Income Statement

for the years ended December 31, 2014 and 2013

NoteFor the years ended December 31,
20142013
(€ million)
Result from investments (1) 1,131 1,127
Other operating income (2) 63 83
Personnel costs (3) (28) (39)
Other operating costs (4) (132) (72)
Financial income/(expense) (5) (475) (210)
PROFIT BEFORE TAXES 559 889
Income taxes (6) 9 15
PROFIT FROM CONTINUING OPERATIONS 568 904
Profit from discontinued operations
PROFIT 568 904

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

1. Result from investments

The following is a breakdown of the result of investments:

For the years ended December 31,
20142013
(€ million)
Share of the profit/(loss) of subsidiaries and associates 1,124 1,120
Dividends from other companies 7 7
Total result of investments 1,131 1,127

The item includes primarily the Company’s share in the net profit or loss of the subsidiaries and associates, in addition to dividends received from CNH Industrial N.V.

2. Other operating income

The following is a breakdown of other operating income:

For the years ended December 31,
20142013
(€ million)
Revenues from services rendered to, and other income from, Group companies and other related parties 61 80
Other revenues and income from third parties 2 3
Total Other operating income 63 83

Revenues from services rendered to Group companies consisted of services rendered by FCA and its managers to the principal subsidiaries of the Group. The decrease from 2013 is due to the reduced scope of activities of the company during the year as a consequence of the re-organization.

3. Personnel costs

Personnel costs consisted of the following:

For the years ended December 31,
20142013
(€ million)
Wages and salaries (16) (24)
Defined contribution plans and social security contributions (7) (10)
Other personnel costs (5) (5)
Total personnel costs (28) (39)

The average number of employees decreased from 236 in 2013 to 140 in 2014 due to the reshape of the Company functions following the reorganization. As described in Note 2, some of the Company’s managers carried out their activities at the principal subsidiaries of the Group and the associated costs were charged back to the companies concerned.

4. Other operating costs

The following is a breakdown of other operating costs:

For the years ended December 31,
20142013
(€ million)
Costs for services rendered by Group companies and other related parties (25) (25)
Costs for services rendered by third parties (34) (24)
Compensation component from stock grant plans (2) (6)
Depreciation and amortization (2) (2)
Leases and rentals (3) (4)
Other (66) (11)
Total other operating costs (132) (72)

Costs for services rendered by Group companies primarily consisted of support and consulting services in the administrative area, as well as IT systems, public relations, payroll, security and facility management.

Costs for services rendered by third parties principally included legal, administrative, financial and IT services. Increase in 2014 primarily reflects the costs incurred for the reorganization, including the Merger and the listing of the Company to the NYSE and MTA in Milan.

The compensation component from stock grant plans represents the notional cost of the Long Term Incentive Plan awarded to the Chief Executive Officer, which was recognized directly in the equity reserve.

Increase in other costs primarily refers to Directors compensations as reported in details into the section “Remuneration of Directors” in the Report on Operations. 

5. Net financial income/(expenses)

The breakdown of financial income and expense was as follows:

For the years ended December 31,
20142013
(€ million)
Financial income 85 8
Financial expense (564) (249)
Currency exchange gains/(losses) 143
Net gains/(losses) on derivative financial instruments (139) 31
Total financial income/(expense) (475) (210)

Financial income are most entirely related to the USD 1.5 billion loan extended in January 2014 to Fiat Chrysler Automobiles North America Holdings LLC (previously named Fiat North America LLC) to fund partially the acquisition of 41.5% of FCA US (previously named Chrysler Group LLC).

Increase in financial expense is driven by increase in debt due to the acquisition of the whole capital of Fiat Chrysler Automobiles North America Holdings LLC from FCA Italy S.p.A in October 2014 for a €7.25 billion consideration.

Currency exchange gains/(losses) and losses on derivatives are related to the USD 1.5 billion loan mentioned above which is fully hedged into euro. Net gains on derivative financial instruments of €31 million in 2013 essentially related to the closure, in December 2013, of the equity swaps contracts entered into as hedges on stock options granted to the Chief Executive Officer in 2004 and 2006.

6. Income taxes

Income taxes were a gain of €9 million in the current year (gain of €15 million in 2013) and relate to compensation receivable for tax losses carried forward contributed to the Italian tax consolidation scheme.

The Company reported losses for tax purposes as the result from investments resulting from the adoption of the equity method is tax neutral.

Deferred tax liabilities refer to the impact of Italian local tax on certain temporary differences.