EX-99.1 2 exhibit991fcanv20150331int.htm FCA NV 3.31.2015 EXHIBIT 99.1 Exhibit 99.1 FCA NV 2015.03.31 Interim Report
Exhibit 99.1


Interim Report
for the quarter ended
March 31, 2015


TABLE OF CONTENTS
 
Page
 
 
 
BOARD OF DIRECTORS
 
CERTAIN DEFINED TERMS
 
INTRODUCTION
 
MANAGEMENT DISCUSSION AND ANALYSIS
 
   Highlights
 
   Group Results
 
   Liquidity and Capital Resources
 
   Outlook
 
INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND NOTES AT MARCH 31, 2015
 
   Interim Consolidated Income Statements
 
   Interim Consolidated Statements of Comprehensive Income
 
   Interim Consolidated Statements of Financial Position
 
   Interim Consolidated Statements of Cash Flow
 
   Interim Consolidated Statements of Changes in Equity
 
   Notes to the Interim Consolidated Financial Statements at March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
BOARD OF DIRECTORS
 
Chairman
John Elkann (3)
 
Chief Executive Officer
Sergio Marchionne
 
Directors
Andrea Agnelli
Tiberto Brandolini d’Adda
Glenn Earle (1)
Valerie A. Mars (1) (2)
Ruth J. Simmons (3)
Ronald L. Thompson (1)
Patience Wheatcroft (1) (3)
Stephen M. Wolf (2)
Ermenegildo Zegna (2)
 
Independent Auditor
 Reconta Ernst & Young S.p.A.
(1)Member of the Audit Committee.
(2)Member of the Compensation Committee.
(3)Member of the Governance and Sustainability Committee.

1


CERTAIN DEFINED TERMS
In this document, unless otherwise specified, the terms “we”, “our”, “us”, the “Company”, the “Group”, and “FCA” refer to Fiat Chrysler Automobiles N.V., together with its subsidiaries, or any one or more of them, as the context may require. References to “Fiat” refer solely to Fiat S.p.A., the predecessor of FCA.





2


INTRODUCTION
The Interim Report for the period ended March 31, 2015 has been prepared in accordance with the requirements of the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and adopted by the European Union and has been prepared in accordance with IAS 34 – Interim Financial Reporting. The accounting principles applied in the Interim Consolidated Financial Statements are consistent with those used for the preparation of the Consolidated Financial Statements at December 31, 2014, except as otherwise stated in “New standards and amendments effective from January 1, 2015” in the Notes to the Interim Consolidated Financial Statements.
The Group’s financial information is presented in Euro except that, in some instances, information in U.S. Dollars is provided in the Interim Consolidated Financial Statements and information included elsewhere in this report. All references in this report to “Euro” and “€” refer to the currency introduced at the start of the third stage of European Economic and Monetary Union pursuant to the Treaty on the Functioning of the European Union, as amended, and all references to “U.S. Dollars”, “U.S. Dollar”, “U.S.$” and “$” refer to the currency of the United States of America (or “U.S.”).
This Interim Report is unaudited.


3


Foreword
This document, and in particular the section entitled “Outlook”, contains forward-looking statements. These statements may include terms such as “may”, “will”, “expect”, “could”, “should”, “intend”, “estimate”, “anticipate”, “believe”, “remain”, “on track”, “design”,“target”, “objective”, “goal”, “forecast”, “projection”, “outlook”, “prospects”, “plan”, “intend”, or similar terms. Forward-looking statements are not guarantees of future performance. Rather, they are based on the Group’s current expectations and projections about future events and, by their nature, are subject to inherent risks and uncertainties. They relate to events and depend on circumstances that may or may not occur or exist in the future and, as such, undue reliance should not be placed on them. Actual results may differ materially from those expressed in such statements as a result of a variety of factors, including: the Group’s ability to reach certain minimum vehicle sales volumes; developments in global financial markets and general economic and other conditions; changes in demand for automotive products, which is highly cyclical; the Group’s ability to enrich the product portfolio and offer innovative products; the high level of competition in the automotive industry; the Group’s ability to expand certain of the Group’s brands internationally; changes in the Group’s credit ratings; the Group’s ability to realize anticipated benefits from any acquisitions, joint venture arrangements and other strategic alliances; the Group’s ability to integrate its operations; potential shortfalls in the Group’s defined benefit pension plans; the Group’s ability to provide or arrange for adequate access to financing for the Group’s dealers and retail customers; the Group’s ability to access funding to execute the Group’s business plan and improve the Group’s business, financial condition and results of operations; various types of claims, lawsuits and other contingent obligations against the Group; disruptions arising from political, social and economic instability; material operating expenditures in relation to compliance with environmental, health and safety regulations; developments in labor and industrial relations and developments in applicable labor laws; increases in costs, disruptions of supply or shortages of raw materials; exchange rate fluctuations, interest rate changes, credit risk and other market risks; our ability to achieve the benefits expected from the proposed separation of Ferrari; political and civil unrest; earthquakes or other natural disasters and other risks and uncertainties.
Any forward-looking statements contained in this Interim report speak only as of the date of this document and the Company does not undertake any obligation to update or revise publicly forward-looking statements. Further information concerning the Group and its businesses, including factors that could materially affect the Company’s financial results, is included in the Company’s reports and filings with the U.S. Securities and Exchange Commission ("SEC"), the Netherlands Authority for the Financial Markets (stichting Autoriteit Financiële Markten, (the"AFM") and Borsa Italiana S.p.A. (the "CONSOB").

    

4





MANAGEMENT DISCUSSION AND ANALYSIS
Highlights
 
For the three months ended March 31,
(€ million)
2015
 
2014
Net revenues
26,396

 
22,125

EBIT
792

 
270

EBITDA(1)
2,189

 
1,438

Adjusted EBIT(2)
800

 
655

Profit/(loss) before taxes
186

 
(223
)
Profit/(loss) from continuing operations
92

 
(173
)
Net profit/(loss)
92

 
(173
)
Attributable to:
 
 
 
Owners of the parent
78

 
(189
)
Non-controlling interest
14

 
16

Basic earnings/(loss) per ordinary share(3)
0.052

 
(0.155
)
Diluted earnings/(loss) per ordinary share(3)
0.052

 
(0.155
)

(1)
EBIT plus Depreciation and Amortization
(2)
Beginning on January 1, 2015, “Adjusted EBIT” is a non-GAAP measure being used by the Group to assess its performance; Adjusted EBIT is calculated as EBIT excluding gains/(losses) on the disposal of investments, restructuring, impairments, asset write-offs and other unusual income/ (expenses) which are considered rare or discrete events that are infrequent in nature. Refer to the section - Group Results below for further discussion on Adjusted EBIT.
(3)
Note 10 to the Interim Consolidated Financial Statements provides additional information on the calculation of basic and diluted earnings per share
(€ million)
 
At March 31, 2015
 
At December 31, 2014
Net Debt
 
(11,448
)
 
(10,849
)
Of which: Net industrial debt
 
(8,607
)
 
(7,654
)
Total equity
 
15,235

 
13,738

Equity attributable to owners of the parent
 
14,893

 
13,425

Number of employees at period end
 
233,692

 
232,165


5


Non-GAAP Financial Measures

We monitor our operations through the use of several non-generally accepted accounting principles, or non-GAAP, financial measures: Net Debt, Net Industrial Debt, EBITDA and certain information provided on a constant currency basis. From January 1, 2015, we have started to use Adjusted Earnings Before Interest and Taxes (“Adjusted EBIT”) as a new non-GAAP measure. Adjusted EBIT is calculated as EBIT excluding: gains/(losses) on the disposal of investments, restructuring, impairments, asset write-offs and other unusual income/(expenses) which are considered rare or discrete events that are infrequent in nature.

We believe these non-GAAP financial measures provide useful and relevant information regarding our operating results and enhance the overall ability to assess our financial performance and financial position. We believe these measures allow management to view operating trends, perform analytical comparisons, benchmark performance between periods and among our segments, as well as make decisions regarding future spending, resource allocations and other operational decisions.

These and similar measures are widely used in the industry in which we operate, however, these financial measures may not be comparable to other similarly titled measures of other companies and are not intended to be substitutes for measures of financial performance and financial position as prepared in accordance with IFRS.

Net Industrial Debt - Refer to the Liquidity and Capital Resources section below for further discussion.    

Adjusted EBIT - Refer to the Group Results section below for further discussion. In addition, refer to Note 26 in the accompanying Interim Consolidated Financial Statements for a reconciliation of Adjusted EBIT to EBIT.

Constant Currency Information - The discussion within Group Results includes information about our net revenues at constant currency. We calculate constant currency by applying the prior-year average exchange rates to current financial data expressed in local currency in which the relevant financial statements are denominated in order to eliminate the impact of foreign exchange rate fluctuations.


6


Group Results
Three months ended March 31, 2015 compared to three months ended March 31, 2014
The following is a discussion of the results of operations for the three months ended March 31, 2015 compared to the three months ended March 31, 2014. The discussion of certain line items (cost of sales, selling, general and administrative costs and research and development costs) includes a presentation of such line items as a percentage of net revenues for the respective periods presented, to facilitate comparisons of the related periods.
The Group is no longer presenting the separate line item “Other unusual income/(expenses)” on the Consolidated Income Statements. All amounts previously reported within the “Other unusual income/(expenses)” line item have been reclassified into the appropriate line item within the Consolidated Income Statements based upon the nature of the transaction. For the three months ended March 31, 2014, a total of €94 million related to the devaluation of the Venezuelan Bolivar was reclassified from Other unusual income/(expense) to Cost of sales. In addition, a total of €271 million was reclassified to Other income/(expense) from Other unusual income/(expense), which includes the €495 million expense recognized in connection with the execution of the memorandum of understanding (the “MOU”) with the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (the “UAW”), entered into by FCA US on January 21, 2014, offset by the non-taxable gain of €223 million on the remeasurement to fair value of the previously exercised options on approximately 10 percent of FCA US’s membership interest in connection with the acquisition of the remaining interest in FCA US previously not owned. Furthermore, €18 million was reclassified to Selling, General and Administrative costs from “Other unusual income/(expenses)”.
 
 
For the three months ended March 31,
(€ million)
 
2015
 
2014
Net revenues
 
26,396

 
22,125

Cost of sales
 
22,979

 
19,331

Selling, general and administrative costs
 
1,986

 
1,680

Research and development costs
 
727

 
626

Result from investments
 
50

 
33

Gains on the disposal of investments
 
—

 
8

Restructuring costs
 
4

 
10

Other income/(expenses)
 
42

 
(249
)
EBIT
 
792

 
270

Net financial expenses
 
606

 
493

Profit/(loss) before taxes
 
186

 
(223
)
Tax expense/(income)
 
94

 
(50
)
Net profit/(loss)
 
92

 
(173
)
Net profit/(loss) attributable to:
 
 
 
 
Owners of the parent
 
78

 
(189
)
Non-controlling interests
 
14

 
16


7


Net revenues
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages)
 
2015
 
2014
 
2015 vs. 2014
  Net revenues
 
26,396

 
22,125

 
4,271

19.3
%
Net revenues for the three months ended March 31, 2015 were €26.4 billion, an increase of €4.3 billion, or 19.3 percent (3.6 percent on a constant currency basis), from €22.1 billion for the three months ended March 31, 2014.
The increase in net revenues was primarily attributable to (i) a €4.4 billion increase in NAFTA net revenues, related to an increase in shipments, improved net pricing, vehicle mix and favorable foreign currency translation effects (ii) a €0.3 billion increase in EMEA mainly attributable to an increase in shipments and a favorable product mix, as well as positive foreign currency effects and (iii) an increase of €0.4 billion in Components net revenues, which were partially offset by (iv) a decrease of €0.4 billion in LATAM net revenues which was attributable to the combined effect of lower vehicle shipments resulting from poor trading conditions in the region's principal markets, partially offset by positive pricing and (v) a decrease of €0.1 billion in Maserati.
See — Results by Segment below for a detailed discussion of net revenues by segment.
Cost of sales
 
 
For the three months ended March 31,
 
  Increase/(decrease)
(€ million, except percentages) 
 
2015
 
Percentage
of net
revenues  
 
2014
 
Percentage
of net
revenues
 
2015 vs. 2014
Cost of sales
 
22,979

 
87.1
%
 
19,331

 
87.4
%
 
3,648

18.9
%
Cost of sales for the three months ended March 31, 2015 was €23.0 billion, an increase of €3.6 billion, or 18.9 percent (3.1 percent on a constant currency basis), from €19.3 billion for the three months ended March 31, 2014. As a percentage of net revenues, cost of sales was 87.1 percent for the three months ended March 31, 2015 compared to 87.4 percent for the three months ended March 31, 2014.
The increase in cost of sales was primarily due to the combination of (i) a €0.7 billion increase related to increased volume primarily in the NAFTA and EMEA segments, partially offset by a reduction in volume in LATAM and APAC, (ii) foreign currency translation effects of €3.0 billion primarily related to the strengthening of the U.S. Dollar, (iii) an increase of €0.2 billion (on a constant currency basis) resulting from increases in warranty expense in the NAFTA segment, partially offset by purchasing efficiencies.
For the three months ended March 31, 2014, €0.1 billion related to the the devaluation of the Venezuelan Bolivar was classified to Cost of Sales.
Selling, general and administrative costs
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages)    
 
2015
 
Percentage
of net
revenues  
 
2014
 
Percentage
of net
revenues  
 
2015 vs. 2014
Selling, general and administrative costs
 
1,986

 
7.5
%
 
1,680

 
7.6
%
 
306

18.2
%
Selling, general and administrative costs include advertising, personnel, and other costs. Advertising costs accounted for approximately 47.2 percent and 43.8 percent of total selling, general and administrative costs for the three months ended March 31, 2015 and 2014, respectively.

8


Selling, general and administrative costs for the three months ended March 31, 2015 were €1,986 million, an increase of €306 million, or 18.2 percent (5.1 percent at constant currency rates), from €1,680 million for the three months ended March 31, 2014. As a percentage of net revenues, selling, general and administrative costs were 7.5 percent in the three months ended March 31, 2015 compared to 7.6 percent in the three months ended March 31, 2014.
The increase in selling, general and administrative costs was due to the combined effects of (i) foreign currency translation of €221 million primarily resulting from the strengthening of the U.S. Dollar against the Euro, (ii) a €65 million increase in advertising expenses driven primarily by the NAFTA and EMEA segments, partially offset by lower marketing expenses in APAC and Maserati and (iii) a €20 million increase in other selling, general and administrative costs.
The increase in advertising expenses within the NAFTA segment was primarily for new product launches, including the all-new 2015 Chrysler 200 and the all-new 2015 Jeep Renegade, while the increase in advertising expenses for the EMEA segment related to support the Jeep brand growth and the launch of the all-new Fiat 500X. The increase in other selling, general and administrative costs was primarily attributable to the LATAM region for launch costs related to the Pernambuco plant.
Research and development costs
 
 
For the three months ended March 31,
 
  Increase/(decrease)
(€ million, except percentages) 
 
2015
 
Percentage
of net
revenues 
 
2014
 
Percentage
of net
revenues
 
2015 vs. 2014
Research and development costs expensed during the year
 
412

 
1.6
%
 
376

 
1.7
%
 
36

9.6
 %
Amortization of capitalized development costs
 
314

 
1.2
%
 
245

 
1.1
%
 
69

28.2
 %
Write-down of costs previously capitalized
 
1

 
n.m.(1)

 
5

 
n.m.(1)

 
(4
)
(80.0
)%
Research and development costs
 
727

 
2.8
%
 
626

 
2.8
%
 
101

16.1
 %
__________________________
(1) Number is not meaningful.
Research and development costs for the three months ended March 31, 2015 were €727 million, an increase of €101 million, or 16.1 percent, from €626 million for the three months ended March 31, 2014. As a percentage of net revenues, research and development costs were 2.8 percent for the three months ended March 31, 2015 and the three months ended March 31, 2014. Total research and development costs expensed in the three months ended March 31, 2015 increased by €36 million, largely attributable to continued research to support the development of new and existing vehicles.
The increase in amortization of capitalized development costs was mainly attributable to the launch of new products, and in particular related to the NAFTA segment, driven by the all-new 2015 Chrysler 200 and the all-new 2015 Jeep Renegade.
Total expenditures on research and development amounted to €1,010 million for the three months ended March 31, 2015, an increase of 22.1 percent, from €827 million, for the three months ended March 31, 2014. Research and development costs capitalized as a percentage of total expenditures on research and development were 59.2 percent for the three months ended March 31, 2015, as compared to 54.5 percent for the three months ended March 31, 2014.
    

9


Result from investments
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages)       
 
2015
 
2014
 
2015 vs. 2014
Result from investments
 
50

 
33

 
17

 
51.5
%
Result from investments for the three months ended March 31, 2015 was €50 million, an increase of €17 million, or 51.5 percent, from €33 million for the three months ended March 31, 2014. The increase in result from investments was primarily attributable to improved results of the Group’s investments in FCA Bank S.p.A. (“FCA Bank”) and Tofas-Turk Otomobil Fabrikasi Tofas A.S. (“Tofas”), both of which are within the EMEA segment.
Gains/(losses) on the disposal of investments
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages)     
 
2015
 
2014
 
2015 vs. 2014
Gains/(losses) on the disposal of investments
 
—

 
8

 
(8
)
 
(100.0
)%
Gains/(losses) on the disposal of investments for the three months ended March 31, 2014 mainly related to the LATAM segment.
Restructuring costs
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages)
 
2015
 
2014
 
2015 vs. 2014
Restructuring costs
 
4

 
10

 
(6
)
 
(60.0
)%
Restructuring costs for the three months ended March 31, 2015 were €4 million, a decrease of €6 million, from €10 million for the three months ended March 31, 2014.
Restructuring costs for the three months ended March 31, 2015 mainly related to the LATAM segment. Restructuring costs for the three months ended March 31, 2014 mainly related to the LATAM and Components segments.
Other income/(expenses)
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages)             
 
2015
 
2014
 
2015 vs. 2014
Other income/(expenses)
 
42

 
(249
)
 
291

 
116.9
%
Other income/(expenses) for the three months ended March 31, 2015 amounted to Other net income of €42 million, as compared to Other net expense of €249 million for the three months ended March 31, 2014.
For the three months ended March 31, 2015, there were no items that either individually or in aggregate are considered material. For the three months ended March 31, 2014, Other expenses amounted to €249 million, primarily relating to the €495 million expense recognized in connection with the execution of the MOU with the UAW, entered into by FCA US on January 21, which was partially offset by the non-taxable gain of €223 million on the remeasurement to fair value of the previously exercised options on approximately 10 percent of FCA US’s membership interest in connection with the acquisition of the remaining equity interest in FCA US previously not owned.    

10


EBIT
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages)  
 
2015
 
2014
 
2015 vs. 2014
EBIT
 
792

 
270

 
522

 
193.3
%
EBIT for the three months ended March 31, 2015 was €792 million, an increase of €522 million, or 193.3 percent, from €270 million for the three months ended March 31, 2014.
The year-over-year results reflect a positive foreign currency translation impact from the strengthening U.S. Dollar, which was offset by negative foreign currency transactional impacts, primarily the strengthening of the U.S. Dollar on NAFTA vehicles and components supplied to other regions and the weakening of the Canadian Dollar on revenues from sales in Canada.
For the three months ended March 31, 2014, EBIT included the €495 million charge connected with the execution of the MOU with the UAW entered into by FCA US on January 21, 2014, the effect of the devaluation of the Venezuelan Bolivar of €94 million and the non-taxable gain of €223 million on the fair value re-measurement of the previously exercised options in connection with the acquisition of the remaining equity interest of FCA US previously not owned.
Adjusted EBIT
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages)  
 
2015
 
2014
 
2015 vs. 2014
Adjusted EBIT
 
800

 
655

 
145

 
22.1
%
Adjusted EBIT increased by €145 million to €800 million, or 22.1 percent due to the combined effect of (i) the improvement in NAFTA higher volumes and improved net pricing, which was partially offset by the negative impacts of the weakened Canadian Dollar and Mexican Peso, and increased warranty and recall costs, (ii) continued improvement in EMEA, which posted a positive result for the second consecutive quarter, primarily attributable to volume increase, a more favorable product mix and positive pricing, (iii) an increase in Components, offset by (iv) a decrease of €109 million in LATAM, reflecting lower volumes due to the market conditions and Pernambuco launch costs, partially offset by favorable pricing and (v) a €70 million decrease in APAC mainly due to reduced volumes and unfavorable net pricing, primarily due to foreign currency translation effects from the Chinese Renminbi, Australian Dollar and Japanese Yen as well as increased incentives in China.
The year-over-year results reflect a positive foreign currency translation impact from the strengthening U.S. Dollar, which was offset by negative foreign currency transactional impacts, primarily the strengthening of the U.S. Dollar on NAFTA vehicles and components supplied to other regions and the weakening of the Canadian Dollar on revenues from sales in Canada.
Net financial expenses
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages)
 
2015
 
2014
 
2015 vs. 2014
Net financial expenses
 
606

 
493

 
113

 
22.9
%
Net financial expenses for the three months ended March 31, 2015 were €606 million, an increase of €113 million, or 22.9 percent, from a net financial expense of €493 million for the three months ended March 31, 2014. The increase was primarily due to higher debt levels in Brazil and unfavorable foreign currency translation effects.

11


Tax expense/(income)
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages)
 
2015
 
2014
 
2015 vs. 2014
Tax expense/(income)
 
94

 
(50
)
 
144

 
288.0
%
Tax expense for the three months ended March 31, 2015 was €94 million, compared with tax income of €50 million for the three months ended March 31, 2014.
The €144 million difference was primarily related to the increase in profit/(loss) before tax. Profit/(loss) before tax for the three months ended March 31, 2014 included certain one-off charges including the non-taxable gain related to the fair value re-measurement of the previously exercised options in connection with the acquisition of the remaining equity interest of FCA US previously not owned. There were no such similar one-off charges during the three months ended March 31, 2015.
Results by Segment
The following is a discussion of Net revenues, Adjusted EBIT and shipments for each segment.
(€ million, except shipments which are in thousands of units)
 
Net revenues
 
Adjusted EBIT
 
Shipments
 
for the three months ended March 31,
 
for the three months ended March 31,
 
for the three months ended March 31,
 
 
2015
2014
 
2015
2014
 
2015
2014
NAFTA
 
16,177

11,732

 
601

380

 
633

585

LATAM
 
1,551

1,965

 
(65
)
44

 
135

205

APAC
 
1,512

1,497

 
65

135

 
47

54

EMEA
 
4,684

4,341

 
25

(72
)
 
271

259

Ferrari
 
621

620

 
100

80

 
2

2

Maserati
 
523

649

 
36

59

 
7

8

Components
 
2,435

2,081

 
68

48

 
—

—

Other activities
 
197

201

 
(9
)
(13
)
 
—

—

Unallocated items & adjustments(1)   
 
(1,304
)
(961
)
 
(21
)
(6
)
 
—

—

Total
 
26,396

22,125

 
800

655

 
1,095

1,113

__________________________
(1) Primarily includes intercompany transactions which are eliminated on consolidation.

Car Mass-Market
NAFTA
 
 
For the three months ended March 31,
 
 Increase/(decrease)
(€ million, except percentages and shipments which are in thousands of units)
 
2015
 
% of
segment
net
revenues
 
2014
 
% of
segment
net
revenues
 
2015 vs. 2014
Net revenues
 
16,177

 
100.0
%
 
11,732

 
100.0
%
 
4,445

 
37.9
%
Adjusted EBIT
 
601

 
3.7
%
 
380

 
3.2
%
 
221

 
58.2
%
Shipments
 
633

 
—

 
585

 
—

 
48

 
8.2
%

12


Net revenues
NAFTA net revenues for the three months ended March 31, 2015 were €16.2 billion, an increase of €4.4 billion, or 37.9 percent (13.4 percent at constant currency rates) from €11.7 billion for the three months ended March 31, 2014. The total increase was primarily attributable to (i) €1.1 billion related to increased shipments of Ram 1500, the all-new 2015 Jeep Renegade and the all-new 2015 Chrysler 200, (ii) favorable net pricing as well as pricing for enhanced content of €0.2 billion, partially offset by foreign exchange transaction impacts of the Canadian Dollar and Mexican Peso (iii) vehicle mix of €0.3 billion and (iv) favorable foreign currency translation effects of €2.9 billion.
The 8.2 percent increase in vehicle shipments from 585 thousand units for the three months ended March 31, 2014, to 633 thousand units for the three months ended March 31, 2015, was largely driven by increased demand of the Group’s vehicles in the retail market, including the all-new 2015 Jeep Renegade, Jeep Cherokee, Ram 1500 pickup and the all-new 2015 Chrysler 200.

Adjusted EBIT
NAFTA Adjusted EBIT for the three months ended March 31, 2015 was €601 million, an increase of €221 million, or 58.2 percent, from an adjusted EBIT of €380 million for the three months ended March 31, 2014.
The increase in NAFTA Adjusted EBIT was primarily attributable to (i) an increase of €207 million due to favorable pricing, partially offset by foreign exchange transaction impacts of the Canadian Dollar and Mexican Peso and (ii) favorable volume/mix impact of €75 million, driven by the increase in shipments described above, partially offset by (iii) increased industrial costs of €125 million and (iv) a €20 million increase in selling, general and administrative costs largely attributable to higher advertising costs to support new vehicle launches.
The increase in industrial costs was primarily attributable to an increase in warranty expenses of approximately €216 million (on a constant currency basis) which included the effects of recall campaigns, an increase in base material costs of €97 million mainly related to higher base material costs associated with vehicles and components and content enhancements on new models, partially offset by purchasing efficiencies.
For the three months ended March 31, 2014, Adjusted EBIT excluded the €495 million charge connected with the execution of the MOU with the UAW entered into in January 2014.

13


LATAM
 
 
For the three months ended March 31,
 
 Increase/(decrease)
(€ million, except percentages and shipments which are in thousands of units)
 
2015
 
% of
segment
net
revenues
 
2014
 
% of
segment
net
revenues
 
2015 vs. 2014
Net revenues
 
1,551

 
100.0
 %
 
1,965

 
100.0
%
 
(414
)
 
(21.1
)%
Adjusted EBIT
 
(65
)
 
(4.2
)%
 
44

 
2.2
%
 
(109
)
 
(247.7
)%
Shipments
 
135

 
—

 
205

 
—

 
(70
)
 
(34.1
)%
Net revenues
LATAM net revenues for the three months ended March 31, 2015 were €1.6 billion, a decrease of €0.4 billion, or 21.1 percent (24.1 percent at constant currency rates), from €2.0 billion for the three months ended March 31, 2014. The total decrease of €0.4 billion was primarily attributable to (i) a decrease of €0.6 billion driven by lower shipments, which were partially offset by (ii) favorable net pricing of €0.2 billion.
The 34.1 percent decrease in vehicle shipments from 205 thousand units for the three months ended March 31, 2014, to 135 thousand units for the three months ended March 31, 2015 reflected continued macroeconomic weakness in the region’s principal markets, where Brazil continued the negative market trend started in 2012 and Argentina was impacted by import restrictions and overall economic uncertainties. The decrease in shipments was also due to the launch of new products by our competitors and pricing pressures, however, the Group remained the leader in the market for the three months ended March 31, 2015 with a 250 bps lead over the nearest competitor and with a market share of 19.7 percent in Brazil.
Adjusted EBIT
LATAM Adjusted EBIT for the three months ended March 31, 2015 was negative €65 million, a decrease of €109 million, from €44 million for the three months ended March 31, 2014.
The decrease in LATAM Adjusted EBIT was primarily attributable to the combination of (i) unfavorable volume/mix impact of €109 million mainly attributable to a decrease in shipments and vehicle mix in Brazil, (ii) an increase in industrial costs of €98 million primarily attributable to launch costs for the Pernambuco plant and higher material costs (iii) €39 million increase in advertising costs for the commercial launch of the all-new 2015 Jeep Renegade, partially offset by (iv) favorable pricing of €154 million driven by pricing actions in Brazil and Argentina.
Adjusted EBIT for the three months ended March 31, 2014 excluded the €94 million effect of the devaluation of the Venezuelan Bolivar.
Venezuela

On February 10, 2015, the Venezuelan government introduced a new market-based exchange system, referred to as Marginal Currency System, or the SIMADI rate, with certain specified limitations on its usage by individuals and legal entities. On February 12, 2015, the SIMADI rate began trading at 170 VEF to U.S. Dollar and is expected to be used by individuals and legal entities in the private sector. The SIMADI exchange rate was utilized by FCA Venezuela for a transaction related to the purchase of parts.

Since its introduction during the first quarter of 2014, we have used the exchange rate determined by an auction process conducted by Venezuela's Supplementary Foreign Currency Administration System (“SICAD”), referred to as the “SICAD I” exchange rate, to remeasure FCA Venezuela's (our Venezuelan subsidiary) net monetary assets in U.S. Dollar. In late March 2014, the Venezuelan government introduced an additional auction-based foreign exchange system, referred to as the “SICAD II” exchange rate. Refer to our 2014 Annual Report for additional details regarding the SICAD I and SICAD II exchange rates.


14


In February 2015, the Venezuelan government announced that the SICAD I and SICAD II exchange systems would be merged into a single exchange system (the “SICAD”) with a rate starting at 12.0 VEF to U.S. Dollar. The SICAD exchange rate will be used to complete the majority of FCA Venezuela's transactions to exchange VEF for U.S. Dollar, as such, it has been deemed the appropriate rate to use to convert our monetary assets and liabilities to U.S. Dollars.
        
We will continue to monitor the currency exchange regulations and other factors to assess whether our ability to control and benefit from our Venezuelan operations has been adversely affected. Refer to Note 27, in the accompanying Interim Consolidated Financial Statements for further detail.

APAC
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages and shipments which are in thousands of units)
 
2015
 
% of
segment
net
revenues
 
2014
 
% of
segment
net
revenues
 
2015 vs. 2014
Net revenues
 
1,512

 
100.0
%
 
1,497

 
100.0
%
 
15

 
1.0
 %
Adjusted EBIT
 
65

 
4.3
%
 
135

 
9.0
%
 
(70
)
 
(51.9
)%
Shipments
 
47

 
—

 
54

 
—

 
(7
)
 
(13.0
)%
Net revenues
APAC net revenues for the three months ended March 31, 2015 were €1.5 billion, consistent with net revenues for the three months ended March 31, 2014. However, net revenues were 17.4 percent lower on a constant currency basis.
The 13.0 percent decrease in shipments from 54 thousand units for the three months ended March 31, 2014 to 47 thousand units for the three months ended March 31, 2015, was primarily due to competitive market actions and the fact that the Jeep Cherokee shipments were lower in advance of beginning localized production later this year.

Adjusted EBIT
APAC Adjusted EBIT for the three months ended March 31, 2015 was €65 million, a decrease of €70 million, or 51.9 percent from €135 million for the three months ended March 31, 2014.
The decrease in APAC Adjusted EBIT was primarily attributable to (i) lower volumes and mix of €46 million, (ii) unfavorable net pricing of €37 million primarily due to foreign currency effects for vehicle sales in China, Australia and Japan as well as increased incentives in China, partially offset by foreign currency translation effects.
EMEA
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages and shipments which are in thousands of units)
 
2015
 
% of
segment
net
revenues
 
2014
 
% of
segment
net
revenues
 
2015 vs. 2014
Net revenues
 
4,684

 
100.0
%
 
4,341

 
100.0
 %
 
343

 
7.9
%
Adjusted EBIT
 
25

 
0.5
%
 
(72
)
 
(1.7
)%
 
97

 
134.7
%
Shipments
 
271

 
—

 
259

 
—

 
12

 
4.6
%
Net revenues
EMEA net revenues for the three months ended March 31, 2015 were €4.7 billion, an increase of €0.3 billion, or 7.9 percent, from €4.3 billion for the three months ended March 31, 2014.

15


The €0.3 billion increase in EMEA net revenues was mainly attributable to increased volume, positive net pricing, favorable product mix, primarily driven by the all-new Fiat 500X and the all-new 2015 Jeep Renegade and favorable foreign exchange effects.
In particular, the 4.6 percent increase in vehicle shipments, from 259 thousand units for the three months ended March 31, 2014, to 271 thousand units for the three months ended March 31, 2015, was largely driven by the Fiat 500 family and the Jeep brand.
Adjusted EBIT
EMEA Adjusted EBIT income for the three months ended March 31, 2015 was €25 million, an improvement of €97 million, or 134.7 percent, from an EBIT negative of €72 million for the three months ended March 31, 2014.
The increase in EMEA Adjusted EBIT was primarily attributable to the combination of (i) a favorable volume/mix impact of €106 million reflecting the continued success of the Fiat 500 family and Jeep brand and more specifically from the all-new Fiat 500X and the all-new 2015 Jeep Renegade, (ii) a €52 million impact from improvement in net pricing, partially offset by (iii) a €46 million increase in sales and marketing spending to support the Jeep brand growth and the launch of the all-new Fiat 500X and (iv) a €24 million increase in industrial costs, reflecting higher costs for U.S. imported vehicles due to weaker Euro, partially offset by purchasing savings and manufacturing efficiencies.
Ferrari
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages and shipments which are in units)
 
2015
 
% of
segment
net
revenues
 
2014
 
% of
segment
net
revenues
 
2015 vs. 2014
Net revenues
 
621

 
100.0
%
 
620

 
100.0
%
 
1

 
0.2
 %
Adjusted EBIT
 
100

 
16.1
%
 
80

 
12.9
%
 
20

 
25.0
 %
Shipments
 
1,635

 
—

 
1,732

 
—

 
(97
)
 
(5.6
)%
Net Revenues
For the three months ended March 31, 2015, Ferrari net revenues of €621 million were consistent with net revenues for the three months ended March 31, 2014, but lower by 5.8 percent on a constant currency basis, reflecting favorable foreign currency exchange effects, offset by reduced shipments.
Adjusted EBIT
Ferrari Adjusted EBIT for the three months ended March 31, 2015, was €100 million, an increase of €20 million, or 25.0 percent from €80 million for the three months ended March 31, 2014. The increase in Adjusted EBIT primarily reflected lower research and development costs, due to timing of model development, and favorable foreign currency exchange effects.
Maserati
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages and shipments which are in units)
 
2015
 
% of
segment
net
revenues
 
2014
 
% of
segment
net
revenues
 
2015 vs. 2014
Net revenues
 
523

 
100.0
%
 
649

 
100.0
%
 
(126
)
 
(19.4
)%
Adjusted EBIT
 
36

 
6.9
%
 
59

 
9.1
%
 
(23
)
 
(39.0
)%
Shipments
 
7,306

 
—

 
8,041

 
—

 
(735
)
 
(9.1
)%


16


Net revenues
For the three months ended March 31, 2015, Maserati net revenues were €523 million, a decrease of €126 million, or 19.4 percent, (29.1 percent on a constant currency basis), from €649 million for the three months ended March 31, 2014, primarily driven by a decrease in vehicle shipments from 8,041 units for the three months ended March 31, 2014 to 7,306 units for the three months ended March 31, 2015, resulting from weaker demand in China.
Adjusted EBIT
Maserati Adjusted EBIT for the three months ended March 31, 2015 was €36 million, a decrease of €23 million, or 39.0 percent, from €59 million for the three months ended March 31, 2014 due to the decrease in volume described above and an unfavorable product mix, partially offset by cost efficiencies.
Components
 
 
For the three months ended March 31,
 
Increase/(decrease)
(€ million, except percentages) 
 
2015
 
% of
segment
net
revenues 
 
2014
 
% of
segment
net
revenues 
 
2015 vs. 2014
Magneti Marelli
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
 
1,807

 
 
 
1,574

 
 
 
233

 
14.8
%
Adjusted EBIT
 
56

 
 
 
43

 
 
 
13

 
30.2
%
Teksid
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
 
180

 
 
 
162

 
 
 
18

 
11.1
%
Adjusted EBIT
 
1

 
 
 
(4
)
 
 
 
5

 
125.0
%
Comau
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
 
468

 
 
 
361

 
 
 
107

 
29.6
%
Adjusted EBIT
 
11

 
 
 
9

 
 
 
2

 
22.2
%
Intrasegment eliminations
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
 
(20
)
 
 
 
(16
)
 
 
 
(4
)
 
25.0
%
Components
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
 
2,435

 
100.0
%
 
2,081

 
100.0
%
 
354

 
17.0
%
Adjusted EBIT
 
68

 
2.8
%
 
48

 
2.3
%
 
20

 
41.7
%

Net revenues
Components net revenues for the three months ended March 31, 2015 were €2.4 billion, an increase of €0.4 billion, or 17.0 percent (11.9 percent on a constant currency basis), from €2.1 billion for the three months ended March 31, 2014.
Magneti Marelli
Magneti Marelli net revenues for the three months ended March 31, 2015 were €1.8 billion, an increase of €0.2 billion, or 14.8 percent, from €1.6 billion for the three months ended March 31, 2014 primarily reflecting positive performance in Europe, partially offset by the contraction of the market in Brazil.
Teksid
Teksid net revenues for the three months ended March 31, 2015 were €180 million, an increase of €18 million, or 11.1 percent, from €162 million for the three months ended March 31, 2014, primarily attributable to a 37 percent increase in aluminum business volumes, offset by an 8 percent decrease in cast iron business volumes.

17


Comau
Comau net revenues for the three months ended March 31, 2015 were €468 million, an increase of €107 million, or 29.6 percent, from €361 million for the three months ended March 31, 2014 mainly attributable to the body welding, powertrain and robotics businesses.
Adjusted EBIT
Components Adjusted EBIT for the three months ended March 31, 2015 was €68 million, an increase of €20 million or 41.7 percent, from €48 million for the three months ended March 31, 2014.
Magneti Marelli
Magneti Marelli Adjusted EBIT for the three months ended March 31, 2015 was €56 million, an increase of €13 million, or 30.2 percent, from €43 million for the three months ended March 31, 2014. The increase in Adjusted EBIT primarily related to higher volumes and the benefit of cost containment actions and efficiencies, partially offset by start-up costs related to the plant in Pernambuco, Brazil.
Teksid
Teksid Adjusted EBIT for the three months ended March 31, 2015 was €1 million, an increase of €5 million, or 125.0% from an Adjusted EBIT negative of €4 million for the three months ended March 31, 2014 primarily attributable to increased cost efficiencies and favorable foreign currency exchange effects.
Comau
Comau Adjusted EBIT for the three months ended March 31, 2015 was €11 million, an increase of €2 million, or 22.2 percent, from €9 million for the three months ended March 31, 2014, primarily due to increased volumes.

Liquidity and Capital Resources

Total Available Liquidity
At March 31, 2015, our total available liquidity was €25.2 billion (€26.2 billion at December 31, 2014), including €3.3 billion available under undrawn committed credit lines related to the €2.1 billion three year syndicated revolving credit line and the U.S.$1.3 billion (approximately €1.2 billion) Revolving Credit Facility of FCA US. The terms of the Revolving Credit Facility require FCA US to maintain a minimum liquidity of U.S.$3.0 billion (€2.8 billion), which includes any undrawn amounts under the Revolving Credit Facility. Total available liquidity includes cash and cash equivalents and current securities. Total available liquidity is subject to intra-month and seasonal fluctuations resulting from business and collection-payment cycles as well as to changes in foreign exchange conversion rates.
The following table summarizes our total available liquidity:
 
 
At March 31,
 
At December 31,
(€ million)
 
2015
 
2014
Cash, cash equivalent and current securities (1)
 
21,895

 
23,050

Undrawn committed credit lines (2)
 
3,308

 
3,171

Total available liquidity (3)
 
25,203

 
26,221

_____________________________
(1)
At March 31, 2015, current securities comprise €226 million (€210 million as of December 31,2014) of short term or marketable securities which represent temporary investments but which do not satisfy all the requirements to be classified as cash equivalents as they may not be able to be readily converted into cash, or they are subject to significant risk of change in value (even if they are short-term in nature or marketable).

18


(2)
Excludes the undrawn €0.7 billion medium/long-term dedicated credit lines available to fund scheduled investments as of March 31, 2015 (€0.9 billion was undrawn at December 31, 2014) and also excludes the undisbursed €0.4 billion on the Mexico Bank Loan as of March 31, 2015 (€0 at December 31, 2014), which can be drawn subject to meeting the preconditions for additional disbursements.
(3)
The majority of our liquidity is available to our treasury operations in Europe, U.S. (subject to the restrictions on FCA US distributions as discussed in the 2014 Annual Report) and Brazil; however, liquidity is also available to certain subsidiaries which operate in other areas. Cash held in such countries may be subject to restrictions on transfer depending on the foreign jurisdictions in which these subsidiaries operate. Based on our review of such transfer restrictions in the countries in which we operate and maintain material cash balances, we do not believe such transfer restrictions have an adverse impact on the Group’s ability to meet its liquidity requirements at the dates represented above.
Our liquidity is principally denominated in U.S. Dollar and in Euro. Out of the total €21.9 billion of cash, cash equivalents and current securities available at March 31, 2015 (€23.0 billion at December 31, 2014), €12.2 billion, or 56 percent were denominated in U.S. Dollar (€10.6 billion, or 46 percent, at December 31, 2014) and €5 billion, or 23 percent, were denominated in Euro (€6.2 billion, or 27 percent, at December 31, 2014). Liquidity available in Brazil and denominated in Brazilian Reals accounted for €0.9 billion or 4 percent at March 31, 2015 (€1.6 billion, or 7 percent, at December 31, 2014), with the remainder being distributed in various countries and denominated in the relevant local currencies.
The decrease in total available liquidity from December 31, 2014 to March 31, 2015 primarily reflects operating cash absorption and the payment of a €1.5 billion bond at maturity, partially offset by favorable foreign currency translation effects. Refer to the —Cash Flows section below for additional information regarding change in cash and cash equivalents.
Cash Flows
The following table summarizes the cash flows from operating, investing and financing activities for each of the three months ended March 31, 2015 and 2014. For a complete discussion of our cash flows, see our Interim Consolidated Statements of Cash Flows in the accompanying Interim Consolidated Financial Statements included elsewhere in this Interim report.
(€ million)
2015
 
2014
Cash and cash equivalents at beginning of the period
22,840

 
19,455

Cash flows from operating activities
958

 
1,396

Cash flows used in investing activities
(1,788
)
 
(1,599
)
Cash flows from financing activities
(1,744
)
 
(1,669
)
Translation exchange differences
1,403

 
(83
)
Total change in cash and cash equivalents
(1,171
)
 
(1,955
)
Cash and cash equivalents at end of the period
21,669

 
17,500

Operating Activities — Three months ended March 31, 2015
For the three months ended March 31, 2015, our net cash from operating activities was €958 million and was primarily the result of:
(i)
net profit of €92 million adjusted to add back €1,397 million for depreciation and amortization expense;
(ii)
a net increase of €274 million in provisions, mainly related to net adjustments to warranties for NAFTA and higher accrued sales incentives, primarily due to an increase in dealer stock levels to support increased sales volumes in NAFTA; and
(iii)
€112 million dividends received from jointly-controlled entities.
These positive contributions were partially offset by:
(iv)
the negative impact of change in working capital of €1,000 million primarily driven by (a) €1,353 million increase in inventories, in line with the trend in production and sales volumes for the period, (b) €205 million increase in trade receivables, (c) €550 million increase in net other current assets and liabilities, which were partially offset by (d) €1,108 million increase of trade payables, mainly related to increased production in EMEA and NAFTA as a result of increased consumer demand for our vehicles.

19


Operating Activities — Three Months Ended March 31, 2014
For the three months ended March 31, 2014, our net cash from operating activities was €1,396 million and was primarily the result of:
(i)
a net loss of €173 million adjusted to add back (a) €1,168 million for depreciation and amortization expense and (b) other non-cash items of €243 million, which primarily includes (i) €366 million related to the non-cash portion of the expense recognized in connection with the execution of the MOU entered into by the UAW and FCA US on January 21, 2014, (ii) a €94 million remeasurement charge recognized as a result of the Group’s change in the exchange rate used to remeasure its Venezuelan subsidiary’s net monetary assets in U.S. Dollars which were partially offset by (iii) the non-taxable gain of €223 million on the re-measurement at fair value of the previously exercised options on approximately 10 percent of FCA US’s membership interests in connection with the equity purchase agreement;
(ii)
a net increase of €384 million in provisions, mainly related to: (i) increase in accrued sales incentives, primarily due to an increase in retail incentives as well as an increase in dealer stock levels as of March 31, 2014 compared to December 31, 2013 to support increased sales volumes in NAFTA, and (ii) net adjustments to pre-existing warranties, including those related to certain recall campaigns; and
(iii)
€55 million of dividends received from jointly-controlled entities;
These positive contributions were partially offset by:
(iv)
the negative impact of the change in working capital of €210 million primarily driven by (a) €605 million increase in inventory mainly related to increased finished vehicles and work in process levels for all segments; (b) €458 million increase in trade receivables, principally because NAFTA shipments at the end of March 2014 exceeded those at December 2013 as a result of the annual plant shutdowns in December 2013 and (c) €195 million in net other current assets and liabilities mainly related to decreases in accrued expenses and tax payables, which were partially offset by (d) €1,048 million increase in trade payables, mainly related to increased production in NAFTA and EMEA as a result of increased consumer demand for vehicles in these regions.
Investing Activities — Three months ended March 31, 2015
For the three months ended March 31, 2015, net cash used in investing activities was €1,788 million, primarily as a result of:
(i)
€2,078 million of capital expenditures, including €598 million of capitalized development costs, to support investments in existing and future products. Capital expenditure primarily relates to the mass-market operations in NAFTA and EMEA and the completion of the new plant at Pernambuco, Brazil; partially offset by
(ii)
a €360 million net decrease in receivables from financing activities primarily related to the decreased lending portfolio of the financial services activities of the Group.
Investing Activities — Three Months Ended March 31, 2014
For the three months ended March 31, 2014, net cash used in investing activities was €1,599 million, primarily as a result of:
(i)
€1,443 million of capital expenditures, including €451 million of capitalized development costs, to support our investments in existing and future products. Capital expenditure primarily relates to the mass-market operations in NAFTA and EMEA and the ongoing construction of the new plant at Pernambuco, Brazil; and

20


(ii)
€211 million of net increase in receivables from financing activities, of which €110 million related to the increased lending portfolio of the financial services activities of the Group and €82 million related to increased financial receivables due from jointly controlled financial services companies.
Financing Activities —Three months ended March 31, 2015
For the three months ended March 31, 2015, net cash used in financing activities was €1,744 million, primarily as a result of:
(i)
the repayment on maturity of a note issued under the Global Medium Term Note Program (“GMTN Program”) for a total principal amount of €1.5 billion; and
(ii)
the payment of medium-term borrowings for a total of €1,139 million, which include the repayment, on maturity, of the European Investment Bank (“EIB”) loan of €250 million and the repayment of our Mexican development banks credit facilities of €414 million as part of FCA Mexico's refinancing transaction in March 2015.
These items were partially offset by:
(i)
proceeds from new medium-term borrowings for a total of €953 million which include the initial disbursement received of €0.5 billion under the new non-revolving loan agreement of $0.9 billion (€0.9 billion) as part of FCA Mexico's refinancing transaction completed in March 2015, and other financing transactions, primarily in Brazil.
Financing Activities —Three Months Ended March 31, 2014
For the three months ended March 31, 2014, net cash used in financing activities was €1,669 million, primarily as a result of:
(i)
the cash payment for the acquisition of the remaining 41.5 percent interest in FCA US not already owned by FCA equal to U.S.$3.65 billion (€2.69 billion) and an additional U.S.$60 million (€45 million) of tax distribution paid by FCA US. The cash payment of €2,691 million is classified as acquisition of non-controlling interests on the Consolidated Statements of Cash Flow while the tax distribution (€45 million) is classified separately;
(ii)
payment of medium-term borrowings for a total of €3,892 million, mainly related to the prepayment of the outstanding financial liability with the UAW Retiree Medical Benefits Trust, or the VEBA Trust, (“VEBA Trust Note”) amounting to approximately U.S.$5.0 billion (€3.6 billion), including accrued and unpaid interest.
These items were partially offset by:
(iii)
proceeds from bond issuances for a total amount of €3,011 million which included €1 billion of notes issued as part of the GMTN Program and €2 billion of senior secured notes issued by FCA US; and
(iv)
proceeds from new medium-term borrowings for a total of €1,840 million, which mainly related to the incremental term loan entered into by FCA US of U.S.$250 million (€181 million) under its existing tranche B term loan facility which matures May 24, 2017, and the U.S.$1.75 billion (€1.3 billion) additional term loan credit facility entered into by FCA US as part of the refinancing transaction to facilitate prepayment of the VEBA Trust Note.
The translation exchange differences in the period were positive for €1,403 million and mainly reflect the increase in Euro translated value of U.S. Dollar denominated cash and cash equivalent balances, due to the strengthening of the U.S. Dollar in the period.

21


Net Industrial Debt
The following table details our Net Debt at March 31, 2015 and December 31, 2014 and provides a reconciliation of this non-GAAP measure to Debt, the most directly comparable measure included in our Consolidated Statements of Financial Position.
Due to different sources of cash flows used for the repayment of the financial debt between industrial activities and financial services (by cash from operations for industrial activities and by collection of financial receivables for financial services) and the different business structure and leverage implications, we provide a separate analysis of Net Debt between industrial activities and financial services.
    
The division between industrial activities and financial services represents a sub-consolidation based on the core business activities (industrial or financial services) of each Group company. The sub-consolidation for industrial activities also includes companies that perform centralized treasury activities, such as raising funding in the market and financing Group companies, but do not, however, provide financing to third parties. Financial services includes companies that provide retail and dealer finance, leasing and rental services in support of the mass-market brands in certain geographical segments, and for the luxury brands.
    
All FCA US activities are included under industrial activities. Since FCA US’s treasury activities (including funding and cash management) are managed separately from the rest of the Group we also provide the analysis of Net Industrial Debt split between FCA excluding FCA US, and FCA US.
 
March 31, 2015
 
December 31, 2014
 
Industrial
Activities
 
Financial
Services
 
Consolidated
 
Industrial
Activities
 
Financial
Services
 
Consolidated
(€ million)
Total
 
FCA ex
FCA US
 
FCA US
 
 
 
Total
 
FCA ex
FCA US
 
FCA US
 
 
Third Parties Debt (Principal)
(31,317
)
 
(19,782
)
 
(11,535
)
 
(1,640
)
 
(32,957
)
 
(31,381
)
 
(21,011
)
 
(10,370
)
 
(1,980
)
 
(33,361
)
Capital Market(1)
(16,739
)
 
(11,204
)
 
(5,535
)
 
(380
)
 
(17,119
)
 
(17,378
)
 
(12,473
)
 
(4,905
)
 
(351
)
 
(17,729
)
Bank Debt
(12,463
)
 
(7,475
)
 
(4,988
)
 
(1,125
)
 
(13,588
)
 
(11,904
)
 
(7,484
)
 
(4,420
)
 
(1,216
)
 
(13,120
)
Other Debt(2)   
(2,115
)
 
(1,103
)
 
(1,012
)
 
(135
)
 
(2,250
)
 
(2,099
)
 
(1,054
)
 
(1,045
)
 
(413
)
 
(2,512
)
Accrued Interest and Other Adjustments(3)
(408
)
 
(116
)
 
(292
)
 
(1
)
 
(409
)
 
(362
)
 
(200
)
 
(162
)
 
(1
)
 
(363
)
Debt with third Parties
(31,725
)
 
(19,898
)
 
(11,827
)
 
(1,641
)
 
(33,366
)
 
(31,743
)
 
(21,211
)
 
(10,532
)
 
(1,981
)
 
(33,724
)
Intercompany Financial Receivables/Payables (net)(4)
1,577

 
1,634

 
(57
)
 
(1,577
)
 
—

 
1,453

 
1,515

 
(62
)
 
(1,453
)
 
—

Current financial receivables from jointly-controlled financial services companies (5)   
54

 
54

 
—

 
—

 
54

 
58

 
58

 
—

 
—

 
58

Debt, net of intercompany and current financial receivables from jointly-controlled financial services companies
(30,094
)
 
(18,210
)
 
(11,884
)
 
(3,218
)
 
(33,312
)
 
(30,232
)
 
(19,638
)
 
(10,594
)
 
(3,434
)
 
(33,666
)
Other financial assets/(liabilities) (net)(6)   
(30
)
 
(303
)
 
273

 
(1
)
 
(31
)
 
(229
)
 
(251
)
 
22

 
(4
)
 
(233
)
Current securities
198

 
198

 
—

 
28

 
226

 
180

 
180

 
—

 
30

 
210

Cash and cash equivalents
21,319

 
8,534

 
12,785

 
350

 
21,669

 
22,627

 
10,653

 
11,974

 
213

 
22,840

Net Debt
(8,607
)
 
(9,781
)
 
1,174

 
(2,841
)
 
(11,448
)
 
(7,654
)
 
(9,056
)
 
1,402

 
(3,195
)
 
(10,849
)
 
 
(1) 
Includes bonds (€16,300 million at March 31, 2015 and €16,980 million at December 31, 2014), the financial liability component of the mandatory convertible securities (€421 million at March 31, 2015 and €373 million at December 31, 2014) and other securities (€398 million at March 31, 2015 and €376 million at December 31, 2014) issued in financial markets, mainly from LATAM financial services companies.
(2) 
Includes Canadian HCT notes (€563 million at March 31, 2015 and €620 million at December 31, 2014), asset backed financing, i.e. sales of receivables for which de-recognition is not allowed under IFRS (€188 million at March 31, 2015 and €469 million at December 31, 2014), arrangements accounted for as a lease under IFRIC 4 -Determining whether an arrangement contains a lease, and other financial payables.

22


(3) 
Includes adjustments for fair value accounting on debt (€63 million at March 31, 2015 and €67 million at December 31, 2014) and (accrued)/deferred interest and other amortizing cost adjustments (€346 million at March 31, 2015 and €296 million net at December 31, 2014).
(4) 
Net amount between Industrial Activities financial receivables due from Financial Services (€1,743 million at March 31, 2015 and €1,595 million at December 31, 2014) and Industrial Activities financial payables due to Financial Services (€166 million at March 31, 2015 and €142 million at December 31, 2014).
(5) 
Financial receivables due from FCA Bank.
(6) 
Fair value of derivative financial instruments (net negative €73 million at March 31, 2015 and net negative €271 million at December 31, 2014) and collateral deposits (€42 million at March 31, 2015 and €38 million at December 31, 2014).
Change in Net Industrial Debt
Net Industrial Debt is management’s primary measure for analyzing our financial leverage and capital structure and is one of the key targets used to measure our performance. The following section sets forth an explanation of the changes in our Net Industrial Debt for the three months ended March 31, 2015.
In the three months ended March 31, 2015, Net Industrial Debt increased by €953 million, from €7,654 million at December 31, 2014 to €8,607 million at March 31, 2015. The increase in Net Industrial Debt was primarily driven by:
•
investments in industrial activities of €2,078 million representing investments in property, plant and equipment and intangible assets;
partially offset by:
•
cash flow from industrial operating activities of €946 million which represents the consolidated cash flow from operating activities of €958 million, net of the cash flows from operating activities attributable to financial services of €12 million. For an explanation of the drivers in consolidated cash flows from operating activities see the —Cash Flows section above.
Capital Market
At March 31, 2015 and December 31, 2014, capital market debt mainly relates to notes issued under the GMTN Program by the Group (excluding FCA US), the Secured Senior Notes of FCA US, the financial liability component of the mandatory convertible securities and short and medium-term marketable financial instruments issued by various subsidiaries, principally in LATAM.

23


The following table sets forth our outstanding bonds at March 31, 2015 and December 31, 2014.


Currency

Face value of
outstanding bonds
(in million)

Coupon

Maturity

March 31, 2015

December 31, 2014
Global Medium Term Notes:









(€ million)
Fiat Chrysler Finance Europe S.A.

EUR

1,500


6.875
%

February 13, 2015

—


1,500

Fiat Chrysler Finance Europe S.A.

CHF

425


5.000
%

September 7, 2015

406


353

Fiat Chrysler Finance Europe S.A.

EUR

1,000


6.375
%

April 1, 2016

1,000


1,000

Fiat Chrysler Finance Europe S.A.

EUR

1,000


7.750
%

October 17, 2016

1,000


1,000

Fiat Chrysler Finance Europe S.A.

CHF

400


5.250
%

November 23, 2016

383


333

Fiat Chrysler Finance Europe S.A.

EUR

850


7.000
%

March 23, 2017

850


850

Fiat Chrysler Finance North America Inc.

EUR

1,000


5.625
%

June 12, 2017

1,000


1,000

Fiat Chrysler Finance Europe S.A.

CHF

450


4.000
%

November 22, 2017

430


374

Fiat Chrysler Finance Europe S.A.

EUR

1,250


6.625
%

March 15, 2018

1,250


1,250

Fiat Chrysler Finance Europe S.A.

EUR

600


7.375
%

July 9, 2018

600


600

Fiat Chrysler Finance Europe S.A.

CHF

250


3.125
%

September 30, 2019

239


208

Fiat Chrysler Finance Europe S.A.

EUR

1,250


6.750
%

October 14, 2019

1,250


1,250

Fiat Chrysler Finance Europe S.A.

EUR

1,000


4.750
%

March 22, 2021

1,000


1,000

Fiat Chrysler Finance Europe S.A.

EUR

1,350


4.750
%

July 15, 2022

1,350


1,350

Others

EUR

7






7


7

Total Global Medium Term Notes









10,765


12,075

Other bonds:














FCA US (Secured Senior Notes)

   U.S.$

2,875


8.000
%

June 15, 2019

2,672


2,368

FCA US (Secured Senior Notes)

   U.S.$

3,080


8.250
%

June 15, 2021

2,863


2,537

Total other bonds









5,535


4,905

Hedging effect and amortized cost valuation





675


668

Total bonds









16,975


17,648

Bank Debt
Bank debt principally comprises amounts due under (i) the senior credit facilities of FCA US of €4.5 billion at March 31, 2015 (€4.0 billion at December 31, 2014), (ii) financial liabilities of the Brazilian operating entity (€4.7 billion at March 31, 2015 and at December 31, 2014) relating to a number of financing arrangements, also with certain Brazilian development banks, primarily used to support capital expenditures, including in our new plant in Pernambuco, Brazil, as well as to fund the financial services business in that country, (iii) loans provided by the European Investment Bank (€0.8 billion at March 31, 2015 and €1.0 billion at December 31, 2014) to fund our investments and research and development costs, (iv) amounts drawn down by FCA treasury companies (excluding FCA US) under short and medium term credit facilities (€1.6 billion at March 31, 2015 and €1.4 billion at December 31, 2014) and (v) amounts outstanding relating to financing arrangements of FCA Mexico, amounting to €0.5 billion at March 31, 2015 (€0.4 billion was outstanding relating to financing arrangements of FCA Mexico with Mexican development banks at December 31, 2014).

24


Other Debt
At March 31, 2015, Other debt mainly relates to the unsecured Canadian Health Care Trust notes, or HCT Notes, totaling €595 million including accrued interest (€651 million at December 31, 2014 including accrued interest), which represents FCA US’s Canadian subsidiary's financial liability to the Canadian Health Care Trust arising from the settlement of its obligations for postretirement health care benefits for National Automobile, Aerospace, Transportation and General Workers Union of Canada, or CAW (now part of Unifor), represented employees, retirees and dependents.
The remaining components of Other debt mainly relate to amounts outstanding under finance leases, amounts due to related parties and interest bearing deposits of dealers in Brazil.
At March 31, 2015, debt secured by assets of the Group, excluding FCA US, amounts to €752 million (€777 million at December 31, 2014), of which €384 million (€379 million at December 31, 2014) is due to creditors for assets acquired under finance leases and the remaining amount mainly related to subsidized financing in Latin America.
At March 31, 2015, debt secured by assets of FCA US amounts to €11,232 million (€9,881 million at December 31, 2014), and includes €10,358 million (€9,093 million at December 31, 2014) relating to the secured senior notes and the senior credit facilities, €272 million (€251 million at December 31, 2014) was due to creditors for assets acquired under finance leases and other debt and financial commitments for €602 million (€537 million at December 31, 2014).

Outlook

The Group confirms full-year guidance as presented in the full year 2014 results:
•
Worldwide shipments in 4.8 to 5.0 million unit range;
•
Net revenues of ~€108 billion;
•
Adjusted EBIT in €4.1 to €4.5 billion range;
•
Net Profit in €1.0 to €1.2 billion range, with Basic EPS in €0.64 to €0.77 range;
•
Net Industrial Debt in €7.5 billion to €8.0 billion range.
Figures do not include any impacts for the previously announced capital transactions regarding Ferrari.

25


INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND NOTES AT MARCH 31, 2015

26


FIAT CHRYSLER AUTOMOBILES N.V.
INTERIM CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
 
 
 
For the three months ended March 31,
 
Note
 
2015
 
2014
 
 
 
(€ million)
Net revenues
(1)
 
26,396


22,125

Cost of sales
(2)
 
22,979

 
19,331

Selling, general and administrative costs
(3)
 
1,986

 
1,680

Research and development costs
(4)
 
727

 
626

Result from investments:
(5)
 
50

 
33

Share of the profit of equity method investees
 
 
44

 
24

Other income from investments
 
 
6

 
9

Gains on the disposal of investments
 
 
—


8

Restructuring costs
(6)
 
4


10

Other income/(expenses)
(7)
 
42


(249
)
EBIT
 
 
792


270

Net financial expenses
(8)
 
606


493

Profit/(loss) before taxes
 
 
186

 
(223
)
Tax expense/(income)
(9)
 
94


(50
)
Profit/(loss) from continuing operations
 
 
92

 
(173
)
Net profit/(loss)
 
 
92

 
(173
)
Net profit/(loss) attributable to:
 
 
 
 
 
Owners of the parent
 
 
78


(189
)
Non-controlling interests
 
 
14

 
16

Basic earnings/(loss) per ordinary share (in €)
(10)
 
0.052

 
(0.155
)
Diluted earnings/(loss) per ordinary share (in €)
(10)
 
0.052

 
(0.155
)






The accompanying notes are an integral part of the Interim Consolidated Financial Statements.

27


FIAT CHRYSLER AUTOMOBILES N.V.
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(UNAUDITED) 
 
 
 
For the three months ended March 31,
 
Note
 
2015
 
2014
 
 
 
(€ million)
Net profit/(loss) (A)
 
 
92

 
(173
)
 
 
 
 
 
 
Items that will not be reclassified to the Consolidated Income Statements in subsequent periods:
(17)
 
 
 
 
(Losses) on remeasurement of defined benefit plans
 
 
(67
)

(2
)
Related tax impact
 
 
16

 
(1
)
Total items that will not be reclassified to the Consolidated Income Statements in subsequent periods (B1)
 
 
(51
)
 
(3
)
 
 
 
 
 
 
Items that may be reclassified to the Consolidated Income Statements in subsequent periods:
(17)
 
 
 
 
(Losses) on cash flow hedging instruments
 
 
(6
)

(57
)
Gains on available-for-sale financial assets
 
 
15


5

Exchange differences on translating foreign operations
 
 
1,433


51

Share of Other comprehensive income/(loss) for equity method investees
 
 
46


(5
)
Related tax impact
 
 
(9
)
 
15

Total items that may be reclassified to the Consolidated Income Statements in subsequent periods (B2)
 
 
1,479

 
9

 
 
 
 
 
 
Total Other comprehensive income, net of tax (B1)+(B2)=(B)
 
 
1,428


6

 
 
 
 
 
 
Total Comprehensive income/(loss) (A)+(B)
 
 
1,520

 
(167
)
 
 
 
 
 
 
Total Comprehensive income/(loss) attributable to:   
 
 
 
 
 
Owners of the parent
 
 
1,505

 
(257
)
Non-controlling interests
 
 
15

 
90





The accompanying notes are an integral part of the Interim Consolidated financial statements.

28


FIAT CHRYSLER AUTOMOBILES N.V.
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 (UNAUDITED) 
 
Note
 
At March 31, 2015
 
At December 31, 2014
 
 
 
 
 
 
 
 
 
(€ million)
Assets
 
 
 
 
 
Intangible assets:
(11)
 
25,321

 
22,847

Goodwill and intangible assets with indefinite useful lives

 
15,753

 
14,012

Other intangible assets

 
9,568

 
8,835

Property, plant and equipment
(12)
 
28,184

 
26,408

Investments and other financial assets:

 
2,089

 
2,020

Investments accounted for using the equity method
 
 
1,522

 
1,471

Other investments and financial assets
 
 
567

 
549

Deferred tax assets
(9)
 
3,594


3,547

Other assets

 
130


114

Total Non-current assets   
 
 
59,318

 
54,936

Inventories
(13)
 
12,624


10,449

Assets sold with a buy-back commitment

 
2,250

 
2,018

Trade receivables
(14)
 
2,949


2,564

Receivables from financing activities
(14)
 
3,545


3,843

Current tax receivables
(14)
 
277


328

Other current assets
(14)
 
2,802


2,761

Current financial assets:
 
 
1,538

 
761

Current investments
 
 
43

 
36

Current securities

 
226

 
210

Other financial assets
(15)
 
1,269

 
515

Cash and cash equivalents
(16)
 
21,669

 
22,840

Total Current assets   
 
 
47,654


45,564

Assets held for sale
 
 
6

 
10

Total Assets
 
 
106,978

 
100,510

Equity and liabilities
 
 
 
 
 
Equity:
(17)
 
15,235

 
13,738

Equity attributable to owners of the parent
 
 
14,893

 
13,425

Non-controlling interest
 
 
342

 
313

Provisions:
(19)
 
22,550


20,372

Employee benefits
 

10,609


9,592

Other provisions
 

11,941


10,780

Deferred tax liabilities
(9)
 
104


233

Debt
(20)
 
33,366


33,724

Other financial liabilities
(15)
 
1,300

 
748

Other current liabilities
(21)
 
11,985

 
11,495

Current tax payables
 
 
250

 
346

Trade payables
 
 
22,188


19,854

Total Equity and liabilities
 
 
106,978

 
100,510

The accompanying notes are an integral part of the Interim Consolidated Financial Statements.

29


FIAT CHRYSLER AUTOMOBILES N.V.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
 
 
For the three months ended March 31,
 
Note
 
2015
 
2014
 
 
 
(€ million)
Cash and cash equivalents at beginning of the period
(16)
 
22,840

 
19,455

Cash flows provided by operating activities:

 


 


Net profit/(loss) for the period

 
92

 
(173
)
Amortization and depreciation

 
1,397

 
1,168

Net (gains)/losses on disposal of tangible and intangible assets

 
(1
)
 
2

Net (gains)/losses on disposal of investments

 
—

 
(8
)
Other non-cash items
(24)
 
(7
)
 
243

Dividends received

 
112

 
55

Change in provisions

 
274

 
384

Change in deferred taxes

 
85

 
(118
)
Change in items due to buy-back commitments and GDP vehicles
(24)
 
6

 
53

Change in working capital
(24)
 
(1,000
)
 
(210
)
Total

 
958

 
1,396

Cash flows used in investing activities:

 


 


Investments in property, plant and equipment and intangible assets

 
(2,078
)
 
(1,443
)
Acquisitions and capital increases in joint ventures, associates and unconsolidated subsidiaries

 
(75
)
 
(2
)
Proceeds from the sale of tangible and intangible assets

 
6

 
17

Proceeds from disposal of other investments

 
—

 
7

Net change in receivables from financing activities

 
360

 
(211
)
Change in current securities

 
8

 
9

Other changes

 
(9
)
 
24

Total

 
(1,788
)
 
(1,599
)
Cash flows used in financing activities:

 


 


Issuance of bonds
(24)
 
—

 
3,011

Repayment of bonds
(24)
 
(1,500
)
 
—

Issuance of other medium-term borrowings
(24)
 
953

 
1,840

Repayment of other medium-term borrowings
(24)
 
(1,139
)
 
(3,892
)
Net change in other financial payables and other financial assets/liabilities
(24)
 
(63
)
 
107

Increase in share capital

 
5

 
1

Distribution of certain tax obligations

 
—

 
(45
)
Acquisition of non-controlling interests
(24)
 
—

 
(2,691
)
Total

 
(1,744
)
 
(1,669
)
Translation exchange differences

 
1,403

 
(83
)
Total change in Cash and cash equivalents

 
(1,171
)
 
(1,955
)
Cash and cash equivalents at end of the period
(16)
 
21,669

 
17,500

The accompanying notes are an integral part of the Interim Consolidated Financial Statements.

30


FIAT CHRYSLER AUTOMOBILES N.V.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
 
Attributable to owners of the parent 
 
 
 
 
 
Share capital
 
Treasury shares
 
Other reserves
 
Cash flow hedge reserve
 
Currency translation differences
 
Available-for-sale financial assets
 
Remeasure-ment of defined benefit plans
 
Cumulative share of OCI of equity method investees
 
Non-controlling interests
 
Total
 
(€ million)
December 31, 2013
4,477

 
(259
)
 
4,860

 
101

 
51

 
(13
)
 
(757
)
 
(134
)
 
4,258

 
12,584

Capital increase
1

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
1

Share-based payments
—

 
—

 
1

 
—

 
—

 
—

 
—

 
—

 
—

 
1

Purchase of shares in subsidiaries from non-controlling interests
—

 
—

 
1,623

 
35

 
171