Iveco Bilancio 2002_1

Iveco Group Consolidated Financial Statements

2002

Stralis Active SpaceTruck of the Year

2003

DIRECTORS

Alessandro BarberisChairman (*)

Michel de LambertManaging Director

Bernhard KappDirector

George KruppDirector

Otto Graf LambsdorffDirector

Ferruccio LuppiDirector

Francesco Paolo MattioliDirector

Lucio RondelliDirector

Sir Hugh RossiDirector

Abdulla SaudiDirector

Giancarlo VezzaliniDirector

(*) since 01/01/2003

Board of Directors

Main consolidated data 1

Foreword 2

Report on operations 6

Markets and economic context 6

Activities of the Iveco Group in 2002 9

Commercial Vehicles Business Unit 14

Truck Business Unit 16

Engines Business Unit 20

Divisions 22

Operations in the Strategic Areas 26

Operations in Other Countries 27

Financing and Service Activities 28

Customer Service 30

Information Technology 31

Human Resources 33

Events occurring after year-end 35

Consolidated financial statements 36

CONTENTS

The Jury’s officialmotivation for

awarding the title“It has introduced

innovative solutions in cab design, aimed at improving comfort

for the person driving.This has been achieved

with a new modular layout of the interior fixtures and fittings,

which provide forincreased usable space

and greater adaptabilityto different needs.

Stralis then developedthe technological

developments alreadyintroduced some years

ago in the engine and transmission fields

by Iveco, and madethem its own.

The tests carried out on all types of route

in Europe by the journalists on the jury

have confirmed particularly interesting

fuel consumption performance, within

the framework of the development of motor transport efficiency, a priority

factor in the preferencesof jury members.”.

00 01 020

40,000

80,000

120,000

160,000

200,000

VEHICLES SOLD

(UNITS)

00 01 020

100,000

200,000

300,000

400,000

500,000

ENGINES PRODUCTION

(UNITS)

00 01 020

60

120

180

240

RESEARCH ANDDEVELOPMENT EXPENSES(MILLION EUROS)

1

HIGHLIGHTS

2000 2002

Commercial data

Sales of trucks, buses and special vehicles (units) 164,776 160,397 161,883

Engines production (units) 457,745 413,222 361,135

Western European truck market share GVW >= 3.5 tonnes (%) 17.8 17.0 17.9

Financial data (million euros)

Net sales 8,610.7 8,650.1 9,136.7

Operating income 489.1 270.7 102.3

Net profit / (loss) 146.2 (124.6) (497.1)

Cash flow (net profit plus depreciation and amortization) 569.2 285.5 (73.4)

Tangible fixed assets as of December 31 2,278,9 2,286,7 2,399.7

Net financial position (indebtedness) as of December 31 (222.6) (210.9) (408.2)

Group Shareholders' equity as at December 31 1,913.7 1,702.7 1,097.9

Ratios (%)

Operating income / Net sales 5.7 3.1 1.1

Net profit / Net sales 1.7 (1.4) (5.4)

Cash flow / Net sales 6.6 3.3 (0.8)

Other data

Gross additions to tangible fixed assets (million euros) 655.8 718.3 587.1

of which: vehicles on operating leases (million euros) 306.1 348.3 330.9

Gross additions / Net sales (%) 7.6 8.3 6.4

Research and development expenses (million euros) 226.5 214.9 238.7

Research and development expenses / Net sales (%) 2.6 2.5 2.6

Number of employees as of December 31 35,852 35,340 38,113

2001

00 01 020

2,500

5,000

7,500

10,000

NET SALES

(MILLION EUROS)

00 01 020

150

300

450

600

OPERATING INCOME

(MILLION EUROS)

00 01 020

1.5

3.0

4.5

6.0

7.5

OPERATING INCOME/NET SALES(%)

In 2002 the downward trend in commercial vehicle demand in Western Europe intensified, although

there were marked differences between the various segments that make up this market.

The market contracted by 5.7% overall; this contraction was reflected in nearly all European markets,

but was particularly strong in Germany (-10.4%) and France (-7.9%), while the Italian market bucked

the trend, growing by 11.1%, mainly due to the effect on demand of application of tax relief on

investments as envisaged by the so-called “Tremonti bis” Law.

The Light commercial vehicle segment was the least affected by the crisis, with 355,000 vehicles

registered (-2.2%). The largest contractions were seen in Spain (-6.8%) and France (-5.4%) and were

only partially offset by strong growth on the Italian market (+13.8%) for the reasons mentioned

above, and by the stability of the British market (+3%).

Registrations in the Medium segment contracted by 8.6% to 81,800, and the downslide was

particularly marked in Germany (-16.5%) and the United Kingdom (-8,6%), partially counterbalanced

by the buoyant Italian market (+17.8%).

The Heavy vehicle market was the worst affected, falling by 9.9% to a total of 213,700 registrations,

and results were particularly poor in Germany (-14.7%) and France (-12.3%), again with the

exception of the Italian market (+2.7%).

The positive growth trend in the Eastern European countries that are of interest to Iveco came to an

end, and demand stabilised at 2001 levels.

The political and financial crisis in South America persisted, and this had a negative impact on the

demand for transport.

As a whole, Iveco sold 161,883 vehicles in 2002 (1.7% down on 2001 based on the same

consolidation perimeter), with Western Europe accounting for about 128,760, in line with 2001 and

Eastern Europe for about 9,500 (-2%), in addition to about 23,500 vehicles to non-European

countries (+5%). Iveco improved its share of the Western European market for vehicles with gross

vehicle weight from 3.5 tonnes, up to 17.9% (+0.9 percentage points) in spite of the shrinking market.

This was due above all to good performance by the medium sector, improvement by the heavy sector

and substantial stability in the light sector.

In the light vehicle segment, Iveco achieved a market share of 18.5% compared to 19% the previous

year, which basically reflected the decreased demand and the aggressive tactics of the competition

sustained by recently launched products. Iveco responded to this situation by launching the new 2.3

litre engine for the Daily in the last quarter, and immediately recovered market share.

The market share for medium weight vehicles grew by fully 5.3 percentage points to over 30%, giving

Iveco the lead on the European market for the first time.

The success of the EuroCargo Tector and Daily medium was particularly evident in Germany (+8.3

percentage points) and Italy (+3.1 percentage points in a market where Iveco controls over 60%) but

significant improvements were recorded in all European markets.

Iveco's heavy vehicles performed well throughout the market, increasing their market share to 12.3%

2

FOREWORD

3

(+1.3 percentage points); this was due to a large extent to the success of the new Stralis Active Space

heavy road vehicle launched early in 2002. Its technical performance, and above all a significant

reduction in fuel consumption, meant that the new vehicle was met with widespread appreciation from

the clientele. The “Stralis Active Space” won the most prestigious award for its sector, the Truck of the

Year title. This coveted award is presented by an international jury of nineteen specialist journalists

representing the most influential titles in their respective countries.

In China, Naveco (a 50-50 joint venture with the Yueijin Group) manufactured and sold over 14,500

vehicles, a 10% improvement on 2001, in spite of fierce local competition and expectation surrounding

the introduction of a new light vehicle developed specifically for the Chinese market.

In Turkey, Otoyol, in which Iveco has a 27% stake, sold about 4,100 vehicles (3,600 in 2001), which

represents a 13% increase in spite of the fact that the market was only showing weak signs of a

recovery after the sharp fall of 2000.

In the bus sector, Irisbus, which is now 100% owned by Iveco, sold a total of about 9,700 vehicles

(9,500 the previous year), resulting in a market share of 27.3% which puts Irisbus in the lead in

Western Europe.

Diesel engine production fell by 13% on 2001 to 361,200 units; this was due primarily to the

expected reduction in sales of light engines to external customers.

During the year manufacture began of new versions of the medium duty engines that equip the

Eurocargo Tector family, for the agricultural and construction vehicles built by CNH. The first prototypes

of the new range of V-shaped engines for special applications, rolling stock and power generation

sectors also made their appearance. Sales to external customers accounted for 58% of total engine

output, three points down on the previous year, mainly as a result of the contraction in the power

generation market.

Activities in the fields of innovation and product development continued in 2002, targeted in particular at

completing the developments and investments for the heavy road range, which will culminate in 2003 with

the launch of the new “Stralis Active Time” and “Stralis Active Day” vehicles, to follow the “Stralis Active Space”.

Where the medium range is concerned, development and capital spending programmes for the new

Eurocargo have been completed, and its launch is also expected by the Summer of 2003.

Development activities for new engine product families progressed, with the definition of variants for

different applications: automotive, agricultural, power generation and rolling stock. Capital spending also

continued reaching its final phase for the medium and light engine ranges, linked to the increase in

output to respond to the greater market demand and the start-up of new applications.

Irisbus continued to invest in product innovation targeted in particular at the completion of the

instrumentation for the new CiVis mass transport vehicle with electric or hybrid drive.

Work was also begun on the definition of the new unified range.

Further expenditure was destined to necessary restructuring and modernisation work at Irisbus's Czech

subsidiary Karosa, to bring the plant into line with European manufacturing standards.

4 I V E C O N V 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

In the field of services, Iveco's finance companies which manage financing and leasing activities for

Iveco products maintained the growth seen in 2001.

In 2002, the Iveco Finance group of companies stipulated about 34,000 financing contracts on new

vehicle sales, in line with the previous year. There was a 12% increase in the number of financing

contracts on used vehicle sales, which reached a total of 6,000 contracts.

Iveco Finance loans and leasing operations regarded approximately 30% of Iveco vehicle sales,

a percentage that was stable at 2001 levels after the strong growth of 2000.

Over the period the portfolio rose from 99,100 to 105,700 vehicles financed for a net value financed

of Euro 2,600 million at the end of 2002. In 2002 Iveco continued to expand its range of

maintenance and repair services; the portfolio of these activities totalled 43,500 contracts at year-end,

showing an increase of 14,800 new contracts (+24% on the previous year).

Iveco net sales and revenues increased from Euro 8,650 million to Euro 9,136 million in 2002,

up 5.6% on the previous year.

We must bear in mind that this figure includes 100% of the Irisbus group, only 50% of which was

consolidated the previous year. If we consider a homogeneous consolidation area, the result is a

modest 1.5% fall on the previous year. We must however see this result in the context of the 5.7%

contraction of the European market, and bear in mind that Iveco improved its European market share

and increased sales to non-European countries.

The operating income amounted to Euro 102 million (Euro 271 million in 2001). This decrease was

due to competitive pressure linked to the shrinking market and was only partially offset by the

increase in market share. Larger allocations to the warranty reserve and to hedge an increase in the

depreciation of used vehicles, further penalised operating profitability, particularly in the second half

of the year.

Net consolidated result before minority interest for the year revealed a loss of Euro 493 million

compared to a net loss of Euro 123 million the previous year.

The deterioration compared to 2001 results was due not only to the effects on the operating profit

mentioned above, but primarily to the accrual of the loss deriving from the programmed disposal of

Fraikin (equal to Euro 210 million) and the adjustment of certain reserves, including the buy-back

reserve, due to new methods of calculating them and to their alignment to the new market conditions.

We should also mention the adjustment of the pension fund in the United Kingdom, following the

slides in the international stock exchanges.

Steps were also taken to allow for the impairment of the fixed assets of the Hungarian Ikarusbus

subsidiary following a significant de-saturation of manufacturing capacity due to the collapse of orders

from both the local market and the Russian market, the traditional export outlet for Hungarian buses.

In 2002 Iveco recorded depreciation and amortisation for Euro 424 million (Euro 299 million if we

exclude Long-Term Rentals). Last year these results were Euro 410 million and Euro 278 million

respectively. Research and development expenditure totalled Euro 239 million, compared to Euro 215

I V E C O N V 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 5

million the previous year. Capital spending in fixed assets amounted to Euro 256 million. Last year's

figure was Euro 370 million.

Market prospects for 2003 are not reassuring: we must expect a further fall in demand, particularly in

Western Europe. However, this forecast is conditioned both by the climate of geopolitical uncertainty

worldwide and the economic and financial difficulties facing the European Union, where countries like

Germany and France expect minimal GDP growth as well as problems related to the "stability pact".

In this uncertain scenario, Iveco is however able to face the market with a completely revamped

product range.

The launches of the “Stralis Active Day”, “Stralis Active Time” and the new “Eurocargo” mark the

completion of the product spending programme in which the company has invested Euro 2 billion in

the last five years. The new Stralis models are the continuation of the significant product innovation

programme that produced the “Stralis Active Space”: captivating, aerodynamic styling, an array of

proposals for the interior layout which cater for all transport missions, extensive use of electronics

which has proved to be of a very high level, a drive line that guarantees outstanding performance and

fuel economy; all this means that Iveco will have a range of vehicles that are at the top of their class,

and will be able to play a more significant role, even in relation to specialists in the field.

The new “Eurocargo” is sure to boost the competitiveness that it acquired with the “Tector” engine,

thanks to the completely revamped cab and other improvements.

The “Daily” revealed its winning characteristics at the start of 2003, and these were intensified by the

adoption of the new 2.3 litre HPI Unijet engine, allowing the “Daily” to regain the lead in its segment.

The development programmes for the integrated Irisbus range, and the possibilities that are opening up

in China following the agreement signed with CBC, are making Iveco a major player in the bus sector

worldwide.

We believe that in spite of the grave uncertainty and strong indications of a coming crisis on the

markets, Iveco can tackle 2003 with the confidence that comes from the results achieved by the

implementation of its completed spending programmes and development plans.

Iveco is convinced that all the people who work for the company, at whatever level of the organisation,

are aware of this great opportunity and are ready to grasp it in full, with great determination.

Michel de LambertManaging Director

Alessandro BarberisChairmanMarch, 2003

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

REPORT ON OPERATIONS

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Western Europe 347,9 378,5 454,9 475,0 488,8 567,5 629,4 681,7 682,7 650,5

France 56,7 63,0 78,6 79,1 74,4 89,3 100,3 117,0 123,1 113,4

Germany 94,7 92,7 100,8 100,9 107,1 131,4 149,3 150,5 140,4 125,8

UK 62,7 78,3 92,7 93,8 96,1 108,5 105,6 113,5 118,6 116,9

Italy 47,2 46,8 61,2 69,6 63,1 68,1 85,1 94,8 94,5 105,1

Spain 22,7 26,1 35,0 36,7 45,5 52,6 65,8 72,4 72,8 68,9

Rest of Western Europe 63,9 71,6 86,7 94,8 102,6 117,6 123,5 133,6 140,2 120,4

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

(1999 data revised)

NEW REGISTRATIONS TREND IN WESTERN EUROPE(BY BUSINESS UNITS)

3.5-6.0 t GVW 6.1-15,9 t GVW >=16.0 t GVW Trend

Markets and economic context

The marked slowdown in the economy that was so

evident in 2001 persisted into 2002, creating a climate

of widespread uncertainty in all the major economic

areas of the world, which impacted negatively on the

possibilities of an economic recovery.

In the United States, the weak signs of recovery were

clouded by a series of uncertainties: the threat of new

terrorist attacks, the volatility of the financial markets,

the fears of a new war in Iraq and the sluggish growth

of employment, all caused domestic demand to

contract, together with consumer and investor

confidence. The drop in the influx of foreign capital

caused the Dollar to depreciate significantly, but this

did not produce the hoped-for reduction in the

chronic U.S. balance of trade deficit, partly because of

the general weakness of the main international

markets. 2002 was also a disappointing year in Europe,

where the economic cycle is generally one or two

quarters behind the U.S. cycle.

Both external and internal uncertainties

made European economic growth extremely weak.

We must point out the gradual reduction in the level

of inflation which reached an all-time low because of

the weak economy. 2002 was also a crisis year for

some economies that were traditionally considered

strong, like the German and French ones, struggling with

the restrictions imposed by respect for the Stability

Pact. To a certain extent the Spanish and British

economies bucked the trend of the other major

economies, recording the best performance in Europe

in 2002.

93 94 95 96 97 98 99 00 01 02

units/1000 350

300

250

200

150

100

50

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 7

Where South America is concerned, 2002 was a

particularly negative year in Argentina; this country

went through one of the worst economic and political

periods of its history, and the crisis that emerged at

the end of 2001 intensified. GDP growth fell to 1993

levels and all the major sectors of the economy collapsed,

including building, services and manufacturing industry.

In Brazil 2002 closed with a surprising growth in GDP,

sustained by positive results in the agricultural and

industrial sectors, and by the service sector above all.

The only negative note regarded the transport sector,

which was penalised by the increase in oil prices.

Trade between the various Mercosur countries

continues to grow steadily, with an average annual

increase of 20% over the last six years.

In the last year, in addition to the continued growth of

trade between the regions, Mercosur has also

maintained, and in some cases increased, the volume of

trade with the rest of the world.

In 2002, the Common External Tariff, which was 14%

on average, was lowered further, confirming that the

Mercosur is one of the most open economic areas in

the world.

In spite of the weakness in the United States and

Europe, strong economic growth was seen in Asia,

particularly in the early part of the year, thanks to

strong domestic demand sustained by a more flexible

monetary policy and tax incentives in many countries

of the area.

The best performance was recorded in China, where

GDP grew by almost 8%, and there was a strong

increase in exports, thanks to a very favourable

exchange rate and very low costs. For the fourth

consecutive year, the Japanese economy recorded

a deflationary trend and is expected to remain weak, in

spite of the efforts of the Central Bank to implement

a monetary policy capable of re-establishing a positive

inflation rate.The financial market reflects the situation

in the economy. Companies are growing increasingly

weaker and their stock is losing value on the stock

exchange, leaving them with fewer liquid assets

to meet their debts.

As a result, the banks, which are faced with the

problem of unprofitable loans, are less inclined to

renew them. In spite of this deflationary scenario, the

Japanese GDP gave signs of a recovery in the first half

of 2002, before slowing down in the last quarter of the

year because of the contraction of domestic demand.

In 2003 the International Monetary Fund expects GDP to

grow by 0.8%.

After the serious recession of 2001, in 2002 the

Japanese economy gave signs of recovering, with a slow

but steady growth of GDP throughout the year and a

strong increase in exports.

On the other hand, domestic demand remained weak,

because of the fears of consumers and investors

regarding a new economic crisis. As a result, industrial

investments were very limited, and the inflation rate

also fell for the fourth consecutive year. The value of

the Yen improved on 2001, as an effect of increased

exports and the weak Dollar.

The GDP of the Nafta area as a whole increased by

2.3% in 2002, sustained in particular by the increase in

consumer demand, primarily the purchase of new cars.

In spite of the performance of the automotive sector

in the eight years since its implementation, the Nafta

area has not brought the hoped-for benefits to

member countries, i.e. the creation of new jobs and a

real increase in Mexican salaries.

The overall demand for trucks with GVW above

6 tonnes was 377,200 units (8% fewer than the

previous year). Heavy Class 8 vehicles recovered

slightly to 183,900 unit sold (up 3% on 2001), while the

market for Medium trucks remained very weak

(-16%) with 193,200 sales. After the crisis of 2001,

Malaysia and Taiwan began to grow again in 2002,

sustained by domestic demand, exports and less

restrictive tax and monetary policies. In both

countries, consumer confidence remains uncertain and

inflation very low. In spite of the slowdown in the

global economy in 2002, macroeconomic results were

positive in Russia, where for the fourth consecutive

year, GDP grew: although it slowed down towards the

end of 2002, it did reach 4.5%.

The economy certainly benefited from the impact of

recent structural reforms, even if the increase in

energy prices and the crisis caused by the devaluation

of the Rouble played an important role in the

performance of the Russian economy. Real salaries

increased proportionally more than productivity,

curtailing company profits and damping any intention

to undertake new investments.

The inflation rate fell by 15%, remaining marginally

above the target of the economic authorities which

expected to achieve a rate of 12-14%. Tax pressure

was lightened, and monetary policy concentrated on

curbing the revaluation of the Rouble and the inflation rate.

The weakness of the global economy, and of the

European one in particular, inevitably influenced the

economies of Eastern Europe. In Poland GDP growth

was extremely low in 2002 (about 1%), while inflation

was mainly kept under control, but the indices related

to the deficit/GDP ratio are a cause for concern, and

unemployment reached an average level of 18.5%.

Economic growth was particularly strong in Cyprus,

while Turkey and Malta both performed badly, the

former as a result of the serious recession that it

experienced in 2001, and the latter because it is facing

a crisis in the high tech sector.

In 2002 commercial vehicle demand in Western Europe

accounted for 650,500 vehicles, 5.7% down on 2001,

affecting all the vehicle ranges to different degrees.

Detailed analysis of the main European markets reveals

a general contraction in demand, the effects of which

were particularly evident in France (-7.9%), Germany

(-10.4%) and Spain (-5.4%), while the Italian market

bucked the trend, expanding by 11.1%, primarily due to

the positive effects of the tax relief on investments

envisaged by the so-called "Tremonti bis" Law.

The Light commercial vehicle market (GVW from 3.5

to 6 tonnes) recorded 355,000 registrations (down 2.2%).

The most significant contractions were seen in France

(-5.4%), Germany (-3.8%) and Spain (-6.8%), only

partially offset by the strong growth of the Italian

market (+13,8%), for the reasons explained above, and

the stability of the British market (+3.%).

Demand for Medium vehicles (GVW from 6.1 to 15.9

tonnes) accounted for 81,800 units (-8.6%).

The contractions of the German (-16.5%) and British

(-8.6%) markets were particularly evident, only the

Italian market bucked the trend (+17,8%). With

213,700 registrations, the Heavy vehicle market

(GVW >= 16 tonnes) recorded a 9.9% fall,

concentrated above all in Germany (-14.7%), France

(-12.3%) and the UK (-6.5%), with the sole exception

of the Italian market (+2.7%).


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 2 9

Activities of the Iveco Group in 2002

Iveco sold a total of about 161,880 vehicles worldwide

in 2002 (+0.9% on 2001), 155,930 of these were

vehicles from the over 3.5 tonne segments (154,060 in

2001), while the remaining 5,950 vehicles (6,340 in

2001) belonged to the segment from 2.8 to 3.49

tonnes. If we also include sales by licensees and

affiliates, of approximately 37,500 units (34,500 in

2001), overall sales totalled about 199,400 units.

Iveco sold 128,760 vehicles in Western Europe

(substantially in line with 2001); on a homogenous

basis (50% of Irisbus sales), the total would reflect a

reduction of about 3%.

Sales were affected by the slump on the French

market, where the units sold decreased sharply (-23%),

partly as a result of more selective policies for the

acquisition of new contracts with the buy-back clause,

and of the contraction on the German market

(-10.4%), which Iveco managed to limit to just 7.9%.

The other markets expanded.

Iveco's share of the Western European market (GVW

>= 3.5 tonnes) grew to 17.9% (+0.9 percentage points)

in a shrinking market: the result is related to the

excellent market performance of the Medium vehicle

segment, the significant improvement achieved by

Heavy vehicles and the stability of Light vehicles.

This last segment achieved an 18.5% share of the

market (19% in 2001), being affected by the launch of

new products by the competition, which Iveco

responded to in the last quarter by launching the new

2.3 litre engine (for the Daily), and was rewarded by a

significant recovery in market share.

The Iveco customersupport center is amultifunctional centrethat interacts betweenthe client center andthe main Ivecodepartments, in thefields of diagnosis,technical training,workshop methods,technicaldocumentation.It deals with advancedtraining on a globallevel and createsthe technicaldocumentation as aback-up for serviceactivities.

R E P O R T O N O P E R A T I O N S10

Iveco increased its share of the medium duty market

by 5.3% on 2001, passing the 30% mark and taking the

lead of the European market for the first time, growing

on all markets.

Performance was particularly good in Italy (up 3.1

percentage points) and in Germany (up 8.3 percentage

points in a plummeting market).

Iveco grew generally in the heavy vehicles segment,

taking 12.3% of the market (up 1.3 percentage points),

thanks in part to the success of the new Stralis, which

was launched early in 2002, winning customer approval

above all for its technical features.

And as a result, an international jury awarded the

Iveco Stralis the prestigious Truck of the Year award

for 2003. Sales in Eastern Europe remained above

9,500 units (2%), while sales outside Europe increased

by 5% to over 23,500 vehicles.

In China, Naveco, the 50-50 joint venture with the

Yueijin group, manufactured and sold over 14,500

vehicles (+10%).

Irisbus sold a total of about 8,430 units (down 11.2%),

for 27.3% share of the Western European market, and

its brands achieved joint leadership of the market with

Evobus Group.

Iveco manufactured 361,135 diesel engines (-13% on

2001), with a decrease in the production of light

engines for external vehicle manufacturers.

During the year production of the NEF engine for

CNH construction and agricultural machinery got

underway. The first prototypes of the new range of

V-shaped engines for special, rolling stock and power

generation applications also made their appearance.

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Western Europe 20,1 19,8 19,1 20,0 18,4 17,0 16,6 17,8 17,0 17,9

France 18,7 18,6 17,4 18,9 18,6 17,1 16,7 19,3 18,6 16,8

Germany 13,5 13,5 11,4 13,2 12,3 11,2 10,8 11,0 9,8 12,2

UK 14,4 13,6 14,4 15,4 14,5 14,0 12,1 11,7 11,9 11,7

UK (GVW >=3.51t) 24,8 22,2 21,4 21,8 21,5 20,5 18,3 17,1 16,1 17,3

Italy 55,1 56,0 51,8 48,0 45,9 44,0 41,3 42,4 40,0 39,4

Spain 22,5 21,8 22,2 22,6 20,4 19,4 19,3 20,4 20,0 21,1

Rest of Western Europe 10,0 11,3 10,1 10,8 10,3 9,4 9,0 10,3 10,0 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 qtr2001 2002

m.s. %

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

35

25

15

5


Sales to external customers accounted for 58% of

total output (down 3 percentage points on the

previous year), partly as a conseguence of the

contraction of the power generation market.

In India, Iveco manufactured and sold 33,450 vehicles

(+9%) through its licensee Ashok Leyland, (31,000

units sold in the domestic market).

In Turkey the Otoyol licensee sold about 4,100 units

(up 13%). The portfolio of Iveco's maintenance and

repair contracts reached a total of 43,500, with 14,800

new contracts stipulated (+24%).

In 2002, the finance companies of the Iveco Finance

group, which manage loan and leasing activities for Iveco

products, maintained their 2001 growth rates, stipulating

about 34,000 financing contracts of new vehicles and

about 6,000 contracts on used vehicles sales (+12%).

The percentage of vehicles financed out of the total of

Iveco sales remained steady at 29.4%. The portfolio of

contracts in being at December 31, 2002 stood at

105,700 units, the total net value of the contracts in

the portfolio amounted to approximately Euro 2,600

million.

A new company was established in Portugal during the year.

The fleet of rental vehicles leased by the Fraikin group

remained relatively stable (37,000 units), with

significant growth in Spain (about 50%) as a result of

the strong growth of long-term rentals, but it was

offset by the fall on the British market (-15.8%), while

there were few significant changes in the other

European countries.


Rental and loan activities to the network and end

customers of the sector as a whole resulted in net

revenues of Euro 1,005 million (787 in 2001), which

increased as a result of the consolidation of the newly

created company Iveco International Trade & Finance

(Euro 211 million, including revenues from trading

activities with dealers outside Europe for

approximately Euro 190 million).

Operating income amounted to Euro 43 million

(down 3%). Pre-tax income showed a loss of about

Euro 183 million (after a pre-tax profit of Euro 46

million in 2001), primarily as an effect of the accrual of

the devaluation related to the sale of Fraikin (Euro 210

million).

Where innovation and product development are

concerned, Iveco completed the development and

capital spending related to the new Stralis AT/AD

vehicles (which were launched in February 2003),

following the launch of the Stralis AS in February 2002.

In the medium range, the same activities were

completed for the new Eurocargo, which will be

introduced gradually in the second half of 2003.

In the engine field, development of the new engine

families continued, with the definition of variants for

different applications: automotive, agricultural, power

generation and rolling stock.

Capital spending on the NEF range and the F1A low

range engine also continued, linked to the increase in

output to respond to the greater market demand and

the start-up of new applications.

Irisbus continued its ongoing programmes, regarding

both the instrumentation for the CiVis and the

definition of the new unified range.

Further expenditure was destined to necessary

modernisation work at the Czech subsidiary Karosa,

to bring the plant into line with European standards.


Iveco acquired total control of Irisbus from Renault in

December 2002.

Capital spending in 2002 amounted to approximately

Euro 587 million (718 in 2001), Euro 256 million of which

Market Change2002 vs 2001

(thousands) (%)

By quarter

1st 160,6 -12,0

2nd 173,6 -6,3

3rd 155,1 -6,0

4th 161,2 2,7

650,5 -5,7

By Business Unit

>=16.0 t GVW (heavy) 213,7 -9,9

6.1 to 15.9 t (medium) 81,9 -8,6

3.5 to 6.0 t (light) 355,0 -2,2

650,5 -5,7

By country

France 113,4 -7,9

Germany 125,8 -10,4

UK 116,9 -1,5

Italy 105,1 11,1

Spain 68,9 -5,4

Other European countries 120,4 -14,1

650,5 -5,7

WESTERN EUROPE 2002DEMAND FOR COMMERCIAL VEHICLES (GVW >=3.5T)

WESTERN EUROPE 2002IVECO: REGISTRATIONS AND MARKET SHARES (GVW >= 3.5 T)

Iveco registrations Iveco shareUnits Change Value Change

(thousands) vs 2001 (%) (%) vs 2001 (%)

By quarter

1st 29,1 -3,3 18,1 1,6

2nd 30,5 0,2 17,6 1,1

3rd 26,6 -7,7 17,2 -0,3

4th 30,1 9,0 18,7 1,1

116,4 -0,6 17,9 0,9

By Business Unit

>=16.0 t GVW (heavy) 26,2 0,3 12,3 1,3

6.1 to 15.9t (medium) 24,7 11,3 30,1 5,3

3.5 a 6.0t (light) 65,5 -4,7 18,5 -0,5

116,4 -0,6 17,9 0,9

By country

France 19,1 -16,8 16,8 -1,8

Germany 15,4 11,9 12,2 2,4

UK 13,7 -3,0 11,7 -0,2

Italy 41,4 9,7 39,4 -0,6

Spain 14,6 -0,1 21,1 1,1

Other European countries 12,4 -11,9 10,3 0,3

116,4 -0,6 17,9 0,9

for industrial activities (Euro 370 million in 2001) and

Euro 331 million for capital spending on vehicles fleets

for rental activities (Euro 348 million in 2001).


COMMERCIAL VEHICLES BUSINESS UNIT

In 2002 the 2.8 to 6 tonne GVW segment of the

European light commercial vehicle market fell by 1.2%

compared to the previous year, from 670,000 to little

more than 662,000 registrations.

Important markets contracted significantly; Germany

(-3.6 %), France (-6.2 %) and Spain (-5.5%), but there

were important exceptions: Italy, which achieved an

exceptional 18.3%, thanks to tax incentives, the UK

(2.4%) and Scandinavia (Denmark, Norway and Sweden

together grew by 5.6%).

The 1.2% contraction was not homogeneous in the

three areas making up the market: the 3.51 to 6 tonne

GVW segment plummeted 10.1% (from 32,000 to

28,700 registrations), and the 3.5 tonne segment fell by

1.4% (from 331,000 to 326,300 registrations), while

the 2.8 to 3.49 tonne GVW segment was relatively

stable with 306,900 units.

In 2002 the Iveco Daily's overall market share

decreased from 11.2% to 10.8%, due primarily to the

self-limitation imposed on sales with the buy-back

clause on the French market, which had also

contracted sharply, and strong growth in the "camper

sector" (4,000 units) where the Daily's presence is

marginal.

The slump in the market and competition between

products, which was particularly evident in a number

of major markets, penalised the Daily's market share; in

the 3.5 to 6 tonne GVW segment, in spite of the 4.1%

fall recorded in France, and the efforts of the

competition, which in the second half of the year

reaped the effects of launches in the first half

(Ducato/Jumper/Boxer), the Iveco Daily achieved

18.5% (-0.5 percentage points on 2001). In the 2.8 to

3.49 t GVW segment the share remained steady at 2%,

The Daily most recentversion (Daily Unijet HPI)

launched in 2002 in the European markets,

anticipate the way townand out-of-town deliveries

are evolving in Europe.

B U S I N E S S U N I T L I G H T 15

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

98 99 00 01 02

24

18

12

6

0

while the share of the 3.51 to 6 tonne GVW segment

decreased by 3.3 percentage points on 2001 to 18%,

partly because the "59" vehicle was replaced by the

"65", registrations of which were recorded in the

higher range segment.

These market results were achieved in a year that was

affected by the phase-in/phase-out of the new Daily

HPI, which was presented in July and launched in

October.

The Iveco Daily continued to play an important role on

Eastern European markets: 29.8% in Romania, 31.9% in

the Slovak Republic, 25.3% in Croatia, 10.2% in

Slovenia, 6.7% in Hungary and 9.4% in the Czech

Republic.

In spite of the economic crisis hitting South American

countries (in Argentina and Venezuela the light

commercial vehicle markets fell by 55% and 33%

respectively), the Iveco Daily confirmed a significant

market share of 14.2%.

Activities to develop the Daily range continued, and in

2002 vehicles equipped with the F1A 96 Hp and 116

Hp engines were launched on the European markets,

already meeting the limitations of European standards

to be introduced in 2004.

WESTERN EUROPE2002 REGISTRATIONS IN ABC CURVE ON MARKET UNITSFROM 3.5 TO 6.0 T GVW (LIGHT)

Units Change Units Change Value Change(thousands) vs 2001 % (thousands) vs 2001 % (%) vs 2001 %

UK 69,0 3,0 5,7 -8,2 8,2 -1,0

Germany 58,4 -3,8 5,7 -0,3 9,7 0,3

France 62,6 -5,4 13,0 -21,0 20,7 -4,1

Italy 67,8 13,8 25,1 8,7 37,0 -1,8

Spain 36,7 -6,8 7,7 -2,0 21,0 1,1

Portugal 11,5 -22,3 1,7 -20,5 14,4 0,3

Holland 9,0 -7,9 1,5 -6,1 16,4 0,3

Belgium 8,7 -16,4 0,8 -25,1 9,0 -1,0

Switzerland 7,2 -12,3 1,7 -10,5 24,0 0,5

Ireland 4,4 -24,9 0,4 25,5 9,3 3,8

Austria 4,6 -8,4 0,7 -9,8 15,6 -0,2

Sweden 4,4 -3,9 0,3 -6,3 7,4 -0,2

Denmark 2,3 -1,7 0,5 -5,8 19,9 -0,9

Poland 5,5 -12,8 0,6 -2,6 11,7 1,2

Norway 1,9 8,2 0,2 -27,8 10,5 -5,2

Luxembourg 0,9 -9,5 0,1 -6,6 6,6 0,2

Total 355,0 -2,2 65,5 -4,7 18,5 -0,5

Iveco shareMarket Iveco registrations

The Stralis family will include in 2003also the Active Time

and Active Day versions which

have been designedspecifically for medium

range deliveries.


TRUCK BUSINESS UNIT

2002 was an extremely important year for Iveco in the

Medium and Heavy vehicles sector, one of

organisational change and of market success for new

products.

Organisation

In June, the Business Units Medium and Heavy merged

to create the new Truck Business Unit, which employs

6,500 people, with three plants in Italy, Spain and

Germany and a pool of over 300 suppliers all over

Europe.

The goal of the new Business Unit is to grasp every

opportunity for simplification and synergies in

products and processes and, more important still, to

start working on the new range that will ensure Iveco's

competitiveness after the year 2010, a range that will

have to confirm and increase the level of integration

between components, suppliers and processes, which

lies behind the success of today's products.

Heavy vehicles

The Western European market for heavy vehicles

slumped 10% in 2002 on the previous year, with a total

of 213,700 vehicles registered.

This was still a good result, sustained by the Italian

market which brought forward registrations as a result

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

98 99 00 01 02

16

12

8

4

0

B U S I N E S S U N I T T R U C K 17

of the tax incentives that were available during the year.

The largest contractions in 2002 were seen in

Germany (which had already lost ground in 2001),

France and the UK, while the other major markets

remained substantially stable: Italy grew marginally

(2.7%), Spain fell marginally (-2.6%), and registrations

also decreased in a number of minor European markets.

The slump in the market in 2002 was attenuated in the

second part of the year.

The competitive pressure on prices that was a feature

of 2001 persisted into 2002, concentrated in the

markets where registrations contracted.

The pressure on vehicle selling prices was also the

result of the high competitiveness in the transport

sector, which forced customers to look for greater

efficiency upstream of the process, in other words

when buying their vehicles from the manufacturer.

And the high fleet renewal rate of recent years also

continued to exert great pressure on the prices of

used vehicles, the supply of which exceeds the

European market's capacity for absorption.

In this scenario Iveco significantly improved its market

share in Western Europe, achieving 12.3% (up 1.3% on

2001).

The results achieved in Germany, Spain and the UK

were particularly positive.

The perception by the network and the customer of

the level of quality achieved by our Heavy vehicles,

combined with the excellent efficiency of the vehicles

on the job, has been consolidated further.

This positions Iveco among the best competition

where fuel consumption is concerned, and the general

productivity of each vehicle.

We believe this is the reason that won us the 2003

Truck of the Year award.

The new Stralis truck has done a great deal to improve

Iveco's market share (15% in December 2002).

The Eastern European markets were buoyant, except

for Romania and Slovenia. Sales were strong in

Hungary, Bulgaria and the Slovak Republic, while the

former USSR and Poland fell below their 2001 levels.

In the Middle East, good results were achieved in Saudi

Arabia,Abu Dhabi and Syria, but there were significant

increases in African markets such as Algeria, and in the

Far East (South Korea).

One of the most important events during the year in

the field of product development was the introduction

of the new Stralis AS (Active Space) truck.

Market Iveco registrations Iveco shareUnits Change Units Change Value Change

(thousands) vs 2001 % (thousands) vs 2001 % (%) vs 2001 %

Germany 42,6 -14,7 3,2 17,4 7,5 2,0

France 40,5 -12,3 3,6 -9,4 8,8 0,3

UK 30,7 -6,5 2,6 4,1 8,4 0,9

Italy 26,7 2,7 10,0 4,2 37,4 0,5

Spain 25,7 -2,6 5,0 2,4 19,3 0,9

Holland 11,6 -15,2 0,3 -11,2 2,3 0,1

Belgium 6,9 -20,7 0,2 -42,4 2,6 -1,0

Austria 6,0 -14,9 0,4 18,1 6,7 1,9

Portugal 3,1 -29,8 0,2 -43,2 6,8 -1,6

Sweden 4,1 -4,9 0,0 -71,4 0,0 -0,2

Denmark 3,5 -8,4 0,2 -21,2 6,6 -1,1

Switzerland 3,2 -26,7 0,3 -38,1 9,7 -1,8

Ireland 2,1 -26,1 0,1 -57,7 4,5 -3,3

Norway 2,4 3,1 0,0 -22,2 1,2 -0,4

Poland 3,8 12,6 0,1 -16,4 3,8 -1,3

Luxembourg 0,9 -21,0 0,1 89,4 10,4 6,1

Total 213,7 -9,9 26,2 0,3 12,3 1,3

WESTERN EUROPE2002 REGISTRATIONS IN ABC CURVE ON MARKET UNITS>= 16,0T GVW (HEAVY)


This vehicle significantly boosted the order book in

this segment, impacting on market share in the second

half of 2002, as mentioned above. In the second half-

year, all activities were concentrated on the new

Stralis AT ("Active Time") and AD ("Active Day")

range: completion of the technical specifications, start-

up of mass production at the end of December, and

preparation for the market launch early in 2003.

Great care was dedicated to product quality during

the start-up process and when deciding deadlines, in

order to guarantee that the clientele enjoys the same

reliability that customers of the Stralis AS are now

appreciating on their vehicles.

Good foundations were therefore laid for 2003, and in

spite of the forecast slump in demand in Europe, Iveco

now has the right products to compete successfully in

all segments of the range in terms of performance

and quality.

Medium vehicles

Demand in the 6 to 16 tonne medium weight truck

segment weakened further in 2002 (-8.5% on 2001)

after the peak of the demand cycle that was reached in 2000.

In Western Europe, market demand in the segment

reached 81,900 units, down from 89,500 in 2001, an

8.5% reduction.

This contraction in demand was most marked in

Germany where market demand in 2002 was nearly

5,000 units lower than in 2001, a reduction of 16.5%

(after a 14.5% reduction in 2001, in a market which

nonetheless represents 30% of Western European

demand).

Italy was the only major market to grow.

Some of these demand trends were influenced by the

growth of the market for “nearly new” vehicles,

bought back from rental companies by various

manufacturers and then re-sold.

Activities to prepare for the commercial

launch got underwayand the new Eurocargo

made its appearanceearly in 2003,

with all the necessaryfeatures to maintain

its leadership of the Western

European market.

B U S I N E S S U N I T T R U C K 19

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

98 99 00 01 02

32

24

16

8

0

Market Iveco registrations Iveco shareUnits Change Units Change Value Change

(thousands) vs 2001 % (thousands) vs 2001 % (%) vs 2001 %

Germany 24,8 -16,5 6,5 22,3 26,1 8,3

UK 17,1 -8,6 5,5 -0,3 31,9 2,6

France 10,3 -4,2 2,5 -1,5 24,3 0,7

Italy 10,6 17,8 6,4 24,2 59,9 3,1

Spain 6,5 -8,4 1,9 1,4 29,9 2,8

Holland 1,9 -13,0 0,4 38,7 18,2 6,8

Portugal 1,5 -19,1 0,2 -28,8 10,8 -1,4

Belgium 1,7 -28,4 0,2 -11,4 14,5 2,8

Austria 0,9 -8,9 0,2 38,2 18,6 6,3

Ireland 1,1 17,1 0,2 9,4 17,6 -1,3

Norway 0,8 0,3 0,1 -0,9 15,3 -0,2

Switzerland 0,6 -32,6 0,1 2,1 15,9 5,4

Sweden 0,7 -21,1 0,1 -10,5 11,9 1,4

Denmark 0,5 -12,8 0,2 11,8 31,1 6,8

Poland 2,7 3,0 0,3 7,4 12,2 0,5

Luxembourg 0,1 -12,6 0,1 34,1 44,7 15,6

Total 81,9 -8,6 24,7 11,3 30,1 5,3

WESTERN EUROPE2002 REGISTRATIONS IN ABC CURVE ON MARKET UNITSFROM 6,1 TO 15,9T GVW (MEDIUM)

Against this background Iveco significantly improved

its performance in the segment, reaching a 30%

market share in Western Europe as a whole.

We improved our position as market leader in Italy,

Spain and the UK, with an 8% surge in Germany.

This means that Iveco is market leader in Europe, 3%

ahead of its nearest competitor.

These results were obtained without making any

concessions on prices. In Central Europe, we

continued our strong performance achieving a better

performance in terms of market share than in 2001,

in Croatia, Slovenia, the Czech Republic, Hungary and

Romania.

2002 was an extremely demanding year for the

Medium vehicle management in the area of product

development.

The project for the new Eurocargo completed its

field tests.

The technical details were finalised, and the first new

trucks went into production.

Commitments in the field of product/process quality

were stepped up in order to ensure the customer of

even better quality and reliability than the current

successful EuroCargo.

Activities to prepare for the commercial launch got

underway and the new Eurocargo was expected to

make its appearance early in 2003, with all the

necessary features to maintain its leadership of the

Western European market.


Year 2002 was affected by macroeconomic factors

which resulted in a sluggish market for diesel engines

for the transport sector, for agricultural and

construction machinery, and for power generation.

The Engine Business Unit responded to this slowdown

with a marketing strategy that addressed external

customers and a revamped product range, that

allowed it to maintain unit sales high and to table

promising negotiations for the coming years.

During the year, 363,600 engines were sold, 13% fewer

than in 2001 (417,000 units). If we analyse the

customer mix, we can see that sales broke down as

follows:

Iveco 42 % (39% in 2001); Fiat Group companies, such

as CNH, Hitachi and Sevel 44% (41% in 2001); outside

customers 14% (20% in 2001). Total sales to external

customers amounted to Euro 1,551 million.

The automotive sector accounted for 286,250 units, in

line with market trends.

A significant part of these sales was the result of the

successful launch of the F1A 110 and 116 Hp engines

for the Fiat Ducato and Iveco Daily, which met

expectations in terms of performance and quality.

Where external customers are concerned, an

agreement was signed with De Tomaso SpA for the

supply of a first batch of F1A engines to power a new

vehicle which will be built in a plant in Southern Italy;

production of a new application of the 8140 Common

Rail engine for a 4x4 Santana began in the second half

of the year.

ENGINES BUSINESS UNIT

The engines in the Cursor family

are manufactured in Bourbon-Lancy

(Bourgogne), those of the Tector family

in Turin and the newUnijet engine in Foggia.

B U S I N E S S U N I T E N G I N E S 21

There were significant events in the Automotive

sector outside Europe: in Brazil, the Sete Lagoas plant

began production of the 8140 engine for non-Fiat

customers; in Russia negotiations got underway with

the RPA group for the supply and local production of

8140 engines for gaz vehicles, and new contracts for

methane engines were acquired in Iran, India and

China (particularly for the city of Beijing in

preparation for the 2008 Olympic Games).

In 2002 the Industrial sector, which covers

agricultural, construction and stationary applications,

was hamstrung by widespread uncertainty which

resulted in irregular trends on the markets during the year.

Although the year got off to a promising start, a

period of stagnation soon followed, which caused

2002 to stabilise at very much the same levels as the

previous year.

The construction sector in particular was conditioned

by a negative trend. Generally speaking, the Engine

Business Unit managed to keep market share at 2001

levels.

The year that has just ended was one of intense

activity to promote the new engine ranges.

The opportunities offered by these products made it

possible to forge relationships with important new

customers, which are expected to result in the

acquisition of significant volumes.

In the marine engine sector, 2002 confirmed the trends

that had already emerged in previous years, with

significant growth in the pleasure sector, and continued

stagnation in the professional sector (with a significant fall

in the fishing sector).

The Italian nautical industry now enjoys a dominant

position in the world market (with growth rates in

double figures).

Unfortunately it was not possible to exploit this

growth rate, because the new engine range was not

yet completed.

However, the first models launched on the market

gave excellent results, and this leads us to expect that

we will achieve an important position on the market

when the range is completed.

Activities in the field of Power Generation were

negatively affected in 2002 by the fall in demand in

several traditional areas (some European markets, the

Middle East, Taiwan, South America) and the growing

aggressiveness on the part of the competition

(particularly in the components sector).

This market situation (combined with insufficient

presence in certain markets, such as the UK, USA,

China and Brazil) resulted in a fall in unit sales (10%

below budget and below 2001) and invoicing (16%

below budget and 12% below 2001).

Where the product is concerned, the launch of the

new Iveco engines (NEF, Cursor and V-shaped), the

standardisation of the large units and the process to

bring control of strategic components, such as

electrical control boards and soundproofed hoods,

inside the company, all got underway. In industrial

terms, the new 2HEnergy plant was inaugurated in

Fecamp (France) to assemble electric generator sets

with power outputs above 500 kVA, which are

essential for the revival of this unit. Important new

production lines which came on stream in 2002

included:

- The 8V rolling stock

engines for the Breda

contract.

- The Cursor 8 pleasure

boat motor.

- The NEF marine and

Power Generation engine

(the first application of

the Common Rail system

in these fields).

- The extension of

agricultural applications

of medium and heavy

engines.The Engines BU

invested over Euro 68

million in research,

development and the

industrialisation of new

products.


ACTIVITIES OF THE DIVISIONS

UNITS SOLD(%)

42%

14%

44%

Iveco

Fiat Group

Third Parties

ENGINE APPLICATIONS(%)

78.5%

12.6%

4%0.5%Automotive

Agricolture andConstructionEquipment

Industrial

Power Generation

Marine

3.9%

Irisbus

Irisbus has been fully owned by Iveco since the

beginning of 2003.

Including CBC-Iveco in China, Irisbus can now boast a

global output of nearly 16,000 vehicles.

In 2002, Irisbus sold 8,501 vehicles while CBC-Iveco

sold 7,268 vehicles. In 2002, on the major European

markets, Irisbus maintained its position in second place

among bus and coach makers with 27.4% of the market.

It consolidated its leadership of the French market

with 50.3%, and of the Italian and Spanish markets

where it achieved 46.4% and 29.7% respectively.

In 2002 global sales by the Irisbus Group broke down

into 3,750 coaches, 9,953 town buses, and 2,066

minibuses and derived versions.

On the marketing front, Irisbus received important

orders during the year, winning public tenders to

supply town buses to the cities of Lyons, Paris,

Grenoble, Prague, Rome,Turin and Milan.

After Lyons, the city of Saint Etienne also ordered the

new Cristalis trolley-bus.

Large companies like Connex and Keolis ordered

significant quantities of town buses and long distance

coaches. And an important order of long distance

coaches has been delivered to the Austrian Post

Office. The success of the Eurorider, My Way,

EuroClass, Recreo, Axer, Iliade and Ares ranges in the

long distance coach market continued. Some models

are now available in 12.8 m and 15 m versions, to

comply with the new European regulations on vehicle

lengths. Activities linked to the development of new

maintenance and repair contracts were pursued on the

Prospects for 2003 indicate that the current

uncertainty surrounding the economies of

industrialised countries will persist.

The current order book, and the marketing initiatives

underway should however make it possible to close the

year with a profit.

In 2003 the process to complete the new engine range

will continue.

New models will enter production, including:

- Medium and Heavy methane engines (NEF 6 cylinders

and Cursor 8);

- 6V and 12V engines for marine, industrial and Power

Generation applications;

- New rolling stock applications for 8V engines;

- Medium engines that meet the Tier 3 limits (starting

with the 6 cylinder 4V Top Power);

- Completion of the Medium-Heavy marine range;

- Start of manufacturing tooling for the F1C engine,

which will enter production in 2004.

These are extremely important developments which

will allow us to extend the range of our products,

increasing their competitiveness and opportunities for

expansion on the open market and with non-Fiat

Original Equipment Manufacturers.

S P E C I A L T I E S 23

Iveco is also a protagonist in the field of new fuel.

European market. Irisbus acquired its importer in

Benelux and created Irisbus Benelux as a new subsidiary.

Measures to integrate the two product ranges were

pursued. All Euro3 engines are now standardised, and

work is ongoing to complete the convergence of

platforms and bodies.

Defence vehicles

In 2002 the Defence Vehicles Division supplied 1,884

trucks, with spare parts and a range of mechanical

components, to the Italian Army and other foreign

armies.

The new generation of tactical vehicles conceived on

the basis of the armed forces' latest operational

requirements, have now passed the study stage of

previous years, and are at the prototype stage.

Prototypes of the Light Multipurpose Vehicle (LMV)

are currently being appraised and tested by a number

of foreign armies as well as the Italian Army.

The prototype Medium Multipurpose Vehicle (MMV) is

undergoing homologation.

These vehicles are expected to enter production next

year, to meet contract deadlines.

Maintenance & Repair activities continued in 2002 for

part of the truck fleet of the Italian Army, confirming

the customer's satisfaction with the activities

performed in the past to extend the chain of value.

In the context of the programme of bullet-proof and

armoured vehicles produced in collaboration with the

Iveco Fiat – Oto Melara Consortium, in which Iveco is

primarily responsible for the engineering aspects


(engine, gearbox, etc.), a further 12 Ariete tanks were

delivered to the Italian Army as part of the contract

for 200 units which was concluded during the year.

Industrialisation was completed and the assembly lines

were started up for two more important long-term

contracts for the Italian Army:

- a total of 200 units of the Dardo crawler troop

carrier and combat vehicle. The first kits (engine,

gearbox, crawler assembly, etc.) were delivered in

2002, allowing Oto Melara to assemble 21 units.

- a total of 560 units of the Puma light armoured

vehicle, 180 of the 4x4 version and 380 of the 6x6

version. In 2002 the first pre-series Puma vehicles

were delivered to the Italian Army for the definitive

operational tests before the start of production.

In 2002 the Consortium signed an important contract

with the Italian Army to supply 70 PZH 2000s (self-

propelled howitzers), production of which will start in

2005. In this case too, Iveco is responsible for the

engineering components.

Eurofire maintains its leading position in the internationalfire-fighting market,

confirmed once more by a growth of orders of more

than 20% throughoutthe product line.

The order book of the Iveco Defence Vehicles

Division is expanding in the heavy/light armoured

vehicle sector with related spare parts, and guarantees

work for the next 4 years, thanks to the order

acquired for a second batch of 62 Centauro vehicles

for the Spanish Army.

Astra

Astra output continues to concentrate on traditional

product lines: Heavy duty quarry and construction

vehicles, high-mobility tactical vehicles for military

applications, and a range of dump trucks (12, 28 and

40 tonne solo vehicles, 25 and 30 tonne artics).

In 2002 the Division consolidated its presence on the

civilian markets in Italy and abroad, but during the year

it also launched its new military range, powered by the

Iveco Cursor Euro3 engine.

1,878 vehicles were sold in 2002 (1602 in 2001, a

17.2% increase), for total sales of Euro 207.8 million

(Euro 187 million in 2001). This growth was primarily

S P E C I A L T I E S 25

the result of the increase in units invoiced to both the

civilian market and the military segment.

Astra's share of the Italian market for industrial

vehicles is stable at 15%, while exports accounted for

17% of total sales. A total of 92 articulated dump

trucks were sold, 82 of which were distributed by

Case New Holland's international network, particularly

in the United States. The civilian HD7/c quarry and

construction range, launched in 2001, confirmed that

it has what it takes to meet the needs of this

particular market segment, thanks in part to the

performance of the Iveco Cursor 13 engine that

powers the 400 and 500 Hp versions of the Astra truck.

The military range of 4x4, 6x6 and 8x8 all-wheel drive

vehicles received Euro3 engines.To this end, the Iveco

Cursor engines were painstakingly modified with the

Engineering department of the Iveco Engines B.U., to

meet the specific requirements of the Armed Forces.

Production got underway successfully in the second

half of the year and vehicles were delivered to both

the Italian and Spanish Armies, and the latter took

delivery of 68 6x6 vehicles through the marketing

network of the Iveco Defence Division.

In December Astra acquired the activities of SIVI SpA,

an outfitter who has been converting and marketing

Iveco vehicles for the special loads segment for many

years. This specific sector combines very well with

the market segment in which Astra traditionally

operates, and the acquisition of the company achieves

the goal of stepping up Astra's specialist capacity to

meet the demands of a market niche.

The synergies that will be developed in 2003 with the

new company, which is located near Milan, will

generate positive spin-off for the company's overall

operations.

Fire-fighting vehicles

The Eurofire holding company draws together all

Iveco's fire-fighting activities. In 2002 Eurofire

confirmed its position as European leader of the fire-

fighting field, and world leader for ladder production.

Four companies coexist and complement each other

in the Eurofire Group, with top performance and a

long, renowned manufacturing tradition:

- Iveco Magirus Brandschutztechnik Gmbh (Germany)

- Camiva SA (France)

- Iveco Mezzi Speciali (Italy)

- Lohr Magirus (Austria)

In 2002 total net sales amounted to Euro 221 million,

a 7% increase on 2001.

Throughout the product segment, orders grew by

more than 20% on 2001, underlining Eurofire's leading

position in the international fire-fighting market.

Important projects and orders from markets all over

the world helped export activities to expand to 50%

of total turnover.The group is stepping up the internal

reorganisation process with a comprehensive

programme, exploiting opportunities for synergies,

especially in engineering, purchasing, and production,

to achieve further rationalisation and cost reductions

in the short term. In the aerial rescue vehicle sector,

two additional new ladder versions have been

launched: a ladder with a rescue height of 24 m for

smaller municipal authorities, and a 30 m ladder in low

profile configuration.These with their new design will

contribute to the ambitious cost reduction targets

and will further improve Eurofire's excellent market

position in this segment.

Product development activities regarding the other

product ranges were concentrated on standardisation

programmes for a tank-pumper and other Fire-fighting

vehicles, taking advantage of a new range of Iveco

chassis and the availability of the new pump range.

Attention was focused on the range of airport rescue

vehicles, and the first important contracts were

received for the new Dragon and 6x6 Impact versions,

designed to provide higher performance and higher

fire extinguishing capacity.

For 2003 the EuroFire group plans to strengthen the

process of integration and expects further growth in

its activities and greater profitability to strengthen its

leading position.


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, are already very important markets,

where Iveco has undertaken significant investments,

directly or through joint ventures.

Brazil

The economic scenario in Brazil changed considerably in the

final months of 2002, after the election victory of President

Lula.The challenges ahead of him are certainly huge. He will

have difficulty in having any law passed if he does not come to

some agreement with other political parties. In addition to

which, his target of raising wages and social spending, and

encouraging exports are going in the opposite direction to the

fiscal targets agreed with the IMF.

In 2002, GDP grew by 1.52%, compared to 1.5% in 2001.

Strong exports, sustained by the devaluation of the Real,

helped to counterbalance the impact of the high interest rates.

The growth rate accelerated in the last quarter, recording a

3.4% improvement on the same period of 2001.

Inflation stood at 8.5%, compared to 6.8% in 2001.

The commercial vehicle market contracted by 4.6% to 79,289

units, compared to 83,142 in 2001. In this situation Iveco sold

3,990 vehicles (-9.9% on 2001), including 2,767 Light vehicles,

213 Medium vehicles and 1,010 Heavy vehicles (+34% on

2001).

Argentina

In 2002, the Argentine economy remained in deep

recession. GDP contracted by 10.9% compared to the fall

of 4.4% in the previous year.There are however first signs

that a number of sectors are over the worst and are

starting to recover, mainly those related to exports and

those that benefit from the strong devaluation of the local

currency. Consumer prices increased by 25.9% having

fallen by 1.1% in 2001.

Prospects in the medium term remain pessimistic, unless

important political reforms are introduced, which the

political parties do not seem inclined to discuss before the

presidential elections of March 2003.The Peronista party,

the only one capable of winning the elections, is going

through one of the worst crises in its history. Regardless of

who wins, the candidates' ability to deal successfully with

the future remains a question mark.

The Argentine commercial vehicle market was badly hit by

the economic crisis. Total registrations plummeted 59.3%

to 3,505 units (8,601 in 2001). Iveco sales fell 49.5% to 723

units, but market share increased from 16.7% to 20.6%.We

must also include 196 vehicles sold to markets to the

South Pacific area.

Venezuela

The sudden deterioration in the political climate in recent

months had a devastating effect on the Venezuelan economy.

The economic impact of the general strike begun in December

probably caused GDP to contract by over 10% in the last

quarter of 2002. For the year as a whole, GDP decreased by

8.9% compared to growth of 2.8% in 2001. Inflation also

soared, from 12.5% to 22.4%.Among measures introduced to

contrast the effects of the general strike, in February President

Chavez fixed the exchange rate for the Bolivar at 1,596 for

Dollar purchases, and 1,600 for Dollar sales, compared to

Bolivar 2,500 on the black market.

The crisis caused the commercial vehicle market to plunge

37% to 6,068 units (9,627 in 2001). In spite of this, Iveco

improved its market share from 18.7% in 2001 to 24%, selling

1,458 units compared to 1,800 the previous year.To this we

must add 162 vehicles sold to countries in central America and

the Caribbean.

Turkey

The most important event was the result of the general

election. For the first time in decades, a single party (the

AKP) won control of Parliament. It seems to be a strong

government capable of introducing the necessary reforms,

but the fragmented structure of the winning party and its

ideological background pose serious risks for the country's

economic and political prospects.

The AKP leadership intends to implement the programme

sponsored by the IMF and to undertake the reforms

necessary to give it access to E.U. membership, but it is

afraid that internal pressure will emerge on the part of

fundamentalist Islamic factions capable of undermining the

government's strength.The new government will also have

to face up to mounting pressure from the Armed Forces

which view the AKP with suspicion.

The economy began to recover after the sudden collapse

of 2001 when GDP fell by 7.4%. In 2002 it grew by 6.3%.

Inflation decreased to 45% from 54.4% the previous year.

Industrial production in the first eight months of the year

increased by 8%, while the weakness of the Turkish Lira

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 27

continues to stimulate exports. The market for Light

commercial vehicles and derived bus versions with GVW

above 3.5 tonnes grew by 27% in 2002 to 29,000 units, and

the companies in the Otoyol joint venture maintained their

share at 9.8%, or 3,179 units sold, 612 of which imported.

Otoyol exports were lower than in 2001 (1,231 vehicles

compared to 1,421). In its first year of operations, Iveco

Otomotiv Ticaret A.S., a full-range dealership owned

entirely by Iveco and a centre of excellence for service to

Heavy vehicles, became the leading dealer on the market

for sales of new vehicles.

China

The Chinese GDP expanded by 8% in 2002, compared to

7.3% in 2001. This growth was sustained by increased

exports and continued state investment in infrastructure.

Industrial production increased at the highest rate of the

last seven years, with foreign companies investing record

sums to build plants, and the government stepping up its

investments to build roads, bridges and railways.

Inflation was -0.8%. In December this deflationary trend

slowed down, resulting in a 0.4% reduction in annual terms.

The automotive market continued its extraordinary

performance: output increased by 38% and sales by 37%.

The goods transport vehicle market as a whole expanded

by 31.5% (to a total of 1,076,600 units).The most striking

increase was in the Heavy vehicle segment (+67%) with

245,500 registrations; the Medium segment grew

marginally (+1.1%) to 164,500 units. The Light segment

increased by 41.1% (502,200 units) while micro vehicles

grew by 4.6% to 145,500 units.The market for passenger

transport vehicles grew by 24% overall.

Global volumes in the medium and large bus segments

were substantially the same (65,500 units) but there was a

shift towards the upper end of the market (buses > 10 m).

The minibus segment, where Naveco operates, expanded

by 21% (332,900 units).

Microbuses also grew by 29% to 631,100 units. The

Naveco company, a 50-50 joint venture with the Yuejin

group, manufactured and sold 14,505 vehicles. A 10%

increase in sales compared to 2001 did not result in an

increase in operating income, because of fierce local

competition and the impact this had on marketing policies.

CBC-Iveco, a 50-50 joint venture with the CBC Group,

sold 7,060 complete buses and CKD chassis kits (5,177

and 1,883 respectively), with sales totalling RMB 1,196

million (US$ 144.2 million).

CBC-Iveco operates in the medium (7 to 10 metres) and

large (over 10 metres) bus segments, and has a 10.6% share

of the market.

Production of gearboxes by Haveco (33% Iveco, 33% Yuejin

Group, 33% H.G.C.) more than doubled compared to

2001 (47,500 units compared 23,000), thanks to

confirmation of contracts for family car programmes.

OPERATIONS IN OTHER COUNTRIES

In 2001, Iveco sold 1,328 vehicles in Australia (+25% on

2001), where the market totalled 22,841 units (+26% on

2001), maintaining its market share stable at 5.8%. In a

context of growing competitiveness, Iveco managed to hold

its position, and the Daily was launched successfully (207

registrations).

In South Africa, Iveco sold 694 units in 2002. It was a good

year for the company, both financially and in terms of the

positive market reaction towards the Iveco brand.

In the Light segment Iveco retailed 465 units, having achieved

a 29% market share in the 12-15.5 ton GVM panel van

segment. The new Daily is proving itself a winner with a

number of fleet owners changing from competitive brands.

New applications for the Daily are constantly being sought,

such as roll back units, armoured vehicles to transport

valuables and luxury bus units.

The Medium and Heavy range is currently being

strengthened by the introduction of the new Cursor and

Tector engines, as well as the 480hp 6x4 truck tractor for

long distance on-highway application, imported from Iveco

Australia.The company is making inroads into selected key

fleets with these new improved products.

The export market is undergoing constant development

with new dealerships opening in Mozambique and Zambia.

Part sales are gaining momentum year on year, coupled to an

extensive after-market drive to support Iveco vehicles

throughout Sub-Saharan Africa.

And finally, in Ethiopia, in spite of the persisting economic

recession that began the previous year, AMCE sold 112

units, maintaining its position on the market. Stock and

capital invested were drastically reduced.There was also a

significant improvement in direct sales, which made it

possible to record total sales for Iveco of 359 units.


Financial services (Transolver Finance)

The Iveco Finance group of companies manage both

financing activities for the distribution network, and

financing and leasing activities for end customers on

the major markets.

The countries in which Iveco Finance has an operating

structure are: France, Germany, Italy, Portugal, Spain,

Switzerland and the United Kingdom.

An Iveco Finance organisation also finances sales in

Brazil.

In 2002 Iveco Finance achieved high levels of business,

and at the end of December 2002, the portfolio of

financing and leasing contracts for end customers

stood at 105,696 units (99,091 units at the end of the

previous year), for a total value of approximately Euro

2,600 million.

During 2002, 42,474 new financing and leasing

contracts were stipulated, in line with the volumes

achieved the previous year.

A total of 33,671 contracts were stipulated for new

Iveco vehicles, and the level of vehicles financed was

approximately 30% of total Iveco sales.

A further 8,803 contracts were stipulated for the

financing and leasing of buses, used vehicles, trailers

and semitrailers.

The highest percentage of Iveco vehicle sales financed

was recorded in Germany and Switzerland, where 50%

of sales were financed by the local Iveco Finance

company.

In France, Italy, Spain and the United Kingdom, the

percentage of Iveco sales was particularly high in the

Heavy vehicle segment, exceeding 30%.

Rental services (Fraikin and Transolver Services)

In 2002, 5,619 new rental contracts were stipulated

(6,681 in 2001), a 15.9% fall on 2001, and 2,308

contracts were renewed (2,831 in 2001, down 18.5%).

The fall in business volumes compared to the previous

year was particularly evident on the important French

market as a result of the general fall of demand in this

area, resulting in lower volumes of contract renewals.

In the other European countries, business volumes in

2002 were essentially stable at the previous year's levels.

At the end of 2002, the fleet of vehicles rented by

Transolver Service and Fraikin was in line with the

fleet at the end of 2001 (about 37,000 units).

On December 31, 2002, the fleet was made up

approximately as follows in the various countries:

28,400 vehicles in France, 4,360 in the United

Kingdom, 1,930 in Spain, 1,200 in the Benelux, 250 in

Germany and 130 in Portugal, while Italy was

substantially stable.

FINANCING AND SERVICE ACTIVITIES

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 2929

2000 2001 2002

Light 19,396 25,524 22,883

Medium 7,359 8,181 8,588

Heavy 9,069 10,248 10,127

Total 35,824 43,953 41,598

NEW CONTRACTS BY RANGE (*)

2000 2001 2002

Italy 9,749 12,514 12,227

France 12,286 14,285 10,477

Germany 7,703 6,343 8,539

Spain 3,409 4,672 4,654

UK 2,251 3,306 3,464

Other 426 2,833 2,237

Total 35,824 43,953 41,598

NEW CONTRACTS BY COUNTRY (*)

(*) renewals included


00 01 02

27,500

22,000

16,500

11,000

5,500

0

00 01 02

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

2000 2001 2002

Retail 12,720 14,301 12,402

Leasing 14,372 20,140 21,269

Contract Hire 8,732 9,512 7,927

Total 35,824 43,953 41,598

NEW CONTRACTS BY PRODUCT (*)


00 01 02

24,000

20,000

16,000

12,000

8,000

4,000

0

Con

trac

ts (

unit)

NEW CONTRACTS BY PRODUCT


CUSTOMER SERVICE

In what was not a positive macroeconomic scenario,

activities related to after-sales service for Iveco vehicles

remained in line with the previous year. Some markets,

such as France, Spain, Germany and Eastern Europe

registered levels of parts and service sales above

expectations.

The market confirmed the trends in terms of service

levels and greater productivity of vehicles for

customers, shorter periods of ownership, longer

maintenance intervals, greater reliability and the need to

minimise unplanned vehicle down times.The result was

the growing percentage importance of revenues

generated by maintenance contracts compared to

revenues generated by parts sales.

In 2002, as part of the goal to increase the

logistic/marketing efficiency of services and parts

distribution, the Ramses project was consolidated. It is

now 100% operative in Spain, Italy, Portugal and the

Benelux, 80% in Germany, Austria and Switzerland, and

in the course of implementation in France and the

United Kingdom. In 2002 Ramses brought a 2% increase

in the level of service to end customers, and a 2.5%

reduction in the parts stocks of the network.

In 2002 over 80 initiatives were launched to promote

the service through e-Services in all European markets,

with the participation of about 2,000 service points.The

virtual "Parts Shop Window", which is the electronic

tool that lets dealers offer their stock for exchange,

recorded a significant increase in business, consolidating

a monthly average of 3,000 accesses and a level of

efficiency exceeding 65%.

The Iveco Client Center, which operates within the

Customer Service Business Unit with the mission of

assisting customers in difficulty on the road, continued

to improve its performance, increasing the use of the

service by customers. During 2002 91,500 cases were

dealt with (+20% on 2001), with an average response

time of 25 seconds.The total number of calls dealt with

was about 1 million, because the agents follow each case

right to its conclusion.

The constant technological evolution of Iveco products,

particularly where electronics is concerned, and the

need to assist vehicles, making it necessary to develop

and maintain skills in this field, continue to be

fundamental “drivers” of Customer Service activities.

In 2002 great progress was made in the field of

diagnostic systems to serve the new electronic

architecture adopted on the new Stralis vehicle. The

advent of the Multiplex system changed the diagnostic

methodologies: Iveco has gradually updated all its

diagnostic tools and has begun to develop the

“diagnostic platform of the future”, the Smartbox.

In 2002 the project for the tele-connection of the

diagnostic instruments present on the network got

underway, and an Expert Centre was created, housed in

the “Customer Support Center”.The Expert Centre can

boast all the technical and linguistic skills necessary to

perform tele-diagnosis, tele-programming and tele-

management.

The programme to boost skills resident in the network

was equally important in 2002: all the profiles of the

training sessions were updated, adapting them to the

new technological contents of vehicles, and the

innovative DEEC (“Dealer Electronic Excellence

Community”) project was launched, thanks to which,

each Dealer will have an "excellent diagnostician" on his

staff, who is in constant contact with the Iveco technical

centre.

These projects are designed to increase the resident

skills in the network, but at the same time, Customer

Service continued its work to increase the loyalty of

end customers by developing a detailed offer of

“planned maintenance”, which enables the customer to

choose the formula that meets his needs, and this

brought a significant increase in the number of operative

contracts in 2002.

31R E P O R T O N O P E R A T I O N S

The Information Systems and e-Business function

(IS&eB) introduced sweeping changes in 2002 and

intended to define a precise, stringent strategy to

meet its customers' IT requirements. To implement

this strategy, which is designed to give the IT services

more added value for the company, IS&eB has targeted

all its available resources at highlighting three aspects

of its activities:

- to understand its customers' needs;

- to offer state-of-the-art technology;

- to meet its commitments with top quality products

and services.

Our goal is to rapidly create solutions for an

increasingly dynamic business environment, with a

growing degree of homogeneity, reactiveness and

quality.

In organisational terms, the first stage of the

transformation, which began in 2002, was the

incorporation into IS&eB of three existing structures

(Information Technology, e-Business, Logistic Methods

and PRP Project), in order to increase the attention

paid to business requirements and the orderly,

efficient realisation of projects. The IS&eB

organisation was designed around five basic principles:

operations stewardship, culture, innovation, value

delivery and client / customer service. All the work

done by IS&eB is constantly measured against these

principles. The new organisation is now in a position

to achieve significant savings on existing IT systems

(legacy systems) but also to develop new solutions.At

the same time, a programme was launched to develop

skills that can support the changes taking place in

technology.

During the year a strategic long-term agreement was

signed with Global Value, for the outsourcing of IS

services. The services provided by GV are above all

the management of hardware (housing), management

of the call centre, on-site support and management of

the legacy systems.

The second stage, which was launched together with

the new organisation, envisages the revamping of basic

company infrastructure. Investments regard local and

geographical networks (LAN and WAN) on one hand,

and, where manufacturing sites are concerned, the

replacement and consolidation of the now outdated

DEC-VAX calculation platforms with new VAX-

ALPHA platforms. And on the other hand, the

standardisation and rationalisation of personal

hardware and software, as well as the replacement of

business applications based on legacy systems in the

areas of materials management, finance and control,

and the revenue cycle.

Legacy systems in the above areas will be replaced by

the integrated SAP (Software Application Product)

system, which offers a unique opportunity to redesign

the business processes, and to achieve greater

uniformity.

And a communications programme was launched at

corporate level to create awareness and to focus,

inside the company, on the importance of individual

responsibility in the management of information.

During the year the policies and procedures to step

up the security of the systems and to manage the

privileges for access to them were also updated, as

were the disaster recovery and business continuity

plans.

This attention to the renewal of current technological

platforms, the improvement of connectivity and use of

SAP modules is a unique opportunity for the company

to update its technological portfolio, simultaneously

adding new possibilities to connect customers and

suppliers.

From this viewpoint, the SAP programme will bring

significant improvements to the quality and price

ratio, which will benefit business activities.

And during the year, a great deal of work was

concluded to consolidate the engineering aids

(CAD/CAM/PDM) and product representation

systems (PRP - Product Representation Process), and

to transfer intellectual property from outside

companies to Iveco personnel.

Starting from the infrastructure realised so far, the

next stages in this development will exploit the

investments in connectivity to create business

INFORMATION TECHNOLOGY


standard systems and processes for the whole

company and for its external partners.

The development of the new IT strategy and its

organisational support, will enable Iveco to

concentrate on its core business and allow IS&eB to

guarantee management of the two major factors that

guide IT decisions:

- to ensure common business processes are

implemented consistently in all parts of Iveco all over

the world;

- to support the integration of Iveco business to

foster interaction between the most important

company functions and the flows of information

necessary for them to work.

In this context, the legacy component of the Iveco IT

system, based on a large number of stand-alone

systems linked in numerous complex systems, will

initially be incorporated into the company network,

gradually being replaced by applications designed to

reflect the principles of standardisation.

In the new business strategy, oriented to make Iveco

a global player in the commercial vehicles sector,

analysis of processes has produced a new

“philosophy”, which recognises the integrated,

standardised nature of the activities performed day

after day throughout the company.

The key principles that support this business

philosophy are:

- to search for standardised and not “single”

solutions;

- to acquire the applications, software and hardware,

not to build them;

- to install the applications as they are, without

changing or altering them;

- to supply a standardised infrastructure of systems

and services;

- to implement “single” solutions only when there is

a demonstrable business benefit.

This approach will make it possible to maximise our

investment in strategic assets and to reduce the

overall cost of delivering services, simultaneously

renewing the application portfolio.

Guided by a global IS organisation and equipped with

standard processes, in terms of business and

geographically, and thanks to a standard infrastructure,

Iveco is in a good position to create value for itself

and for its customers in the commercial vehicles

market.

R E P O R T O N O P E R A T I O N S 33

In 2002, development activities were concentrated on a

dual goal: greater attention to training quality and the

development of skills, and a strong urge towards the

active involvement of employees in any processes that

impact on business results.

The Change Management platform, launched with the

objective of stimulating cultural change inside the

company, completed the first stage of the Q32000

programme in 2002, designed to make all the

professionals aware of the culture of re-engineering

processes and of constant improvement in the light of

Total Quality Management.

What is more, the training activities undertaken by the

Change Management platform, have touched on several

topics, one of the most important of which was the

training of blue collars and training staff to activate the

Base Teams in the context of the Integrated Plant

project (see below), which involved more than 8,000

people.

Of the various development programmes, a constant

focus was maintained on specific groups of the company

workforce, particularly young graduates. In 2002 the

Graduates were once again at the centre of an appraisal

programme to support their professional development,

backed up by personalised feedback (Feedback

Intensive Programme).

Iveco's young graduates were also the protagonists of

the now traditional Graduates Convention, the third

edition of which confirmed the consolidated

competition between international and interfunctional

groups, and focused attention on knowledge of the

company from within and the development of an

aptitude for relating with other people to achieve a

more effective relationship with suppliers, dealers and

customers.

The attention paid to these resources, combined with a

labour market that is less dynamic than in recent years,

determined a high level of retention inside the company.

The 2002 People Satisfaction Survey provided feedback

of the level of satisfaction on the job (ISL) and the index

of the Iveco Professionals' identification with the

company (IIA).

Compared to 2001, there were a number of significant

changes to the PSS: a larger number of sites (52 instead

of 48), the extension of the parameter to include Irisbus

Professionals, the activation of a “building site” for

Commercial Operations – Customer Service employees

and the introduction of online responses instead of the

traditional paper forms. A total of 3,012 professionals

and 147 employees took part in the survey.

The results of the ISL and IIA substantially confirmed

the positive results of the 2001 PSS (-1.1% for ISL; -0.5%

for IIA). The resulting improvements that will be

introduced in 2003 will focus on improving the climate

in the various sites, acting on the areas for improvement

identified by careful analysis of the local data.

In organisational terms, 2002 brought several important

changes. The birth of the Trucks Business Unit began a

far-reaching, complex process of integration between

the existing structures (BU Medium and BU Heavy)

which continued for most of the year. Born out of the

growing competitive pressure on Iveco's business to

speed up the globalisation of industrial and product

management worldwide, the Trucks BU has a dual goal:

to achieve maximum operating synergies wherever

possible and to create a single management system for

the development and realisation of the new trucks that

are destined to replace the Iveco medium and heavy

range in a few years time.

The Information System & e-Business function was

created by merging the Information Technology,

e-Business, and Logistic Methods and PRP Project

functions, with the goal of accompanying the radical

transformation underway within Iveco, by worldwide

coordination of all activities related to management of

Iveco's information systems.

The process to incorporate Irisbus was also concluded

in 2002.And we must mention that the Integrated Plant

project (see above) was substantially completed, with

the creation of Base Teams in Iveco plants.

Increasingly widespread and extensive use of

information systems such as the Human Resources

Management System and Data WareHouse in the

context of Human Resources, provided concrete,

HUMAN RESOURCES


immediate support to an increasingly vast amount of

work. At the same time, use of the intranet e-portal

increased steadily, and this legitimated the increased

supply of web-based services and information for Iveco

users.

Where personnel management is concerned, there was

significant turnover in 2002.To respond to the high level

of manufacturing demand, 2,352 people were taken on

during the year, but the number of people leaving the

company during the year also remained high (over 3,480

people).

Efforts undertaken to rationalise industrial and

commercial facilities resulted in the closure of the

Seddon Atkinson plant in the United Kingdom, and

production was transferred to the Madrid plant. And in

Northern Europe, and Iveco-owned branches and

dealerships were reorganised, resulting in a smaller

workforce.

The workforces of the plants in Argentina and Brazil

were also downsized to adapt to the lower demand

from the market, due to the particular economic

situation in these countries.

And the outsourcing programme was completed with

operations that affected 180 people.

As in previous years, there was consistent recourse to

methods to increase the flexibility of labour, and in

particular to short-term contracts, part-time contracts

and similar systems.

Tools that allow the working calendar to be modified to

reflect the absorption of manufacturing output by the

various markets were widely used in Spain and

Germany, for example.

And finally, a strong impulse came from the achievement

of “ISO 14001” certification for the environmental

management system; the Ulm and Comesa plants, which

had received their certification in recent years, were

joined in 2002 by the Foggia plant, and the Turin plant

where the NEF engines are built.

R E P O R T O N O P E R A T I O N S 35

In the first quarter of 2003, 100% of the Fraikin Group

was sold to Eurazeo, an investment Company listed on

the Paris Stock Exchange; the related estimated loss has

been accrued in the Consolidated Financial Statements.

Iveco's relations with Fraikin will however continue to

produce positive results. Actually, the agreement with

Eurazeo envisages that Iveco will continue to be the

supplier of vehicles and services connected to the

activities of the Fraikin Group.

During the first part of 2003 there was strong tension

on the market, especially in Western Europe, where

demand is expected to decrease marginally in the first

quarter compared to the trend of the final months of

2002.

The current political and economical situation

worldwide and the uncertainties regarding the risk of

war are not conducive to investments in durable goods.

In this context, Iveco is undertaking to recover

profitability, thanks to the market share gained with the

launch of new products and the improvements achieved

in terms of quality, products, and industrial processes.

EVENTS OCCURRING AFTER YEAR-END

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 S36

CONSOLIDATED FINANCIAL STATEMENTS

Analysis of the financial situation 37

Consolidated balance sheets 42

Consolidated statements of operations 46

Consolidated statements of cash flow 48

Notes to the consolidated financial statements 49

Composition, principal changes and other information 54

Report of the indipendent auditors 80

Ten-year highlights 81

The companies in the Iveco Group 82

CONTENTS

37C 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 2002, the consolidation perimeter of the Iveco Group was modified by the line-by-line consolidation of the

following:

- Iveco Finance AG: (consolidated at cost in 2002);

- Iveco - Motor Sich Inc and Iveco Ucraine Inc: (consolidated at Equity method in 2001);

- Zona Franca Alari Sepauto (from July);

- Iveco International Trade & Finance SA (from August);

and by the total consolidation of the Irisbus group (consolidated on a proportional method 50% in 2001).

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

ANALYSIS OF THE FINANCIAL SITUATION

Summary of the consolidated Income Statement (Euro million)

2002 2001 % Change

Revenues from sales 8,113.3 7,627.6 6,4

Revenues from sales of services 1,022.3 1,022.5 (0,0)

Net revenues 9,135.6 8,650.1 5,6

Other revenues 619,3 531.1 16,6

Value of production 9,754.9 9,181.2 6,2

Cost of materials 5,462.6 4,995.2 9,4

Cost of services 1,317.8 1,367.1 (3,6)

Cost of labour 1,409.2 1,336.9 5,4

Other expense 1,463.0 1,211.3 20,8

Cost of production 9,652.6 8,910.5 8,3

Operating profit 102.3 270.7 (62,2)

Financial income and expense (138,7) (145,5) (4,7)

Adjustments to financial assets (23,4) (3,0) 693,7

Extraordinary income and expense (489,3) (233,9) n.s.

Income tax 56,2 (11,2) (601,6)

Minority interest (4,1) (1,8) 129,0

Net profit (497,0) (124,7) 298,7

38 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

Total net revenues for 2002 came to Euro 9,136 million, a 5.7% increase on the previous year (about Euro 8,650

million in 2001). In homogeneous terms, with the Irisbus group consolidated 50%, net revenues would show a

1.5% contraction, attributable, by the same rule of homogeneity, to a 0.9% fall in sales volumes and the

unfavourable performance of the Western European market (down 5.7% on 2001), which Iveco was able to offset,

increasing its share by 0.9 percentage points to 17.9%, thanks in part to excellent results in the medium vehicle

segment, the success of the new Stralis AS heavy vehicle and the consolidation of the Irisbus group.

The overall effect of the perimeter Delta on net revenues, linked to the changes to the consolidation perimeter

of the companies listed above, amounted to Euro 836 million in 2002.

Revenues from sales of services, related primarily to the activities of the Iveco finance companies, remained

essentially stable.

Other revenues increased by approximately Euro 88 million (16.6%) primarily as an effect of the internal

production of fixed assets (Euro 117 million) and higher surpluses from the disposal of tangible fixed assets (Euro

36.8 million), both related to the renewal of the long-term rental vehicle fleet of the finance companies,

counterbalanced by the decrease in final inventories (Euro 61.2 million).

The Cost of production amounted to Euro 9,652.6 million (Euro 8,911 million in 2001), an 8.3% increase (Euro

8,989 million in homogeneous terms).

The Operating profit amounted to Euro 102.3 million (Euro 270.7 million in 2001) and represented operating

profitability of 1.1% of net revenues, lower than in 2001 (3.1% of net revenues).

This contraction was determined primarily by the combined effect of:

- lower unit sales volumes for all the products marketed, as illustrated above, and, to a lesser degree, a reduction

in prices for the vehicle ranges, the effect of the worsening conditions on the market, which has contracted,

causing an increase in competitive pressure, only partially offset by Iveco's improved market share. The volume

effect amounted to a loss of Euro 126 million;

- larger allocations to the warranty fund, a significant allocation of funds in the second half of the year for a recall

campaign in France, and the increased depreciation of used vehicles (total effect, a cost of over Euro 50 million),

as well as the effect of increased depreciation and amortisation (Euro 13 million), due in part to the changes in

the consolidation perimeter, mentioned above.

Net financial expense amounted to Euro 138.7 million (Euro 145.5 million in 2001), or Euro 157.4 million if we

include the Euro 11.7 million tax credit on dividends, reclassified in 2002 together with taxation, primarily the

result of a lower level of indebtedness during the year, and the fall in interest rates.

Income from non-consolidated investments was negative for Euro 23.4 million (negative for Euro 3 million in

2001), and was influenced by the alignment of a number of affiliated investments to their equity values, and, to a

larger extent, attributable to TBCO (Euro 19.2 million), to Turkish operations (Euro 2.5 million) and to the E.E.A.

project (Euro 2.4 million).

During the year, the balance between extraordinary income and expense was negative for Euro 489 million (Euro

234 million the previous year) which represents a deterioration of about Euro 255 million.The cause of this lies

first of all in the prudential accrual of the Euro 210 million loss deriving from the sale of the investment in Fraikin

and secondly, to the impairment of the assets of the Ikarusbus Jamugyarto RT company, and the widespread effect

of the alignment of Irisbus to the Fiat Group consolidation principles.

Income tax produced a credit of Euro 56 million (a charge of Euro 11.2 million in 2001); this breaks down into

Euro 25.2 million for IRAP (Euro 29.6 million in 2001), Euro 24.5 million for other taxes (Euro 30.8 million in

2001), Euro 15 million for tax credits on dividends (under financial charges in 2001), and Euro 91 million for

deferred tax credits (Euro 49.2 million in 2001).

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 39

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

Net tangible fixed assets increased by Euro 113 million, from Euro 2,287 million to Euro 2,400 million, primarily

as a result of:

- new capital spending totalling Euro 587 million (Euro 718 million in 2001), of which Euro 256 million for

industrial investments (Euro 370 million in 2001), primarily related to the new plant to produce shafts for light

and medium duty engines, the restyling of the new Stralis heavy vehicle and the new medium duty EuroCargo

Tector, and the development of new engine families (the new F1A engine for light vehicles), and Euro 331 million

(Euro 348 million in 2001) to expand the contract hire vehicle fleet;

- depreciation of Euro 354 million (Euro 344 million in 2001), of which Euro 125 million (Euro 132 million in 2001)

related to long-term leasing vehicles;

- the negative effect (Euro 89 million) of the conversion of investments in companies with currencies of account

other than the Euro, at year-end exchange rates, related primarily to companies operating in South America;

- disposals and other changes totalling Euro 129 million (Euro 355 million in 2001).

Other fixed assets amounted about to Euro 445 million (about Euro 672 million in 2001), decreasing by Euro 227

million; this change is primarily the effect of the amortisation of intangible fixed assets (Euro 69 million), the

change in the consolidation method of the Ukrainian companies and changes to the consolidation perimeter, the

devaluation of the Libyan investment in TBCO, partially offset by the new investment in the CBC joint venture,

and above all, the writing-off of the goodwill for the Fraikin group (Euro 201 million).

Summary of the consolidated Balance sheet (Euro million)

2002 2001 % Change

Fixed assets

Tangible fixed assets 2,399.7 2,286.7 4.9

of which vehicles under operating lease 548.5 397.5 38

Assets under financial lease 784.7 770 1.9

Other fixed assets 444.5 671.8 (33.8)

Net current assets

Inventories 1,488.6 1,530.1 (2.7)

Trade receivables 1,036 1,018.6 1.7

Financial receivables 3,595 2,816.9 27.6

Cash and cash equivalents, securities and bonds 479 405.3 18.2

Other assets 618.3 505.6 22.3

Total assets 10,845.8 10,004.9 8.4

Stockholders' equity 1,174.3 1,768.4 (33.6)

Liabilities

Reserves for risks and charges 1,180.7 880.9 34

Trade payables 2,230.9 2,229.2 0.1

Financial payables 5,076 4,119.8 23.2

Other liabilities 1,183.8 1,006.5 17.6

Total liabilities and stockholders' equity 10,845.8 10,004.9 8.4

Summary of Cash Flow (Euro million)

Net Financial Position at 31/12/2001 (211)

Cash flow generated/absorbed by operating activities

Total net profit plus depreciation and amortisation (73)

Net income from non-consolidated investments 4

Net change in provisions 314

Change in current assets and liabilities 76

Other 3

324

Cash flow generated/absorbed by investment activities

Investment in tangible fixed assets (587)

Investment in intangible fixed assets (47)

Disposal of tangible fixed assets 110

(524)

Changes in consolidation area (45)

Dividends paid 0

Other changes 48

Net Financial position at 31/12/2002 (408)

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 S40

Working capital decreased by about Euro 81 million, from Euro (18) million to Euro (99) million, as a result of:

- a Euro 17 million increase in trade receivables, the joint effect of the consolidation of the remaining 50% of

Irisbus and increased discount and securitisation operations undertaken during the year as well as measures taken

to reduce overdue accounts. Considering homogenous consolidation conditions (Irisbus 50%), trade receivables

would be Euro 930 million lower, a decreasing by approximately Euro 90 million on 2001;

- a Euro 41 million decrease in inventories;

- higher current liabilities (trade payables and other net payables), for Euro 53 million. Had the consolidation

conditions of Irisbus remained the same, trade payables would have been approximately Euro 173 million lower.

Stockholders' equity decreased from Euro 1,768 million at 31/12/2001 to Euro 1,174 million at 31/12/2002; the

shareholders' equity pertaining to Iveco totalled Euro 1,098 million (down Euro 605 million compared to 2001).

The Euro 604.8 million decrease in Stockholders' equity was primarily the result of the loss for the year (Euro

497.1 million), and exchange rate differences from the conversion of financial statements in currencies other than

the Euro (loss of Euro 103.5 million).

The net financial position at 31/12/2002 revealed net indebtedness of Euro 408 million (Euro 211 million in 2001),

an improvement of Euro 197 million during the year.

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


The net financial position worsened marginally compared to 2001 due to the joint effect of cash flow (net loss

plus amortisation and depreciation) generated during the year, amounting to Euro (70) million, increased

allocations to provisions of Euro 314 million, and related effects are to the efforts to reduce operating capital

(Euro 76 million).

Funds generated by the year's operations (Euro 323 million) were below the uptake of cash absorbed by

investment activities (Euro 524 million, net of disposals).

The structure of the net financial position at 31/12/2002 is illustrated in the following table, and compared with

that at 31/12/2001:

Structure of the net financial position (Euro million)

31/12/2002 31/12/2001 Change

Liquid assets and marketable securities 479 405.3 73.7

Short and medium/long-term financial receivables 3,617.8 2,867.6 750.2

Assets granted in leasing 784.7 770 14.7

Accrued income and prepaid expenses 21.4 15.1 6.3

Total financial assets 4,902.9 4,057.9 845

Short-term financial payables 3,798.5 2,511.9 1,286.6

Medium/long-term financial payables 1,285.6 1,616.5 (330.9)

Accrued expenses and deferred income 227 140.5 86.5

Total financial payables 5,311.1 4,268.8 1,042.3

Net Financial position (408.2) (210.9) (197.2)

Analysis of the financial position reveals a higher percentage of financial receivables against the total invested,

which increased by Euro 750 million on 2001, primarily as a result of the increase in sales financing activities by

Transolver finance companies, and the impossibility of securitising the leasing and retail portfolio.

Assets granted in leasing at 31/12/2002 represented a net value of Euro 784.7 million, having increased by about

Euro 15 million.

The increase in financial indebtedness was related primarily to the conclusion of the Fraikin securitisation

programme under the Synthetic Lease plan, and was an effect of the changes to equity and net invested capital

illustrated above.


ASSETS

(THOUSAND EUROS)

CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31, 2002 AND 2001

Notes December 31, 2002 December 31, 2001Amounts due from stockholders’for shares subscribed but not called — —

Fixed assetsIntangible fixed assets 1Start-up and expansion costs 9.623 23.023 Research, development and advertising expenses — —Industrial patents and intellectual property rights 9.576 9.516 Concessions, licenses, trademarks and similar rights 39.916 47.750Goodwill 16.152 17.633 Intangible assets in progress and advances 46.166 24.847 Other intangible assets 22.569 24.624 Differences on consolidation 142.376 341.256 Total 286.378 488.649

Property, plant and equipment 2Land and buildings 656.472 651.568 Plant and machinery 737.847 674.558 Industrial and commercial equipment 244.042 200.019 Other assets 621.723 471.949Construction in progress and advances 139.653 288.607Total 2.399.737 2.286.701

Financial fixed assets 3Investments in:

Unconsolidated subsidiaries 2.030 18.803Associated companies 82.103 69.812 Other companies 17.215 38.596

Total Investments 101.348 127.211

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 — 2.953 Total Receivables from parent companies — 2.953 Others:

Due within one year 19.328 40.019 Due beyond one year 3.502 7.719

Total Receivables from others 22.830 47.738 Total Receivables 22.830 50.691 Other securities 33.973 5.227 Treasury stock — —Assets leased 784.685 769.987 Total 942.836 953.116 Total fixed assets 3.628.951 3.728.466

Current assetsInventories 4Raw materials and supplies 363.900 367.004 Work in progress and semifinished products 218.570 204.804 Contract work in progress 4.959 5.910 Finished goods and merchandise 898.045 946.880 Advances to suppliers 3.139 5.454 Total 1.488.613 1.530.052


ASSETS

(THOUSAND EUROS)

Notes December 31, 2002 December 31, 2001Receivables 5Trade receivables:

Due within one year 962.058 1.003.357 Due beyond one year 21.959 5.702

Total Trade receivables 984.017 1.009.059 Receivables from unconsolidated companies:

Due within one year 52 1.713 Due beyond one year

Total Receivables from unconsolidated companies 52 1.713 Receivables from associated companies:

Due within one year 51.750 8.319 Due beyond one year 658

Total Receivables from associated companies 52.408 8.319 Receivables from parent companies:

Due within one year Due beyond one year

Total Receivables from parent companiesOther receivables:

Due within one year 421.747 360.335 Due beyond one year 135.981 112.972

Total Other receivables 557.728 473.307 Total 1.594.205 1.492.398

Financial assets not held as fixed assets 6Investments in

Other companies — —Total Investments — — Other securities 4.741 49.696 Financial receivables

Receivables from unconsolidated subsidiaries:Due within one year 155 2.455 Due beyond one year — —

Total Financial receivables from unconsolidated subsidiaries 155 2.455 Receivables from associated companies:

Due within one year 135.732 28.932 Due beyond one year 187.975 —Total Financial receivables from associated companies 323.707 28.932

Receivables from parent companies:Due within one year 48.468 33.284 Due beyond one year — 689

Total Financial receivables from parent companies 48.468 33.973 Receivables from others:

Due within one year 2.124.653 1.772.768 Due beyond one year 1.098.011 978.738

Total financial receivables from others 3.222.664 2.751.505 Total financial receivables 3.594.994 2.816.866 Total 3.599.735 2.866.562 Cash 7Bank and post office accounts 460.481 351.310 Checks 843 774 Cash on hand 12.947 3.491 Total 474.271 355.575 Total current assets 7.156.824 6.244.587

Accrued income and prepaid expenses 8Other accrued income and prepaid expenses 60.001 31.863 Total accrued income and prepaid expenses 60.001 31.863

Total assets 10.845.776 10.004.916


LIABILITIES AND STOCKHOLDERS’ EQUITY

(THOUSAND EUROS)

Notes December 31, 2002 December 31, 2001Stockholders’ 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 402,494 634,735Net result (497,095) (124,578)Total 1,097,906 1,702,664 Minority interest 76,369 65,777 Total stockholders’ equity 1,174,302 1,768,441

Reserves for risks and charges 10Reserve for pensions and similar obligations 266,684 149,293 Income tax reserves 184,867 175,955 Other reserves 729,185 555,633 Consolidation reserve for future risks and charges — —Insurance policy liabilities and accruals — —Total reserves for risks and charges 1,180,736 880,881

Reserve for employee severance indemnities 11 227,027 213,349

Payables 12Bonds :

Due within one year — — Due beyond one year — —

Total bonds — — Convertible bonds — —Borrowings from banks :

Due within one year 984,929 831,945 Due beyond one year 416,445 458,403

Total borrowings from banks 1,401,374 1,290,348 Other financial payables :

Due within one year 2,813,977 1,678,311Due beyond one year 860,614 1,149,551

Total other financial payables 3,674,611 2,827,862Advances :

Due within one year 71,639 58,264Due beyond one year — 82

Total advances 71,639 58,347 Trade payables :

Due within one year 2,205,140 2,192,889 Due beyond one year 13,476 19,827

Total trade payables 2,218,616 2,212,717Notes payable :

Due within one year 19,134 19,490 Due beyond one year 338 36

Total notes payable 19,472 19,526 Payables to unconsolidated subsidiaries :

Due within one year 458 2,449 Due beyond one year

Total payables to unconsolidated subsidiaries 458 2,449 Payables to associated companies :

Due within one year 13,405 11,648 Total payables to associated companies 13,405 11,648 Payables to parent companies :

Due within one year 292 5,356Total payables to parent companies 292 5,356

December 31, 2002 December 31, 2001Guarantees grantedUnsecured guaranteesSuretyships :

On behalf of unconsolidated subsidiaries — —On behalf of associated companies — —On behalf of others 277,649 226,288

Total suretyships 277,649 226,288 Guarantees of notes:

On behalf of others 261,946 107,879 Total guarantees of notes 261,946 107,879 Other unsecured guarantees:

On behalf of unconsolidated subsidiaries — —On behalf of associated companies — —On behalf of others 800,847 571,681

Total other unsecured guarantees 800,847 571,681 Total 1,340,442 905,848 Secured guarantees:

On behalf of unconsolidated subsidiaries — —On behalf of associated companies — — On behalf of others 112,200 86,923

Total 112,200 86,923 Total guarantees granted 1,452,642 992,772 CommitmentsCommitments related to off-balance-sheet instruments 564,052 772,270 Commitments to purchase property, plant and equipment 107,724 333,835 Commitments for contracts in progress 12,896 13,616 Commitments for buy back 680,764 653,628 Other Commitments 93,256 28,281Total Commitments 1,458,692 1,801,630Third-Party assets held by the Group 89,732 112,995 Group assets held by third parties 878,565 848,802 Other memorandum accounts — 37,368 Total memorandum accounts 3,879,631 3,793,567

45

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, 2002 December 31, 2001Taxes payable :


Total taxes payable 157,716 164,554 Social security payable :


Total social security payable 72,048 56,856 Other payables :


Total other payables 196,733 125,691 Total payables 7,826,364 6,775,353Accrued expenses and deferred incomeOther accrued expenses and deferred income 13 437,347 366,892 Total accrued expenses and deferred income 437,347 366,892 Total liabilities and stockholders’ equity 10,845,776 10,004,916


CONSOLIDATED STATEMENTS OF OPERATIONS(THOUSAND EUROS)

Notes December 31, 2002 December 31, 2001Value of production 15Revenues from sales and services 9,136,697 8,646,349Change in work in progress, semi-finished and finished products inventories (96,781) ( 35,599)Change in contract work in progress (1,125) 3,741Additions to internally produced fixed assets 386,478 269,541 Other income and revenues:

Revenue grants 3,024 5,352Other 326,565 291,789

Total other income and revenues 329,589 297,141Total value of production 9,754,858 9,181,174

Costs of production 16Raw materials, supplies and merchandise 5,462,593 4,995,237Services 1,317,806 1,367,070Leases and rentals 207,083 174,872 Personnel:

Salaries and wages 1,056,289 1,000,225Social security contributions 274,276 253,369 Employees severance indemnities 32,969 33,064 Employees pensions and similar obligations 25,081 23,706 Other costs 20,598 26,561

Total personnel costs 1,409,213 1,336,925 Amortization, depreciation and writedowns:

Amortization of intangible fixed assets 69,575 66,213 Depreciation of property, plant and equipment 354,118 343,829 Writedown of fixed assets — — Writedown of receivables among current assets and liquid funds 61,753 48,946

Total amortization, depreciation and writedowns 485,446 458,988Change in raw materials, suppliesand merchandise inventories (12,680) (21,393)Provisions for risks 367,437 305,626Other provisions 1,855 349 Other charges 270,909 209,862Expenses of financial services companies 142,924 82,970Insurance claims and other costsTotal costs of production 9,652,586 8,910,506Difference between the value and costs of production 102,272 270,668Financial income and expenses 17Investment income:

Unconsolidated subsidiaries 382 11,746Associated companies — —Other companies 10 225

Total investment income 392 11,971Other financial income

From long-term receivables:From others — 651From securities held as fixed assets other than equity investments 13 261 From securities held as current assets other than equity investments 378 193 Other income from:Unconsolidated subsidiaries 183 33Associated companies — —Parent companies 150 —Others 179,827 158,789 Total other income 180,160 158,822

Total other financial income 180,551 159,927


(THOUSAND EUROS)

Notes December 31, 2001 December 31, 2000Interest and other financial expenses

Unconsolidated subsidiaries — 8Associated companies 456 44Parent companies 225 268Others 318,928 317,050

Total interest and other financial expenses 319,609 317,369Total financial income and expenses (138,666) (145,471)Adjustments to financial assets 18Revaluations of:

Equity investments 3,357 5,249Financial fixed assets other than equity investments — —Securities among current assets other than equity investments 8 —

Total revaluations 3,365 5,249 Writedowns:

Equity investments 26,057 8,197Financial fixed assets other than equity investments 27 2Securities among current assets other than equity investments — — Financial receivables 695 —

Total writedowns 26,779 8,199 Total adjustments to financial assets (23,414) (2,950) Extraordinary income and expenses 19Income:

Gains on disposals 2,884 339Other income 2,777 2,692

Total income 5,661 3,031 Expenses:

Losses on disposals 95 1,252 Taxes relating to prior years 28,281 551Other expenses 466,628 235,108

Total expenses 495,004 236,911 Total extraordinary income and expenses (489,343) (233,879)Result before taxes (549,151) (111,634)Income taxes 20 (56,178) 11,186 Result before minority interest (492,973) (122,820) Minority interest 4,122 1,758 Net result (497,095) (124,578)


CONSOLIDATED STATEMENTS OF CASH FLOW(THOUSAND EUROS)

2002 2001

A) Cash at January 1 1,330,614 1,051,710B) Cash flows provided (used) by operating activities:

Net income before minority interest (492,973) (122,820)

Amortization and depreciation 635,945 410,042

Change in reserve for employee severance indemnities 131,068 (21,121)

Net change in restructuring provision 28,155 31,070

Net change in other provisions 145,397 67,377

Result from non-consolidated investments 3,621 3,073

Change in current assets and liabilities:

Trade receivables (16,625) 110,816

Inventories 41,439 25,029

Accounts payable 5,900 (53,290)

Other 45,234 8,122

Reserve for income taxes and other reserves 8,912 (20,957)

Changes in the scope of consolidation (76,126) ( 566)

Total 459,947 436,775

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

Investment in:

Fixed assets (587,060) (718,271)

Intangible assets and deferred charges (47,421) (58,107)

Proceeds from the sale of fixed assets 38,866 333,057

Change in financial receivables (464,413) (835,932)

Other (including effects of acquisitions and other changesin the composition of the scope of consolidation) 10,281 (165,796)

Total (1,049,747) (1,445,048)

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

Changes in long-term borrowings (331,906) 284,094

Changes in short-term borrowings 1,288,131 1,067,183

Dividends paid — (64,100)

Total 956,226 1,287,176

E) Total change in cash 366,425 278,904

F) Cash at December 31 1,697,039 1,330,614

The detail of cash is as follows:

(thousand euros)

Cash on hand 474,271 355,575

Temporary investment of liquidity 1,218,027 925,343

Securities 4,741 49,696

Total 1,697,039 1,330,614


Form and Content of the Consolidated Financial Statements

The 2002 consolidated financial statements have been prepared in accordance with the rules introduced by the

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

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 of

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 :

Consolidation Line by Line in Iveco Group of :

- Iveco Finance AG

- Iveco-Motor Sich Inc.

- Iveco Ukraine Inc.

- Zona Franca Alari Sepauto AS

- Iveco International Trade and Finance SA

- Irisbus Group (it was consolidated in 2001 with a proportional method 50%)

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 Board (I.A.S.B.).

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

applying the Article 32 of the Legislative Decree No. 127/91, which provides for changes to be made to obtain a

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

Principles of consolidation

Assets, liabilities, 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 in the caption

“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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2002


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 year-end 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.

On the Financial Statements as of December 31, 2002, it has been introduced a change in the determination of

buy-back and maintenance and repair reserves.

The effects of the above mentioned changes have been reflected in the caption “Extraordinary income and

expenses”.

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

expected period of recovery. Goodwill represents the contractual amount paid for goodwill resulting from the

acquisition of a company or investment.The costs of researching and developing new products and/or processes

are mainly charged to income in the period in which such costs are incurred.

Major exchange rates versus Euro

2002 2001

Average End Average End

US Dollar per unit 1,018 1,049 0,896 0,881

Pound Sterling per unit 0,642 0,651 0,622 0,609

Brasilian Real per unit 3,697 3,705 2,107 2,045

Argentine Peso per unit 3,592 3,534 0,895 1,472

Australian Dollar per unit 1,808 1,856 1,731 1,728

Swedish Krona per unit 9,096 9,153 9,252 9,301


The Group periodically assesses that the carrying value of such assets is not higher than the estimated recovery

value, in relation to their use or realization, as determined by reference to the most recent Group plans.

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.When, at the balance sheet date, property plant and equipment show a permanent impairment in value to

below their carrying value, such assets are written down to the lower value, according to the method indicated

above for intangible 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 from 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 normally 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 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 at cost. Potential 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. Securities not held as fixed assets

are evaluated at lower of cost or market value.


Reserves for risks and charges and employee severance indemnities

The reserve for risks and charges include provisions to cover losses or liabilities likely to be incurred but

uncertain as to the amount or as the date on which they will arise.

The reserve for pensions and similar obligations include provisions for long-service or other bonuses payable to

employees and former employees under contractual agreements or by law, determined on an actuarial basis

where applicable. In particular, pension funds are accounted for in accordance with IAS 19, starting from 2001, in

order to improve the presentation of the effects deriving from actuarial gains or losses relating to Pension Plans,

the Group adopted to the "corridor" approach, allowed by IAS 19.

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

companies 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.

Restructuring reserves include the costs to carry out reorganization and restructuring plans and are provided in

the year the Management formally decides to commence such plans, to the extent that such costs can be

reasonably estimated.

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 percentage of completion method.

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

on operating leases.

53

Costs

Costs are recognized on an accrual basis.

Research and development costs are mainly 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. The caption Leases and rental, relate rental and,

according to the Italian regulations, the operating leases costs, included those carried out by Fraikin Group's

companies following the securitization of the fleet.

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

12/31/2001 and other 12/31/2002

Start-up and expansion costs 23.023 189 4.595 (8.994) 9.623

Research, developmentand advertising expenses — — — — —

Industrial patentsand intellectual property rights 9.516 659 2.313 1.714 9.576

Concessions, licenses, trademarksand similar rights 47.749 13.736 30.384 8.815 39.916

Goodwill 17.634 834 3.222 906 16.152

Intangible assets in progressand advances 24.846 27.849 - (6.529) 46.166

Other intangible assets 24.624 4.154 7.732 1.523 22.569

Differences on consolidation 341.255 31.593 233.581 3.109 142.376

Total intangible fixed assets 488.649 79.013 281.828 544 286.378

1. Intangible fixed assets

54

2. Property, plant and equipment

(thousand euros) Net of Addi- Depre- Change in Reclassifi- Foreign Disposals Net of Accumulateddepreciation tions ciation the area of cations exchange and depreciation depreciation12/31/2001 consolidation effects other 12/31/2002 12/31/2002

Land and buildings 651.568 36.783 33.532 49.460 36.066 (37.432) (46.441) 656.472 510.013

Plant and machinery 674.558 65.572 104.701 29.320 118.683 (31.669) (13.916) 737.847 1.284.426

Industrialand commercialequipment 200.019 62.797 68.684 7.796 50.159 (9.791) 1.746 244.042 668.485

Other assets 74.499 32.562 22.336 11.076 (4.658) (4.938) (13.008) 73.197 310.206

Vehicles onoperating leases 397.450 330.892 124.865 — 2.460 (1.634) (55.777) 548.526 396.992

Constructionin progressand advances 288.607 58.454 — 404 (202.710) (3.202) (1.900) 139.653 —

Total property,plant and equipment 2.286.702 587.060 354.118 98.056 — (88.666) (129.297) 2.399.737 3.170.122


The decrease in “Start-up and expansion costs” (13.4 million euros) is due to the amortization for 4.6 million euros

and to the difference in exchange rates of 8.7 million euros in Iveco Fiat Brasil Ltda. Increase of 13.7 million during

the year in the item “Concessions, licenses, trademarks and similar rights” mainly relates the expenses for utilisation

of softwares and costs related to the Cummins project and others development projects in Iveco SpA.

The addition in “Intangible assets in progress and advances” for 27.8 million euros concerns in particular purchasing

in Iveco SpA. of software programs that refer to: SAP, PRP, new LAN in Turin area,WEB infrastructure, Ebom-PDM

integration.

The addition in “Differences on consolidation” include the goodwill on the 50% residual acquisition of the Irisbus

Group for an amount of 28.7 million euros.The column “Amortization” includes also the estimated loss (210 million

euros) based on the available best estimation of the net selling price of the shares of Fraikin’s Group, as described

in the Director’s report, which has been booked in the financial statements as of December 31, 2002.

COMPOSITION, PRINCIPAL CHANGES AND OTHER INFORMATION

Fixed assets


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

residual net book value of these revaluations at December 31, 2002 after depreciation and disposals amounted

to 94.5 million euros (101.6 million euros at 2001 year end).

“Change in the area of consolidation” shows a total increase of 98.1 million euros mainly due to the consolidation

of 100% Irisbus Group that on previous year was consolidated applying the proportional method (50%).

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.

Foreign exchange effects for a negative amount of 88.7 million euros is principally due to the exchange effect in

Iveco Fiat Brasil Ltda, Iveco Latin America Ltda, Iveco Argentina SA and Iveco Venezuela..

Caption “Vehicles under operating leases” refers to value of assets of Fraikin Group and Transolver companies

under operating leases contracts.The additions in this item for an amount of 330.9 million euros is mainly due to

the renewal of the Fraikin fleet for an equivalent of 286.3 million euros.

The securitization of a part of Fraikin Group fleet made in 2001 and 2000 year has been no longer carried on in

2002, and the future lease payments under non cancellable Fraikin’s lease agreements existing as at December 31,

2002, have been totally paid on February 28, 2003 for an amount of 316.0 million euros in connection with the

above described sale of the Fraikin Group.

The depreciation rates used are as follows:

The depreciation rates % are consistent with those applied in the previous year.

Weighted average

Land and buildings 2.9% - 4.1%

Plant and machinery 5.2% - 17.7%

Industrial and commercial equipment 16.7% - 18.8%

Other assets 11.1% - 24.0%

(thousand euros) As at 12/31/2002 As at 12/31/2001

Investments accounted for using the equity method 38,567 63,337

Investments valued at cost 62,781 63,875

Total investments 101,348 127,211


3. Financial fixed assets

Investments

The movement in investments is as follows:

12/31/2001 Other Translation Dividends Share in result 12/31/2002movements differences received & valuation

adjustments

Unconsolidated subsidiaries 18,803 (16,773) — — — 2,030

Associated companies 69,812 19,720 (2,789) (534) (4,106) 82,103

Other companies 38,595 (16,529) — (5,336) 485 17,215

Total investments 127,210 (13,582) (2,789) (5,870) (3,621) 101,348

The line “Unconsolidated Subsidiaries” shows a decrease of 16.8 million euros due to the consolidation at line by

line method of the companies Iveco Ukraine, Iveco Motor Sich and Iveco Finance AG.

“Associated Companies” increases for an amount of 19.7 million euros mainly due to the increase of the CBC

– Iveco investments (25.9 million euros) and to the sale of OM Carrelli Elevatori (-5.2 million euros).

“Other Companies” decreases for an amount of 16.5 million euros due to the partial write-off of Trucks & Bus

Company.

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

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

(thousand euros) Dividends Sharereceived in result

Otoyol Sanayi — (3,510)

Otoyol Pazarlama 3 991

Ashok Leyland — (776)

Ennore Foundries — (158)

Haveco 531 1,707

Iveco Uralaz — 18

Elasis 171 485

Trucks & Bus Company 5,165 —

E.E.A. — (2,378)

Total 5,870 (3,621)

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

(thousand euros)


(thousand euros)

% Amount % Amount

Unconsolidated subsidiaries :

Fias 80.— 82 80.— 82

Financière Pegaso France 100.— 169 100.— 169

F. Pegaso SA 100.— 1,278 100.— 1,278

Iveco Ukraine — — 65.909 11,517

Iveco Motorsich — — 55.556 4,765

Sivi SpA 100.— 501 — —

Iveco Finance AG — — 100.— 993

Total 2,030 18,803

As at 12/31/2001As at 12/31/2002

(thousand euros)

% Amount % Amount

Associated companies:

AFIN Leasing AG 40.— 1,711 40.— 1,600

Atlas Vehicules Ind. SA. 48.985 853 48.985 853

Auto Distribution Illiberis — — 49.— 1.208

CBC - Iveco Ltd 50.— 37,396 50.— 11,468

C.R.F. 20.— 5,032 20.— 5,032

C.S.S.T. 30.— 155 30.— 155

E.E.A. 33.333 2,588 33.333 4,966

Elettronica Trasporti 50.— 66 50.— 66

Fiat OM Carrelli — — 25.— 5,171

SADI Brasil Ltda 20.— 5 20.— 10

Haveco 33.333 8,990 33.333 9,908

Iveco Uralaz 33.333 3,788 33.333 4,462

Machen 30.— 8,378 30.— 9,312

Otoyol Pazarlama 27.— 1,949 27.— 961

Otoyol Sanayi 27.— 11,131 27.— 14,641

Consorzio Coforma 50.— 26 — —

Consorzio Iveco - Otomelara 50.— 35 — —

Total 82,103 69,812

As at 12/31/2001As at 12/31/2002

As allowed by law, the above companies have not been consolidated either because 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:

58

At 12/31/2001

Receivables

(thousand euros)

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

Parent companies — — — 2,953 — 2,953

Unconsolidated companies — — — — — —

Third parties 19,328 3,502 22,830 40,019 7,719 47,738

Total receivables 19,328 3,502 22,830 42,972 7,719 50,691

At 12/31/2001At 12/31/2002

At 12/31/2001

The increase in “Other securities” mainly refers to the reclassification of the participating loan granted by Iveco

NV to Machen-Iveco Holding SA, previously classified as“Financial credits”.

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 of the leasing portfolio is essentially due to the growth of Iveco Finance Italy, Germany and France

that have reached a mature phase after the priors year launch.

Assets leased

(thousand euros) Value at Additions Depreciation Foreign Disposals Net of Accumulated12/31/2001 exchange and other depreciation depreciation

effects 12/31/2002 12/31/2002

Assets leased 769,987 475,463 273,513 570 (187,822) 784,685 730,447


At 12/31/2002

Other Securities

(thousand euros)

Bonds held as permanent investments 33,973 5,227

Investments in other companies are as follows:

(thousand euros)

Other companies:

Truck & Bus Company 9,805 32,503

Elasis 2,945 2,640

Fiat Sepin 1,090 —

Others 3,366 3,453

Total 17,215 38,595

At 12/31/2002

59

4. Current assets

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

Net inventories of 1,488.6 million euros at December 31, 2002 show a decrease of 41.4 million euros compared

to the prior year (1,530 million euros at December 31, 2001), the decrease is split as follows:

- gross inventories decrease of 60.3 million euros. It is mainly due to the decline of used stock, in connection

with the higher volume of sales: 20,447 units sold in 2002 compared to 17,235 units sold in 2001.

- allowance for inventory writedowns decrease of 18.9 million euros.

Inventories

(thousand euros)

Gross Allowance Net Gross Allowance Net

Raw materials and supplies 390,032 (26,132) 363,900 387,975 (20,971) 367,004

Work in progressand semifinished products 220,818 (2,248) 218,570 208,493 (3,689) 204,804

Contract work in progress 4,959 — 4,959 5,910 — 5,910

Finished goodsand merchandise 836,086 (89,783) 746,303 860,164 (104,614) 755,550

Used stock 192,232 (40,490) 151,742 239,587 (48,257) 191,330

Advances to suppliers 3,139 — 3,139 5,454 — 5,454

Total inventories 1,647,266 (158,653) 1,488,613 1,707,584 (177,531) 1,530,052

At 12/31/2001At 12/31/2002

(thousand euros) At Increase Foreign Change in the At 12/31/2001 (Decrease) exchange area of 12/31/2002

effect consolidation

Allowance forinventories writedown 177,532 (21,442) (6,680) 9,243 158,653



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 886,765 17,863 904,628 835,212 5,702 840,913


Other companies 75,293 4,096 79,389 168,145 — 168,145

Total trade receivables 962,058 21,959 984,017 1,003,357 5,702 1,009,059

Other receivables from:

Employees 14,268 1,250 15,518 10,089 1,433 11,522

Tax authorities 288,946 128,585 417,531 210,920 108,911 319,831

Social security contributions 2,408 — 2,408 2,675 23 2,698

Others:Third parties 112,680 6,145 118,825 123,500 2,605 126,105

Others: Unconsolidated companies 52 — 52 1,713 — 1,713

Others:Associated companies 51,750 658 52,408 8,319 — 8,319

Others: Parent companies — — — — — —

Others: Other companies 3,446 — 3,446 13,151 — 13,151

Total other receivables 473,550 136,638 610,188 370,368 112,972 483,339

Total receivables 1,435,608 158,597 1,594,205 1,373,725 118,673 1,492,398

At 12/31/2001At 12/31/2002


(thousand euros) At Increase Decrease and Change in At12/31/2001 other consolidation 12/31/2002

changes area

Allowance for doubtful accounts 133,291 38,506 (30,713) 9,290 150,374

(thousand euros)

Trade Other Total Trade Other Total

Third parties 904.628 — 904.628 840.914 — 840.914


Other companies 79.389 — 79.389 168.145 — 168.145

Total trade receivables 984.017 — 984.017 1.009.059 — 1.009.059

Other receivables from:

Employees — 15.518 15.518 — 11.522 11.522

Tax authorities — 417.531 417.531 — 319.831 319.831

Social security contributions — 2.408 2.408 — 2.698 2.698

Others:Third parties — 118.825 118.825 — 126.105 126.105

Others: Unconsolidated companies — 52 52 — 1.713 1.713

Others:Associated companies — 52.408 52.408 — 8.319 8.319

Others: Parent companies — — — — — —

Others: Other companies — 3.446 3.446 — 13.151 13.151

Total other receivables — 610.188 610.188 — 483.339 483.339

Total receivables 984.017 610.188 1.594.205 1.009.059 483.339 1.492.398

Receivables are shown net of allowances for doubtful accounts of 150.4 million euros at December 31, 2002

(133.3 million euros at December 31, 2001).

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

The amount evidenced in the column “Change in the consolidation area” is due to the 100% Irisbus Group

consolidation that on previous year was consolidated applying the proportional method (50%).

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 267.7 million euros (183.4 million euros at December 31, 2001), accounted for

according to the accounting principle 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 reduction of the level of overdue accounts and to the

closing of the activity towards Motorcomsa and now transferred to Iveco International Trade Finance SA.

At 12/31/2001At 12/31/2002

An analysis of receivables by nature 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 155 — 155 2,455 — 2,455

Associated companies 135,732 187,975 323,707 28,932 — 28,932

Parent companies 48,468 — 48,468 33,284 689 33,973

Third parties 2,124,653 1,098,011 3,222,664 1,772,768 978,738 2,751,505

Total financial receivables 2,309,008 1,285,986 3,594,994 1,837,439 979,427 2,816,866

At 12/31/2001At 12/31/2002

Financial receivables amount to 3,595 million euros at December 31, 2002 (2,816.9 million euros at December

31, 2001) and show an increase of 778.1 million euros mainly related to the consolidation in Iveco Group of

Iveco International Trade Finance SA (424.2 million euros), and to the higher level of the activity of Transolver

Financial Companies.They are shown net of an allowance for doubtful accounts of 81.7 million euros (22.7 million

euros at December 31, 2001).

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

6. Financial assets not held as fixed assets

Securities

The decrease in caption “Securities” is due to an investment of liquidity in Irisbus Group in bank deposit instead

of in daily monetary investment funds.

Financial Receivables

(thousand euros) At Increase Decrease and At12/31/2001 other 12/31/2002

changes

Allowance for doubtful accounts 22,735 23,942 35,014 81,691

The increase in the item “Bank and post office account” is mainly due to the financial investments of Iveco UK

companies, under the scheme of cash management with Midland Bank Group.

7. Cash

(thousand euros) At 12/31/2002 At 12/31/2001

Bank and post office accounts 460.481 351.310

Checks 843 774

Cash on hand 12.947 3.491

Total cash and cash equivalent 474.271 355.575


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, 2001 1,179.440 13.067 (218.514) 939.712 1,913.705

Translation differences — — (20,941) — (20,941)

Other movements — — — (1,422) (1,422)

Result of the year — — — (124,578) (124,578)

Dividend paid — — — (64,100) (64,100)

Balance at December 31, 2001 1,179,440 13,067 (239,455) 749,612 1,702,664

Translation differences — — (103,502) — (103,502)

Other movements — — — (4,161) (4,161)

Result of the year — — — (497,095) (497,095)

Dividend paid — — — — —

Balance at December 31, 2002 1,179,440 13,067 (342,957) 248,356 1,097,906

Share capital

At December 31, 2002 the authorized share capital amounted to 100,000,000 shares of Euro 46 (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

particularly in Italy according to specific local laws.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.

As of December 31, 2002, no deferred taxes have been accrued on this caption, since the Group does not

consider as probable the distribution of such reserves.

8. Accrued income and prepaid expenses


Commercial accrued income

Accrued interest and commissions 5,066 1,258

Other 5,185 8,564

Total commercial accrued income 10,251 9,822

Commercial prepaid expenses

Interest 993 745

Other 27,334 6,222

Total commercial prepaid expenses 28,327 6,967

Financial accrued income 2,010 2,527

Financial prepaid expenses 19,413 12,547

Total accrued income and prepaid expenses 60,001 31,863


(thousand euros) Net equity Net profit Net equity Net profitAt 12/31/2002 2002 At 12/31/2001 2001

Statutory financial statements Iveco NV 1,494,147 (535,032) 2,110,184 (163,057)

Different valuation methodon tangible fixed assets (396,241) 37,937 (407,520) 38,479

Consolidated financial statements Iveco NV 1,097,906 (497,095) 1,702,664 (124,578)

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

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:

2002 2001% held by % held byminority minority

shareholders shareholders

Companies:

Amce, Ethiopia 30.00 30.00

Componentes Mecanicos, Spain 40.61 40.61

Lohr Magirus,Austria 5.00 5.00

Iveco Fiat Brasil, Brasil 50.00 50.00

Transolver Finance EFC, Spain 50.00 50.00

Transolver Services, France 90.00 90.00

Ikarusbus, Hungary 95.00 23.47

Rhein Main, Germany 35.00 35.00

Minority interest

(thousand euros) 2002 2001

Balance at January 1 65,777 70,123

Changes during the year:

Change in consolidation area 17,221 4,835

Result of the year 4,122 1,758

Translation differences (15,199) (2,737)

Capital increase — —

Dividends paid to third parties (378) (1,678)

Other movements 4,854 (6,524)

Balance at December 31 76,396 65,777

Iveco Motor - Sich Inc. 44.44 —

Iveco Ukraine Inc. 34.09 —

During the year 2002 Iveco Group has consolidated line by line Iveco Motor – Sich Inc. and Iveco Ukraine Inc. that last

year were consolidated at equity method.


Significant increase on buy-back reserve is related to adequate the provision to the particular involution of the

used vehicles market in order to cover future risks (Note 19 Income Statement).

Income tax reserves

The Deferred income tax reserve at December 31, 2002 includes deferred tax liabilities, net of deferred tax

assets, which have been offset where possible, in reference to the individual companies included in the

consolidation. The Deferred income tax reserve, net of Deferred tax assets recorded under the caption “Other

receivables from others”, is composed as follows:

10. Reserves for risks and charges

(thousand euros) At 12/31/2002 At 12/31/2001 Change

Reserve for pension and similar obligations 266,684 149,293 117,391

Income tax reserves:

Current income tax reserve 34,095 10,169 23,926

Deferred income tax reserve 150,772 165,785 (15,013)

Total income tax reserves 184,867 175,954 8,913

Other reserves:

Warranty reserve 215,572 165,596 49,977

Restructuring reserves 83,270 55,115 28,155

Buy back reserve 165,427 86,352 79,075

Various liabilities and risk reserves 264,916 248,571 16,345

Total other reserves 729,185 555,633 173,552

Total reserves for risks and charges 1,180,736 880,881 299,855

(thousand euros) At 12/31/2002 At 12/31/2001 Change

Deferred income tax reserve 150,772 165,785 (15,013)

Deferred tax assets (267,732) (183,430) (84,302)

Total (116,960) (17,645) (99,315)

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 139.6 million euros (100 million euros at December 31, 2001) of tax benefits

connected to tax loss carryforwards.

Other reserves

The various liabilities and risk reserves amount to 264.9 million euros at December 31, 2002 (248.6 million

euros at December 31, 2001) 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 267,875 228,703

Deferred tax on gains 22,485 21,326

Capital investment grants 586 1,061

Other 41,213 60,871

Total deferred tax liabilities 332,159 311,961

Deferred tax assets for:

Reserves for risks and taxed charges 112,600 87,238

Inventories 35,298 25,915

Taxed allowance for doubtful accounts 16,358 35,754

Pension funds 3,459 4,672

Other 175,329 90,646

Total deferred tax assets 343,044 244,225

Theoretical tax benefit connectedto tax loss carryforwards 216,776 156,263

Adjustments for assets whose recoverability is uncertain(mainly tax loss carryforwards) (110,701) (70,882)

Total deferred income tax reserve, net of Deferred tax assets (116,960) (17,645)


11. Reserve for employee severance indemnities

12. Payables

Payables may be analyzed by due date as follows:

(thousand euros) At Increase Decrease Change in the At 12/31/2001 and other area of 12/31/2002

changes consolidation

Reserve for employeeseverance indemnities 213,349 32,969 (32,367) 13,076 227,027

The reserve for employee severance indemnities amounts to 227 million euros at December 31, 2002 (213.3

million euros at December 31, 2001) 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 — — — — — — — —

Borrowings from banks 984.929 416.445 19.253 1.401.374 831.945 458.403 27.081 1.290.348

Other financial payables 2.813.997 860.614 410.723 3.674.611 1.678.311 1.149.551 372.125 2.827.862

Advances 71.639 — — 71.639 58.264 82 — 58.347

Trade payables 2.205.140 13.476 — 2.218.616 2.192.889 19.827 — 2.212.717

Notes payable 19.134 338 — 19.472 19.490 36 — 19.526

Payables to unconsolidatedsubsidiaries 458 — — 458 2.449 — — 2.449

Payables to associatedcompanies 13.405 — — 13.405 11.648 — — 11.648

Payables to parentcompanies 292 — — 292 5.356 — — 5.356

Taxes payable 146.993 10.723 — 157.716 155.361 9.193 — 164.554

Social security payable 70.708 1.340 — 72.048 55.532 1.324 — 56.856

Other payables 189.961 6.772 — 196.733 119.479 6.212 — 125.691

Total payables 6.516.656 1.309.708 429.976 7.826.364 5.130.724 1.644.629 399.206 6.775.353

At 12/31/2001At 12/31/2002


(thousand euros)

Trade Financial Other Total Trade Financial Other Total

Bonds — — — — — — — —

Borrowings from banks — 1,401,374 — 1,401,374 — 1,290,348 — 1,290,348

Other financial payables — 3,674,611 — 3,674,611 — 2,827,862 — 2,827,862

Advances — — 71,639 71,639 — — 58,347 58,347

Trade payables 2,218,616 — — 2,218,616 2,212,717 — — 2,212,717

Notes payable 11,003 8,469 — 19,472 11,204 8,321 — 19,525

Payables to unconsolidated

subsidiaries — 458 — 458 — 2,449 — 2,449

Payables to associated

companies 11,465 — 1,940 13,405 9,883 — 1,765 11,648

Payables to parent

companies 292 — — 292 5,356 — — 5,356

Taxes payable — — 157,716 157,716 — — 164,554 164,554

Social security payable — — 72,048 72,048 — — 56,856 56,856

Other payables — — 196,733 196,733 — — 125,691 125,691

Total payables 2,241,376 5,084,912 500,076 7,826,364 2,239,160 4,128,980 407,213 6,775,353

At 12/31/2001At 12/31/2002

The increase (1,051 million euros) in Payables compared to December 31, 2001 is mainly due to the increase of

955.9 million euros in Financial payables as a result of refinancing of the portfolio of the Transolver financial

companies and from the change in consolidation area deriving from the consolidation of the new companies

Iveco International Trade Finance SA and Iveco Finance AG.

The portion of medium and long-term financial payables due beyond one year amounts to 1,277.1 million euros

at December 31, 2002 (1,608 million euros at December 31, 2001).

The scheduled maturities are:

(thousand euros) 2004 2005 2006 2007 beyond 2007

Medium and long-term debtdue beyond one year 439,485 261,639 113,598 32,361 429,976

Payables may be analyzed by nature 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 2002 mediumand long-term debt 793 344 82 17 41 1,277

Medium and long-term debt interest rates, including the instalments expiring within the next year, at December

31, 2002 are as follows:

Financial accrued expenses include interest expenses on financial payables and financial deferred income includes

deferred interest income.

13. Accrued expenses and deferred income


Commercial accrued expenses

Accrued interest and commissions 23,674 27,270

Other 141,736 163,628

Total commercial accrued expenses 165,410 190,898

Commercial deferred income

Interest 756 1,902

Other 44,131 33,629

Total commercial deferred income 44,887 35,531

Financial accrued expenses 39,421 48,154

Financial deferred income 187,629 92,309

Total accrued expenses and deferred income 437,347 366,892


At December 31, 2002 Guarantees granted by the Iveco Group totaled 1,452.6 million euros (992.8 million

euros at December 31, 2001).

Other guarantees include commitments for receivables and bills discounted with recourse in the amount of

588.3 million euros (410.7 million euros at December 31, 2001). The volume of receivables discounted with

recourse in 2002 was 2,451.4 million euros (2,004.3 million euros in 2001).

Although not included in the memorandum accounts, receivables and bills discounted by the Group without

recourse having due dates beyond December 31, 2002 amounted to 724.9 million euros (in 2001, 1,183.0 million

euros with due dates beyond December 31, 2001).

14. Memorandum accounts


Guarantees granted

Unsecured guarantees

Suretyships:

On behalf of unconsolidated subsidiaries — —

On behalf of associated companies — —

On behalf of others 277,649 226,288

Total suretyships 277,649 226,288

Guarantees of notes:


Total guarantees of notes 261,946 107,879

Other unsecured guarantees:


On behalf of associated companies 46,913 50


Total other unsecured guarantees 800,847 571,681

Total 1,340,442 905,848

Secured guarantees


On behalf of associated companies — —


Total secured guarantees 112,200 86,923

Total guarantees granted 1,452,642 992,772


Commitments

Commitments amounted to 1,459 million euros as December 31, 2002 (1,802 million euros at December 31, 2001).

Commitments for buy back for the amount of 681 million euros as December 31, 2002 (654 million euros at

December 31, 2001) 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 187.7 million euros (363.4

million euros at December 31, 2001) and for contracts to hedge interest rate exposure risks of 376.4 million euros

(408.9 million euros at December 31, 2001).

Such transactions, reflecting the notional principal amount, should not be subject to risks owing to non-fulfilment

by the counterparts insofar as the contracts are mainly entered into with Fiat Group's financial companies and with

several primary financial institutions.

The contracts to hedge foreign exchange risks outstanding at December 31, 2002 will expire during 2003. The

consolidated statement of operations includes the effects both of the contracts that expired in 2002 and the

accruals for the contracts expiring after December 31, 2002 as stated in the accounting principles.

The contracts to hedge interest rate exposure risks outstanding at December 31, 2002 will expire for 326.4 million

euros during 2003, 10.0 million euros during 2004, 40.0 million euros during 2005.

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 2002, 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 favourable trend in the rates.

Also this year, the management of exchange risks was again based principally on a combination of currency options.

Finally, the European Union issued Directive 2000/53/CE relative to end-of-life-vehicles.

This Directive, among other things, provides that, in the future, vehicles manufacturers will have to bear all, or a

significant part of the cost arising from the collection, treatment and recovery of end-of-life vehicles.

The above Directive should be introduced into the national legislation of the individual member states by April

2002 and would become applicable for all vehicles placed on the market starting from July 2002; beginning January

2007, instead, all vehicles on the market will be covered, even those placed before July 2002. Iveco Group has applied

this Directive starting from 2002.


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 9,135.6 million euros in

2002 compared to 8,650.1 million euros in 2001.They include revenues from sales and services of 9,136.7 million

euros (8,643.3 million euros in 2001) and the change in contract work in progress of -1.1 million euros (3.7

million euros in 2001).

Revenues include the amount of 835.7 million euros due to the change in consolidation area relating to the

activity of Irisbus Group (50%), Iveco Ukraine Inc., Iveco-Motor Sich Inc, Iveco International Trade Finance SA.

Capital gains from the sale of fixed assets of 77.8 million euros (40.8 million euros in 2001) of which 56.8 million

euros are due to the renewal of "vehicles under operating leases" in Fraikin group. 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.

Other income and revenues


Revenue grants 3,024 5,352

Capital gains 77,801 40,761

Investment grants 2,113 1,245

Other income 246,651 249,782

Total other income and revenues 329,589 297,141

Net revenues by area of destination may be analyzed as follows:


Italy 2,955,237 2,687,741

Europe (excluding Italy) 5,290,465 5,090,773

Mercosur and Central and South America 181,610 277,150

North America 4,276 3,638

Other areas 703,984 590,789

Total revenues from sales and servicesand change in contract work in progress 9,135,572 8,650,091


16. Cost of Production

The costs of production amount to 9.7 billion euros (8.9 billion euros in 2001).Assuming the same consolidation area

than 2001 the decrease is 1.7%.The main components of this item and the changes that occurred during the year can

be described as follows:

Raw materials, supplies and merchandise

Raw materials, supplies and merchandise amount to 5.5 billion euros (5.0 billion euros in 2001). Assuming the

same consolidation area than 2001 the decrease is 2.3%.The total is equal to 59.8% of revenues (57.8% in 2001).

Services

Services amount to 1,317.8 million euros (1,367.1 million euros in 2001). Assuming the same consolidation area

than 2001 the decrease is 11.6%. This amount is equal to 14.4% of revenues (15.8% in 2001). Services include

advertising costs, outside information technology and telecommunication service costs, maintenance costs and

transportation costs.

Leases and rental

The caption includes rental costs for 207.1 million euros (174.9 million euros in 2001), of which 93.5 million euros

(55.6 million euros in 2001), according to the Italian regulations, is related to operating leases costs, included

those carried out by Fraikin’s companies following the securitization of the fleet.

Personnel

Personnel costs consist of the following:

Personnel costs, which amount to 1,409.2 million euros in 2002, are equal to 15.4% of revenues (15.5% in 2001).

The increase is principally due to change of consolidation area.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 435 — 435 354 39 393

White-collar 12,434 460 12,894 9,677 1,793 11,470

Blue-collar 24,370 1,037 25,407 20,344 3,557 23,901

Total 37,239 1,497 38,736 30,375 5,389 35,764

Number of emloyeesas at 12/31/2002 36,658 1,455 38,113 29,934 5,406 35,340

At 12/31/2001At 12/31/2002


Salaries and wages 1,056,289 1,000,225

Social security contributions 274,276 253,369

Employees severance indemnities 32,969 33,064

Employees pension and similar obligations 25,081 23,706

Other costs 20,598 26,561

Total personnel costs 1,409,213 1,336,926


Provisions for risks

Provisions for risks of 367.4 million euros in 2002 (305.6 million euros in 2001) 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 - expenses

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”, respec-

tively. 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. Customer interest and lease income

increase is due to the higher level of business of financial activities in 2002.

The increase in financial expenses is due to the higher average indebtedness.

Other operating costs


Loss on sale of fixed assets 4,212 32,691

Indirect and other taxes 64,049 54,132

Sundry expenses 202,648 123,039

Total other operating costs 270,909 209,862

17. Financial income and expenses

Investment income


Dividends 392 70

Tax credit on dividends — 11,901

Gain on sale of investments classified within current assets — —

Total investment income 392 11,971


Interest and other financial expenses


Interest and other financial expenses:

Unconsolidated subsidiaries — 8

Associated companies 456 44

Parent companies 225 268

Others:

Bond interest 2 72

Bank interest 17,336 10,668

Interest on trade and other payables 20,167 27,267

Interest on notes payable — 779

Discounts and other expenses 206,730 143,856

Expenses from off-balance sheet financial instruments 5,317 34,429

Interest to other financial institutions 104,051 123,018

Loss on sale of securities — —

Foreign exchange losses, net 108,252 59,930

Total interest and other financial expenses - other 461,855 400,020

Total interest and other financial expenses 462,536 400,339

of which:

Interest and other financial expenses, excluding financial activities 319,609 317,369


Other financial income from:

Receivables from others held as fixed assets — 651

Securities held as fixed assets other than equity investments 13 261

Securities held as current assets other than equity investments 378 193

Other income from:

Unconsolidated subsidiaries 183 33

Associated companies 150 —

Third companies — —

Others:

Bank and other interest 2,045 3,196

Customer interest and lease income 211,713 169,514

Discounts and other income 58,899 47,066

Income from off-balance sheet financial instruments 54,708 32,062

Foreign exchange gains, net 44,391 49,633

Total from others 371,756 301,472

Total other income 372,089 301,505

Total other financial income 372,480 302,610

of which:

Other income, excluding financial activities 180,551 159,927

76

Revaluations and writedowns of equity investments include the share of the net income and losses of companies

accounted for using the equity method.

The writedown of financial investments in 2002 is mainly due to the depreciation in Iveco SpA of the following

companies: Trucks & Bus Company (16.7 million euros) and SIVI SpA (2.5 million euros).


18. Adjustments to financial assets


Revaluations:

Equity investments 3,357 5,249

Financial fixed assets other than equity investments — —

Securities among current assets other than equity investments 8 —

Total revaluations 3,365 5,249

Writedowns:

Equity investments 26,057 8,197

Financial fixed assets other than equity investments 27 2

Securities among current assets other than equity investments — —

Provisions for doubtful financial credits 695 —

Total writedowns 26,779 8,199

Total adjustments to financial assets (23,414) ( 2,950)

19. Extraordinary income and expenses


Extraordinary income

Gains on disposals of investments and other fixed assets 2,884 339

Other income:

Prior period income 2,100 63

Other income 677 2,629

Total other income 2,777 2,692

Total extraordinary income 5,661 3,030

Extraordinary expenses

Losses on disposals of investments and other fixed assets 95 1,252

Taxes related to prior years 28,281 551

Other expenses:

Extraordinary accruals 97,609 114,359

Other extraordinary expenses 367,978 119,149

Prior period expenses 1,041 1,600

Total other expenses 466,628 235,107

Total extraordinary expenses 495,004 236,911

Total extraordinary income and expenses (489,343) ( 233,880)


The increase in Other extraordinary expenses is mainly due to the recognition of the estimated loss (Euro

210 million) related to the sale of Fraikin Group, as described in the above caption "Intangible fixed assets".

In addition, the caption includes extraordinary provisions relating to the change in the accounting principles

applied for the determination of buy back and maintenance and repair reserves (41.8 million euros), additional

extraordinary provisions of the buy back reserve, following the adoption of significant changes in the

methodology of estimation of the buy back commitments in respect to that applied in prior years due to the

exceptional worsening conditions of the market scenario (52.2 million euros), and impairment of Ikarusbus

fixed assets (25 million euros).

Moreover, the caption “Taxes related to prior years” includes for Euro 26.1 million euros the costs of a tax

pardon benefited from Iveco SpA in conpliance with the guidelines stated by the Italian law.

Than the changes relating to the accounting of the buy back and maintenance and repairs reserves produce a

total negative impact on the result of the year and on the shareholders equity as of December 31, 2002 of 94

million euros.

Income taxes paid by the Iveco Group in 2002 approximately amounted to 63.2 million euros.

The increase of Deferred taxes is mainly due to the effect of temporarily non deductable allowances and costs

booked by Iveco SpA.

20. Income taxes

Income taxes recorded in the consolidated statement of operations in 2002 and 2001 are as follows:


Current taxes:

IRAP 25,188 29,587

Other taxes 9,689 30,758

Current taxes 34,877 60,345

Deferred taxes (91,055) (49,159)

Total income taxes (56,178) 11,186


The item 'Services and Financial Companies' includes: Transolver Financial and Services Companies, Fraikin

Group, Iveco Participations and Iveco International Trade Finance SA.

21.Other information

Segment information - Business segments

Operating Services Elimin. TotalYear ended Companies and Financial Interco. GroupDecember 31, 2002 Companies

Revenues 8,758.4 1,005.1 (627.9) 9,135.6

Segment result

Operating profit 59.1 43.2 — 102.3

Financial cost (123.0) (16.8) — (139.8)

Share results non-cons. invest. (223.9) — 201.6 (22.3)

Profit from ordinary activities (287.8) 26.4 201.6 (59.9)

Extraordinary item (280.3) (209.0) — (489.3)

Profit before tax (568.2) (182.7) 201.6 (549.2)

Tax 71.3 (15.1) — (56.2)

Income before minority interest (496.8) (197.8) 201.6 (493.0)

Minority interest 0.4 3.8 — 4.1

Net income (497.1) (201.6) 201.6 (497.1)

Total consolidated assets 6,685.3 4,569.9 (409.4) 10,845.8

Total consolidated liabilities 5,543.6 4,395.4 (267.5) 9,671.5

Equity 1,141.7 174.5 (141.9) 1,174.3

Capital expenditure 248.4 338.7 — 587.1

Depreciation 225.8 128.3 — 354.1

Amortization 46.9 22.7 — 69.6

(million euros)


(million euros) Operating Services Elimin. TotalYear ended Companies and Financial Interco. GroupDecember 31, 2001 Companies

Revenues 12,785.4 792.2 (4,927.5) 8,650.1

Segment result

Operating profit 202.7 68.0 — 270.7

Financial cost (135.9) (21.5) — (157.4)

Share results non-cons. invest. 9.0 — — 9.0

Profit from ordinary activities 75.8 46.5 — 122.3

Extraordinary item (232.3) 13.6 (15.2) (233.9)

Profit before tax (156.5) 60.1 (15.2) (111.6)

Tax 8.2 (19.4) — (11.2)

Income before minority interest (148.3) 40.7 (15.2) (122.8)

Minority interest 1.8 — — 1.8

Net income (146.6) 40.7 (15.2) (121.1)

Total consolidated assets 12,178.6 4,019.9 (6,193.6) 10,004.9

Total consolidated liabilities 6,932.5 3,323.1 (2,019.1) 8,236.5

Equity 5,246.1 696.8 (4,174.5) 1,768.4

Capital expenditure 374.6 343.7 — 718.3

Depreciation 206.5 137.3 — 343.8

Amortization 44.0 22.2 — 66.2


REPORT OF THE INDIPENDENT AUDITORS


TEN-YEAR HIGHLIGHTS (*)

2002 2001 2000 1999 1998 1997 1996 1995 1994 1993

Commercial data

Sales of trucks, buses and special vehicles (units) 161,883 160,397 164,776 149,903 136,824 124,162 119,697 124,835 101,217 90,830

Engines production (units) 361,135 413,222 457,745 404,917 363,089 292,268 274,438 330,169 244,174 206,333

Western European truck marketshare GVW >= 3.5 tonnes (%) 17.9 17.0 17.8 16.6 17.0 18.4 20.0 19.1 19.8 20.1

Financial data (millions euros)

Net sales 9,136.7 8,650.1 8,610.7 7,386.2 6,649.5 5,913.8 5,324.7 4,954.5 4,310.0 3,828.3

Operating income 102.3 270.7 489.1 311.1 261.5 204.2 154.7 247.8 139.2 (159.7)

Net profit/(loss) (497.1) (124.6) 146.2 162.7 200.5 176.4 124.5 190.5 14.1 (268.5)

Cash flow (net profit plus depreciation and amortisation) (73.4) 285.5 569.2 415.8 376.4 378.2 324.8 363.4 202.1 (62.9)

Tangible fixed assets as at December 31 2,399.7 2,286.7 2,278.9 2,305.2 1,541.3 1,465.8 1,423.0 1,300.8 1,369.8 1,530.7

Net financial resources (indebtedness) as at December 31 (408.2) (210.9) (222.6) (402.2) (67.8) 194.4 (54.0) 44.2 (236.5) (822.2)

Group Shareholders' equity as at December 31 1,097.9 1,702.7 1,913.7 1,817.5 1,685.8 1,626.2 1,496.3 1,362.9 1,197.2 874.7

Ratios (%)

Operating income / Net sales 1.1 3.1 5.7 4.2 3.9 3.5 2.9 5.0 3.2 (4.2)

Net profit / Net sales (5.4) 1.4 1.7 2.2 3.0 3.0 2.3 3.8 0.3 (7.0)

Cash flow / Net sales (0.8) 3.3 6.6 5.6 5.7 6.4 6.1 7.3 4.7 (1.6)

Other data

Gross additions to tangible fixed assets (million euros) 587.1 718.3 655.8 359.5 306.7 268.5 243.5 148.5 112.7 159.7

of which: under operating leases(millions euros) 330.9 348.3 306.1 60.7 12.4 — — — — —

Gross additions / Net sales (%) 6.4 8.3 7.6 4.9 4.6 4.5 4.6 3.0 2.6 4.2

Research and development expenses (million euros) 238.7 214.9 226.5 214.6 200.5 188.3 189.6 153.5 136.8 164.8

Research and development expenses / Net sales (%) 2.6 2.5 2.6 2.9 3.0 3.2 3.6 3.1 3.2 4.3

Number of employees as at December 31 38,113 35,340 35,852 36,217 31,912 32,074 32,448 33,390 31,510 33,715

(*) 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 SAS Fecamp France 2,000,000.00 EURO 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

Astra VI SpA Piacenza Italy 10,400,000.00 EURO 100.000 Iveco SpA 100.000

Brandschutztechnik Gorlitz GmbH Gorlitz Germany 1,000,000.00 DEM 88.000 Iveco Magirus Brand. GmbH 88.000

BV Rimij Apeldoorn Netherlands 4,538.00 NLG 100.000 Iveco Nederland BV 100.000

Camiva SA Saint-Alban-Leysse France 1,870,168.50 EURO 99.960 Iveco Eurofire (Holding) GmbH 99.960

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 Vallauris France 50,600.00 EURO 99.940 Lev SA 100.000

Euromoteurs SA Garchizy France 915,000.00 EURO 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 Levallois Perret France 40,000.00 EURO 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 Sociéte Anonyme Bruxelles Belgium 2,974,722.30 EURO 100.000 Fraikin Sociéte Anonyme 100.000

Fraikin Belgium Truck Renting Société Anonyme Bruxelles Belgium 9,048,113.65 EURO 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 Locamion Société Anonyme Levallois Perret France 23,071,328.00 EURO 100.000 Fraikin Société Anonyme 92.929Locamion Société Anonyme 7.071

Fraikin Locatime Société Anonyme Levallois Perret France 3,574,080.00 EURO 100.000 Fraikin Société Anonyme 100.000

Fraikin - Lux SA Walferdange Luxembourg 142,166.94 EURO 100.000 Fraikin Société Anonyme 97.303Fraikin Belgium Truck Renting SA 2.697

Fraikin SA (Suisse) to be liquidated Romont Switzerland 1,000,000.00 CHF 100.000 Fraikin Société Anonyme 100.000

Heuliez Bus SA Mauleon France 9,000,000.00 EURO 100.000 Societè Charolaise SA 100.000

Fraikin Société Anonyme Levallois Perret France 50,665,643.00 EURO 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

Ikarus Egyedi Autobusz Gy Budapest Hungary 350,000,000.00 HUF 64.700 Ikarusbus Jamugyàrto RT 68.114

Ikarusbus Jamugyàrto RT Szekesfehervar Hungary 974,268,827.00 HUF 95.001 Irisbus Holding SL 95.001

Immobiliere Fraikin Société Anonyme Levallois Perret France 4,634,720.00 EURO 100.000 Fraikin Société Anonyme 100.000

Industrial Vehicles Center Hainaut SA Charleroi Belgium 600,000.00 EURO 100,000 SA Iveco Belgium NV 95.000Iveco Nederland BV 5.000

Interoto France Location GEIE Levallois Perret France - - 99.970 Locamion Société Anonyme 25.000Fraikin Locamion Société Anonyme 25.000Fraikin Locatime Société Anonyme 25.000

Lev Société Anonyme 25.000

Irisbus Australia Pty Ltd Dandenong Australia 1,500,000.00 AU$ 100.000 Irisbus Holding SL 100.000

THE COMPANIES IN THE IVECO GROUP

I V E C O N V 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 83

Irisbus Deutschland GmbH Mainz Germany 10,000,000.00 EURO 100.000 Irisbus Holding SL 100.000

Irisbus France SA Venissieux Francia 142,482,000.00 EURO 100.000 Irisbus Holding SL 100.000

Irisbus Holding SL Madrid Spain 233,670,000.00 EURO 100.000 Iveco SpA 99.999Iveco Pegaso SL 0.001

Irisbus Iberica SL Madrid Spain 28,930,787.75 EURO 100.000 Irisbus Holding SL 100.000

Irisbus Italia SpA Turin Italy 100,635,750.00 EURO 100.000 Irisbus Holding SL 100.000

Irisbus (UK) LTD Watford Great Britain 200,000.00 GBP 100.000 Irisbus Holding SL 100.000

IVC Brabant NV SA Groot-Bijgardeen Belgium 800,000.00 EURO 100.000 SA Iveco Belgium/NV 75.000Iveco Nederland BV 25.000

IVC Nutzfahrzeuge AG Hendschiken Switzerland 3,500,000.00 CHF 100.000 Iveco (Schweiz) AG 100.000

IVC Vehicules industriels SA Morges Switzerland 1,200,000.00 CHF 100.000 Iveco (Schweiz) AG 100.000

IVC Salzburg Ntz.GmbH Eugendorf Austria 37,000.00 EURO 100.000 Iveco Austria GmbH 100.000

IVC - Wien Ntz.GmbH Wien Austria 37,000.00 EURO 100.000 Iveco Austria GmbH 100.000

Iveco Aifo SpA Milan Italy 5,200,000.00 EURO 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 6,178,000.00 EURO 100.000 Iveco NV 100.000

Iveco Bayern GmbH Nurnberg Germany 742,000.00 EURO 100.000 Iveco Magirus AG 100.000

Iveco Danmark A/S Kastrup Denmark 501,000.00 DKK 100.000 Iveco NV 100.000

Iveco Eurofire (Holding) GmbH Weisweil Germany 60,194,300.00 DEM 100.000 Iveco Magirus AG 90.032Iveco SpA 9.968

Iveco Fiat Brasil Ltda Sete Lagoas Brazil 110,100,000.00 BRL 50.000 Iveco SpA 47,800Iveco Latin America Ltda 2.200

Iveco Finance AG Kloten Schweiz 1,500,000.00 CHF 100.000 Iveco Schweiz 100.000

Iveco Finance GmbH Ulm Germany 40,000,000.00 EURO 100.000 Iveco Magirus AG 100.000

Iveco Finance Ltd Watford Great Britain 100.00 GBP 100.000 Iveco UK Ltd 100.000

Iveco Finance Luxembourg SA Luxembourg Luxembourg 12,252,065.83 EURO 100.000 Iveco NV 100.000

Iveco Finanziaria SpA Turin Italy 30,000,000.00 EURO 100.000 Iveco SpA 100.000

Iveco Finland OY Espoo Finland 168,187.93 EURO 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 92.410 Iveco Ford Truck Ltd 50.000Iveco UK Ltd 50.000

Iveco International Trade Finance SA Paradiso Switzerland 1,500,000.00 CHF 100.000 Iveco NV 100.000

Iveco Investitions GmbH Ulm Germany 5,000,000.00 DEM 100.000 Iveco Magirus AG 99.020Iveco NV 0.980

Iveco Latin America Ltda Sao Paulo Brazil 266,000,000.00 BRL 100.000 Iveco SpA 99.999Iveco NV 0.001

Iveco Lease GmbH Ulm Germany 775,000.00 EURO 100.000 Iveco Magirus AG 100.000

Iveco Magirus AG Ulm Germany 250,000,000.00 EURO 100.000 Iveco NV 51.341Iveco SpA 48.659


consolid. by held


Iveco Magirus Brandschutztechnik GmbH Ulm Germany 12,700,000.00 DEM 100.000 Iveco Eurofire (Holding) GmbH 99.764Iveco NV 0.236

Iveco Mezzi Speciali SpA Brescia Italy 3,120,000.00 EURO 100.000 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 - Motor Sich Inc Zaporozhye Ukraine 26,568,000.00 UAH 55.560 Iveco SpA 55.556

Iveco Nederland BV Amersfoort Netherlands 4,537,802.00 EURO 100.000 Iveco NV 100.000

Iveco Nord Ntz. GmbH Hambourg Germany 818,500.00 EURO 100.000 Iveco Magirus AG 100.000

Iveco Norge AS Voyenenga Norway 18,000,000.00 NOK 100.000 Iveco NV 100.000

Iveco Nord-Ost Ntz. GmbH Berlin Germany 2,120,000.00 EURO 100.000 Iveco Magirus AG 100.000

Iveco Ntz. GmbH Hannover - Braunschweig Hannover Germany 793,000.00 EURO 100.000 Iveco Magirus AG 100.000

Iveco Ntz. Nord - West GmbH Dortmund-Wambel Germany 1,355,000.00 EURO 100.000 Iveco Magirus AG 100.000

Iveco Otomotiv A.S. Nisantasi Turkey 2,899,365,000,000.00 TRL 99.995 Iveco SpA 99.995

Iveco Participations SA Trappes France 250.000.000,00 EURO 100,000 Iveco SpA 100.000

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 46,974,500.00 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 West Ntz. GmbH Dusseldorf Germany 1,662,000.00 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 15,000,750.00 SAR 100.000 Iveco NV 100.000

Iveco SpA Turin Italy 378,400,000.00 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 Australia Ltd Dandenong Australia 47,492,260.00 AUD 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 Ukraine Inc Kiev Ukraine 62,515,200.00 UAH 65.910 Iveco SpA 65.910

Iveco Venezuela CA La Victoria Venezuela 2,495,691,000.00 VEB 100.000 Iveco NV 100.000

Karosa AS Vysoke Myto Czeck Rep. 1,065,559,000.00 CZK 97.521 Satau SA 97.521

Karosa rso Bratislava Slovak Rep. 200.000.00 CZK 97.521 Karosa SA 100.000

Lev Société Anonyme Levallois Perret France 9,165,168.00 EURO 99.940 Locamion Société Anonyme 100.000

Locamion Société Anonyme Levallois Perret France 10,900,064.00 EURO 99.940 Fraikin Société Anonyme 99.940

Loca-Pel Srl Vallarius France 75,900.00 EURO 99.940 Lev SA 100.000

Lohr-Magirus Feuerwehrtechnik GmbH Kainbach Austria 1,271,774.60 EURO 95.000 Iveco Magirus Brand. GmbH 95.000

Lyon Vehicules Industriéls SAS Saint Priest France 915,000.00 EURO 100.000 Iveco France SA 99.999


consolid. by held

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 85


consolid. by held

Iveco NV 0.001

Mediterranéa de Camiones SL Valencia Spagna 48,080.00 EURO 100.000 Iveco Pegaso SA 100.000

Officine Brennero SpA Trento Italy 3,120,000.00 EURO 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 248,000.00 EURO 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 Ltd 100.000

Seddon Atkinson Vehicles Ltd Oldham Great Britain 41,700,000.00 GBP 100.000 Iveco UK Ltd 100.000

SELTRA SA Bezons France 2,598,864.00 EURO 100.000 Fraikin Société Anonyme 100.000

Service Lorrain VI SAS Ludres France 699,200.00 EURO 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

SIMIS Société Anonyme Saint-Alban-Leysse France 40,015.50 EURO 97.690 Camiva SA 98.000

Société Civile Immobiliere Cles Amiens France 33,600.00 EURO 100.000 Immobiliere Fraikin SA 99.905Fraikin Société Anonyme 0.095

Société Civile Immobiliere Des Cars Bleus Levallois Perret France 90,000.00 EURO 99.940 Locamion Société Anonyme 99.833Immobiliere Fraikin SA 0.167

Société Civile Immobiliere "La Vitrollaise" Levallois Perret France 640.00 EURO 100.000 Immobiliere Fraikin Societé Anonyme 97.500Fraikin Société Anonyme 2.500

Société Civile Immobiliere Les Boussenot Levallois Perret France 36,864.00 EURO 99.940 Locamion Société Anonyme 99.957Immobiliere Fraikin Société Anonyme 0.043

Soc. Charolaise de Participations SA Venissieux France 2,370,000.00 EURO 100.000 Irisbus Holding SL 100.000

Sociétè d’Ass.Tec.Automob. - SATAU SA Venissieux France 35,610,000.00 EURO 100.000 Irisbus France SA 100.000

Societè Diffusion Vehicules Industriels SA Trappes France 7,022,400.00 EURO 100.000 Iveco France SA 100.000

Sociétè de la Seoune SA Trappes France 45,600.00 EURO 100.000 Iveco France SA 100.000

Sodima SAS Haunconcourt France 305,600.00 EURO 100.000 Iveco France SA 100.000

Stevi SAS S.Priest en Jarez France 503,250.00 EURO 100.000 Iveco France SA 100.000

Transolver Finance EFC SA Madrid Spain 9,315,500.00 EURO 50.000 Iveco Finance Luxembourg SA 50.000

Transolver Finance SA Trappes France 15,244,900.00 EURO 100.000 Iveco Finance Luxembourg SA 100.000

Transolver Operational Services Ltd Watford Great Britain 1,400,000.00 GBP 100.000 Iveco UK Ltd 100.000

Transolver Service SA Madrid Spain 610,000.00 EURO 100.000 Iveco Pegaso SL 100.000

Transolver Service SpA Turin Italy 1,989,000.00 EURO 100.000 Iveco SpA 100.000

Transolver Service GmbH Unterschliessheim Germany 750,000.00 EURO 1000.000 Iveco Magirus AG 100.000

Transolver Service SA Trappes France 38,000.00 EURO 10.000 Iveco France SA 100.000

Trucksure Services Ltd Watford Great Britain 900,000.00 GBP 100.000 Iveco UK Ltd 100.000

U.V.I.F. SAS La Garenne France 1,067,500.00 EURO 100.000 Iveco France SA 99.999Iveco NV 0.001


consolid. by held


Vehic. Ind. Phoceens SAS Vitrolles France 927,200.00 EURO 100.000 Iveco France SA 99.999Iveco NV 0.001

Zona Franca Alari Sepauto AS Barcellona Spain 520,560.00 EURO 51.867 Iveco Pegaso SL 51.867

Companies valued by equity method

Altra SpA Genoa Italy 516,400.00 EURO 66.670 Irisbus Italia SpA 66.670

Ashok Leyland Ltd Madras India 1,189,298,000.00 RUPIA 15.280 LRLIH Ltd 50.935

Ennore Foundries Ltd Madras India 67,899,000.00 RUPIA 20.930 LRLIH Ltd 59.090

European Engine Alliance Scrl Turin Italy 24,000,000.00 EURO 33.330 Iveco SpA 33.330

Fiat GRA.DE EEIG Watford Great Britain — — 24.000 Iveco NV 24.000

F.Pegaso SA Madrid Spain 933,045.00 EURO 100.000 Iveco Pegaso SL 100.000

Financiere Pegaso France SA Trappes France 260,832.00 EURO 100.000 Iveco Pegaso SL 100.000

Haveco Ltd Zhajiang Rep. of China 200,010,000.00 CNY 33.330 Iveco SpA 33.333

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 Istanbul Turkey 1,410,000,000,000.00 TRL 27.000 Iveco SpA 27.000

Otoyol Sanayi AS Istanbul Turkey 12,000,000,000,000.00 TRL 27.000 Iveco SpA 27.000

V.IVE.RE GEIE Turin Italy — — 50.000 Iveco SpA 50.000

V.IVE.RE GEIE Boulogne France — — 50.000 Iveco SpA 50.000

Companies valued at cost

AFIN BULGARIA AD Sofia Bulgaria 200,000.00 BGN LEV 40.000 AFIN LEASING AG 100.000

AFIN HUNGARY Kereskeldelmi Kft Budapest Ungheria 24,000,000.00 HUF 40.000 AFIN LEASING AG 100,000

AFIN LEASING AG Vienna Austria 1,500,000.00 EURO 40.000 IVECO NV 40.000

AFIN ROMANIA AS Bucarest Romania 2,063,200,000.00 LEI 39.920 AFIN LEASING AG 99.800

AS AFIN BALTICA Tallin Estonia 800,000.00 EEK 40.000 AFIN LEASING AG 100.000

Atlas Vehicules Ind.AS Casablanca Marocco 19,700,000.00 MAD 48.985 Iveco NV 48.984Iveco SpA 0.001

CBC-IVECO Ltd Changzhou Rep. of China 664,000,000.00 CNY 50.000 Iveco NV 12.500Iveco SpA 37.500

CONSAF - Consorzio Svil.Az. Fornitrici Torino Italy 250,741.33 EURO 10.300 Iveco SpA 10.300

Consorzio Coforma Turin Italy 51,646.00 EURO 50.000 Iveco SpA 50.000

Consorzio Fiat Media Center Turin Italy 214,329.59 EURO 4.770 Iveco SpA 1.590Astra VI SpA 1.590

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 87

Irisbus Italia SpA 1.590

Consorzio Iveco Fiat - Oto Melara Rome Italy 51,645.69 EURO 50.000 Iveco SpA 50.000

C.R.F. Scpa Orbassano Italy 25,000,000.00 EURO 20.000 IVECO SpA 20.000

CSST SpA Turin Italy 520,000.00 EURO 30.000 Iveco SpA 30.000

Elettr.Trasp. Comm. Srl Turin Italy 109,200.00 EURO 50.000 Iveco SpA 50.000

European Engine Alliance E.E.I.G. Maidenhead Great Britain — — 33.330 Iveco SpA 33.330

Fias Fiat Administration und Service GmbH Ulm Germany 200,000.00 DEM 80.000 Iveco Magirus AG 80.000

GESTRANS SA Suresnes France 45,730.00 EURO 50.000 Irisbus France SA 100.000

IKAMCO Teheran Iran 100,000,000,000.00 RIALS 0.220 Iveco SpA 0.220

Ikarusbus Trejd Kft Mosca Russia 20,000.00 USD 95.001 Ikarusbus Jamugyàrto RT 100.000

Iran Magirus-Deutz **Teheran Iran 180,000,000.00 IRR 100.000 Iveco Magirus AG 100.000

Irisbus North America LLC Dover United States 20,000.00 US$ 100.000 Irisbus France AS 100.000

Iveco Colombia Ltda S.ta Fè di Bogotà Colombia 75,699,000.00 PESO COL. 99.000 Iveco Venezuela 99.000

Iveco Hong Kong Ltd. Hong Kong Rep. of China 1,000.00 HK$ 100.000 Iveco SpA 100.000

IVEDEX EEIG Gainsborough Great Britain — — 50.000 Iveco SpA 50.000

MR Fire Fighting International SA Brasov Romania 35,000,000.00 ROL 76.000 Iveco Magirus Brandsch. GmbH 74.000Iveco Eurofire (Holding) GmbH 1.000

Brandschutzt. Gorlitz GmbH 1.000

Orione Cons. Ind.le per la Sicur. e la Vigil. Turin Italy 26,081.00 EURO 0.990 Iveco SpA 0.990

Sirio Consorzio per la Sicurezza Industriale Turin Italy 55,529.00 EURO 11.226 Iveco SpA 9.200Irisbus Italia SpA 1.290

Iveco Aifo 0.460Iveco Mezzi Speciali SpA 0.093

Astra VI SpA 0.183

SIVI SpA Milano Italy 500,000.00 EURO 100.00 Iveco SpA 100.000

SOTRA SA Abidjan Ivory Coast 3,000.000,000.00 CFA 39.800 Irisbus France SA 39.800

Trucks & Bus Company Tajoura Libya 87,000,000.00 LYD 17.241 Iveco Pegaso 8.621

Iveco SpA 8.621

UAB AFIN BALTICA Vilnius Lituania 35,000.00 LT 40.000 Afin Leasing Ag 100.000

Zastava-Kamioni D.O.O. **Kragujevac Serbia 1,234,433,600.00 DIN. 46.500 Iveco SpA 46.500

Companies consolidated by proportional method

Naveco Ltd Nanjing Rep. of China 2,527,000,000.00 CNY 50.000 Iveco SpA 50.000


consolid. by held


Investment in other companies

A.Q.M. Soc. Cons. rl Rezzato Italy 1,881,467.20 EURO 0.723 Iveco SpA 0.723

ASSE Scpa Avellino Italy 428,280.00 EURO 6.020 Irisbus Italia SpA 6.020

Cemat SpA Milano Italy 7,000,000.00 EURO 5.638 Iveco SpA 5.638

Consorzio a responsabilità limitata Spike Genoa Italy 90,380.00 EURO 15.000 Iveco SpA 15.000

Consorzio Bolzano Energia Bolzano Italy 12,000.00 EURO 16.667 Iveco SpA 16.667

Elasis Soc. Cons. pAz 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 Revi Scrl Turin Italy 300,000.00 EURO 10.000 Iveco NV 10.000

Fiat Sepin ScpA Turin Italy 3,850,000.00 EURO 0.084 Iveco SpA 0.084

Hinduja TMT Ltd Mumbai India 355,837,000.00 RUPIA 0.840 Iveco SpA 0.840

Isfor 2000 ScpA Brescia Italy 540,000.00 EURO 1.963 Iveco SpA 1.963

Isvor Fiat SpA Turin Italy 780,000.00 EURO 9.000 Iveco SpA 9.000

Sadi Brasil Ltda Nova Lima Brazil 100,000.00 BRL 15.000 Iveco Fiat Brasil Ltda 10.000Iveco Latin America Ltda 10.000

Transaval SGR SA Madrid Spain 1,889,118.60 EURO 6.999 Iveco Pegaso SA 6.999

(*) 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 SF00324088Printed in Italy - SANTurin - 09.03

This financial statements is also visible oniveco.com site, under the “About Us” section.Other copies are available on request from:

Iveco CommunicationsVia Puglia, 3510156 Turin (Italy)

or from the individual nationalCompanies.

Design:Iveco Commercial Communication and ImageStudio Frenda Advertising (Turin)

Colour separations:Mycrom (Turin)

www.iveco.com

Documents

Iveco Bilancio 2002_1