13.9 CORPORATE GOVERNANCE DISCLOSURES 13 • 29THE FIAT GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
at December 31, 2001, 2000 and 1999quired the obligatory revaluation of industrial and commercial land and buildings for all Italian compa-
nies, using coefficients as set forth by the law. Revaluations were credited to stockholders’ equity and
the revalued assets are depreciated over their remaining useful lives.
U.S. GAAP does not permit the revaluation of fixed assets. The capital gain differences arising
upon the sale of such fixed assets are stated separately in the caption “Capital gains on the sale of prop-
erty, plant and equipment.” The gross asset increase due to revaluation was 645 million euros and 707
million euros at December 31, 2001 and 2000, respectively.
(e)Goodwill—The Group’s accounting policy related to accounting for goodwill is described in
the notes “Principles of consolidation and significant accounting policies.” These policies differ in cer-
tain respects from those required under U.S. GAAP, as further described below.
(e.i)Accounting for goodwill—Prior to December 31, 1994, the Group accounted for goodwill
on acquisitions as a direct reduction of equity. Under U.S. GAAP, goodwill is recorded on the balance
sheet as an intangible asset of the acquiring company and then through December 31, 2001 was amor-
tized to income over a period not in excess of 40 years. For the adjusted U.S. GAAP results in the ta-
bles above, goodwill previously charged to equity has been reinstated and is amortized over a 30-year
period. This item also includes other differences on goodwill recorded in purchase accounting subse-
quent to 1994 due to U.S. GAAP adjustments applicable to acquired companies. The total amount of
adjustments to goodwill, gross of accumulated amortization, was 1,323 million euros and 1,360 million
euros at December 31, 2001 and 2000, respectively.
(e.ii)Difference of amortization period of Case goodwill—For U.S. GAAP financial reporting
purposes, the goodwill recorded by CNH Global N.V., the purchaser of Case Group, is being amortized
over a 30-year period, whereas under Italian GAAP the amortization period for goodwill is limited to
20 years. CNH Global N.V. reports separate U.S. GAAP consolidated financial statements.
(e.iii)Elimination of goodwill amortization—In June 2001, the FASB issued SFAS No. 142, “Good-
will and Other Intangible Assets.” SFAS No. 142 addresses financial accounting and reporting for intangi-
ble assets and goodwill. The Statement requires that goodwill and intangible assets having indefinite use-
ful lives not be amortized, but rather be tested at least annually for impairment. Intangible assets that have
finite useful lives will continue to be amortized over their useful lives. Italian GAAP, on the other hand,
requires that “goodwill and other intangible assets” be amortized over their remaining useful lives. As re-
quired by SFAS No. 142, for U.S. GAAP purposes the Group has adopted this standard for goodwill ac-
quired after June 30, 2001. For goodwill existing as of June 30, 2001, on the other hand, the standard be-
came effective on January 1, 2002. The complete application of the non-amortization provision of SFAS
No. 142 is expected to result in a pretax increase in earnings of approximately 240 million euros per year
related to goodwill and an insignificant amount per year related to the intangible assets with indefinite
lives. The Group is currently defining its reporting units and performing the required transitional impair-
ment tests of goodwill and indefinite-lived intangible assets. The Group has not yet determined the finan-
cial impact, if any, of these transitional impairment tests. During 2001, the Group continued to evaluate
the recoverability of goodwill in compliance with SFAS No. 121, “Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of” (SFAS No. 121), for U.S. GAAP purposes
only. The Group did not record any impairment in accordance with the requirements of SFAS No. 121.
(f)Difference in gains/losses on disposal of investments in subsidiaries—Gains or losses on dis-
posals of investments arising from the sale of interests in subsidiaries as recorded in the Group’s consoli-
dated statement of operations are adjusted to reflect the higher or lower U.S. GAAP basis of the underly-
ing equity of the disposed interest. Negative adjustments primarily relate to unamortized goodwill which
has been reinstated in the U.S. GAAP value of the subsidiary’s net equity, thereby resulting in lower
gains on sale on a U.S. GAAP basis; positive adjustments relate primarily to the effect of reversal of the
revaluation of fixed assets which is included in the Italian GAAP value of the subsidiary’s net equity.
(g)Accounting for Case acquisition—As described in the note “Form and content of the consoli-
dated financial statements,” Fiat’s Italian GAAP consolidated financial statements as of December 31,
1999 did not consolidate the financial statements at that date of the Case Group, which was acquired on
Exhibit 13.13. (continued)