Iveco Annual Report 2000

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Daily City Van7 m3

Iveco Group Consolidated Financial Statements

2000

DIRECTORS

Paolo CantarellaChairman

Giancarlo Boschetti Managing Director

Damien ClermontDirector

Bernhard KappDirector

Georg KruppDirector

Otto Graf LambsdorffDirector

Francesco Paolo MattioliDirector

Umberto QuadrinoDirector

Lucio RondelliDirector

Sir Hugh RossiDirector

Abdulla SaudiDirector

Giancarlo VezzaliniDirector

Foreword 2

Report on Operations 4

Markets and economic context 4

Activities of the Iveco Group in 2000 6

Business Unit Light 10

Business Unit Medium 12

Business Unit Heavy 14

Business Unit Engines 16

Specialties 19

Operations in the Strategic Areas 22

Operations in Other Countries 23

Financing and Service Activities 24

Customer Service 26

Information Technology 27

Human Resources 28

Subsequent Events 29

Consolidated Financial Statements 30

CONTENTS

98 99 000

100,000

200,000

300,000

400,000

500,000

ENGINES PRODUCTION

(UNITS)

98 99 000

60

120

180

240

RESEARCH ANDDEVELOPMENT EXPENSES(MILLION EUROS)

98 99 000

40,000

80,000

120,000

160,000

200,000

VEHICLES SOLD

(UNITS)

The new EuroCargo Tector:

engineered with passion; it provides

state-of-the-artreliability, high

productivity and newlevels of comfort

for the driver.

1

98 99 000

150

300

450

600

OPERATING INCOME

(MILLION EUROS)

98 99 000

2,500

5,000

7,500

10,000

NET SALES

(MILLION EUROS)

98 99 000

1.5

3.0

4.5

6.0

7.5

OPERATING INCOME/NET SALES(%)

HIGHLIGHTS

98 99 000

150

300

450

600

750

CASH FLOWGROSS ADDITIONS(MILLION EUROS)

19991998 2000

Commercial data

Sales of trucks, buses and special vehicles (units) 136,824 149,903 164,776

Engines production (units) 363,089 404,917 457,745

Western European truck market share GVW >= 3.5 tonnes (%) 17.0 16.6 17.8

Financial data (million euros)

Net sales 6,649.5 7,386.2 8,610.7

Operating income 261.5 311.1 489.1

Net profit 200.5 162.7 146.2

Cash flow (net profit plus depreciation and amortisation) 376.4 415.8 569.2

Tangible fixed assets as of December 31 1,541.3 2,305.2 2,278.9

Net financial position (indebtedness) as of December 31 (67.8) (402.2) (222.6)

Stockholders’ equity of the Group as of December 31 1,685.8 1,817.5 1,913.7

Ratios (%)

Operating income / Net sales 3.9 4.2 5.7

Net profit / Net sales 3.0 2.2 1.7

Cash flow / Net sales 5.7 5.6 6.6

Other data

Gross additions to tangible fixed assets (million euros) 306.7 359.5 655.8

of which : vehicles on operating leases (million euros) 12.4 60.7 306.1

Gross additions / Net sales (%) 4.6 4.9 7.6

Research and development expenses (million euros) 200.5 214.6 226.5

Research and development expenses / Net sales (%) 3.0 2.9 2.6

Number of employees as of December 31 31,912 36,217 35,852

The year 2000 was again marked in Western Europe by a continuation of the positive trend for the transport industry

and the commercial vehicle market in particular. Growth in demand was 8.6% higher than in the previous year.

In general in the second half of the year however certain signs of weakeness emerged, although to a lesser degree

than the sudden return to a negative cycle witnessed in North America.

The strongest growth was recorded by the light vehicle segment (+13.4%), with for the fifth year running an all-time high

for registrations (345,800 units registered), whilst performance was also good in the heavier segments. The medium

segment (+3.3% and 94,100 vehicles registered) in 2000 showed further signs of acceleration in the last quarter whereas

there was a most surprising new high in the heavy market where the increase was +4.5% (243,800 registrations).

In Central European countries, the recovery which began in the second part of 1999 continued and the markets

in Hungary, Rumania, Czech Republic and Slovakia were particularly buoyant.

In emerging markets with high development potential, and in which Iveco has manufacturing facilities, the 2000

market scenario for commercial vehicles was generally favourable:

- in Brazil, the improved economic situation fuelled the market growth, (+25%) which reached about 69,000 units,

against 55,000 units in the prior year. Unfortunately the Argentinian market continued to be affected by the

country's difficult economic situation and registrations fell from 19,300 units in 1999 to 17,180 in 2000 (-11%);

- in the Chinese Peoples Republic, substantial increases characterized both the light and heavy vehicle segments

as well as the light buses market in which Naveco operates. Growth here was extremely strong with a total

of more than 247,000 registrations, compared with 181,000 in the previous year ;

- in the initial portion of the year the Turkish economy confirmed the signs of recovery seen in the latter half

of the previous year but in the closing months this trend suddenly reversed as a result of the country's financial

crisis. In spite of these economic and financial difficulties, the overall commercial vehicle market grew from

33,700 vehicles in 1999 to 63,300 units.

In this context, Iveco invoiced 164,800 units, 130,900 of which to Western European markets, a 9.3% increase

over 1999. When adding the units invoiced to and sold through associated companies, the total reached

207,500 units (+8.1% over the prior year).

An all-time high was recorded for the second year running in engine production with a total of 457,700 units

(+13% over 1999), more than 62% of which were sold to Fiat Group or third-party customers.

During the course of 2000 the company pursued its development programmes, principally based on renewal

of the product range and growth in the services sector.

As far as the former was concerned, Iveco completed the Daily City Truck range with the introduction of lighter

models. This range was first launched back in mid '99 and sales to date have been extremely positive (more

than 90,000 vehicles worldwide, of which 77,800 in Western Europe, representing an increase of about 20%).

These sales volumes have made the Daily the Western European leader in the 3.5 to 6.0 tonne GVW sector,

with a market share of 20.7% (about 2 percentage points higher than in the previous year).

Iveco completed its launch of the Cursor family engines during the year with a 13 litre version earmarked for

the top segment of the heavy vehicle range. Customers have acknowledged the excellent performance and low

consumption of this new family of engines, which has made a further, positive impact on the company's image.

Again on the subject of the planned renewal of the engine range, at the end of the year production of a new

medium-range engine got underway (part of the EEA joint venture where Iveco, CNH and Cummins are equal

partners), which will initially equip the Iveco EuroCargo Tector.

On the services front, Transolver activities continued at an intense pace in terms of both revenue growth and new

products offered.

Positive results were recorded in 2000 for Fraikin, the French contract hire company acquired in the last quarter of 1999.

2

FOREWORD

Paolo CantarellaGiancarlo Boschetti

3

Net revenues amounted to 493 million euros (+10% compared with 1999) with an operating result of 69 million

euros or a 14% return on sales. A sign of Fraikin's great vitality was the company's capital investment amounting

to 277 million euros, and the signing of two important contracts during the last quarter : one with Unilever

and the other with the French Postal Service amounting to 1,500 and 800 vehicles respectively.

In the bus sector, Irisbus - the joint venture which sees Iveco and Renault as equal partners - confirmed its number-

two position in Europe with a market share of 22%, which also makes it third among manufacturers worldwide.

In 2000 Irisbus registered more than 9,800 units (+12% over 1999) for a turnover of 1,237 million euros: this

result also includes consolidation of the Hungarian company, Ikarusbus.

Iveco achieved net revenues of 8,611 million euros, representing an increase of 16.6% over 1999. Operating profit

reached 489 million euros for a return on sales of 5.7%, significantly higher than in the previous year.

This result was affected by:

- a negative price trend, particularly for heavy vehicles, but also because of cost increases for diesel fuel which have

reduced the profitability of transport companies;

- start-up costs for the Sete Lagoas plant in Brazil, a joint venture with Fiat Auto for production of Daily and

Ducato light vehicles;

- price tensions in the used vehicle market, especially in the United Kingdom where the volume of used vehicle

business is particularly high for all manufacturers because of buy-back commitments. On this subject it has to be

noted that Iveco has adjusted the specific buy-back provisions to reflect the actual market prices for used vehicles;

- gains on divestment of a part of Iveco Pegaso land in Madrid.

The level of operating profitability achieved together with actions to reduce working capital requirements have

enabled the company to report a return on capital invested that has created value.

The net profit amounted to 146 million euros (equal to 1.7% on net sales), after bearing higher financial charges

compared with 1999, mainly because of the increase in average indebtedness due to the acquisition of the Fraikin

Group and of higher interest rates in the Euro area; moreover, the result was influenced by the alignment

of the values of some non-consolidated companies and by extraordinary charges mainly due to the changes in

the accounting principles in booking certain expenses related to personnel. Also fiscal charges increased compared

with 1999, as a consequence of the improved result for the year and of the increase in deferred tax liabilities.

Net indebtedness at the end of 2000 improved compared with 1999 (223 million euros versus 402 million euros),

mainly as the result of the reduction in net working capital and of a structured leasing operation on the Fraikin fleet

effected in December in order to reduce the above mentioned increase in indebtedness.

As regards 2001, Iveco will complete most of the investment plan in the product area, which began back in 1996.

The company will be able to give new impetus to the heavy vehicle range and engine business, the latter, by focusing

on certain non-vehicle application areas, particularly power generation. Special efforts will be made to develop

services and in addition activities will be broadened in certain European countries where up to now the company

has been only marginally present.

On the internal front, the company will intensify activities to revise fundamental processes, with a focus on product

and service quality and cost reduction.

April, 2001Giancarlo BoschettiManaging Director

Paolo CantarellaChairman

4 R E P O R T O N O P E R A T I O N S

Markets and economic context

The world economy was substantially buoyant in

2000, with a widespread increase in investments, an

acceleration of manufacturing output and high levels

of international trade, particularly in the first half.

This growth was confirmed first of all in the United

States and in the Euro area; the economy in Japan

showed some signs of a recovery and growth was also

consolidated in emerging countries.

In the second half of the year, however, the North

American market growth began to slow down and there

were fears of a possible recession; the economic

situation in Europe also suffered a setback in the second

half, in a situation already characterised by rising petrol

prices and a weak Euro.

The signs of a slowdown in the American economy

became stronger in the early months of 2001, induced

by a fall in industrial output and employment levels.

In South America 2000 was a year of varying results:

a favourable economic situation with growing

consumption, investments and manufacturing output

in Brazil, and a persisting serious crisis in Argentina.

The worldwide commercial vehicle market (GVW over

6 tonnes) was affected by the different economic

REPORT ON OPERATIONS

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Western Europe 477.8 441.9 347.9 378.5 454.9 475.0 488.8 567.5 629.4 683.8

France 83.9 71.6 56.7 63.0 78.6 79.1 74.4 89.3 100.3 117.0

Germany 136.8 129.4 94.7 92.7 100.8 100.9 107.1 131.4 149.3 152.5

UK 59.3 58.1 62.7 78.3 92.7 93.8 96.1 108.5 105.6 113.5

Italy 67.9 63.6 47.2 46.8 61.2 69.6 63.1 68.1 85.1 94.8

Spain 43.4 39.4 22.7 26.1 35.0 36.7 45.5 52.6 65.8 72.4

Rest of Western Europe 86.6 79.8 63.9 71.6 86.7 94.8 102.6 117.6 123.5 133.6

COMMERCIAL VEHICLE DEMAND TREND IN WESTERN EUROPE GVW >=3.5 T (THOUSANDS OF UNITS)

NEW REGISTRATIONS TREND IN WESTERN EUROPE(BY BUSINESS UNITS)

91 92 93 94 95 96 97 98 99 00

units/1000

3.5-6.0 t GVW 6.1-15.9 t GVW >=16.0 t GVW Trend

350

300

250

200

150

100

50

(1999 data revised)

M A R K E T S A N D E C O N O M I C C O N T E X T 5

and financial trends in the various countries in 2000.

In the Nafta area, the world's most important market,

total demand for vehicles with GVW over 6 tonnes fell

to 534,000 units, down almost 9% on 1999.

The decrease in the class 8 vehicle segment (heavy duty)

was particularly strong, falling 15%, to little more than

263,000 units, with month-on-month falls of 30-40% in

the second half of the year; in this area, sales of classes

4-7 vehicles (medium duty) were relatively stable, with

271,000 units sold.

The Asian markets (excluding India, China and Japan)

continued to recover from the drastic losses of

previous years, stabilising at over 70,000 vehicles as

a whole in the over 6 tonne GVW segment. This market

remained weak in Japan, with 83,000 registrations, falling

2% on the previous year.

As for South America, the market was buoyant in

Brazil, but there was a sharp contraction

in Argentina.

In the Central and Eastern European markets where

Iveco is active, we should underline the good growth of

the former and a good performance from the Russian

market, encouraged by high oil prices; in the latter

market demand grew by 8%, and over 54,000 medium

and heavy vehicles were registered.

Sustained by the widespread economic recovery,

in 2000 the Western European commercial vehicle

market confirmed the continuing growth begun in 1994.

Demand for vehicles with gross vehicle weight from

3.5 tonnes up totalled 683,800 units, an 8.6% increase

on the previous year.

Signs of a slowdown began to be apparent in this market

during the final part of the year, although they were less

obvious than the sudden return to a negative cycle seen

in the North American market.

Analysis by market segment reveals strong growth

(13.4%) in the light commercial vehicles segment (GVW

from 3.5 to 6 tonnes), with the fifth consecutive year of

record high sales (345,800 registrations), and stability in

the higher product segments; the medium vehicle

segment (GVW from 6.1 to 15.9 tonnes) increased by

3.3% (94,100 registrations), with demand concentrated

in the final quarter; in many ways the further 4.5%

increase in heavy vehicle sales (GVW over 16 tonnes)

to 243,800 registrations was unexpected.

The growth in demand for all vehicles with GVW above

3.5 tonnes was evident in all the main markets,

but above all in France (+16.7%), Italy (+11.5%) and

Spain (+10.1%); the recovery on the UK market was

also confirmed (+7.5%), while growth on the important

German market (2.2%) was below the European

average, after two years of rapid expansion. Among

the minor European markets, Holland expanded

strongly (16.8%).


Activities of the Iveco Group in 2000

In 2000 Iveco sold a total of 164,800 vehicles

throughout the world, a 9.9% increase on 1999

(149,900 units). If we also consider sales by licensees,

which totalled approximately 42,700 units, overall sales

amounted to 207,500 units (192,000 in 1999).

Iveco sold 130,900 vehicles in Western Europe, a 9.3%

increase on 1999, a result that reflects the good trends

of sales and orders, particularly of light vehicles, in all

European countries.

The best results for sales to third parties were achieved

in France (+15.1%), Italy (+10.3%) and Germany (+9%),

while below-average trends were recorded in Spain

(+5%) and the United Kingdom (-4%).

In 2000, Iveco's overall share of the Western European

market (for vehicles with GVW over 3.5 tonnes) grew by

1.2 percentage points, from 16.6% in 1999 to 17.8%

(+2.6 percentage points in France, +1.1 percentage points

in Italy and Spain, +0.2 percentage points in Germany and

-0.4 percentage points in the United Kingdom).

Iveco increased its share of the light vehicles market

by 1.9 percentage points, from 18.8% to 20.7%;

this result is due above all to the market success

of the new Daily City Truck in all Western European

countries. In Italy the new vehicle achieved 41.5% of

the market, 26.3% in France and 21.1% in Spain, with

excellent results also in Switzerland and Northern

European countries.

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Western Europe 20.0 19.4 20.1 19.8 19.1 20.0 18.4 17.0 16.6 17.8

France 18.8 18.1 18.7 18.6 17.4 18.9 18.6 17.1 16.7 19.3

Germany 12.4 11.5 13.5 13.5 11.4 13.2 12.3 11.2 10.8 11.0

UK 12.7 12.7 14.4 13.6 14.4 15.4 14.5 14.0 12.1 11.7

UK (GVW >=3.51t) 23.5 23.4 24.8 22.2 21.4 21.8 21.5 20.5 18.3 17.1

Italy 55.9 54.6 55.1 56.0 51.8 48.0 45.9 44.0 41.3 42.4

Spain 22.4 22.7 22.5 21.8 22.2 22.6 20.4 19.4 19.3 20.4

Rest of Western Europe 8.6 8.6 10.0 11.3 10.1 10.8 10.3 9.4 9.0 10.3

TREND OF IVECO'S MARKET SHARE IN WESTERN EUROPE (GVW >= 3.5T)

IVECO MARKET SHARE TREND IN WESTERN EUROPE(BY QUARTERS AND GVW SEGMENT)

I qtr II qtr III qtr IV qtr I qtr II qtr III qtr IV qtr1999 2000

m.s. %

6.1-15.9 t GVW>=3.5 t GVW 3.5-6.0 t GVW >=16.0 t GVW Trend

25

20

15

10

A C T I V I T I E S O F T H E I V E C O G R O U P I N 2 0 0 0 7

This does not include Iveco's growth, albeit still at

marginal values, in the up to 3.5 tonne GVW segment

(from 0.7% to 1.5%), following the introduction of

the 7 cubic metre version of the Daily van during the

year. Iveco's share of the medium segment amounted

to 23.8%, up 0.4 percentage points on 1999; the

best results were recorded in Italy, with 57.3%,

the United Kingdom, with 28.1% and France, with

24.1%. In the heavy vehicle segment, Iveco achieved

a market share of 11.2%, in line with the previous year;

improvements were recorded in France, Italy and

Northern Europe, while there were marginal

contractions in Germany, the United Kingdom, Benelux

and Spain.

Iveco sales in Eastern Europe totalled 8,500 units,

26.9% up on 1999, as a result of the improved

conditions on these markets; the Hungarian, Rumanian,

Czech and Slovak markets were particularly buoyant.

In non-European markets, Iveco sold a total of 25,400

vehicles, an increase of 8.5% on 1999 (23,400 units).

Sales in Brazil improved, thanks to the improvement

in the country's economy and the strengthening of the

Iveco commercial network which now numbers over

forty dealers. In China Naveco, a 50-50 joint venture

with the Yueijin Group, manufactured and sold over

17,500 vehicles (8,750 attributed to Iveco), substantially

in line with the previous year, and it maintained its

market share in its target segments.

The Irisbus joint venture sold more than 9,800 units

(4,900 attributed to Iveco), a 12% increase on the previous

year; this result also includes the consolidation of the

Hungarian company Ikarusbus, which was acquired in late

1999, and of its subsidiary Ikarus Egyedi Autobusz Gy.

As for the licensee companies in India and Turkey, we

point out that:

- in India, Ashok Leyland manufactured and sold a total


of 34,500 units, about 1,000 less than the previous year,

because of a generalised contraction of the market; the

company's market share (for vehicles with GVW above

7.5 tonnes) increased to 37% from 32.5% in the same

period of the previous year;

- in Turkey, Otoyol sold 8,100 units (a 40% increase on

1999) for 7.7% of the market (vehicles with GVW above

3.5 tonnes); these volumes reflect the market's strong

growth (63,300 registrations, compared to 33,700 the

previous year).

The market for used vehicles was particularly sluggish,

but in spite of this Iveco recorded over 16,000 sales

during the year, a 25% increase on 1999. The company

reacted to the situation by implementing special

marketing initiatives, in some cases in collaboration with

important customers, and by modifying marketing

structures to ensure more effective management of

these activities.

In the field of financing and service activities,Transolver

reinforced its presence in the major European markets

in 2000, through :

- in the field of financing, under the Transolver Finance

company (in Italy and in Germany partially through Fidis

companies), the granting of a total of 27,100 loans on

sales of new vehicles (approximately 1,120 million euros

financed) and over 3,450 contracts on sales of used

vehicles.

The percentage of vehicles financed in Western Europe

reached 24.6% of Iveco sales (23.2% for light vehicles,

22.5% for medium vehicles and 30.1% for heavy vehicles);

- in the field of long-term rentals, under the Fraikin and

Transolver Service companies, the leased vehicle fleet

increased by 14.4% to 33,680 vehicles at December 31,

2000.

During the year, 306 million euros were invested in

vehicles dedicated to contract hiring activities, a sum

equal to approximately half Iveco's total capital

spending, with 277 million euros being dedicated to the

Iveco sold 130,900vehicles in Western

Europe, a 9.3%increase on 1999;

the best results wereachieved in France,Italy and Germany.

A C T I V I T I E S O F T H E I V E C O G R O U P I N 2 0 0 0 9

Fraikin Group fleet. We should point out that at year-

end an innovative structured leasing operation was

undertaken on the French Fraikin vehicle fleet, to

reduce invested capital and free resources that could be

used for new investments.

Iveco also continued to develop its range of maintenance

and repair services: the portfolio of these activities

totalled 25,500 contracts at December 31, with over

9,500 new contracts stipulated during the year.

Diesel engine output by Iveco totalled about 457,700

units, confirming the strong growth of previous years

(+13% on 1999 and +27% on 1998); sales to Group and

external customers accounted for 62% of total

production. Manufacture of the new 13-litre engine in

the Cursor family began during the year, and will equip

vehicles at the top end of the Iveco heavy duty range. In

all, about 20,000 units of this innovative family of heavy

duty engines (Cursor 8 and Cursor 10) were built

during the year. The programme to renew the engine

range continued, with the investments programmed for

the various product families. In this context, production

of the new 1-litre-per-cylinder medium range engine

Market Change2000 vs 1999

(thousands) (%)

By quarter

1st 175.6 9.9

2nd 179.3 7.7

3rd 162.4 10.3

4th 166.5 6.8

683.8 8.6

By Business Unit

>=16.0 t GVW (heavy) 243.8 4.5

6.1 to 15.9 t (medium) 94.1 3.3

3.5 to 6.0 t (light) 345.8 13.4

683.8 8.6

By country

France 117.0 16.7

Germany 152.5 2.2

UK 113.5 7.5

Italy 94.8 11.5

Spain 72.4 10.1

Other European countries 133.6 8.1

683.8 8.6

WESTERN EUROPE 2000DEMAND FOR COMMERCIAL VEHICLES (GVW >=3.5T)

WESTERN EUROPE 2000IVECO: REGISTRATIONS AND MARKET SHARES (GVW >= 3.5 T)

Iveco registrations Iveco shareUnits Change Value Change

(thousands) vs 1999 (%) (%) vs 1999 (%)

By quarter

1st 32.2 21.6 18.3 1.8

2nd 30.6 15.9 17.1 1.2

3rd 28.4 19.1 17.5 1.3

4th 30.3 8.1 18.2 0.3

121.4 16.0 17.8 1.2

By Business Unit

>=16.0 t GVW (heavy) 27.3 4.5 11.2 0.0

6.1 to 15.9 t (medium) 22.4 5.3 23.8 0.4

3.5 to 6.0 t (light) 71.6 25.3 20.7 1.9

121.4 16.0 17.8 1.2

By country

France 22.6 34.5 19.3 2.6

Germany 16.8 4.5 11.0 0.2

UK 13.3 3.8 11.7 -0.4

Italy 40.2 14.5 42.4 1.1

Spain 14.8 16.3 20.4 1.1

Other European countries 13.7 23.4 10.3 1.3

121.4 16.0 17.8 1.2

began at the end of the year by the EEA joint venture

between Iveco, CNH and Cummins; its first application

will be on the Iveco EuroCargo Tector vehicle.

Research and development activities focused primarily

on the new families of diesel engines in the light F1

range, on new applications for the medium range, and

development of the new range of V-shaped engines for

industrial applications.

Capital spending by Iveco during the year also regarded

the completion of the plant in Brazil, which will

manufacture both vehicles from the Daily and Ducato

ranges in a joint venture with Fiat Auto, and Iveco

engines for the local market. The new plant was

inaugurated in September and production is now

underway.

As part of the process to focus on core activities, the

outsourcing of certain activities continued; in particular

we should mention the transfer of European spare parts

logistic management activities to the Hays Group (in the

United Kingdom, France, Germany, Italy and Spain), and

of the plastic components manufacturing process in the

Brescia plant.

10

In 2000 the Daily CityTruck won the position

of market leader inWestern Europe with20.7% of the market

(+1.9 percentagepoints) in the 3.5 to

6 tonne GVW segment.

In 2000, the European light commercial vehicle

market continued to expand, sustained by the

strong economic growth.

In Western Europe the 2.8 to 6 tonne GVW segment,

which had already expanded steadily in previous years,

totalled 649,400 registrations, a 9,6% increase on the

previous record of 1999.

This growth was due above all to the expansion of

the 3.5 tonne segment which increased by 14% to

over 312,800 registrations, overtaking the Light

Commercial segment (2.8 to 3.49 tonne GVW),

historically the largest.

In this context, Iveco completed and consolidated the

introduction of its Daily City Truck, launched in

the Summer of 1999, selling over 90,000 vehicles

throughout the world, 77,800 of which in Western

Europe.

These sales volumes won the Daily City Truck the

position of market leader in Western Europe with 20.7%

of the market (+1.9 percentage points) in the 3.5 to

6 tonne GVW segment, with 41.5% of the Italian

market, 26.3% in France, 21.1% in Spain, and excellent

results in Switzerland and Northern European countries.

Iveco's presence in the 2.8 to 3.49 tonne GVW

segment also increased, albeit still at marginal

values (about +1 percentage point), following the

BUSINESS UNIT LIGHT

R E P O R T O N O P E R A T I O N S

B U S I N E S S U N I T L I G H T 11

introduction of the 7 cubic metre version in the

van range in mid 2000.

These results are extremely significant in the light

of the strong competition between manufacturers,

which saw the launch of the revamped Sprinter from

Daimler-Chrysler, and of a new Transit from Ford.

Trends were similar, although more moderate, on the

main export markets of Central and Eastern Europe,

where the market grew by 4% in the Daily's reference

segment (GVW from 3.5 to 6 tonnes), and Iveco

increased its share to 16.5% (up 3.6 percentage points

on 1999).

As part of the globalisation process, in September

2000 the Brazilian plant of Sete Lagoas was inaugurated;

Iveco and Fiat Auto will manufacture Daily and Ducato

vehicles in the plant for the South American market.

Daily output from the plant is expected to reach

7,000 units in 2001, added to European production in

the Suzzara and Valladolid plants, which turned out

its one millionth Daily in December 2000.

After the important capital spending programmes

targeting the product and manufacturing processes

in 1999 in preparation for the launch of the Daily

City Truck, development activities in 2000 regarded

the specialisation of the product for specific missions,

while industrial investments were directed at

bringing manufacturing capacity into line with

growing demand.

WESTERN EUROPE2000 REGISTRATIONS IN ABC CURVE ON MARKET UNITSFROM 3.5 TO 6.0 T GVW (LIGHT)

Units Change Units Change Value Change(thousands) vs 1999 % (thousands) vs 1999 % (%) vs 1999 %

UK 62.4 10.4 5.2 17.5 8.3 0.5

Germany 60.0 7.1 8.1 10.2 13.4 0.4

France 59.7 26.9 15.7 43.9 26.3 3.1

Italy 59.4 12.0 24.6 16.6 41.5 1.7

Spain 40.1 12.3 8.5 32.4 21.1 3.2

Portugal 15.2 8.1 1.7 37.0 11.2 2.4

Holland 9.9 23.2 1.9 54.3 19.5 3.9

Belgium 9.2 4.3 1.2 26.8 12.5 2.2

Switzerland 7.4 23.4 2.1 53.8 28.6 5.7

Ireland 5.3 32.7 0.1 -14.5 2.4 -1.4

Austria 5.3 9.2 0.9 16.7 17.7 1.1

Sweden 4.2 13.1 0.4 55.4 10.0 2.7

Denmark 2.8 12.5 0.7 2.8 23.6 -2.3

Finland 2.3 1.7 0.2 58.9 6.5 2.3

Norway 1.8 11.1 0.3 31.6 19.8 3.1

Luxembourg 0.8 12.0 0.0 40.0 5.4 1.1

Total 345.8 13.4 71.6 25.3 20.7 1.9

WESTERN EUROPEIVECO MARKET SHAREFROM 3.5 TO 6.0 T GVW (LIGHT)

96 97 98 99 00

24

18

12

6

0

Iveco shareMarket Iveco registrations


2000 was another good year for the European medium

duty vehicle market. Demand was stable at above 1999

levels and Iveco's capacity to meet it was favoured by

the accelerated renewal of its product range.

In Western Europe, the market accounted for 94,100

vehicles, a 3.3% increase on 1999, with registrations

concentrated in particular in the last quarter of the year.

The strongest increases in demand were seen in

Italy (+11%), France (+6.8%) and the United Kingdom

(+5%), while the important German market was stable,

and the Spanish market contracted by 5.1%.

Taken as a whole, the Central European markets

accounted for 9,200 vehicles, a 4.5% increase on 1999.

In Western Europe, Iveco's share of the medium

duty segment reached 23.8%, up 0.4 percentage points

on 1999, and in Italy Iveco maintained its excellent

share of 57.3%. Significant increases in market share

were recorded in France (24.1%, +1.5 percentage

points), Spain (25.2%, +1.1 percentage points) and

Germany (16.5%, +0.3 percentage points).

Iveco maintained its lead of the market in the United

Kingdom, with 28.1%, in spite of a 1.6 percentage

points fall due to the policy of strict selection of sales

which entails the assumption of implicit charges with

the commitment to buy vehicles back.

Iveco also increased its share of the Central European

markets, particularly in the Czech Republic, Hungary,

Rumania, Croatia and Slovenia.

These excellent results were achieved in the face

of fierce competition from the other European

The new EuroCargo Tectorrange with changes tothe cab and the main

mechanical componentsmade possible by the

adoption of sophisticatedtechnology, is powered by

the Tector engine andreconciles state-of-the-art

performance with reducedconsumption, acousticand gassy emissions,and low running andmaintenance costs.

BUSINESS UNIT MEDIUM


Germany 36.2 0.4 6.0 2.2 16.5 0.3

UK 18.6 5.0 5.2 -0.7 28.1 -1.6

France 10.2 6.8 2.5 13.9 24.1 1.5

Italy 9.4 11.0 5.4 10.9 57.3 0.0

Spain 6.6 -5.1 1.7 -0.6 25.2 1.1

Holland 2.4 29.1 0.3 31.4 14.1 0.2

Portugal 2.2 -1.2 0.2 14.9 10.8 1.5

Belgium 2.2 -10.2 0.2 -32.2 10.9 -3.6

Austria 1.3 8.6 0.2 43.6 16.1 3.9

Ireland 1.2 18.8 0.2 28.5 16.5 1.2

Norway 0.9 0.1 0.1 48.7 12.9 4.2

Switzerland 0.8 32.7 0.1 47.1 14.8 1.5

Sweden 0.8 6.8 0.1 0.0 7.7 -0.5

Denmark 0.6 -1.1 0.1 12.0 18.6 2.2

Finland 0.5 -5.6 0.0 68.2 6.9 3.0

Luxembourg 0.2 -3.2 0.0 16.0 19.3 3.2

Total 94.1 3.3 22.4 5.3 23.8 0.4

B U S I N E S S U N I T M E D I U M 13

manufacturers, culminating in the launch of the new

Renault Midlum vehicle, the revamping of the Volvo

FL with a new cab, and constant pressure on prices.

As for the product, in 2000 Iveco launched the new

EuroCargo Tector range: this new vehicle, with changes

to the cab and the main mechanical components

made possible by the adoption of sophisticated

technology, is powered by the Tector engine and

reconciles state-of-the-art performance with reduced

consumption, acoustic and gassy emissions, and low

running and maintenance costs.

The new Iveco EuroCargo Tector range was presented

to the public at the Frankfurt Motor Show in

September 2000; deliveries started in early 2001.

The launch of the new EuroCargo Tector was

preceded by intense experimentation in the field

to guarantee the highest quality and reliability

standards.

The Brescia plant was significantly restructured

during 2000 in order to accommodate the new

EuroCargo Tector range. Despite the high level

of industrial reorganisation, the plant operated at

a high level of efficiency for most of the year.

Progress was also made in the elimination of some

production bottlenecks that had hampered the

flexibility of the plant. For most of 2000, we continued

to achieve the 8 to 10 week delivery lead times to

which our dealers have become accustomed.

WESTERN EUROPE2000 REGISTRATIONS IN ABC CURVE ON MARKET UNITSFROM 6.1 TO 15.9 T GVW (MEDIUM)

WESTERN EUROPEIVECO MARKET SHAREFROM 6.1 TO 15.9 T GVW (MEDIUM)

96 97 98 99 00

32

24

16

8

0

Market Iveco registrations Iveco share

14

2000 saw the introductionof the new Cursor 13

engine on the EuroTrakkerrange (12.9 litres capacity,output of 380 and 440 Hp).

The latest arrival inthe Cursor family, designed

for heavy duty operationin the off-road segment,

joined the Cursor 8 tocomplete the innovative

new family of Ivecoengines for the heavy

vehicle range.

In 2000, the Western European heavy vehicle market was

particularly strong, with 243,800 registrations, which

represents an increase of 4.5% and a new all-time high.

This growth was particularly strong in Spain (11.2%), Italy

(10.4%), France (7.9%) and Benelux (6.9%); the UK

market on the other hand (+3.7%) was below the market

average and the German market contracted by 1.5%.

This result was helped by the positive economic scenario

in Europe and above all, by the acceleration in the

renewal of the existing fleet, that had already been

noted in previous years, with customers looking for

technologically advanced vehicles as a means of boosting

their productivity.

In this context, all the manufacturers offered innovative,

efficient, comfortable products that complied with

European exhaust emissions standards.

In spite of the high demand for heavy vehicles, in 2000

there was strong competitive pressure on the prices of

new vehicles and competition was also rife in all aspects

of the transport services offered.

What is more, the high rate of fleet renewal also brought

strong growth in the availability of used vehicles,

exceeding the natural absorption rate of the European

market, which caused their prices to fall, particularly in

the United Kingdom.

In this scenario the network and customers expressed

their appreciation of the quality levels achieved by Iveco,

which were the fruit of the rigorous plan embarked on in

recent years to improve manufacturing processes and the

product.

In marketing terms, in 2000 Iveco confirmed its share of

the Western European market at 11.2%, an achievement

BUSINESS UNIT HEAVY



Germany 56.3 -1.5 2.8 -5.0 5.0 -0.2

France 47.2 7.9 4.4 18.7 9.3 0.9

UK 32.4 3.7 2.9 -8.0 9.0 -1.1

Italy 26.0 10.4 10.2 11.5 39.2 0.4

Spain 25.7 11.2 4.7 0.2 18.1 -2.0

Holland 14.0 10.9 0.3 -36.1 2.5 -1.8

Belgium 8.6 -1.6 0.3 -23.9 4.0 -1.2

Austria 7.5 0.4 0.5 11.8 6.3 0.6

Portugal 4.9 8.5 0.3 0.3 6.6 -0.6

Sweden 4.7 -6.7 0.0 78.6 0.5 0.2

Denmark 3.9 -9.6 0.3 15.6 7.9 1.7

Switzerland 3.3 22.4 0.2 0.5 6.1 -1.3

Ireland 3.2 -4.0 0.2 -5.3 6.1 -0.1

Norway 2.5 3.5 0.0 -30.2 1.2 -0.6

Finland 2.5 -4.6 0.1 18.9 3.6 0.7

Luxembourg 1.3 29.7 0.1 83.3 6.7 1.9

Total 243.8 4.5 27.3 4.5 11.2 0.0

B U S I N E S S U N I T H E A V Y 15

which is the result of the performance of the various

markets that differed slightly from the previous year:

Iveco increased its market share in Italy (39.2%,

+0.4 percentage points), France (9.3%, +0.9 percentage

points), and Northern Europe (3.3%, +0.5 percentage

points), while it decreased in Spain (18.1%, -2 percentage

points), the United Kingdom (9%, -1.1 percentage points)

and Benelux (3.3%, -1.4 percentage points).

Heavy vehicle sales in non-European markets were

strong in 2000, expanding by 27% on 1999.

Iveco's performance in the Eastern European markets

was satisfactory on the whole. Good results were

achieved in the Czech Republic, the Baltic states,

Rumania, Croatia and Slovenia, and there were signs of a

possible recovery in CIS markets.

We should also point out that market demand in most

non-European countries is extremely variable, and in this

context overall Iveco sales in the Middle East and Africa

fell by about 10%.

Where the Far East was concerned, in 2000 Iveco

strengthened its position in Indonesia and Hong Kong,

although volumes were still marginal.

In 2000 the Turkish market began to show signs of a

recovery, after the sharp fall of 1999, but towards the

end of the year there was a substantial reversal of this

trend due to the country’s financial crisis. Iveco sold

about 700 heavy vehicles in the country.

As for individual product ranges, in Western Europe

sales of the EuroStar increased by 7.6% and those

of the EuroTrakker by 8.3%, while those of the

EuroTech decreased by 9.1% and SuperCargo volumes

were stable.

As a whole, sales of quarry and construction site vehicles

increased while road vehicles decreased marginally (-2%).

The most significant changes to the product regarded

the introduction of the new Cursor 13 engine on

the EuroTrakker range (12.9 litres capacity, output of

380 and 440 Hp).

The latest arrival in the Cursor family, designed for heavy

duty operation in the off-road segment, joined the

Cursor 8 to complete the innovative new family of Iveco

engines for the heavy vehicle range.

During the year the Cursor 8 and Cursor 10 road range

received new wheelbases and full air suspension.

And in the first months of 2001, the Cursor 13 will also

be introduced on the road range.

WESTERN EUROPE2000 REGISTRATIONS IN ABC CURVE ON MARKET UNITS>= 16.0 T GVW (HEAVY)

WESTERN EUROPEIVECO MARKET SHARE>= 16.0 T GVW (HEAVY)

96 97 98 99 00

16

12

8

4

0

Market Iveco registrations Iveco share

16

The production of thenew Cursor 13 engineat the Bourbon-Lancy

plant; the thirdmember of this family

is destined to completethe renewal of the

entire range of Ivecoheavy duty engines.

In 2000 the Western European market for diesel

engines for commercial vehicles confirmed the upward

trend of recent years, thanks to persistent growth in

vehicle demand in these countries; in the United

States, on the other hand, in the second half of the year

there was a sharp fall in demand for commercial

vehicles, which had a significant impact on engine

manufacturers and coincided with the slowdown in

economic growth.

The situation was also very similar in other sectors,

such as agricultural and industrial machinery and

power generation: in Europe the moderate growth of

recent years was confirmed, while in the United States

there was a downturn in demand in the latter part of

the year.

2000 also confirmed the merger trend among

manufacturers of commercial vehicles and agricultural

and industrial tractors, and vertical engine-machine

alliances, accentuating the ongoing process of

concentration of the free market, to the benefit of the

captive market.

In terms of product, the mergers among both

European and American engine manufacturers

continued and this, combined with the appearance of

BUSINESS UNIT ENGINES


B U S I N E S S U N I T E N G I N E S 17

Japanese, Korean and Brazilian engine manufacturers

on Western markets, is radically changing the

competitive scenario.

In 2000 the commercial and manufacturing

performance of the Business Unit Engines was very

good. Approximately 458,000 engines were sold, an

increase of 12.8% on 1999; about 38% of these met

Iveco's requirements for its own vehicles, 33% was

supplied to other Fiat Group companies (CNH, Sevel),

and the remaining 29% to external customers (20%

directly and 9% through Aifo).

If we consider the various areas of application, we find

strong growth in the automotive sector with 367,000

units (up 14%), as a result of strong demand for light

vehicles, and in the industrial sector with 14,000 units

(+21%). Power generation also grew strongly with

20,000 units sold (+24%), thanks in particular to the

synergies with 2H Energy and the continuous

improvement in the product mix in the area of

complete and high power units; sales to other areas

were relatively stable.

The most significant events where the product is

concerned in 2000, were :

- launch of the new Cursor 13 engine, the third

member of this family which is destined to complete

the renewal of the entire range of Iveco heavy duty

engines in the 200-430 kW bracket by the end of

2001;

- the start of production of the new Tector 4 and

6-cylinder engines, which will equip all medium-

duty Iveco vehicles in the 95 to 200 kW bracket,

replacing the 8000 series engines. These engines

are built in a new assembly unit in the Turin

plant.

Where output is concerned, we should underline

the record of 290,000 light engines produced in the

Foggia plant, and the production of the 3,000,000th

8140 engine at the same plant, to seal more than

twenty years of life and success for this engine that

made the history and fortunes of the Iveco Daily, Fiat

Ducato and Renault Master light vehicles.

International developments for the Business Unit

Engines included the following:

- the start of production in the engine assembly plant

of Sete Lagoas (Brazil), which has an output capacity

of 30,000 model 8140 engines for the Iveco Daily and

Fiat Ducato light vehicles;

- the start of assembly of 8000 family engines in India

for the farm tractors of CNH India and a local original

equipment manufacturer;

- the complete incorporation of the technical and

manufacturing structures, as well as the commercial

network of 2H Energy and Aifo in the Power

generation division, with important synergies that

were underlined by the brilliant results achieved in the

first year of shared activity.

Market prospects for 2001 point to a levelling off

period in the automotive sector, while the other

sectors should remain stationary or enjoy moderate

growth.

As regards product development, the Business

Unit Engines will pursue its long-term programme

for the development and industrialisation of

new engines, with the goal of :

- creating a vaster,

more specialised

range for the various

applications, that is

competitive in terms

of performance,

consumption and

costs, with a higher

added value for

customers;

- respecting legislation

regarding polluting

emissions due to

be enforced from

2001 (Euro 3) for

commercial vehicles

and from 2002-2003

(Tier 2) for agricultural

machinery.

The new range of

Iveco's Foggia plantregistered the recordoutput of 290,000light engines, andalso celebrated the3,000,000th 8140engine.


Iveco engines breaks down into 4 families:

- light engines: two new 4-cylinder engines (2.3 litres

and 3 litres) with outputs from 70 to 135 kW. They are

expected to reach full scale production in 2002 and

2003 respectively;

- medium engines: 3, 4, 5 and 6-cylinder engines with

outputs from 35 to 200 kW, developed by the

European Engine Alliance with CNH and Cummins.

Manufacture of these engines for application on Iveco

vehicles began in 2000, and that for CNH construction

and farm machinery and for the free market will be

built up gradually from 2002;

- heavy engines: the new Cursor family comprises 3

basic 6-cylinder engines with power outputs from 200

to 430 kW. The three models are already in

production, and the remaining versions for Iveco

engines will be launched in 2001;

- "V-shaped" engines: the new family of V6,V8 and V12

engines, with power outputs from 300 to 1200 kW, for

power generation, industrial, railway and marine

applications will enter production in 2003.

In 2001 priority will go to activities to develop

Cursor and Tector engines for specific applications

(Agricultural, Industrial, Marine, Power Generation)

and to encourage and increase the penetration of

these products on the free market and with original

equipment manufacturers in the automotive and

agricultural sectors.

The engineering development and industrialisation of

the new ranges will require a total investment of

approximately 950 million euros, 50% of which has

already been spent. A further 200 million euros plus

will also be invested in 2001 in research, development

and industrialisation.

UNITS SOLD(%)

38%

29%

33%

Iveco

Fiat Group

Third Parties

ENGINE APPLICATIONS(%)

80.2%

11.8%

4.3%0.2%Automotive

Agricolture andConstructionEquipment

Industrial and Marine

Power Generation

Other

3.6%

19

The CityClass Cursor,Domino 2001 andEuroClass HD.

Irisbus

The bus market in Western Europe accounted for

approximately 25,000 vehicles in 2000, 3.8% lower than

in 1999.

Irisbus, the 50-50 joint venture created by Iveco and

Renault SA, in its second year of activity confirmed its

position as second European manufacturer with 22% of

the market, and number three in the world. Irisbus was

market leader in Italy with 49%, in France with 50% and

in Spain with 30%, and improved its position in the United

Kingdom from 7% to 9%. Performance was also good in

the minibus segment, with the company taking 33% of the

European market.

In 2000 Irisbus sold 9,811 vehicles, an 11.7% increase on

1999; of these, 4,457 were long-distance coaches, 3,078

town buses and 2,276 minibuses and derived versions.On

the marketing front, important orders were acquired in

2000, won in public tenders for the supply of town buses

in Rome, Milan, Turin, Genoa, Florence, Catania, Madrid,

Paris, Lille and Bordeaux.

Ikarusbus won an important contract to supply 286

vehicles to the city of Moscow. By December 31, 2000

orders for a total of 672 methane-powered buses had

been received, confirming the good prospects for this

type of drive system.

In the field of long distance coaches, we should underline

the commercial success of the EuroRider, MyWay and

EuroClass vehicles.

Activities linked to maintenance and repairs contracts

progressed successfully in all European markets.

SPECIALTIES

S P E C I A L T I E S


Activities to integrate the product ranges, design

activities and quality levels of the various companies in

the joint venture continued in 2000, while respecting

national characters and traditions; the incorporation of

the Hungarian company Ikarusbus, acquired at the end of

1999, was a significant step.

Important capital spending programmes were targeted at

product innovation such as the Civis project, an

innovative mass urban transport vehicle with

conventional, electric and hybrid drive, and featuring low

emissions, excellent access, interior mobility, quiet

operation and outstanding comfort.

Defence vehicles

A total of 1,369 vehicles were manufactured in 2000

for the Italian Army and the export markets, including:

286 model 40.10 WM light trucks, 51 model 90.17 WM

4x4 medium trucks, other special vehicles, spare parts

and various components.

In 2000 a maintenance and repair contract was signed

for the first time with the Italian Army for a batch of

trucks already in use.

Activities of the Iveco Fiat - Oto Melara Consortium

in the field of heavy and light armoured vehicles

resulted in the sale of 39 Ariete tanks, as part of a

contract to supply 200 units to the Italian Army.

Industrialisation and manufacturing activities also got

underway for the pre-production series of Puma light

armoured vehicles (4x4 and 6x6), as part of an order

from the Italian Defence Ministry for 580 units. Similar

activities were performed for the Dardo crawler troop

carrier, and orders for 200 vehicles have been

received.

Iveco Eurofire presentedits entire range at the

Interschutz internationalexhibition in June 2000;

products exhibitedincluded an innovative

30 metre automaticturntable ladder.

S P E C I A L T I E S 21

Important international activities included the delivery

to the Spanish Army of the first 7 units (out of a batch

of 22, including logistic support) of the Centauro heavy

armoured vehicle. The supply will be complete during

2001.

In 2000 the Iveco Fiat - Oto Melara Consortium also

assisted at operational tests held in America to certify

the efficiency of the 16 Centauro vehicles that the

Italian Army loaned to the U.S. Army.

In terms of product development, we must underline

the advanced stage of development of the VMM

(medium multirole vehicle) and VML (light multirole

vehicle) to meet the needs of the new European

defence models. The new VMM and VML vehicles are

expected to enter production in late 2001 and 2002

respectively.

In 2000 the Bolzano plant began activities to prepare

for quality certification to ISO 9002 standards, in

addition to the specific certification it already holds to

the corresponding AQAP 110 military standards.

At December 31, 2000 the order book covered more

or less 3 years of activity.

Astra

Astra production is divided into three product lines:

heavy quarry and construction site vehicles, high

mobility heavy tactical vehicles for military uses, and

rigid 12, 28 and 38 tonne dump trucks.

A total of 1,870 vehicles were invoiced in 2000, a

40% increase on 1999.

Exports accounted for approximately 20% of sales, an

increase on previous years.

In 2000, the Astra construction range was extended by

the addition of a new articulated dump truck, in 16, 25

and 30 tonne versions, which was received well on the

European and North American markets.

Worldwide distribution of Astra dump trucks in

collaboration with Case New Holland became fully

operational in 2000. Exports of military vehicles to the

Spanish, Irish and British armies continued, accounting

for a total of 169 units in 2000.

Fire-fighting vehicles

Iveco Eurofire Holding groups together Iveco's

activities in the field of emergency and fire-fighting

vehicles: Iveco Magirus Brandschutztechnik GmbH in

Germany, Camiva SA in France, Iveco Mezzi Speciali

SpA in Italy and Lohr-Magirus Feuerwehrtechnik

GmbH in Austria.

In 2000, the group sold 1,450 vehicles and outfits.

The positive market results were linked to an upturn

in the European markets after the contraction of

previous years and an increase in exports to non-

European markets, which accounted for 40% of overall

sales.

On the industrial front the integration of the different

companies in the group continued, to achieve synergies

and structural efficiencies of operating and

manufacturing costs.

Considerable resources were destined to product

innovation and the standardisation of the range and

components. Iveco Eurofire presented its entire range

at the Interschutz international exhibition in June

2000, consolidating its image as technological leader

with operators in its field; products exhibited included

an innovative 30 metre automatic turntable ladder,

the new range of Eurofire fire-fighting appliances,

the new Octopus multirole vehicle and the new ALP

320 telescopic aerial platform with electronic drive.

22

Iveco's globalisation strategy is concentrated primarily

in four areas with a high growth potential: the

Mercosur area, China,Turkey and India. Some of these

areas, such as China and the Mercosur area, are already

very important markets, where Iveco has undertaken

significant investments, directly or through joint

ventures.

Mercosur

Brazil

Manufacturing activities in Brazil were stepped up

during the year, sustained primarily by the recovery in

consumption and investment, and 4% growth of the

economy. Thanks to this favourable situation, the

country was able to reach the targets agreed with the

International Monetary Fund regarding management of

public sector indebtedness.

In 2000 the commercial vehicle market in Brazil

succeeded in reversing the negative trend of 1999, and

grew by 25%, stabilising at about 69,000 units (GVW

above 3.5 tonnes).

Iveco continued to pursue its development policy in

the country, consolidating its commercial network that

now numbers over forty dealers.

In spite of the difficulties caused by the imbalance in

the exchange rate between the Brazilian Real and the

Argentine Peso, which is pegged to the Dollar, severely

penalising Argentine exports to Brazil, in 2000 Iveco

sold over 4,000 vehicles in Brazil (28.7% up on the

previous year), of which 1,027 imported by the

Argentinian plant. Iveco continued to expand in the light

vehicle market (GVW from 3.5 to 6 tonnes), where its

market share reached 29.9% (up 2.3 percentage points).

As for industrial activities, production of the Daily and

of engines in the new Sete Lagoas plants got under way

in October 2000.

Argentina

In Argentina, after 1999 when Gross National Product

actually decreased by 3.4% in real terms, no economic

growth was recorded in 2000. The implementation of

restrictive budgetary measures further depressed

investments, causing a marked slowdown in industrial

output in the second half of the year and a rise in

unemployment. The Argentine commercial vehicle

market continued to feel the effects of the country's

difficult economic situation, and registrations in 2000

totalled 17,200 units, an 11% contraction on the

previous year.

Iveco sales exceeded 2,100 units, a 14% increase on

the previous year (1,875 units).

Venezuela

In Venezuela, in a market that was substantially stable

(7,300 units), Iveco sold over 1,300 vehicles, a 45%

increase on 1999, for 18.4% of the market.

China

The Chinese economy grew by 8% in 2000, almost

a percentage point more than in 1999.

High exports and hefty investment in industry and

infrastructure proved once again to be the two basic

impulses behind the country's economic growth. In

2000 China benefited from a favourable moment for

international trade and the country continued its

programme of intense investment in infrastructure. In

2000 the country confirmed its position as the world's

second most attractive country for foreign investors,

behind the United States.

In 2000 the commercial vehicle market confirmed the

trend towards a specialisation of demand: the heavy

vehicle sector (GVW above 8 tonnes) grew

significantly, with over 80,000 registrations (47,000 in

1999), and this was clearly related to the development

of road and motorway infrastructure; the light vehicle

sector (GVW between 1 and 3 tonnes) was also

strong, with 397,000 units (384,000 in 1999), while the

medium segment (GVW from 3 to 8 tonnes), which

represents the world's second market, contracted

from 181,000 to 163,000 units. The important

light bus market, where the Naveco company

operates, expanded strongly, with over 247,000

OPERATIONS IN THE STRATEGIC AREAS


O P E R A T I O N S I N T H E S T R A T E G I C A R E A S 23

registrations compared to 181,000 the previous year.

Naveco (50% Iveco and 50% Yueijin Group)

manufactured and sold over 17,500 vehicles from the

Daily range in 2000 (14,700 light and medium

minibuses and 2,800 chassis-cabs), to confirm 1999

results, maintaining its position in its reference

segments.

Output of gearboxes by the Haveco company (33%

Iveco, 33% Yueijin Group, 33% Hangzhou) was limited

to about 15,000 units (approximately 21,000 units in

1999).

Turkey

In 2000 the Turkish economy confirmed the signs of a

recovery that had been felt in the second half of the

previous year, and Gross Domestic Product grew by

about 6%. However, towards the end of the year,

Turkey came close to a financial crisis which left its

mark, with the drastic devaluation of the national

currency in February 2001. The difficult moment was

tackled with the intervention of the International

Monetary Fund and this made it possible to avoid

serious repercussions on the banking system.

In spite of this economic and financial uncertainty, the

commercial vehicle market (GVW above 3.5 tonnes)

reacted well, totalling 63,300 registrations, returning to

pre-1999 levels, the year of the disastrous earthquake.

Sales by Otoyol (the joint venture between Iveco and

the Turkish Koç Group) increased to 7,200 units

from 4,750.

Exports contracted marginally from the 1,042 units in

the previous year to 890 units.

Iveco imports into the country grew significantly after

the sharp drop of 1999: from 500 to 1,380 units.

India

In 2000 the macroeconomic situation in India resulted

in growth to the tune of 4.5%.

After the boom of 1999, in 2000 the commercial

vehicle market contracted, in line with the country's

economic growth which was below expectations.

The market for medium and heavy weight commercial

vehicles (GVW above 7.5 tonnes) which is of

particular interest to Iveco, decreased from 108,000

vehicles in 1999 to approximately 92,000 in 2000.

Ashok Leyland Ltd, Iveco's Indian subsidiary, sold

34,500 vehicles from its various ranges (down 4.7%).

In spite of this, Ashok Leyland's performance on the

domestic market can be considered positive, because

sales of medium duty vehicles, where its product range

is concentrated, grew to 32,200 vehicles in 2000, and

market share grew from 32.5% in 1999 to 37% in 2000.

Vehicle exports reached 2,300 units, substantially in

line with the previous year (2,400 units).

OPERATIONS IN OTHER COUNTRIES

In Australia, where the market accounted for 18,800

units, Iveco sold 891 units in 2000, for 4.8% of the

market (6.4% in 1999).

The contraction was particularly significant in the light

vehicle segment (GVW from 3.5 to 7.5 tonnes)

because of strong pressure from the competition, and

in the heavy vehicle sector (GVW above 15.5 tonnes),

where Iveco achieved 11.8% of the market.

Iveco sold 440 units in Ethiopia in 2000 (398 of which

were heavy vehicles), which represented a decrease on

the previous year, due to the country's cash-flow

problems; in spite of this Iveco maximised the

opportunities offered by the market, maintaining its

market share high.

In South Africa, Iveco sold over 600 vehicles in 2000,

in line with the previous year; sales on this market

were affected by the phasing in and out of the new

Daily and the EuroCargo line-up, while exports grew.

24

2000 was an extremely important year for the

development of Iveco's financial and rental services.

Financial services (Transolver Finance)

In 2000,Transolver Finance concentrated on expanding

its activities, both by developing existing finance

companies (in Germany and the United Kingdom),

and by creating a new subsidiary in Switzerland.

A structure to deal with sales financing also began

operations in Brazil.

In 2000, these new activities enabled the Transolver

Finance group of companies to manage financing

activities for the distribution network directly on the

markets covered (in Italy and Germany early in 2001)

and for end customers, with retail financing and

financial leasing products.

The portfolio of loans to end customers increased to

86,000 contract at December 31, 2000 (74,000 at

December 31, 1999).

The percentage of Iveco sales in Western Europe

financed by Transolver Finance amounted to 31.9%

in the light vehicle range (compared to 23.4% in 1999),

32.3% of medium vehicles (26.3% in 1999) and 41.1%

of heavy vehicles (28.8% in 1999).

The highest share was recorded in Germany, with an

average of 44.5% of sales of Iveco vehicles.

In France activities remained above expectations,

particularly in the light and medium ranges.Transolver

achieved a share of 26.5%.

In Spain the joint venture agreement with Hispamer

continued to give good results, in terms of both

volumes and financial margins.

In Italy, Iveco's principal market, the reorganisation of

the company's credit risk management, administrative

activities and other activities connected to contract

management was completed. A share of 23.6% was

achieved in 2000.

Rental services (Fraikin and Transolver Service)

In 2000, in order to support the development strategy

of its transport services and to take full advantage of

Fraikin's skills and experience in the field of short and

long-term rentals, Iveco decided to entrust the

management and development of Transolver Service's

activities to Fraikin.

Iveco is now operating in this sector in France, where it

is undisputed market leader, in the United Kingdom,

Benelux, Spain and Italy, and is examining the

opportunities for development in Germany and Portugal.

At the end of 2000, the Fraikin Group and Transolver

Service companies together owned a total fleet of

33,680 rental vehicles, broken down as follows: 27,550

FINANCING AND SERVICE ACTIVITIES

1998 1999 2000

Retail 12,523 12,907 12,720

Leasing 7,768 8,672 14,372

Contract Hire 1,018 984 8,732

Total 21,309 22,563 35,824

NEW CONTRACTS BY PRODUCT (*)

(*) renewals included


98 99 00

15,000

12,000

9,000

6,000

3,000

0

Con

trac

ts (

unit)

NEW CONTRACTS BY PRODUCT

F I N A N C I N G A N D S E R V I C E A C T I V I T I E S 25

in France, 4,191 in the United Kingdom, 1,174 in the

Benelux, 465 in Spain, 236 in Italy and 64 in Portugal.

As a result the owned fleet grew by 14.4% on 1999.

On the whole, the dynamic economic scenario of 2000

favoured the Fraikin Group's commercial activities.

As a result of its multibrand approach and ability

to offer efficient service through its operating

network, in the last quarter of the year Fraikin

was able to conclude an important contract with

the subsidiaries of an important worldwide food

company (1,600 refrigerated vehicles).

The Group's extensive computerised fleet management

and network support system resulted in Iveco's being

chosen by the French Postal Service at year-end for

the long-term rental of 800 vehicles.

As a whole in 2000, the Fraikin Group and Transolver

Service concluded 6,442 new contracts and renewed

2,290 existing contracts, delivering the same number

of vehicles.

1998 1999 2000

Light 11,829 12,401 19,396

Medium 3,481 3,687 7,359

Heavy 5,999 6,475 9,069

Total 21,309 22,563 35,824

NEW CONTRACTS BY RANGE (*)

1998 1999 2000

Italy 7,889 8,271 9,749

France 4,089 4,912 12,286

Germany 5,870 5,610 7,703

Spain 2,443 2,858 3,409

UK 1,018 912 2,251

Other — — 426

Total 21,309 22,563 35,824

NEW CONTRACTS BY COUNTRY (*)



98 99 00

20,000

16,000

12,000

8,000

4,000

0

98 99 00

15,000

12,000

9,000

6,000

3,000

0

Con

trac

ts (

unit)

NEW CONTRACTS BY RANGE

Con

trac

ts (

unit)

NEW CONTRACTS BY COUNTRY


CUSTOMER SERVICE

The most important activities during 2000 for the

Customer Service regarded the outsourcing of the

logistic system for spare parts distribution and of the

technical training structures for the Iveco service

network. Implementation of the computer system to

back up the Ramses project was also begun during

the year.

Spare parts distribution was entrusted to an operator

that specialises in logistics (the Hays Group) with the

prospect of both guaranteeing an excellent service to

the customer and of achieving efficiency in terms of

distribution costs and invested capital.

The operation regarded management of the five

European distribution centres (Turin, Trappes,

Langenau, Madrid and Winsford) and their personnel

(approximately 1,000 people).

Technical training activities were entrusted to Isvor

Dealer Net (IDN), a Fiat Group company that

specialises in training, consultancy and vocational

courses for automotive commercial networks, and

which has absorbed all the specialist resources and

skills of the entire Fiat Group.

In this new organisational context, Iveco technical

training will be able to develop both the excellent

instruments it already possesses and other training

methods, such as distance learning and multimedia

technologies at competitive costs in order to further

increase its marketing network's ability to relate and

to intervene.

The Ramses project is intended to strengthen Iveco's

partnership with its network through the far-reaching

reorganisation and development of parts sales and

services to end customers.This starts from knowledge

of the dealer's stock and of sales forecasts that

generate the issue of supply orders. The common

advantages for the network and for Iveco are evident,

in terms of improvements to the level of service and

the optimisation of stocks.

Another function of the project is the issue of "service

offers" and the management of promotional packages

and all-inclusive services at set prices.

In 2001 this instrument is destined to be extended

to all European countries.

27R E P O R T O N O P E R A T I O N S

In 2000 activities to adapt central and outlying systems

progressed, making it possible to adopt the Euro for all

company processes.

In the field of computer security, new guidelines are

now being implemented to bring the logical and

physical protection of Iveco's operational and

computerised systems into line with the best

international standards.

The development and implementation of new

operational and computerised systems continued, the

most significant being:

- the Product Representation Process (PRP), for which

the development stage was concluded and application

will be extended to the commercial area, and a number

of functions will be completed for the technical and

product areas;

- the Key-Account management system (ALI-IKAM),

for which the modules for sales planning and the

extension to new markets have begun;

- the used vehicle management system (REMOS), for

which the functions of the module to manage buy-back

were made available, and the Gap Analysis function was

completed;

- the Customer Service support system (RAMSES)

whose basic functions were completed, and which is

now being applied on some markets.

In addition to this, a number of new computer systems

were activated; in particular we mention the system

dedicated to Human Resources Management, which is

designed to manage Iveco Professionals, to assess

skills, to manage Core Resources and to support

assessment processes.

In the field of e-business, in 2000 Iveco tackled the

subject in a structured way, adopting a specific

e-strategy project to define the priorities and actions

to take to exploit the opportunities it could offer.

Iveco considers the Internet as a powerful instrument

for the re-engineering of company processes, directed

both inside and outside the company.

The first achievements regarded the "human resources

portal", the design of a "corporate portal", and the

creation of a marketplace for used vehicles.

INFORMATION TECHNOLOGY


In 2000 numerous audit and training initiatives were

undertaken to focus management's attention on the

new leadership model that is now the basis for career

development.

2000 also saw the implementation of the new method

to manage the individual's professional skills and his

value to the company which is now reflected in the

segmentation into "Non-professional, Professional,

Corporate Resources". From the viewpoint of skill

management, the skill target profiles for each

professional figure were defined, and as a result,

training and professional mobility programmes

consistent with these objectives were prepared.

The organisational structure was also re-examined in

the light of this new segmentation, defining the

positions which, because of their content, simplify and

optimise the development of Corporate Resources.

To support these new operational models, the Human

Resources function and the personnel information

system were also reorganised, to deal directly with

skill management.

To maintain and increase its leadership of its area of

business, Iveco also embarked on a drastic process to

re-engineer its fundamental processes.

This re-engineering is based on all-embracing

management of the changes from which Iveco intends

to find winning answers in the context of increasingly

high quality at increasingly competitive costs.

In the area of collective management, favourable

market conditions in 2000 made it possible to adopt

the flexible working instruments (part time, weekends)

already adopted during the previous year.

In order to rationalise company processes, further

outsourcing was undertaken involving more than 1,600

employees in Europe, and the most significant of these

involved the management of the European parts

warehouses (about 1,000 employees) and of

maintenance activities to Comau Service (about 350

employees).

Variations to the consolidation area due to

acquisitions regarded about 3,700 people (Fraikin, 2H

Energy, Truck Line), while about 2,400 people were

taken on, including 780 under short-term contracts.

The total number of Iveco employees amounted to

30,458 people, an increase of almost 1,600 on last year.

To this we should add the employees of 50%-owned

subsidiaries (Naveco, Irisbus and Transolver Finance

Spain), a total of 5,394 people.

In the context of action taken to increase the flexibility

of working performance, we should underline the

increased recourse to part-time workers in Italy (with

over 1,000 workers in the various manufacturing

centres) and the use of flexible working hours in

Germany, achieved with the agreement of the local

Trades Unions.

The need to focus on reducing labour costs resulted in

the definition of an increase in working hours with no

change to salaries under the same German agreement

(equal to existing intervals for workers and one and a

half hours a week for office staff), and the application

of a 35-hour week in France with the Unions'

agreement, achieved by absorbing existing intervals

and exploiting plant better.

HUMAN RESOURCES

29

As part of the programme to develop activities in the

area of dealers and end customers financing within

Iveco through the Transolver Finance companies, in

January Iveco exercised its option to sell its stake in

Fidis SpA (7.537%) to Fiat Auto SpA.

In the early months of 2001, Iveco continued its policy

of divesting real estate properties that were not

relevant to its activities: in February it concluded the

sale of the building which housed a service centre in

Milan (Italy), and an agreement for the sale of the spare

parts centre in Langenau (Germany) is currently being

negotiated.

Following the exercise by Renault of its put option on

Iveco Eurofire (Holding) GmbH stake, Iveco Magirus

AG will acquire the participation of 15% of Iveco

Eurofire (Holding) GmbH.

Iveco has tabled negotiations with Renault SA with the

goal of maintaining the Irisbus Group together,

even considering the option of purchasing all or part

of Renault's shares, in the framework of the

commitments undertaken by the Renault Group

with the Antitrust authority of the European

Commission in the context of its agreement with

the Volvo Group.

In the early months of 2001, the commercial vehicle

market remained strong, both in Western Europe and

in the emerging countries that are strategic for Iveco's

globalisation strategy.

In this context, Iveco is committed to maintaining the

positive results achieved in 2000.

SUBSEQUENT EVENTS


30 C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

CONSOLIDATED FINANCIAL STATEMENTS

Analysis of operating results and financial position 31

Consolidated balance sheets 36

Consolidated statements of operations 40

Consolidated statements of cash flow 42

Notes to the consolidated financial statements 43

Report of the indipendent auditors 74

Ten-year highlights 75

The companies in the Iveco Group 76

CONTENTS

31C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

In 2000, the Iveco Group made significant changes to the consolidation perimeter, following the consolidation of

new finance and service companies, and the completion of purchasing operations begun in 1999.

In 2000 the consolidation perimeter was modified by the following:

- the consolidation on a line-by-line basis of the Spanish company Transolver Service SA, the German company

Transolver Finance GmbH and the wholly owned German dealer Rhein Main, formerly consolidated using the

equity method;

- the consolidation, proportional to the share capital held (50%), of the Spanish company Transolver Finance EFC

SA and the Hungarian company Ikarusbus Jamugyarto RT and its subsidiary Ikarus Egyedi Autobusz Gy consolidated

line-by-line within the Irisbus group (consolidated using the equity method in the previous year);

- the acquisition and line-by-line consolidation of the French company Houvenaghel-Hennequin SA subsequently

renamed 2H Energy SA, of Seltra SA of the Fraikin Group and parts activities of the Truck Line company by the

Australian company International Trucks of Australia Ltd;

- the divestment to third parties of Saummo SA of the Fraikin Group and of the Spanish company Inmobiliaria Urbanitas.

The operating results for the year are summarised in the brief Statements of Income and the Notes that follow:

ANALYSIS OF OPERATING RESULTS AND FINANCIAL POSITION

(*) Fraikin consolidated for three months only

Summary of the Consolidated Statements of Income (million euros)

2000 1999 % Change

Revenues from sales of goods 7,820 7,048 10.9

Revenues from sales of services 791 338 (*) 134.2

Net revenues 8,611 7,386 16.6

Other revenues 648 294 120.6

Value of production 9,259 7,680 20.6

Cost of materials 5,130 4,411 16.3

Cost of services 1,221 938 30.1

Cost of labour 1,359 1,260 7.9

Other expenses 1,060 760 39.6

Cost of production 8,770 7,369 19.0

Operating profit 489 311 57.3

Financial income and expenses (145) (80) 81.7

Adjustments to financial assets (7) 15 —

Non-operating income and expenses (61) 16 —

Income tax (130) (82) 58.1

Minority interests (0) (17) (98.0)

Net profit 146 163 (10.1)


Net revenues for 2000 totalled 8,611 million euros, up 16.6% on 1999.This significant increase was generated by

higher sales volumes of vehicles and connected parts for a total of 771 million euros (+10.9%) and increased

revenues from sales financing and rental activities for 454 million euros.The latter was due to the inclusion in the

consolidation perimeter of the Fraikin Group for the entire year (in 1999 it was only consolidated in the last

quarter), which contributed 377 million euros to the increase in revenues (net revenues in the fourth quarter

increased by 21 million euros on the same period of 1999), and to increased revenues from services, for

77 million euros. Considering the same consolidation area, sales increased by 9%.

Other revenues increased from 294 million euros in 1999 to 648 million euros in 2000, primarily comprising gains

on the disposal of fixed assets for 156 million euros (an increase of 129 million euros), the internal production

of plant, partly in relation to the sales to contract hire companies, for 207 million euros (up 114 million euros),

non-operating profits for 86 million euros (an increase of 42 million euros), other operating income and revenue

and investment grants for 202 million euros (an increase of 103 million euros).

The cost of production totalled 8,770 million euros, a 19% increase on 1999. The cost of materials, which

represented approximately 60% of net revenues, increased by 16.3% on the previous year as a result of higher

volumes, offset by the lower impact of labour costs on revenues (15.8%, down from 17.1% in 1999); the increase

in the cost of materials compared to the previous year was influenced by the outsourcing of certain production

activities and by make-or-buy policies. We should also emphasise the strong increase in the cost of services

(+30.1%) resulting from the outsourcing of management of parts warehouses and maintenance activities.

The strong increase in other expenses was primarily the result of higher amortisation and depreciation

(450 million euros, up 212 million euros), related in particular to contract hire activities (159 million euros);

what is more this item includes allocations to provisions for risks which increased from 210 million euros to

264 million euros, such as allocations to the buy-back provisions for used vehicles to adapt these funds

to the future realizable value. Research and development expenditure of 227 million euros was in line with

the previous year, and was charged entirely to production costs; it regarded primarily the development of new

engine families and related vehicle applications.

The operating profit amounted to 489 million euros (311 million euros in 1999) and represented operating

profitability of 5.7% of sales, 1.5 percentage points up on the previous year. This result was positively affected by

profits achieved on the disposal of fixed assets that were no longer essential to industrial and commercial activities.

The operating profit was also influenced by the pressure on prices, particularly those of heavy and used vehicles,

and by start-up costs at the Sete Lagoas plant in Brazil.

Net financial expenses amounted to 144.5 million euros, increasing 65 million euros on the previous year;

this was primarily the result of a higher level of indebtedness during the year, linked to the acquisition of

the Fraikin Group and the consolidation of the related debt, higher interest rates in the Euro area, the emergence

of commercial and financial exchange rate differences payable related to the Sterling and Dollar exchange rate

to the Euro; these exchange trends did however have a positive effect on revenues.

Income from non-consolidated investments was negative for 6 million euros, and was influenced by the alignment

of a number of associated investments to equity values.

During the year the balance between non-operating income and expenses amounted to 61 million euros.

This item includes non-operating expenses related to the changes in the accounting principles in booking

certain expenses related to personnel and non-operating costs encurred to limit production losses due

to the interruption in supplies of essential components caused by the floods that hit Northern Italy in the

second half of October.

C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S 33

Net tangible fixed assets decreased by 26 million euros, from 2,305 million euros to 2,279 million euros,

primarily as a result of:

- new capital spending totalling 656 million euros, of which 350 million euros for industrial investments, connected

primarily to the completion of the new plant to produce light vehicles in Brazil and the development of new

engine families, and 306 million euros to expand the contract hire vehicle fleet;

- depreciation of 364 million euros, of which 159 million euros related to contract hire vehicles;

- disposals totalling 320 million euros, deriving primarily from structured leasing operations on the Fraikin fleet

for 200 million euros and the outsourcing operations referred to above;

- the effect of changes in the consolidation perimeter was negative for 2 million euros, the net result of the demerger

of Inmobiliaria Urbanitas and the acquisition of Seltra, and of the positive effect (4 million euros) of the conversion

to year-end exchange rates of investments in companies with currency of account other than the Euro.

Other fixed assets amounted to 714 million euros, increasing by 136 million euros as a result of the

Income tax also increased on 1999, as a result of the improvement in pre-tax income and high allocations

to the deferred taxation reserve.

Financial trends during the year are described briefly in the Balance Sheets and Notes that follow:

Summary of the Consolidated Balance Sheets (million euros)

2000 1999 % Change

Fixed assets

Tangible fixed assets 2,279 2,305 (1.1)

of which vehicles on operating lease 449 514 (12.6)

Assets under financial lease 568 397 43.1

Other fixed assets 714 578 23.5

Current assets

Inventories 1,555 1,505 3.3

Trade receivables 1,130 1,393 (18.9)

Financial receivables 1,860 935 98.9

Cash and cash equivalents, securities and bonds 246 255 (3.5)

Other assets 457 429 6.6

Total assets 8,809 7,797 13.0

Stockholders' equity 1,984 1,957 1.4

Liabilities

Reserves for risks and charges 812 793 2.5

Trade payables 2,266 2,236 1.3

Financial payables 2,767 1,889 46.5

Other liabilities 980 922 6.3

Total liabilities and stockholders’ equity 8,809 7,797 13.0


goodwill paid for the acquisition of the residual share capital of Fraikin (145 million euros), Seltra (9.5 million

euros) and 2H Energy (2 million euros), partially offset by the alignment of the investments in associated

companies to their equity value.

Working capital decreased by 273 million euros, from 398 million euros to 125 million euros, as result of the

263 million euros decrease in trade receivables due to increased discount and securitisation operations

undertaken during the year and to measures taken to reduce overdue accounts; this reduction was partially offset

by the increase in inventories from 1,505 million euros to 1,555 million euros, while current liabilities were higher

than last year by 60 million euros.

Shareholders' equity grew from 1,957 million euros at December 31, 1999 to 1,984 million euros at December

31, 2000; the shareholders' equity pertaining to Iveco totalled 1,914 million euros (up 96 million euros). This

increase was due primarily to income for the year (146 million euros), net of dividends paid (64 million euros),

the decrease in minority interest in stockholders' equity (69 million euros) following the acquisition of the

remainder of the Fraikin Group shares and exchange rate differences from the conversion of financial statements

in currencies other than the Euro (up 17 million euros).

The net financial position at December 31, 2000 revealed net indebtedness of 223 million euros, which

decreased by 180 million euros on year-end 1999 (net indebtedness of 402 million euros).

The following table illustrates the main financial flows that produced this change:

Summary of Cash Flow (million euros)

Net Financial Position at 12/31/1999 (402)

Cash flow generated/absorbed by operating activities

Net profit plus depreciation and amortisation 570

Net profit from non-consolidated investments 23

Net change in provisions (38)

Change in current assets and liabilities 283

838

Cash flow generated/absorbed by investment activities

Investment in tangible fixed assets (656)

Investment in intangible fixed assets (77)

Disposal of tangible fixed assets 332

(401)

Change in consolidation area (194)

Dividend paid (64)

Net Financial Position at 12/31/2000 (223)


The improvement in the net financial position can be attributed primarily to cash flow (net income plus

amortisation and depreciation) generated during the year, which amounted to 570 million euros, and to efforts

to reduce operating capital (283 million euros).

Funds generated by the year's activities (838 million euros) exceeded the cash absorbed by investment activities

(401 million euros, net of divestments), the increased financial needs generated by the changes to the

consolidation area (194 million euros) and by payment of the dividend to shareholders (64 million euros).

The structure of the net financial position at December 31, 2000 is illustrated in the following table, and

compared with that at December 31, 1999:

Analysis of the financial position reveals the growing importance of financial receivables against the total invested,

which increased by 930 million euros on 1999, primarily as a result of the increase in activities by Transolver

Finance companies in the field of sales financing, and of new receivables arising from the sale of the Inmobiliaria

Urbanitas company.

Assets leased at December 31, 2000 represented a net value of 568 million euros, having increased by 171 million

euros; this was the result of new loans granted for 478 million euros, net of amortisation and depreciation of

151 million euros and reimbursements of 156 million euros.

The increase in financial indebtedness, related primarily to the refinancing of increased investment in financial assets,

was hedged by medium-term indebtedness with rate structures consistent with the assets financed.

Structure of the Net Financial Position (million euros)

12/31/2000 12/31/1999 Change

Liquid assets and marketable securities 246 255 (9)

Short and medium/long term financial receivables 1,887 957 930

Assets leased 568 397 171

Accrued income and prepaid expenses 6 2 4

Total financial assets 2,708 1,611 1,097

Short-term financial payables 1,524 1,564 (41)

Medium/long-term financial payables 1,335 419 916

Accrued expenses and deferred income 72 30 42

Total financial payables 2,930 2,013 917

Net Financial Position (223) (402) 179


ASSETS

(THOUSAND EUROS)

CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31, 2000 AND 1999

Notes December 31, 2000 December 31, 1999Amounts due from stockholders’for shares subscribed but not called — —

Fixed assetsIntangible fixed assets 1Start-up and expansion costs 32,680 18,734 Research, development and advertising expenses — 242 Industrial patents and intellectual property rights 11,167 4,918 Concessions, licenses, trademarks and similar rights 50,491 44,594 Goodwill 19,515 13,262 Intangible assets in progress and advances 22,013 20,842 Other intangible assets 3,753 10,960 Differences on consolidation 354,299 226,787 Total 493,918 340,339

Property, plant and equipment 2Land and buildings 701,390 668,161Plant and machinery 645,874 675,094 Industrial and commercial equipment 209,262 185,050Other assets 533,775 591,293 Construction in progress and advances 188,601 185,591Total 2,278,902 2,305,189

Financial fixed assets 3Investments in :

Unconsolidated subsidiaries 24,740 32,699 Associated companies 57,963 81,612 Other companies 105,805 98,146

Total Investments 188,508 212,457

Receivables from :Unconsolidated subsidiaries :

Due within one year Total Receivables from unconsolidated subsidiaries — —Associated companies :

Due beyond one year Total Receivables from associated companies — —Parent companies :

Due beyond one year 908 —Total Receivables from parent companies 908 —Others :

Due within one year 12,348 12,201Due beyond one year 13,753 9,461

Total Receivables from others 26,101 21,662Total Receivables 27,009 21,662Other securities 4,719 3,765Treasury stock — —Assets leased 568,000 396,760 Total 788,236 634,644 Total fixed assets 3,561,056 3,280,172

Current assetsInventories 4Raw materials and supplies 391,644 340,198 Work in progress and semifinished products 207,360 182,799 Contract work in progress 1,787 1,350 Finished goods and merchandise 949,713 975,603 Advances to suppliers 4,577 4,715 Total 1,555,081 1,504,665


ASSETS

(THOUSAND EUROS)

Notes December 31, 2000 December 31, 1999Receivables 5Trade receivables :

Due within one year 1,126,655 1,388,990Due beyond one year 3,179 4,117

Total Trade receivables 1,129,834 1,393,107Receivables from associated companies :

Due within one year 12 103 Due beyond one year

Total Receivables from associated companies 12 103 Receivables from parent companies :

Due within one year 61 3 Due beyond one year

Total Receivables from parent company 61 3 Other receivables :

Due within one year 287,965 275,084 Due beyond one year 133,062 115,284

Total Other receivables 421,027 390,368 Total 1,550,934 1,783,581

Financial assets not held as fixed assets 6Investments in

Other companies Total Investments — — Other securities 9,853 5,683 Financial receivables

Receivables from unconsolidated subsidiaries :Due within one year 448 — Due beyond one year

Total Financial receivables from unconsolidated subsidiaries 448 —Receivables from associated companies :

Due within one year 29,879 29,887 Due beyond one year

Total Financial receivables from associated companies 29,879 29,887 Receivables from parent company :

Due within one year 44,551 9,408 Due beyond one year

Total Financial receivables from parent company 44,551 9,408 Receivables from others :

Due within one year 1,254,494 753,643Due beyond one year 530,782 142,136

Total financial receivables from others 1,785,276 895,779 Total financial receivables 1,860,154 935,074 Total 1,870,007 940,757Cash 7Bank and post office accounts 233,265 247,839 Checks 814 290 Cash on hand 2,526 1,597 Total 236,605 249,726 Total current assets 5,212,627 4,478,729

Accrued income and prepaid expenses 8Other accrued income and prepaid expenses 35,739 38,277 Total accrued income and prepaid expenses 35,739 38,277

Total assets 8,809,422 7,797,178


LIABILITIES AND STOCKHOLDERS’ EQUITY

(THOUSAND EUROS)

Notes December 31, 2000 December 31, 1999Stockholders’ equity 9Stockholders’ equity of the GroupCapital stock 1,179,440 1,179,440 Additional paid-in capital 13,067 13,067 Legal reserve Treasury stock valuation reserve Retained earnings and other reserves 574,941 462,343 Net income 146,257 162,658 Total 1,913,705 1,817,508Minority interest 70,123 139,093 Total stockholders’ equity 1,983,828 1,956,601

Reserves for risks and charges 10Reserve for pensions and similar obligations 158,332 165,242 Income tax reserves 196,912 159,571 Other reserves 457,186 468,136 Consolidation reserve for future risks and charges Insurance policy liabilities and accruals Total reserves for risks and charges 812,430 792,949

Reserve for employee severance indemnities 11 225,431 244,482

Payables 12Bonds :

Due within one year 3,632 194 Due beyond one year

Total bonds 3,632 194 Convertible bonds — —Borrowings from banks :


Total borrowings from banks 442,169 605,113 Other financial payables :

Due within one year 1,082,787 1,014,089Due beyond one year 1,238,345 269,564

Total other financial payables 2,321,132 1,283,653Advances :

Due within one year 40,283 37,146Due beyond one year 63 8,853

Total advances 40,346 45,999 Trade payables :

Due within one year 2,238,827 2,235,254 Due beyond one year 27,179 1,348

Total trade payables 2,266,006 2,236,602Notes payable :

Due within one year 17,406 14,170 Due beyond one year 242 158

Total notes payable 17,648 14,328 Payables to unconsolidated subsidiaries :

Due within one year 141 2,326 Due beyond one year

Total payables to unconsolidated subsidiaries 141 2,326 Payables to associated companies :

Due within one year 4,016 1,070 Total payables to associated companies 4,016 1,070 Payables to parent companies :

Due within one year 7,166 238 Total payables to parent companies 7,166 238

39

LIABILITIES AND STOCKHOLDERS’ EQUITY

(THOUSAND EUROS)

MEMORANDUM ACCOUNTS 14

(THOUSAND EUROS)

C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Notes December 31, 2000 December 31, 1999Taxes payable :


Total taxes payable 153,534 200,358 Social security payable :


Total social security payable 57,641 57,488 Other payables :

Due within one year 157,178 123,238 Due beyond one year 7,076 30

Total other payables 164,254 123,268 Total payables 5,477,685 4,570,637Accrued expenses and deferred incomeOther accrued expenses and deferred income 13 310,048 232,509 Total accrued expenses and deferred income 310,048 232,509 Total liabilities and stockholders’ equity 8,809,422 7,797,178

December 31, 2000 December 31, 1999Guarantees grantedUnsecured guaranteesSuretyships :

On behalf of unconsolidated subsidiariesOn behalf of associated companiesOn behalf of others 220,095 187,586

Total suretyships 220,095 187,586 Guarantees of notes:

On behalf of others 19,022 13,324 Total guarantees of notes 19,022 13,324 Other unsecured guarantees :

On behalf of unconsolidated subsidiariesOn behalf of associated companiesOn behalf of others 660,504 526,423

Total other unsecured guarantees 660,504 526,423 Total 899,621 727,333 Secured guarantees :

On behalf of unconsolidated subsidiariesOn behalf of associated companies 13,814 On behalf of others 108,036 76,307

Total 108,036 90,121 Total guarantees granted 1,007,657 817,454 CommitmentsCommitments related to off-balance-sheet instruments 428,933 463,365 Commitments to purchase property, plant and equipment 412,665 131,557 Commitments for contracts in progress 12,896 4,701 Commitments for buy back 610,428 633,752 Other Commitments 62,074 96,001Total Commitments 1,526,996 1,329,376Third-Party assets held by the Group 113,351 61,241 Group assets held by third parties 349,860 425,770 Other memorandum accounts 43,810 4,623 Total memorandum accounts 3,041,674 2,638,464


CONSOLIDATED STATEMENTS OF OPERATIONS(THOUSAND EUROS)

Notes December 31, 2000 December 31, 1999Value of production 15Revenues from sales and services 8,610,682 7,386,234Change in work in progress, semi-finished and finished products inventories (3,929) 29,852Change in contract work in progress 333 359Additions to internally produced fixed assets 207,402 93,548 Other income and revenues :

Revenue grants 6,074 4,795Other 438,748 165,356

Total other income and revenues 444,822 170,151Total value of production 9,259,310 7,680,144

Costs of production 16Raw materials, supplies and merchandise 5,130,204 4,411,261Services 1,220,803 938,134Leases and rentals 97,017 78,346 Personnel :

Salaries and wages 1,016,045 924,863Social security contributions 268,169 271,867 Employees severance indemnities 40,239 42,581 Employees pensions and similar obligations 16,555 10,275 Other costs 18,018 10,486

Total personnel costs 1,359,026 1,260,072 Amortization, depreciation and writedowns :

Amortization of intangible fixed assets 58,534 32,485 Depreciation of property, plant and equipment 364,369 220,685 Writedown of fixed assets 850 517 Writedown of receivables among current assets and liquid funds 26,745 29,993

Total amortization, depreciation and writedowns 450,498 283,680Change in raw materials, suppliesand merchandise inventories (23,080) (38,097)Provisions for risks 264,029 209,983Other provisions 209 2,402 Other charges 228,723 206,465Expenses of financial services companies 42,723 16,801Insurance claims and other costsTotal costs of production 8,770,152 7,369,047Difference between the value and costs of production 489,158 311,097Financial income and expenses 17Investment income :

Unconsolidated subsidiaries — —Associated companies — —Other companies 109 122

Total investment income 109 122Other financial income

From long-term receivables :From others 383 627From securities held as fixed assets other than equity investments 25 26 From securities held as current assets other than equity investments 637 145 Other income from :Unconsolidated subsidiaries — —Associated companies — 63 Others 199,485 155,155 Total other income 199,485 155,218

Total other financial income 200,530 156,016


(THOUSAND EUROS)

Notes December 31, 2000 December 31, 1999Interest and other financial expenses

Unconsolidated subsidiaries 4 1 Associated companies 12 236Parent companies 39 —Others 345,054 235,439

Total interest and other financial expenses 345,109 235,676Total financial income and expenses (144,470) (79,538)Adjustments to financial assets 18Revaluations of :

Equity investments 7,981 17,528Financial fixed assets other than equity investments — —Securities among current assets other than equity investments — —

Total revaluations 7,981 17,528 Writedowns :

Equity investments 14,362 904Financial fixed assets other than equity investments 9 33Securities among current assets other than equity investments — 5 Financial receivables 35 1,248

Total writedowns 14,406 2,190 Total adjustments to financial assets (6,425) 15,338 Extraordinary income and expenses 19Income :

Gains on disposals 464 18Other income 26,973 71,105

Total income 27,437 71,123 Expenses :

Losses on disposals 4,693 748 Taxes relating to prior years 1,269 63Other expenses 82,890 54,662

Total expenses 88,852 55,473 Total extraordinary income and expenses (61,415) 15,650Income before taxes 276,848 262,547Income taxes 20 130,250 82,424 Income before minority interest 146,598 180,123 Minority interest 341 17,464 Net income 146,257 162,658


CONSOLIDATED STATEMENTS OF CASH FLOW(THOUSAND EUROS)

2000 1999A) Cash at January 1 812,834 757,532

B) Cash flows provided (used) by operating activities :

Net income before minority interest 146,598 180,121

Amortization and depreciation 423,753 253,170

Change in reserve for employee severance indemnities (25,961) (45,457)

Net change in restructuring provision (7,998) (1,402)

Net change in other provisions (2,952) (190)

Result from non-consolidated investments 23,416 (16,927)

Change in current assets and liabilities:

Trade receivables 232,614 100,022

Inventories (50,416) (51,006)

Accounts payable 34,760 255,953

Other 71,854 87,082

Reserve for income taxes and other reserves 37,341 (49,902)

Changes in the scope of consolidation (56,930) (486,605)

Total 826,079 224,859

C) Total cash flows provided (used) by investing activities :

Investment in:

Fixed assets (655,777) (359,509)

Intangible assets and deferred charges (76,819) (52,514)

Proceeds from the sale of fixed assets 331,569 62,802

Change in financial receivables (854,060) (321,993)

Other (including effects of acquisitions and other changesin the composition of the scope of consolidation) (142,552) 58,127

Total (1,397,639) (613,087)

D)Total cash flows provided (used) by financing activities :

Increase in borrowings 914,174 —

Proceeds of borrowings — 64,125

Changes in short-term borrowings (39,639) 443,505

Dividends paid (64,100) (64,100)

Total 810,435 443,530

E) Total change in cash 238,875 55,302

F) Cash at December 31 1,051,709 812,834

The detail of cash is as follows :

(thousand euros)

Cash on hand 236,605 249,727

Temporary investment of liquidity 805,251 557,424

Securities 9,853 5,683

Total 1,051,709 812,834


Form and Content of the Consolidated Financial Statements

The 2000 consolidated financial statements have been prepared in accordance with the rules introduced by Italian

Legislative Decree No. 127 dated April 9, 1991, which fulfilled the Fourth and Seventh EC Directives. For

comparative purposes, 1999 figures also have been accordingly restated. Such reclassification has not determined

effects on the equity as of December 31, 1999 and on the consolidated result of the year then ended. Note that

the principles utilized for the preparation of the consolidated financial statements (Italian GAAP) may differ from

those adopted in the other countries.

The subsequent events described in the Report of Operations are an integral part of the Notes to the

consolidated financial statements.

The consolidated financial statements include the financial statements of Iveco NV, the Parent Company, and all

subsidiaries that constitute the Iveco Group, in which Iveco NV holds directly or indirectly more than 50% of the

voting capital or has de facto control. Also included are joint ventures in which the Parent Company holds control

directly or indirectly with other partners, consolidated using the proportional method.

Main changes from the previous year are summarized below :

- Acquisition of the residual stake of the Fraikin Group;

- Sale of Inmobiliaria Urbanitas, set up in 2000 through the demerger of Iveco Pegaso;

- Acquisition of 2H Energy;

- Acquisition of the parts activities of the Truck Line company by International Trucks of Australia;

- Consolidation of Ikarusbus and its subsidiary Ikarus Egyedi Autobusz.

Principles of consolidation and significant accounting policies

The consolidated financial statements have been prepared from the statutory financial statements of the Group’s

single companies or subconsolidated financial statements of certain subsidiaries approved by the Boards of

Directors and adjusted, where necessary, by the directors of the companies to conform with Fiat Group

accounting principles and to eliminate tax-driven adjustments. The Fiat Group’s accounting policy respects the

requirements set forth by Legislative Decree No. 127 of April 9, 1991, interpreted and supplemented by the Italian

accounting principles issued by the National Boards of Dottori Commercialisti and of Ragionieri and, where there

are none and not at variance, by those laid down by the International Accounting Standards Committee (I.A.S.C.).

In order to obtain a true and correct representation of the financial position and results of operations of the

Group, taking into account their functional integration, the financial subsidiaries have been consolidated on a

line-by-line basis. As a result, adjustments to the balance sheet and statement of operations format have been

made in applying Article 32 of Legislative Decree No. 127/91, which calls for changes to be made to obtain more

clear, true and correct representation of the financial position and results of operations.

Principles of consolidation

Assets and liabilities, and revenues and expenses, of subsidiaries consolidated on a line-by-line basis are

included in the consolidated financial statements, regardless of the percentage of ownership. Carrying values of

investments are eliminated against the subsidiaries’ related stockholders’ equity. The portion of stockholders’

equity and results of operations attributed to minority interests are disclosed separately.

In accordance with Legislative Decree No. 127, differences arising from the elimination of investments against the

related stockholders’ equity of the investments at the date of acquisition are allocated, where applicable, to assets

and liabilities of the company being consolidated. The residual value, if positive, is capitalized as an asset

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2000


“Differences on consolidation”, and is amortized on the straight-line method over the estimated period of

recoverability. Negative residual amounts are recorded as a component of stockholders’ equity “Consolidation

reserve” (or as a liability “Consolidation reserve for future risks and charges”, when due to a forecast of

unfavorable economic results).

Unrealized intercompany profits, losses, and related tax effects are eliminated, together with all intercompany

receivables, payables, revenues and expenses arising on transactions between consolidated companies which have

not been realized with third parties.

The gross margin on intercompany sales is eliminated, with the exception of plant and equipment produced and

sold at prices in line with market conditions, in which case such eliminations would be effectively irrelevant and

not cost-beneficial. Also subject to elimination are guarantees, commitments and risks relating to companies

included in the area of consolidation.

The balance sheets of foreign subsidiaries are translated into Euro by applying the exchange rates in effect at year

end.The statements of operations of foreign subsidiaries are translated using the average exchange rates, except

for those subsidiaries operating in high-inflation countries (cumulative inflation in excess of 100% in three years),

in which case accounting principles for high inflation accounting are used.

Exchange differences resulting from the translation of opening stockholders’ equity at current exchange rates and

at the exchange rates used at the end of the previous year, as well as differences between net income expressed

at average exchange rates and that expressed at current exchange rates, are reflected in the stockholders’ equity

caption “Foreign exchange translation differences”. Such reserves relating to investments in subsidiaries or

associated companies are included in the statement of operations upon the sale of the investments to third parties.

Accounting principles

Balance sheet

Fixed assets

Intangible fixed assets

Intangible assets and deferred charges expected to benefit future periods are recorded at cost, adjusted by

amortization calculated on a straight-line basis over the period to be benefited. In particular, goodwill and

differences on consolidation are amortized over a period of not more than 20 years, taking into account their

Major exchange rates versus Euro

2000 1999

Average End Average End

US Dollar per unit 0.924 0.931 1.065 1.005

Pound Sterling per unit 0.610 0.624 0.659 0.622

German Mark per unit 1.956 1.956 1.956 1.956

French Franc per unit 6.560 6.560 6.560 6.560

Italian Lira per unit 1,936.270 1,936.270 1,936.270 1,936.270

Spanish Peseta per unit 166.386 166.386 166.386 166.386

Netherlands Guilder per unit 2.204 2.204 2.204 2.204

Brasilian Real per unit 1.690 1.819 1.935 1.797

Argentine Peso per unit 0.924 0.929 1.065 1.004

Australian Dollar per unit 1.589 1.677 1.651 1.542

Swedish Krona per unit 8.446 8.831 8.806 8.563


expected period of recovery.The costs of researching and developing new products and/or processes are included

in the results of operations in the period in which such costs are incurred.

Goodwill represents the contractual amount paid for goodwill resulting from the acquisition of a company or investment.

Property, plant and equipment

Property, plant and equipment are recorded at purchase or construction cost. These values are adjusted where

specific laws of the country in which the assets are located allow or require revaluation, in order to reflect, even

if only partially, changes in the purchasing power of the currency. Cost also includes internal and external financing

expenses incurred up to the time the tangible assets are ready for use.

Depreciation is provided on a straight-line basis with rates that reflect the estimated useful life of the related

assets. Ordinary repairs and maintenance expenses related to property, plant and equipment are charged to the

statement of operations in the year in which they are incurred, while maintenance expenses which increase the

value of property, plant and equipment are capitalized.

Capital investment grants related to investments in property, plant and equipment are recorded as deferred

income when collection becomes certain and credited to income over the useful life of the related asset.

Financial fixed assets

Financial fixed assets include investments in unconsolidated subsidiaries, financial receivables held for investment

purposes and other securities.

Companies in which Iveco NV directly or indirectly holds 20% to 50% of the voting capital are valued in

accordance with the equity method or recorded at cost when it approximates the value of stockholders’ equity,

when it would not have been practicable to obtain the necessary information for their consolidation on a timely

basis without disproportionate expense or because their activities are not significant.

Less significant investments in which Iveco NV directly or indirectly holds less than 20% of the voting capital are

valued at cost, corresponding to the cost of acquisition increased by direct charges or any amounts paid for the

value of additional shares purchased. In cases of permanent impairment, a valuation allowance is provided as a

direct reduction of the corresponding asset.

Financial receivables are shown net of a specific or generic provisions and recorded at estimated realizable value.

Securities are recorded at cost, including additional direct charges. In cases of permanent impairment, a valuation

allowance is provided as a direct reduction of the securities.

The investment in equipment leased is recorded at cost.The related depreciation is generally calculated based on

the life of the lease and the related risk in managing such contracts.

Current assets

Inventories are valued at the lower of cost or market, cost being determined on a First In First Out (FIFO) basis.

The valuation of inventories includes the direct costs of materials and labor and variable and fixed indirect costs.

Work in progress on long-term contracts is valued based on the stage of completion and is recorded gross of

advance payments received from customers. Eventual losses on such contracts are fully recorded when they

become known. Provision is made for obsolete and slow-moving raw materials, finished goods, spare parts and

other supplies based on their expected future use and realizable value.

Receivables are recorded at estimated realizable value. Unearned interest included in the nominal value of

receivables has been deferred to future periods. Receivables denominated in foreign currency are translated at


the exchange rate in effect at year end. Resulting exchange gains and losses are included in the statement of

operations.

Reserves for risks and charges and employee severance indemnities

Provisions for risks and charges include all allowances relating to the covering, on an accrual basis, of the

contingent debts or losses originated by future events which are characterized by a determinate nature and an

existence which is certain or likely, but which amount or date of occurance can not be exactly stated.

The reserve for pensions and similar obligations include provisions for long-service bonuses determined on an

actuarial basis and payable to former employees under contractual agreements.

The reserve for employee severance indemnities includes the liability for severance indemnities for Italian

companies which is accrued at year end for each employee and determined in accordance with labour legislation.

In particular, the liability includes a portion of the employee’s annual salary and is indexed for inflation in

accordance with Italian rules.

Starting from year 2000, some costs relating to personnel have been booked, in compliance with the regulations

in force, on an accrual basis.

Payables

Payables are recorded at face value; the portion of interest included in the nominal amount is deferred until future

periods in which it is paid. Accounts payable denominated in foreign currency are translated at the exchange

rate in effect at year end. Resulting exchange gains and losses are included in the statement of operations.

Taxes payable includes the tax charge for the current year recorded in the statement of operations.

Accruals and deferrals

Accruals and deferrals are determined using the accrual method based on the income and expense to which they

relate.

Memorandum accounts

Off-balance sheet financial instruments

Financial instruments used to hedge exchange and interest rate fluctuations and, in general, changes in the assets

and liabilities, are presented in Note 14. Off-balance sheet financial instruments are recorded at inception in the

memorandum accounts at their nominal contract value. Instead, financial instruments used for trading purposes

are valued at year-end market value and the difference compared to the nominal contract value is recorded in

the statement of operations under Financial income and expenses.

Statement of Operations

Revenue recognition

Revenues from sales of products are recognized at the moment title passes to the customer, which is generally at

the time of shipment. Revenues from long-term contracts are recognized using the completed contract method.

47

Revenues also include amounts received from financing leases, net of depreciation, and income from company

assets on operating leases.

Costs

Costs are recognized on an accrual basis.

Research and development costs are charged to the statement of operations in the period in which they are

incurred. Research-related revenue grants provided by the Government or the EU are credited to the statement

of operations when collection becomes certain.

Advertising and promotion expenses are charged to the statement of operations in the period in which they are

incurred. Estimated product warranty costs are charged to the statement of operations at the time of sale

(accrual method).

Financial income and expenses

Income and expenses resulting from off-balance sheet financial instruments, as well as year-end exchange

differences, are included as financial income and expenses in the statement of operations in accordance with the

following policies.

Gains and losses relating to off-balance sheet financial instruments not designated as hedges are determined

based on the fair market value of such instruments and are included in the statement of operations.

For foreign exchange instruments designated as hedges, the premium or discount, representing the difference

between the spot exchange rate at the inception of the contract and the forward exchange rate, is included in

the statement of operations in accordance with the accrual method. Differences between the value of such

instruments using the exchange rates at inception and those at year-end are also included in the statement of

operations and offset the exchange effects of the items being hedged.

Costs relating to the factoring of receivables and notes of any type (with recourse, without recourse,

securitization) and nature (trade, financial, other) are charged to the statement of operations on an accrual basis.

Income taxes

Income taxes currently payable are provided for on the basis of reasonable estimates of the liability for

the year, in accordance with the existing legislation of the countries in which the Group operates.

Deferred tax liabilities or deferred tax assets are determined for the most significant consolidation transactions

and all the temporary differences between the consolidated assets and liabilities and the corresponding amounts

for purposes of taxation shown on the statutory financial statements of the consolidated companies.

In particular, deferred tax assets have only been recorded if there is a reasonable certainty of their future

recovery. Deferred tax liabilities, instead, are not recorded if it is unlikely that a future liability will arise.

Deferred tax assets and liabilities are offset if they refer to the same company. The balance from offsetting the

amounts is recorded in Other receivables in current assets, if a deferred tax asset, and in the Deferred tax

reserve, if a deferred tax liability.



(thousand euros) Net of Additions Amortization Disposals, Net ofamortization reclassifications amortization

12/31/1999 and other 12/31/2000

Start-up and expansion costs 18,734 18,583 3,325 (1,312) 32,680

Research, developmentand advertising expenses 242 — 65 (177) —

Industrial patentsand intellectual property rights 4,918 13,759 1,996 (5,514) 11,167

Concessions, licenses, trademarksand similar rights 44,594 16,143 27,993 17,748 50,491

Goodwill 13,262 9,535 3,186 (97) 19,515

Intangible assets in progressand advances 20,842 18,230 — (17,059) 22,013

Other intangible assets 10,960 569 2,217 (5,559) 3,753

Differences on consolidation 226,787 147,264 19,752 — 354,299

Total intangible fixed assets 340,339 224,083 58,534 (11,970) 493,918

The increase in 'Start-up and expansion costs' (18.6 million euros) is due to the start-up of the manufacturing

activities of Iveco Fiat Brasil and Iveco Mercosul.

Increase during the year in the items ‘Industrial patents and intellectual property rights' and 'Concessions,

licenses, trademarks and similar rights’ mainly concerns the acquisition and capitalisation of software

programmes to be used in Iveco processes.

The change in the item 'Goodwill' is mainly due to the acquisition of Seltra by the Fraikin Group.

Increases during the year in the item ‘Differences on consolidation’ mainly refer to 145 million euros arising

from the acquisition of the residual stake of Fraikin Group, and 2.2 million euros referring to the acquisition of

2H Energy.

COMPOSITION, PRINCIPAL CHANGES AND OTHER INFORMATION

Fixed assets

1. Intangible fixed assets


2. Property, plant and equipment

(thousand euros) Net of Addi- Depre- Change in Reclassifi- Foreign Disposals Net of Accumulateddepreciation tions ciation the scope of cations exchange and depreciation depreciation12/31/1999 consolidation effects other 12/31/2000 12/31/2000

Land and buildings 668,161 13,832 28,543 (29,891) 87,181 (5,247) (4,101) 701,392 436,590

Plant and machinery 675,094 73,122 97,350 7,041 14,995 4,760 (31,788) 645,874 1,149,356

Industrialand commercialequipment 185,050 63,782 51,913 2,972 9,119 348 (96) 209,262 541,597

Other assets 77,005 40,969 27,420 2,029 (37) (4) (7,887) 84,655 305,247

Vehicles onoperating leases 514,288 306,057 159,143 15,376 — (64) (227,395) 449,119 523,006

Constructionin progressand advances 185,591 158,015 — — (111,258) 4,584 (48,332) 188,600 —

Total property,plant and equipment 2,305,189 655,777 364,369 (2,473) — 4,377 (319,599) 2,278,902 2,955,796

A limited part of the tangible fixed assets were revalued in past year as described in the accounting policies.

The residual net book value of these revaluations at December 31, 2000 after depreciation and disposals

amounted to 112.0 million euros (119.7 million euros at 1999 year end). A fixed assets' revaluation booked in

Iveco Venezuela, which operates in hyperinflationary economy, has been reported in the item ‘Others’ for a total

amount of 0.4 million euros.

The change in the scope of consolidation of 30 million euros in item ‘Land & Buildings’ refers to the exclusion

of Inmobiliaria Urbanitas and the amount of 15 million euros in item ‘Vehicles on operating leases’ refers to the

inclusion of Seltra in the Fraikin Group.

Disposals of 227.4 million euros in the item ‘Vehicles on operating leases’ is mainly due to the securitization

of Fraikin, through which the invested capital has been reduced versus the development of innovative structured

leasing operations.

The increase in 'Construction in progress and advances' is essentially due to the significant investments made

by the Italian companies.

Reclassifications primarily refer to a reduction in construction in progress and advances for the purchase of

property, plant and equipment existing at the end of the prior year which were reclassified at the time they

were effectively acquired and put into operation.

The range of depreciation rates used is as follows :

Depreciation rates

Land and buildings 2.5% - 5%

Plant and machinery 5% - 10%

Industrial and commercial equipment 16% - 28%

Other assets 14% - 33%


3. Financial fixed assets

Investments

The movement in investments is as follows :

12/31/1999 Reclassific. Translation Dividends Share in result 12/31/2000and other differences received & valuation

adjustments

Unconsolidated subsidiaries 32,699 4,231 1,296 — (13,486) 24,740

Associated companies 81,612 (31,711) 2,024 — 6,038 57,963

Other companies 98,146 27,480 128 (3,981) (15,968) 105,805

Total investments 212,457 — 3,448 (3,981) (23,416) 188,508

The 1999 figures have been restated according to Legislative Decree 127/91; this restatement is shown

in the “Reclassifications”. The reclassification in the associated companies is mainly related to the

reclassification in the other companies of Truck & Bus Company; Iveco’s participation in the company

decreased from 25% in 1999 to 17.241% in 2000.

Investments are stated net of provisions for permanent impairment where considered necessary.

The detail of the share in result and dividends received is as follows :

(thousand euros) Dividends Sharereceived in result

Fidis 2,809 (11,122)

Otoyol Sanayi 3,342

Otoyol Pazarlama 1,241

Iveco Motorsich (2,804)

Iveco Kraz (10,680)

Ashok Leyland 1,332

Ennore Foundries 73

Other Companies 1,172 (4,798)

Total 3,981 (23,416)

The investment by type of consolidation method, are analysed as follows :

(thousand euros)

(thousand euros) 12/31/2000 12/31/1999

Investments accounted for using the equity method 126,228 173,748

Investments valued at cost 62,280 38,709

Total investments 188,508 212,457


(thousand euros)

% Amount

Unconsolidated subsidiaries :

Fias 80.— 82

Financière Pegaso France 100.— 169

F. Pegaso 100.— 1,278

Finomina 60.— 32

Iveco Kraz 58.— 11,393

Iveco Otomotive 99.973 3,418

Iveco Motorsich 55.556 4,913

Transolver Service GmbH 100.— 750

Transolver Lease GmbH 100.— 775

V.I.O. 100.— 945

Transolver Finance AG 100.— 985

Total 24,740

At 12/31/2000

(thousand euros)

% Amount

Associated subsidiaries :

Auto Distribution Illiberis 49.— 1,208

C.R.F. 20.— 2,582

C.S.S.T. 30.— 155

E.E.A. 33.333 8,000

Elettronica Trasporti 50.— 66

Fiat OM Carrelli 25.— 5,171

Gesco Fortrade 10.— 11

Haveco 33.333 8,727

Iveco Uralaz 33.333 1,131

Machen 30.— 10,642

Otoyol Pazarlama 27.— 1,823

Otoyol Sanayi 27.— 16,706

Vehiculos Industriales 20.— 1,170

Zona Franca Motor 20.— 571

Total 57,963

At 12/31/2000

As allowed by law, the above companies have not been consolidated either because they were acquired towards

the end of the year and it would not have been practicable to obtain the necessary information for their

consolidation in time or because their activities are not significant.

Investments in associated companies are as follows :

The detail of the unconsolidated investments is as follows:

52

At 12/31/1999

Receivables

(thousand euros)

Due within Due beyond Total Due within Due beyond Totalone year one year one year one year

Parent companies — 908 908 — — —

Unconsolidated subsidiaries — — — — — —

Others 12,348 13,753 26,101 12,201 9,461 21,662

Total receivables 12,348 14,661 27,009 12,201 9,461 21,662

At 12/31/1999At 12/31/2000

At 12/31/1999

Other securities mainly include marketable Government securities and bonds.

Assets leased consist of vehicles sold by the Iveco Sector under financial leases (Transolver companies).

Assets leased do not include vehicles on operating leases, which are included under property, plant

and equipment.

The increase is due to higher volumes of operations of the financial companies of the Group.

Assets leased

(thousand euros) Value at Additions Depreciation Foreign Disposals Net of Accumulated12/31/1999 exchange and other depreciation depreciation

effects 12/31/2000 12/31/2000

Assets leased 396,760 478,134 150,482 — (156,412) 568,000 244,623


At 12/31/2000

Other Securities

(thousand euros)

Bonds held as permanent investments 4,719 3,765

Investments in other companies are as follows :

(thousand euros)

Other companies :

Fidis 68,315 80,341

Truck & Bus Company 32,503 —

Others 4,987 17,805

Total 105,805 98,146

At 12/31/2000

53

4. Current assets

Net inventories of 1,555 million euros at December 31, 2000 show an increase of 50 million euros

compared to the prior year (1,505 million euros at December 31, 1999), the increase is split as follows:

- gross inventories increase of 72 million euros;

- allowance for inventory writedowns increase of 22 million euros.

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

Inventories

(thousand euros)

Gross Allowance Net Gross Allowance Net

Raw materials and supplies 411,120 (19,475) 391,645 358,305 (18,107) 340,198

Work in progressand semifinished products 210,597 (3,237) 207,360 187,225 (4,426) 182,799

Contract work in progress 1,787 — 1,787 1,350 — 1,350

Finished goodsand merchandise 850,537 (95,799) 754,738 880,824 (92,168) 788,656

Used stock 237,303 (42,329) 194,974 210,849 (23,902) 186,947

Advances to suppliers 4,577 — 4,577 4,715 — 4,715

Total inventories 1,715,921 (160,840) 1,555,081 1,643,268 (138,603) 1,504,665

At 12/31/1999At 12/31/2000

(thousand euros) At Use Foreign Change in the At 12/31/1999 and exchange scope of 12/31/2000

accruals effects consolidation

Allowance forinventory writedowns 138,602 21,668 (792) 1,362 160,840



5. Receivables

An analysis of receivables by due date is as follows :

(thousand euros)

Due Due Total Due Due Totalwithin beyond within beyond

one year one year one year one year

Third parties 956,790 3,179 959,969 1,223,744 4,117 1,227,861


Other companies 169,865 — 169,865 165,246 — 165,246

Total trade receivables 1,126,655 3,179 1,129,834 1,388,990 4,117 1,393,107

Other receivables from :

Employees 13,480 1,683 15,163 12,884 1,979 14,863

Tax authorities 156,027 124,996 281,023 165,400 106,031 271,431

Social security contributions 2,056 — 2,056 2,433 — 2,433

Others :Third parties 108,646 5,709 114,355 83,261 2,433 85,694

Others : Unconsolidated companies — — — — — —

Others :Associated companies 12 — 12 103 — 103

Others : Parent companies 61 — 61 3 — 3

Others : Other companies 7,756 674 8,430 11,106 4,841 15,947

Total other receivables 288,038 133,062 421,100 275,190 115,284 390,474

Total receivables 1,414,693 136,241 1,550,934 1,664,180 119,401 1,783,581

At 12/31/1999At 12/31/2000


(thousand euros) At Accruals Use and Change in At12/31/1999 other the scope of 12/31/2000

changes consolidation

Allowances for doubtful accounts 136,193 24,581 (46,664) 996 115,106

(thousand euros)

Trade Other Total Trade Other Total

Third parties 959,969 — 959,969 1,227,861 — 1,227,861


Other companies 169,865 — 169,865 165,246 — 165,246

Total trade receivables 1,129,834 — 1,129,834 1,393,107 — 1,393,107

Other receivables from:

Employees — 15,163 15,163 — 14,862 14,862

Tax authorities — 281,023 281,023 — 271,431 271,431

Social security contributions — 2,056 2,056 — 2,433 2,433

Others:Third parties — 114,355 114,355 — 85,694 85,694

Others: Unconsolidated companies — — — — — —

Others:Associated companies — 12 12 — 103 103

Others: Parent companies — 61 61 — 3 3

Others: Other companies — 8,430 8,430 — 15,948 15,948

Total other receivables — 421,100 421,100 — 390,474 390,474

Total receivables 1,129,834 421,100 1,550,934 1,393,107 390,474 1,783,581

Receivables are shown net of allowances for doubtful accounts of 115 million euros at December 31, 2000

(136 million euros at December 31, 1999).

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

Receivables from tax authorities principally refer to the Italian tax authorities for VAT and income taxes.

They also include the tax credit regarding the advance payments of income tax maturing on employee severance

indemnities paid by the Italian companies according to the Italian law: the related interest income receivable

referring to the current year is recorded in Financial income and expenses. Furthermore, they include the net

balance of deferred tax assets of 153 million euros (140 million euros at December 31, 1999), accounted for

according to the accounting principle covering the subject that was previously described. Additional information

on these assets is provided in reserve for risks and charges under Deferred income tax reserve.

The decrease in trade receivables is mainly due to the higher level of securitization programs implemented and

to the reduction of overdue accounts.

At 12/31/1999At 12/31/2000

An analysis of receivables by type is as follows :


(thousand euros)

Due Due Total Due Due Totalwithin beyond within beyond

one year one year one year one year

Third parties — — — — — —

Unconsolidated subsidiaries 448 — 448 — — —

Associated companies 29,879 — 29,879 29,887 — 29,887

Parent companies 44,551 — 44,551 9,408 — 9,408

Other companies 1,254,494 530,782 1,785,276 753,643 142,136 895,779

Total financial receivables 1,329,372 530,782 1,860,154 792,938 142,136 935,074

At 12/31/1999At 12/31/2000

Financial receivables amount to 1,860 million euros at December 31, 2000 (935 million euros at December

31,1999) and show an increase of 925 million euros mainly related to higher level of activity of Transolver

financial companies, to the financial receivables following on Inmobiliaria Urbanitas transactions and to the

temporary investments of liquidity on the Group Central Treasury. They are shown net of an allowance for

doubtful accounts of 16 million euros (14 million euros at December 31,1999). Movements in these allowance

accounts during the year were as follows:

6. Financial assets not held as fixed assets

Securities

The caption includes an amount of 9,853 million euros (5,683 million euros as of December 31, 1999)

of marketable securities held as temporary investment of liquidity.

Financial Receivables

(thousand euros) At Accruals Use and At12/31/1999 other 12/31/2000

changes

Allowances for doubtful accounts 14,391 2,167 (192) 16,366

Cash recorded in the financial statements at December 31, 2000 and 1999 is in line with the fair value

of the respective periods.

7. Cash

(thousand euros) At 12/31/2000 At 12/31/1999

Bank and post office accounts 233,265 247,839

Checks 814 290

Cash on hand 2,526 1,597

Total cash and cash equivalent 236,605 249,726


9. Stockholders’ equity

(thousand euros) Paid-up Share Accumulated Accumulated Totaland premium translation results and other

called-up reserve differences reserves, net incomecapital for the year

Balance at January 1, 1999 1,163,492 29,015 (264,935) 757,731 1,685,303

Translation differences — — 29,366 — 29,366

Other movements 15,948 (15,948) — 4,281 4,281

Profit for the year — — — 162,658 162,658

Dividend paid — — — ( 64,100) ( 64,100)

Balance at December 31, 1999 1,179,440 13,067 (235,569) 860,570 1,817,508

Translation differences — — 17,055 — 17,055

Other movements — — — (3,015) (3,015)

Profit for the year — — — 146,257 146,257

Dividend paid — — — (64,100) (64,100)

Balance at December 31, 2000 1,179,440 13,067 (218,514) 939,712 1,913,705

Share capital

At December 31, 2000 the authorized share capital amounted to 100,000,000 shares of 46.00 euros (Euro in

units) of which 25,640,000 were issued and fully paid up.

Accumulated translation differences

They represent the cumulative difference arising on the translation of the equity of the consolidated companies

whose financial statements were prepared in foreign currencies.

Accumulated results and other reserves

Other reserves include surpluses arising on the tangible fixed asset revaluations recorded in past years in Italy

and Spain under specific local laws and practices. The residual net book value of these surpluses is disclosed in

note 2. Under Italian law the surplus can be utilized to cover losses but in case of distribution it may attract the

taxation from which it was exempt on constitution.

8. Accrued income and prepaid expenses


Commercial accrued income

Accrued interest and commissions 5,307 4,473

Other 5,569 2,824

Total commercial accrued income 10,876 7,297

Commercial prepaid expenses

Interest 2,153 92

Other 16,721 29,300

Total commercial prepaid expenses 18,874 29,392

Financial accrued income 4,608 685

Financial prepaid expenses 1,381 903

Total accrued income and prepaid expenses 35,739 38,277


(thousand euros) Net equity Net profit Net equity Net profitAt 12/31/2000 2000 At 12/31/1999 1999

Statutory financial statements Iveco NV 2,307,207 124,211 2,184,829 138,361

Different valuation methodon tangible fixed assets (393,502) 22,046 (367,321) 24,297

Consolidated financial statements Iveco NV 1,913,705 146,257 1,817,508 162,658

The minority interest in stockholders’ equity refers to the following companies consolidated on a line-by-line basis :

Dividend

The Shareholders decided on December 7, 2000 to distribute an amount of 2.50 euros (Euro in units) per share as

interim dividend for the year 2000.This dividend amounting to 64.1 million euros, was paid on December 22, 2000.

Distributable results

The amount of accumulated net profit which is available for distribution is established in the official accounts of

Iveco NV, a copy of which is filed at the Amsterdam Chamber of Commerce.

The reconciliation to Stockholders’ equity and net income of the parent company Iveco NV is as follows :

Minority interest

(thousand euros) 2000 1999

Balance at January 1 139,093 10,697

Changes during the year :

Change in consolidation area (89,812) 110,932

Result of the year 341 17,464

Translation differences (1,262)

Capital increase 23,668

Dividends paid (1,075)

Other movements (830)

Balance at December 31 70,123 139,093

2000 1999% held by % held byminority minority

shareholders shareholders

Companies :

Amce, Ethiopia 30.00 30.00

Componentes Mecanicos, Spain 40.61 40.61

Iveco Eurofire (Holding), Germany 15.00 15.00

Lohr Magirus, Austria 19.25 19.25

Iveco Fiat Brasil, Brasil 50.00 50.00

Fraikin, France 0.00 40.16

Transolver Services, France 90.00 90.00

Ikarusbus, Hungary 23.47 n.c.

Rhein Main, Germany 35.00 n.c.


Income tax reserves

The Deferred income tax reserve at December 31, 2000 includes deferred tax liabilities, net of deferred tax

assets, which have been offset where possible, in reference to the individual companies in consolidation. The

Deferred income tax reserve, net of Deferred tax assets recorded under Other receivables from others, is

composed as follows :

10. Reserves for risks and charges

(thousand euros) At 12/31/2000 At 12/31/1999 Change

Reserve for pension and similar obligations 158,332 165,242 (6,910)

Income tax reserves

Current income tax reserve 12,474 7,588 4,886

Deferred income tax reserve 184,438 151,983 32,455

Total income tax reserves 196,912 159,571 37,341

Other reserves

Warranty reserve 164,043 186,763 (22,720)

Restructuring reserves 24,045 32,043 (7,998)

Buy back reserve 80,121 66,606 13,515

Various liabilities and risk reserves 188,977 182,724 6,253

Total other reserves 457,186 468,136 (10,950)

Total reserves for risks and charges 812,430 792,949 19,481

(thousand euros) At 12/31/2000 At 12/31/1999 Change

Deferred income tax reserve 184,438 151,983 32,455

Deferred tax assets (152,767) (140,197) (12,570)

Total 31,671 11,786 19,885

Deferred tax assets are included in Other receivables from tax authorities (see note 5).


The Deferred income tax reserve, net of Deferred tax assets recorded under Other receivables from others,

can be analyzed as follows :

The item 'Other' mainly includes the warranty reserve and other taxed provisions.

The Deferred tax reserve includes 94 million euros (75 million euros at December 31, 1999) of tax

benefits connected to tax loss carryforwards. Moreover, a further tax benefit connected to tax loss

carryforwards has not been recorded in the financial statements of the companies for 123 million euros

(138 million euros at December 31, 1999).

Other reserves

The various liabilities and risk reserves amount to 189 million euros at December 31, 2000 (183 million euros

at December 31, 1999) and represent the amounts set aside by individual companies of the Group principally in

connection with contractual and commercial risks and disputes.


Deferred tax liabilities for :

Accelerated depreciation 223,885 193,595

Deferred tax on gains 11,444 13,665

Capital investment grants 1,659 1,905

Other 58,581 58,052

Total deferred tax liabilities 295,569 267,217

Deferred tax assets for :

Reserves for risks and taxed charges 64,044 62,262

Inventories 23,974 18,312

Taxed allowance for doubtful accounts 16,344 16,263

Pension funds 3,765 3,525

Other 98,847 116,570

Total deferred tax assets 206,974 216,932

Theoretical tax benefit connectedto tax loss carryforwards 216,800 212,906

Adjustments for assets whose recoverability is uncertain(mainly tax loss carryforwards) (159,876) (174,407)

Total deferred income tax reserve, net of Deferred tax assets 31,671 11,786


11. Reserve for employee severance indemnities

12. Payables

Payables may be analyzed by due date as follows :

(thousand euros) At Accruals Use and Change in the At 12/31/1999 other scope of 12/31/2000

changes consolidation

Reserve for employeeseverance indemnities 244,482 40,239 (59,290) — 225,431

The total reserve for employee severance indemnities amounts to 225 million euros at December 31, 2000

(244 million euros at December 31, 1999) and reflects the severance indemnities accrued in favour of

employees at year-end by the companies in conformity with existing laws.

(thousand euros)

Due within Due beyond Of which Total Due within Due beyond Of which Totalone year one year due beyond one year one year due beyond

five years five years

Bonds 3,632 — — 3,632 194 — — 194

Borrowings from banks 356,653 85,516 42,831 442,169 464,990 140,123 — 605,113

Other financial payables 1,082,787 1,238,345 25,783 2,321,132 1,014,089 269,564 29,764 1,283,653

Advances 40,283 63 — 40,346 37,146 8,853 — 45,999

Trade payables 2,238,827 27,179 — 2,266,006 2,235,254 1,348 — 2,236,602

Notes payable 17,406 242 — 17,648 14,170 158 — 14,328

Payables to unconsolidatedsubsidiaries 141 — — 141 2,326 — — 2,326

Payables to associatedcompanies 4,016 — — 4,016 1,070 — — 1,070

Payables to parentcompanies 7,166 — — 7,166 238 — — 238

Taxes payable 145,519 8,015 — 153,534 194,258 6,100 — 200,358

Social security payable 56,531 1,110 — 57,641 56,450 1,038 — 57,488

Other payables 157,178 7,076 — 164,254 123,238 30 — 123,268

Total payables 4,110,139 1,367,546 68,614 5,477,685 4,143,423 427,214 29,764 4,570,637

At 12/31/1999At 12/31/2000


(thousand euros)

Trade Financial Other Total Trade Financial Other Total

Bonds — 3,632 — 3,632 — 194 — 194

Borrowings from banks — 442,169 — 442,169 — 605,113 — 605,113

Other financial payables — 2,321,132 — 2,321,132 — 1,283,653 — 1,283,653

Advances — — 40,346 40,346 — — 45,999 45,999

Trade payables 2,266,006 — — 2,266,006 2,236,602 — — 2,236,602

Notes payable 10,329 7,319 — 17,648 5,188 9,140 — 14,328

Payables to unconsolidated

subsidiaries — 141 — 141 — 2,326 — 2,326

Payables to associated

companies 3,020 — 996 4,016 295 — 775 1,070

Payables to parent

companies 36 — 7,130 7,166 232 — 6 238

Taxes payable — — 153,534 153,534 — — 200,358 200,358

Social security payable — — 57,641 57,641 — — 57,488 57,488

Other payables — — 164,254 164,254 — — 123,268 123,268

Total payables 2,279,391 2,774,393 423,901 5,477,685 2,242,317 1,900,426 427,894 4,570,637

At 12/31/1999At 12/31/2000

The increase in Payables (907 million euros) compared to December 31, 1999 is mainly due to the increase in

Financial payables of 878 million euros as a result of refinancing of the portfolio of the Transolver financial

companies.

The portion of medium and long-term financial payables due beyond one year amounts to 981 million

euros at December 31, 2000 (410 million euros at December 31, 1999).

The scheduled maturities are :

(thousand euros) 2002 2003 2004 2005 beyond 2005

Medium and long-term debtdue beyond one year 415,886 372,594 48,329 76,547 68,615

Payables may be analyzed by type as follows :


(thousand euros) Less than From 5% From 7.5% From 10% Greater Total

5% to 7.5% to 10% to 12.5% than 12.5%

Total 2000 mediumand long-term debt 297,307 1,023,810 — 18,050 1,586 1,340,753

Interest rates of medium and long-term debt, including the instalments expiring within the year, at

December 31, 2000 are as follows :

Financial accrued expenses include interest expense on financial payables for the part referring to the current

year and financial deferred income includes deferred interest income.

13. Accrued expenses and deferred income


Commercial accrued expenses

Accrued interest and commissions 27,102 7,649

Other 159,340 134,178

Total commercial accrued expenses 186,442 141,827

Commercial deferred income

Interest 2,426 10,712

Other 49,356 50,597

Total commercial deferred income 51,782 61,309

Financial accrued expenses 34,669 12,326

Financial deferred income 37,155 17,048

Total accrued expenses and deferred income 310,048 232,510


At December 31, 2000 Guarantees granted by the Iveco Group totaled 1,008 million euros (817 million euros

at December 31, 1999) the main increase (121 million euros) is due to receivables and bills discounted

by Iveco Group without recourse.

Other guarantees include commitments for receivables and bills discounted with recourse in the amount of

459.1 million euros (401.8 million euros at December 31, 1999). The volume of receivables discounted with

recourse in 2000 was 2,323.2 million euros (2,432.8 million euros in 1999).

Although not included in the memorandum accounts, receivables and bills discounted by the Group without

recourse having due dates beyond December 31, 2000 amounted to 1,273.4 million euros (in 1999,

936.7 million euros with due dates beyond December 31, 1999).

14. Memorandum accounts


Guarantees granted

Unsecured guarantees

Suretyships :

On behalf of unconsolidated subsidiaries

On behalf of associated companies

On behalf of others 220,095 187,586

Total suretyships 220,095 187,586

Guarantees of notes :


Total guarantees of notes 19,022 13,324

Other unsecured guarantees :




Total other unsecured guarantees 660,504 526,423

Total 899,621 727,333

Secured guarantees




Total secured guarantees 108,036 90,121

Total guarantees granted 1,007,657 817,454


Commitments

Commitments amounted to 1,527 million euros as December 31, 2000 (1,329 million euros at December

31,1999) and the increase is due to commitments to purchase property plant and equipment of Iveco SpA for

Foggia plant.

Commitments for buy back for the amount of 610 million euros as December 31, 2000 (634 million euros at

December 31, 1999) represent the repurchase value stipulated in the contract for vehicles sold under this kind

of sales scheme.

There are also some commitments for contracts to hedge foreign exchange risks of 429 million euros.

Such transactions, reflecting the notional principal amount, should not be subject to risks owing to

non-fulfillment by the counterparties insofar as the contracts are mainly entered into with Fiat Group's financial

companies and with several primary financial institutions. The contracts outstanding at December 31,

2000 will expire during 2001.The consolidated statement of operations includes the effects both of the contracts

that expired in 2000 and the accruals for the contracts expiring after December 31, 2000 as stated in the

accounting principles.

The Iveco Group’s financial policy attaches particular importance to the management and control of financial risks

in that they can significantly impact profits. The Group has adopted a series of guidelines regarding the

management of exchange rate and interest rate exposure.

The Group’s policy allows off-balance sheet financial instruments to be used only for managing exchange

and interest rate risks connected to monetary flows and assets and liabilities, and not for speculative purposes.

In 2000, foreign exchange risk management followed the aforementioned policy and maintained the character

of selectivity. The reduction in exchange exposure, substantially originating from the positive balance

between exports and imports, was based on the expected trend in exchange rates and the

need to hedge the exchange levels of reference without completely foregoing the benefits deriving from a

favorable trend in the rates.

Also this year, the management of exchange risks was again based principally on a combination

of currency options.


15.Value of Production

Revenues from sales and services and change in contract work in progress

Revenues from sales and services and change in contract work in progress amounted to 8,611 million euros in

2000 compared to 7,387 million euros in 1999. They include revenues from sales and services

of 8.610 million euros (7,386 million euros in 1999) and the change in contract work in progress of 0,3 million

euros (0,3 million euros in 1999).

Capital gains from the sale of fixed assets of 156 million euros (27 million euros in 1999) show an increase of

129 million euros compared to the prior year, of which 104 million euros are due to disposals regarding land

and building of Inmobiliaria Urbanitas. Other income includes sundry income and income which cannot be

classified as revenues from sales and services.

The caption includes royalties, refunds of customs and export duties, miscellaneous cost recoveries.


Italy 2,752,549 2,497,558

Europe (excluding Italy) 4,862,229 3,900,432

Mercosur + Central and South America 283,608 231,223

North America 10,400 3,785

Other areas 702,229 753,595

Total revenues from sales and servicesand change in contract work in progress 8,611,015 7,386,593

Other income and revenues


Revenue grants 6,074 4,795

Capital gains 156,368 27,007

Investment grants 3,225 4,659

Other income 279,155 133,690

Total other income and revenues 444,822 170,151

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


16. Cost of Production

The costs of production amount to 8.8 million euros (7.4 million euros in 1999), an increase of 19% compared to

1999.The main components of this item and the changes that occurred during the period can be described as follows:

Raw materials, supplies and merchandise

Raw materials, supplies and merchandise amount to 5.1 million euros, an increase of 16.3% compared to 1999.

Their increase is due to higher volumes.The total is equal to 59.58% of revenues (59.72% in 1999).

Services

Services amount to 1,221 million euros, an increase of 30.13% compared to 1999. This amount is equal to

14.18% of revenues (12.70% in 1999). Services include advertising costs, outside information technology and

telecommunication service costs, maintenance costs and transportation costs.

Personnel

Personnel costs consist of the following:

Personnel costs, which amount to 1.4 million euros in 2000, are equal to 15.78% of revenues

(17.06% in 1999). The decrease is principally due to improvements in efficiency and a reduction in the average

number of employees (-553 units) in 2000 compared to 1999.

An analysis of the average number of employees by category is provided as follows:

Companies Companies Total Companies Companies Totalconsolidated on consolidated by consolidated on consolidated by

a line-by-line proportional a line-by-line proportionalbasis method basis method

Average number of employees

Managers 410 32 442 434 25 459

White-collar 9,653 1,615 11,268 9,740 1,379 11,119

Blue-collar 21,004 3,413 24,417 21,916 3,185 25,101

Total 31,067 5,060 36,127 32,090 4,589 36,679

Number of emloyeesas of 12/31/2000 30,466 5,386 35,852 31,587 4,630 36,217

At 12/31/1999At 12/31/2000


Salaries and wages 1,016,045 924,863

Social security contributions 268,169 271,867

Employees severance indemnities 40,239 42,581

Employees pension and similar obligations 16,555 10,275

Other costs 18,018 10,486

Total personnel costs 1,359,026 1,260,072


Provisions for risks

Provisions for risks of 264 million euros in 2000 (210 million euros in 1999) mainly relate to other reserves

connected to industrial risks.

Further details on such caption are shown in the Balance Sheet section.

Dividends were mainly received from minority investment valued at costs.

Other financial income

The following analyses of “Other financial income” and “Interest and other financial expenses” present the

amounts shown in the related captions on the statement of operations and also the amounts of income and

expenses of the Group’s financial companies presented in the captions on the statement of operations under

“Revenues from sales and services” and “Interest and other expenses of Financial Services Companies”,

respectively. The last line in the table shows “other financial income” and “interest and other financial

expenses” as shown on the statement of operations, excluding the financial activities. The increase in financial

expenses is due to the higher average indebtedness and, to an increase in interest rates in the Euro area.

Other operating costs


Loss on sale of fixed assets 3,368 55,689

Indirect and other taxes 56,856 35,084

Sundry expenses 168,499 115,692

Total other operating costs 228,723 206,465

17. Financial income and expenses

Investment income


Dividends 109 122

Tax credit on dividends — —

Gain on sale of investments classified within current assets — —

Total investment income 109 122


Interest and other financial expenses


Other financial income from :

Receivables from others held as fixed assets 383 627

Securities held as fixed assets other than equity investments 25 26

Securities held as current assets other than equity investments 637 145

Other income from :

Unconsolidated subsidiaries — —

Associated companies — 63

Third companies — —

Others :

Bank and other interest 4,913 5,478

Customer interest and lease income 130,253 85,466

Discounts and other income 45,803 25,724

Income from off-balance sheet financial instruments 5,479 20,238

Foreign exchange gains, net 79,185 54,771

Total from others 265,633 191,677

Total other income 265,633 191,740

Total other financial income 266,678 192,538

of which :

Other income, excluding financial activities 200,530 156,016


Interest and other financial expenses :

Unconsolidated subsidiaries 4 1

Associated companies 12 236

Parent companies 39 —

Others :

Bond interest 23 —

Bank interest 13,173 13,288

Interest on trade and other payables 7,024 15,813

Interest on notes payable 241 —

Discounts and other expenses 138,615 39,757

Expenses from off-balance sheet financial instruments 33,484 65,584

Interest to other financial institutions 110,606 64,321

Loss on sale of securities — —

Foreign exchange losses, net 84,311 52,877

Total interest and other financial expenses - other 387,477 251,640

Total interest and other financial expenses 387,532 251,877

of which :

Interest and other financial expenses, excluding financial activities 345,109 235,676

70

Revaluations and writedowns of equity investments include the share of the net income and losses of

companies accounted for using the equity method.

The increase in writedown of equity investments is mainly due to the devaluation of the Fidis investment

to realizable value.


18. Adjustments to financial assets


Revaluations :

Equity investments 7,981 17,528

Financial fixed assets other than equity investments — —

Securities among current assets other than equity investments — —

Total revaluations 7,981 17,528

Writedowns :

Equity investments 14,362 904

Financial fixed assets other than equity investments 9 33

Securities among current assets other than equity investments — 5

Provisions for doubtful financial credits 35 1,248

Total writedowns 14,406 2,190

Total adjustments to financial assets (6,425) 15,338


The increase in other extraordinary expenses is mainly due to the accruals concerning labour cost.

Income taxes paid by the Iveco Group in 2000 approximately amounted to 107 million euros.

19. Extraordinary income and expenses


Extraordinary income

Gains on disposals of investments and other fixed assets 464 18

Other income :

Prior period income 442 27,460

Other income 26,531 43,645

Total other income 26,973 71,105

Total extraordinary income 27,437 71,123

Extraordinary expenses

Losses on disposals of investments and other fixed assets 4,693 748

Taxes related to prior years 1,269 63

Other expenses :

Extraordinary accruals 24,484 40,707

Other extraordinary expenses 54,264 13,869

Prior period expenses 4,142 86

Total other expenses 82,890 54,662

Total extraordinary expenses 88,852 55,473

Total extraordinary income and expenses (61,415) 15,650

20. Income taxes

Income taxes recorded in the consolidated statement of operations in 2000 and 1999 are as follows:


Current taxes :

IRAP 30,202 28,315

Other taxes 85,251 62,103

Current taxes 115,453 90,418

Deferred taxes 14,797 (7,994)

Total income taxes 130,250 82,424


The item 'Financial Companies' includes: Transolver companies, Fraikin Group and Iveco Participations.

21.Other information

Segment information - Business segments

Operating Services Elimin. TotalYear ended Companies and Financial Interco. GroupDecember 31, 2000 Companies

Revenues 12,917.9 598.5 (4,905.4) 8,611.0

Segment result

Operating profit 434.4 54.8 — 489.2

Financial cost (113.5) (31.0) — (144.5)

Share results non-cons. invest. (6.4) — — (6.4)

Profit from ordinary activities 314.5 23.8 — 338.3

Extraordinary item (61.4) (0.1) — (61.5)

Profit before tax 253.1 23.7 — 276.8

Tax (117.7) (12.5) — (130.2)

Income before minority interest 135.4 11.2 — 146.6

Minority interest 1.1 (1.4) — (0.3)

Net income 136.4 9.8 — 146.2

Total consolidated assets 11,509.8 2,719.5 (5,419.9) 8,809.4

Total consolidated liabilities 6,491.7 2,108.0 (1,729.1) 6,870.6

Equity 5,018.1 611.5 (3,690.8) 1,983.8

Capital expenditure 336.7 319.1 — 655.8

Depreciation 205.2 159.2 — 364.4

Amortization 54.7 3.8 — 58.5

(million euros)

73

Operating Services Elimin. TotalYear ended Companies and Financial Interco. GroupDecember 31, 1999 Companies

Revenues 11,594.0 228,1 (4,435.8) 7,386,3

Segment result

Operating profit 300.7 10.4 — 311.1

Financial cost (76,2) (3.3) — (79.5)

Share results non-cons. invest. 8.0 7.3 — 15.3

Profit from ordinary activities 232.5 14.4 — 246.9

Extraordinary item (11.8) 27.4 — 15.6

Profit before tax 220.7 41.8 — 262.5

Tax (67.4) (15.0) — (82.4)

Income before minority interest 153.3 26.8 — 180.1

Minority interest 0.8 (18.3) — (17.5)

Net income 154.1 8.5 — 162.6

Total consolidated assets 10,684.8 1,799.5 (4,687.1) 7,797.2

Total consolidated liabilities 5,967.0 1,528.7 (1,655.1) 5,840.6

Equity 4,717.8 270.8 (3,032.0) 1,956.6

Capital expenditure 293.9 65.1 — 359.0

Depreciation 182.5 38.2 — 220.7

Amortization 27.3 5.2 — 32.5


(million euros)


REPORT OF THE INDIPENDENT AUDITORS


TEN-YEAR HIGHLIGHTS (*)

2000 1999 1998 1997 1996 1995 1994 1993 1992 1991

Commercial data

Sales of trucks, buses and special vehicles (units) 164,776 149,903 136,824 124,162 119,697 124,835 101,217 90,830 115,433 122,276

Engines production (units) 457,745 404,917 363,089 292,268 274,438 330,169 244,174 206,333 247,694 268,713

Western European truck marketshare GVW >= 3.5 tonnes (%) 17.8 16.6 17.0 18.4 20.0 19.1 19.8 20.1 19.4 20.0

Financial data (millions euros)

Net sales 8,610.7 7,386.2 6,649.5 5,913.8 5,324.7 4,954.5 4,310.0 3,828.3 5,143.1 5,556.3

Operating income 489.1 311.1 261.5 204.2 154.7 247.8 139.2 (159.7) (104.3) (28.6)

Net profit 146.2 162.7 200.5 176.4 124.5 190.5 14.1 (268.5) (47.0) (56.3)

Cash flow (net profit plus depreciation and amortisation) 569.2 415.8 376.4 378.2 324.8 363.4 202.1 (62.9) 208.4 258.5

Tangible fixed assets as at December 31 2,278.9 2,305.2 1,541.3 1,465.8 1,423.0 1,300.8 1,369.8 1,530.7 1,657.3 1,904.5

Net financial resources (indebtedness) as at December 31 (222.6) (402.2) (67.8) 194.4 (54.0) 44.2 (236.5) (822.2) (686.9) (406.7)

Group Shareholders' equity as at December 31 1,913.7 1,817.5 1,685.8 1,626.2 1,496.3 1,362.9 1,197.2 874.7 1,216.4 1,363.9

Ratios (%)

Operating income / Net sales 5.7 4.2 3.9 3.5 2.9 5.0 3.2 (4.2) (2.0) (0.5)

Net profit / Net sales 1.7 2.2 3.0 3.0 2.3 3.8 0.3 (7.0) (0.9) (1.0)

Cash flow / Net sales 6.6 5.6 5.7 6.4 6.1 7.3 4.7 (1.6) 4.1 4.7

Other data

Gross additions to tangible fixed assets (million euros) 655.8 359.5 306.7 268.5 243.5 148.5 112.7 159.7 276.7 415.6

of which: under operating leases(millions euros) 306.1 60.7 12.4 — — — — — — —

Gross additions / Net sales (%) 7.6 4.9 4.6 4.5 4.6 3.0 2.6 4.2 5.4 7.5

Research and development expenses (million euros) 226.5 214.6 200.5 188.3 189.6 153.5 136.8 164.8 215.0 250.2

Research and development expenses / Net sales (%) 2.6 2.9 3.0 3.2 3.6 3.1 3.2 4.3 4.2 4.5

Number of employees as at December 31 35,852 36,217 31,912 32,074 32,448 33,390 31,510 33,715 37,073 41,320

(*) All figures referring to 1997 and previous years have been calculated using the official exchange rate as at

December 31, 1998: 1 Euro equal to 2.204 Netherlands Guilder


Companies consolidated on a line-by-line basis

Registered Capital % of Interest % Name office Country stock Currency Group held interest

consolid. by held

Iveco NV Amsterdam Netherlands1,179,440,000,00 EURO 100.000 IHF-Int.-Hold. Fiat SA 55.285Fiat SpA 44.715

2H Energy Fecamp France 12,500,000.00 FRF 100.000 Iveco Aifo SpA 100.000

Amce - Automotive Manuf. Co. Ethiopia Addis Ababa Ethiopia 3,000,000.00 ETB 70.000 Iveco NV 70.000

AR.V.I.S. SAS Trappes France 7,500,000.00 FRF 100.000 Iveco France SA 99.500Iveco NV 0.500

Astra VI SpA Piacenza Italy 10,400.000.00 EURO 100.000 Iveco SpA 100.000

Bedrijswagen Service Nijmegen BV Nijmegen Netherlands 100,000.00 NLG 100.000 Iveco Nederland BV 100.000

Brandschutztechnik Gorlitz GmbH Gorlitz Germany 1,000.000.00 DEM 74.800 Iveco Magirus Brand. GmbH 88.000

BV Rimij Apeldoorn Netherlands 10,000.00 NLG 100.000 Iveco Nederland BV 100.000

Camiva SA Saint-Alban-Leysse France 12,263,400.00 FRF 84.970 Iveco Eurofire (Holding) GmbH 99.963

CBW Grundstucksver. GmbH ODS KG Ulm Germany 10,000.00 DEM 100.000 Iveco Investitions GmbH 95.000Iveco NV 5.000

Componentes Mecanicos SA Barcelone Spain 37,405,038.00 EURO 59.387 Iveco Pegaso SA 59.387

Effe Grundbesitz GmbH Ulm Germany 20,000,000.00 DEM 100.000 Iveco Investitions GmbH 90.000Iveco NV 10.000

Equip' Lev Srl Antibes France 330,000.00 FRF 99.940 Lev SA 100.000

Euromoteurs SA Garchizy France 6,000,000.00 FRF 100.000 Iveco France SA 100.000

Fiat Capital Corporation New Castle United States 0.10 USD 100.000 Iveco Trucks of NA Inc. 100.000

FL Maintenance Société Anonyme La Courneuve France 250,000.00 FRF 99.940 Locamion Société Anonyme 100.000

Fraikin Alquiler de Vehiculos SA Barcelone Spain 1,803,000.00 EURO 100.000 Fraikin Société Anonyme 100.000

Fraikin Belgium Société Anonyme Bruxelles Belgium 120,000,000.00 FRB 100.000 Fraikin Société Anonyme 100.000

Fraikin Belgium Truck Renting Société Anonyme Bruxelles Belgium 365,000,000.00 FRB 99.940 Locamion Société Anonyme 99.997Fraikin Société Anonyme 0.003

Fraikin Limited Langley Great Britain 2,710,000.00 GBP 100.000 Fraikin Société Anonyme 100.000

Fraikin Locatime Société Anonyme Paris France 22,338,000.00 FRF 100.000 Fraikin Société Anonyme 100.000

Fraikin Location Société Anonyme Paris France 134,000,000.00 FRF 100.000 Fraikin Société Anonyme 100.000

Fraikin - Lux SA Walferdange Luxembourg 5,375,000.00 LUF 100.000 Fraikin Société Anonyme 97.303Fraikin Belgium Truck Renting SA 2.697

Fraikin SA (Suisse) Romont Switzerland 1,000,000.00 FRS 100.000 Fraikin Société Anonyme 100.000

Fraikin Société Anonyme Cannes France 285,757,960.00 FRF 100.000 Iveco Participations SA 100.000

IAV Industrie-Anlagen-Verpachtung GmbH Ulm Germany 50,000.00 DEM 100.000 Iveco Investitions GmbH 95.000Iveco NV 5.000

Immobilière Fraikin Société Anonyme Cannes France 28,967,000.00 FRF 100.000 Fraikin Société Anonyme 100.000

Ind.Vehic. Center Brabant/Antwerpen NV St. Pieters Leeuw Belgium 37,380,000.00 BEF 100.000 Iveco Belgium SA/NV 99.732Iveco Nederland BV 0.268Iveco Nederland BV 0.238

Ind.Vehic. Center Hainaut SA Charleroi Belgium 42,000,000.00 BEF 100.000 Iveco Belgium SA/NV 99.762Iveco Nederland BV 0.238

International Trucks Australia Ltd Dandenong Australia 37,492,260.00 AUD 100.000 Iveco NV 100.000

THE COMPANIES IN THE IVECO GROUP

T H E C O M P A N I E S I N T H E I V E C O G R O U P 77

Interoto France Location GEIE Paris France — — — Locamion Société Anonyme 25.000Fraikin Location Société Anonyme 25.000Fraikin Locatime Société Anonyme 25.000

Lev Société Anonyme 25.000

IVC Nutzfahrzeuge AG Hendschiken Switzerland 3,500,000.00 CHF 100.000 Iveco (Schweiz) AG 100.000

IVC Salzburg Ntz. GmbH Eugendorf Austria 500,000.00 ATS 100.000 Iveco Austria GmbH 100.000

IVC Vehicules industriels SA Morges Switzerland 1,200,000.00 CHF 100.000 Iveco (Schweiz) AG 100.000

IVC - Wien Ntz. GmbH Wien Austria 500,000.00 ATS 100.000 Iveco Austria GmbH 100.000

Iveco Aifo SpA Milan Italy 10,000,000,000.00 LIT 100.000 Iveco SpA 100.000

Iveco Argentina SA Cordoba Argentina 26,700,000.00 ARS 100.000 Iveco SpA 99.999Iveco NV 0.001

Iveco Austria GmbH Wien Austria 85,000,000.00 ATS 100.000 Iveco NV 100.000

Iveco Danmark A/S Kastrup Denmark 500,000.00 DKK 100.000 Iveco NV 100.000

Iveco Eurofire (Holding) GmbH Weisweil Germany 60,194,300.00 DEM 85.000 Iveco Magirus AG 75.032Iveco SpA 9.968

Iveco Fiat Brasil Ltda Sete Lagoas Brazil 110,100,000.00 BRL 50.000 Iveco SpA 47.800Iveco Mercosul Ltda 2.200

Iveco Finance Luxembourg SA Luxembourg Luxembourg 12,252,065.83 EURO 100.000 Iveco NV 100.000

Iveco Finland OY Espoo Finland 1,000,000.00 FIM 100.000 Iveco NV 100.000

Iveco Ford Truck Ltd *Watford Great Britain 117,000,000.00 GBP 84.820 Iveco UK Ltd 84.821

Iveco Ford Truck Pension Trustee Ltd Watford Great Britain 2.00 GBP 76.000 Iveco Ford Truck Ltd 50.000Iveco UK Ltd 50.000

Iveco France SA Trappes France 615,000,000.00 FRF 100.000 Iveco NV 51.220Iveco SpA 48.780

Iveco Investitions GmbH Ulm Germany 5,000,000.00 DEM 100.000 Iveco Magirus AG 99.020Iveco NV 0.980

Iveco LKW-Zentrum Sachsen GmbH Dresda Germany 2,000,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Magirus AG Ulm Germany 492,000,000.00 DEM 100.000 Iveco NV 51.341Iveco SpA 48.659

Iveco Magirus Brandschutztechnik GmbH Ulm Germany 12,700,000.00 DEM 85.000 Iveco Eurofire (Holding) GmbH 99.998Iveco NV 0.002

Iveco Mercosul Ltda Sao Paulo Brazil 149,800,000.00 BRL 100.000 Iveco SpA 99.999Iveco NV 0.001

Iveco Mezzi Speciali SpA Brescia Italy 3,120,000.00 EURO 85.000 Iveco Eurofire (Holding) GmbH 100.000

Iveco Motorenforschung AG Arbon Switzerland 4,600,000.00 CHF 100.000 Iveco SpA 60.000Iveco France SA 40.000

Iveco Nederland BV Amersfoort Netherlands 10,000,000.00 NLG 100.000 Iveco NV 100.000

Iveco Nord Ntz. GmbH Hambourg Germany 1,600,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Ntz. GmbH Berlin-Brandeburg Berlin Germany 2,150,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Ntz. GmbH Hannover - Braunschweig Hannover Germany 1,550,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Ntz. Nord - West GmbH Dortmund-Wambel Germany 2,650,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Nordbayern Ntz. GmbH Nurnberg Germany 1,450,000.00 DEM 100.000 Iveco Magirus AG 100.000


consolid. by held


Iveco Norge AS Voyenenga Norway 500,000.00 NOK 100.000 Iveco NV 100.000

Iveco Participations SA Trappes France 250,000,000.00 EURO 100.000 Iveco SpA 80.000Iveco NV 20.000

Iveco Pegaso SL Madrid Spain 105,213,628.00 EURO 100.000 Iveco NV 100.000

Iveco Plan SA Buenos Aires Argentina 153,000.00 ARS 100.000 Iveco Argentina SA 99.600Iveco NV 0.400

Iveco Poland Ltd. Warsaw Poland 13,866,350.00 PLN 100.000 Iveco NV 100.000

Iveco Portugal Ltda Villa Franca de Xira Portugal 15,961,532.71 EURO 100.000 Iveco NV 99.999Iveco SpA 0.001

Iveco Rhein - Ruhr Ntz. GmbH Dusseldorf Germany 1,500,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco Rhein - Sieg Ntz. GmbH Koln Germany 1,750,000.00 DEM 100.000 Iveco Magirus AG 100.000

Iveco (Schweiz) AG Kloten Switzerland 9,000,000.00 CHF 100.000 Iveco NV 100.000

Iveco South Africa Ltd Wadeville South Africa 15,000,300.00 SAR 100.000 Iveco NV 100.000

Iveco SpA Turin Italy 322,400,000.00 EURO 100.000 Iveco NV 100.000

Iveco Sud-West Ntz. GmbH Mannheim-Neckarau Germany 1,533,900.00 EURO 100.000 Iveco Magirus AG 100.000

Iveco Sweden A/B Arlov Sweden 600,000.00 SEK 100.000 Iveco NV 100.000

Iveco Trucks of North America Inc Wilmington United States 1.00 USD 100.000 Iveco NV 100.000

Iveco (UK) Ltd Watford Great Britain 47,000,000.00 GBP 100.000 Iveco NV 67.723Iveco SpA 32.277

Iveco Venezuela CA La Victoria Venezuela 2,495,691,000.00 VEB 100.000 Iveco NV 100.000

Lev Société Anonyme Paris France 57,282,300.00 FRF 99.940 Locamion Société Anonyme 100.000

Locamion Société Anonyme Paris France 68,125,400.00 FRF 99.940 Fraikin Société Anonyme 99.940

Loca-Pel Srl Antibes France 495,000.00 FRF 99.940 Lev SA 100.000

Loca-Service Srl Antibes France 1,000,000.00 FRF 99.940 Loca-Pel Srl 100.000

Lohr-Magirus Feuerwehrtechnik GmbH Lassnitzhohe Austria 17,500,000.00 ATS 80.750 Iveco Magirus Brand. GmbH 95.000

Lyon Vehicules Industriels SAS Saint Priest France 6,000,000.00 FRF 100.000 Iveco France SA 99.999

Officine Brennero SpA Trento Italy 6,000,000,000.00 LIT 100.000 Iveco NV 100.000

Rhein-Main Ntz.GmbH Reichold & Partner Frankfurt Germany 1,800,000.00 DEM 65.000 Iveco Magirus AG 65.000

SA Iveco Belgium /NV Zellik Belgium 6,000,000.00 EURO 100.000 Iveco NV 99.950Iveco SpA 0.050

SCI La Mediterraneenne Vitrolles France 1,600,000.00 FRF 100.000 Soc.Dif.Veh.Ind.SDVI SA 50.000Iveco France SA 50.000

Seddon Atkinson Spares & Services Ltd Oldham Great Britain 20,000.00 GBP 100.000 Seddon Atkinson Vehicles 100.000

Seddon Atkinson Vehicles Ltd Oldham Great Britain 41,700,000.00 GBP 100.000 Iveco UK Ltd 100.000

SELTRA Bezons France 4,241,824.00 FRF 100.000 Fraikin Société Anonyme 100.000

Service Lorrain VI SAS Ludres France 4,600,000.00 FRF 100.000 Iveco France SA 99.500Iveco NV 0.500

Sicca SpA Modena Italy 5,300,000.00 EURO 100.000 Iveco SpA 100.000


consolid. by held



consolid. by held

SIMIS Société Anonyme Saint-Alban-Leysse France 259,560.00 FRF 83.270 Camiva SA 98.000

Société Civile Immobilière Cles Amiens France 210,000.00 FRF 100.000 Immobilière Fraikin SA 99.905Fraikin Société Anonyme 0.095

Société Civile Immobilière Des Cars Bleus Paris France 600,000.00 FRF 99.940 Locamion Société Anonyme 99.833Immobilière Fraikin SA 0.167

Société Civile Immobilière Les Boussenot Paris France 230,400.00 FRF 99.940 Locamion Société Anonyme 99.957Immobilière Fraikin Société Anonyme 0.043

Société Civile "La Vitrollaise" Paris France 4,000.00 FRF 100.000 Immobilière Fraikin Société Anonyme 97.500Fraikin Société Anonyme 2.500

Société de la Seoune SA Trappes France 300,000.00 FRF 100.000 Iveco France SA 100.000

Société Diffusion Vehicules Industriels SA Trappes France 46,200,000.00 FRF 100.000 Iveco France SA 100.000

Sodima SA Haunconcourt France 2,000,000.00 FRF 100.000 Iveco France SA 100.000

Stevi SA S.Priest en Jarez France 3,300,000.00 FRF 100.000 Iveco France SA 100.000

Transolver Finance GmbH Ulm Germany 35,000,000.00 EURO 100.000 Iveco Magirus AG 100.000

Transolver Fin. Services Ltd Watford Great Britain 100.00 GBP 100.000 Iveco UK Ltd 100.000

Transolver Finance SA Trappes France 100,000,000.00 FRF 100.000 Iveco Finance Luxembourg SA 100.000

Transolver Finance SpA Turin Italy 20,000,000.00 EURO 100.000 Iveco SpA 100.000

Transolver Operational Services Ltd Watford Great Britain 1,400,000.00 GBP 100.000 Iveco UK Ltd 50.000Transolver Fin. Serv. Ltd 50.000

Transolver Service SA Trappes France 250,000.00 FRF 10.000 Fiat France SA 90.000Iveco France SA 10.000

Transolver Service SA Madrid Spain 610,000.00 EURO 100.000 Iveco Pegaso SL 100.000

Transolver Service SpA Turin Italy 3,900,000,000.00 LIT 100.000 Iveco SpA 100.000

Trucksure Services Ltd Watford Great Britain 900,000.00 GBP 100.000 Iveco UK Ltd 100.000

UVIF SAS La Garenne France 7,000,000.00 FRF 100.000 Iveco France SA 99.999Iveco NV 0.001

Var Mat Srl La Farlede France 50,000.00 FRF 99.940 Loca-Pel Srl 100.000

Vehic. Ind. Phoceens SAS Vitrolles France 6,100,000.00 FRF 100.000 Iveco France SA 99.999Iveco NV 0.001

Companies valued by equity method

Altra SpA Genoa Italy 516,400.00 EURO 33.340 Irisbus Italia SpA 66.670

Ashok Leyland Ltd Madras India 1,189,500,000.00 RUPIA 15.280 LRLIH Ltd 50.935

Auto Distr. Hilliberis SA Peligros Spain 461,290,000.00 ESP 49.000 Iveco Pegaso SL 49.000

Ennore Foundries Ltd Madras India 67,899,000.00 RUPIA 20.911 LRLIH Ltd 59.090

Fiat GRA.DE EEIG Watford Great Britain — — 24.000 Iveco NV 24.000

F. Pegaso SA Madrid Spain 933,045.20 EURO 100.000 Iveco Pegaso SL 100.000

Fidis SpA Turin Italy 430,400,000.00 EURO 7.537 Iveco SpA 7.537

Financière Pegaso France SA Trappes France 1,716,000.00 FRF 100.000 Iveco Pegaso SL 100.000

GEIE V.IV.RE Paris France — — 50.000 Iveco SpA 50.000



consolid. by held

Haveco Ltd Zhajiang Rep. of China 200,010,000.00 CNY 33.330 Iveco SpA 33.333

Iveco - Kraz Inc Kremenchuk Ukraine 71,040,000.00 UAH 58.000 Iveco SpA 58.000

Iveco - Motor Sich Inc Zaporozhye Ukraine 26,568,000.00 UAH 55.560 Iveco SpA 55.556

Iveco SPRL **Kinshasa Rep. of Congo 340,235,000.00 ZRN 100.000 Iveco NV 100.000

Iveco Uralaz Ltd Miass Russia 65,255,056.00 RUR 33.330 Iveco SpA 33.333

LRLIH Ltd London Great Britain 76,075,000.00 GBP 30.000 Machen-Iveco Holding SA 100.000

Machen-Iveco Holding SA Luxembourg Luxembourg 26,000,000.00 GBP 30.000 Iveco SpA 30.000

Otoyol Pazarlama AS Kartal/Istanbul Turkey 600,000,000,000.00 TRL 27.000 Iveco SpA 27.000

Otoyol Sanayi AS Kartal/Istanbul Turkey 4,000,000,000,000.00 TRL 27.000 Iveco SpA 27.000

V.IVE.RE GEIE Turin Italy — — 50.000 Iveco SpA 50.000

Companies valued at cost

Atlas Vehicules Ind. SA Casablanca Marocco 13,400,000.00 MAD 25.000 Iveco NV 24.999Iveco SpA 0.001

CONSAF - Consorzio Svil.Az. Fornitrici Torino Italy 210,000,000.00 LIT 23.810 Iveco SpA 23.81

Consorzio Coforma Turin Italy 100,000,000.00 LIT 50.000 Iveco SpA 50.000

Consorzio Fiat Media Center Turin Italy 275,000,000.00 LIT 5.952 Iveco SpA 2.381Astra VI SpA 2.381

Irisbus Italia SpA 2.381

Consorzio Iveco Fiat - Oto Melara Rome Italy 100,000,000.00 LIT 50.000 Iveco SpA 50.000

CSST SpA Turin Italy1,000,000,000.00 LIT 30.000 Iveco SpA 30.000

Elettr.Trasp. Comm. Srl Turin Italy 210,000,000.00 LIT 50.000 Iveco SpA 50.000

European Engine Alliance Srl Turin Italy 24,000,000.00 EURO 33.330 Iveco SpA 33.330

European Engine Alliance EEIG Maidenhead Great Britain — — 33.330 Iveco SpA 33.330

Fias Fiat Administration und Service GmbH Ulm Germany 200,000.00 DM 80.000 Iveco Magirus AG 80.000

Fiat OM-Carr. Elev. SpA Lainate Italy 38,438,000,000.00 LIT 25.000 Iveco SpA 25.000

Finomina Servicios de Personal SL Madrid Spain 8,000,000.00 ESP 60.000 Iveco Pegaso SL 60.000

IKAMCO Teheran Iran 25,000,000,000.00 RIALS 0.220 Iveco SpA 0.220

Iran Magirus-Deutz **Teheran Iran 180,000,000.00 IRR 100.000 Iveco Magirus AG 100.000

Irisbus Australia Pty Ltd Brisbane Australia 825,000.00 AU$ 30.000 Irisbus Holding SL 60.000

Irisbus North America LLC Dover United States 20,000.00 US$ 50.000 Irisbus France SA 50.000

Iveco Colombia Ltda S.ta Fè di Bogotà Colombia 43,478,000.00 PESO COL. 99.530 Iveco Venezuela 99.530

Iveco Hong Kong Ltd Hong Kong Rep. of China 1,000.00 HK$ 100.000 Iveco NV 100.000

Iveco Otomotiv AS Nisantasi Turkey1,957,763,000,000.00 TRL 99.993 Iveco SpA 99.993

Orione Cons. Ind.le per la Sicur. e la Vigil. Turin Italy 50,500,000.00 LIT 0.990 Iveco SpA 0.990


Sirio Consorzio per la Sicurezza Industriale Turin Italy 106,552,000.00 LIT 11.239 Iveco SpA 9.385Irisbus Italia SpA 1.313

Iveco Aifo 0.469Iveco Mezzi Speciali SpA 0.093

Sicca SpA 0.469Astra VI SpA 0.187

Transolver Finance AG Kloten Switzerland 1,500,000.00 CHF 100.000 Iveco Schweiz 100.000

Transolver Lease GmbH Ulm Germany 775,000.00 EURO 100.000 Iveco Magirus AG 100.000

Transolver Services GmbH Unterschliessheim Germany 750,000.00 EURO 100.000 Iveco Magirus AG 100.000

Trucks & Bus Company Tajoura Libya 87,000,000.00 LYD 17.241 Iveco SpA 17.241

Vehiculos Industriales SA Lampa Chile 2,299,760,525.00 CLP 20.000 Iveco Pegaso SL 20.000

V. Ind. Occitans SAS Trappes France 6,200,000.00 FRF 100.000 Iveco France SA 99.998Iveco NV 0.002

Zastava-Kamioni DOO **Kragujevac Serbia 1,234,433,600.00 DIN 46.500 Iveco SpA 46.500

Zona Franca Alari Sepauto SA Barcellona Spain 520,560.00 EURO 20.000 Iveco Pegaso SL 10.373

Companies consolidated by proportional method

Heuliez Bus SA Mauleon France 25,000,000.00 FRF 47.160 Société Charolaise SA 98.930

Ikarusbus Jamugyarto RT Szekesfehervar Hungary 6,375,100,000.00 HUF 38.270 Irisbus Holding SL 76.531

Ikarus Egyedi Autobusz Gy Budapest Hungary 350,000,000.00 HUF 26.060 Ikarusbus Jamugyarto RT 68.114

Irisbus Deutschland GmbH Mainz Germany 7,500,000.00 EURO 50.000 Irisbus Holding SL 100.000

Irisbus France SA Venissieux Francia 934,622,600.00 FRF 50.000 Irisbus Holding SL 100.000

Irisbus Holding SL Madrid Spain 233,670,000.00 EURO 50.000 Iveco SpA 30.403Iveco NV 19.597

Irisbus Iberica SL Madrid Spain 28,930,787.75 EURO 50.000 Irisbus Holding SL 100.000

Irisbus Italia SpA Turin Italy 100,635,750 EURO 50.000 Irisbus Holding SL 100.000

Irisbus (UK) Ltd Watford Great Britain 200,000.00 GBP 50.000 Irisbus Holding SL 100.000

Karosa A.S. Vysoke Myto Czeck Rep. 1,065,559,000.00 CZK 47.924 SATAU SA 95.848

Karosa RSA Bratislava Czeck Rep. 200,000.00 CZK 50.000 Karosa SA 100.000

Naveco Ltd Nanjing Rep. of China 2,527,000,000.00 CNY 50.000 Iveco SpA 50.000

Soc.d'Ass.Tecn.Automob. - SATAU SA Venissieux France 233,599,700.00 FRF 50.000 Irisbus France SA 100.000

Soc. Charolaise de Participat. SA Venissieux France 15,548,500.00 FRF 50.000 Irisbus Holding SL 100.000

Transolver Finance EFC SA Madrid Spain 9,315,500.00 EURO 50.000 Iveco Fin. Luxembourg SA 50.000


consolid. by held

Investment in other companies


consolid. by held

Alitsoft Ltd Bangalore India 67,500,000.00 RUPIE 8.890 Iveco SpA 8.890

AQM Soc. Cons. rl Rezzato Italy 3,000,000,000.00 LIT 0.930 Iveco SpA 0.933

ASSE Scpa Avellino Italy 830,000,000.00 LIT 0.602 Irisbus Italia SpA 0.602

Cemat SpA Rome Italy 7,000,000.00 EURO 5.640 Iveco SpA 5.638

Consorzio SCLV Giugliano Italy 775,000,000.00 LIT 1.300 Iveco SpA 1.300

Consorzio a respons. limitata Spike Genoa Italy 175,000,000.00 LIT 15.000 Iveco SpA 15.000

Consorzio Bolzano Energia Bolzano Italy 12,000.00 EURO 16.670 Iveco SpA 16.667

CRF Scpa Orbassano Italy 12,750,000.00 EURO 20.000 Iveco SpA 20.000

Elasis Soc. Cons. p.Az. Pomigliano d'Arco Italy 19,240,000.00 EURO 3.300 Iveco SpA 3.300

Fiat GES.CO France (GEIE) Paris France — — 15.000 Iveco France SA 15.000

Fiat Rev.i Scrl Turin Italy 300,000.00 EURO 10.000 Iveco NV 10.000

Fiat Se.p.in. ScpA Turin Italy 3,850,000.00 EURO 6.000 Iveco SpA 6.000

Fivinsa SA Lampa Chile 843,925,871.00 CLP 16.000 Iveco Pegaso SA 16.000

Isfor 2000 ScpA Brescia Italy 1,000,000,000.00 LIT 2.000 Iveco SpA 2.000

Isvor Fiat SpA Turin Italy 780,000.00 EURO 9.000 Iveco SpA 9.000

Transaval SGR SA Madrid Spain 280,653,551.00 PTAS 16.000 Iveco Pegaso SA 16.000

Wohnungsverein Ulm AG Ulm Germany 1,000,000.00 DM 13.600 Iveco Magirus AG 13.600

(*) 52% of the issued ordinary voting share capital plus 100% of the issued non votin preference share capital

(**) investment fully written off


Publication editedby Iveco Communications

Publication SF00262970Printed in Italy - StigeTurin - 09.01

These financial statements are alsoavailable in Italian and can be obtained either from:

Iveco NV - Prof. Bavincklaan, 5Amstelveen (The Netherlands)

Iveco CommunicationsVia Puglia, 3510156 Turin (Italy)

or from the individual nationalCompanies.

Design:Iveco Commercial Communication and ImageStudio Frenda Advertising (Turin)

Colour separations:LitoHelio Servizio (Turin)

Iveco NV Prof. Bavincklaan, 5 Amstelveen (The Netherlands)www.iveco.com

Iveco Annual Report 2000

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