13 • 30 CORPORATE FINANCIAL DISCLOSURE: A GLOBAL ASSESSMENTTHE FIAT GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
at December 31, 2001, 2000 and 1999November 12, 1999, on the grounds that it would not have been practicable to obtain the necessary in-
formation on a timely basis without disproportionate expense; accordingly for Italian GAAP purposes, the
Case Group was consolidated and related purchase accounting entries were recorded with effect from
January 1, 2000. U.S. GAAP does not permit the exclusion of controlled companies from consolidation
unless control is temporary. Accordingly, for U.S. GAAP purposes, the net loss incurred by the Case
Group from the date of acquisition to December 31, 1999, has been included in determining net income
and stockholders’ equity of the Group in accordance with U.S. GAAP as of December 31, 1999. The ad-
justments reflected in the reconciliation for the two years ended December 31, 2001 relate to the effect of
this difference on the calculation of goodwill arising on the acquisition of the Case Group, which was de-
termined in the Italian GAAP consolidated financial statements as of January 1, 2000. Additional informa-
tion required by U.S. GAAP related to this acquisition is provided in (v) Business combinations.
(h)Deferred revenue recognition—Certain transactions which are recognized as sales under Ital-
ian GAAP on the basis of passage of title are accounted for under U.S. GAAP as financing transactions
or operating lease arrangements until the buyer resells or subsequently consumes or uses the product,
and the risks and rewards of ownership are effectively transferred, thus deferring the moment at which
revenues and margins are recognized.
(i)Real estate sale-leaseback transactions—In December 1998, the Group entered into sale-
leaseback transactions involving certain of its real estate subject to the terms of an operating lease
which extends for approximately 22 years. The lease does not contain any purchase or renewal op-
tions. At December 31, 1998, buildings with a total book value of 107 million euros have been re-
moved from the balance sheet and, after giving effect to minority interest, the gains realized on the sale
transaction totaling 73 million euros, before taxes of approximately 31 millions euros, have been fully
realized in accordance with the accounting principles applied by the Group. The approximate annual
lease payments over the lives of the leases are 15 million euros for the above mentioned buildings.
During 2001, the Group entered into two sets of sale-leaseback transactions. The first involved
the sale of certain property and its leaseback, has a term of 12 years and includes a purchase option. As
a result of the sale, assets with a value of 6 million euros were removed from the balance sheet. Under
Group accounting principles, a gain of 16 million euros was recognized in 2001. The total rental cost
for the property over the life of the lease is approximately 22 million euros.
The second set of 2001 sale-leaseback transactions involved the sale of property under three
contracts with lease terms of 5, 5 and 6 years. As a result of this transaction, 53 million euros of as-
sets were removed from the balance sheet. The net gain realized on this set of transactions under
Group accounting principles was 35 million euros. The total annual lease payments are approximately
34 million euros. Under these agreements, if the Group chooses not to repurchase the assets, the pur-
chaser has the option to compel the Group to continue to lease the property for an additional five years.
U.S. GAAP requires that, where certain conditions are met, such gain be deferred and be recog-
nized in proportion to the related gross rental charges to expense over the term of the operating lease.
(j)Start-up costs—In accordance with the Group’s accounting policies, the costs of start-up ac-
tivities are capitalized and amortized over their estimated useful lives. Effective January 1, 1999, how-
ever, U.S. GAAP Statement of Position 98-5, “Reporting on the Costs of Start-Up Activities” (SOP 98-5),
requires that these costs be expensed as incurred. The initial adoption of SOP 98-5 as of January 1,
1999 has been reported as a cumulative effect of a change in accounting principle, as required for U.S.
GAAP purposes. Such costs incurred after that date have also been expensed for U.S. GAAP purposes
and, consequently, amortization expense deriving from amounts capitalized in accordance with the
Group’s accounting policies is reversed.
(k)Financial instruments—The Group’s accounting policies related to financial receivables, fi-
nancial payables and derivative financial instruments are described in the notes, “Principles of consoli-
dation and significant accounting policies” and “Memorandum accounts.” These policies and the re-
lated disclosures included in the Group’s consolidated financial statements differ in certain respects
from those required under U.S. GAAP, as further described below.
(^1) 2
Exhibit 13.13. (continued)