About EDGAR Online | Login
 
Enter your Email for a Free Trial:
The following is an excerpt from a 20-F SEC Filing, filed by FIAT S P A on 6/30/2006.
Next Section Next Section Previous Section Previous Section
FIAT S P A - 20-F - 20060630 - KEY_INFORMATION
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
     Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
     Not applicable.
ITEM 3. KEY INFORMATION
The Fiat Group
     We are one of the largest industrial groups in Italy. We also have extensive operations in the rest of Europe, the US and in other parts of the world.
     We are engaged principally in the manufacture and sale of automobiles, commercial vehicles and agricultural and construction equipment. We also manufacture, for use by our automotive sectors and for sale to third parties, other automotive-related products and systems, principally powertrains (engines and transmissions), components, metallurgical products and production systems. In addition, we are currently involved in other sectors, including publishing and communications and certain service operations. A detailed description of our business can be found in Item 4. “Information on the Company.”
     Our significant subsidiaries as of December 31, 2005, were:
    Fiat Auto S.p.A. (“Fiat Auto”), an Italian corporation wholly owned through our Dutch subsidiary Fiat Auto Holdings B.V.;
 
    Maserati S.p.A. (“Maserati”), an Italian corporation formerly owned by Ferrari. Maserati became a wholly owned member of the Group in April 2005, and its results are now reported as a separate sector;
 
    Ferrari S.p.A. (“Ferrari”), an Italian corporation which produces luxury sports cars, of which we own approximately 56% of the voting shares;
 
    Fiat Powertrain Technologies S.p.A. (“FPT”) a wholly owned Italian corporation established in the first half of 2005, which carries out our powertrain operations;
 
    CNH, a Dutch corporation that is the lead company of our agricultural and construction equipment sector, of which we hold approximately 90% of the voting shares, following the conversion in March 2006 of 8,000,000 Series A Preferred Shares into CNH common shares. See Item 4. “Information on the Company – Introduction — Recent Developments – Financial Initiatives;”
 
    Iveco S.p.A. (“Iveco”), a wholly owned Italian corporation that is the lead company of our trucks and commercial vehicles sector;
 
    Magneti Marelli Holding S.p.A. (“Magneti Marelli”), a wholly owned Italian corporation that is the lead company of our automotive components sector;

4


Table of Contents

    Teksid S.p.A. (“Teksid”), an Italian corporation that is the lead company of our metallurgical products sector, of which we hold 84.8% of the voting shares;
 
    Comau S.p.A. (“Comau”), a wholly owned Italian corporation that is the lead company of our production systems sector;
 
    Business Solutions S.p.A. (“Business Solutions”), a wholly owned Italian corporation that is the lead company of our services sector; and
 
    Itedi-Italiana Edizioni S.p.A. (“Itedi”), a wholly owned Italian corporation that is the lead company of our publishing and communications sector.
     Beginning in 2006, the FPT sector also includes the powertrain businesses of Iveco, Centro Ricerche Fiat (“CRF,” the Fiat Research Center) and Elasis (Fiat’s advanced research center headquartered in Pomigliano d’Arco near Naples). See Item 4. “Information on the Company—Introduction—Recent Developments.”
     Since January 1, 2005, we have aggregated our activities into five business areas for certain external communication purposes: Automobiles (including the sectors led by Fiat Auto, FPT, Maserati and Ferrari); Agricultural and Construction Equipment (the CNH sector); Trucks and Commercial Vehicles (the Iveco sector); Components and Production Systems (which includes the sectors led by Magneti Marelli, Teksid and Comau); and Other Businesses (the sectors led by Business Solutions and Itedi, as well as the results of our holding companies and other companies).
Selected Financial Data
     The following selected consolidated financial data at December 31, 2005 and 2004, and for each of the years in the two-year period ended December 31, 2005, have been derived from the audited Consolidated Financial Statements included in Item 18. This data should be read in conjunction with Item 5. “Operating and Financial Review and Prospects” and are qualified in their entirety by reference to the audited Consolidated Financial Statements and the Notes thereto included in Item 18.
     The Consolidated Financial Statements and the Notes thereto for fiscal years ending at December 31, 2005 and 2004 have been prepared in accordance with the requirements of IFRS. IFRS differ in certain respects from US GAAP. For an explanation and quantification of such differences, see Note 38 to the Consolidated Financial Statements included in Item 18. In the tables below, we also present selected statement of operation and balance sheet data calculated in accordance with US GAAP for each of the years in the period 2001-2005, as explained in more detail in the US GAAP reconciliation footnote to our consolidated financial statements for the relevant years included in our prior annual reports on Form 20-F.
     The following selected consolidated financial data for 2005 and 2004 also reflect certain changes in our structure during the years presented. See “Principles of consolidation and significant accounting policies” in the Notes to the Consolidated Financial Statements included in Item 18. In particular, this data reflects the following transactions that resulted in changes in the scope of consolidation:
    At the end of 2005, the Fiat Group acquired Enel’s share of Leasys S.p.A. (“Leasys”), which rents and manages corporate car fleets, thereby obtaining 100% control of the former joint venture. For additional details, see Item 4. “Information on the Company — Sectors — Fiat Auto.”

5


Table of Contents

    On June 1, 2005, Iveco sold to Barclays Mercantile Business Finance Ltd a 51% stake in Iveco Finance Holdings Limited, a company comprising certain financial services companies of Iveco operating in France, Germany, Italy, Switzerland and the United Kingdom. As of that date, Iveco Finance Holdings Limited was no longer consolidated on a line-by-line basis, but rather accounted for using the equity method. For additional details, see Item 4. “Information on the Company — Sectors - Trucks and Commercial Vehicles.”
 
    As of May 2005, the operations that had previously been transferred to the Fiat-GM Powertrain joint venture were consolidated in FPT. Upon termination of the 2000 master agreement that had governed our former industrial alliance (the “Master Agreement”) with General Motors Corp. (“GM”), Fiat re-acquired the full control of all such operations with the sole exception of those in Poland (which continue to be jointly managed by both parties).
 
    In the first quarter of 2005, we sold 65% of our stake in the temporary employment agency WorkNet to Generale Industrielle. For additional details, see Item 4. “Information on the Company — Sectors – Services.”
 
    In the first quarter of 2005, Magneti Marelli increased its equity investment in the Turkish automotive component manufacturer Mako Elektrik Sanayi Ve Ticaret A.S. (“Mako”) to 95%, thus acquiring control from the Turkish group Koç. As a result, the company, previously accounted for using the equity method, is now consolidated on a line-by-line basis. For additional details, see Item 4. “Information on the Company — Sectors – Components.”
 
    In September 2004, Magneti Marelli sold its Midas automotive repair and maintenance service business (“Midas”) in Europe and Latin America to the Norauto Group.
 
    As a result of our gradual acquisition of control of Magneti Marelli Sistemi Elettronici S.p.A. (“Electronic Systems”) culminating in our acquisition of full ownership, we have been consolidating Electronic Systems on a line-by-line basis since the beginning of 2004.
 
    We deconsolidated Fiat Engineering, S.p.A. (“Fiat Engineering”), as a result of its sale in February 2004 to Maire Investimenti S.p.A. (now Maire Engineering S.p.A.), a privately held Italian company.

6


Table of Contents

      Statement of Operations Data
                         
    Year ended December 31,
    2005   2005   2004
    (in million of    
    dollars except per   (in million of euro
    share data)   except per share data)
Amount in conformity with IFRS
                       
Net revenues
    55,117       46,544       45,637  
Trading profit
    1,184       1,000       50  
Gains (losses) on the disposal of investments
    1,072       905       150  
Restructuring costs
    594       502       542  
Other unusual income (expenses)
    961       812       (243 )
 
                       
Operating result
    2,623       2,215       (585 )
Financial income (expenses)
    (998 )     (843 )     (1,179 )
Unusual financial income (1)
    1,016       858        
Result from investments (2)
    40       34       135  
Result before taxes
    2,681       2,264       (1,629 )
Income taxes
    999       844       (50 )
Result from continuing operations
    1,682       1,420       (1,579 )
Result from discontinued operations
                 
Net result before minority interest
    1,682       1,420       (1,579 )
Minority interest
    106       89       55  
 
                       
Group interest in net result
    1,576       1,331       (1,634 )
 
                       
 
                       
Earnings per ordinary and preference share (3)
    1.480       1.250       (1.699 )
Earnings per savings share (3)
    1.480       1.250       (1.699 )
Diluted earnings per ordinary and preference share (3)
    1.480       1.250       (1.699 )
Diluted earnings per savings share (3)
    1.480       1.250       (1.699 )
 
(1)   The “unusual financial income” recorded in 2005 represents the excess of the aggregate subscription price paid by the lending banks for the Fiat shares received upon conversion of our €3 billion mandatory convertible facility at maturity in September 2005 and the aggregate stock market value of those shares on the subscription date of approximately €2,141 million. We had no unusual financial income in 2004.
 
(2)   This item includes investment income, as well as writedowns of and upward adjustments to equity investments accounted for using the equity method.
 
(3)   In accordance with IAS 33, the dilutive effects of the mandatory convertible facility have not been included in the determination of earnings per share for 2004, as there was a net loss for the period.

7


Table of Contents

                                                 
    Year ended December 31,
    2005   2005   2004   2003   2002   2001
    (in million of    
    dollars except    
    per share    
    data)   (in million of euro except per share data)
Amounts in accordance with US GAAP :
                                               
 
                                               
Net income (loss)
    148       125       (2,100 )     (2,934 )     (3,906 )     (762 )
 
                                               
Net income (loss) from continuing operations before accounting changes
    176       149       (2,088 )     (3,542 )     (3,286 )     (1,050 )
Income (loss) per ordinary and preference share and ordinary and preference ADR (basic and diluted)
    0.14       0.12       (2.15 )     (3.89 )     (6.65 )     (1.36 )
 
                                               
Income (loss) per savings share and savings ADR (basic and diluted)
    0.14       0.12       (2.15 )     (3.89 )     (6.65 )     (1.21 )
 
                                               
Income (loss) from continuing operations per ordinary and preference share and ordinary and preference ADR (basic and diluted)
    0.17       0.14       (2.14 )     (4.70 )     (5.59 )     (1.87 )
Income (loss) from continuing operations per savings share and savings ADR (basic and diluted)
    0.17       0.14       (2.14 )     (4.70 )     (5.59 )     (1.72 )
Balance Sheet Data
                                         
    2005       2005       2004  
    (in millions of dollars   (in millions of euro except per share data) (shares  
    except per share data)   outstanding in thousands)  
Amounts in conformity with IFRS:
                                       
Total assets
    73,958               62,454             62,522    
 
                                       
Total stockholders’ equity
    11,147               9,413             4,928    
 
                                       
Capital stock
    7,552               6,377             4,918    
Dividends declared per share
                                   
Ordinary and preference
                                 
Savings
                                 
Shares outstanding (par value of €5 per share)
                                 
Ordinary
    1,092,246               1,092,246             800,418    
Preference
    103,292               103,292             103,292    
Savings
    79,913               79,913             79,913    

8


Table of Contents

                                                 
    Year ended December 31,
    2005   2005   2004   2003   2002   2001
    (in million    
    of dollars    
    except per    
    share data)   (in million of euro)
Amounts in accordance with US GAAP :
                                               
Stockholders’ equity
      7,951       6,714       2,718       4,935       6,066       10,667  
Exchange Rates
     Fluctuations in the exchange rate between the euro and the dollar will affect the dollar equivalent of euro prices of shares listed on the Italian Stock Exchange and, as a result, are likely to affect the market price of our American Depositary Receipts (“ADRs”) in the United States. Exchange rate fluctuations will also affect the dollar amounts received by holders of ADRs on the conversion into dollars by the depositary for the ADRs of any cash dividends declared and paid in euro on the shares represented by the ADRs.
     The following table sets forth the Noon Buying Rate for euro expressed in dollars per euro rounded to the nearest one hundredth of a US cent for the periods indicated.
                                 
    At Period            
    End   Average (1)   High   Low
Year:
                               
2001
    0.8901       0.8909                  
2002
    1.0485       0.9495                  
2003
    1.2597       1.1411                  
2004
    1.3538       1.2478                  
2005
    1.1842       1.2400                  
 
                               
Month:
                               
December 2005
                    1.2041       1.1699  
January 2006
                    1.2287       1.1980  
February 2006
                    1.2100       1.1860  
March 2006
                    1.2197       1.1886  
April 2006
                    1.2624       1.2091  
May 2006
                    1.2888       1.2606  
 
(1)   Average of the Noon Buying Rate for euro for the last business day of each month in the period.
     The Noon Buying Rate for euro on June 26, 2006, was $1.2554= €1.0000 or $1.00 = €0.7966.

9


Table of Contents

Risk Factors
Risks Related to the Fiat Group
We have recorded significant losses in recent periods. Our future profitability and financial condition depend on the successful implementation of our current strategic objectives.
     From 2002-2004, our operating performance was negatively affected by a persistently unfavorable business environment in the automotive market and the poor performance of Fiat Auto. We recorded net losses under Italian GAAP of €1,586 million, €1,900 million and €3,948 million in 2004, 2003 and 2002, respectively. Our net loss in 2004 as recalculated in accordance with IFRS was €1,634 million. In response to these challenging conditions, we have adopted a series of organizational and industrial initiatives intended to refocus our efforts on our core automotive businesses and bring us back to profitability. These initiatives aim to achieve significant improvements in our results over the period through 2007 by restoring Fiat Auto to profitability and reorganizing our businesses to develop our innovation capabilities and expertise, while reinforcing our capital structure and maintaining a comfortable liquidity position. They also provide for significant cost savings to be generated through cost structure rationalization and improved manufacturing efficiency, further synergies among our industrial joint ventures and inter-sector cooperation, and the adoption of a more dynamic and efficient management structure. See Item 4. “Information on the Company—Introduction — Strategies and Programs.” The initial positive impact of these initiatives is reflected in our operating and financial results for 2005 and for the first quarter of 2006. See Item 4. “Information on the Company—Introduction —Recent Developments” and Item 5. “Operating and Financial Review and Prospects—Results of Operations—2005 Compared with 2004.”
     Our ability to further strengthen our capital structure, reduce our indebtedness and improve profitability, while at the same time continuing to invest in new products, research and development and our distribution network, will depend on the success of these organizational and industrial initiatives, as well as on general economic and business conditions and the performance of our companies. Any failure to implement a significant portion of these initiatives successfully, or to realize the anticipated benefits, could have a material adverse effect on our financial condition, results of operations and business prospects.
     In addition, realization of our development plans for Fiat Auto over the period through 2008 is predicated upon specified financial and operating factors, including the Group’s overall ability to generate the necessary profitability, to access financing and state grants under available regulations for research, development and innovation, and to realize specific programs, as well as upon the cooperation of unionized labor. In order to be competitive, we must also implement operational solutions that will allow for improvements in cost efficiency, flexibility with regard to plant use and productivity. See Item 4. “Information on the Company—Introduction —Recent Developments” for additional information.
Our businesses are affected by cyclical economic conditions.
     Our businesses depend upon general activity levels in our key industries, which historically have been highly cyclical. In addition, we generate a substantial portion of our revenues in Western Europe, and more particularly in Italy. Both demand for cars and our market shares have been volatile in recent periods, though in the first quarter of 2006, demand for automobiles grew by 3.3% in Western Europe as a whole, and by 9.0% in Italy, with Fiat Auto increasing its market share in both regions. See Item 4. “Information on the Company—Sectors—Fiat Auto—Markets and Competition” for more information on trends in the automobile market. Any event adversely affecting activity in the

10


Table of Contents

automotive industry, such as an economic downturn in a key market, an increase in energy prices, fluctuations in the prices of other commodities or raw materials, adverse shifts in sector specific factors such as weather, interest rates, government policies (including environmental regulation), infrastructure spending or major epidemics (such as avian flu) could negatively affect our profitability and business prospects.
We operate in highly competitive industries.
     Approximately 93% of our net revenues are generated in the highly competitive worldwide automotive industry, which includes automobiles, commercial vehicles, agricultural and construction equipment and automotive-related products. We face strong competition in Europe and Latin America from other international automobile and commercial vehicle manufacturers, and in Europe, North America and Latin America from global, regional and local agricultural and construction equipment manufacturers and suppliers of automotive-related products. We compete in these markets in terms of product quality and features, innovation and development time, pricing, reliability, safety, fuel economy, customer service and financing terms. We also face strong competition in our other businesses.
We face intense price competition in the automobile and other sectors.
     Competition, particularly with regard to price, has increased in several of our operating sectors in recent years, and has had a negative impact on sales and margins in these sectors. In addition, overall manufacturing capacity in the global automotive industry exceeds current demand. This overcapacity, combined with already intense competition in the automotive industry and persistent weakness in the global economy, may intensify pricing pressures. Our ability to maintain or improve the quality of our products, increase market share and improve profitability in the face of strong competitive pricing pressures will be fundamental to our future success.
Our future performance depends on our ability to innovate and on market acceptance of new or existing products.
     Our ability to improve our position within our product and market segments through research to improve current products, as well as the development of innovative new products and services will have a significant impact on our future performance. Failure to develop and offer products that compare favorably to those of our competitors, particularly in more profitable segments, in terms of price, quality, styling, reliability, safety, functionality or otherwise, may result in lower market share, lower sales volumes and margins, and may have a substantial adverse effect on our operational and financial results. For example, Fiat Auto’s development plans call for the launch over the 2005–2008 period of 20 new models, including the Fiat Grande Punto and the Alfa 159, which were introduced commercially at the end of the third quarter of 2005, as well as 23 restylings of existing models of the Fiat, Lancia, Alfa Romeo and Fiat Commercial Vehicle brands. See Item 4. “Sectors – Fiat Auto – Product Development.” The lack of market acceptance of these and other new automotive models, potential delays in bringing new vehicles to market or the inability to achieve efficiency targets without suffering quality losses would adversely affect our overall profitability.
Downgrades of our credit ratings would raise our cost of capital and could limit our access to financing and negatively affect our business.
     We are currently rated below investment grade, with a rating of Ba3 with a stable outlook from Moody’s Investors Service (“Moody’s”), BB- with a stable outlook from Standard & Poor’s Ratings Service, a division of the McGraw Hill Companies, Inc. (“Standard & Poor’s”), and BB- with a stable

11


Table of Contents

outlook from Fitch Ratings. Our ability to access capital markets, and the cost of borrowing in those markets, is highly dependent on our credit ratings. The rating agencies may review their ratings for possible further downgrades, and any new downgrades would increase our cost of capital, potentially limit our access to sources of financing, and could negatively affect our businesses, especially our vehicle lease and sales financing businesses, which are typically financed with a high proportion of debt. Moreover, the management and development of the core automotive and automotive-related businesses in which we operate, may require large capital investments. Consequently, we may find it necessary to secure additional financing or to refinance our outstanding debt. We cannot give any assurances as to whether we will be able to secure such funds or refinance existing indebtedness, or whether any additional measures may be required to raise funds, nor whether we will be able to effect any or all of any such transactions at all, or on favorable terms.
We may not achieve the expected benefits of mergers, acquisitions, joint ventures or other similar corporate transactions.
     We have engaged in the past and may engage in the future in significant corporate transactions, such as mergers, acquisitions, joint ventures and restructurings, the success of which is difficult to predict. We have also sold a number of businesses and equity investments as part of the refocusing of our operations on our core automotive businesses. There can be no assurance that we will be able to enter into such transactions without encountering administrative, technical, political, financial or other difficulties. Each of our automotive sectors participates in joint ventures, and Fiat Auto is currently exploring or has recently signed additional cooperation or other agreements with various auto makers, including Tata Motors of India, Severstal of Russia and Ford Motor Co. of the United States. See “Item 4 - Introduction – Recent Developments.”
     Joint ventures involve special risks associated with the possibility that the joint venture partners may:
    have economic or business interests or goals that are inconsistent with ours;
 
    take action contrary to our instructions or requests or contrary to our policies or objectives with respect to operations;
 
    be unable or unwilling to fulfill their obligations under the joint venture agreement; or
 
    experience financial or other difficulties.
We are subject to risks relating to international sales and exposure to changing local conditions.
     A significant portion of our current operations is conducted and located outside of Italy, and we expect that revenues from sales outside of Italy, and more generally outside of the EU, will continue to account for a material portion of our total revenues for the foreseeable future. We are subject to risks inherent in operating on a global basis, including risks related to:
    exposure to local economic and political conditions;
 
    export and import restrictions;
 
    currency exchange rate fluctuations;

12


Table of Contents

    multiple tax regimes, including regulations relating to transfer pricing and withholding and other taxes on remittances and other payments by subsidiaries;
 
    foreign investment restrictions or requirements, foreign exchange controls and restrictions on repatriation of funds; and
 
    local content laws.
     The degree of risk and the potential magnitude of effects of unfavorable developments in any one of these areas vary from country to country, and, depending on the circumstances, could have a material adverse effect on our business prospects, results of operations and financial condition.
Developments in emerging market countries may adversely affect our business.
     We operate in a number of emerging market countries, both directly, in markets such as Brazil and Argentina, and through joint ventures or other cooperation agreements, including in Turkey, India, China and Russia. Our Brazilian operations accounted for approximately 8.3% of our net revenues in 2005. As a result, economic and political developments in Brazil and other emerging market countries, including economic crises and political instability, have had, and may in the future have, a material adverse impact on our operating and financial results.
We are subject to extensive environmental and other governmental regulation.
     Our products and operations are subject to increasingly stringent environmental laws and regulations in many of the countries in which we operate. Such regulations govern, among other things, vehicle emissions, fuel economy, vehicle safety and the type and level of pollutants generated by industrial production facilities. We expend significant resources to comply with such regulations, and expect to continue to incur substantial compliance and remediation costs in the future.
     In addition, government initiatives that affect consumer demand for our products, such as changes in tax policy or the grant or repeal of subsidies to provide incentives for the purchase of vehicles, can substantially influence the timing and level of our revenues. Such government actions are unpredictable and beyond our control, and any adverse changes in government policy could have a significantly negative impact on our business prospects, financial condition and results of operations.
Labor matters could impair our flexibility to reposition our businesses.
     Most of our employees worldwide are represented by labor unions. In Europe, our employees are protected by various laws giving them, through local and central works councils, consultation rights with respect to specific matters regarding their employers’ businesses and operations, including the downsizing or closure of facilities and employment terminations. These laws and the collective bargaining agreements to which we are subject could impair our flexibility as we continue our efforts to reorganize and restructure our businesses.
     The processes of reorganizing and restructuring that are under way could increase conflict with our labor unions. Our policy, which we implement in accordance with local rules and labor practices, is to seek to minimize labor unrest by maintaining constructive relations with representatives of our workers and with their unions, in an effort to reach a consensus on measures to manage the social consequences of these processes. For example, our initiatives to reduce business governance costs are expected to result in a further streamlining of our (predominantly white collar) administrative, technical and sales personnel. We seek to use measures such as the so-called “ mobilità lunga ,” a

13


Table of Contents

program that provides a supplemental unemployment allowance to bridge the period prior to retirement, to manage the impact of these initiatives, as we and our unions believe such programs help reduce their social consequences. However, use of these programs is subject to the Italian government’s passage of specific legislation permitting us to do so.
     In the past, union dissatisfaction with our restructuring initiatives has resulted in labor unrest, including occasional wildcat and other strikes of varying severity and duration. See Item 6. “Directors, Senior Management and Employees—Employees and Labor Relations” for additional information. Any future work stoppages or labor unrest, whether involving our own employees or those of other companies on which we depend for goods and services, could have a material adverse effect on our business, results of operations and financial condition.
We are subject to risks associated with exchange rate fluctuations, interest rate changes and other market risks.
     We are subject to currency exchange rate risk in the ordinary course of our business to the extent that our costs are denominated in currencies other than those in which we earn revenues. Exchange rate fluctuations also affect our operating results because we recognize revenues in currencies other than euro but publish our financial statements in euro. Similarly, changes in interest rates affect our results by increasing or decreasing borrowing costs and financial income. Our financial services businesses also involve risks relating to changes in interest and inflation rates, consumer and dealer insolvency rates and the overall strength of the economies in which these businesses operate.
     We seek to manage these risks through the use of financial hedging instruments. However, despite these hedging transactions, exchange rate or interest rate fluctuations may continue to adversely affect our financial condition or results of operations. See Notes 22 and 34 to the Consolidated Financial Statements included in Item 18 and “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”
Our success depends on the ability of our management team to operate and manage effectively.
     Most of our current senior managers have been appointed relatively recently. Our Chairman, Luca Cordero di Montezemolo, and our Chief Executive Officer (“CEO”), Sergio Marchionne, were appointed in June 2004. In February 2005, Mr. Marchionne assumed the additional position of CEO of Fiat Auto, Paolo Monferino, who was CEO of CNH, became CEO of Iveco, and Harold Boyanovsky became interim CEO of CNH, prior to being confirmed in that position later in the year. In 2005, following the creation of FPT, we also reorganized management at certain of our other sectors. See “Item 6. Directors, Senior Management and Employees- Senior Management.”
     Our success depends in large part on the ability of our executive officers and other members of senior management continuing to operate and manage effectively, both independently and as a group. The loss of the services of any executive officer, senior manager or other key employee without adequate replacement or the inability to attract and retain new qualified personnel could have a material adverse effect upon our business, operating results and financial condition.

14


Table of Contents
BROKERAGE PARTNERS