAP                                                                                    125                     141                      156
   Other taxes                                                                              31                     192                      652
Total Current taxes                                                                                    156                     333                  808
Deferred taxes                                                                                         494                    (887)                 (514)
Total Income taxes                                                                                     650                    (554)                 294


Income taxes paid by the Group in 2003 and 2002 amounted to 132 million euros and 660 million euros, respectively.
The reconciliation between the tax charge recorded in the consolidated financial statements and the theoretical tax charge,
calculated on the basis of the theoretical tax rates in effect in Italy, is the following:

(in millions of euros)                                                                                                         2003         2002    2001

Theoretical income taxes                                                                                                      (441)       (1,734)   (207)
Utilization of tax loss carryforwards                                                                                          (57)          (47)    (66)
Tax effect of permanent differences                                                                                            136         (325)    (117)
Tax effect of difference between foreign tax rates and theoretical Italian tax rates                                             (6)         13      76
Deferred tax assets not provided                                                                                               881        1,361     544
Other differences                                                                                                               12           37      (92)
Income taxes recorded in financial statements excluding IRAP
(current and deferred income taxes)                                                                                            525         (695)    138
IRAP                                                                                                                           125          141     156
Income taxes recorded in financial statements (current and deferred income taxes)                                              650         (554)    294


In order to render the reconciliation between income taxes recorded in the financial statements and theoretical income taxes more
meaningful, beginning from 2002 the IRAP tax is not taken into consideration. Since the IRAP tax has a taxable basis that is different
from income before taxes, it generates distortions between one year and another. Accordingly, the theoretical income taxes were
determined applying only the tax rate in effect in Italy (IRPEG equal to 34% in 2003) to the income before taxes. The amounts for
2001 were consequently reclassified.
In 2003 and 2002, as a result of the loss reported by the Group, the effective tax rate is not significant.
With reference to the above reconciliation, the permanent differences include the tax effect on non-taxable income of 148 million
euros (356 million euros in 2002) and on nondeductible costs of 341 million euros in 2003 (1,276 million euros in 2002).
In 2003, Other differences include unrecovered withholdings for 20 million euros (34 million euros in 2002).
                                            114          Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                      Notes to the Consolidated Financial Statements




21 Other information
Assets by geographical area

                                                                                                                                            Total Assets
(in millions of euros)                                                                                       At 12/31/2003   At 12/31/2002 At 12/31/2001

Europe                                                                                                           49,690          75,254        76,039
North America                                                                                                     9,200          12,013        15,353
Mercosur                                                                                                          2,890            3,451        6,939
Other areas                                                                                                          931           1,803        2,418
Total Assets                                                                                                     62,711          92,521      100,749


The reduction in total assets of 29,810 million euros is mainly due to the change in the scope of consolidation following the sale
of the Toro Assicurazioni Group, FiatAvio S.p.A. and the retail activities of the Automobile Sector. Moreover, the reduction in North
America is connected with the weakness of the U.S. dollar.


Capital expenditures by geographical area

                                                                                                                             Total Capital Expenditures
(in millions of euros)                                                                                               2003            2002          2001

Europe                                                                                                            1,723            2,225        2,545
North America                                                                                                        138             313           555
Mercosur                                                                                                             120             150           249
Other areas                                                                                                           30              83            89
Total Capital expenditures                                                                                        2,011            2,771        3,438




Operating income by geographical area
The following analysis of operating income by geographical area excludes the operating income of the Group’s insurance companies.

                                                                                                                               Total Operating Income
(in millions of euros)                                                                                               2003            2002          2001

Europe                                                                                                              (832)         (1,136)           52
North America                                                                                                        139            (118)           15
Mercosur                                                                                                             135             260           176
Other areas                                                                                                            (5)            89             8
Total Industrial and Financial activities                                                                           (563)           (905)          251
Insurance companies                                                                                                   53             143            67
Total Operating income                                                                                              (510)           (762)          318
                                                  115                            Fiat Group      Consolidated Financial Statements at December 31, 2003
                                                                                                 Notes to the Consolidated Financial Statements




Net Sales and Revenues, Operating income (loss), Depreciation and Amortization, Capital expenditures by segment

                                                                                                       Net sales Revenues
                                                                                                                                      Operating Depreciation
                                                                                                               Inter-                   Income            and       Capital      Total
(in millions of euros)                                                                 Third parties      segment (*)         Total        (loss) Amortization expenditures     Assets

2003
Automobiles                                                                                19,839               171         20,010        (979)            962      1,100     20,908
Agricultural and Construction Equipment                                                       9,410                8         9,418         229             450        217     12,928
Commercial Vehicles                                                                           8,206             234          8,440          81             304        210      9,108
Ferrari and Maserati                                                                          1,250               11         1,261          32             85         193        965
Components                                                                                    2,087           1,119          3,206          32             173        148      2,418
Production Systems                                                                            1,756             537          2,293            2            56           18     4,125
Metallurgical Products                                                                         735              109           844           12             49           56       739
Aviation (**)                                                                                  625                 –          625           53             41           33          –
Insurance (***)                                                                               1,654                –         1,654          44             16            –          –
Services                                                                                      1,019             797          1,816          45             30            7     1,892
Publishing and communications                                                                  372                11          383           10              7            3       251
Other companies and eliminations (****)                                                        318           (2,997)        (2,679)        (71)            96           26     9,377
Group total                                                                                47,271                  –        47,271        (510)        2,269        2,011     62,711
2002
Automobiles                                                                                21,908               239         22,147      (1,343)            959      1,116      30,026
Agricultural and Construction Equipment                                                    10,502                 11        10,513         163             541        431      14,434
Commercial Vehicles                                                                           8,816             320          9,136         102             424        587      10,846
Ferrari and Maserati                                                                          1,194               14         1,208          70              77        176        897
Components                                                                                    2,085           1,203          3,288          (16)           190        148       2,752
Production Systems                                                                            1,763             557          2,320        (101)             64          20      4,763
Metallurgical Products                                                                        1,411             128          1,539          27              93          78       857
Aviation (**)                                                                                 1,532                2         1,534         210              69        130       3,206
Insurance (***)                                                                               4,834               82         4,916         147              47          14     19,041
Services                                                                                      1,005             960          1,965          67              42          14      3,306
Publishing and communications                                                                  346                14          360             3              8           3       227
Other companies and eliminations (****)                                                        253            (3,530)       (3,277)         (91)           100          54      2,166
Group total                                                                                55,649                  –        55,649        (762)        2,614        2,771      92,521
2001
Automobiles                                                                                24,177               263         24,440        (549)        1,150        1,331      33,488
Agricultural and Construction Equipment                                                    10,762                 15        10,777         209             553        615      18,228
Commercial Vehicles                                                                           8,120             530          8,650         271             410        718      10,005
Ferrari and Maserati                                                                          1,040               18         1,058          62              76        125        844
Components                                                                                    2,438           1,635          4,073          (74)           207        240       3,551
Production Systems                                                                            1,510             708          2,218          60              63          38      5,537
Metallurgical Products                                                                        1,429             323          1,752          15             109        151       1,936
Aviation (**)                                                                                 1,632                4         1,636         186              88          41      3,071
Insurance (***)                                                                               5,369               92         5,461          68              47          29     18,326
Services                                                                                       762            1,043          1,805          73              70          32      3,253
Publishing and communications                                                                  334                13          347            (2)             7           6       234
Other companies and eliminations (****)                                                        433            (4,644)       (4,211)          (1)           100        112       2,276
Group total                                                                                58,006                  –        58,006         318         2,880        3,438     100,749
(*)    Intersegment net sales and revenues include revenues between Group companies consolidated line-by-line and reporting to different Sectors. Intersegment sales are accounted for
       at transfer prices that are substantially in line with market conditions.
(**)   The Aviation Sector’s data is included up to the date of sale (July 1, 2003).
(***) The Insurance Sector’s data is included up to the date of sale (May 2, 2003).
(****) The operating income (loss) of “Other Companies” amounts to -137 million euros in 2003, -105 million euros in 2002 and -95 million euros in 2001.
                                  116                   Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                     Notes to the Consolidated Financial Statements




Research and development expenses
Each year significant expenditures are borne by the Group for research and development programs that generally cover a period
of several years and which are charged to income in the year incurred.
In 2003 and 2002 direct research and development expenses were 1,747 million euros and 1,748 million euros, respectively. For the
most important projects, the Group has applied for financing to the Italian government and the European Community under related
legislation.
At the end of 2003, there were multiyear research and innovation projects that are being examined or for which incentives are being
paid, by the above authorities, which show estimated expenditures in the relative applications amounting to approximately 898
million euros (an amount which also comprises projects on which the balance of the incentives was received in the same year). The
Group filed/received low-rate loans for 142 million euros and grants for 394 million euros in respect of these projects which could also
give rise to receipts for incentives in future years. The amounts received during 2003, referring to the aforementioned expenditures,
totaled 27 million euros in low-rate loans and 54 million euros in grants, for a cumulative total at December 31, 2003 of 45 million
euros in low-rate loans and 132 million euros in grants.
The average interest rate on financing received for research and innovation at December 31, 2003 was 2,27% (2,49% for outstanding
financing at December 31, 2002).


Maintenance costs
Maintenance costs charged to income in 2003 and 2002 amounted to 435 million euros and 556 million euros, respectively.


Advertising costs
Advertising costs charged to income in 2003 and 2002 amounted to 921 million euros and 1,106 million euros, respectively.




22 Statement of cash flows
Beginning last year the Statement of cash flows is included, and commented on, in the Report on Operations – Analysis of
the Financial Position and Operating Results of the Fiat Group and Fiat S.p.A.
A reconciliation between cash and the Group net financial position is also reported in the Report on Operations – Analysis of
the Financial Position and Operating Results of the Fiat Group and Fiat S.p.A.




23 Translation of foreign financial statements
The principal exchange rates used in 2003 and 2002 to translate the foreign currency financial statements into euros were:

                                                                                                    Average           At      Average           At
                                                                                                       2003   12/31/2003         2002   12/31/2002

U.S. dollar                                                                                          1.131       1.263         0.944       1.049
British sterling                                                                                     0.692       0.705         0.628       0.651
Swiss franc                                                                                          1.521       1.558         1.467       1.452
Polish zloty                                                                                         4.398       4.717         3.854       4.020
Brazilian real                                                                                       3.474       3.649         2.765       3.705
Argentine peso                                                                                       3.335       3.713         2.957       3.534
                                  117                   Fiat Group   Consolidated Financial Statements at December 31, 2003
                                                                     Notes to the Consolidated Financial Statements




24 Emoluments to directors and statutory auditors
                                                                                                         2003                                   2002

(in thousands of euros)                                                   Fiat S.p.A.   Subsidiaries     Total   Fiat S.p.A.   Subsidiaries     Total

Directors                                                                    4,764          6,904      11,668      29,483               87    29,570
Statutory auditors                                                             147             125       272           145            268       413
Total Emoluments                                                             4,911          7,029      11,940      29,628             355     29,983


These refer to emoluments to which the Directors and Statutory Auditors of Fiat S.p.A. are entitled for carrying out these functions
also in other companies included in the scope of consolidation. In 2002 the emoluments to the Directors of Fiat S.p.A. included
20,053 thousand euros as a severance indemnity to Mr. Cantarella, who stepped down from the post of Chief Executive Officer on
June 10, 2002, of which 9,296 thousand euros will be paid in 20 years.


The list of companies included in the consolidated financial statements
(Article 38 and 39 of Legislative Decree 127/91) is attached.




Turin, March 26, 2004




The Board of Directors
By:




Umberto Agnelli
Chairman
119




Annex to the Notes to the Consolidated Financial Statements
                                                        120                       Fiat Group       Annex to the Notes to the Consolidated Financial Statements




                                                        The Companies of the Fiat Group


As required by Consob Resolution No. 11971 of May 14, 1999                                         stated in the original currency. The percentage of Group
as amended (Articles 81 and 126 of the Regulations), a complete                                    consolidation and the percentage held by Fiat S.p.A. or
list of the companies and significant equity investments of the                                    its subsidiaries are also shown.
Group is provided below.
The companies on this list have been classified according to                                       A separate column shows the percentage held
percentage of ownership, method of consolidation and type                                          of the voting rights at the ordinary stockholders’ meeting,
of business. The information provided for each company                                             when this figure differs from the percentage interest held
includes: name, registered office, country and capital stock                                       in the company.



                                                                                                                           % of
                                                                                                                         Group                                                   % of
                                                                                                                        consoli- Interest                        % interest   voting
Name                                            Registered office   Country                    Capital stock Currency    dation held by                               held     rights

Controlling company
❚ Parent company
Fiat S.p.A.                                     Turin               Italy                4,918,113,540       EUR             –   –                                       –         –


Subsidiaries consolidated on a line-by-line basis
❚ Automobiles
Fiat Auto Holdings B.V.                         Amsterdam           Netherlands              1,000,000       EUR        90.00    Fiat Partecipazioni S.p.A.       90.000
Banco Fidis de Investimento SA                  São Paulo           Brazil                 116,235,465       BRL        89.97    Fiat Auto S.p.A.                 94.968
                                                                                                                                 Fiat Automoveis S.A. - FIASA      5.000
B.D.C. S.A.                                     Brussels            Belgium                     1,289,294    EUR        90.00    Fiat Auto (Belgio) S.A.          99.998
                                                                                                                                 Fiat Auto (Suisse) S.A.           0.002
FAL Fleet Services S.A.S.                       Trappes             France                   3,000,000       EUR        90.00    Fidis Renting Italia S.p.A.     100.000
Fiat Auto Argentina S.A.                        Buenos Aires        Argentina              463,938,188       ARS        90.00    Fiat Auto S.p.A.                 63.336
                                                                                                                                 Fiat Automoveis S.A. - FIASA     36.664
Fiat Auto (Belgio) S.A.                         Brussels            Belgium                     7,585,220    EUR        90.00    Fiat Finance Netherlands B.V.    99.990
                                                                                                                                 Fiat Auto (Suisse) S.A.           0.010
Fiat Auto Contracts Ltd                         Slough Berkshire United Kingdom                13,500,000    GBP        90.00    Fidis Renting Italia S.p.A.     100.000
Fiat Auto Dealer Financing SA                   Brussels          Belgium                          62,000    EUR        89.86    Fiat Auto (Belgio) S.A.          99.839
Fiat Auto Espana S.A.                           Alcalá De Henares Spain                        57,696,960    EUR        90.00    Fiat Finance Netherlands B.V.    99.998
                                                                                                                                 Fiat Auto (Suisse) S.A.           0.002
Fiat Auto Financial Services Limited            Slough Berkshire    United Kingdom           2,250,000       GBP        90.00    Fiat Auto (U.K.) Ltd            100.000
Fiat Auto Financial Services (Wholesale) Ltd.   Slough Berkshire    United Kingdom                   1       GBP        90.00    Fiat Auto (U.K.) Ltd            100.000
Fiat Auto (France) S.A.                         Trappes             France                  91,050,000       EUR        90.00    Fiat Finance Netherlands B.V.    99.999
Fiat Auto Hellas S.A.                           Argyroupoli         Greece                  33,533,499       EUR        90.00    Fiat Finance Netherlands B.V.   100.000
Fiat Auto (Ireland) Ltd.                        Dublin              Ireland                  5,078,952       EUR        90.00    Fiat Finance Netherlands B.V.   100.000
Fiat Auto Japan K.K.                            Minatu-Ku. Tokyo    Japan                  420,000,000       JPY        90.00    Fiat Auto S.p.A.                100.000
Fiat Auto Kreditbank GmbH                       Vienna              Austria                  5,000,000       EUR        90.00    Fiat Auto S.p.A.                 50.000
                                                                                                                                 Fidis S.p.A.                     50.000
Fiat Auto Lease N.V.                            Utrecht             Netherlands                454,000       EUR        90.00    Fidis Renting Italia S.p.A.     100.000
Fiat Auto Maroc S.A.                            Casablanca          Morocco                314,000,000       MAD        89.96    Fiat Auto S.p.A.                 99.950
Fiat Auto Nederland B.V.                        Lijnden             Netherlands              5,672,250       EUR        90.00    Fiat Finance Netherlands B.V.   100.000
Fiat Auto Poland S.A.                           Bielsko-Biala       Poland                 660,334,600       PLN        77.98    Fiat Auto S.p.A.                 86.644
Fiat Auto Portuguesa S.A.                       Alges               Portugal                 8,000,000       EUR        90.00    Fiat Finance Netherlands B.V.   100.000
Fiat Auto South Africa (Proprietary) Ltd        Sandton             South Africa                   440       ZAR        90.00    Fiat Auto S.p.A.                100.000
Fiat Auto S.p.A.                                Turin               Italy                2,500,000,000       EUR        90.00    Fiat Auto Holdings B.V.         100.000
Fiat Auto (Suisse) S.A.                         Geneva              Switzerland             21,400,000       CHF        90.00    Fiat Auto S.p.A.                100.000
Fiat Auto (U.K.) Ltd                            Slough Berkshire    United Kingdom          44,600,000       GBP        90.00    Fiat Finance Netherlands B.V.   100.000
Fiat Auto Var S.r.l. a S.U.                     Turin               Italy                   10,200,000       EUR        90.00    Fiat Auto S.p.A.                100.000
Fiat Automobil AG                               Heilbronn           Germany                 97,280,000       EUR        90.00    Fiat Finance Netherlands B.V.    99.000
                                                                                                                                 Fiat Auto (Suisse) S.A.           1.000
Fiat Automobil GmbH                             Vienna              Austria                        37,000    EUR        90.00    Fiat Finance Netherlands B.V.   100.000
Fiat Automobil Vertriebs GmbH                   Frankfurt           Germany                     8,700,000    EUR        90.00    Fiat Automobil AG               100.000
                                                121                       Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                           The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                   % of
                                                                                                                 Group                                                            % of
                                                                                                                consoli- Interest                                 % interest   voting
Name                                    Registered office   Country                    Capital stock Currency    dation held by                                        held     rights
Fiat Automobiler Danmark A/S            Glostrup            Denmark                 55,000,000       DKK        90.00    Fiat Finance Netherlands B.V.            100.000
Fiat Automoveis S.A. - FIASA            Betim               Brazil               1,432,341,332       BRL        90.00    Fiat Auto S.p.A.                         100.000
Fiat Center Italia S.p.A.               Turin               Italy                    2,000,000       EUR        90.00    Fiat Auto S.p.A.                         100.000
Fiat Center (Suisse) S.A.               Geneva              Switzerland             13,000,000       CHF        90.00    Fiat Auto (Suisse) S.A.                  100.000
Fiat CR Spol. S.R.O.                    Prague              Czech Republic           1,000,000       CZK        90.00    Fiat Auto S.p.A.                         100.000
Fiat Credit Belgio S.A.                 Evere               Belgium                  3,718,403       EUR        90.00    Fiat Auto (Belgio) S.A.                   99.999
Fiat Credito Compania Financiera S.A.   Buenos Aires        Argentina              264,595,928       ARS        90.00    Fidis S.p.A.                              99.999
                                                                                                                         Fiat Auto Argentina S.A.                   0.001
Fiat Distribuidora Portugal S.A.        Lisbon              Portugal                      450,300    EUR        90.00    Fiat Auto Portuguesa S.A.                100.000
Fiat Finance Holding S.A.               Luxembourg          Luxembourg                  2,300,000    EUR        90.00    Fiat Finance Netherlands B.V.             99.995
                                                                                                                         Fidis S.p.A.                               0.005
Fiat Finance Netherlands B.V.           Amsterdam           Netherlands            690,000,000       EUR        90.00    Fiat Auto Holdings B.V.                   50.252
                                                                                                                         Fidis S.p.A.                              49.748
Fiat Handlerservice GmbH               Heilbronn            Germany                  5,100,000       EUR        90.00    Fiat Automobil AG                        100.000
Fiat India Automobiles Private Limited Mumbai               India               18,780,741,500       INR        90.00    Fiat Auto S.p.A.                         100.000
Fiat India Private Ltd.                Mumbai               India               14,917,862,500       INR        88.07    Fiat India Automobiles Private Limited    89.377 88.415
                                                                                                                         Fiat Auto S.p.A.                           8.478 9.245
Fiat Magyarorszag Kereskedelmi KFT.     Budapest            Hungary                150,000,000       HUF        90.00    Fiat Auto S.p.A.                         100.000
Fiat Motor Sales Ltd                    Slough Berkshire    United Kingdom           1,500,000       GBP        90.00    Fiat Auto (U.K.) Ltd                     100.000
Fiat SR Spol. SR.O.                     Bratislava          Slovack Republic         1,000,000       SKK        90.00    Fiat Auto S.p.A.                         100.000
Fiat Versicherungsdienst GmbH           Heilbronn           Germany                     26,000       EUR        94.90    Fiat Automobil AG                         51.000
                                                                                                                         Rimaco S.A.                               49.000
Fidis Credit Danmark A/S                Glostrup            Denmark                    500,000       DKK        90.00    Fiat Finance Netherlands B.V.            100.000
Fidis Dealer Services B.V.              Utrecht             Netherlands                698,000       EUR        90.00    Fiat Auto Nederland B.V.                 100.000
Fidis Faktoring Polska Sp. z o.o.       Warsaw              Poland                   1,000,000       PLN        90.00    Fiat Finance Netherlands B.V.            100.000
Fidis Finance Polska Sp. z o.o.         Warsaw              Poland                  10,000,000       PLN        90.00    Fiat Finance Netherlands B.V.            100.000
Fidis Hungary KFT                       Budapest            Hungary                     13,000       EUR        90.00    Fidis S.p.A.                             100.000
Fidis Renting Italia S.p.A.             Turin               Italy                   70,300,000       EUR        90.00    Fiat Auto S.p.A.                         100.000
Fidis S.p.A.                            Turin               Italy                  311,232,342       EUR        90.00    Fiat Auto S.p.A.                          99.900
                                                                                                                         Nuove Iniziative Finanziarie 2 S.r.l.      0.100
Finplus Renting S.A.                    Madrid            Spain                           455,991    EUR        90.00    Fidis Renting Italia S.p.A.              100.000
Inmap 2000 Espana S.L.                  Alcalá De Henares Spain                        12,020,000    EUR        90.00    Fiat Auto Espana S.A.                    100.000
International Metropolitan
Automotive Promotion (France) S.A.      Paris               France                         56,000    EUR        90.00    Fiat Auto (France) S.A.                  100.000
Italian Automotive Center S.A.          Brussels            Belgium                    16,902,175    EUR        90.00    B.D.C. S.A.                              100.000
Sata-Società Automobilistica
Tecnologie Avanzate S.p.A.              Melfi               Italy                  276,640,000       EUR        90.00    Fiat Auto S.p.A.                         100.000
Savarent Società per Azioni             Turin               Italy                   21,000,000       EUR        90.00    Fidis Renting Italia S.p.A.              100.000
Sofice-Société de Financement
des Concessionaires s.a.s.              Trappes             France                      3,353,600    EUR        90.00    Fiat Auto (France) S.A.                  100.000
Tarfin S.A.                             Geneva              Switzerland                   500,000    CHF        90.00    Fiat Finance Netherlands B.V.            100.000
Targa Assistance S.r.l.                 Turin               Italy                         260,000    EUR        90.00    Fidis S.p.A.                             100.000
Targa Automotive S.p.A.                 Turin               Italy                       5,000,000    EUR        90.00    Fidis S.p.A.                             100.000
Targa Infomobility S.p.A.               Turin               Italy                         100,000    EUR        90.00    Fidis S.p.A.                             100.000
Targa Rent S.r.l.                       Turin               Italy                         310,000    EUR        90.00    Fidis S.p.A.                             100.000
Targasys Espana S.L.                    Alcalá De Henares   Spain                           5,000    EUR        90.00    Fiat Auto Espana S.A.                    100.000
Targasys Stock E.F.C. S.A.              Alcalá De Henares   Spain                       5,108,799    EUR        90.00    Fiat Auto Espana S.A.                    100.000

❚ Agricultural and Construction Equipment
CNH Global N.V.                  Amsterdam                  Netherlands            317,055,857       EUR        85.13    Fiat Netherlands Holding N.V.             85.063 84.238
                                                                                                                         CNH Global N.V.                            0.083 0.000
Austoft Industries Limited              Bundaberg           Australia               16,353,225       AUD        85.13    CNH Australia Pty Limited                100.000
Banco CNH Capital S.A.                  Curitiba            Brazil                 137,582,600       BRL        85.13    CNH Global N.V.                           85.660
                                                                                                                         CNH Latino Americana Ltda                 14.340
                                                     122                      Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                               The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                       % of
                                                                                                                     Group                                                            % of
                                                                                                                    consoli- Interest                                % interest    voting
Name                                          Registered office   Country                  Capital stock Currency    dation held by                                       held      rights
Bli Group Inc.                                Wilmington          U.S.A.                     1,000       USD        85.13    New Holland North America Inc. 100.000
Blue Leaf I.P. Inc.                           Wilmington          U.S.A.                     1,000       USD        85.13    Bli Group Inc.                              100.000
Case Brasil & CIA. LTDA.                      Sorocaba            Brazil               301,480,657       BRL        85.13    Case Brazil Holdings Inc.                    87.510
                                                                                                                             Case Equipment International Corporation 12.490
Case Brazil Holdings Inc.                     Wilmington          U.S.A.                     1,000       USD        85.13    Case LLC                                    100.000
Case Canada Receivables Inc.                  Calgary             Canada                         1       CAD        85.13    Case Credit Corporation                     100.000
Case Credit Australia Investments Pty. Ltd.   St. Marys           Australia            187,360,048       AUD        85.13    CNH Australia Pty Limited                   100.000
Case Credit Corporation                       Wilmington          U.S.A.                     1,000       USD        85.13    CNH Capital Corporation                     100.000
Case Credit Holdings Limited                  Wilmington          U.S.A.                         5       USD        85.13    Case Credit Corporation                     100.000
Case Credit Ltd.                              Calgary             Canada                         1       CAD        85.13    Case Credit Corporation                      99.500
                                                                                                                             CNH Canada Ltd.                               0.500
Case Equipment Holdings Limited               Wilmington          U.S.A.                            5    USD        85.13    Case LLC                                    100.000
Case Equipment International Corporation      Wilmington          U.S.A.                        1,000    USD        85.13    Case LLC                                    100.000
Case Europe S.a.r.l.                          Roissy              France                        7,622    EUR        85.13    Case LLC                                    100.000
Case Harvesting Systems GmbH                  Neustadt            Germany                     281,211    EUR        85.13    Case LLC                                    100.000
Case India Limited                            Wilmington          U.S.A.                            5    USD        85.13    Case LLC                                    100.000
Case International Limited                    Basildon            United Kingdom           61,504,001    GBP        85.13    New Holland Holding Limited                 100.000
Case International Marketing Inc.             Wilmington          U.S.A.                            5    USD        85.13    Case LLC                                    100.000
Case LBX Holdings Inc.                        Wilmington          U.S.A.                            5    USD        85.13    Case LLC                                    100.000
Case LLC                                      Wilmington          U.S.A.                            4    USD        85.13    Fiatallis North America Inc.                 61.111
                                                                                                                             Case New Holland Inc.                        38.889
Case Machinery (Shanghai) Co. Ltd.            Shanghai            People’s Rep.of China 2,250,000        USD        85.13    Case LLC                                    100.000
Case Mexico S.A.                              Mexico              Mexico                   810,000       MXN        85.13    Case LLC                                    100.000
Case New Holland Inc.                         Wilmington          U.S.A.                         5       USD        85.13    CNH Global N.V.                             100.000
Case New Holland Italia s.p.a.                Modena              Italy                 15,600,000       EUR        85.13    CNH International S.A.                      100.000
Case United Kingdom Limited                   Basildon            United Kingdom         3,763,618       GBP        85.13    Case LLC                                    100.000
Case Wholesale Receivables Inc.               Wilmington          U.S.A.                     1,000       USD        85.13    Case LLC                                    100.000
CNH Argentina S.A.                            Buenos Aires        Argentina             29,611,105       ARS        85.13    New Holland Holdings Argentina S.A. 80.654
                                                                                                                             Case LLC                                     19.346
CNH Australia Pty Limited                     St. Marys           Australia            306,785,439       AUD        85.13    CNH Global N.V.                             100.000
CNH Belgium N.V.                              Zedelgem            Belgium               27,268,300       EUR        85.13    CNH International S.A.                      100.000
CNH Canada Ltd.                               Toronto             Canada                28,000,100       CAD        85.13    CNH Global N.V.                              66.524
                                                                                                                             Case LLC                                     33.476
CNH Capital Australia Pty. Ltd.               St. Marys           Australia                26,819,518    AUD        85.13    Case Credit Australia Investments Pty. Ltd. 100.000
CNH Capital Benelux S.A.                      Zedelgem            Belgium                      54,458    EUR        85.13    CNH Global N.V.                              99.000
                                                                                                                             CNH Capital U.K. Ltd                          1.000
CNH Capital Corporation                       Wilmington          U.S.A.                            5    USD        85.13    Case LLC                                    100.000
CNH Capital (Europe) plc                      Dublin              Ireland                      38,100    EUR        85.13    CNH Capital plc                              99.984
                                                                                                                             CNH Financial Services A/S                    0.003
                                                                                                                             CNH Financial Services S.r.l.                 0.003
                                                                                                                             CNH Global N.V.                               0.003
                                                                                                                             CNH International S.A.                        0.003
                                                                                                                             New Holland Financial Services Ltd 0.003
                                                                                                                             CNH Trade N.V.                                0.001
CNH Capital Insurance Agency Inc.             Wilmington          U.S.A.                            5    USD        85.13    Case Credit Corporation                     100.000
CNH Capital plc                               Dublin              Ireland                   6,386,790    EUR        85.13    CNH Global N.V.                             100.000
CNH Capital Receivables Inc.                  Wilmington          U.S.A.                            5    USD        85.13    Case Credit Corporation                     100.000
CNH Capital U.K. Ltd                          Basildon            United Kingdom           10,000,001    GBP        85.13    CNH Global N.V.                             100.000
CNH Danmark A/S                               Hvidovre            Denmark                  12,000,000    DKK        85.13    CNH International S.A.                      100.000
CNH Deutschland GmbH                          Heilbronn           Germany                  18,457,650    EUR        85.13    CNH International S.A.                      100.000
CNH Engine Corporation                        Wilmington          U.S.A.                        1,000    USD        85.13    Case LLC                                    100.000
CNH Financial Services A/S                    Hvidovre            Denmark                     500,000    DKK        85.13    CNH Global N.V.                             100.000
                                                          123                         Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                       The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                               % of
                                                                                                                             Group                                                           % of
                                                                                                                            consoli- Interest                                % interest   voting
Name                                               Registered office    Country                    Capital stock Currency    dation held by                                       held     rights
CNH Financial Services GmbH                        Heilbronn            Germany                     200,000      EUR        85.13    CNH International S.A.                   100.000
CNH Financial Services S.A.                        Puteaux              France                       38,125      EUR        85.13    CNH Global N.V.                          100.000
CNH Financial Services S.r.l.                      Modena               Italy                        10,400      EUR        85.13    CNH Global N.V.                          100.000
CNH France S.A.                                    Villepinte           France                  138,813,150      EUR        85.13    CNH International S.A.                   100.000
CNH Information Technology Company LLC             Wilmington           U.S.A.                            0      USD        85.13    Case LLC                                 100.000
CNH International S.A.                             Luxembourg           Luxembourg              300,000,000      USD        85.13    CNH Global N.V.                          100.000
CNH Latino Americana Ltda                          Curitiba             Brazil                  215,131,804      BRL        85.13    CNH Global N.V.                           55.345
                                                                                                                                     Case Brasil & CIA. LTDA.                  44.655
CNH Maquinaria Spain S.A.                          Coslada              Spain                      21,000,000    EUR        85.13    CNH International S.A.                    77.142
                                                                                                                                     Case LLC                                  22.857
CNH Movimento Terra S.p.A.                         Turin                Italy                    12,320,000      EUR        85.13    Case New Holland Italia s.p.a.           100.000
CNH Osterreich GmbH                                St. Valentin         Austria                   2,000,000      EUR        85.13    CNH Global N.V.                          100.000
CNH Polska Sp. z o.o.                              Plock                Poland                  162,591,660      PLN        85.13    CNH Belgium N.V.                         100.000
CNH Portugal-Comercio de Tractores
e Maquinas Agricolas Ltda                          Carnaxide            Portugal                      498,798    EUR        85.13    CNH International S.A.                    99.980
                                                                                                                                     Case New Holland Italia s.p.a.             0.020
CNH Receivables Inc.                               Wilmington           U.S.A.                           1,000   USD        85.13    Case Credit Corporation                  100.000
CNH Serviços Técnicos e
Desenvolvimento de Negocios Ltda                   Curitiba             Brazil                      1,000,000    BRL        85.13    Banco CNH Capital S.A.                     100.000
CNH Trade N.V.                                     Amsterdam            Netherlands                    50,000    EUR        85.13    CNH Global N.V.                            100.000
CNH U.K. Limited                                   Basildon             United Kingdom             91,262,275    GBP        85.13    New Holland Holding Limited                100.000
CNH Wholesale Receivables Inc.                     Wilmington           U.S.A.                          1,000    USD        85.13    Case Credit Corporation                    100.000
Fiat Kobelco Construction Machinery S.p.A.         San Mauro Torinese   Italy                      80,025,291    EUR        63.53    Case New Holland Italia s.p.a.              59.625
                                                                                                                                     CNH Global N.V.                             15.000
Fiatallis North America Inc.                       Wilmington           U.S.A.                             10    USD        85.13    Case New Holland Inc.                      100.000
Fiat-Kobelco Construction Machinery Belgium SA     Herstal-lez-Liege    Belgium                       247,900    EUR        63.53    Fiat Kobelco Construction Machinery S.p.A. 100.000
Flexi-Coil (U.K.) Limited                          York                 United Kingdom                  1,000    GBP        85.13    CNH Canada Ltd.                            100.000
Harbin New Holland Tractors Co., Ltd.              Harbin               People’s Rep.of China       2,859,091    USD        85.13    New Holland Mauritius (Private) Ltd.        99.000
                                                                                                                                     CNH International S.A.                       1.000
HFI Holdings Inc.                                  Wilmington           U.S.A.                          1,000    USD        85.13    Case LLC                                   100.000
JV Uzcaseagroleasing LLC                           Tashkent             Uzbekistan                          0    USD        43.42    Case Credit Holdings Limited                51.000
JV UzCaseMash LLC                                  Tashkent             Uzbekistan                          0    USD        51.08    Case Equipment Holdings Limited 60.000
JV UzCaseService LLC                               Tashkent             Uzbekistan                          0    USD        43.42    Case Equipment Holdings Limited 51.000
JV UzCaseTractor LLC                               Tashkent             Uzbekistan                          0    USD        43.42    Case Equipment Holdings Limited 51.000
Kobelco Construction Machinery America LLC         Wilmington           U.S.A.                              0    USD        55.34    New Holland Excavator Holdings LLC 65.000
Kobelco Construction Machinery Europe BV           Almere               Netherlands                   567,225    EUR        63.53    Fiat Kobelco Construction Machinery S.p.A. 100.000
MBA AG, Baumaschinen                               Bassersdorf          Switzerland                 4,000,000    CHF        85.13    CNH Global N.V.                            100.000
Multi Rental Locaçao de Maquinas Ltda.             Sorocaba             Brazil                      1,000,000    BRL        85.13    CNH Latino Americana Ltda                  100.000
New Holland Australia Pty. Limited                 Riverstone           Australia                   3,500,000    AUD        85.13    CNH Australia Pty Limited                  100.000
New Holland (Canada) Credit Company                Calgary              Canada                          1,000    CAD        85.13    CNH Canada Ltd.                             99.000
                                                                                                                                     Case Credit Ltd.                             1.000
New Holland (Canada) Credit Holding Ltd. in liq.   Toronto              Canada                            1      CAD        85.13    CNH Canada Ltd.                            100.000
New Holland Canada Ltd.                            Saskatoon            Canada                       10,403      CAD        85.13    CNH Canada Ltd.                            100.000
New Holland Credit Australia Pty Limited           Riverstone           Australia                11,507,150      AUD        85.13    CNH Capital Australia Pty. Ltd.            100.000
New Holland Credit Company LLC                     Wilmington           U.S.A.                            0      USD        85.13    Fiatallis North America Inc.               100.000
New Holland Excavator Holdings LLC                 Wilmington           U.S.A.                            0      USD        85.13    Case LLC                                   100.000
New Holland Financial Services Ltd                 Basildon             United Kingdom               50,000      GBP        85.13    CNH Global N.V.                            100.000
New Holland Holding Limited                        London               United Kingdom          165,000,000      GBP        85.13    CNH International S.A.                     100.000
New Holland Holdings Argentina S.A.                Buenos Aires         Argentina                23,555,415      ARS        85.13    CNH Global N.V.                            100.000
New Holland Ltd                                    Basildon             United Kingdom            1,000,000      GBP        85.13    CNH Global N.V.                            100.000
New Holland Mauritius (Private) Ltd.               Port Louis           Mauritius                78,571,333      USD        85.13    Case New Holland Italia s.p.a.             100.000
New Holland North America Inc.                     Wilmington           U.S.A.                           60      USD        85.13    Fiatallis North America Inc.               100.000
New Holland Receivables Corporation                Wilmington           U.S.A.                           10      USD        85.13    Fiatallis North America Inc.               100.000
                                                124                          Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                              The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                      % of
                                                                                                                    Group                                                                  % of
                                                                                                                   consoli- Interest                                       % interest   voting
Name                                     Registered office     Country                    Capital stock Currency    dation held by                                              held     rights
New Holland Retail Receivables Corporation I Las Vegas         U.S.A.                       1,000       USD         85.13   New Holland Credit Company LLC                 100.000
New Holland Retail Receivables Corporation II Las Vegas        U.S.A.                       1,000       USD         85.13   New Holland Retail Receivables Corporation I   100.000
New Holland Tractor Ltd. N.V.                 Antwerp          Belgium                  9,631,500       EUR         85.13   New Holland Holding Limited                    100.000
New Holland Tractors (India) Private Ltd New Delhi             India              210,920,725,750       INR         85.13   New Holland Mauritius (Private) Ltd.           100.000
O & K - Hilfe GmbH                            Berlin           Germany                     25,565       EUR         85.13   O & K Orenstein & Koppel GmbH                  100.000
O & K Orenstein & Koppel GmbH                 Berlin           Germany                 61,355,030       EUR         85.13   CNH International S.A.                         100.000
Olaf Poulsen A/S                              Ishoj            Denmark                  6,000,000       DKK         85.13   CNH Danmark A/S                                100.000
Pryor Foundry Inc.                            Oklahoma City    U.S.A.                       1,000       USD         85.13   Case LLC                                       100.000
Receivables Credit Corporation Calgary                         Canada                           1       CAD         85.13   Case Credit Corporation                        100.000
Receivables Credit II Corporation Calgary                      Canada                           1       CAD         85.13   Case Credit Corporation                        100.000
Receivables Credit III Corporation Calgary                     Canada                           1       CAD         85.13   Case Credit Corporation                        100.000
RosCaseMash                                   Saratov          Russia                     200,000       RUR         32.56   Case Equipment Holdings Limited                 38.250 51.000
Servicios Case Mexicana S.A. de C.V. Mexico                    Mexico                     375,000       MXN         85.13   Case LLC                                       100.000
Shanghai New Holland Agricultural
Machinery Corporation Limited                 Shanghai         People’s Rep.of China 35,000,000         USD         51.08   New Holland Mauritius (Private) Ltd. 60.000

❚ Commercial Vehicles
Iveco S.p.A.                              Turin                Italy                  858,400,000       EUR        100.00   Fiat Netherlands Holding N.V.         100.000
Amce-Automotive Manufacturing Co.Ethiopia Addis Ababa          Ethiopia                 3,000,000       ETB         70.00   Iveco S.p.A.                           70.000
Astra Veicoli Industriali S.p.A.          Piacenza             Italy                   10,400,000       EUR        100.00   Iveco S.p.A.                          100.000
Brandschutztechnik Gorlitz GmbH Gürlitz                        Germany                    511,292       EUR         88.00   Iveco Magirus Brandschutztechnik GmbH 88.000
C.A.M.I.V.A. Constructeurs Associés
de Materiels S.A.                         Saint-Alban-Leysse   France                      1,870,169    EUR         99.96   Iveco Eurofire (Holding) GmbH                   99.963
Componentes Mecanicos S.A.                Barcelona            Spain                      37,405,038    EUR         59.39   Iveco Pegaso S.L.                               59.387
Effe Grundbesitz GmbH                     Ulm                  Germany                    10,225,838    EUR        100.00   Iveco Investitions GmbH                         90.000
                                                                                                                            Iveco S.p.A.                                    10.000
Euromoteurs S.A.                  Garchizy                     France                        915,000    EUR        100.00   Iveco France S.A.                              100.000
European Engine Alliance S.c.r.l. Turin                        Italy                      32,044,797    EUR         61.71   CNH Global N.V.                                 33.333
                                                                                                                            Iveco S.p.A.                                    33.333
Heuliez Bus S.A.                         Rorthais              France                      9,000,000    EUR        100.00   Société Charolaise de Participations S.A.      100.000
IAV-Industrie-Anlagen-Verpachtung GmbH   Ulm                   Germany                        25,565    EUR        100.00   Iveco Investitions GmbH                         95.000
                                                                                                                            Iveco S.p.A.                                     5.000
Ikarus Egyedi Autobusz GY               Budapest               Hungary                350,000,000       HUF         68.15   Irisbus Holding S.L.                            68.146
Ikarusbus Jamugyarto RT                 Szekesfehervar         Hungary                974,268,827       HUF        100.00   Irisbus Holding S.L.                           100.000
Industrial Vehicles Center Hainaut S.A. Charleroi              Belgium                    600,000       EUR        100.00   S.A. Iveco Belgium N.V.                         95.000
                                                                                                                            Iveco Nederland B.V.                             5.000
Irisbus Australia Pty. Ltd.              Dandenong             Australia                1,500,000       AUD        100.00   Irisbus Holding S.L.                           100.000
Irisbus Deutschland GmbH                 Mainz-Mombach         Germany                 10,000,000       EUR        100.00   Irisbus Holding S.L.                           100.000
Irisbus France S.A.                      Vénissieux            France                 142,482,000       EUR        100.00   Irisbus Holding S.L.                           100.000
Irisbus Holding S.L.                     Madrid                Spain                  233,670,000       EUR        100.00   Iveco S.p.A.                                    99.999
                                                                                                                            Iveco Pegaso S.L.                                0.001
Irisbus Iberica S.L.                     Madrid                Spain                   28,930,788       EUR        100.00   Irisbus Holding S.L.                           100.000
Irisbus Italia S.p.A.                    Turin                 Italy                  100,635,750       EUR        100.00   Irisbus Holding S.L.                           100.000
Irisbus (U.K.) Ltd                       Watford               United Kingdom             200,000       GBP        100.00   Irisbus Holding S.L.                           100.000
IVC Brabant N.V. S.A.                    Groot                 Belgium                    800,000       EUR        100.00   S.A. Iveco Belgium N.V.                         75.000
                                                                                                                            Iveco Nederland B.V.                            25.000
IVC Nutzfahrzeuge AG                     Hendschiken           Switzerland                 3,500,000    CHF        100.00   Iveco (Schweiz) AG                             100.000
IVC Vehicules Industriels S.A.           Morges                Switzerland                 1,200,000    CHF        100.00   Iveco (Schweiz) AG                             100.000
IVC-Salzburg Nutzfahrzeughandel GmbH     Eugendorf             Austria                        37,000    EUR        100.00   Iveco Austria GmbH                             100.000
IVC-Wien Nutzfahrzeughandel GmbH         Vienna                Austria                        37,000    EUR        100.00   Iveco Austria GmbH                             100.000
Iveco Argentina S.A.                     Còrdoba               Argentina                  26,700,000    ARS        100.00   Iveco S.p.A.                                   100.000
Iveco Austria GmbH                       Vienna                Austria                     6,178,000    EUR        100.00   Iveco S.p.A.                                   100.000
Iveco Bayern GmbH                        Nuremberg             Germany                       742,000    EUR        100.00   Iveco Magirus AG                               100.000
                                                 125                        Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                             The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                     % of
                                                                                                                   Group                                                      % of
                                                                                                                  consoli- Interest                           % interest   voting
Name                                     Registered office   Country                     Capital stock Currency    dation held by                                  held     rights
Iveco Danmark A/S                        Glostrup            Denmark                        501,000    DKK        100.00   Iveco S.p.A.                       100.000
Iveco Eurofire (Holding) GmbH            Weisweil            Germany                     30,776,857    EUR        100.00   Iveco Magirus AG                     90.032
                                                                                                                           Iveco S.p.A.                          9.968
Iveco Fiat Brasil Ltda                   Sete Lagoas         Brazil                  170,100,000       BRL         95.00   Fiat Automoveis S.A. - FIASA         50.000
                                                                                                                           Iveco S.p.A.                         48.576
                                                                                                                           Iveco Latin America Ltda              1.424
Iveco Finance AG                         Kloten              Switzerland                  1,500,000    CHF        100.00   Iveco (Schweiz) AG                 100.000
Iveco Finance GmbH                       Ulm                 Germany                     40,000,000    EUR        100.00   Iveco Magirus AG                   100.000
Iveco Finance Limited                    Watford             United Kingdom                      100   GBP        100.00   Iveco (UK) Ltd                     100.000
Iveco Finanziaria S.p.A.                 Turin               Italy                       30,000,000    EUR        100.00   Iveco S.p.A.                       100.000
Iveco Finland OY                         Espoo               Finland                        200,000    EUR        100.00   Iveco S.p.A.                       100.000
Iveco France S.A.                        Trappes             France                      93,800,000    EUR        100.00   Iveco S.p.A.                       100.000
Iveco International Trade Finance S.A.   Paradiso            Switzerland                 25,000,000    CHF        100.00   Iveco S.p.A.                       100.000
Iveco Investitions GmbH                  Ulm                 Germany                      2,556,459    EUR        100.00   Iveco Magirus AG                     99.020
                                                                                                                           Iveco S.p.A.                          0.980
Iveco Latin America Ltda                 São Paulo           Brazil                  459,700,000       BRL        100.00   Iveco S.p.A.                       100.000
Iveco Lease GmbH                         Ulm                 Germany                        775,000    EUR        100.00   Iveco Magirus AG                   100.000
Iveco Limited                            Watford             United Kingdom          117,000,000       GBP        100.00   Iveco (UK) Ltd                     100.000
Iveco Lorraine S.a.s.                    Haunconcourt        France                         305,600    EUR        100.00   Iveco France S.A.                  100.000
Iveco Magirus AG                         Ulm                 Germany                 250,000,000       EUR        100.00   Iveco S.p.A.                         53.660
                                                                                                                           Fiat Netherlands Holding N.V.        46.340
Iveco Magirus Brandschutztechnik GmbH Ulm                    Germany                      6,493,407    EUR        100.00   Iveco Eurofire (Holding) GmbH        99.764
                                                                                                                           Iveco S.p.A.                          0.236
Iveco Mezzi Speciali S.p.A.              Brescia             Italy                       13,120,000    EUR        100.00   Iveco Eurofire (Holding) GmbH      100.000
Iveco Motorenforschung AG                Arbon               Switzerland                  4,600,000    CHF        100.00   Iveco S.p.A.                         60.000
                                                                                                                           Iveco France S.A.                    40.000
Iveco Motors of North America Inc.       Wilmington          U.S.A.                                1   USD        100.00   Iveco S.p.A.                       100.000
Iveco Nederland B.V.                     Breda               Netherlands                  4,537,802    EUR        100.00   Iveco S.p.A.                       100.000
Iveco Nord Nutzfahrzeuge GmbH            Hamburg             Germany                        818,500    EUR        100.00   Iveco Magirus AG                   100.000
Iveco Nord-Ost Nutzfahrzeuge GmbH Berlin                     Germany                      2,120,000    EUR        100.00   Iveco Magirus AG                   100.000
Iveco Norge A.S.                         Voyenenga           Norway                      18,600,000    NOK        100.00   Iveco S.p.A.                       100.000
Iveco Nutzfahrzeuge GmbH
Hannover Braunschweig                    Hannover            Germany                        793,000    EUR        100.00   Iveco Magirus AG                   100.000
Iveco Nutzfahrzeuge Nord-West GmbH       Dortmund-Wambel Germany                          1,355,000    EUR        100.00   Iveco Magirus AG                   100.000
Iveco Otomotiv Ticaret A.S.              Nisantasi-Istanbul Turkey              5,474,378,000,000      TRL        100.00   Iveco S.p.A.                         99.995
Iveco Participations S.A.                Trappes             France                      10,896,100    EUR        100.00   Iveco S.p.A.                       100.000
Iveco Pegaso S.L.                        Madrid              Spain                   105,213,628       EUR        100.00   Iveco S.p.A.                       100.000
Iveco Pension Trustee Ltd                Watford             United Kingdom                        2   GBP        100.00   Iveco Limited                        50.000
                                                                                                                           Iveco (UK) Ltd                       50.000
Iveco Plan S.A. de Ahorro
para fines determinados                  Buenos Aires        Argentina                      153,000    ARS        100.00   Iveco Argentina S.A.                 99.600
                                                                                                                           Iveco S.p.A.                          0.400
Iveco Poland Ltd.                        Warsaw              Poland                      46,974,500    PLN        100.00   Iveco S.p.A.                       100.000
Iveco Portugal-Comercio de
Veiculos Industriais S.A.                Vila Franca de Xira Portugal                    15,962,000    EUR        100.00   Iveco S.p.A.                         99.997
                                                                                                                           Astra Veicoli Industriali S.p.A.      0.001
Iveco (Schweiz) AG                       Kloten              Switzerland                  9,000,000    CHF        100.00   Iveco Nederland B.V.               100.000
Iveco South Africa (Pty) Ltd.            Wadewille           South Africa                15,000,750    ZAR        100.00   Iveco S.p.A.                       100.000
Iveco Sud-West Nutzfahrzeuge GmbH Mannheim-Neckarau Germany                               1,533,900    EUR        100.00   Iveco Magirus AG                   100.000
Iveco Sweden A.B.                        Arlov               Sweden                         600,000    SEK        100.00   Iveco S.p.A.                       100.000
Iveco Trucks Australia Limited           Dandenong           Australia                   47,492,260    AUD        100.00   Iveco S.p.A.                       100.000
Iveco (UK) Ltd                           Watford             United Kingdom              47,000,000    GBP        100.00   Iveco S.p.A.                       100.000
                                                   126                            Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                   The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                           % of
                                                                                                                         Group                                                           % of
                                                                                                                        consoli- Interest                                % interest   voting
Name                                        Registered office       Country                    Capital stock Currency    dation held by                                       held     rights
Iveco Ukraine Inc.                          Kiev                    Ukraine                    62,515,200    UAK         99.99   Iveco S.p.A.                             89.489 99.968
                                                                                                                                 Iveco Ukraine Inc.                       10.483 0.000
                                                                                                                                 Iveco-Motor Sich. Inc.                    0.028 0.032
Iveco Venezuela C.A.                        La Victoria             Venezuela            2,495,691,000       VEB        100.00   Iveco S.p.A.                            100.000
Iveco West Nutzfahrzeuge GmbH               Düsseldorf              Germany                  1,662,000       EUR        100.00   Iveco Magirus AG                        100.000
Iveco-Motor Sich. Inc.                      Zaporozhye              Ukraine                 26,568,000       UAK         55.56   Iveco S.p.A.                             55.556
                                                                                                                                 Société d`Assistance Técnique
Karosa A.S.                        Vysoke Myto                      Czech Republic       1,065,559,000       CZK         97.52   Automobile S.A.T.A.U. S.A.               97.521
Karosa r.s.o.                      Bratislava                       Slovack Republic           200,000       SKK         97.52   Karosa A.S.                             100.000
Lohr-Magirus Feuerwehrtechnik GmbH Kainbach                         Austria                  1,271,775       EUR         95.00   Iveco Magirus Brandschutztechnik GmbH    95.000
Lyon Vehicules Industriels S.A.S. Saint Priest                      France                     915,000       EUR        100.00   Iveco France S.A.                       100.000
Mediterranea de Camiones S.L. Valencia                              Spain                       48,080       EUR        100.00   Iveco Pegaso S.L.                       100.000
Officine Brennero S.p.A.           Trento                           Italy                    6,120,000       EUR        100.00   Iveco S.p.A.                            100.000
Rhein-Main Nutzfahrzeuge GmbH
Reichold, Franz Kahl & Partners Frankfurt                           Germany                       920,325    EUR        100.00   Iveco Magirus AG                        100.000
S.A. Iveco Belgium N.V.            Zellik                           Belgium                     6,000,000    EUR        100.00   Iveco S.p.A.                             99.983
                                                                                                                                 Iveco Nederland B.V.                      0.017
S.C.I. La Mediterranéenne                   Vitrolles               France                        248,000    EUR        100.00   Iveco France S.A.                        50.000
                                                                                                                                 Société de Diffusion de Vehicules
                                                                                                                                 Industriels-SDVI S.A.S.                  50.000
Seddon Atkinson Spares & Service Limited    Oldham                  United Kingdom                 20,000    GBP        100.00   Seddon Atkinson Vehicles Ltd            100.000
Seddon Atkinson Vehicles Ltd                Oldham                  United Kingdom             41,700,000    GBP        100.00   Iveco (UK) Ltd                          100.000
Sicca S.p.A.                                Modena                  Italy                       5,300,000    EUR        100.00   Iveco S.p.A.                            100.000
S.I.M.I.S.-Société Industrielle pour le                                                                                          C.A.M.I.V.A. Constructeurs
Materiels d’Incendie et de Securité S.A.    Saint-Alban-Leysse      France                         40,016    EUR         97.96   Associés de Materiels S.A.               98.000
Société Charolaise de Participations S.A.   Vénissieux              France                      2,370,000    EUR        100.00   Irisbus Holding S.L.                    100.000
Société d`Assistance Técnique
Automobile S.A.T.A.U. S.A.                  Vénissieux              France                     35,610,000    EUR        100.00   Irisbus France S.A.                     100.000
Société de Diffusion de Vehicules
Industriels-SDVI S.A.S.                     Trappes                 France                      7,022,400    EUR        100.00   Iveco France S.A.                       100.000
Stevi-Société Stephanoise de
Vehicules Industriels S.A.S.                Saint-Priest-En-Jarez   France                        503,250    EUR        100.00   Iveco France S.A.                       100.000
Transolver Finance S.A.                     Trappes                 France                     30,244,800    EUR        100.00   Iveco S.p.A.                            100.000
Transolver Operational Services Limited     Watford                 United Kingdom              2,000,000    GBP        100.00   Iveco (UK) Ltd                          100.000
Transolver Service S.A.                     Madrid                  Spain                         610,000    EUR        100.00   Iveco Pegaso S.L.                       100.000
Transolver Service S.p.A.                   Turin                   Italy                       1,989,000    EUR        100.00   Iveco S.p.A.                            100.000
Transolver Services GmbH                    Unterschliessheim       Germany                       750,000    EUR        100.00   Iveco Magirus AG                        100.000
Transolver Services S.A.                    Trappes                 France                         38,000    EUR        100.00   Fiat France S.A.                         90.000
                                                                                                                                 Iveco France S.A.                        10.000
Trucksure Services Ltd                      Watford                 United Kingdom                900,000    GBP        100.00   Iveco (UK) Ltd                          100.000
Utilitaries & Vehicules Industriels
Franciliens-UVIF SAS                        La Garenne              France                      1,067,500    EUR        100.00   Iveco France S.A.                       100.000
Zona Franca Alari Sepauto S.A.              Barcelona               Spain                         520,560    EUR         51.87   Iveco Pegaso S.L.                        51.867
2 H Energy S.A.S.                           Fécamp                  France                      2,000,000    EUR        100.00   Iveco S.p.A.                            100.000

❚ Ferrari and Maserati
Ferrari S.p.A.                              Modena                  Italy                      20,000,000    EUR         56.00   Fiat S.p.A.                              56.000
Ferrari Deutschland GmbH                    Wiesbaden               Germany                     1,000,000    EUR         56.00   Ferrari International S.A.              100.000
Ferrari International S.A.                  Luxembourg              Luxembourg                 13,112,000    EUR         56.00   Ferrari S.p.A.                           99.999
                                                                                                                                 Ferrari N.America Inc.                    0.001
Ferrari N.America Inc.                      Englewood Cliffs        U.S.A.                        200,000    USD         56.00   Ferrari S.p.A.                          100.000
Ferrari San Francisco Inc.                  Mill Valley             U.S.A.                        100,000    USD         56.00   Ferrari N.America Inc.                  100.000
Ferrari (Suisse) SA                         Nyon                    Switzerland                 1,000,000    CHF         56.00   Ferrari International S.A.              100.000
GSA-Gestions Sportives Automobiles S.A.     Meyrin                  Switzerland                 1,000,000    CHF         56.00   Ferrari International S.A.              100.000
Maserati North America Inc.                 Englewood Cliffs        U.S.A.                          1,000    USD         56.00   Ferrari N.America Inc.                  100.000
                                                        127                        Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                    The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                            % of
                                                                                                                          Group                                                                % of
                                                                                                                         consoli- Interest                                   % interest     voting
Name                                             Registered office   Country                    Capital stock Currency    dation held by                                          held       rights
Maserati S.p.A.                                  Modena              Italy                      31,000,000    EUR        56.00    Ferrari S.p.A.                              100.000
Société Française de Participations
Ferrari - S.F.P.F. S.A.R.L.                      Neuilly-sur-Seine   France                      6,000,000    EUR        56.00    Ferrari International S.A.                  100.000

❚ Components
Magneti Marelli Holding S.p.A.                   Corbetta            Italy                  254,324,998       EUR        99.99    Fiat S.p.A.                                        99.991 100.000
Automotive Lighting Brotterode GmbH              Meiningen           Germany                  7,270,000       EUR        99.99    Automotive Lighting Reutlingen GmbH 100.000
Automotive Lighting Corporation                  Farmington Hills    U.S.A.                       1,000       USD        99.99    Magneti Marelli Holding S.p.A.                    100.000
Automotive Lighting Holding GmbH in liq.         Innsbruck           Austria                 11,952,191       EUR        99.99    Magneti Marelli Holding S.p.A.                    100.000
Automotive Lighting Italia S.p.A.                Venaria Reale       Italy                    2,000,000       EUR        99.99    Magneti Marelli Holding S.p.A.                    100.000
Automotive Lighting o.o.o.                       Rjiasan             Russia                  36,875,663       RUR        85.38    Automotive Lighting Reutlingen GmbH 85.389
Automotive Lighting Polska Sp. z o.o.            Sosnowiec           Poland                  83,500,000       PLN        99.99    Automotive Lighting Reutlingen GmbH 100.000
Automotive Lighting Reutlingen GmbH              Reutlingen          Germany                  1,330,000       EUR        99.99    Magneti Marelli Holding S.p.A.                    100.000
Automotive Lighting S.R.O.                       Jihlava             Czech Republic         927,637,000       CZK        99.99    Automotive Lighting Reutlingen GmbH 100.000
Automotive Lighting UK Limited                   Cannock             United Kingdom          15,387,348       GBP        99.99    Magneti Marelli Holding S.p.A.                    100.000
C.e.a. Axo Scintex S.A.                          Saint Denis         France                  16,040,896       EUR        99.99    Seima Italiana S.p.A.                              99.998
Fiat CIEI S.p.A.                                 Corbetta            Italy                      624,000       EUR        99.99    Magneti Marelli Holding S.p.A.                    100.000
Iluminacao Automotiva Ltda                       Contagem            Brazil                  93,260,418       BRL        99.99    Automotive Lighting Reutlingen GmbH 100.000
Industrial Yorka de Mexico S.A. de C.V.          Mexico City         Mexico                      50,000       MXN        99.99    Yorka de Mexico S.A. de CV                         98.000
                                                                                                                                  Industrial Yorka de Tepotzotlan S.A. de C.V. 2.000
Industrial Yorka de Tepotzotlan S.A. de C.V. Mexico City             Mexico                         50,000    MXN        99.99    Yorka de Mexico S.A. de CV                         99.000
                                                                                                                                  Industrial Yorka de Mexico S.A. de C.V. 1.000
Kadron S/A                                       Maua                Brazil                     20,000,000    BRL        99.69    Magneti Marelli do Brasil Industria e Comercio SA 100.000
Magneti Marelli After Market Limited in liq.     Cannock             United Kingdom                      1    GBP        99.99    Magneti Marelli After Market S.p.A. 100.000
Magneti Marelli After Market S.p.A.              Turin               Italy                      15,349,500    EUR        99.99    Magneti Marelli Holding S.p.A.                     99.999 100.000
Magneti Marelli Argentina S.A.                   Buenos Aires        Argentina                   2,000,000    ARS        99.90    Magneti Marelli France S.A.                        84.563
                                                                                                                                  Magneti Marelli Holding S.p.A.                     15.437
Magneti Marelli Cofap Companhia
Fabricadora de Pecas                     Santo Andre                 Brazil                 243,408,933       BRL        99.62    Magneti Marelli Holding S.p.A.             99.628 99.966
Magneti Marelli Components B.V. Amsterdam                            Netherlands             53,600,000       EUR        99.99    Magneti Marelli Holding S.p.A.            100.000
Magneti Marelli Conjuntos de Escape S.A. Buenos Aires                Argentina                   12,000       ARS        99.99    Magneti Marelli Sistemi di Scarico S.p.A. 99.000
                                                                                                                                  Magneti Marelli Argentina S.A.              1.000
Magneti Marelli Controle Motor Ltda.             Hortolandia         Brazil                 125,863,327       BRL        99.99    Magneti Marelli Powertrain S.p.A. 99.997
                                                                                                                                  Fiat do Brasil S.A.                         0.003
Magneti Marelli Deutschland GmbH                  Russelsheim        Germany                     1,050,000    EUR        99.99    Magneti Marelli After Market S.p.A. 100.000
Magneti Marelli do Brasil Industria e Comercio SA Hortolandia        Brazil                     16,868,427    BRL        99.69    Magneti Marelli Holding S.p.A.             99.695 99.976
Magneti Marelli Escapamentos Ltda Amparo                             Brazil                     65,736,384    BRL        99.99    Magneti Marelli Sistemi di Scarico S.p.A.  99.997
                                                                                                                                  Fiat do Brasil S.A.                         0.003
Magneti Marelli Exhaust Systems Polska Sp. z o.o. Sosnowiec          Poland                     15,000,000    PLN        99.99    Magneti Marelli Sistemi di Scarico S.p.A. 100.000
Magneti Marelli France S.A.                       Nanterre           France                     67,380,000    EUR        99.88    Magneti Marelli Holding S.p.A.             99.884
                                                                                                                                  Ufima S.A.S.                                0.003
Magneti Marelli Iberica S.A.              Madrid                     Spain                          99,766    EUR        99.99    Magneti Marelli Holding S.p.A.            100.000
Magneti Marelli Motopropulsion France SAS Nanterre                   France                     10,692,500    EUR        99.88    Magneti Marelli France S.A.               100.000
                                                                                                                                  Magneti Marelli Cofap Companhia
Magneti Marelli North America Inc.               Wilmington          U.S.A.                     40,223,205    USD        99.61    Fabricadora de Pecas                      100.000
Magneti Marelli Otomotiv Sistemleri
Sanayi ve Ticaret A.S.                           Esentepe-Istanbul   Turkey                9,000,000,000      TRL        97.99    Magneti Marelli Holding S.p.A.               98.000
Magneti Marelli Poland S.A.                      Sosnowiec           Poland                   10,567,800      PLN        99.99    Magneti Marelli Holding S.p.A.              100.000
Magneti Marelli Powertrain GmbH                  Russelsheim         Germany                     100,000      EUR        99.99    Magneti Marelli Powertrain S.p.A.           100.000
Magneti Marelli Powertrain (Shanghai) Co. Ltd.   Shanghai            People’s Rep.of China 10,000,000         USD        99.99    Magneti Marelli Powertrain S.p.A.           100.000
Magneti Marelli Powertrain S.p.A.                Corbetta            Italy                    85,690,872      EUR        99.99    Magneti Marelli Holding S.p.A.               99.999 100.000
Magneti Marelli Powertrain U.S.A. Inc.           Sanford             U.S.A.                   25,000,000      USD        99.99    Magneti Marelli Powertrain S.p.A.           100.000
Magneti Marelli Powertrain (WUHU) Co. Ltd.       Anhui               People’s Rep.of China     3,000,000      USD        99.99    Magneti Marelli Powertrain S.p.A.           100.000
Magneti Marelli Services S.p.A.                  Corbetta            Italy                    15,349,500      EUR        99.99    Magneti Marelli Holding S.p.A.               99.999 100.000
                                                            128                              Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                              The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                                      % of
                                                                                                                                    Group                                                               % of
                                                                                                                                   consoli- Interest                                    % interest   voting
Name                                                 Registered office        Country                     Capital stock Currency    dation held by                                           held     rights
Magneti Marelli Sistemi di Scarico S.p.A.            Corbetta                 Italy                       20,000,000    EUR         99.99   Magneti Marelli Components B.V. 100.000
Magneti Marelli South Africa (Proprietary) Limited   Johannesburg             South Africa                 1,950,000    ZAR         99.99   Magneti Marelli Sistemi di Scarico S.p.A. 100.000
Magneti Marelli Suspension
Systems Poland Sp. z o.o.                            Sosnowiec                Poland                      43,100,000    PLN         99.99   Magneti Marelli Holding S.p.A.              100.000
Magneti Marelli Svenska A/B in liq.                  Goteborg                 Sweden                         100,000    SEK         99.99   Magneti Marelli Components B.V.             100.000
Magneti Marelli Tubos de Escape SL                   Barcelona                Spain                       10,154,256    EUR         99.99   Magneti Marelli Sistemi di Scarico S.p.A.   100.000
Magneti Marelli U.K. Limited                         Cannock                  United Kingdom              12,400,000    GBP         99.99   Magneti Marelli Components B.V.             100.000
Malaysian Automotive Lighting SDN. BHD               Penang                   Malaysia                     8,000,000    MYR         79.99   Automotive Lighting Reutlingen GmbH          80.000
Midas Autoservice GmbH                               Vienna                   Austria                        472,373    EUR         99.99   Magneti Marelli Services S.p.A.             100.000
Midas Europe S.A.M.                                  Monaco                   Princ.of Monaco                331,000    EUR         99.99   Magneti Marelli Services S.p.A.             100.000
Midas France S.a.s.                                  Celle S. Cloud           France                      17,475,000    EUR         99.99   Magneti Marelli Services S.p.A.              99.999
                                                                                                                                            Midas Italia S.p.A.                           0.001
Midas Italia S.p.A.                                  Milan                    Italy                        5,000,000    EUR         99.99   Magneti Marelli Services S.p.A.             100.000
Midas Polska Sp. z o.o.                              Warsaw                   Poland                       8,650,000    PLN         99.99   Magneti Marelli Services S.p.A.             100.000
Midas S.A.                                           Berchem                  Belgium                      4,000,000    EUR         99.99   Magneti Marelli Services S.p.A.              99.774
                                                                                                                                            Midas Italia S.p.A.                           0.226
Midas Schwiez AG                                     Zurich                   Switzerland                    680,000    CHF         99.99   Magneti Marelli Services S.p.A.             100.000
Midas Silenciador S.L.                               Madrid                   Spain                       3, 093,563    EUR         99.99   Magneti Marelli Services S.p.A.             100.000
Midas Spain Inc.                                     Chicago                  U.S.A.                           1,000    USD         99.99   Magneti Marelli Services S.p.A.             100.000
MotorMust.com S.p.A. in liq.                         Milan                    Italy                        2,300,000    EUR         99.66   Magneti Marelli Services S.p.A.              99.674
Sadim S.a.r.l.                                       Celle S. Cloud           France                           8,000    EUR         99.99   Midas France S.a.s.                         100.000
Seima Italiana Deutschland GmbH                      Grasbrunn-Neukerferloh   Germany                         25,565    EUR         98.99   Seima Italiana S.p.A.                        99.000
Seima Italiana S.p.A.                                Tolmezzo                 Italy                       13,220,000    EUR         99.99   Magneti Marelli Holding S.p.A.              100.000
Sistemi Sospensioni S.p.A.                           Corbetta                 Italy                       60,500,000    EUR         99.99   Magneti Marelli Holding S.p.A.              100.000
Tecnologia de Iluminacion Automotriz S.A. de C.V.    Chihuahua                Mexico                          50,000    MXN         99.99   Automotive Lighting Corporation             100.000
Tutela Lubrificantes S.A.                            Contagem                 Brazil                         941,028    BRL         99.99   Magneti Marelli Holding S.p.A.              100.000
Ufima S.A.S.                                         Nanterre                 France                          44,940    EUR         99.94   Magneti Marelli Holding S.p.A.               35.541
                                                                                                                                            Fiat Partecipazioni S.p.A.                   34.980
                                                                                                                                            Magneti Marelli Components B.V.              29.426
                                                                                                                                            Yorka SA - Senalizacion y
Yorka de Mexico S.A. de CV                           El Marques Queretaro Mexico                              50,000    MXN         99.99   Accesorios del Automovil                    100.000
Yorka SA - Senalizacion y
Accesorios del Automovil                             Llinares del Valles Spain                             9,153,693    EUR         99.99   Seima Italiana S.p.A.                       100.000

❚ Production Systems
Comau S.p.A.                                         Grugliasco               Italy                   140,000,000       EUR        100.00   Fiat Partecipazioni S.p.A.                100.000
Autodie International, Inc.                          Grand Rapids             U.S.A.                        1,000       USD        100.00   Comau Pico Holdings Corporation           100.000
Comau Argentina S.A.                                 Buenos Aires             Argentina                 3,617,977       ARS        100.00   Comau S.p.A.                               55.283
                                                                                                                                            Comau do Brasil Industria e Comercio Ltda. 44.689
                                                                                                                                            Fiat Argentina S.A.                         0.028
Comau Australia Pty. Ltd                             Wingfield                Australia                      765,589    AUD        100.00   Comau S.p.A.                               99.998
Comau Belgium N.V.                                   Zedelgem                 Belgium                        175,000    EUR        100.00   Comau S.p.A.                               99.900
                                                                                                                                            Comau Service France S.A.                   0.100
Comau Deutschland GmbH                     Boblingen                          Germany                   1,330,000       EUR        100.00   Comau S.p.A.                              100.000
Comau do Brasil Industria e Comercio Ltda. Betim                              Brazil                  112,794,611       BRL        100.00   Comau S.p.A.                               99.999
                                                                                                                                            Fiat do Brasil S.A.                         0.001
Comau Estil Unl.                  Luton                                       United Kingdom              46,108,100    USD        100.00   Comau S.p.A.                              100.000
COMAU Germann-Intec GmbH & Co. KG Heilbronn                                   Germany                      1,478,614    EUR        100.00   Germann-Intec Verwaltungs GmbH 100.000
Comau India Private Limited       Pune                                        India                       58,435,020    INR        100.00   Comau S.p.A.                               99.990
                                                                                                                                            Comau Deutschland GmbH                      0.010
COMAU Ingest Sverige AB                              Trollhattan              Sweden                      10,000,000    SEK        100.00   Comau S.p.A.                               51.000
                                                                                                                                            Ingest Facility S.p.A.                     49.000
Comau Pico Holdings Corporation Southfield                                    U.S.A.                              100   USD        100.00   Comau S.p.A.                              100.000
                                                        129                         Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                     The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                             % of
                                                                                                                           Group                                                          % of
                                                                                                                          consoli- Interest                               % interest   voting
Name                                             Registered office      Country                  Capital stock Currency    dation held by                                      held     rights
Comau Poland Sp. z o.o.                          Bielsko-Biala          Poland                  2,100,000      PLN        100.00   Comau S.p.A.                              100.000
Comau Quad Precision (Pty) Ltd. in liq.          Eppindust              South Africa                1,000      ZAR         83.70   Comau South Africa (Pty) Ltd.              83.700
Comau Romania S.R.L.                             Bihor                  Romenia             3,249,800,000      ROL        100.00   Comau S.p.A.                              100.000
Comau SA Body Systems (Pty) Ltd.                 Uitenhage              South Africa                  300      ZAR        100.00   Comau South Africa (Pty) Ltd.             100.000
Comau SA Press Tools and Parts (Pty) Ltd.        Uitenhage              South Africa                  100      ZAR        100.00   Comau South Africa (Pty) Ltd.             100.000
Comau SA Properties (Pty) Ltd.                   Uitenhage              South Africa                  100      ZAR        100.00   Comau South Africa (Pty) Ltd.             100.000
Comau Sciaky S.A.                                Trappes                France                     40,000      EUR         99.76   Comau Systèmes France S.A.                 99.760
Comau Service France S.A.                        Trappes                France                  2,250,000      EUR         99.99   Comau S.p.A.                               99.987
Comau Service Systems S.L.                       Madrid                 Spain                     250,000      EUR        100.00   Comau S.p.A.                              100.000
Comau Service U.K. Ltd                           Watford                United Kingdom             50,000      GBP        100.00   Comau S.p.A.                              100.000
Comau (Shanghai) Automotive Equipment Co. Ltd.   Shanghai               People’s Rep.of China 1,000,000        USD        100.00   Comau S.p.A.                              100.000
Comau South Africa (Pty) Ltd.                    Uitenhage              South Africa            1,001,000      ZAR        100.00   Comau S.p.A.                              100.000
Comau Systèmes France S.A.                       Trappes                France                 29,173,600      EUR        100.00   Comau S.p.A.                              100.000
Eagle Test and Assembly Co.                      Southfield             U.S.A.                      1,000      USD        100.00   Comau Pico Holdings Corporation 100.000
Estil Shrewsbury Ltd. in liq.                    Shropshire             United Kingdom                100      GBP        100.00   Comau Estil Unl.                          100.000
Geico do Brasil Ltda                             Betim                  Brazil                    202,950      BRL         48.78   Geico S.p.A.                               95.565
                                                                                                                                   Comau do Brasil Industria e Comercio Ltda. 0.044
Geico Endustriyel Taahhut A.S.                   Istanbul               Turkey         100,000,000,000         TRL         50.98   Geico S.p.A.                               99.959
Geico S.p.A.                                     Cinisello Balsamo      Italy                3,627,000         EUR         51.00   Comau S.p.A.                               51.000
Germann-Intec Verwaltungs GmbH                   Heilbronn              Germany                 25,000         EUR        100.00   Comau Deutschland GmbH                    100.000
Italtech S.p.A.                                  Brescia                Italy                1,000,000         EUR        100.00   Comau S.p.A.                              100.000
Mecaner S.A.                                     Urdùliz                Spain                6,000,000         EUR        100.00   Comau S.p.A.                              100.000
Novi Industries, Inc.                            Novi                   U.S.A.                   1,000         USD        100.00   Comau Pico Holdings Corporation 100.000
Numerical Control Center, Inc. in liq.           Southfield             U.S.A.                   1,000         USD        100.00   Comau Pico Holdings Corporation 100.000
Pico East, Inc.                                  Macomb                 U.S.A.                   1,000         USD        100.00   Comau Pico Holdings Corporation 100.000
Pico Estil Control Systems Ltd.                  Rainham                United Kingdom             100         GBP        100.00   Comau Estil Unl.                          100.000
Pico Estil Manufacturing Ltd. in liq.            Luton                  United Kingdom           5,000         GBP        100.00   Comau Estil Unl.                          100.000
Pico Europe, Inc.                                Southfield             U.S.A.                   1,000         USD        100.00   Comau S.p.A.                              100.000
Pico Expatriate, Inc.                            Southfield             U.S.A.                   1,000         USD        100.00   Comau Pico Holdings Corporation 100.000
Pico Iaisa S.de R.L. de C.V.                     Tepotzotlan            Mexico                   3,000         MXN        100.00   Progressive Mexico S.de R.L. de C.V. 99.967
                                                                                                                                   Comau S.p.A.                                0.033
Pico Pitex S.de R.L. C.V.                        Tepotzotlan            Mexico                         3,000   MXN        100.00   Progressive Mexico S.de R.L. de C.V. 99.967
                                                                                                                                   Comau S.p.A.                                0.033
Pico Resources, Inc.                             Southfield             U.S.A.                         1,000   USD        100.00   Comau Pico Holdings Corporation 100.000
Precision.Com Corp.                              Plymouth               U.S.A.                         1,000   USD        100.00   Comau Pico Holdings Corporation 100.000
Progressive Industries Co. of Canada Ltd.        Windsor                Canada                           100   CAD        100.00   Comau S.p.A.                              100.000
Progressive Mexico S.de R.L. de C.V.             Tepotzotlan            Mexico                         3,000   MXN        100.00   Comau S.p.A.                               99.967
                                                                                                                                   Comau Deutschland GmbH                      0.033
Progressive Tool & Industries Company            Southfield             U.S.A.                       21,455    USD        100.00   Comau Pico Holdings Corporation           100.000
Trebol Tepotzotlan S.de R.L. de C.V.             Tepotzotlan            Mexico                        3,000    MXN        100.00   Progressive Mexico S.de R.L. de C.V. 99.967
                                                                                                                                   Comau S.p.A.                                0.033
Wisne Automation & Engineering Co.               Novi                   U.S.A.                         1,000   USD        100.00   Comau Pico Holdings Corporation 100.000
Wisne Technologies, Inc. in liq.                 Royal Oak              U.S.A.                         1,000   USD        100.00   Comau Pico Holdings Corporation 100.000

❚ Metallurgical Products
Teksid S.p.A.                                    Turin                  Italy                239,600,000       EUR         80.48   Fiat Partecipazioni S.p.A.               80.482
Accurcast Limited                                Saint John             Canada                39,684,600       CAD         41.05   Meridian Technologies Inc.              100.000
Fonderie du Poitou Fonte S.A.S.                  Ingrandes-sur-Vienne   France                26,958,464       EUR         80.48   Teksid S.p.A.                           100.000
Funfrap-Fundicao Portuguesa S.A.                 Aveiro                 Portugal              13,697,550       EUR         67.29   Fonderie du Poitou Fonte S.A.S.          83.607
Jutras Die Casting Limited                       Saint John             Canada                24,490,715       CAD         41.05   Meridian Technologies Inc.              100.000
Magnesium Products of America Inc.               Eaton Rapids           U.S.A.                43,454,000       USD         41.05   Meridian Technologies Inc.               69.439
                                                                                                                                   Meridian Magnesium N.V. in liq.          30.561
                                                        130                        Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                    The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                            % of
                                                                                                                          Group                                                       % of
                                                                                                                         consoli- Interest                            % interest   voting
Name                                            Registered office    Country                    Capital stock Currency    dation held by                                   held     rights
Magnesium Products of Italy S.r.l. Verres                            Italy                      13,962,000    EUR         41.05   Magnesium Products of America Inc. 100.000
Meridian Deutschland GmbH          Heilbronn                         Germany                        25,600    EUR         41.05   Meridian Technologies Inc.         100.000
Meridian Magnesium LLC             Wilmington                        U.S.A.                          4,962    USD         41.05   1118395 Ontario Inc.                90.000
                                                                                                                                  Meridian Technologies Inc.          10.000
Meridian Magnesium N.V. in liq.                 Amstelveen           Netherlands              35,193,626      EUR         41.05   Meridian Technologies Inc.         100.000
Meridian Technologies Inc.                      Saint John           Canada                  179,063,445      CAD         41.05   Teksid S.p.A.                       31.450
                                                                                                                                  Teksid Acquisition Inc.             19.550
Shanghai Meridian Magnesium
Products Company Limited                        Shanghai             People’s Rep.of China       8,000,000    USD         24.63   Meridian Technologies Inc.            60.000
Société Bretonne de Fonderie
et de Mecanique S.A.                            Caudan               France                   10,549,860      EUR         80.48   Teksid S.p.A.                       100.000
Teksid Acquisition Inc.                         Toronto              Canada                   72,300,001      CAD         80.48   Teksid S.p.A.                       100.000
Teksid do Brasil Ltda                           Betim                Brazil                   59,899,570      BRL         80.48   Teksid S.p.A.                       100.000
Teksid Hierro de Mexico S.A. de C.V.            São Pedro            Mexico                  567,466,400      MXN         60.36   Teksid S.p.A.                        75.000
Teksid Inc.                                     Wilmington           U.S.A.                      100,000      USD         60.36   Teksid S.p.A.                        75.000
Teksid Investment N.V. in liq.                  Amsterdam            Netherlands              69,000,000      EUR         80.48   Teksid S.p.A.                       100.000
Teksid Iron Poland Sp. z o.o.                   Skoczow              Poland                  115,678,500      PLN         80.48   Teksid S.p.A.                       100.000
1118395 Ontario Inc.                            Saint John           Canada                        6,210      CAD         41.05   Meridian Technologies Inc.          100.000

❚ Services
Business Solutions S.p.A.                       Turin                Italy                      10,000,000    EUR        100.00   Fiat Partecipazioni S.p.A.          100.000
Building Services S.r.l.                        Turin                Italy                          90,000    EUR         51.00   Ingest Facility S.p.A.               51.000
Building Support S.r.l. a socio unico           Turin                Italy                          90,000    EUR         51.00   Building Services S.r.l.            100.000
Business Solutions Deutschland FiatGroup GmbH   Ulm                  Germany                       200,000    EUR        100.00   Business Solutions S.p.A.           100.000
Business Solutions do Brasil Ltda               Nova Lima            Brazil                     36,915,855    BRL        100.00   Business Solutions S.p.A.           100.000
Business Solutions France FiatGroup S.a.s.      Levallois-Perret     France                        695,600    EUR        100.00   Business Solutions S.p.A.            60.000
                                                                                                                                  Fiat France S.A.                     40.000
Business Solutions Iberica Fiat Group SL        Madrid               Spain                         369,327    EUR        100.00   Business Solutions S.p.A.            80.000
                                                                                                                                  Fiat Iberica S.A.                    20.000
Business Solutions Polska Sp. z o.o.            Bielsko-Biala        Poland                      3,600,000    PLN        100.00   Business Solutions S.p.A.            99.986
                                                                                                                                  Fiat Polska Sp. z o.o.                0.014
Cleantecno S.r.l.                               Turin                Italy                          90,000    EUR        100.00   Ingest Facility S.p.A.              100.000
Cromos Consulenza e Formazione S.r.l.           Turin                Italy                          13,000    EUR         74.96   Isvor Knowledge System S.p.A.        76.000
Delivery & Mail S.r.l.                          Turin                Italy                          90,000    EUR        100.00   Ingest Facility S.p.A.              100.000
Easy Drive S.r.l. a S.U.                        Turin                Italy                          10,400    EUR        100.00   Business Solutions S.p.A.           100.000
eSPIN S.p.A.                                    Turin                Italy                       1,000,000    EUR        100.00   Business Solutions S.p.A.           100.000
Fast Buyer do Brasil Ltda                       Nova Lima            Brazil                         50,000    BRL         99.92   Fast-Buyer S.p.A.                    99.998
                                                                                                                                  Business Solutions do Brasil Ltda     0.002
Fast Buyer France S.a.r.l.                      Paris                France                          7,700    EUR         99.92   Fast-Buyer S.p.A.                   100.000
Fast-Buyer S.p.A.                               Turin                Italy                         500,000    EUR         99.92   Business Solutions S.p.A.            99.916
Fiat Engineering France S.A.                    Paris                France                        680,000    EUR         99.98   Fiat Engineering S.p.A.              99.984
Fiat Engineering India Ltd.                     New Delhi            India                       3,500,000    INR        100.00   Fiat Engineering S.p.A.             100.000
Fiat Engineering S.p.A.                         Turin                Italy                      10,588,250    EUR        100.00   Fiat Partecipazioni S.p.A.          100.000
Fiat GES.CO. Belgium N.V.                       Brugge               Belgium                        62,500    EUR        100.00   Gesco U.K. Limited                   99.960
                                                                                                                                  Fiat Gesco S.p.A.                     0.040
Fiat Gesco S.p.A.                                   Turin            Italy                       3,600,000    EUR        100.00   Business Solutions S.p.A.           100.000
FiatEngineering do Brasil-Comercio e Industria Ltda Belo Horizonte   Brazil                      8,500,000    BRL        100.00   Fiat Engineering S.p.A.              78.800
                                                                                                                                  Fiat Engineering France S.A.         21.200
Gesco U.K. Limited                              Basildon             United Kingdom                750,000    GBP        100.00   Fiat Gesco S.p.A.                    75.000
                                                                                                                                  Fiat United Kingdom Limited          25.000
GestioneLavoro S.p.A.                           Turin                Italy                         100,000    EUR         51.00   H.R. Services S.p.A.                 51.000
Global Value S.p.A.                             Turin                Italy                       1,000,000    EUR         50.00   Business Solutions S.p.A.            50.000
                                                             131                     Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                      The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                              % of
                                                                                                                            Group                                                                   % of
                                                                                                                           consoli- Interest                                      % interest     voting
Name                                                 Registered office   Country                  Capital stock Currency    dation held by                                             held       rights
H.R. Services S.p.A.                                 Turin               Italy                       400,000    EUR        100.00   Business Solutions S.p.A.                          100.000
                                                                                                                                    WorkNet società di fornitura
Individua S.p.A.                                     Milan               Italy                       105,000    EUR        100.00   di lavoro temporaneo-per azioni 100.000
Ingest Facility Polska Sp. z o.o.                    Bielsko-Biala       Poland                      500,000    PLN        100.00   Ingest Facility S.p.A.                             100.000
Ingest Facility S.p.A.                               Turin               Italy                     1,700,000    EUR        100.00   Business Solutions S.p.A.                          100.000
Isvor Knowledge System S.p.A.                        Turin               Italy                       500,000    EUR         98.63   Business Solutions S.p.A.                           70.000
                                                                                                                                    Isvor Fiat Società consortile di sviluppo
                                                                                                                                    e addestramento industriale per Azioni 30.000
Japigia 2000 S.r.l.                                  Turin               Italy                        98,000    EUR         95.00   Fiat Engineering S.p.A.                             95.000
KeyG Consulting S.p.A.                               Turin               Italy                       125,000    EUR         60.00   Fiat Gesco S.p.A.                                   52.800
                                                                                                                                    Business Solutions S.p.A.                            7.200
La Fenice S.A.                                       Buenos Aires        Argentina                    12,000    ARS        100.00   Business Solutions do Brasil Ltda 99.992
                                                                                                                                    Fiat Auto Argentina S.A.                             0.008
Learning Systems S.p.A.                              Milan               Italy                       104,000    EUR         50.30   Isvor Knowledge System S.p.A.                       51.000
Matrix S.r.l. in liquidation                         Turin               Italy                        30,000    EUR         98.63   Isvor Knowledge System S.p.A.                      100.000
Risk Management S.p.A.                               Turin               Italy                       104,000    EUR        100.00   Business Solutions S.p.A.                          100.000
Sadi Brasil Ltda.                                    Nova Lima           Brazil                      100,000    BRL         97.01   Business Solutions do Brasil Ltda 60.000
                                                                                                                                    CNH Latino Americana Ltda                           10.000
                                                                                                                                    Fiat Automoveis S.A. - FIASA                        10.000
                                                                                                                                    Iveco Fiat Brasil Ltda                              10.000
                                                                                                                                    Iveco Latin America Ltda                            10.000
Sadi Polska-Agencja Celna Sp. z o.o.                 Bielsko-Biala       Poland                      500,000    PLN        100.00   Servizi e Attività Doganali per l’Industria S.p.A. 100.000
Scuola di Pubblica Amministrazione s.p.a.            Lucca               Italy                       100,000    EUR         51.98   Isvor Knowledge System S.p.A.                       52.700
Servizi e Attività Doganali per l’Industria S.p.A.   Turin               Italy                       520,000    EUR        100.00   Business Solutions S.p.A.                          100.000
Sestrieres S.p.A.                                    Sestriere           Italy                    16,120,000    EUR         70.00   Business Solutions S.p.A.                           70.000
Sporting Club Sestrieres S.r.l.                      Sestriere           Italy                       312,000    EUR         70.00   Sestrieres S.p.A.                                  100.000
Telexis do Brasil Ltda.                              Nova Lima           Brazil                        1,400    BRL         99.94   Fast Buyer do Brasil Ltda                           71.357
                                                                                                                                    Business Solutions do Brasil Ltda 28.643
TRANSFIMA S.p.A.                                     Turin               Italy                     1,020,000    EUR         51.00   Fiat Engineering S.p.A.                             51.000
Trantor S.r.l.                                       Milan               Italy                       104,000    EUR        100.00   Ingest Facility S.p.A.                             100.000
                                                                                                                                    WorkNet società di fornitura
Worknet Formazione S.r.l.       Milan                                    Italy                        50,000    EUR        100.00   di lavoro temporaneo-per azioni 100.000
WorkNet società di fornitura
di lavoro temporaneo-per azioni Rome                                     Italy                     1,000,000    EUR        100.00   Fiat Partecipazioni S.p.A.                     100.000

❚ Publishing and Communications
Itedi-Italiana Edizioni S.p.A.  Turin                                    Italy                     5,980,000    EUR        100.00   Fiat S.p.A.                                    100.000
Editrice La Stampa S.p.A.       Turin                                    Italy                     4,160,000    EUR        100.00   Itedi-Italiana Edizioni S.p.A.                 100.000
Publikompass S.p.A.             Milan                                    Italy                     3,068,000    EUR        100.00   Itedi-Italiana Edizioni S.p.A.                 100.000

❚ Miscellaneous and Holding companies
Atlanet S.p.A.                      Turin                                Italy                     2,000,000    EUR        100.00   Fiat Partecipazioni S.p.A.           100.000
Celt Receivables Limited            Dublin                               Ireland                          52    EUR        100.00   Fiat Finance and Trade Ltd           100.000
Centro Ricerche Plast-Optica S.r.l. Amaro                                Italy                     1,033,000    EUR         72.36   C.R.F. Società Consortile per Azioni 51.000
                                                                                                                                    Seima Italiana S.p.A.                 24.500
C.R.F. Società Consortile per Azioni                 Orbassano           Italy                    45,400,000    EUR         93.84   Fiat Auto S.p.A.                      40.000
                                                                                                                                    Iveco S.p.A.                          20.000
                                                                                                                                    Magneti Marelli Holding S.p.A.        20.000
                                                                                                                                    Case New Holland Italia s.p.a.         5.000
                                                                                                                                    Comau S.p.A.                           5.000
                                                                                                                                    Teksid S.p.A.                          5.000
                                                                                                                                    Fiat Partecipazioni S.p.A.             4.000
                                                                                                                                    Ferrari S.p.A.                         1.000
                                                       132                      Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                 The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                         % of
                                                                                                                       Group                                                            % of
                                                                                                                      consoli- Interest                                % interest    voting
Name                                          Registered office   Country                    Capital stock Currency    dation held by                                       held      rights
Deposito Avogadro S.r.l.                      Turin             Italy                           100,000    EUR        100.00   Fiat Partecipazioni S.p.A.                  100.000
Elasis-Società Consortile per Azioni          Pomigliano d’Arco Italy                        20,000,000    EUR         91.17   Fiat Auto S.p.A.                             56.000
                                                                                                                               C.R.F. Società Consortile per Azioni 27.933
                                                                                                                               CNH Movimento Terra S.p.A.                    6.800
                                                                                                                               Fiat Partecipazioni S.p.A.                    4.450
                                                                                                                               Iveco S.p.A.                                  3.300
                                                                                                                               Ferrari S.p.A.                                1.100
                                                                                                                               Isvor Fiat Società consortile di sviluppo
                                                                                                                               e addestramento industriale per Azioni 0.250
                                                                                                                               Fiat S.p.A.                                   0.167
Fahag Immobilien-und Finanz-Gesellschaft AG   Zurich              Switzerland                   500,000    CHF        100.00   IHF-Internazionale Holding Fiat S.A. 100.000
Fias Fiat Administration und Service GmbH     Ulm                 Germany                       102,258    EUR         98.00   Iveco Magirus AG                             80.000
                                                                                                                               Fiat Automobil AG                            20.000
Fiat Argentina S.A.                           Buenos Aires        Argentina                     520,002    ARS        100.00   Fiat Partecipazioni S.p.A.                   99.990
                                                                                                                               SGR-Sociedad para la Gestion de Riesgos S.A. 0.010
Fiat Concord S.A.                             Buenos Aires        Argentina                            1   ARS        100.00   Fiat Argentina S.A.                          99.990
                                                                                                                               SGR-Sociedad para la Gestion de Riesgos S.A. 0.010
Fiat do Brasil S.A.                           Nova Lima           Brazil                        999,684    BRL        100.00   Fiat Partecipazioni S.p.A.                   99.932
                                                                                                                               Fiat Gesco S.p.A.                             0.061
                                                                                                                               Isvor Fiat Società consortile di sviluppo
                                                                                                                               e addestramento industriale per Azioni 0.007
Fiat Energia S.r.l.                           Turin               Italy                  350,088,770       EUR        100.00   Fiat Partecipazioni S.p.A.                  100.000
Fiat Financas Brasil Ltda                     Nova Lima           Brazil                   2,469,701       BRL        100.00   Fiat Ge.Va. S.p.A.                           99.994
                                                                                                                               Fiat do Brasil S.A.                           0.006
Fiat Finance and Trade Ltd                    Luxembourg          Luxembourg             251,494,000       EUR        100.00   Fiat Ge.Va. S.p.A.                           99.993
                                                                                                                               Fiat Finance Canada Ltd.                      0.007
Fiat Finance Canada Ltd.                      Calgary             Canada                     10,099,885    CAD        100.00   Fiat Ge.Va. S.p.A.                          100.000
Fiat Finance France S.N.C.                    Paris               France                        228,674    EUR         99.83   Fiat France S.A.                             98.333
                                                                                                                               Sofice-Société de Financement
                                                                                                                               des Concessionaires s.a.s.                    1.667
Fiat Finance Luxembourg S.A.                  Luxembourg          Luxembourg                    100,000    USD        100.00   Intermap (Nederland) B.V.                    99.000
                                                                                                                               Fiat Netherlands Holding N.V.                 1.000
Fiat Finance North America Inc.               Wilmington          U.S.A.                     40,090,010    USD        100.00   Fiat Ge.Va. S.p.A.                           60.526
                                                                                                                               Fiat S.p.A.                                  39.474
Fiat France S.A.                              Paris               France                     55,216,000    EUR        100.00   Fiat Partecipazioni S.p.A.                  100.000
Fiat Ges.co France (GEIE)                     Levallois-Perret    France                              0    EUR         98.48   Fiat Gesco S.p.A.                            50.000
                                                                                                                               Magneti Marelli France S.A.                  20.000
                                                                                                                               Fiat Auto (France) S.A.                      15.000
                                                                                                                               Iveco France S.A.                            15.000
Fiat Gesco UK Limited in liq.                 London              United Kingdom             625,767       GBP        100.00   Fiat United Kingdom Limited                 100.000
Fiat Ge.Va. S.p.A.                            Turin               Italy                  224,440,000       EUR        100.00   Fiat S.p.A.                                 100.000
Fiat Gra.De EEIG                              Watford             United Kingdom                   0       GBP         91.72   Fiat Auto S.p.A.                             46.000
                                                                                                                               CNH Global N.V.                              23.000
                                                                                                                               Fiat Netherlands Holding N.V.                23.000
                                                                                                                               Business Solutions S.p.A.                     2.000
                                                                                                                               Fiat S.p.A.                                   2.000
                                                                                                                               Comau S.p.A.                                  1.000
                                                                                                                               C.R.F. Società Consortile per Azioni 1.000
                                                                                                                               Magneti Marelli Holding S.p.A.                1.000
                                                                                                                               Teksid S.p.A.                                 1.000
Fiat Iberica S.A.                                Madrid           Spain                       2,797,054    EUR        100.00   Fiat Partecipazioni S.p.A.                  100.000
Fiat Information & Communication Services S.r.l. Turin            Italy                         800,000    EUR        100.00   Fiat S.p.A.                                  51.000
                                                                                                                               Fiat Partecipazioni S.p.A.                   49.000
Fiat International S.p.A.                     Turin               Italy                       1,300,000    EUR        100.00   Fiat S.p.A.                                 100.000
                                                        133                       Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                   The Companies of the Fiat Group




Subsidiaries consolidated on a line-by-line basis (continued)
                                                                                                                           % of
                                                                                                                         Group                                                           % of
                                                                                                                        consoli- Interest                                % interest   voting
Name                                            Registered office   Country                    Capital stock Currency    dation held by                                       held     rights
Fiat Netherlands Holding N.V.                   Amsterdam           Netherlands          4,366,482,748       EUR        100.00   Fiat S.p.A.                               60.563
                                                                                                                                 Fiat Partecipazioni S.p.A.                24.504
                                                                                                                                 IHF-Internazionale Holding Fiat S.A. 14.933
Fiat Partecipazioni S.p.A.            Turin                         Italy                3,924,685,869       EUR        100.00   Fiat S.p.A.                              100.000
Fiat Polska Sp. z o.o.                Warsaw                        Poland                  25,500,000       PLN        100.00   Fiat Partecipazioni S.p.A.               100.000
Fiat Servizi per l’Industria S.c.p.a. Turin                         Italy                    3,850,000       EUR         93.22   Fiat S.p.A.                               36.468
                                                                                                                                 Fiat Auto S.p.A.                          33.532
                                                                                                                                 Iveco S.p.A.                               6.000
                                                                                                                                 Magneti Marelli Holding S.p.A.             4.000
                                                                                                                                 Business Solutions S.p.A.                  3.000
                                                                                                                                 Case New Holland Italia s.p.a.             3.000
                                                                                                                                 Fiat Partecipazioni S.p.A.                 3.000
                                                                                                                                 H.R. Services S.p.A.                       2.000
                                                                                                                                 Teksid S.p.A.                              2.000
                                                                                                                                 Comau S.p.A.                               1.500
                                                                                                                                 C.R.F. Società Consortile per Azioni 1.500
                                                                                                                                 Editrice La Stampa S.p.A.                  1.500
Fiat Servizi S.A.                               Paradiso            Switzerland                   100,000    CHF        100.00   IHF-Internazionale Holding Fiat S.A. 100.000
Fiat United Kingdom Limited                     London              United Kingdom                860,000    GBP        100.00   Fiat Partecipazioni S.p.A.               100.000
Fiat U.S.A. Inc.                                New York            U.S.A.                     16,830,000    USD        100.00   Fiat S.p.A.                              100.000
Fiat-Revisione Interna e Ispettorato S.c.r.l.   Turin               Italy                         300,000    EUR         93.34   Fiat Auto S.p.A.                          20.000
                                                                                                                                 Fiat Partecipazioni S.p.A.                15.667
                                                                                                                                 Fiat S.p.A.                               14.000
                                                                                                                                 CNH Global N.V.                           10.000
                                                                                                                                 Iveco S.p.A.                              10.000
                                                                                                                                 Comau S.p.A.                               5.000
                                                                                                                                 Ferrari S.p.A.                             5.000
                                                                                                                                 Itedi-Italiana Edizioni S.p.A.             5.000
                                                                                                                                 Magneti Marelli Holding S.p.A.             5.000
                                                                                                                                 Teksid S.p.A.                              5.000
                                                                                                                                 Business Solutions S.p.A.                  4.333
                                                                                                                                 Fiat Ge.Va. S.p.A.                         1.000
IHF-Internazionale Holding Fiat S.A. Paradiso                       Switzerland          2,000,000,000       CHF        100.00   Fiat S.p.A.                              100.000
Intermap (Nederland) B.V.            Amsterdam                      Netherlands                 72,605       EUR        100.00   Fiat Partecipazioni S.p.A.               100.000
                                                                                                                                 Isvor Fiat Società consortile di sviluppo
Isvor Dealernet S.r.l.                          Turin               Italy                          10,000    EUR         94.34   e addestramento industriale per Azioni 80.000
                                                                                                                                 Fiat Auto S.p.A.                          20.000
Isvor Fiat Società consortile di sviluppo
e addestramento industriale per Azioni Turin                        Italy                         300,000    EUR         95.43   Fiat S.p.A.                              26.000
                                                                                                                                 Fiat Auto S.p.A.                         22.000
                                                                                                                                 Iveco S.p.A.                             17.000
                                                                                                                                 Case New Holland Italia s.p.a.           12.000
                                                                                                                                 Magneti Marelli Holding S.p.A.            9.000
                                                                                                                                 Comau S.p.A.                              8.000
                                                                                                                                 Business Solutions S.p.A.                 3.000
                                                                                                                                 Teksid S.p.A.                             3.000
La Stampa Europe SAS                            Paris               France                     18,600,000    EUR        100.00   Fiat France S.A.                        100.000
Neptunia Assicurazioni Marittime S.A.           Lugano              Switzerland                10,000,000    CHF        100.00   Rimaco S.A.                             100.000
New Business Quattordici S.p.A.                 Turin               Italy                       1,000,000    EUR        100.00   Fiat Partecipazioni S.p.A.              100.000
Palazzo Grassi S.p.A.                           Venice              Italy                       8,500,000    EUR        100.00   Fiat Partecipazioni S.p.A.              100.000
Pharos S.r.l.                                   Turin               Italy                         105,000    EUR         93.54   Fiat Servizi per l’Industria S.c.p.a.    95.238
                                                                                                                                 Fiat Partecipazioni S.p.A.                4.762
Rimaco S.A.                        Lausanne                         Switzerland                   350,000    CHF        100.00   IHF-Internazionale Holding Fiat S.A.    100.000
Sisport Fiat Società per Azioni-SF Turin                            Italy                       7,120,800    EUR        100.00   Fiat Partecipazioni S.p.A.              100.000
                                                          134                      Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                    The Companies of the Fiat Group




Subsidiaries valued by the equity method
                                                                                                                            % of
                                                                                                                          Group                                                      % of
                                                                                                                         consoli- Interest                           % interest   voting
Name                                               Registered office   Country                  Capital stock Currency    dation held by                                  held     rights
❚ Automobiles
Alfa Romeo Inc.                                    Orlando             U.S.A.                   3,000,000     USD         90.00   Fiat Auto S.p.A.                      100.000
Alfa Romeo Motors Ltd.                             Bangkok             Thailand               100,000,000     THB         90.00   Fiat Auto S.p.A.                       99.999
Andalcar Motor S.L.                                Jerez               Spain                      186,927     EUR         90.00   Inmap 2000 Espana S.L.                100.000
Auto Italia Erfurt GmbH in liquidation             Erfurt              Germany                  1,284,000     EUR         90.00   Fiat Automobil Vertriebs GmbH 100.000
BDC SA & Co.                                       Brussels            Belgium                  1,992,768     EUR         90.00   Italian Automotive Center S.A.         86.840
                                                                                                                                  B.D.C. S.A.                            13.160
                                                                                                                                  International Metropolitan Automotive
Copada S.A.S.                                      Paris               France                      750,000    EUR         90.00   Promotion (France) S.A.               100.000
F.A. Austria Commerz GmbH                          Vienna              Austria                      37,000    EUR         90.00   Fiat Auto (Suisse) S.A.               100.000
Fiat Auto Egypt Industrial Company SAE             Giza                Egypt                    50,000,000    EGP         72.36   Fiat Auto S.p.A.                       80.400
Fiat Auto Egypt S.A.E.                             Giza                Egypt                       500,000    EGP         71.64   Fiat Auto Egypt Industrial Company SAE 99.000
Fiat Auto S.A. de Ahorro para Fines Determinados   Buenos Aires        Argentina                    60,000    ARS         90.01   Fiat Auto Argentina S.A.               99.900
                                                                                                                                  Fiat Argentina S.A.                     0.100
Fiat Auto Thailand Pvt. Ltd.                       Bangkok             Thailand               150,000,000     THB         90.00   Fiat Auto S.p.A.                      100.000
Fiat Automoviles Venezuela C.A.                    Caracas             Venezuela                  300,000     VEB         90.00   Fiat Automoveis S.A. - FIASA          100.000
Italcar SA                                         Casablanca          Morocco                  4,000,000     MAD         90.00   Inmap 2000 Espana S.L.                100.000
Leasys S.p.A.                                      Fiumicino           Italy                  319,200,000     EUR         45.90   Fidis Renting Italia S.p.A.            51.000
Multipoint Sevilla S.A.                            Seville             Spain                      836,611     EUR         90.00   Inmap 2000 Espana S.L.                100.000
                                                                                                                                  International Metropolitan Automotive
SA France Auto                                     Roubaix             France                    1,981,837    EUR         90.00   Promotion (France) S.A.               100.000
                                                                                                                                  International Metropolitan Automotive
SA France Auto Roubaix                             Roubaix             France                       89,213    EUR         90.00   Promotion (France) S.A.               100.000
Saigarage S.p.A. in liq.                           Turin               Italy                       516,456    EUR         90.00   Fiat Auto Var S.r.l. a S.U.           100.000
Sirio Polska Sp. z o.o.                            Bielsko-Biala       Poland                    1,350,000    PLN         77.98   Fiat Auto Poland S.A.                 100.000
Zao Nizhegorod Motors                              Nizhnjy Novgorod    Russia                   24,660,000    RUR         65.83   Fiat Auto S.p.A.                       73.139 73.127

❚ Agricultural and Construction Equipment
Challenger New Holland Ltd.        Ottawa                              Canada                      623,000    CAD         49.89   New Holland Canada Ltd.             58.604
Farmers New Holland Inc.           Wilmington                          U.S.A.                      650,000    USD         85.13   New Holland North America Inc.     100.000
First State New Holland Inc.       Wilmington                          U.S.A.                      260,000    USD         59.99   New Holland North America Inc.      70.462
Garden City New Holland Inc.       Wilmington                          U.S.A.                      542,500    USD         55.85   New Holland North America Inc.      65.604
La Grande New Holland Inc.         Wilmington                          U.S.A.                      404,800    USD         64.57   New Holland North America Inc.      75.840
Medicine Hat New Holland Ltd. Ottawa                                   Canada                      956,400    CAD         75.40   New Holland Canada Ltd.             88.570
Memphis New Holland Inc.           Wilmington                          U.S.A.                      487,600    USD         82.36   New Holland North America Inc.      96.739
Northside New Holland Inc.         Wilmington                          U.S.A.                      250,000    USD         78.32   New Holland North America Inc.      92.000
Pensacola Tractor & Equipment Inc. Wilmington                          U.S.A.                      330,000    USD         85.13   New Holland North America Inc.     100.000
Redwood Equipment Inc.             Wilmington                          U.S.A.                      516,500    USD         85.13   New Holland North America Inc.     100.000
Ridgeview New Holland Inc.         Wilmington                          U.S.A.                      449,100    USD         76.96   New Holland North America Inc.      90.403
St. Catharines New Holland Ltd. Ottawa                                 Canada                      327,700    CAD         57.62   New Holland Canada Ltd.             67.680
Sunrise Tractor & Equipment Inc. Wilmington                            U.S.A.                      875,000    USD         80.11   New Holland North America Inc.      94.103
Tallahassee New Holland Inc.       Wilmington                          U.S.A.                      385,000    USD         82.92   New Holland North America Inc.      97.403
Topeka New Holland Inc.            Wilmington                          U.S.A.                      400,000    USD         70.79   New Holland North America Inc.      83.150
Tri-County New Holland Inc.        Wilmington                          U.S.A.                      400,000    USD         85.13   New Holland North America Inc.     100.000

❚ Commercial Vehicles
Altra S.p.A.                                       Genoa               Italy                       516,400    EUR         66.67   Irisbus Italia S.p.A.               66.670
F. Pegaso S.A.                                     Madrid              Spain                       993,045    EUR        100.00   Iveco Pegaso S.L.                  100.000
Financiere Pegaso France S.A.                      Trappes             France                      260,832    EUR        100.00   Iveco Pegaso S.L.                  100.000
Iveco S.P.R.L.                                     Kinshasa            Congo (Dem. Rep. Congo) 340,235,000    ZRN        100.00   Iveco S.p.A.                        99.992
                                                                                                                                  Astra Veicoli Industriali S.p.A.     0.008
                                                          135                     Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                   The Companies of the Fiat Group




Subsidiaries valued by the equity method (continued)
                                                                                                                           % of
                                                                                                                         Group                                                          % of
                                                                                                                        consoli- Interest                               % interest   voting
Name                                            Registered office   Country                    Capital stock Currency    dation held by                                      held     rights
❚ Components
                                                                                                                                 Magneti Marelli do Brasil
Cofap Companhia Fabricadora de Pecas LTDA       Santo Andre         Brazil                     60,838,291    BRL         68.14   Industria e Comercio SA                  68.350
Seima Italiana Auto Svet                        Krasnig Oktjabr Kirz Russia                    14,574,000    RUR         99.99   Seima Italiana S.p.A.                  100.000
Seima Italiana Russia                           Vjazniki Vladimir   Russia                 100,000,000       RUR         99.99   Seima Italiana S.p.A.                  100.000


❚ Metallurgical Products
Compania Industrial Frontera S.A. de C.V. São Pedro                 Mexico                         50,000    MXN         60.36   Teksid Hierro de Mexico S.A. de C.V. 100.000
Teksid of India Private Limited Company         Panaji              India                  403,728,450       INR         80.48   Teksid S.p.A.                          100.000


❚ Services
FiatEngineering Polska Sp. z o.o. Bielsko-Biala                     Poland                        100,000    PLN        100.00   Fiat Engineering S.p.A.                100.000


❚ Miscellaneous and Holding companies
Banca Unione di Credito (Cayman) Ltd            Grand Cayman        Cayman Islands             10,000,000    CHF        100.00   BUC - Banca Unione di Credito          100.000
BUC - Banca Unione di Credito                   Lugano              Switzerland            100,000,000       CHF        100.00   IHF-Internazionale Holding Fiat S.A.   100.000
Business Solutions FiatGroup USA Inc. Wilmington                    U.S.A.                           1,000   USD        100.00   Fiat Partecipazioni S.p.A.             100.000
Centro Studi sui Sistemi di Trasporto-CSST S.p.A. Turin             Italy                         520,000    EUR         84.42   Fiat Auto S.p.A.                         49.000
                                                                                                                                 Iveco S.p.A.                             30.000
                                                                                                                                 C.R.F. Società Consortile per Azioni     11.000
European Engine Alliance EEIG                   Maindenhead         United Kingdom                       0   GBP         61.71   CNH U.K. Limited                         33.333
                                                                                                                                 Iveco S.p.A.                             33.333
Fiat Deutschland GmbH                           Ulm                 Germany                       511,292    EUR        100.00   Fiat Finance and Trade Ltd             100.000
Fiat Geva Europe Ltd. in liq.                   Dublin              Ireland                219,494,225       EUR        100.00   Fiat Finance and Trade Ltd             100.000
Fiat Russia OOO                                 Moscow              Russia                     18,509,050    RUR        100.00   Fiat Partecipazioni S.p.A.               80.000
                                                                                                                                 Fiat International S.p.A.                20.000
Luganova S.A.                                   Lugano              Switzerland                 3,000,000    CHF        100.00   BUC - Banca Unione di Credito          100.000
New Business 7 S.p.A.                           Turin               Italy                      11,899,524    EUR        100.00   Fiat Partecipazioni S.p.A.             100.000
New Business 8 S.p.A.                           Turin               Italy                       1,437,210    EUR        100.00   New Business 7 S.p.A.                  100.000
Norfinance & Associes S.A.                      Geneva              Switzerland                 4,600,000    CHF        100.00   BUC - Banca Unione di Credito          100.000
Norfinance Gestion (Ticino) S.A. Mendrisio                          Switzerland                   300,000    CHF        100.00   Norfinance & Associes S.A.             100.000
SGR-Sociedad para la Gestion de Riesgos S.A.    Buenos Aires        Argentina                      10,000    ARS         99.96   Rimaco S.A.                              99.960
Sistemi Ambientali S.p.A. in liq.               Rivoli              Italy                       9,544,080    EUR         99.78   Fiat Partecipazioni S.p.A.               99.778
                                                        136                    Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                The Companies of the Fiat Group




Subsidiaries valued at cost
                                                                                                                        % of
                                                                                                                      Group                                                                  % of
                                                                                                                     consoli- Interest                                     % interest     voting
Name                                         Registered office     Country                  Capital stock Currency    dation held by                                            held       rights
❚ Automobiles
Fiat Auto de Mexico Sociedad Anonima
de Capital Variable (S.A. de C.V.) in liq. Mexico City             Mexico                       50,000    MXN         90.00   Fiat Auto S.p.A.                                99.998
                                                                                                                              Fiat Automoveis S.A. - FIASA                     0.002
Fiat Auto Espana Marketing Instituto
Agrupacion de Interes Economico      Alcalá De Henares Spain                                    30,051    EUR         85.50   Fiat Auto Espana S.A.                           95.000
Fiat Auto Marketing Institute (Portugal) ACE Alges                 Portugal                     15,000    EUR         72.00   Fiat Auto Portuguesa S.A.                       80.000
Nuove Iniziative Finanziarie 2 S.r.l.        Turin                 Italy                        25,000    EUR         90.00   Fiat Auto S.p.A.                                99.000
                                                                                                                              Fidis S.p.A.                                     1.000
Powertrain India Pvt. Ltd.                   Mumbai                India                       101,000    INR         90.00   Fiat India Automobiles Private Limited        100.000
Pro-Car LLC                                  Moscow                Russia                    1,001,000    RUR         90.00   Nuove Iniziative Finanziarie 2 S.r.l. 100.000


❚ Agricultural and Construction Equipment
Consorzio Fiat-Kobelco Isvor
Dealernet Rete in liquidation                San Mauro Torinese Italy                           21,175    EUR         40.95   Fiat Kobelco Construction Machinery S.p.A. 46.341
                                                                                                                              Isvor Dealernet S.r.l.                          12.195
David Brown Tractors (Ireland) Ltd. Dublin                         Ireland                      25,395    EUR         85.13   Pryor Foundry Inc.                            100.000
Fermec North America Inc.                    Wilmington            U.S.A.                             5   USD         85.13   Case LLC                                      100.000
International Harvester Company Wilmington                         U.S.A.                         1,000   USD         85.13   Case LLC                                      100.000
J.I. Case Company Limited                    Doncaster             United Kingdom                     2   GBP         85.13   Case United Kingdom Limited                   100.000
New Holland Superannuation Pty. Ltd. St. Marys                     Australia                          2   AUD         85.13   New Holland Australia Pty. Limited            100.000


❚ Commercial Vehicles
Consorzio per la Formazione
Commerciale Iveco-Coforma                    Turin                 Italy                        51,646    EUR         59.54   Iveco S.p.A.                                    50.000
                                                                                                                              Isvor Fiat Società consortile di sviluppo
                                                                                                                              e addestramento industriale per Azioni          10.000
Gestrans S.A.                                Suresnes              France                       45,730    EUR        100.00   Irisbus France S.A.                           100.000
Ikarus Trade Kft.                            Budapest              Hungary              423,220,000       HUF        100.00   Ikarusbus Jamugyarto RT                         99.976
                                                                                                                              Irisbus Holding S.L.                             0.024
IkarusBus Trejd KFT in liq.                  Moscow                Russia                       20,000    USD        100.00   Ikarusbus Jamugyarto RT                       100.000
Iran Magirus-Deutz                           Teheran               Iran                 180,000,000       IRR        100.00   Iveco Magirus AG                              100.000
Irisbus Benelux Ltd.                         Luxembourg            Luxembourg                  594,000    EUR        100.00   Irisbus France S.A.                             99.983
                                                                                                                              Société Charolaise de Participations S.A.        0.017
Irisbus North America Limited Liability Company Dover              U.S.A.                       20,000    USD        100.00   Irisbus France S.A.                           100.000
Iveco Colombia Ltda.                         Santa Fe’ de Bogota   Colombia                 75,699,000    COP         99.00   Iveco Venezuela C.A.                            99.000
Iveco Defence Vehicles S.p.A.                Bolzano               Italy                       100,000    EUR        100.00   Iveco S.p.A.                                  100.000
M.R. Fire Fighting International S.A.        Brasov                Romenia                  35,000,000    ROL         75.88   Iveco Magirus Brandschutztechnik GmbH           74.000
                                                                                                                              Brandschutztechnik Gorlitz GmbH                  1.000
                                                                                                                              Iveco Eurofire (Holding) GmbH                    1.000
Sivi S.p.A. in liquidation                   Trezzano Rosa         Italy                       500,000    EUR        100.00   Iveco S.p.A.                                  100.000


❚ Components
Automotive Lighting Japan K.K.               KohoKu-Ku-Yokohama Japan                       10,000,000    JPY         99.99   Automotive Lighting Reutlingen GmbH 100.000
Magneti Marelli Auto Pecas Ltda.             São Paulo             Brazil                         1,000   BRL         99.69   Magneti Marelli do Brasil Industria e Comercio SA 100.000
Magneti Marelli Automotive
Components (India) Limited                   Pune                  India                125,000,000       INR         99.99   Magneti Marelli Components B.V. 100.000
Magneti Marelli Pecas de Reposicao Ltda      São Paulo             Brazil                         1,000   BRL         99.69   Magneti Marelli do Brasil Industria e Comercio SA 100.000
Rien E.U.R.L. in liq.                        Vaulx-En-Velin        France                       45,735    EUR         99.99   Magneti Marelli Holding S.p.A.                100.000
Yorka Northamerica Corp.                     Southfield            U.S.A.                       10,000    USD         99.99   Yorka de Mexico S.A. de CV                    100.000


❚ Production Systems
Comau Russia OOO                             Moscow                Russia                    4,770,225    RUR        100.00   Comau S.p.A.                                    99.000
                                                                                                                              Comau Deutschland GmbH                           1.000
                                                        137                  Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                              The Companies of the Fiat Group




Subsidiaries valued at cost (continued)
                                                                                                                      % of
                                                                                                                    Group                                                                  % of
                                                                                                                   consoli- Interest                                     % interest     voting
Name                                          Registered office   Country                 Capital stock Currency    dation held by                                            held       rights
Comau (Shanghai) International
Trading Co. Ltd.                              Shanghai            People’s Rep.of China      200,000    USD        100.00   Comau S.p.A.                                  100.000
Comau U.K. Limited                            Telford             United Kingdom                2,500   GBP        100.00   Comau S.p.A.                                  100.000
Synesis                                       Modugno             Italy                       20,000    EUR         75.00   Comau S.p.A.                                    75.000

❚ Services
C.O.AV. Città Ospedaliera Avellino S.c. a r.l. Parma              Italy                       25,500    EUR         51.00   Fiat Engineering S.p.A.                         51.000
Consorzio Co.Ge.Av. in liquidation            Turin               Italy                       51,646    EUR        100.00   Fiat Engineering S.p.A.                       100.000
Consorzio Infatecno                           Turin               Italy                       35,000    EUR         70.00   Ingest Facility S.p.A.                          55.000
                                                                                                                            Cleantecno S.r.l.                               15.000
CONSORZIO SERMAGEST -
Servizi Manutentivi Gestionali                Turin               Italy                       15,000    EUR         60.00   Ingest Facility S.p.A.                          60.000
Fast Buyer Middle East A.S.                   Bursa               Turkey            95,000,000,000      TRL         98.72   Fast-Buyer S.p.A.                               98.800
Gestione Servizi Territoriali S.r.l.          Turin               Italy                       90,000    EUR        100.00   Ingest Facility S.p.A.                        100.000
Immobiliare F.E. S.r.l. a Socio Unico         Turin               Italy                       30,000    EUR        100.00   Fiat Engineering S.p.A.                       100.000
Transfima Gruppo Europeo di Interesse Economico Turin             Italy                      250,000    EUR         50.65   Fiat Engineering S.p.A.                         43.000
                                                                                                                            TRANSFIMA S.p.A.                                15.000


❚ Miscellaneous and Holding companies
Centro.com S.r.l. a S.U.                      Turin               Italy                       25,000    EUR        100.00   Fiat Partecipazioni S.p.A.                    100.000
Consorzio “Sirio” per la Sicurezza Industriale Turin              Italy                       56,239    EUR         65.51   Fiat Auto S.p.A.                                   37.027
                                                                                                                            Iveco S.p.A.                                        9.705
                                                                                                                            Magneti Marelli Powertrain S.p.A.                   1.663
                                                                                                                            Fiat S.p.A.                                         1.593
                                                                                                                            Comau S.p.A.                                        1.590
                                                                                                                            Ferrari S.p.A.                                      1.547
                                                                                                                            Teksid S.p.A.                                       1.405
                                                                                                                            Irisbus Italia S.p.A.                               1.315
                                                                                                                            Fiat Gesco S.p.A.                                   1.169
                                                                                                                            Sistemi Sospensioni S.p.A.                          1.164
                                                                                                                            Fiat Kobelco Construction Machinery S.p.A. 1.134
                                                                                                                            C.R.F. Società Consortile per Azioni 1.131
                                                                                                                            Fiat Servizi per l’Industria S.c.p.a.               1.065
                                                                                                                            Fiat Ge.Va. S.p.A.                                  0.949
                                                                                                                            Isvor Fiat Società consortile di sviluppo
                                                                                                                            e addestramento industriale per Azioni              0.948
                                                                                                                            Fidis S.p.A.                                        0.638
                                                                                                                            Magneti Marelli Sistemi di Scarico S.p.A. 0.498
                                                                                                                            Fiat Engineering S.p.A.                             0.489
                                                                                                                            Automotive Lighting Italia S.p.A.                   0.488
                                                                                                                            Editrice La Stampa S.p.A.                           0.488
                                                                                                                            Elasis-Società Consortile per Azioni 0.488
                                                                                                                            Ingest Facility S.p.A.                              0.488
                                                                                                                            Fiat Partecipazioni S.p.A.                          0.426
                                                                                                                            H.R. Services S.p.A.                                0.373
                                                                                                                            Case New Holland Italia s.p.a.                      0.288
                                                                                                                            Astra Veicoli Industriali S.p.A.                    0.213
                                                                                                                            Atlanet S.p.A.                                      0.213
                                                                                                                            Fiat Information & Communication Services S.r.l. 0.213
                                                                                                                            Magneti Marelli Holding S.p.A.                      0.213
                                                                                                                            Savarent Società per Azioni                         0.213
                                                                                                                            Servizi e Attività Doganali per l’Industria S.p.A.  0.213
                                                                                                                            CNH Movimento Terra S.p.A.                          0.207
                                                                                                                            Midas Italia S.p.A.                                 0.126
                                              138                       Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                         The Companies of the Fiat Group




Subsidiaries valued at cost (continued)
                                                                                                                 % of
                                                                                                               Group                                                               % of
                                                                                                              consoli- Interest                                    % interest   voting
Name                                  Registered office   Country                    Capital stock Currency    dation held by                                           held     rights
                                                                                                                       Fiat-Revisione Interna e Ispettorato S.c.r.l.    0.121
                                                                                                                       Iveco Mezzi Speciali S.p.A.                      0.121
                                                                                                                       Fiat Center Italia S.p.A.                        0.089
                                                                                                                       Isvor Knowledge System S.p.A.                    0.089
                                                                                                                       Business Solutions S.p.A.                        0.078
                                                                                                                       eSPIN S.p.A.                                     0.078
                                                                                                                       Fast-Buyer S.p.A.                                0.078
                                                                                                                       Itedi-Italiana Edizioni S.p.A.                   0.075
                                                                                                                       Maserati S.p.A.                                  0.075
                                                                                                                       Orione-Consorzio Industriale per la
                                                                                                                       Sicurezza e la Vigilanza                         0.075
                                                                                                                       Pharos S.r.l.                                    0.075
                                                                                                                       Risk Management S.p.A.                           0.075
                                                                                                                       Sisport Fiat Società per Azioni-SF               0.075
                                                                                                                       Cleantecno S.r.l.                                0.038
                                                                                                                       Delivery & Mail S.r.l.                           0.038
                                                                                                                       Easy Drive S.r.l. a S.U.                         0.038
                                                                                                                       Fiat International S.p.A.                        0.038
                                                                                                                       Global Value S.p.A.                              0.038
                                                                                                                       Iveco Finanziaria S.p.A.                         0.038
                                                                                                                       Palazzo Grassi S.p.A.                            0.038
Fiat Common Investment Fund Limited   London              United Kingdom                       2   GBP        100.00   Fiat United Kingdom Limited                 100.000
Fiat Oriente S.A.E. in liq.           Cairo               Egypt                          50,000    EGP        100.00   Fiat S.p.A.                                 100.000
Fides Corretagens de Securos Ltda     Nova Lima           Brazil                        365,525    BRL        100.00   Rimaco S.A.                                     99.998
Immobilier 92 SAS                     Paris               France                         38,115    EUR        100.00   Fiat France S.A.                            100.000
                                                                                                                       Isvor Fiat Società consortile di sviluppo
ISVOR DILTS Leadership Systems Inc. Burlingame            U.S.A.                           1,000   USD         48.67   e addestramento industriale per Azioni          51.000
                                                                                                                       Isvor Fiat Società consortile di sviluppo
Isvor Fiat India Private Ltd. in liq. New Delhi           India                       1,750,000    INR         95.43   e addestramento industriale per Azioni 100.000
Komdix SAS                            Paris               France                         40,000    EUR        100.00   Fiat France S.A.                            100.000
Luto Servizi S.A. in liquidation      Lugano              Switzerland                   100,000    CHF        100.00   BUC - Banca Unione di Credito               100.000
New Business Sei S.r.l.               Turin               Italy                          50,000    EUR        100.00   Fiat Partecipazioni S.p.A.                  100.000
Nuova Immobiliare Cinque S.r.l.       Turin               Italy                          50,000    EUR        100.00   Fiat Partecipazioni S.p.A.                  100.000
Nuova Immobiliare Quattro S.r.l. Turin                    Italy                          50,000    EUR        100.00   Fiat Partecipazioni S.p.A.                  100.000
Nuova Immobiliare Tre S.r.l.          Turin               Italy                          50,000    EUR        100.00   Fiat Partecipazioni S.p.A.                  100.000
Nuove Iniziative Finanziarie 3 S.r.l. Turin               Italy                          50,000    EUR        100.00   Fiat Partecipazioni S.p.A.                  100.000
Orione-Consorzio Industriale per
la Sicurezza e la Vigilanza           Turin               Italy                          26,342    EUR         95.62   Fiat S.p.A.                                     82.010
                                                                                                                       Editrice La Stampa S.p.A.                        2.000
                                                                                                                       Fiat Auto S.p.A.                                 2.000
                                                                                                                       Case New Holland Italia s.p.a.                   1.000
                                                                                                                       Comau S.p.A.                                     1.000
                                                                                                                       Fiat Gesco S.p.A.                                1.000
                                                                                                                       Fiat Ge.Va. S.p.A.                               1.000
                                                                                                                       Fiat Partecipazioni S.p.A.                       1.000
                                                                                                                       Isvor Fiat Società consortile di sviluppo
                                                                                                                       e addestramento industriale per Azioni           1.000
                                                                                                                       Iveco S.p.A.                                     1.000
                                                                                                                       Magneti Marelli Holding S.p.A.                   1.000
                                                                                                                       Palazzo Grassi S.p.A.                            1.000
                                                                                                                       Sisport Fiat Società per Azioni-SF               1.000
Overseas Union Bank and Trust
(Bahamas) Ltd. in liquidation         Nassau              Bahamas                     5,000,000    USD        100.00   BUC - Banca Unione di Credito               100.000
Sacafet in liq.                       Addis Ababa         Ethiopia                    2,000,000    ETB        100.00   IHF-Internazionale Holding Fiat S.A.        100.000
                                                         139                       Fiat Group        Annex to the Notes to the Consolidated Financial Statements
                                                                                                     The Companies of the Fiat Group




Associated companies valued by the equity method
                                                                                                                             % of
                                                                                                                           Group                                                       % of
                                                                                                                          consoli- Interest                            % interest   voting
Name                                             Registered office   Country                     Capital stock Currency    dation held by                                   held     rights
❚ Automobiles
Fiat-GM Powertrain B.V.                          Amsterdam           Netherlands                    232,000    EUR        45.00    Fiat Auto Holdings B.V.               50.000
Fidis Bank G.m.b.H.                              Vienna              Austria                       4,740,000   EUR        45.00    Fiat Auto S.p.A.                      50.000
Fidis Retail Italia S.p.A.                       Turin               Italy                      672,076,000    EUR        44.10    Fiat Auto S.p.A.                      49.000
GM-Fiat Worldwide Purchasing B.V.                Amsterdam           Netherlands                    300,000    EUR        45.00    Fiat Auto Holdings B.V.               50.000
IN ACTION S.r.l.                                 Arese               Italy                          336,000    EUR        44.91    Fidis S.p.A.                          49.900
Jiangsu Nanya Auto Co. Ltd.                      Nanjing             People’s Rep.of China     1,409,469,782   CNY        45.00    Fiat Auto S.p.A.                      50.000
Società di Commercializzazione
e Distribuzione Ricambi S.p.A.                   Turin               Italy                          100,000    EUR        17.10    Fiat Auto S.p.A.                      19.000
Società Europea Veicoli Leggeri-Sevel S.p.A.     Atessa              Italy                       68,640,000    EUR        45.00    Fiat Auto S.p.A.                      50.000
Société Europeenne de Vehicules Legers
du Nord-Sevelnord Société Anonyme      Paris                         France                      80,325,000    EUR        45.00    Fiat Auto (France) S.A.               50.000
Somaca-Société Marocaine
Construction Automobiles S.A.                    Casablanca          Morocco                      60,000,000   MAD        18.00    Fiat Auto S.p.A.                      20.000
Targa Trafficmaster S.p.A.                       Turin               Italy                         8,340,000   EUR        45.00    Fidis S.p.A.                          50.000
Targasys S.r.l.                                  Turin               Italy                       10,400,000    EUR        45.00    Fidis S.p.A.                          50.000
Tofas-Turk Otomobil Fabrikasi Tofas A.S.         Levent              Turkey          450,000,000,000,000       TRL        34.07    Fiat Auto S.p.A.                      37.856
Toro Targa Assicurazioni S.p.A.                  Turin               Italy                        46,126,000   EUR        44.10    Fiat Auto S.p.A.                      49.000


❚ Agricultural and Construction Equipment
Al-Ghazi Tractors Ltd                            Karachi             Pakistan                   195,165,660    PKR        36.75    CNH Global N.V.                       43.170
CNH Capital Europe S.A.S.                        Puteaux             France                      72,480,297    EUR        42.48    CNH Global N.V.                       49.900
Consolidated Diesel Company                      Whitakers           U.S.A.                              100   USD        42.57    CNH Engine Corporation                50.000
Employers Health Initiatives LLC Wilmington                          U.S.A.                                0   USD        42.57    New Holland North America Inc.        50.000
GQM Products LLC                                 Wilmington          U.S.A.                                0   USD        42.57    Case LLC                              50.000
Kobelco Construction Machinery Co. Ltd.          Hiroshima           Japan                   320,000,000,000   JPY        17.03    Case New Holland Italia s.p.a.        20.000
LBX Company LLC                                  Wilmington          U.S.A.                                0   USD        42.57    Case LBX Holdings Inc.                50.000
L&T Case Equipment Limited                       Mumbai              India                      180,100,000    INR        42.57    Case LLC                              50.000
Megavolt L.P. L.L.L.P.                           Wilmington          U.S.A.                         500,000    USD        34.05    Case LLC                              40.000
New Holland de Mexico SA de CV                   Queretaro           Mexico                      24,000,000    MXN        42.57    CNH Global N.V.                       50.000
New Holland Finance Ltd                          Basingstoke         United Kingdom                2,900,000   GBP        41.72    CNH Global N.V.                       49.000
New Holland HFT Japan Inc.                       Sapporo             Japan                      240,000,000    JPY        42.57    CNH Global N.V.                       50.000
New Holland Trakmak Traktor A.S. Izmir                               Turkey                  525,000,000,000   TRL        31.93    CNH Global N.V.                       37.500
Rathell Farm Equipment Company Inc. Wilmington                       U.S.A.                         640,000    USD        36.83    New Holland North America Inc.        43.266
Sip-Mot S.A.                                     Zamosc              Poland                        4,000,000   PLN        18.64    CNH Polska Sp. z o.o.                 21.890
Turk Traktor Ve Ziraat Makineleri A.S. Ankara                        Turkey           24,000,000,000,000       TRL        31.93    CNH Global N.V.                       37.500


❚ Commercial Vehicles
Afin Leasing AG                                  Vienna              Austria                       1,500,000   EUR        40.00    Iveco International Trade Finance S.A. 40.000
GEIE V.IV.RE                                     Boulogne            France                                2   EUR        50.00    Iveco S.p.A.                          50.000
Haveco Automotive Transmission Co. Ltd.          Zhajiang            People’s Rep.of China      200,010,000    CNY        33.33    Iveco S.p.A.                          33.333
Iveco Uralaz Ltd.                                Miass               Russia                      65,255,056    RUR        33.33    Iveco S.p.A.                          33.330
Machen-Iveco Holding S.A.                        Luxembourg          Luxembourg                  26,000,000    GBP        30.00    Iveco S.p.A.                          30.000
Naveco Ltd.                                      Nanjing             People’s Rep.of China 2,527,000,000       CNY        50.00    Iveco S.p.A.                          50.000
Otoyol Pazarlama A.S.                            Kartal/Istanbul     Turkey             1,590,000,000,000      TRL        27.00    Iveco S.p.A.                          27.000
Otoyol Sanayi A.S.                               Kartal/Istanbul     Turkey           30,000,000,000,000       TRL        27.00    Iveco S.p.A.                          27.000
Transolver Finance Establecimiento
Financiero de Credito S.A.                       Madrid              Spain                         9,315,500   EUR        50.00    Iveco S.p.A.                          50.000
V.IVE.RE Gruppo Europeo di Interesse Economico   Turin               Italy                                 2   EUR        50.00    Iveco S.p.A.                          50.000
                                                        140                     Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                 The Companies of the Fiat Group




Associated companies valued by the equity method (continued)
                                                                                                                         % of
                                                                                                                       Group                                                       % of
                                                                                                                      consoli- Interest                            % interest   voting
Name                                            Registered office   Country                  Capital stock Currency    dation held by                                   held     rights
❚ Components
Mako Elektrik Sanay Ve Ticaret A.S.             Osmangazi Bursa     Turkey         16,500,000,000,000      TRL        43.00    Magneti Marelli Holding S.p.A.        43.000


❚ Production Systems
Gerbi & Sciaky s.a.s.                           Bonneuil Sur Marne France                        50,000    EUR        44.89    Comau Sciaky S.A.                     45.000
Gonzales Production Systems Inc.                Pontiac             U.S.A.                       10,000    USD        49.00    Comau Pico Holdings Corporation 49.000
G.P. Properties I L.L.C.                        Pontiac             U.S.A.                       10,000    USD        49.00    Comau Pico Holdings Corporation 49.000


❚ Metallurgical Products
Hua Dong Teksid Automotive Foundry Co. Ltd. Zhenjiang-Jangsu People’s Rep.of China 307,100,000             CNY        40.24    Teksid S.p.A.                         50.000
Nanjing Teksid Iron Foundry Co. Ltd. Nanjing                        People’s Rep.of China 199,617,600      CNY        40.24    Teksid S.p.A.                         50.000


❚ Services
Global Value Services S.p.A.                    Turin               Italy                    10,730,000    EUR        50.00    Business Solutions S.p.A.             50.000
Global Value Soluçoes Ltda                      Nova Lima           Brazil                         2,000   BRL        50.00    Business Solutions do Brasil Ltda     50.000
Global Value Solutions S.p.A.                   Turin               Italy                       270,000    EUR        50.00    Business Solutions S.p.A.             50.000
Servizio Titoli S.r.l.                          Turin               Italy                       105,000    EUR        27.24    Business Solutions S.p.A.             27.238
S.I.NO.DO. - Sistema Informativo                                                                                               Servizi e Attività Doganali
Normativa Doganale in liq.       Turin                              Italy                        77,469    EUR        50.00    per l’Industria S.p.A.                50.000


❚ Publishing and Communications
Editalia S.r.l.                                 Caserta             Italy                     2,868,918    EUR        45.00    Editrice La Stampa S.p.A.             45.000
Editoriale Corriere Romagna S.r.l.              Forlì               Italy                     2,856,000    EUR        40.00    Editrice La Stampa S.p.A.             40.000
Edizioni Dost S.r.l.                            Bologna             Italy                     1,042,914    EUR        40.00    Editrice La Stampa S.p.A.             40.000
Società Editrice Mercantile S.r.l.              Genoa               Italy                     4,247,000    EUR        40.00    Editrice La Stampa S.p.A.             40.000


❚ Miscellaneous and Holding companies
IPI S.p.A.                                      Turin               Italy                    40,784,134    EUR        10.00    Fiat Partecipazioni S.p.A.            10.000
Italenergia Bis S.p.A.                          Turin               Italy                906,624,000       EUR        24.61    Fiat Energia S.r.l.                   24.613
Livingstone Motor Assemblers Ltd.               Livingstone         Zambia                   20,000,000    ZMK        20.00    Fiat Partecipazioni S.p.A.            20.000
Rizzoli Corriere della Sera MediaGroup S.p.A.   Milan               Italy                761,709,000       EUR         9.80    Fiat Partecipazioni S.p.A.             9.801 10.194
Rubattino 87 S.r.l.                             Milan               Italy                    10,845,400    EUR        30.59    Fiat Partecipazioni S.p.A.            30.589
                                                                   141                          Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                                 The Companies of the Fiat Group




Associated companies valued at cost
                                                                                                                                         % of
                                                                                                                                       Group                                                          % of
                                                                                                                                      consoli- Interest                               % interest   voting
Name                                                       Registered office     Country                     Capital stock Currency    dation held by                                      held     rights
❚ Automobiles
Car City Club S.r.l.                   Turin                                     Italy                          110,000    EUR        29.70    Savarent Società per Azioni              33.000
Consorzio per la Reindustrializzazione
dell’area di Arese S.c.r.l.            Arese                                     Italy                         1,020,000   EUR        27.00    Fiat Auto S.p.A.                         30.000
Fabrication Automobiles de Tiaret SpA Wilaya de Tiaret                           Algeria                   1,225,000,000   DZD        32.91    Fiat Auto S.p.A.                         36.571
G.E.I.E. Gisevel                       Paris                                     France                           15,200   EUR        45.00    Fiat Auto (France) S.A.                  50.000
G.E.I.E.-Sevelind                      Paris                                     France                           15,200   EUR        45.00    Fiat Auto (France) S.A.                  50.000
N. Technology S.p.A.                   Chivasso                                  Italy                         1,500,000   EUR        18.00    Fiat Auto S.p.A.                         20.000

❚ Commercial Vehicles
Atlas Vehicules Industriels S.A.                           Casablanca            Morocco                       2,200,000   MAD        48.97    Iveco S.p.A.                             48.968
CBC-Iveco Ltd.                                             Changzhou             People’s Rep.of China       664,000,000   CNY        50.00    Iveco S.p.A.                             50.000
Consorzio Iveco Fiat-Oto Melara                            Rome                  Italy                            51,646   EUR        50.00    Iveco S.p.A.                             50.000
Elettronica Trasporti Commerciali S.r.l. (Eltrac S.r.l.)   Turin                 Italy                           109,200   EUR        50.00    Iveco S.p.A.                             50.000
Sotra S.A.                                                 Abidijan              Ivory Coast               3,000,000,000   XAF        39.80    Irisbus France S.A.                      39.800
Zastava-Kamioni D.O.O.                                     Kragujevac            Yugoslavia                1,673,505,893   YUM        33.68    Iveco S.p.A.                             33.677

❚ Ferrari and Maserati
GPWC Holdings B.V.                                         Amsterdam             Netherlands                   2,500,000   EUR        11.20    Ferrari S.p.A.                           20.000

❚ Components
Flexider S.p.A.                                            Turin                 Italy                         4,131,655   EUR        25.00    Magneti Marelli Holding S.p.A.           25.000
Gulf Carosserie India Limited                              Worli                 India                         5,000,000   INR        20.00    Magneti Marelli Holding S.p.A.           20.000
Mars Seal Private Limited                                  Mumbai                India                           400,000   INR        23.97    Magneti Marelli France S.A.              24.000
Matay Otomotiv Yan Sanay Ve Ticaret A.S.                   Istanbul              Turkey                  855,000,000,000   TRL        28.00    Magneti Marelli Holding S.p.A.           28.000
M.I.P.-Master Imprese Politecnico                          Milan                 Italy                            20,658   EUR        50.00    Magneti Marelli Holding S.p.A.           50.000
Parades GEIE                                               Milan                 Italy                           216,900   EUR        33.33    Magneti Marelli Powertrain S.p.A.        33.330

❚ Production Systems
Consorzio Fermag                     Rome               Italy                                                   144,608    EUR        40.00    Comau S.p.A.                             40.000
Consorzio Generazione Forme-CO.GE.F. San Mauro Torinese Italy                                                    15,494    EUR        33.33    Comau S.p.A.                             33.333

❚ Metallurgical Products
S.A.S.-Società Assofond Servizi S.r.l.                     Trezzano sul Naviglio Italy                          520,000    EUR        16.10    Teksid S.p.A.                            20.000
Servicios Industriales Parque
Fundidores S.de r.l. de C.V.                               São Pedro             Mexico                          10,000    MXN        20.12    Teksid Hierro de Mexico S.A. de C.V.     33.330

❚ Services
C.I.S.A. Consorzio per Impiantistica
e Servizi Aerospaziali                                     Naples                Italy                          103,291    EUR        34.00    Fiat Engineering S.p.A.                  34.000
Coberga S.c.r.l. in liq.                                   Imola                 Italy                           10,329    EUR        37.51    Fiat Engineering S.p.A.                  37.506
Consorzio Brescia Val                                      Sesto S. Giovanni     Italy                           25,000    EUR        30.00    Fiat Engineering S.p.A.                  30.000
Consorzio CO.RI.R.E. in liq.                               Brindisi              Italy                           51,646    EUR        20.00    Fiat Engineering S.p.A.                  20.000
Consorzio “Dinamicity”                                     Milan                 Italy                           25,000    EUR        33.00    Fiat Engineering S.p.A.                  33.000
Consorzio per il Barocco in liq.                           Rome                  Italy                          154,937    EUR        24.50    Fiat Engineering S.p.A.                  24.500
Feic-Consorzio Imprese Lavori FFSS di Saline               Misterbianco          Italy                           15,494    EUR        33.34    Fiat Engineering S.p.A.                  33.335
Niugarit.Promocao e Desenvolvimiento de
Actividades Industriais em Cooperacao Ltda                 Lisbon                Portugal                        49,880    EUR        29.97    Fast-Buyer S.p.A.                        30.000
Palavela Società Consortile a
Responsabilità Limitata                                    Turin                 Italy                           10,000    EUR        50.00    Fiat Engineering S.p.A.                  50.000
Parco Grande S.c.r.l.                                      Turin                 Italy                           10,000    EUR        50.00    Fiat Engineering S.p.A.                  50.000
Piacenza 800                                               Turin                 Italy                          100,000    EUR        50.00    Fiat Engineering S.p.A.                  50.000
Ravizza S.c.r.l.                                           Turin                 Italy                           10,000    EUR        50.00    Fiat Engineering S.p.A.                  50.000
                                                           142                 Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                                The Companies of the Fiat Group




Associated companies valued at cost (continued)
                                                                                                                        % of
                                                                                                                      Group                                                                  % of
                                                                                                                     consoli- Interest                                      % interest    voting
Name                                             Registered office   Country                Capital stock Currency    dation held by                                             held      rights
S.I.MA.GEST2 Società Consortile
a Responsabilità Limitata       Zola Predosa                         Italy                      50,000    EUR        30.00    Ingest Facility S.p.A.                             30.000
Uffici Finanziari 2000 S.c.r.l.                  Turin               Italy                      10,200    EUR        40.00    Fiat Engineering S.p.A.                            40.000


❚ Miscellaneous and Holding companies
Agenzia Internazionalizzazione
Imprese Torino S.r.l. in l.                      Turin               Italy                     102,000    EUR        35.00    Fiat Partecipazioni S.p.A.                         35.000
Alcmena S.a.r.l.                                 Luxembourg          Luxembourg              5,000,000    EUR        20.00    BUC - Banca Unione di Credito                      20.000
Ciosa S.p.A. in liq.                             Milan               Italy                          516   EUR        25.00    Fiat Partecipazioni S.p.A.                         25.000
Concordia Finance S.A.                           Luxembourg          Luxembourg             12,900,000    EUR        30.00    Fiat Netherlands Holding N.V.                      30.000
CONFORM - Consorzio                                                                                                           Isvor Fiat Società consortile di sviluppo
Formazione Manageriale                           Avellino            Italy                      51,600    EUR        46.22    e addestramento industriale per Azioni             35.000
                                                                                                                              Isvor Knowledge System S.p.A.                      13.000
Consorzio Fiat Media Center                      Turin               Italy                     214,330    EUR        41.51    Astra Veicoli Industriali S.p.A.                    1.667
                                                                                                                              Atlanet S.p.A.                                      1.667
                                                                                                                              Business Solutions S.p.A.                           1.667
                                                                                                                              Case New Holland Italia s.p.a.                      1.667
                                                                                                                              Comau S.p.A.                                        1.667
                                                                                                                              Editrice La Stampa S.p.A.                           1.667
                                                                                                                              eSPIN S.p.A.                                        1.667
                                                                                                                              Fast-Buyer S.p.A.                                   1.667
                                                                                                                              Fiat Auto S.p.A.                                    1.667
                                                                                                                              Fiat Center Italia S.p.A.                           1.667
                                                                                                                              Fiat Gesco S.p.A.                                   1.667
                                                                                                                              Fiat Information & Communication Services S.r.l.    1.667
                                                                                                                              Fiat S.p.A.                                         1.667
                                                                                                                              Global Value S.p.A.                                 1.667
                                                                                                                              Irisbus Italia S.p.A.                               1.667
                                                                                                                              Itedi-Italiana Edizioni S.p.A.                      1.667
                                                                                                                              Iveco S.p.A.                                        1.667
                                                                                                                              Leasys S.p.A.                                       1.667
                                                                                                                              Magneti Marelli After Market S.p.A.                 1.667
                                                                                                                              Maserati S.p.A.                                     1.667
                                                                                                                              Midas Italia S.p.A.                                 1.667
                                                                                                                              MotorMust.com S.p.A. in liq.                        1.667
                                                                                                                              Palazzo Grassi S.p.A.                               1.667
                                                                                                                              Pharos S.r.l.                                       1.667
                                                                                                                              Savarent Società per Azioni                         1.667
                                                                                                                              Targa Automotive S.p.A.                             1.667
                                                                                                                              WorkNet società di fornitura
                                                                                                                              di lavoro temporaneo-per azioni                     1.667
Consorzio Oto-BPD in liq.                        Aulla               Italy                     103,291    EUR        50.00    Fiat Partecipazioni S.p.A.                         50.000
Consorzio Parco Industriale di Chivasso Chivasso                     Italy                      51,650    EUR        23.10    Fiat Partecipazioni S.p.A.                         23.100
Consorzio per lo Sviluppo delle Aziende Fornitrici Turin             Italy                     250,741    EUR        28.34    Case New Holland Italia s.p.a.                     10.299
                                                                                                                              Fiat Auto S.p.A.                                   10.299
                                                                                                                              Iveco S.p.A.                                       10.299
Consorzio Prode                                  Naples              Italy                      51,644    EUR        45.59    Elasis-Società Consortile per Azioni               50.000
Consorzio Scire                                  Pomigliano d’Arco Italy                        51,644    EUR        45.59    Elasis-Società Consortile per Azioni               50.000
Consorzio Scuola Superiore per l’Alta
Formazione Universitaria Federico II             Naples              Italy                     127,500    EUR        18.23    Elasis-Società Consortile per Azioni               20.000
Expo 2000 - S.p.A.                               Turin               Italy                   2,828,750    EUR        24.50    Fiat Partecipazioni S.p.A.                         24.498
FMA-Consultoria e Negocios Ltda São Paulo                            Brazil                           1   BRL        50.00    Fiat do Brasil S.A.                                50.000
Giraglia Immobiliare S.p.A.                      Milan               Italy                   3,500,000    EUR        28.24    Fiat Partecipazioni S.p.A.                         28.240
                                                   143                     Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                            The Companies of the Fiat Group




Associated companies valued at cost (continued)
                                                                                                                    % of
                                                                                                                  Group                                                               % of
                                                                                                                 consoli- Interest                                    % interest   voting
Name                                     Registered office   Country                    Capital stock Currency    dation held by                                           held     rights
Interfinanziaria S.A.                    Paradiso            Switzerland                 1,000,000    CHF        33.33    IHF-Internazionale Holding Fiat S.A. 33.330
Italimpianti S.p.A.                      Milan               Italy                       5,356,000    EUR        41.76    Fiat Partecipazioni S.p.A.                    41.760
Italpark-Società per Infrastrutture
Ausiliarie di Trasporti S.p.A. in liq.   Rome                Italy                         247,899    EUR        29.00    Fiat Partecipazioni S.p.A.                    29.000
Le Monde Europe S.A.                     Paris               France                      3,658,800    EUR        32.00    La Stampa Europe SAS                          32.000
Le Monde Presse S.A.                     Paris               France                      7,327,930    EUR        27.28    La Stampa Europe SAS                          27.277
Lombard Bank Malta PLC                   Valletta            Malta                       1,980,000    MTL        26.85    BUC - Banca Unione di Credito                 26.845
MB Venture Capital Fund I N.V.           Amsterdam           Netherlands                    50,000    EUR        45.00    Fiat Partecipazioni S.p.A.                    45.000
Motorcity Park S.r.l.                    Milan               Italy                       3,112,463    EUR        40.00    Fiat Partecipazioni S.p.A.                    40.000
Nuova Didactica S.c. a r.l.              Modena              Italy                         112,200    EUR        19.61    Ferrari S.p.A.                                16.364
                                                                                                                          Case New Holland Italia s.p.a.                12.273
Presse Europe Regions S.A.               Paris               France                     62,087,232    EUR        25.28    La Stampa Europe SAS                          25.280
                                                                                                                          Isvor Fiat Società consortile di sviluppo
QSF Qualità Servizi Formazione GEIE      Turin               Italy                          10,329    EUR        23.86    e addestramento industriale per Azioni        25.000
Tecnologie per il Calcolo Numerico-Centro
Superiore di Formazione S.c. a r.l.       Trento             Italy                         100,000    EUR        23.46    C.R.F. Società Consortile per Azioni          25.000
Zetesis S.p.A.                           Milan               Italy                         398,000    EUR        40.00    Fiat Partecipazioni S.p.A.                    40.000
                                                  144                      Fiat Group       Annex to the Notes to the Consolidated Financial Statements
                                                                                            The Companies of the Fiat Group




Other companies valued at cost
                                                                                                                    % of
                                                                                                                  Group                                                               % of
                                                                                                                 consoli- Interest                                    % interest   voting
Name                                     Registered office   Country                    Capital stock Currency    dation held by                                           held     rights
❚ Agricultural and Construction Equipment
Lubelska Fabryka Maszyn Rolnicych S.A.   Lublin              Poland                     13,000,000    PLN        15.72    CNH Polska Sp. z o.o.                         18.460
Plast-Form Sp. z o.o.                    Lublin              Poland                      2,090,000    PLN        10.18    CNH Polska Sp. z o.o.                         11.962
Polagris S.A.                            Pikieliszki         Lithuania                   1,133,400    LTT         9.41    CNH Polska Sp. z o.o.                         11.054


❚ Commercial Vehicles
Consorzio Bolzano Energia                Bolzano             Italy                          12,000    EUR        16.67    Iveco S.p.A.                                  16.667
Consorzio Spike                          Genoa               Italy                          90,380    EUR        15.00    Iveco S.p.A.                                  15.000
Trucks & Bus Company                     Tajoura             Libya                      87,000,000    LYD        17.24    Iveco Pegaso S.L.                             17.241


❚ Components
Consorzio U.L.I.S.S.E.                   Rome                Italy                         227,241    EUR        11.36    Magneti Marelli Holding S.p.A.                11.360


❚ Services
Byte Software House - S.p.A.             Turin               Italy                       4,215,000    EUR        17.79    Business Solutions S.p.A.                     17.794
H.R.O. Polska Sp. z o.o.                 Bielsko-Biala       Poland                        400,000    PLN        18.00    Business Solutions Polska Sp. z o.o.          18.000
Metrofiera S.c. a r.l.                   Milan               Italy                          10,000    EUR        15.00    Fiat Engineering S.p.A.                       15.000
We-Cube.Com S.p.A.                       Turin               Italy                         666,668    EUR        14.79    Business Solutions S.p.A.                     14.790


❚ Miscellaneous and Holding companies
                                                                                                                          Isvor Fiat Società consortile di sviluppo
Ascai Servizi S.r.l.                     Rome                Italy                          73,337    EUR        13.44    e addestramento industriale per Azioni        14.085
Consorzio Sorore                         Siena               Italy                            9,296   EUR        16.66    Fiat Partecipazioni S.p.A.                    16.663
Consorzio Technapoli                     Naples              Italy                       1,626,855    EUR        10.13    Elasis-Società Consortile per Azioni          11.110
Ercole Marelli e C. S.p.A.               Milan               Italy                       9,633,000    EUR        13.00    Fiat Partecipazioni S.p.A.                    13.000
Euromedia Luxembourg One S.A. Luxembourg                     Luxembourg                 52,500,000    USD        14.29    Fiat Netherlands Holding N.V.                 14.286
Fin.Priv. S.r.l.                         Milan               Italy                          20,000    EUR        14.29    Fiat S.p.A.                                   14.285
Gas Turbine Technologies S.p.A. Turin                        Italy                       5,000,000    EUR        15.00    Fiat Partecipazioni S.p.A.                    15.000
I.M. Intermetro S.p.A.                   Rome                Italy                       2,461,320    EUR        12.50    Fiat Partecipazioni S.p.A.                    12.500
IRCC-Istituto per la Ricerca e la
Cura del Cancro-Torino S.p.A.            Turin               Italy                      15,500,000    EUR        19.36    Fiat S.p.A.                                   19.355
Istituto Europeo di Oncologia S.r.l.     Milan               Italy                  106,500,000       EUR        10.90    Fiat S.p.A.                                   10.903
Kish Receivables Company                 Dublin              Ireland                123,451,123       EUR         1.49    Celt Receivables Limited                       1.485 16.248
Selvi & Cie S.A.                         Geneva              Switzerland                 2,400,000    CHF        16.67    BUC - Banca Unione di Credito                 16.666
Société Anonyme Technique Immobilière
et Financière de la Sadim (S.A.T.I.F.) Monaco                Princ.of Monaco               750,000    EUR        12.60    Fiat Partecipazioni S.p.A.                    12.600
145




Fiat S.p.A. — Financial Statements at December 31, 2003




Fiat S.p.A.
Head Office: 250 Via Nizza, Turin, Italy
Paid-in Capital: 4,918,113,540 euros
Entered in the Turin Company Register
Fiscal code: 00469580013
                                           146         Fiat S.p.A.   Financial Statements at December 31, 2003




                                           Balance Sheet
                                           ❚ ASSETS

                                                                                          December 31, 2003                      December 31, 2002
                                                                                                   in euros                               in euros

FIXED ASSETS
Intangible fixed assets                                (note 1)
Start-up and expansion costs                                                56,916,950                             15,405,925
Concessions, licenses, trademarks and similar rights                            97,891                                 62,159
Intangible assets in progress and advances                                     180,080                                242,084
Other intangible fixed assets                                               19,422,996                             29,876,447
Total                                                                                         76,617,917                              45,586,615
Property, plant and equipment                          (note 2)
Land and buildings                                                          37,187,059                             38,947,852
Plant and machinery                                                          3,881,608                              4,917,146
Other assets                                                                 4,169,698                              4,309,108
Total                                                                                         45,238,365                              48,174,106
Financial fixed assets                                 (note 3)
Investments in:
      Subsidiaries                                                       7,143,056,463                           7,908,826,095
      Associated companies                                                            –                               500,000
      Other companies                                                     139,075,478                             140,867,643
Total investments                                                                          7,282,131,941                           8,050,193,738
Other securities                                                                                   74,672                                  74,974
Total                                                                                      7,282,206,613                           8,050,268,712
TOTAL FIXED ASSETS                                                                         7,404,062,895                           8,144,029,433
CURRENT ASSETS
Inventories                                            (note 4)
Contract work in progress                                                   74,402,481                             54,364,194
Advances to suppliers                                                    5,162,514,994                           3,711,196,990
Total                                                                                      5,236,917,475                           3,765,561,184
Receivables                                            (note 5)
      Trade receivables (*)                                               198,904,177                             216,836,545
      Receivables from subsidiaries (**)                                    16,437,527                              7,124,425
      Receivables from others (***)                                       479,224,159                             385,413,113
Total                                                                                        694,565,863                             609,374,083
Financial assets not held as fixed assets              (note 6)
Treasury stock (total par value 21,920,095 euros)                                             28,044,570                              20,374,862
Financial receivables:
      From subsidiaries                                                  1,436,664,083                           1,475,178,226
      From others                                                                     –                            10,396,148
                                                                                           1,436,664,083                           1,485,574,374
Total                                                                                      1,464,708,653                           1,505,949,236
Cash                                                   (note 7)
Bank and post office accounts                                                  245,921                                850,810
Cheques                                                                          1,200                                130,804
Cash on hand                                                                       487                                    474
Total                                                                                             247,608                                982,088
TOTAL CURRENT ASSETS                                                                       7,396,439,599                           5,881,866,591
ACCRUED INCOME AND PREPAID EXPENSES                    (note 8)                               11,560,153                               1,013,765
❚ TOTAL ASSETS                                                                            14,812,062,647                          14,026,909,789
(*)      Amounts due within one year                                                            198,594,303                            216,500,848
         Amounts due beyond one year                                                                309,874                                335,697
(**)     Amounts due within one year                                                             16,437,527                              7,124,425
(***)    Amounts due within one year                                                            476,743,159                            361,624,827
         Amounts due beyond one year                                                              2,481,000                             23,788,286
                                           147                  Fiat S.p.A.   Financial Statements at December 31, 2003




                                           Balance Sheet
                                           ❚ LIABILITIES AND STOCKHOLDERS’ EQUITY

                                                                                                  December 31, 2003                     December 31, 2002
                                                                                                           in euros                              in euros

STOCKHOLDERS’ EQUITY                                            (note 9)
Capital stock                                                                                       4,918,113,540                        3,082,128,000
Additional paid-in capital                                                                            278,962,232                        2,327,119,028
Revaluation reserve under Law No. 413 of 12/30/91                                                      22,590,857                            22,590,857
Legal reserve                                                                                         659,340,011                          659,340,011
Treasury stock valuation reserve                                                                       28,044,570                            20,374,862
Other reserves
       Extraordinary reserve                                                       112,253,587                            112,253,587
       Reserve for purchase of treasury shares                                     971,955,430                            979,625,138
       Out-of-period income reserve under Art. 55,
       Presidential Decree No. 917 of 12/22/86
       (Article 18, Law No. 675 of 8/12/77)                                           1,914,925                             1,914,925
       Reserve for grants under Article 102,
       Presidential Decree No. 1523 of 6/30/67                                       17,693,098                            17,693,098
       Reserve for capital grant under Regional Law No. 19/84                           122,780                              122,780
                                                                                                    1,103,939,820                        1,111,609,528
Retained earnings                                                                                     763,109,624                          763,109,624
Net loss                                                                                           (2,358,789,924)                       (2,052,620,996)
TOTAL STOCKHOLDERS’ EQUITY                                                                          5,415,310,730                        5,933,650,914
RESERVES FOR RISKS AND CHARGES                                  (note 10)
Reserve for pensions and similar obligations                                                           23,964,546                            37,943,421
Other reserves                                                                                         31,018,247                            28,042,853
TOTAL RESERVES FOR RISKS AND CHARGES                                                                   54,982,793                            65,986,274
RESERVE FOR EMPLOYEE SEVERANCE INDEMNITIES                      (note 11)                              14,112,307                            24,474,508
PAYABLES                                                        (note 12)
Borrowings from banks (*)                                                                           3,030,000,204                        3,000,000,000
Advances                                                                                            5,371,031,598                        3,859,044,271
Trade payables                                                                                        399,485,100                          323,127,740
Payables to subsidiaries (**)                                                                         402,819,172                          480,565,363
Taxes payable (***)                                                                                    10,701,921                            11,699,313
Social security payable                                                                                 2,344,037                             1,435,346
Other payables (****)                                                                                  18,997,465                          265,156,680
TOTAL PAYABLES                                                                                      9,235,379,497                        7,941,028,713
ACCRUED EXPENSES AND DEFERRED INCOME                            (note 13)                              92,277,320                            61,769,380




❚ TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                       14,812,062,647                       14,026,909,789
(*)      Amounts due within one year                                                                             204                                     –
         Amounts due beyond one year                                                                   3,030,000,000                         3,000,000,000
(**)   Amounts due within one year                                                                       402,819,172                          230,565,363
       Amounts due beyond one year                                                                                 –                          250,000,000
(***) Amounts due within one year                                                                         10,701,921                            9,952,339
       Amounts due beyond one year                                                                                 –                            1,746,974
(****) Amounts due within one year                                                                         7,188,656                            8,298,675
       Amounts due beyond one year                                                                        11,808,809                          256,858,005
                                      148                 Fiat S.p.A.   Financial Statements at December 31, 2003




                                      Balance Sheet
                                      ❚ MEMORANDUM ACCOUNTS (note 14)

                                                                                            December 31, 2003                       December 31, 2002
                                                                                                     in euros                                in euros

GUARANTEES GRANTED
Unsecured guarantees
Suretyships on behalf of:
  Subsidiaries                                                               789,465,315                            2,094,695,513
  Others                                                                    1,283,134,073                            163,522,241
                                                                                              2,072,599,388                           2,258,217,754
Other unsecured guarantees on behalf of:
  Subsidiaries                                                            13,422,684,768                        15,830,466,835
  Others                                                                     217,686,478                             171,465,991
                                                                                             13,640,371,246                          16,001,932,826
TOTAL GUARANTEES GRANTED                                                                     15,712,970,634                          18,260,150,580
COMMITMENTS
Commitments related to supply contracts                                                       8,010,928,125                           7,717,521,984
Commitments related to derivative financial instruments                                          61,730,000                                        –
Other commitments                                                                                12,853,280                              16,431,045
TOTAL COMMITMENTS                                                                             8,085,511,405                           7,733,953,029
OTHER MEMORANDUM ACCOUNTS                                                                                  –                             19,244,380
❚ TOTAL MEMORANDUM ACCOUNTS                                                                  23,798,482,039                          26,013,347,989
                                         149         Fiat S.p.A.   Financial Statements at December 31, 2003




                                         Statement of Operations


                                                                                                     2003                              2002
                                                                                                 in euros                          in euros

VALUE OF PRODUCTION                                  (note 15)
Revenues from sales and services                                                            73,271,898                        68,927,335
Change in contract work in progress                                                         20,038,288                        16,219,800
Other income and revenues                                                                   19,217,446                        10,230,420
TOTAL VALUE OF PRODUCTION                                                                  112,527,632                        95,377,555
COSTS OF PRODUCTION                                  (note 16)
Raw materials, supplies and merchandise                                                        384,685                           428,191
Services                                                                                    99,821,396                       115,877,073
Leases and rentals                                                                             735,001                           982,252
Personnel
  Wages and salaries                                                      41,480,282                            36,328,802
  Social security contributions                                           12,845,132                             7,333,885
  Employee severance indemnities                                          30,443,304                            10,077,951
  Employee pensions and similar obligations                                5,101,776                             7,869,665
  Other costs                                                              7,664,954                             4,584,858
                                                                                            97,535,448                        66,195,161
Amortization, depreciation and writedowns
  Amortization of intangible fixed assets                                 26,522,758                             6,988,334
  Depreciation of property, plant and equipment                            3,250,914                             3,146,922
                                                                                            29,773,672                        10,135,256
Other operating costs                                                                       14,491,726                        28,206,031
TOTAL COSTS OF PRODUCTION                                                                  242,741,928                       221,823,964
DIFFERENCE BETWEEN THE
VALUE AND COSTS OF PRODUCTION                                                             (130,214,296)                      (126,446,409)
FINANCIAL INCOME AND EXPENSES                        (note 17)
Investment income
  Subsidiaries                                                          397,034,992                            273,446,956
  Other companies                                                          2,892,475                             4,989,540
                                                                                           399,927,467                       278,436,496
Other financial income
  From receivables held as fixed assets
     Subsidiaries                                                                   –                             441,189
  From securities held as fixed assets
  other than equity investments                                                2,556                                 3,277
  Other income
     Subsidiaries                                                         40,543,680                            60,390,523
     Others                                                               13,923,956                             8,220,122
                                                                          54,467,636                            68,610,645
                                                                                            54,470,192                        69,055,111
Interest and other financial expenses
     Subsidiaries                                                         16,885,354                            18,773,875
     Others                                                             206,381,817                             75,551,420
                                                                                           223,267,171                        94,325,295
TOTAL FINANCIAL INCOME AND EXPENSES                                                        231,130,488                       253,166,312
                                     150         Fiat S.p.A.   Financial Statements at December 31, 2003




                                     Statement of Operations


                                                                                                 2003                                  2002
                                                                                             in euros                              in euros

ADJUSTMENTS TO FINANCIAL ASSETS                  (note 18)
Writedowns
  Equity investments                                               2,373,625,928                           2,846,000,910
  Securities among current assets other
  than equity investments                                              5,076,490                             20,434,360
TOTAL ADJUSTMENTS                                                                   (2,378,702,418)                        (2,866,435,270)
EXTRAORDINARY INCOME AND EXPENSES                (note 19)
Income
  Gains on disposals                                                     106,366                            672,955,280
  Other income                                                            88,482                                209,110
                                                                                           194,848                           673,164,390
Expenses
  Taxes relating to prior years                                        2,440,787                                      –
  Other expenses                                                      18,093,821                             41,185,543
                                                                                        20,534,608                            41,185,543
TOTAL EXTRAORDINARY INCOME AND EXPENSES                                                (20,339,760)                          631,978,847
INCOME (LOSS) BEFORE TAXES                                                          (2,298,125,986)                        (2,107,736,520)
 Income taxes                                    (note 20)                              60,663,938                           (55,115,524)
NET LOSS                                                                            (2,358,789,924)                        (2,052,620,996)
                                   151                     Fiat S.p.A.   Financial Statements at December 31, 2003




                                    Notes to the Financial Statements

ACCOUNTING PRINCIPLES AND METHODS                                        the appraisals required by law, determined by the LIFO method
                                                                         with annual adjustments. As shown in a separate schedule,
Consistently with the previous fiscal year, the financial
                                                                         some of these assets have been adjusted for inflation, as
statements at December 31, 2003, which include the balance
                                                                         required by the relevant legislation.
sheet, the statement of operations and the notes to the financial
statements, have been prepared in accordance with the format             Investments in companies that have suffered a permanent loss
and regulations set forth in Legislative Decree No. 127 of April         in value are written down accordingly. If in subsequent fiscal
9, 1991, and provide the additional information required by              years the reasons for these adjustments are no longer valid, the
CONSOB.                                                                  writedowns are reversed. No reversals are made for writedowns
                                                                         recognized prior to the effective date of Decree Law No. 127/1991.
The valuation criteria used, which are discussed below, are
consistent with those used in previous fiscal years, and conform         Other securities include securities shown at their net purchase
to the provisions of Article 2426 of the Italian Civil Code.             price, adjusted for the accrual of any premium or discount
                                                                         earned or incurred upon issuance or purchase, because the
In particular:
                                                                         securities, which are pledged to fund scholarship grants, are
                                                                         not held for trading purposes.
❚ BALANCE SHEET
Intangible fixed assets                                                  Inventories
Start-up and expansion costs consist of costs incurred in                Inventories include contract work in progress and advances to
connection with capital increases. They are capitalized on the           suppliers.
basis of their estimated useful life. They are amortized on a
                                                                         Work in progress under long-term contracts (i.e. contracts
straight-line basis over five years; the available reserves exceed
                                                                         signed between Fiat and Treno Alta Velocità – T.A.V. S.p.A. in
not already amortized costs by a substantial amount.
                                                                         connection with the High-Speed Railway Project, described in
Trademarks are recorded at a value that reflects only the                Note 4) is valued on the basis of the respective production cost.
administrative cost of registration. To ensure a conservative            Amounts received from the bidder company T.A.V. S.p.A. while
valuation, this amount is amortized on a straight-line basis             work is in progress are treated as a form of financing and are
over three years.                                                        included among the liabilities under advances, while those paid
The other intangible fixed assets are represented by the                 to the subcontracting consortia are booked under inventories –
commissions paid for organization of the convertible facility            advances to suppliers.
granted in 2002. They are amortized on a pro-rated basis                 Revenues are booked when the work is actually delivered
according to the term of the facility.                                   and accepted by customers.


Property, plant and equipment and depreciation                           Treasury stock
Property, plant and equipment is recorded at acquisition cost            Treasury stock is stated at the lower of purchase cost, determined
plus directly attributable charges. As indicated in a separate           using the annual lot LIFO method and the average market price
schedule, the value of some of these assets includes the                 for the last month of the fiscal year.
inflation adjustments required under the pertinent laws.
Improvement costs are added to the value of the asset in                 If in subsequent fiscal years the reasons for these adjustments
question only when they permanently increase their value.                are no longer valid, the writedowns are reversed.
Depreciation is computed on a straight-line basis at rates               A corresponding treasury stock reserve for the same amount has
deemed adequate in view of the estimated useful life of the              been recorded in the balance sheet under stockholders’ equity.
assets. For assets acquired during the fiscal year, the annual           This reserve cannot be used to cover losses.
depreciation is taken at half the regular rate. The cost of
maintenance and repairs is charged directly to income when
incurred.                                                                Receivables and payables
                                                                         Accounts receivable are shown at their estimated realizable
                                                                         value, which represents the difference between their face value
Financial fixed assets                                                   and the adjustments included in the allowance for doubtful
Financial fixed assets include equity investments and other              accounts. The individual items are shown in the balance sheet
securities.                                                              net of the respective allowances.
Equity investments are shown in the balance sheet at their               Based on past experience, the amount of these allowances
historical cost and, more exactly, on the basis of the costs             is determined in accordance with a prudent estimate of
incurred or, when business operations are transferred, at the            uncollectible amounts and reflects the risks associated
values set forth in the respective contracts in accordance with          with specific delinquent accounts.
                                   152                    Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                        Notes to the Financial Statements




Receivables and payables denominated in currencies of non-              Commitments
EMU countries are converted into euros using the exchange               The Group’s commitments are posted under memorandum
rate prevailing at the time when booked. These receivables              accounts in their amount at December 31. In particular, the
and payables are adjusted at year-end exchange rates only in            supply commitments for the High-Speed Railway Project include
the case where balances translated at year-end exchange rates           the amount of supply commitments envisaged in the original
produce a material net exchange loss.                                   agreements made with Treno Alta Velocità – T.A.V. S.p.A., the
                                                                        amounts envisaged in agreements for alterations during
                                                                        construction, and relative monetary adjustments.
Accruals and deferrals
                                                                        If the amount of a commitment cannot be quantified,
Accruals and deferrals are determined by the accrual method,
                                                                        the commitment is not posted under memorandum
in accordance with the general principle of assigning revenues
                                                                        accounts but described instead in the notes to the financial
and expenses to the accounting period in which they are earned
                                                                        statements.
or incurred.


Reserves for risks and charges                                          Derivative financial instruments

Reserves for risks and charges are established to cover costs           Derivative financial instruments are recorded at inception in
or liabilities that have already been incurred or the occurrence        the memorandum accounts at their notional contract amount.
of which was probable or definite at the end of the fiscal year,        More specifically, derivative financial instruments classified
but were undetermined either as to amount or time of probable           as trading instruments insofar as they do not satisfy the
occurrence.                                                             requirements for hedge accounting treatment (e.g. equity
                                                                        swaps), are valued at their market value and the differential,
                                                                        if negative compared to the contractual value, is recorded in
Reserve for employee severance indemnities                              the statement of operations, in Financial income and expenses
The reserve for employee severance indemnities represents the           in accordance with the principle of prudence.
actual liability toward employees accrued as of the end of the
fiscal year and is adjusted each year in accordance with current
laws and collective bargaining agreements.                              ❚ STATEMENT OF OPERATIONS
                                                                        Dividends
❚ MEMORANDUM ACCOUNTS                                                   Dividends are recorded in the year when declared by the
                                                                        disbursing companies.
Suretyships and other unsecured guarantees
                                                                        The respective tax credits are booked when the dividends
The suretyships and other unsecured guarantees granted
                                                                        are collected.
on behalf of subsidiaries and others are posted under
memorandum accounts.
The suretyships granted against payment of the leases                   Financial income and expenses
of subsidiaries are posted in the amount of the provided
guarantee; the suretyships for the Sava Notes are posted in             Financial income and expenses are recorded on the accrual
the amount of the outstanding notes; the suretyships and other          basis.
unsecured guarantees granted for financing, bonds, credit               Costs relating to the sale of receivables of any type (with and
facilities, and commercial paper of subsidiaries and others are         without recourse) and nature (trade, financial, other) are charged
posted for the value of these notes at December 31.                     to the statement of operations on an accrual basis.
The Other unsecured guarantees include the amount of
the risk of withdrawal on sales of receivables with recourse.
                                                                        Income taxes
The receivables sold with recourse are eliminated from
the balance sheet; the risk of withdrawal is reported under             Liability for corporate income taxes due for the fiscal year
memorandum accounts and described in the notes to the                   is determined in accordance with the current legislation.
financial statements.                                                   Deferred tax assets and liabilities are determined on the basis
The suretyships granted by others for enterprise debts, in              of the temporary differences that arise between asset and
particular those granted by the Consortia participating in the          liability items and the corresponding tax items.
High-Speed Railway Project to guarantee the successful conclusion       In particular, deferred tax assets are recognized only when it
of work and the advances posted on the balance sheet under              is reasonably certain that they will be recovered. Conversely,
“Advances,” are not reported under memorandum accounts                  deferred tax liabilities are not recognized if it is unlikely that
but described instead in the notes to the financial statements.         the corresponding obligations will in fact arise.
                                      153                       Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                              Notes to the Financial Statements




ANALYSIS OF THE INDIVIDUAL ITEMS


Fixed assets
1 Intangible fixed assets
Start-up and expansion costs
At December 31, 2003, they totaled 56,917 thousand euros, and include costs (bank charges and other charges) incurred in
connection with the 2002 and 2003 capital increases.
The net increase of 41,511 thousand euros since December 31, 2002 is the net result of:
(in thousands of euros)

Capitalization of costs connected with the capital increase resolved on June 26, 2003                                         56,729
Amortization for the fiscal year                                                                                              (15,218)
Net change                                                                                                                    41,511


Concessions, licenses, trademarks and similar rights
This item, which amounted to 98 thousand euros at December 31, 2003, includes trademarks owned by the Company, which are
amortized over three years.
The net increase of 36 thousand euros compared with December 31, 2002 is the net effect of the following items:
(in thousands of euros)

Capitalization of expenses for new trademark registrations                                                                       106
Amortization for the fiscal year                                                                                                  (70)
Net change                                                                                                                        36


Intangible assets in progress and advances
This item reflects the costs incurred in connection with ongoing administrative procedures required to register trademarks.
With respect to December 31, 2002 it showed a net decrease of 62 thousand euros to 180 thousand euros at December 31, 2003,
as a result of new trademark registrations.


Other intangible fixed assets
They totaled 19,423 thousand euros at December 31, 2003 and are represented by the commissions and charges paid for organization
of the three-year convertible facility granted in 2002 by a pool of banks arranged by Capitalia, Banca Intesa, Sanpaolo IMI, and
Unicredit Banca. They are amortized on a pro-rated basis according to the term of the facility (September 24, 2002 – September 16,
2005).
The net decrease of 10,453 thousand euros with respect to December 31, 2002 is due to:
(in thousands of euros)

Amortization for the fiscal year                                                                                              (11,235)
Capitalization of costs                                                                                                          782
Net change                                                                                                                    (10,453)
                                          154                   Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                              Notes to the Financial Statements




2 Property, plant and equipment
At December 31, 2003 and 2002, property, plant and equipment totaled 45,238 thousand euros and 48,174 thousand euros,
respectively. These amounts are net of accumulated depreciation of 17,910 thousand euros at December 31, 2003 and 16,364
thousand euros at December 31, 2002.
The net decrease of 2,936 thousand euros is the net effect of the following items:
(in thousands of euros)

Additions
   New vehicles (786); purchase of furniture and equipment (812)                                                                            1,598
Disposals
   sale of real estate (C.so Dante 102)                                                                                   (445)
   sales of vehicles                                                                                                      (397)
   elimination of obsolete furniture and equipment                                                                        (441)
Total disposals                                                                                                                            (1,283)
Provision for the fiscal year charged to accumulated depreciation                                                                          (3,251)
Net change                                                                                                                                 (2,936)


Depreciation taken in 2003 was computed using the following rates:
                                                                                                                                  Depreciation rates

Buildings                                                                                                                                      3%
Plant and machinery                                                                                                                          10%
Furniture                                                                                                                                    12%
Equipment                                                                                                                                    20%
Vehicles                                                                                                                                     25%




3 Financial fixed assets
Investments
This item totaled 7,282,132 thousand euros at December 31, 2003, down 768,062 thousand euros from December 31, 2002.
A breakdown of changes occurred during the year is provided in the following tables:
                                           155                      Fiat S.p.A.    Financial Statements at December 31, 2003
                                                                                   Notes to the Financial Statements




(in millions of euros)                                                                2002 Acquisitions                                                   2003
                                                                      % owned        Book      Capital    Contri-                                        Book
Company name                                                      by Fiat S.p.A.     value   increases    butions   Mergers    Disposals Write-downs     value

Subsidiaries
Fiat Partecipazioni S.p.A.
(formerly Sicind S.p.A.) – Turin                                       100.00       3,007         100                 1,118                  (1,210)    3,015
FiatAvio Partecipazioni S.p.A.
(formerly FiatAvio S.p.A.) – Turin                                            –      161                               (161)                                –
Fiat Gestione Partecipazioni S.p.A.
(formerly Business Solutions S.p.A.) – Turin                                  –      229                               (229)                                –
Fiat Partecipazioni S.p.A. (formerly Fiat Auto
Partecipazioni S.p.A.) – Turin                                                –      728                               (728)                                –
Fiat Netherlands Holding N.V.
(formerly Iveco N.V.) – Amsterdam (Netherlands)                          60.56       668                              2,682                  (1,000)    2,350
Fiat Netherlands Holding N.V. –
Amsterdam (Netherlands)                                                       –     1,167                 1,382      (2,549)                                –
CNH Global N.V. – Amsterdam (Netherlands)                                     –         –       1,382     (1,382)                                           –
Comau B.V. – Amsterdam (Netherlands)                                          –        33                   100        (133)                                –
Comau S.p.A. – Turin                                                          –         –         100       (100)                                           –
Magneti Marelli Holding S.p.A. – Turin                                   99.99       803             8                                         (144)     667
IHF - Internazionale Holding Fiat S.A. – Paradiso (Switzerland)        100.00        669                                                                 669
Fiat GE.VA. S.p.A. – Turin                                             100.00        222                                                                 222
Ferrari S.p.A. – Modena                                                  56.00       161                                                                 161
Itedi - Italiana Edizioni S.p.A. – Turin                               100.00           6           10                                                     16
Fiat USA Inc. – New York (U.S.A.)                                      100.00          35                                                       (10)       25
Fiat Finance North America Inc. – Wilmington (U.S.A.)                    39.47         17                                                                  17
Fiat International S.p.A. – Turin                                      100.00           1                                                         (1)       –
Fiat Servizi per l’Industria SE.P.IN. S.c.p.A. – Turin                   36.47          1                                                         (1)       –
Other companies                                                                         1            1                                            (1)       1
Total subsidiaries                                                                  7,909       1,601          –          –           –      (2,367)    7,143
Associated companies
GPWC Holdings B.V. – Amsterdam (Netherlands)                                  –         1                                            (1)                    –
Total associated companies                                                              1            –         –          –          (1)          –         –
Other companies
Mediobanca S.p.A. – Milan                                                 1.81         93                                                                  93
Istituto per la Ricerca e la Cura del Cancro S.p.A. - Turin              19.35          6                                                                   6
Istituto Europeo di Oncologia S.r.l. – Milan                             10.90          8            1                                            (3)       6
Fin.Priv. S.r.l. – Milan                                                 14.29         14                                                                  14
Consortium S.r.l. – Milan                                                 2.27         20                                                                  20
Total other companies                                                                141             1         –          –           –          (3)     139
❚ Grand total                                                                      8,051        1,602          –          –          (1)     (2,370)    7,282
                                          156                    Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                               Notes to the Financial Statements




In particular, increases include:
(in thousands of euros)

Acquisitions
Subsidiaries
   51% of Fiat Information & Communication Services S.r.l.
   from Fiat Partecipazioni S.p.A. (formerly Sicind S.p.A.)                                                                     430
   5% of Fiat Revi S.c.r.l. from Toro Assicurazioni S.p.A.                                                                       15
Total                                                                                                                                       445
Capital increases
Subsidiaries
   CNH Global N.V. through contribution of financial receivables                                                           1,381,990
   Magneti Marelli Holding S.p.A.                                                                                             8,649
   Comau S.p.A.                                                                                                             100,000
   Itedi S.p.A.                                                                                                              10,000
   Fiat Partecipazioni S.p.A. (formerly Sicind S.p.A.)                                                                      100,000
   Isvor Fiat S.c.p.A.                                                                                                          156
   Fiat Revi S.c.r.l.                                                                                                            42
   Elasis S.c.p.A.                                                                                                                7
Total subsidiaries                                                                                                                     1,600,844
Other companies
   Istituto Europeo di Oncologia S.r.l.                                                                                       1,142
Total                                                                                                                                  1,601,986
Contributions
Subsidiaries
   Fiat Netherlands Holding N.V. shares received following contribution of CNH Global N.V. shares                          1,381,990
   Comau B.V. shares received following contribution of Comau S.p.A. shares                                                 100,000
Total                                                                                                                                  1,481,990
Mergers
Subsidiaries
   Fiat Partecipazioni S.p.A. (formerly Sicind S.p.A.) shares received following merger
   of Fiat Partecipazioni S.p.A. for 727,821 thousand euros, of FiatAvio Partecipazioni S.p.A.
   (formerly FiatAvio S.p.A.) for 161,109 thousand euros, and Fiat Gestione Partecipazioni S.p.A.
   (formerly Business Solutions S.p.A. until June 30, 2003) for 229,559 thousand euros                                     1,118,489
   Fiat Netherlands Holding N.V. (formerly Iveco N.V.) shares received
   following merger of Fiat Netherlands Holding N.V. for 2,548,603
   thousand euros and of Comau B.V. for 133,372 thousand euros                                                             2,681,975
Total                                                                                                                                  3,800,464
Total increases                                                                                                                        6,884,885
                                          157                    Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                               Notes to the Financial Statements




In particular, decreases include:
(in thousands of euros)

Disposals
Subsidiaries
   0.06% of the preference shares of Toro Assicurazioni S.p.A. to DeAgostini Invest S.A.                                        420
Associated companies
   20% of GPWC Holdings B.V. to Ferrari S.p.A.                                                                                  500
Total                                                                                                                                       920
Contributions
Subsidiaries
   shares of CNH Global N.V. contributed to Fiat Netherlands Holding N.V.                                                  1,381,990
   shares of Comau S.p.A. contributed to Comau B.V.                                                                         100,000
Total                                                                                                                                  1,481,990
Mergers
Subsidiaries
   Cancellation of shares following merger in Fiat Partecipazioni S.p.A. (formerly Sicind S.p.A.)
   of Fiat Partecipazioni S.p.A. (727,821 thousand euros), of FiatAvio Partecipazioni S.p.A.
   (formerly FiatAvio S.p.A.) (161,109 thousand euros) and of Fiat Gestione Partecipazioni S.p.A.
   (formerly Business Solutions S.p.A. until June 30, 2003) (229,559 thousand euros)                                       1,118,489
   Cancellation of shares following merger in Fiat Netherlands Holding N.V.
   (formerly Iveco N.V.) of Fiat Netherlands Holding N.V. (2,548,603 thousand euros)
   and of Comau B.V. (133,372 thousand euros)                                                                              2,681,975
Total                                                                                                                                  3,800,464
Writedowns of carrying value
Subsidiaries
   Fiat Partecipazioni S.p.A. (mainly due to the negative performance of the Automobile Sector)                            1,210,084
   Fiat Netherlands Holding N.V. (due to the losses of the Iveco and CNH subsidiaries)                                     1,000,425
   Magneti Marelli Holding S.p.A.                                                                                           144,221
   Fiat USA Inc.                                                                                                              9,747
   Isvor Fiat S.c.p.A.                                                                                                          268
   Fiat International S.p.A.                                                                                                  1,279
   Fiat Se.p.In. S.c.p.A.                                                                                                       569
   Fiat Revi S.c.r.l.                                                                                                            41
Total subsidiaries                                                                                                                     2,366,634
Other companies
   Istituto Europeo di Oncologia S.r.l.                                                                                       2,939
Total                                                                                                                                  2,369,573
Total decreases                                                                                                                        7,652,947


The table at the end of these Notes to the Financial Statements contains a list of equity investments and the additional information
required under Article 2427 of the Italian Civil Code and the supplemental data recommended by CONSOB, including changes in
quantity and value of subsidiaries and associated companies and, for publicly traded companies, a comparison between the book
value and the market value.
As required by Article 2426, Section 3, of the Italian Civil Code, we wish to emphasize that certain investments are carried at an
amount that exceeds the value of the corresponding portion of the underlying stockholders’ equity in the latest approved financial
statements, after deducting dividends and after the adjustments required for consolidation purposes.
In particular, the values of the investments in Magneti Marelli Holding S.p.A., Fiat Partecipazioni S.p.A., Ferrari S.p.A., and Fiat
Finance North America Inc. that are reported on the balance sheet of Fiat S.p.A. are higher that the corresponding shares of
stockholders’ equity in the companies (123 million euros, 271 million euros, 55 million euros, and 3 million euros, respectively)
because these investments have objectively higher inherent values than what is documented by accounting records.
The higher values for the investment in Magneti Marelli Holding S.p.A. are confirmed by the external appraisal performed at the
end of 2002 when the Company was formed; those for Fiat Partecipazioni S.p.A. by the contractually agreed gain on the indirect
investment in Italenergia Bis S.p.A. that can be realized at the beginning of 2005 upon exercise of the put option for sale to EDF;
those for Ferrari S.p.A. by the current values recently realized upon sale of 34% of the investment to Mediobanca in 2002 (see Note
14 hereunder for an updated disclosure of the mutual commitments assumed at that time).
                                    158                    Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                         Notes to the Financial Statements




All the other investments in subsidiaries have a book value that is less than or equal to the stockholders’ equity determined in
accordance with the aforesaid principles.


Other securities
These consist of listed Treasury securities pledged to fund scholarship grants.
At December 31, 2003, their book value totaled 75 thousand euros (based on their quotations at December 30, 2003), in line with
the previous year.
As regards fixed assets, the tables at the end of these Notes to the Financial Statements include the following:
❚ the additional information on cost, upward adjustments, writedowns and amortization and depreciation required under Article 2427
  of the Italian Civil Code; and
❚ as required under Article 10 of Law No. 72 of March 19, 1983, a mention of the assets held at December 31, 2003 which have been
  adjusted for inflation pursuant to the relevant laws.




Current assets
4 Inventories
This item consists of costs incurred in connection with the High-Speed Railway Project. Fiat, as general contractor, has signed
contracts with Treno Alta Velocità – T.A.V. S.p.A. (which, in turn, had received the order from F.S. S.p.A. - Italian State Railways) for the
executive design and construction of two high-speed rail lines (Bologna-Florence and Turin-Milan) for a contract price of 3,638 million
euros and 4,373 million euros, respectively.
Fiat S.p.A. has entrusted the CAV.E.T. and CAV.TO.MI. consortia with the design and execution of works, retaining responsibility
for coordination and organization, while project management was subcontracted. The contract for the job connected to the Turin-
Novara line is still in course of definition with the CAV.TO.MI. Consortium.
Financing of the project is carried out by means of advances paid by T.A.V. S.p.A. to Fiat S.p.A., which then transfers to the two
consortia the net amounts after deducting its fee (about 3.8%).
The following items are included under Inventories:
❚ Contract work in progress
  This item, which totaled 74,402 thousand euros at December 31, 2003, refers for 48,346 thousand euros (42,673 thousand euros
  at December 31, 2002) to the Florence-Bologna line and for 26,056 thousand euros (11,691 thousand euros at December 31, 2002)
  to the Turin-Novara line. The item includes cumulative costs for coordination, organization, and project management work. The
  increase in contract work in progress totaled 20,038 thousand euros with respect to the end of 2002.
❚ Advances to suppliers
  Advances totaled 5,162,515 thousand euros and include disbursements made to the Alta Velocità Emilia Toscana – CAV.E.T.
  (2,766,064 thousand euros) and Alta Velocità Torino-Milano – CAV.TO.MI. Consortia (2,396,451 thousand euros) mainly for work
  completed and contractual advances. Work completed as at December 31, 2003 totaled 4,583,284 thousand euros. Of this amount,
  the Bologna-Florence line accounted for 2,491,634 thousand euros (2,151,803 thousand euros at December 31, 2002) and the Turin-
  Novara sub-line for 2,091,650 thousand euros (763,024 thousand euros at December 31, 2002).
  This item shows an increase of 1,451,526 thousand euros from December 31, 2002, as a result of the advances for work completed
  during the fiscal year paid to CAV.E.T. for 305,024 thousand euros and to CAV.TO.MI. for 1,146,502 thousand euros.
As explained later, the item Advances on the liabilities side of the balance sheet includes contractual advances totaling 5,371,032
thousand euros paid by the bidder company Treno Alta Velocità – T.A.V. S.p.A.
                                         159                        Fiat S.p.A.    Financial Statements at December 31, 2003
                                                                                   Notes to the Financial Statements




Fiat S.p.A. provided T.A.V. S.p.A. with bank suretyships totaling 1,565,814 thousand euros (641,732 thousand euros for the Bologna-
Florence line and 924,082 thousand euros for the Turin-Milan line) as security for contractual advances received and proper execution
of work. Conversely, the CAV.E.T. Consortium provided Fiat S.p.A. with bank suretyships totaling 617,051 thousand euros, as
envisaged by contract. In 2003, the CAV.TO.MI. Consortium issued the contractually envisaged bank suretyships (889,115 thousand
euros) and obtained reimbursement of the cash collateral of 250,000 thousand euros paid in 2002.




5 Receivables
Receivables amounted to 694,566 thousand euros at December 31, 2003. A breakdown of the net increase of 85,192 thousand euros
from the figure at the end of 2002 is provided in the following table:
(in thousands of euros)                                                                                  12/31/03              12/31/02     Change

Trade receivables                                                                                       199,162                217,095    (17,933)
   Allowance for doubtful accounts                                                                          (258)                 (258)         –
Total trade receivables                                                                                 198,904                216,837    (17,933)
Subsidiaries                                                                                             16,438                  7,124      9,314
Others
   Due from the Tax Authorities                                                                         404,211                318,982     85,229
   Receivables for net deferred tax assets                                                                     –                56,096    (56,096)
   Due from employees                                                                                        311                  484        (173)
   Receivables from factoring companies                                                                  74,402                  9,695     64,707
   Other (security deposits, social security institutions, advances to suppliers, etc.)                      300                  156        144
Total others                                                                                            479,224                385,413     93,811
Total receivables                                                                                       694,566                609,374     85,192


Compared with December 31, 2002, trade receivables decreased by 17,933 thousand euros. These receivables are mainly the result
of corresponding amounts owed by T.A.V. S.p.A. for works completed in 2003, net of receivables sold.
The liabilities include, under trade payables, the amounts owed to CAV.E.T. and CAV.TO.MI.
Receivables from subsidiaries stem from the provision of services. At December 31, 2003, they were 9,314 thousand euros higher
than at the end of 2002.
Receivables from others totaled 479,224 thousand euros at December 31, 2003 and include receivables from Tax Authorities for a
total of 404,211 thousand euros. This latter amount includes the consolidated Group VAT credits of 216,036 thousand euros (of
which 112,914 thousand euros were requested in the form of reimbursements, net of receivables sold, and 103,122 thousand euros
were carried forward), IRPEG (mainly for 2003) of 184,444 thousand euros, IRAP of 448 thousand euros, prepayment of taxes on
employee severance indemnities of 1,058 thousand euros, and other minor credits of 2,225 thousand euros.
Receivables from others showed a net increase of 93,811 thousand euros from December 31, 2002, as a net result of the following items:
(in thousands of euros)

Lower consolidated Group VAT receivables                                                                                                   (8,183)
Corporate income tax receivables for the fiscal year (IRPEG)                                                                              142,666
2002 corporate income tax receivables transferred to Group companies                                                                      (40,200)
Higher receivables from factoring companies                                                                                                64,707
Elimination of receivables for net deferred tax assets                                                                                    (56,096)
Miscellaneous items                                                                                                                        (9,083)
Net change                                                                                                                                 93,811


The increase in receivables from factoring companies refers in part to receivables sold to factors and not yet paid.
The credit for net deferred tax assets was the result of provisions to reserves in fiscal 2002 for tax prepayments on losses from equity
investments deductible in subsequent fiscal years (238,000 thousand euros) net of deferred tax liabilities on the gain from disposal
of Ferrari S.p.A. shares taxable in future fiscal years (177,791 thousand euros).
It has been eliminated because there is no reasonable certainty that it will be recovered in future fiscal years.
                                      160                      Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                             Notes to the Financial Statements




Net deferred tax assets refer mainly to quotas of losses deductible in future fiscal years and amount to about 700 million euros. As
there is no reasonable certainty of their recovery they have not been recorded in the balance sheet.
There are no receivables with a residual term of more than five years.




6 Financial assets not held as fixed assets
Treasury stock
This item consists of 4,384,019 ordinary shares with a total par value of 21,920 thousand euros, earmarked for the Stock Option Plans.
Treasury stock totaled 28,045 thousand euros at December 31, 2003. A breakdown of the net increase by 7,670 thousand euros from
December 31, 2002 is provided in the following table:
(in thousands of euros)

Purchases                                                                                                                             12,746
Writedown to market value during the last month of the fiscal year                                                                    (5,076)
Net change                                                                                                                             7,670


Financial receivables
This item totaled 1,436,664 thousand euros at December 31, 2003, compared with 1,485,574 thousand euros at the end of 2002.
A breakdown is provided below:
(in thousands of euros)                                                                            12/31/03                12/31/02    Change

Subsidiaries
   Fiat Ge.Va. S.p.A.                                                                           1,436,664                1,475,178    (38,514)
Others
   Tax Authorities                                                                                       –                 10,396     (10,396)
Total financial receivables                                                                     1,436,664                1,485,574    (48,910)


This item consists of a fixed rate loan of 1,300,000 thousand euros, due on January 15, 2004, provided to the subsidiary Fiat Ge.Va.
S.p.A. and liquidity left on deposit with the same company (136,664 thousand euros).
In April 2003, Fiat S.p.A. acquired financing (financial receivables) due within and beyond the fiscal year from Fiat Finance & Trade
Ltd. for US$ 1,480 million (equal to 1,381 million euros). Subsequently, these loans were contributed to the indirect subsidiary CNH
Global N.V. against issuance of 5,920,000 preferred shares (Note 3).
In 2003 receivables due from tax authorities, for which Government securities have already been requested in lieu of cash, were sold
without recourse to Ifitalia.




7 Cash
Bank and post office accounts
This item, which at the end of December 31, 2003 amounted to 246 thousand euros, showed a decrease of 605 thousand euros with
respect to December 31, 2002.


Cheques
This item, which at the end of December 31, 2003 amounted to 1 thousand euros, showed a decrease of 130 thousand euros
compared with the figure at December 31, 2002.


Cash on hand
Cash on hand at December 31, 2003 was in line with the figure at December 31, 2002.
                                       161                     Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                             Notes to the Financial Statements




8 Accrued income and prepaid expenses
Accrued income
At 3,322 thousand euros, accrued income showed an increase of 3,243 thousand euros from the amount at December 31, 2002.
Of this amount, 3,191 thousand euros represent accrued interest on the loan granted to the subsidiary Fiat Ge.Va. S.p.A.


Prepaid expenses
These total 8,238 thousand euros at December 31, 2003, for a net increase of 7,303 thousand euros compared with December 31,
2002, mainly connected to the consideration that is contractually owed to TOROC for sponsorship of the XX Winter Olympic Games
in 2006, applicable to future fiscal years.
They include:
(in thousands of euros)                                                                            12/31/03              12/31/02   Change

Interest on the sale of receivables due from Tax Authorities                                           502                  254      248
Other operating costs                                                                                7,736                  681     7,055
Total prepaid expenses                                                                               8,238                  935     7,303




9 Stockholders’ Equity
Capital stock
Capital stock, fully paid-in, amounts to 4,918,114 million euros at December 31, 2003 and consists of 983,622,708 shares as follows:
❚ 800,417,598 ordinary shares;
❚ 103,292,310 preference shares;
❚ 79,912,800 savings shares;
all with a par value of 5 euros each.
Compared to December 31, 2002, capital stock increased by 1,835,986 thousand euros, corresponding to 367,197,108 ordinary shares.
Such shares were issued in a ratio of three new ordinary shares for every five shares of any class of stock outstanding, at the price of
5 euros, following the execution in August 2003 of the capital stock increase voted by the Board of Directors on June 26, 2003.
The capital stock increase was effected on the basis of the mandate given by the Extraordinary Stockholders’ Meeting on September
12, 2002. This Meeting authorized the Board of Directors to increase capital stock, by September 11, 2007, in one or more times, up
to a maximum of 8 billion euros, of which 3 billion euros is to be reserved, with reference to the mandatory convertible facility (Note
12), according to Paragraph 7 of Article 2441 of the Italian Civil Code, to the banks identified in the same resolution, in the event the
facility is not paid at an earlier date, with subscription and payment of the newly issued ordinary shares to be achieved exclusively by
compensating the Banks’ receivables for principal up to a maximum total of 3 billion euros.
It should be pointed out that when the capital increase voted by the Board of Directors on December 10, 2001 was perfected in
February 2002, 65,820,600 warrants were issued for the purchase in January 2007 of one ordinary share, always with a par value of 5
euros, at the price of euro 29.448 each, for every four warrants. In execution of the resolution passed on June 26, 2003, up to the
limits established in the mandate by the stockholders’ meeting, in order to implement the capital increase, the Company purchased
311,432 “FIAT ordinary share warrants 2007” and 2,100,000 “option rights” for cancellation. Accordingly, on the basis of the
resolutions passed by the Board of Directors Meetings on December 10, 2001 and June 26, 2003, the capital stock could ultimately
be increased against payment for a maximum of 81,886 thousand euros, thus reaching 5 billion euros, through the issue of a
maximum of 16,377,292 ordinary shares of par value 5 euros each, on February 1, 2007, following the exercise of outstanding “FIAT
ordinary share warrants 2007”.
                                   162                   Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                       Notes to the Financial Statements




Again with reference to the “FIAT ordinary share warrants 2007”, Fiat reserved the right to pay the warrant holders in cash, starting on
January 2, 2007, in lieu of the shares to be issued (shares in exchange for warrants), for the difference between the arithmetic average
of the official market price of Fiat ordinary shares in December 2006 and the warrant exercise price, unless this difference exceeds the
maximum amount set and previously communicated by Fiat, in which case the holder of the warrants may opt to subscribe to the
shares in exchange for warrants.
The resolutions regarding capital increases to service the stock option plans (27,530 thousand euros) have been revoked since the
Board of Directors decided on June 26, 2003 to use ordinary treasury stock to be bought back for this purpose.


Additional paid-in capital
Additional paid-in capital totaled 278,962 thousand euros at December 31, 2003, reflecting a net decrease of 2,048,157 thousand
euros compared with December 31, 2002, in consequence of its being used to cover the loss for fiscal 2002 (2,052,621 thousand
euros), as resolved by the stockholders’ meeting of May 13, 2003. The decrease was partly compensated by the proceeds from the
sale of the option rights of the 2003 capital increase that were not exercised and which were sold on the stock market pursuant to
Article 2441, paragraph 3 Italian Civil Code, net of the amount paid for the option rights and warrants purchased to execute the
Board of Directors resolution of June 26, 2003.


Treasury stock valuation reserve
The treasury stock valuation reserve totaled 28,045 thousand euros at December 31, 2003, with a net increase of 7,670 thousand
euros from the prior year. The change comes from the difference between the increase of 12,746 thousand euros equal to the
countervalue of the stock purchased during 2003 and a decrease of 5,076 thousand euros for the writedown of the stock to market
value during the last month of the fiscal year.


Other reserves
Reserve for purchase of treasury shares
The reserve for purchase of treasury shares totaled 971,955 thousand euros at December 31, 2003, with a net decrease of 7,670
thousand euros from the prior year as a result of the transfer to the treasury stock valuation reserve of the equivalent amount of the
purchased shares (12,746 thousand euros), net of the transfer from the treasury stock valuation reserve of the amount corresponding
to the writedown of the stock to market value (5,076 thousand euros).
The table appearing at the end of the Notes to the Financial Statements provides a detailed breakdown of the tax status of the
various components of stockholders’ equity.
                                        163                        Fiat S.p.A.       Financial Statements at December 31, 2003
                                                                                     Notes to the Financial Statements




The table below shows the changes that affected stockholders’ equity in 2002 and 2003:
                                                                                          Revaluation                                                                      Net
                                                                             Additional reserve under                 Treasury stock                             income/(loss)
                                                                  Capital      paid-in Law No. 413            Legal        valuation       Other      Retained          for the
(in millions of euros)                                   Total     stock        capital   of 12/30/91       reserve          reserve   reserves (*)   earnings      fiscal year

Balance at December 31, 2001                         7,168.8     2,753.0         1,636.0        22.6        659.3             37.6      1,094.4         587.2          378.7
Allocation of net income for the 2001 fiscal year:
Dividends paid to Stockholders                        (202.8)                                                                                                         (202.8)
Transfer of the remaining net income                       –                                                                                            175.9         (175.9)
Utilization of part of the reserve for
purchase of treasury shares with transfer
to treasury stock valuation reserve                         –                                                                   3.5          (3.5)
Transfer of part of treasury stock valuation
reserve to reserve for purchase of treasury
shares following writedown of treasury stock                –                                                                 (20.4)        20.4
Transfer of part of treasury stock valuation
reserve to reserve for purchase of treasury
shares for assignment of shares to the
Chairman of the Board of Directors                          –                                                                  (0.3)         0.3
Transfer of part of extraordinary reserve to            (18.7)                                                                             (18.7)
reserve for purchase of treasury shares                  18.7                                                                               18.7
Capital increase from 2,753 million euros to
3,082.1 million euros through issue of shares
with a share premium as resolved by the
Board of Directors on December 10, 2001               1,020.2      329.1          691.1
Loss for the year                                    (2,052.6)                                                                                                      (2,052.6)
Balance at December 31, 2002                          5,933.6    3,082.1         2,327.1        22.6        659.3             20.4      1,111.6         763.1       (2,052.6)
Coverage of the loss for fiscal 2002                  2,052.6                                                                                                        2,052.6
through recourse to a portion of the
additional paid-in capital                           (2,052.6)                (2,052.6)
Utilization of part of the reserve for
purchase of treasury shares with transfer
to treasury stock valuation reserve                         –                                                                 12.8         (12.8)
Transfer of part of treasury stock valuation
reserve to reserve for purchase of treasury
shares following writedown of treasury stock                –                                                                  (5.1)          5.1
Allocation to additional paid-in capital
of the value of unexercised option
rights sold on the stock market                           4.5                        4.5
Capital increase from 3,082.1 million euros
to 4,918.1 million euros through issue of
ordinary shares as resolved by the Board
of Directors on June 26, 2003                         1,836.0    1,836.0
Loss for the year                                    (2,358.8)                                                                                                      (2,358.8)
Balance at December 31, 2003                         5,415.3     4,918.1          279.0         22.6        659.3             28.1      1,103.9        763.1       (2,358.8)


(*) Broken down as follows                                                  12/31/03               12/31/02
Extraordinary reserve                                                        112.3                      112.3
Out-of-period income reserve under Article 55
of Presidential Decree No. 917 of 12/22/86                                        1.9                     1.9
Reserve for capital grants under Article 102
of Presidential Decree No. 1523 of 6/30/67                                     17.7                   17.7
Reserve for capital grants under Regional Law No. 19/84                         0.1                    0.1
Reserve for purchase of treasury shares                                       971.9                  979.6
Total                                                                       1,103.9                1,111.6
                                       164                       Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                               Notes to the Financial Statements




10 Reserves for risks and charges
Reserve for pensions and similar obligations
This reserve covers early retirement incentives and payments and bonuses due to retired employees. Determined on the basis of
actuarial computations, it was established as a result of supplemental collective and individual agreements.
At December 31, 2003, it totaled 23,964 thousand euros, for a net decrease of 13,979 thousand euros compared with the end of 2002,
broken down as follows:
(in thousands of euros)

Provisions for the fiscal year charged to income                                                                                      5,461
Cash conversion of reserve for early retirement incentives                                                                            (3,763)
Personnel transfers within the Group                                                                                                  (3,298)
Utilization for the fiscal year                                                                                                      (12,379)
Net change                                                                                                                           (13.979)


Other reserves
This item consists of contractually envisaged commissions owed for future listing of Ferrari S.p.A. shares (23,256 thousand euros) on
the stock market, expenses for employee bonuses (7,103 thousand euros), losses of equity investments in excess of their book value
(148 thousand euros), scholarships (68 thousand euros), and costs connected to personnel laid off with long-term unemployment
benefits (443 thousand euros). It totaled 31,018 thousand euros at December 31, 2003, or 2,975 thousand euros more than at
December 31, 2002.
The change resulted from the following:
(in thousands of euros)

Provision for the fiscal year charged to income                                                                                       8,026
Utilization for the fiscal year, mainly for bonuses granted to employees                                                              (5,051)
Net change                                                                                                                            2,975


Fiat S.p.A. is still subject to a pending lawsuit for damages resulting from alleged violation of an agreement granting the pre-emption
right on the sale of land located at Via Rivalta 15 in Turin.
Given the pending nature of this action, as well as its specific conditions, no reasonable prediction can be made as to its outcome
or the costs that the company might sustain.
The Company settled the tax litigation regarding its IRPEG (corporate income taxes) liability for 1992 by utilizing the tax relief
envisaged in Article 16 of Law no. 289 of December 27, 2002.




11 Reserves for employee severance indemnities
At December 31, 2003, this reserve totaled 14,112 thousand euros, a net decrease of 10,363 thousand euros from the end of 2002.
A breakdown of the change is as follows:
(in thousands of euros)

Provision for the fiscal year charged to income                                                                                      30,443
Utilization for the fiscal year                                                                                                      (40,806)
Net change                                                                                                                           (10,363)




12 Payables
Borrowings from banks
This item amounted to 3,030,000 thousand euros at December 31, 2003 with an increase of 30,000 thousand euros comparable to the
figure at December 31, 2002.
                                    165                    Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                         Notes to the Financial Statements




They are represented by 3 billion euros for the mandatory convertible facility granted pursuant to the Framework Agreement of May
27, 2002 with Capitalia, Banca Intesa, SanPaolo IMI, and Unicredit Banca (the Lending Banks) for the purpose of providing the
Fiat Group with the financial support it needs to implement its industrial plan. The facility was disbursed on September 24, 2002
by a pool of banks comprising the lending banks and BNL, Monte dei Paschi di Siena, ABN Amro, BNP Paribas, Banco di Sicilia,
and Banca Toscana (hereinafter referred to as “the Banks”). They also include the commissions contractually owed for the first year
(30,000 thousand euros). The principal characteristics of the Mandatory Convertible Facility are as follows:
❚ The facility has a term of three years, it expires on September 16, 2005 and it may be repaid with newly issued Fiat S.p.A. ordinary
  shares. Moreover, Fiat may elect to repay the facility in cash at an earlier date, even partially, on a six-monthly basis on condition
  that, even after the repayment, its rating remains at least equal to the investment grade level. Any residual liability for principal
  will be repaid with ordinary shares of Fiat S.p.A., which the banks have agreed to underwrite and offer pre-emptively to all Fiat
  stockholders. The issue price per share will be the average of 14.4409 euros (in accordance with the rules of the Italian Association
  of Financial Analysts – AIAF – the value has been adjusted with respect to the original value of 15.50 euros following the capital
  increase of Fiat S.p.A.) and the average stock market price in the last three or six months, depending on the case, preceding the
  facility repayment date. The same formula will be applied in the event of an earlier expiration date.
❚ The capital increase shall be approved at the expiration of the three-year term of the facility, for an amount equal to the
  outstanding balance of the facility.
❚ Conditions giving rise to an earlier expiration date of the facility include the occurrence of an event that creates a serious crisis
  for the company, such as the request for a court-appointed administrator or other proceedings of composition with creditors,
  a bankruptcy filing, or one of the causes of business dissolution set forth in Article 2484 of the Italian Civil Code (formerly Article
  2448). In addition, the Banks have the authority to demand early repayment of the entire amount of the facility and proceed with
  the conversion of the debt into capital in the following cases:
  – Fiat Group companies have not fulfilled their duty to repay liquid and current financial obligations of an aggregate amount
    of more than 1 billion euros;
  – the external auditors have issued a negative opinion on the consolidated financial statements, unless new auditors, who must
    have accepted the assignment within 30 days, issue a favorable opinion no later than 60 days thereafter;
  – Fiat becomes the target of a take-over bid in accordance with Article 106 and 107 of the Consolidated Law on Financial
    Intermediation by third parties.
❚ Lastly, the Banks also have the right but are not obliged to demand early repayment of a portion of the amount of the facility, up
  to a maximum of 2 billion euros, after 24 months have elapsed from the signing of the agreement (and, therefore, beginning from
  July 26, 2004), in the event that at least one of the leading international rating agencies does not maintain the “investment grade”
  rating and, after 18 months have elapsed from the signing of the agreement (January 26, 2004), in the event that the level of net
  and/or gross financial indebtedness (respectively in the definitions of “net financial position” and “financial payables” used by the
  Group and detailed in the Report on Operations) is more than 20% higher than the corresponding level established by the
  Financial Objectives stipulated in the facility agreement.
❚ The aforementioned Financial Objectives refer, in particular, to the reduction of the negative balance of the net financial position
  to less than 3 billion euros by the date the Board of Directors approves the 2002 financial statements and the maintenance of that
  level until the expiration of the facility. Pursuant to the agreement, the proceeds generated from the transactions related to the
  sale of the investment in Italenergia Bis S.p.A. are also considered, including those connected with the Citigroup facility of 1,150
  million euros, and the financial effects arising from binding contracts for the sale of assets (equity investments, companies, plant
  and equipment, etc.), including those not yet executed. The agreement also states that gross indebtedness must be reduced by 12
  billion euros, compared to March 31, 2002, by the date the Board of Directors approves the 2002 financial statements and must
  be maintained at less than 23.6 billion euros until the expiration of the facility.
The Group confirms that it has met the Financial Objectives agreed to with the lending banks under the mandatory convertible facility,
in terms of both reduction of the net financial position to 3 billion euros and reduction of gross indebtedness to 23.6 billion euros.
At December 31, 2003, ratings assigned to the Group by the leading rating agencies were as follows:

                                                                                                                      Short-term   Medium-term

Moody’s Investors Service                                                                                            Not Prime            Ba3
Standard & Poor’s Rating Services                                                                                            B            BB-
Fitch Ratings                                                                                                                B            BB

The ratings of the Group shown in the above table are non-investment grade ratings.
Should this condition persist, as of July 26, 2004 the banks will have the right but not the obligation to demand early repayment of
the facility and proceed with the conversion of the debt into capital for an amount up to 2 billion euros.
                                        166                       Fiat S.p.A.    Financial Statements at December 31, 2003
                                                                                 Notes to the Financial Statements




Advances
Advances totaled 5,371,032 thousand euros and consisted of advances received from Treno Alta Velocità – T.A.V. S.p.A. for the
High-Speed Railway Project, as previously described at Note 4, Inventories. They refer mainly to work completion and contractual
advances. The Florence-Bologna line accounted for 2,873,802 thousand euros and the Turin-Novara sub-line for 2,497,230 thousand
euros. Work completed as at December 31, 2003 amounted to 2,591,299 thousand euros and 2,181,817 thousand euros, respectively.
The 1,511,988 thousand euro increase since December 31, 2002 is due to 317,225 thousand euros in advances received for work
completed on the Florence-Bologna line and advances for work completion on the Turin-Novara sub-line in the amount of 1,194,763
thousand euros.
T.A.V. S.p.A. has been provided with bank suretyships to secure these advances and proper execution of work for a total of 1,565,814
thousand euros, as described more exhaustively in Notes 4 and 14.


Trade payables
Trade payables stem from services received (consulting, publications, etc.) and amounts due to CAV.E.T. and CAV.TO.MI. for progress
payments due for work completed in the fourth quarter of 2003 and paid in the first quarter of 2004. They totaled 399,485 thousand
euros at December 31, 2003, a net increase of 76,357 thousand euros compared with December 31, 2002, mainly due to the
consideration owed to the CAV.TO.MI. Consortium.


Payables to subsidiaries
These stood at 402,819 thousand euros at December 31, 2003, showing a net decrease of 77,746 thousand euros from a year earlier.
A breakdown of this item is as follows:
(in thousands of euros)                                                                                12/31/03              12/31/02    Change

Financial payables                                                                                    383,334                466,563    (83,229)
Trade payables                                                                                         15,635                 12,991     2,644
Other payables                                                                                           3,850                 1,011     2,839
Total payables to subsidiaries                                                                        402,819                480,565    (77,746)

Financial payables at December 31, 2003 include 250,000 thousand euros for the fixed rate loan payable to the subsidiary Fiat Ge.Va.
S.p.A. and due on July 15, 2004, and amounts payable to subsidiaries for their VAT receivables, which they transferred to Fiat S.p.A.
under the consolidated VAT filing system (133,334 thousand euros).
Trade payables reflect the purchase of external relations, administrative and general services.


Taxes payable
At December 31, 2003, taxes payable totaled 10,702 thousand euros, a net decrease of 997 thousand euros from the figure at
December 31, 2002. A breakdown is as follows:
(in thousands of euros)                                                                                12/31/03              12/31/02    Change

VAT payable                                                                                              5,866                 4,631     1,235
Liability for substitute tax payable on the capital gain from the sale of IN.TE.SA.
(Legislative Decree No. 358/1997)                                                                        1,747                 3,494     (1,747)
Taxes withheld on payments to employees and independent contractors                                      2,624                 3,143       (519)
Miscellaneous items                                                                                        465                  431         34
Total taxes payable                                                                                    10,702                 11,699       (997)

The last installment of the substitute tax payable on the capital gain earned on the sale of IN.TE.SA. S.p.A. will be paid within the
filing deadline for the 2003 tax return.


Social security payable
This item totaled 2,344 thousand euros at December 31, 2003, an increase of 909 thousand euros from December 31, 2002.
                                       167                       Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                               Notes to the Financial Statements




Other payables
At December 31, 2003, other payables were 18,998 thousand euros, for a net year-on-year decrease of 246,159 thousand euros. A
breakdown is provided below:
(in thousands of euros)                                                                              12/31/03              12/31/02     Change

Former Chief Executive Officer for retirement incentives to be paid in installments over 20 years      6,310                 6,549        (239)
Employees for fees to be paid                                                                          2,356                 3,219        (863)
Payables to employees who left the Company                                                             5,963                  568       5,395
Payables to stockholders of Toro Assicurazioni S.p.A.,
Magneti Marelli S.p.A. and Comau S.p.A. for public offerings                                             869                  909          (40)
Dividends payable                                                                                        449                  560         (111)
CAV.TO.MI. “Cash Collateral” (see the item “Inventories”)                                                  –               250,000    (250,000)
Miscellaneous payables (mainly charges for capital increase)                                           3,051                 3,352        (301)
Total other payables                                                                                 18,998                265,157    (246,159)


There are no payables with a residual term of more than five years.




13 Accrued expenses and deferred income
Accrued expenses
The balance of 92,256 thousand euros at December 31, 2003 is 30,507 thousand euros higher than the figure at December 31, 2002.
A breakdown of this item is provided below:
(in thousands of euros)                                                                              12/31/03              12/31/02     Change

Interest on convertible facility                                                                     29,833                 38,653      (8,820)
Commissions on convertible facility                                                                  58,952                 18,785     40,167
Interest on Fiat Ge.Va. S.p.A. loans                                                                   3,101                 4,068        (967)
Interest due to Intermap (Nederland) B.V.                                                                344                     –        344
Miscellaneous                                                                                             26                  243         (217)
Total accrued expenses                                                                               92,256                 61,749     30,507


Deferred income
Deferred income totaled 21 thousand euros at December 31, 2003, representing an increase of 1 thousand euros with respect to the
end of the previous year and regarding income to be collected in 2004.




14 Memorandum accounts
Guarantees granted
Unsecured guarantees
Suretyships
Suretyships totaled 2,072,599 thousand euros at December 31, 2003.
They include suretyships provided on behalf of FiatSava S.p.A. (1,174,843 thousand euros) to secure a debenture issue and to secure
Billets de Trésorerie issued by Group companies (totaling 210,000 thousand euros), bank loans (279,816 thousand euros), and rent
payment obligations for buildings leased from Morgan Stanley & Co. International Ltd. and other lessors (407,940 thousand euros).
The net decrease of 185,618 thousand euros from December 31, 2002 is mainly due to lower guarantees provided to secure Sava
debentures (93,926 thousand euros) and bank loans (216,347 thousand euros), net of increases for Billets de Trésorerie (133,800
thousand euros).
                                   168                    Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                        Notes to the Financial Statements




Other unsecured guarantees
This item totaled 13,640,371 thousand euros at December 31, 2003, or 2,361,562 thousand euros less than at the end of 2002.
It includes the following:
❚ 13,422,685 thousand euros in guarantees provided on behalf of subsidiaries to secure loans (Banco CNH Capital S.A. 568,949
  thousand euros, Fiat Automoveis S.A. 101,091 thousand euros, Iveco Fiat Brasil Ltda 26,978 thousand euros, Case LLC 148,389
  thousand euros, Iveco Latin America Ltda 6,945 thousand euros, Fiat Partecipazioni S.p.A. (formerly Sicind S.p.A.) 1,130,387
  thousand euros in favor of Citigroup), bond issues (Fiat Finance and Trade Ltd. 8,118,721 thousand euros, Fiat Finance North
  America Inc. 187,632 thousand euros, Fiat Finance Luxembourg S.A. 1,764,842 thousand euros, Fiat Finance Canada Ltd. 100,000
  thousand euros), credit lines (New Holland Credit Company LLC 395,883 thousand euros, Fiat Auto Financial Services Limited
  582,577 thousand euros), VAT receivable under the Group consolidation process (57,647 thousand euros), as provided under
  Ministerial Decree of 12/13/79 as amended, and sundry guarantees (232,645 thousand euros);
❚ 128,791 thousand euros for the risk of nonpayment on receivables due from tax authorities;
❚ 88,895 thousand euros in miscellaneous guarantees.
The turnover of receivables sold with recourse in 2003 was 387 million euros (350 million euros in 2002).
Although they are not included in the memorandum accounts, trade receivables and other receivables due after December 31, 2003
were sold without recourse for a total of 396 million euros (341 million euros in 2002 for receivables due after December 31, 2002).
The turnover of receivables sold without recourse totaled 1,471 million euros in 2003 (364 million euros in 2002).
The guarantees issued on behalf of subsidiaries show a net decrease, largely on account of fewer guarantees granted following
the reimbursement of bonds and reduced use of credit facilities.
Pursuant to the General Motors Co. stock equity swap agreement between Intermap (Nederland) B.V. (a subsidiary of Fiat
Partecipazioni S.p.A.) and Merrill Lynch International, Fiat S.p.A. granted the latter a guarantee securing the obligations assumed
by Intermap (Nederland) B.V. in connection with its commitment to pay for the eventual difference between the price of the sold
32,053,422 General Motors Co. shares that was fixed at beginning of the contract (December 2002) in the amount of USD 36.11 per
share and the price of the shares upon maturity (March 16, 2007), in the case of unfavorable performance of the shares, plus interest
on the initial value of the agreement (USD 1,157 million), net of the dividends distributed on the shares during the term of the
agreement itself.
At December 31, 2003 the performance of said shares was positive and quantifiable in 439 thousand euros.
Upon sale of its controlling interest in the rolling stock activities, Fiat S.p.A. assumed certain obligations towards the purchaser
Alsthom N.V. in guarantee of any breaches of contract occurring prior to the sale. On the basis of due diligence results, it is believed
that Fiat does not face a reasonable likelihood of loss.


Commitments
Commitments related to supply contracts
This item totaled 8,010,928 thousand euros at December 31, 2003. Of this amount, 3,637,930 thousand euros represent the
commitment (corresponding to the contractual amounts) stemming from the agreement executed on May 7, 1996 and the
supplemental agreements signed by Fiat S.p.A. and Treno Alta Velocità – T. A.V. S.p.A. for the design and construction of the
Bologna-Florence high-speed rail line, and 4,372,998 thousand euros for the commitment undertaken pursuant to the agreement
of February 14, 2002 and subsequent supplement agreements for the design and construction of the Turin-Novara sub-line. The
increase of 293,406 thousand euros compared with December 31, 2002 includes agreements reached during 2003 regarding the
Florence-Bologna line, specifically alterations to the network (28,407 thousand euros), urgent corrective measures (26,311 thousand
euros) and monetary adjustments (46,026 thousand euros) and agreements regarding the Turin-Novara sub-line, specifically
relating to alterations (129,095 thousand euros), and monetary adjustments (63,567 thousand euros).
Fiat S.p.A. has subcontracted design and construction to the CAV.E.T. and CAV.TO.MI. Consortia.
Fiat S.p.A. provided T.A.V. S.p.A. with bank suretyships totaling 1,565,814 thousand euros as security for contractual advances
received and proper execution of work. These guarantees are not recorded under the Memorandum Accounts since advances are
included under Liabilities – Advances. Likewise, the CAV.E.T. and CAV.TO.MI Consortia provided Fiat S.p.A. with the contractually
envisaged bank suretyships totaling 617,051 thousand euros and 889,115 thousand euros, respectively.
                                   169                    Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                        Notes to the Financial Statements




Commitments for derivative financial instruments
These totaled 61,730 thousand euros at December 31, 2003, reflecting an increase by the same amount with respect to December 31,
2002, and refer to the equity swap on Fiat shares.
In 2003, the Board of Directors approved a resolution granting Giuseppe Morchio options to purchase 13,338,076 ordinary Fiat shares
at a price of 5.623 euros per share. These options, which are exercisable between March 27, 2004 and March 27, 2010, constitute the
only variable compensation awarded to Mr. Morchio for his services as Chief Executive Officer. In each of the first five years, Mr.
Morchio will earn the right to purchase up to 20% of the total number of available shares. Two-thirds of the options that will vest
on March 27 of each year from 2005 to 2008 will be exercisable only if certain predetermined profitability targets are reached during
the reference period. The risk that Fiat’s stock price will significantly rise above the exercise price of the options has been hedged
through the allocation of 3,338,076 treasury shares and, for the remaining 10,000,000 shares, by executing a total return equity swap
contract with a reference price of 6.173 euros per share. The swap matures on August 31, 2004. Under current accounting principles,
hedge-accounting rules cannot be applied to equity swaps, even when they are executed for hedging purposes, because these
swaps constitute negotiable financial derivatives. As a result, in keeping with a conservative approach, if over the life of the contract
the performance of the Fiat stock is favorable, the instrument’s positive fair value will not be recognized in earnings. Conversely, if
its performance is unfavorable, the instrument’s negative fair value will be recognized as a financial expense. At December 31, 2003,
the abovementioned equity swap had a negative fair value 906 thousand euros, which was recognized in the statement of income.


Other commitments
This item, which totaled 12,853 thousand euros at December 31, 2003 (16,431 thousand euros at December 31, 2002), represents
the residuary amount of the commitment, undertaken by Fiat on the occasion of its centennial under a resolution adopted by
the Stockholders’ Meeting on June 22, 1998, to defray, over a ten-year period, the costs incurred to provide courses for a
Degree in Automotive Engineering and pay for the renovation of the respective building. The decrease of 3,578 thousand
euros from December 31, 2002 reflects the outlays incurred in the year to renovate the building and teach the courses.
A summary is presented below of the rights arising from the purchase of 34% of the capital stock of Ferrari S.p.A. for 775 million
euros by Mediobanca S.p.A., within the framework of a consortium set up for the acquisition and placement of the Ferrari shares.
Fiat realized a gain of 671 million euros on this sale, net of selling expenses. The sales contract sets out the following principal
elements:
❚ Mediobanca assumed the responsibility of sole Global Coordinator in charge of coordinating and leading the consortium.
❚ Mediobanca can not sell its Ferrari shares to another group in the automobile industry as long as the Fiat Group maintains a 51%
  controlling interest in Ferrari. Barring certain specific assumptions, the Fiat Group can not reduce its investment in Ferrari below
  51% until the end, depending on the case, of the third or fourth year subsequent to signing the contract.
❚ Fiat holds a call option that allows it to repurchase the Ferrari shares at any time before June 30, 2006 (the original date of June 30,
  2005 was extended by one year during the course of 2003), except during the five months subsequent to the presentation of an
  IPO application to the competent authorities. The option exercise price is equal to the original price at which the shares were sold
  plus interest during the period based on the BOT yield plus 4%.
❚ Mediobanca, moreover, does not hold any put option to resell the purchased Ferrari shares to Fiat, even in the event that the
  IPO does not occur or is not completed.
❚ Fiat may share, in declining percentages, in any gain realized by Mediobanca and the other members of the consortium in the
  event of an IPO.
As part of the sale of Piemongest S.p.A. to Iupiter S.r.l., Fiat S.p.A. guaranteed performance of the obligations envisaged under
that transaction.
It should be noted that, while Renault has a 19.52% interest in Teksid S.p.A., Fiat S.p.A. and Renault have agreed that this may
be resold to Fiat S.p.A., should there be a material change in the conditions upon which the original agreement was based.


Other memorandum accounts
Company assets held by third parties
There were no company assets held by third parties at December 31, 2003.
                                   170                    Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                        Notes to the Financial Statements




15 Value of production
Service revenues
Service revenues, which amounted to 73,272 thousand euros in 2003, are mainly the result of transactions with Group companies.
The main component of this item (47,748 thousand euros) is fees paid for the use of the Fiat trademark. The amounts paid by
the individual companies, which are determined as a percentage of sales, are: 44,803 thousand euros from Fiat Auto S.p.A., 2,899
thousand euros from Iveco S.p.A. (only for the January 1 – May 7, 2003 period as a result of the name of the company changing
from Iveco Fiat S.p.A. to Iveco S.p.A.), 43 thousand euros from FiatAvio S.p.A., until its activities were sold to third parties. The
percentages are as follows: Fiat Auto S.p.A. and FiatAvio S.p.A. 0.5% and Iveco S.p.A. 0.2%.
Service revenues also include 25,524 thousand euros for services rendered by management personnel of Fiat S.p.A. at the main
Group companies. Overall, they increased by 4,345 thousand euros over a year earlier.


Change in contract work in progress
This item represents mainly direct costs incurred during the fiscal year for project management, coordination, and organization
in connection with the High-Speed Railway Project and capitalized as part of inventories.
Totaling 20,038 thousand euros in 2003, or 3,818 thousand euros more than in 2002, it mainly consists of services provided by
suppliers outside the Group (19,676 thousand euros).


Other income and revenues
These amounted to 19,218 thousand euros in 2003 and include 2,237 thousand euros in rental income from buildings owned by Fiat
S.p.A. and leased to Group companies; 9,110 thousand euros in fees paid by subsidiaries for services performed by employees of
Fiat S.p.A. in the capacity of Directors; 1,557 thousand euros deriving from the capital gain on the sale of the building located in
Corso Dante 102, 999 thousand euros in miscellaneous income and expense reimbursements and 5,315 thousand euros in prior
period income, largely represented by provisions for early retirement incentives not owed following the premature severance of
employees. They show an increase of 8,987 thousand euros compared with 2002.




16 Costs of production
Raw materials, supplies and merchandise
This item totaled 385 thousand euros in 2003, against 428 thousand euros in 2002.
It consists mainly of the cost of research publications, office supplies and printed forms.


Services
Service costs amounted to 99,821 thousand euros in 2003, a decrease of 16,056 thousand euros compared with 2002 due to lower
expenses for financial and legal consulting services, general services and travel.
This item represents expenses for consulting services and research studies, as well as for travel, financial, administrative, tax and
external relations services. It also includes ordinary and extraordinary maintenance and general expenses (security, cleaning, EDP,
telephone, insurance, etc.). Amounts paid to Group companies for services provided totaled 38,663 thousand euros and include
support and consulting services in Italy (3,067 thousand euros to Fiat Gesco S.p.A., 1,137 thousand euros to Fiat Ge.Va. S.p.A., 1,230
thousand euros to Fiat International S.p.A. and 448 thousand euros to KeyG Consulting S.p.A.) and abroad (708 thousand euros to
Fiat do Brasil S.A.); external relations services (2,778 thousand euros to Fiat I&CS S.r.l.); personnel training services (866 thousand
euros to Isvor Fiat S.c.p.A.); office management, maintenance (7,481 thousand euros to Ingest Facility S.p.A.); personnel management
and similar services (6,016 thousand euros to Fiat Se.p.In. S.c.p.A.); information technology services (3,234 thousand euros to Global
Value S.p.A.); security services (5,285 thousand euros to Consorzio Orione and 1,161 thousand euros to Consorzio Sirio), and
accounting and internal audit services (1,830 thousand euros to Fiat Revi S.c.r.l.).
It also includes consulting, research and professional fees of 43,174 thousand euros.
                                   171                   Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                       Notes to the Financial Statements




Leases and rentals
Leases and rentals totaled 735 thousand euros in 2003, or 247 thousand euros less than in 2002.


Personnel
This item amounted to 97,535 thousand euros in 2003 and includes provisions to the Reserve for pensions and similar obligations for
bonuses and severance incentives (5,102 thousand euros). This item shows an increase of 31,340 thousand euros with respect to 2002
due to higher retirement incentives and increased wage and salary and social security contributions. The Company’s average number
of staff decreased from 210 employees in 2002, including 108 managers, 96 clerical staff, and 6 blue collar workers, to 167 employees
in 2003, including 87 managers, 75 clerical staff, and 5 blue collar workers.
During 2003, 15 managers were seconded to the Group’s main subsidiaries (16 in 2002), which were billed for the respective costs.


Amortization and depreciation
This item totaled 29,774 thousand euros in 2003, with a net increase of 19,639 thousand euros from the previous year. This change
is largely attributable to amortization, determined on a pro-rated basis for the entire fiscal year, of the expenses for the convertible
facility, and the amortization of costs incurred in connection with the capital increase which are capitalized in the fiscal year.
Amortization of intangible fixed assets totaled 26,523 thousand euros, and depreciation of property, plant and equipment amounted
to 3,251 thousand euros.


Other operating costs
At 14,492 thousand euros, this item was 13,714 thousand euros less than in 2002.
It includes indirect taxes and fees (45 thousand euros for municipal property taxes, 237 thousand euros for nondeductible VAT, etc.);
contributions and association fees (1,149 thousand euros); costs connected to contributions to fund the automotive engineering
degree course (2,606 thousand euros); losses on sales of vehicles and office equipment (231 thousand euros), prior period expenses
for employee bonuses (2,379 thousand euros) that were ascertained upon audit to be less than what was paid and sundry items.
It also includes fees paid to the Statutory Auditors and Directors of Fiat S.p.A. amounting to 147 thousand euros and 4,763 thousand
euros, respectively.
Directors’ fees included 4,132 thousand euros in compensation awarded by the Stockholders’ Meeting as well as annual fees
approved by the Board of Directors for Directors vested with particular offices, and 631 thousand euros for compensation provided
in kind, which was booked under services.
                                        172                Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                         Notes to the Financial Statements




17 Financial income and expenses
Investment income
Income from investments came to 399,927 thousand euros in 2003, an increase of 121,491 thousand euros compared with 2002.
A breakdown is as follows:
(in thousands of euros)                                                                                               2003                2002

Subsidiaries
Dividends distributed by:
    FiatAvio S.p.A.                                                                                100,000                    67,000
    Fiat Partecipazioni S.p.A. (formerly Sicind S.p.A.)                                             70,000                        –
    Business Solutions S.p.A.                                                                       67,000                        –
    Itedi S.p.A.                                                                                    10,620                        –
    Fiat Ge.Va. S.p.A.                                                                               6,700                        –
    Toro Assicurazioni S.p.A.                                                                           49                        –
    Ferrari S.p.A.                                                                                        –                  108,000
    Elasis S.c.p.A.                                                                                       –                       9
Total                                                                                                           254,369                175,009
Tax credit on dividends paid                                                                                    142,666                 98,438
Total subsidiaries                                                                                              397,035                273,447
Other companies
Dividends distributed by:
    Mediobanca S.p.A.                                                                                2,541                     2,118
    Fin. Priv. S.r.l.                                                                                  351                      292
    Tredicimarzo S.r.l.                                                                                   –                     783
Total                                                                                                                2,892               3,193
Tax credit on dividends paid                                                                                            –                1,796
Total other companies                                                                                                2,892               4,989
Total investment income                                                                                         399,927                278,436


Other financial income
From receivables held as fixed assets
This item was equal to zero in 2003. This item represented accrued interest on a loan to Elasis S.c.p.A. paid off in the first half of 2002.
From securities held as fixed assets other than equity investments
This item consists of interest earned on securities pledged to fund scholarship grants.
Income from these securities totaled 2 thousand euros in 2003, 1 thousand euros less than in 2002.
Other income
Other income came to 54,468 thousand euros in 2003, a decrease of 14,143 thousand euros compared with 2002.
                                         173                     Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                               Notes to the Financial Statements




A breakdown is as follows:
(in thousands of euros)                                                                                                     2003              2002

Subsidiaries
Interest earned from:
    Fiat Ge.Va. S.p.A.                                                                                    33,840                   50,320
    Miscellaneous                                                                                             21                       –
Total                                                                                                                  33,861               50,320
Fees for suretyships and unsecured guarantees provided on behalf of the following Group companies:
    Fiat Finance and Trade Ltd                                                                             2,815                    3,281
    Fiat Partecipazioni S.p.A. (formerly Sicind S.p.A.)                                                      706                     178
    Fiat Finance Luxembourg S.A.                                                                             569                     678
    Fiat Auto Financial Services Limited                                                                     371                     272
    Banco CNH Capital S.A.                                                                                   278                     165
    Fiat Auto S.p.A.                                                                                         270                     280
    New Holland Credit Company LLC                                                                           255                     306
    FiatSava S.p.A.                                                                                             –                   3,274
    Miscellaneous                                                                                            809                    1,373
Total                                                                                                                      6,073             9,807
Other income                                                                                                                590                 –
Foreign exchange gains                                                                                                       20               264
Total subsidiaries                                                                                                     40,544               60,391
Others
Interest earned on bank deposits                                                                                              1               227
Interest earned on amounts receivable from the Tax Authorities                                                             9,926             7,735
Other interest income                                                                                                        51                80
Fees for suretyships provided:
    FiatSava S.p.A.                                                                                        3,111                       –
    Miscellaneous                                                                                            127                       –
Total                                                                                                                      3,238                –
Foreign exchange gains                                                                                                      708               178
Total others                                                                                                           13,924                8,220
Total other income                                                                                                     54,468               68,611
                                        174                   Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                            Notes to the Financial Statements




Interest and other financial expenses
Interest and other financial expenses amounted to 223,267 thousand euros in 2003, or 128,941 thousand euros more than in 2002.
A breakdown is provided below:
(in thousands of euros)                                                                                                 2003              2002

Subsidiaries
Interest and other financial expenses paid to:
    Fiat Ge.Va. S.p.A.                                                                                 15,010                  18,538
    Intermap (Nederland) B.V.                                                                             844                      –
Total                                                                                                               15,854              18,538
Fees paid to:
    Fiat Ge.Va. S.p.A.                                                                                                   12                41
Foreign exchange losses                                                                                                  98               156
Interest on derivative financial instruments                                                                            906                 –
Miscellaneous                                                                                                            15                39
Total subsidiaries                                                                                                  16,885              18,774
Others
Interest paid on convertible facility                                                                              123,489              38,655
Fees paid on convertible facility                                                                                   70,200              18,838
Interest and other financing charges paid to banks                                                                       20                20
Interest paid to other lenders                                                                                          327              3,170
Interest expenses and charges for the sale of receivables                                                           10,807              12,955
Charges for stock listings, dividend payments and other charges                                                         513              1,844
Foreign exchange losses                                                                                                  26                70
Total others                                                                                                       205,382              75,552
Total interest and other financial expenses                                                                        222,267              94,326




18 Adjustments to financial assets
Writedowns of equity investments
This item totaled 2,373,626 thousand euros in 2003 and includes 2,369,572 thousand euros for writedown to book value of several
equity investments and 4,054 thousand euros for losses in excess of their book value. These include Fiat Netherlands Holding N.V.
(1,000,425 thousand euros), Fiat Partecipazioni S.p.A. (1,210,084 thousand euros), Magneti Marelli Holding S.p.A. (144,221 thousand
euros), Fiat USA Inc. (9,747 thousand euros), Istituto Europeo di Onclogia S.r.l. (2,939 thousand euros), Isvor Fiat S.c.p.A. (4,321
thousand euros), Fiat International S.p.A. (1,279 thousand euros), Fiat Se.p.In. S.c.p.A. (569 thousand euros), and Fiat Revi S.c.r.l.
(41 thousand euros).
In 2002 writedowns included Fiat Partecipazioni S.p.A. (1,189,200 thousand euros), Iveco N.V. (280,025 thousand euros), Fiat
Netherlands Holding N.V. (732,359 thousand euros), Comau B.V. (349,673 thousand euros), Sicind S.p.A. (291,376 thousand euros),
Isvor Fiat S.c.p.A. (580 thousand euros), Istituto Europeo di Oncologia S.r.l. (1,641 thousand euros), Fiat Se.p.In. S.c.p.A. (320 thousand
euros), and Fiat Revi S.c.r.l. (27 thousand euros).


Writedowns of securities among current assets other than equity investments
This item amounted to 5,076 thousand euros and consists of writedown of the book value of treasury stock to the average stock
market price for the month of December 2003.
In 2002, it amounted to 20,434 thousand euros.
                                   175                    Fiat S.p.A.   Financial Statements at December 31, 2003
                                                                        Notes to the Financial Statements




19 Extraordinary income and expenses
Extraordinary income
Extraordinary income totaled 195 thousand euros in 2003, for a decrease of 672,969 thousand euros from the previous year. It consists
of 106 thousand euros in gains from the disposal of investments and 89 thousand euros in other income.
The gains from disposal of investments derive from the sale of 0.06% of the preference capital of Toro Assicurazioni S.p.A. to
DeAgostini Invest S.A.
In 2002, the gains from disposal of investments mainly derived from the sale of 34% of the capital stock of Ferrari S.p.A. to
Mediobanca S.p.A. (670,970 thousand euros).


Extraordinary expenses
Extraordinary expenses in 2003 totaled 20,535 thousand euros and referred to bank commissions paid to Mediobanca S.p.A. for the
postponement of the commitments undertaken by Mediobanca in connection with the “Ferrari” contract described in Note 14
(15,504 thousand euros) and valuation of the Insurance Sector headed by Toro Assicurazioni S.p.A. (1,617 thousand euros), which was
subsequently sold.
They also include IRPEG (corporate income taxes) for fiscal 2002 (2,441 thousand euros) and other expenses (973 thousand euros).
In 2002, they consisted of 40,582 thousand euros connected with the sale of 34% of the capital of Ferrari S.p.A. and listing of its stock.




20 Income taxes
Income tax owed for 2003 totaled 60,664 thousand euros, consisting of the elimination of net deferred tax assets set aside in reserves
in previous fiscal years, insofar as there is no reasonable certainty that they can be recovered in future fiscal years.
Net deferred tax assets, which mainly refer to the portions of losses deductible in subsequent fiscal years and are not posted on the
balance sheet because there is no reasonable certainty that they will be recovered, total approximately 700 million euros.
                                      176                                   Fiat S.p.A.          Financial Statements at December 31, 2003
                                                                                                 Notes to the Financial Statements




ANALYSIS OF FIXED ASSETS AND SUPPLEMENTAL INFORMATION


Cost of fixed assets
                                                      Gross value at beginning of fiscal year                     Increases                                Decreases      Gross value at the end of fiscal year
                                                                                                                                                        Disposals,
                                                                                                                                                         sales and
                                                                                                                                                      contributions
                                                        Historical    Upward                     Reclassifi-                    Reclassifi-   Historical    Upward        Historical    Upward
(in thousands of euros)                                      cost adjustments           Total      cations       Purchases        cations          cost adjustments            cost adjustments            Total

Intangible fixed assets
Start-up and expansion costs:
   Cost of capital increase to
   3,082.13 million euros
   (Board Resolution of 12/10/01)                       19,224                      19,224                                                                                19,224                       19,224
   Cost of capital increase to
   4,918.11 million euros
   (Board Resolution of 06/26/03)                               –                          –                       56,729                                                 56,729                       56,729
   Leasehold improvements                                    651                       651                                                                                    651                          651
                                                        19,875                      19,875                         56,729                                                 76,604                       76,604
Concessions, licenses, trademarks
and similar rights                                           854                       854              86               20                       (50)                        910                          910
Intangible assets in progress and advances                   242                       242             (86)              25                         (1)                       180                          180
Other Intangible fixed assets
   Expenses connected to
   convertible facility                                 32,846                      32,846                             782                                                33,628                       33,628
                                                        53,817                      53,817                –       57,556                 –        (51)                   111,322                    111,322
Property, plant and equipment
Land and buildings                                      46,066            918       46,984                                                       (121)         (816)      45,945             102       46,047
Plant and machinery                                     10,142              37      10,179                                                        (85)           (37)     10,057                       10,057
Other fixed assets                                        7,375                      7,375                          1,598                      (1,929)                      7,044                       7,044
Construction in progress and advances                           –                          –                                                                                      –                            –
                                                        63,583            955       64,538                –         1,598                –    (2,135)         (853) 63,046                  102       63,148


                                          Gross value at beginning of fiscal year                Increases                                                  Decreases       Gross value at the end of fiscal year
                                                                                                                  Permanent                    Disposals
                                                                                                              losses in value                      Sales
                                                                                        Capital
                                           Historical    Upward                      increases, Reclassifi-        Historical     Historical    Upward     Reclassifi-     Historical Upward
(in thousands of euros)                         cost adjustments            Total    purchases cations                  cost           cost adjustments      cations            cost adjustments           Total

Financial fixed assets
Investments in:
   Subsidiaries                         11,339,306        38,583 11,377,889         1,601,290                          (442)          (420)                        (5) 12,939,729 38,583 12,978,312
   Associated companies                        500                          500                                                       (500)                                        –                           –
   Other companies                        147,596                      147,596           1,142           5                                                                 148,743                    148,743
                                     11,487,402          38,583 11,525,985 1,602,432                    5              (442)          (920)           –            (5) 13,088,472 38,583 13,127,055
Other securities:
   Debt securities                               75                          75                                                                                                   75                         75
                                                 75                          75                                                                                                   75                         75
                                        177                           Fiat S.p.A.          Financial Statements at December 31, 2003
                                                                                           Notes to the Financial Statements




Upward adjustments of fixed assets
Classes of assets                                                  Upward adjustments                                                      Deductions              Upward adjustments
                                                                included in gross value                                                   for divested          included in gross value
(in thousands of euros)                                          at beginning of period                         Increases                        assets               at end of period

Property, plant and equipment
Land and buildings                                                                  918                                                         (816)                             102
Plant and machinery                                                                  37                                                           (37)                               –
                                                                                  955                                  –                        (853)                             102
Financial fixed assets
Investments in:
    Subsidiaries                                                              38,583                                   –                             –                        38,583




Depreciation and amortization of fixed assets
Classes of assets                                                        Amortization             Increases due         Decreases due                                    Amortization
                                                                     and depreciation               to additions          to disposals                               and depreciation
                                                                         at beginning                 during the            during the            Reclassifi-               at end of
(in thousands of euros)                                                  of fiscal year               fiscal year           fiscal year             cations                fiscal year

Intangible fixed assets
Start-up and expansion costs
    Cost of capital increase to 3,082.13 million
    euros (Board Resolution of 12/10/2001)                                      3,845                    3,845                                                                  7,690
    Cost of capital increase to 4,918.11 million
    euros (Board Resolution of 06/26/2003)                                            –                 11,346                                                                11,346
    Leasehold improvements                                                          624                      27                                                                   651
                                                                                4,469                   15,218                       –                     –                  19,687
Concessions, licenses, trademarks and similar rights                                792                      70                   (50)                                            812
Other Intangible fixed assets
    Expenses connected to convertible facility                                  2,970                   11,235                                                                14,205
                                                                                8,231                  26,523                     (50)                     –                  34,704
Property, plant and equipment
Land and buildings                                                              8,037                    1,355                   (531)                                          8,861
Plant and machinery                                                             5,262                       995                   (82)                                          6,175
Other fixed assets                                                              3,065                       901               (1,092)                                           2,874
                                                                              16,364                     3,251                (1,705)                      –                  17,910




Writedowns of financial fixed assets
Classes of assets                                   Writedowns        Increases due to                               Decreases due to                                      Writedowns
                                                   at beginning       additions during         Disposals during      Permanent losses          Reversals of                  at end of
(in thousands of euros)                            of fiscal year        the fiscal year          the fiscal year             in value         writedowns                   fiscal year

Financial fixed assets
Investments in:
    Subsidiaries                                    3,469,062              2,366,367                                             (174)                                     5,835,255
    Other companies                                      6,729                  2,939                                                                                           9,668
                                                   3,475,791              2,369,306                            –                (174)                      –              5,844,923
                                    178                            Fiat S.p.A.       Financial Statements at December 31, 2003
                                                                                     Notes to the Financial Statements




Art. 10, Law No. 72 of March 19, 1983 – Analysis of assets adjusted for inflation as of December 31, 2003
Classes of assets                                            Historical cost                                       Upward adjustments permitted by Law            Upward adjustments
                                     not subject to             subject to                                                                                         included in book
(in euros)                      upward adjustments     upward adjustments          No. 74 of 2/11/52            No. 72 of 3/19/83      No. 413 of 12/30/91    value at end of period

Property, plant and equipment
Land and buildings                    45,791,125                  154,566                        19,385                                           82,785                     102,170
Plant and machinery                   10,056,829                                                                                                                                      –
Other fixed assets                      7,043,693                                                                                                                                     –
                                     62,891,647                   154,566