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IVECO GROUPConsolidated Financial Statements

IVECO: ROOTED IN THE PAST, PROJECTED INTO THE FUTURE

A global company

Focused on customers, products, technology and innovation

With a global network of highly specialist dealers

With efficient, global purchasing

With cutting-edge IT systems

Focusing on the development of its human capital

With a profitable global growth strategy

2004 MACROECONOMIC SCENARIO

IVECO AND THE GLOBAL MARKET

Iveco in Western Europe

Iveco in the rest of the world

Iveco: many products and services, one excellent trademark

Daily

Eurocargo

Stralis

Trakker

Irisbus Iveco

Special Vehicles

Astra Iveco

Iveco Magirus

Iveco Defence

Iveco Motors

GLOBAL CUSTOMER SERVICES

After-sales services

Financial and contract hire services

CONSOLIDATED FINANCIAL STATEMENTS

Analysis of the financial situation

Balance Sheet at December 31, 2004

2004 Statement of Operations

Consolidated statement of cash flows for 2004 and 2003

Notes to the Financial Statements

Breakdown and principal changes to items and other information

Report of external auditors

Ten-year highlights 1995 - 2004

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Contents

2002 2003 2004

Commercial data

Sales of commercial vehicles, buses and special vehicles (units) 161,883 146,437 162,301

Engine production (units) 361,135 378,396 434,779

Western European market share GVW >= 2.8 t (%) 12.8 11.5 11.1

Western European market share GVW >= 3.5 t (%) 17.9 16.2 16.3

Economic / financial data (million Euro)

Net sales 9,136.7 8,442.4 9,290.0

Operating income 102.9 80.9 357.2

Net result after minority interest (497.1) (243.9) 103.9

Cash flow (net result plus depreciation and amortization) (73.4) 70.4 434.1

Net tangible fixed assets at 31.12 2,399.7 1,908.2 1,789.7

Net financial position (indebtedness) at 31.12 (408.2) (397.4) (33.2)

Group Stockholders’ Equity at 31.12 1,097.9 729.3 826.8

Ratios (%)

Operating income / Net sales 1.1 1.0 3.8

Net result / Net sales (5.4) (2.9) 1.1

Cash flow / Net sales (0.8) 0.8 4.7

Other data

Capital spending (million Euro) 587.1 210.3 148.2

of which: vehicles on operating leases (million Euro) 330.9 28.3 12.0

Capital spending / Net sales (%) 6.4 2.5 1.6

R&D expenditure (million Euro) 238.7 212.3 231.0

R&D expenditure / Net sales (%) 2.6 2.5 2.5

Employees at 31.12 38,113 31,511 30,771

Main Consolidated Data

60

120

180

240

2,500

5,000

7,500

10,000

NET SALES(MILLION EURO)

02 03 04

RESEARCH ANDDEVELOPMENTEXPENSES(MILLION EURO)

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240

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VEHICLES SOLD(UNITS)

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ENGINE PRODUCTION(UNITS)

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200,000

300,000

400,000

450,000

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OPERATING INCOME(MILLION EURO)

02 03 040

OPERATING INCOMENET SALES(%)

02 03 04

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Dear Stockholder and Customer,

The economic recovery that began to emerge in the second half of 2003 continued in

the first half of 2004, with one of the strongest global growth rates in the last thirty years,

sustained in particular by the United States and Asian countries.Although growth was not as

strong in Western Europe, the European commercial vehicle market still expanded by 11.8%

in 2004, thanks in particular to the positive trends in the United Kingdom, France and Spain.

2004 was a positive year for Iveco, in terms of financial results and of the progress of its

global growth strategy. Total sales and revenues for 2004 amounted to Euro 9.3 billion, a

10.2% increase on the previous year. Operating income increased from Euro 81 million in

2003 to Euro 357 million in 2004. The year closed with a net profit (Euro 104 million) for

the first time since 2001.

This significant improvement in Iveco’s financial performance is justified by a significant

increase in volumes, and a positive trend that also regards product prices and costs, in spite of

the negative repercussions of the increase in raw material costs in the second half of the year.

Iveco concentrated its strategy on the market and on customers, focusing on excellent

quality and technological innovation. Efficient manufacturing and distribution were the

guidelines of our approach and they have ensured that the value of our products has been

recognised.

In 2004, we confirmed our core values with strategic initiatives regarding the issues of the

environment, safety and productivity on the road.

We presented our completely revamped product range at the Hanover Commercial Vehicle

Show last September, together with cutting edge engines that anticipate future emissions

standards. It was an opportunity to communicate our technological innovations, which

include new engines that respect Euro 4 and Euro 5 emissions standards, the application

of active safety features, and open-architecture telematic systems for vehicle and fleet

management.

In 2004, Iveco also stepped up its efforts to internationalise, achieving concrete results such

as the definition of important new cooperation agreements with leading partners in China,

India and Turkey.

Our commitment to the satisfaction of our customers and stockholder, by focusing

incessantly on the market, the excellent quality of our products and services, and our global

presence in partnership with our dealers, will be confirmed in full in 2005, in a market that

continues to show signs of growth.

We would like to thank our customers and our stockholder for their trust and support, as

well as the entire Iveco team for the commitment and dedication with which it has pursued

and will continue to pursue our goals of lasting, profitable growth.

Sergio Marchionne

Paolo Monferino

Iveco Chief Executive Officer

Sergio Marchionne

Iveco Chairman

Paolo Monferino

4-5 IVECO: ROOTED IN THE PAST, PROJECTED INTO THE FUTURE

6 A GLOBAL COMPANY

7 FOCUSED ON CUSTOMERS, PRODUCTS,TECHNOLOGY AND INNOVATION

11 WITH A GLOBAL NETWORK OF HIGHLY SPECIALIST DEALERS

12 WITH EFFICIENT, GLOBAL PURCHASING

13 WITH CUTTING EDGE IT SYSTEMS

14 FOCUSING ON THE DEVELOPMENT OF ITS HUMAN CAPITAL

15 WITH A PROFITABLE GLOBAL GROWTH STRATEGY

IVECO: ROOTED IN THE PAST,PROJECTED INTO THE FUTURE

Iveco: 30 years of history, over 350 years of experience.

1975: a great challenge to the market and to the competition was launched. Iveco emerged

from the merger of 5 European commercial vehicle specialists, all founded late in the 19th

century. It is a story that star ts a long time ago, but which is heading straight into the future,

investing unwavering commitment and determination in the development of its products,

respect for the environment and for human beings. Thir ty years in which Iveco has always

pursued its vocation as a global, multicultural company.

In 2004 Iveco redirected its strategies, concentrating on customer satisfaction, technological

excellence and the quality of its products, as well as on service quality and striving for the

highest level of efficiency, with a lean organisation based on environment-friendly processes.

Thirty years behind,many more ahead

IVECO: ROOTED IN THE PAST, PROJECTED INTO THE FUTURE6- 7

The partnership with the Hinduja Group of India, with which Iveco holds 51% in the AshokLeyland company and 59% in Ennore Foundries,was also strengthened in 2004.The newagreement with the Indian partners envisages a significant expansion of the cooperationbetween the two companies and marks animportant step forward in Iveco’s globaldevelopment strategy, as well as constitutingsound foundations for the supply of products and services at competitive costs.

Continuous growth through the expansion ofthe product range introduced in Eastern Europe,the development of marketing agreements inRussia and local manufacturing of the new heavyrange in Argentina and Brazil were essentialelements of Iveco’s globalisation strategy in 2004.

ventures, licensing agreements, investments andmarketing networks.The most importantmanufacturing ventures are in China with NavecoLtd., Haveco Ltd. and CBC-Iveco Ltd., in SouthAmerica with Iveco Argentina, Iveco Fiat do BrasilLtda and Iveco Venezuela, in India, with AshokLeyland, and in Australia with Ital.

In 2004 Iveco stepped up its globalisationstrategy, and in December 2004 announced anagreement with the Shanghai Automotive IndustryCorp., one of the largest Chinese car-makers, forthe development of a long-term partnership inthe production of vehicles and of engines for themedium and heavy range.The product range of the Naveco company inNanking was also enlarged, while the CBC-Ivecoventure in the urban bus sector was reorganisedand strengthened.

A global company

Iveco is a global corporation with 49manufacturing plants in 19 different countries in five continents, and one of the leaders of thetransport sector.The company designs, builds andmarkets a comprehensive range of light (2.8 – 6 tonnes GVW), medium (6 – 16 tonnes GVW)and heavy (over 16 tonnes GVW) commercialvehicles for goods transport by road and for off-road applications, engines for vehicle andindustrial applications, buses and coaches, specialvehicles for civil protection and other specificmissions, and fire-fighting appliances.

With its various brands – Iveco, IvecoMotors, Iveco Magirus, Astra Iveco, Iveco SeddonAtkinson and Irisbus Iveco – in 2004 the companymanufactured and marketed over 162,000 vansand commercial vehicles and about 435,000engines, and it has a distinctive global approach.It operates in over 100 countries through joint

Focused on customers, products,technology and innovation

Iveco draws on many years of experience on all the world markets to propose optimalproduct and service solutions to operatesuccessfully in the transport business.The maingoal is to guarantee profitability for ourcustomers who are our real business partners.This result is related to both the optimal use of efficient means of transport, and to the packetof services offered in terms of loans,maintenance and service. Iveco’s commitmentconsists in identifying and proposing to itscustomers a combination of products andservices that can guarantee maximumprofitability during the vehicle’s entire lifespan.

In 2004 Iveco continued with the renewal of its light commercial vehicle range, introducingtwo new models, the Daily .14 HPI and

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Daily .17 HPT, both of which are equipped withnew generation engines that confirm Iveco’sleadership in this sector. In 2004 Iveco alsolaunched the Daily Agile which features anautomatic transmission, stability control, andlevels of driving comfort that are usually onlyavailable on cars.

In 2004, two new models were launched at the upper end of the Iveco Eurocargo range,leader of the European medium duty transportmarket, the 140E, with GVW of 14 t, and the160E, with GVW of 16 tonnes.A new version of the Eurocargo 4x4 was also launched, with a completely revamped cab.

The heavy Stralis range was also completedin 2004, with a prestigious version that has

no rivals on the market: the Executive Spaceflagship, undisputed top of the range withoutstanding equipment in terms of safety,comfort and practicality.

Iveco’s new Trakker family of quarry andconstruction vehicles was also launched in 2004,with a cab that shares the “family feeling” of the Stralis Active Time and Active Day, in a comprehensive range of 60 different types of trucks.The Trakker adopts chassis, front andrear axles and suspension technologies designedfor extreme conditions, that have been tried andtested in off-road vehicles for decades.The modern conception of the engines – thevarious versions of the Cursor 8 and Cursor 13families – guarantees outstanding performance at all times, combined with unequalled reliability.

Irisbus Iveco also pursued its range renewalprogramme in 2004, focusing in particular on therange of low emissions vehicles, and thosefuelled by natural gas.A CityClass bus poweredby fuel cells running on hydrogen was alsoregistered in Turin.

The special vehicle range was also extendedwith the introduction of new Astra Ivecoarticulated vehicles equipped with Cursorengines, and with new solutions in the fire-fighting sector, where Iveco Magirus is worldleader for technology and market leader forturntable ladders; this range has also beencompletely renewed.

At the 2004 Hanover IAA Show, Ivecolaunched a new range of engines for road

applications that are compatible with Euro 4 andEuro 5 emissions legislation well ahead of thedeadlines envisaged by the law.And it launchedthe new range of Vector engine for industrialapplications (rolling stock, marine applicationsand power generation).

Iveco also backs up its product range with a vast selection of after-sales services, sustainedby the technical efficiency and extension of theafter-sales network.

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With a global network of highly specialist dealers

In 2004 Iveco strengthened its global deliverystrategy for its products through an organisednetwork of dealers, each of whom reflects a highlevel of specialisation and business skills,guaranteeing respect for quality standards that are constantly monitored.

The Iveco dealer network comprises 844companies in 100 countries around the world,which employ about 80,000 people.A significantpart of our network focuses on the sale andmaintenance of commercial vehicles for goodstransport, while the remainder is dedicated tobuses, special vehicles and engines. Iveco and itsnetwork strive constantly to find synergiesbetween the various business sectors in itsdistribution and service activities, so as to exploitIveco’s global presence all over the world and thecomprehensiveness of its product range.

For many years, Iveco has invested in thequality and specialisation of its network, in thefield of sales and of service. Service to customersis an essential element to improve loyalty to theIveco brand and this service is provided throughthe dealer network; all dealers are homologatedby criteria of service excellence for the vehicle’sentire life cycle, 24 hours a day, 365 days a year.

In order to guarantee a higher level of service for its customers, Iveco operates an organisational unit dedicated to analysis and optimisation of dealer performance.Our activities are directed primarily at:• optimising the process and distribution costs,

essential elements of the competitiveness of Iveco itself and its dealers;

• supporting the activities of Iveco dealersthrough the best service methods, marketinginstruments and management of the brand;

• strong development of marketing performancethrough initiatives to train salesmen andimprove their productivity.

For Iveco, the dealer is an essential partner in its professional and business growth. In 2004the dealer network was consolidated andstrengthened in several important geographicalareas, such as North America for engines, andEastern Europe and South America for the entirevehicle range, with the objective of sustainingIveco’s strategy of global growth.

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With efficient, global purchasing

In 2004 Iveco completely reorganised thestructure of its Global Purchasing function,which is now able to grasp every opportunity to introduce new technologies, support the“Platform teams” effectively, and speed upmaterial cost efficiencies by exploiting everyavailable means, including the optimisation oftechnical content and Global Sourcing strategies.

In quantitative terms, our goal has been toguarantee far-reaching familiarity with the GlobalSourcing strategies, for 30% of annual purchasing,while also exploiting the competitiveness ofsuppliers from countries where costs are lower,developing relations with suppliers and favouringthose with co-designers and system integrators,as well as with strategic suppliers regardinginnovation and cost reduction.

Global Purchasing adopts the same rigoroustransparent system to manage purchasing all overthe world, implementing APQP (Advance ProductQuality Planning) after careful revision andreprogramming, both during the development of new products and in ongoing activities. Globalpurchasing has also chosen to carry out online

auctions, to analyse and to reassess the marketconditions of current products, particularly forindirect materials and instruments.

In 2004, some of Iveco’s main suppliers wereinvolved in Technology Days, which tackled theissue of innovation through the presentation ofnew products and new applications, trends andtechnological benchmarks.The Technology Dayswere backed up by meetings between the topmanagement of the various companies to reviewmutual commitments, to discuss and analyse thecurrent situation and to draft future programmestogether.

The savings achieved by Global Purchasingwhere material costs are concerned, are perfectlyin line with programmes, in spite of theunexpected increase and huge impact of the costof ferrous raw materials. Important savings havealso been achieved in the area of indirect andancillary materials and services, with a 5% costreduction.The quality of suppliers has beensignificantly improved.The new Global Sourcingstructure has concentrated considerable efforton organising purchasing in countries where

costs are lower, starting to import from EasternEurope, India, China and Brazil.

In September 2004, a Dealers’ Conventionwas organised for over 900 people, at which thecentral topics were competitive partnership,leadership and excellence.

With cutting edge information systems

In 2004 Iveco also radically restructured theIveco information systems. Group spirit, thecapacity to create complex projects in parallel in different parts of the world, and speed of execution were the features of the newinformation systems based on the SAP platform,accompanied by the growing dissemination ofsolutions that focus on virtual product definition.However, activities during the year were notrestricted to the classic Information Systems roll-out, but tested our ability to introduce new,highly innovative technologies, including LAN

Wireless,Voice-over IP, the Iveco teleconferencesystem and shared printing services.

Initiatives related to the adoption ofInternational Accounting Standards with the IASproject and to improve security with theMicrosoft Active Directory project, enabled us to bring Iveco into line with the internationalstandards and to consolidate and protect ourInternet environment.

Specialist expertise is now available tosupport all the business lines and joint ventures,consolidating the integration and standardisationof information systems in the various units, andstrengthening the Group’s innovative imagethroughout the world.

We have also broadened the InformationTechnology horizons beyond traditional boundaries,thanks to joint initiatives such as those in thebusiness development areas, the “Productivity on the Road” programme and the design anddevelopment of Iveco’s new Internet site.

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With a profitable global growth strategy

Achieving an excellent operating result withthe lowest possible capital outlay: in a word, this is the goal of all the best companies.Iveco identifies with this model and pursues it tenaciously, producing growing value for thestockholder.

These results are born from constantactivities that involve all business areas:• Attention to and focus on the customer

and the market• Product technology and innovation• Transport safety and protection of the

environment• Striving for excellence in quality• Lean organisation• After-sales and financial services for the

customer• Global market strategy


Focusing on the development of its human capital

Growing attention to the quality of productsand services, that is typical of extremelycompetitive sectors like the automotive markettoday, has stimulated Iveco to invest its bestefforts in the selection and development of outstanding people.Today Iveco men andwomen have an opportunity to significantlyinfluence company results.

Iveco puts the growth of individual skills atthe centre of its professional development, inorder to achieve results. In other words, it offerspeople a system to develop human resourcesbased on the enhancement of professionalexpertise and constant stimulus to reachexcellent results.

To fuel and monitor this process, it constantlymeasures individual performance, and decidesboth career and salary developments, and theneed to enhance individual skills with targetedtraining programmes, on the basis of results.

This system proposes concrete opportunities for professional development and the recognitionof the results achieved. In other words: joiningIveco does not only mean finding a job, but alsograsping an opportunity to test one’s determinationto act and to grow in the working world.

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16-17 2004 MACROECONOMIC SCENARIO

2004 MACROECONOMIC SCENARIO

The improvement in the world economy that emerged in the second half of 2003, continued in

the first half of 2004 and even accelerated.

Data currently available indicate that the global growth rate in 2004 should be one of the

highest in the last 30 years.

Once again, in 2004 much of the merit forthis result should go to the United States, but thiswas not the only locomotive to drive the worldeconomy.Another important contribution camefrom Asia, and from China in particular.The surge of activity in Asia was one of the mainreasons for the strong increase in the price of raw materials, including crude oil.In spite of its recovery, expectations weredisappointed once again in the Euro zone, whichwas even overtaken by Japan where economicperformance is concerned.

One of the main risks of the growthrecorded in the latter part of 2004 was the trendin oil prices, which remained very high althoughbelow the all-time high achieved, in nominalterms, at the end of October.The drastic increasein crude oil prices was caused by what could bedescribed as a “perfect storm” in the oil market:the simultaneous effect of pressure on thedemand and supply sides, exasperated by financialspeculation.

For the time being, oil prices do not appearto have caused significant problems for the USeconomy. Compared to the high growth ratesrecorded in the second half of 2003, the USeconomy remained very strong but did lose steamin 2004 – coinciding with the end of theincentives of the last tax package and the gradualincrease in the cost of money.

There are still huge potential risks for USgrowth. One of the most important is the trendin the labour market, because the economydepends to such a large extent on privateconsumption, and the “twin deficits” of publicsector finances and the balance of payments.The continued deterioration of the latter is themain reason why the Dollar has begun to loseground once again.There is a school of thoughtthat only a weak Dollar will be able to reduce the US balance of payments deficit. However,the deficit is too large to be corrected only by the exchange rate mechanism, and it will onlybe possible to significantly reduce the deficit by

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2004 MACROECONOMIC SCENARIO20- 21

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Western Europe 666.5 685.5 724.5 829.3 916.9 985.4 996.8 957.5 951.4 1064.1

France 108.5 111.1 107.7 132.1 148.9 175.5 182.5 168.7 158.5 175.4

Germany 172.2 172.0 182.2 202.7 225.7 230.0 224.6 207.3 211.0 231.3

United Kingdom 114.3 118.9 125.5 145.9 144.2 148.5 154.8 153.6 165.6 189.7

Italy 77.5 81.0 78.1 85.8 109.6 122.8 121.4 139.5 117.7 124.8

Spain 47.8 48.3 59.0 68.6 83.4 90.2 91.3 86.9 94.6 108.1

Rest of Western Europe 146.1 154.2 172.1 194.3 205.0 218.4 222.1 201.6 204.0 234,8

COMMERCIAL VEHICLE DEMAND TREND IN WESTERN EUROPEGVW >=2.8 T (THOUSANDS OF UNITS)

NEW REGISTRATIONS TREND IN WESTERN EUROPE(BY BUSINESS UNIT)

2.8-6.0 t GVW 6.1-15.9 t GVW >=16.0 t GVW Trend

95 96 97 98 99 00 01 02 03 04

units/1000 750

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tackling the real cause of the problem: the lowpropensity to saving in both the public and theprivate sectors.

Once again it is the Euro that has to bearmost of the brunt of the realignment of theDollar.This puts the economic recovery of theEuro zone at risk, after it began to waver in thethird quarter because of the negative impact ofnet exports on growth rates.The result hides a very heterogeneous performance in the majorcountries in the area, in terms of both the rateand the composition of growth.

Unfortunately, because of the difficultsituation of the public finances of many Euro zonecountries (and of Germany and France inparticular), the authorities will not be able tointroduce additional tax incentives to stimulatedomestic demand.With persisting inflationarypressure and the already low level of interestrates, it also seems unlikely that the EuropeanCentral Bank will be able to provide a stimulus by a new relaxation of monetary policy.

The only action possible to give a newimpulse to the economy seems to be that of further structural reforms, something that

European Governments seem to haveunderstood. Reforms have become even moreurgent since the ten new members joined theEuropean Union.

The expansion of the European Union hascertainly had a positive effect on the economiesof the new member countries.This isdemonstrated by Poland, where the growth rateleapt forward at the start of the year thanks to a boom in consumer spending. However, thisgrowth sparked off inflationary pressure again,well above the targets set by the Central Bank.

The Turkish economy also performed well,and seems to have finally reached the longawaited stability, through careful management of economic policy.The recent green light to the start of negotiations for membership of theEuropean Union should further consolidate theresults achieved so far.

As we mentioned earlier, 2004 was anotheryear of strong growth in Asia, particularly inChina, which is rapidly taking on the role of majorgrowth engine in the area, the role formerly filledby Japan.

The Chinese economy is again recordinggrowth rates above 9% and, in spite of initial fearsthat it might overheat, it seems destined toachieve a “soft landing”, mainly thanks to theslowdown in investments brought about by newmeasures introduced by the Government.

2004 was also an excellent year for SouthAmerica.The Argentine economy recorded stronggrowth for the second year running, thanks toexcellent domestic demand. However, the fact

that negotiations have not been concluded withinternational creditors, which is indispensable if the situation is to normalise, remains a stumbling block.The Brazilian economy is alsorecovering well, after a disappointing 2003.Economic activities were initially the outcome of excellent exports, sustained by the boom inthe price of commodities. In subsequent months,growth has been sustained by domestic demand,stimulated by a relaxation of monetary policies in the second half of 2003.

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22-23 IVECO AND THE GLOBAL MARKET

25 IVECO IN WESTERN EUROPE

26 IVECO IN THE REST OF THE WORLD

28 IVECO: MANY PRODUCTS AND SERVICES, ONE EXCELLENT TRADEMARK

28 DAILY

30 EUROCARGO

32 STRALIS

34 TRAKKER

36 IRISBUS

38 SPECIAL VEHICLES

38 ASTRA IVECO

40 IVECO MAGIRUS

41 IVECO DEFENCE

42 IVECO MOTORS

IVECO AND THE GLOBAL MARKET

Iveco sold a total of 162,301 vehicles worldwide in 2004 (+10.8%), and an additional 57,500 units

were sold by affiliates and licensees (+15.9%). During the year, Iveco also sold 434,800 diesel

engines (+14.7%), and this increase was due both to the increase in sales within Iveco and to

sales to Fiat Auto, CNH and other external customers. The total portfolio of repair and

maintenance contracts increased by 3.1%, to a total of approximately 32,400 contracts at year-

end. During the year, Iveco financed 34,292 new and used vehicles, trailers and semitrailers.

There were 103,080 financial contracts with customers in being at the end of 2004, and total

receivables amounted to Euro 2,575 million (Euro 2,312 million in 2003). The fleet of vehicles

rented out as part of Transolver Services’ rental activities, totalled 3,770 units at the end of 2004.

24- 25

Iveco in Western Europe

The Western European market forcommercial vehicles with GVW from 2.8 tonnestotalled 1,064,100 units (11.8% up on 2003), theresult of growth on all the major Europeanmarkets, and on the British (+14.6%), Spanish(+14.3%) and French (+10.6%) markets inparticular.

The light vehicle segment (GVW from 2.8 to 6 tonnes) expanded by 13.4% to 749,630registrations, with significant increases in theUnited Kingdom (+20.7%), Spain (+18.1%) andFrance (+13.3%).

Demand for medium duty vehicles (GVWfrom 6.01 to 15.9 tonnes) reversed the trend of the previous year, and recorded similar growthon all the major European markets (+5.8%), for a total of 78,620 units.

The heavy vehicle market (GVW >= 16tonnes) also expanded significantly (+9.1%),reaching 235,840 registrations, with substantialgrowth in Germany (+16.7%) and Spain (+7.7%),although there was a marginal contraction in theUnited Kingdom of 1.2%.

Iveco sold 118,460 vehicles in WesternEurope (+8.1%), for 11.1% of the market,a marginal contraction (-0.4%) compared

to the previous year, due primarily to theunsatisfactory performance in Italy and Spain (-0.8% and –1.1% respectively).

Iveco market share contracted marginally in the light vehicle (-0.5%) and heavy vehicle (-0.2%) segments, while the medium vehiclesegment achieved 28.2% (+0.8%). Iveco succeededin maintaining its lead of the European market in this segment.

Irisbus Iveco sold a total of 8,262 units, in linewith sales in the previous year, achieving morethan 25% of the Western European market.

Astra Iveco sold 1,783 units in 2004, includingexports of military vehicles through IvecoDefence, for a 14.4% share of the Italian marketfor heavy duty vehicles for off-road applications.In 2004, Iveco sold 1,300 special fire-fightingvehicles, and maintained its position as leader of the major European markets with a 38% share.Iveco also leads the world turntable laddermarket, with 59%. Iveco Defence soldapproximately 1,900 vehicles to militarycustomers.

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IVECO AND THE GLOBAL MARKET26- 27

Iveco in the rest of the world

Iveco improved its position in Brazilsignificantly in 2004, selling 4,330 units (+70%);this comprised 2,075 light vehicles (+31%), 706medium vehicles (+75%), and 1,548 heavy vehicles(+169%).This increase was due to the fact thatproduction of medium and heavy vehicles gotunderway in Brazil in 2004.

The Argentine commercial vehicle marketalso began to grow significantly once again(+160%), reaching 14,530 units (5,590 in 2003).Iveco sales rose to a total of 1,727 vehicles and a market share of 11.9%. In addition to this,359 vehicles were sold to markets in the SouthPacific area.

Commercial vehicle sales in Venezuela in 2004totalled 13,310 units (4,776 in 2003), and Iveco'smarket share dropped from 17.3% in 2003 to14.4%, in spite of selling a total of 1,913 vehicles,compared with 826 in the previous year.

In Turkey, after the dramatic contraction of recent years, the market for commercialvehicles with GVW over 3.5 t rose by 60.5%,to 69,163 units.Sales by the Otoyol joint venture and direct salesby Iveco totalled 4,103 units, for a market shareof 5.9%. Iveco Otomotiv Ticaret A.S., distributorof the entire range of Iveco products,consolidated its position in the light and mediumcommercial vehicle market and in particular,after-sales service for heavy vehicles.

Sales and exports by Ashok Leyland, an Ivecosubsidiary company in India, improved by 19% anda total of 39,275 vehicles were sold.

The commercial vehicle market in thePeople’s Republic of China expanded by 26.1% to 1,525,980 units.The most significant increasewas seen in the heavy vehicle segment (+44.9%)with 370,795 registrations.The medium duty

expanded by 28.8% (175,650 units) and the lightsegment by 18.5% (808,020 units) while themicro-vehicle segment grew by 25% (171,451units).The passenger transport vehicle marketcontracted by 7%.The minibus sector fell by 9.6% (397,772 units)whereas volumes for medium and large buses for town and long distance transport grew by9.3%, recovering after its poor showing in 2003when it was conditioned by the SARS epidemic.

Naveco, Iveco’s 50% joint venture with theYuejin Group, produced and sold 15,006 lightcommercial vehicles.

CBC-Iveco, a 50% joint venture with theCBC Group, which operates in the medium andlarge bus segment, sold 2,764 complete buses andchassis kits, which Haveco, a company producingtransmissions that is owned 33% by Iveco, 33%

by the Yuejin Group and 33% by HGC, sold55,100 transmission, which represented a consistent fall on the record year of 2003,but did consolidate the volumes achieved in previous years.

Iveco Trucks Australia sold 2,144 vehicles on the domestic market.The company achievedmarket share of 7.2%, which reflects a downturncompared to a share of 8.5% in the previous year.

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Iveco: many products and services, one excellent trademark

Iveco is one of a small number of manufacturers that produce a full range of commercial vehicles: the range is reallycomprehensive, extending from the Daily (2.8 –6.5 tonnes), to the Eurocargo (6.5 – 18 tonnes),the Stralis (up to 44 tonnes) and off-road vehicleslike the Trakker, which can handle a maximumpermissible load on its various trailers of up to 72 tonnes.The bus range is also very broad,from minibuses to a wide range of town and out-of-town buses and luxury touring coaches.The Iveco range also includes vehicles for specialapplications: tactical, logistic, defence vehicles,heavy vehicles for off-road applications, dumptrucks, and fire-fighting appliances.And finally, Iveco also leads the world market forthe production of diesel engines between 72 and2,000 Hp.

Daily

The 2.8 to 6 tonne GVW segment of theWestern European light commercial vehiclemarket expanded strongly in 2004 with 749,630registrations, compared to 661,600 registrationsin 2003 (+13.4%).This growth was evident in all the major markets:Italy (+7.5%), France (+13.6%), Spain (+18.1%),Germany (+6.8%) and the UK (+20.7%).

Where the different segments wereconcerned, the 2.8-3.49 t market expandedstrongly (+19.6%), as did the 3.5 t segment(+8.7%), where the Daily maintains its excellentcompetitive position with 17% of the market.

There was a marginal contraction (-1.5%) in the 3.51-6 t segment, but in spite of this, theDaily consolidated its excellent position (18.3%).

Outside Western Europe, the Daily lost someground but continued to record good marketshare in Eastern European and Mediterraneancountries.This is borne out by market share forthe 3.5 – 6.5 t segment in Poland (14.1%), Croatia(32.3%), Hungary (17.7%), Slovenia (20%), Romania(32.4%), the Czech Republic (22.3%) and theSlovak Republic (28.1%).

In South and Central America, strong marketgrowth enabled the Daily to increase its salesvolumes significantly (+55%) while maintaining an excellent position on the various markets,with 17.6% in Brazil, 19.6% in Argentina and 12.1%in Venezuela.

In China, Naveco manufactured and sold15,006 vehicles in 2004, which represents a 2.5%increase on 2003 sales, thanks to the marketlaunch of the new PowerDaily range.

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30- 31

Eurocargo

In 2004, European demand for medium dutycommercial vehicles (from 6.01 to 15.9 tonnes)expanded compared to the previous year, for thefirst time in the last 4 years (+5.8%).

The strongest growth was seen in Germany,which expanded by 11.3%, while Poland followedup its 7% growth of 2003 with a further 6.8%increase in 2004. On the other hand, the Italianmarket contracted by 0.8%.

Overall, Iveco consolidated its leadership of this segment, raising its share from 27.4% to 28.2%.

The Group improved its market share in twelve out of sixteen markets.

In Eastern Europe, the medium duty segmentcontracted by 2.3%, while Iveco improved itsshare of the local market from 33.8% to 36.5%,improving in 6 markets out of 9.

In 2004, Iveco launched its new Eurocargo4x4 range and further extended the range of 4x2vehicles, introducing new models in the 14 to 16tonne segment.

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Stralis

In 2004 the heavy vehicle market maintainedthe growth begun in 2003 (+1.2%), stabilising at atotal of 235,837 registrations, an increase of 9.1%.The market in Germany expanded by 16.7%, andthe performance of the Polish (+57.7%),Portuguese (+37.7%) and Austrian (+22.6%)markets were also worthy of note.The Britishmarket on the other hand contracted by 1.2%.

Iveco closed the year with 11.1% of theWestern European market, improving itsperformance compared to the previous year in 10 markets.

The heavy vehicle market in Eastern Europeexpanded by 36.3% to 17,872 registrations, andIveco recorded a market share of 11.2%.Weshould mention the 47.5% expansion of theRomanian market.The only market that did notrespect the trend was Croatia, which contractedby 17.4%.The fact that many countries in this areajoined the European Union during the year, clearlygave a significant boost to their overall demand.


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New Trakker range

In November Iveco launched its new off-roadrange, known as the Trakker, which completes theheavy duty vehicle range.

The many versions of the Trakker meet all possible operating applications, thanks to itscomprehensive range of engines (from 270 to 480 Hp) and configurations (chassis-cabs andtractors).

Positive feedback was received fromcustomers regarding product performance andcab comfort. From the final months of 2004,incoming orders were well above expectations,and commercial results will certainly begin to be seen in 2005.

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Irisbus Iveco

Irisbus sold 8,262 vehicles in 2004, including2,536 town buses, 3,519 touring coaches and out-of-town buses and 2,207 minibuses.To this we should add 2,764 units sold by CBC-Iveco. Irisbus confirmed its position as joint leaderof the main European markets, with a marketshare of 25.7% (total weight exceeding 3.5tonnes), which represents an improvement on the previous year. Irisbus maintained itsleadership of the French (48.2%), Italian (46%) and Spanish (29%) markets.

In 2004, Iveco continued its work to developvehicles with a low environmental impact: the FuelCell bus was delivered in Turin, and beganexperimental service on the local transportnetwork; the new electric Europolis came intoservice in the city of Lyons, and the new Cristalistrolleybus was delivered to the Milan cityauthorities during the year.Where alternativefuels are concerned, the application of the newmethane-fuelled Cursor engine on the townranges was particularly significant, resulting inimproved performance and reduced consumption.

Synergies with the Iveco network continue to improve, and the network is expanding,increasing its ability to support the customer;important growth is programmed outside theEuropean market.

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38- 39

Special vehicles

Astra Iveco 2004 was a year of consolidation for the

Astra Iveco range, which has been almost entirelyrenewed since 2001.A total of 1,642 vehicles were sold in 2004, anincrease of about 3% on the previous year.Astra Iveco has achieved a 14% share of theItalian market, and currently exportsapproximately 30% of its output. Exportsincreased by 28% in 2004, and this growth is expected to continue.

In 2004,Astra Iveco concluded the acquisitionof the Sivi SpA company, transferring activities to Piacenza, thus supplementing its own marketrange with vehicles for exceptional loads.

Output of defence vehicles was significant in 2004, sustained by a range of all-wheel drivestandard production vehicles, 4x4, 6x6 and 8x8,which is proving a great success.A total of 108articulated dump trucks were sold, 92 of whichwere marketed through CNH, primarily on theU.S. market.

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Iveco DefenceIveco controls 95% of the Italian terrestrial

defence vehicle market, and enjoys a strongposition in other European Union countries likeSpain, Germany and Belgium. In 2004 we suppliedabout 2,000 vehicles to European armed forces,as part of long-term programmes.

Iveco operates in the field of bullet-proof andarmoured vehicles through the Iveco Oto-MelaraConsortium.

During the year, Iveco Defence achievedsignificant results, which included an orderreceived for 1,150 units of the light VTLM (lightmultipurpose tactical vehicle) for the Italian Army,which follows the order received the previousyear from the British Army for 400 units with an option for a further 400. In 2004, Iveco alsowon an important tender to supply approximately300 vehicles to the Belgian Army.

Activities related to maintenance and repaircontracts and the supply of parts for fleetsoperated by the various armed forces continuedto expand during the year.

Iveco MagirusThe various divisions of Iveco Magirus in

Germany (Iveco Magirus Brandschuetztechnich),Italy (Iveco Mezzi Speciali), France (Camiva) andAustria (Lohr Magirus), confirmed the Group’sleadership of the European market for fire-fightingappliances, achieving a 38% share of the majorEuropean markets.The strong international structure of activities in the fire-fighting sector was underlined by thefact that exports outside the traditional Europeandomestic market accounted for about 40% of sales.Iveco Magirus is world leader of the turntableladder marker, with a share of approximately 59%.

In 2004, total sales of vehicles and outfits by Iveco Magirus on all markets totalled 1,300,compared to 1,249 in 2003.

In 2004 there was a significant cut in publicspending in several European countries,particularly Germany and France, because of restrictive policies related to the stability pact.In spite of this, medium and long-term prospectsare promising, thanks in particular to the forecastof substantial growth in demand for civilprotection vehicles.

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Iveco Motors

The Diesel engine market benefited fromgrowing global demand in 2004, thanks to thegrowth of the economies of developing countriesand fleet renewal in industrialised countries.In 2004 Iveco sold a total of 434,800 engines,compared to 379,000 in 2003 (+14.7%), 37.8% of which were used on Iveco vehicles, while 50.6%were sold to Fiat Auto (Sevel) and CNH, and theremaining 11.6% were sold to other customers.

Negotiations continued for the supply andlocal manufacture of engines in China.The agreement with the City of Beijing sponsoredby the Italian Ministry for the Environment has ledto the supply of 300 natural gas engines for townbuses as part of a sustainable mobility programmefor the 2008 Olympic Games. 260 environment-


In 2004, the leisure segment of the marineengine market grew significantly, although theprofessional sector remained stagnant.The Italiannautical industry confirmed its dominant positionin the world market, and 2,071 Iveco Motorsengines were delivered, including the new NEFand Cursor versions presented at the Genoa BoatShow.This product range will also be extended in 2005.

Deliveries of Vector engines, for rolling stockapplications related to two important Europeancontracts got underway in 2004, and the firsttrains were delivered to Trenitalia in the firstquarter of 2005.

friendly diesel engines were sold to the BeijingCity Council, opening the doors of the Chinesemarket for subsequent supplies.

Sales of industrial engines for stationary,agricultural and construction applications,increased with respect to the previous year.

NEF and Cursor engines were introduced in 2004 for power generation applications.A total of 14,414 engines were sold for assemblyand for complete units, to which we should add718 special high power assemblies produced by the French subsidiary 2HEnergy.In 2005 the product range will be furtherextended with the launch of new engine versions,such as the Vector and gas engines.

The new Iveco Motors brand, launched earlyin 2004, has increased awareness in the marketthat Iveco, one of the world’s most importantmanufacturers of commercial vehicles, buses, andspecial vehicles, is also one of the leadingmanufacturers of diesel and natural gas engines.

Work to extend the distribution networkcontinued in 2004, with a significant presence on the US market, where new dealers wereappointed to manage a network of about 140sales outlets, and 200 service points.

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44-45 GLOBAL CUSTOMER SERVICES

46 AFTER-SALES SERVICES

49 49 FINANCIAL AND CONTRACT HIRE SERVICES

GLOBAL CUSTOMER SERVICES

During 2004, Iveco Customer Service continued to develop its global service to customers

from the viewpoint of both the geographical area covered and the Iveco brands assisted. For

example, the logistical parts service for Irisbus and Iveco Motors, was better integrated with the

service delivered to commercial vehicle customers, while the gradual homogenisation of

onboard equipment has made it possible to develop more extensive after-sales services for all

types of vehicle.

Continuous investment in qualityafter-sales services

Particular attention was focused ondeveloping the services of the Customer ServiceInternational Operations, for customers inEastern Europe,Africa and the Middle East,and the Asian Pacific basin.The figure of DistrictManager was created for each of the non-European Customer Service areas.From 2004, customers in the countries that haverecently joined the European Union can count on parts deliveries in less than 24 hours.

The availability of spare parts has proved a decisive factor of customer satisfaction and the competitiveness of the whole Iveco range.In 2004, Supply Chain Customer Service furtherboosted its service capability:

• increased availability of spare parts in itswarehouses and those of the dealer network;

• extension of the range by integrating parts forall products – commercial vehicles, buses,special vehicles, engines – in a single logistic-distribution system;

• specific investments in this service in EasternEurope.

What is more, over 200 dealers in Europenow share information, with each other and withIveco, regarding existing parts stocks in thenetwork, opening up a further formidable,

innovative source of parts that is crucial to theservice.A significant number of Authorisedworkshops in Europe now transmit parts ordersonline to dealers.The Customer Support Centre has developed itsactivities in the field of telediagnosis, by steppingup the resident skills of the “Expert Centre” andsignificantly increasing the number of remoteservices provided: in 2004, there was a 75%increase in the teleservices delivered compared to 2003.The number of workshops linked onlinealso increased significantly, guaranteeing a fasterresponse to our customers’ needs.

Over one million telephone contacts weremanaged, solving every request for service fromour customers, 24 hours a day, 365 days a year.

EASY (Electronic Advanced System) waslaunched in 2004, an innovative diagnosticinstrument for the various control units on thevehicle, which has met with the approval of thenetwork technicians: in just a few months,1,000 Iveco technicians have been trained to use the enormous potential that this systemoffers the workshop. EASY is the heart of theIveco Advanced Diagnostics Service, andrepresents the access key to the workshop of the future, thanks in part to interaction withTeleservices and other Iveco technical supports.

GLOBAL CUSTOMER SERVICES46- 47

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Financial and Contract hire services

Recognising the significant investment thatpurchasing a vehicle entails for an operator, Ivecooffers its customers a whole range of financial andoperational services through Iveco Finance.

Iveco Finance operates in Germany, France,the United Kingdom, Italy, Spain, Portugal,Switzerland and Brazil, and it has developed a portfolio of products to supply Iveco customerswith competitive solutions, aimed at ensuring the most effective cost of ownership.

Within its range of financial services, IvecoFinance is able to study tailor-made solutions thatmay either confer ultimate ownership of thevehicle to the transport operator, or simplyprovide a vehicle with or without operationalservices under a long-term rental agreement.Various aspects of the operator’s business weretaken into consideration, including operatingincome, tax status and balance sheet aspirations,in order to propose the most effective solution.

Contract Hire envisages the provision of anIveco chassis, but may also include optional and/or

complementary equipment and bodywork, repairsand maintenance for the complete vehicle, roadsideassistance, trade-in, tyres, statutory tests wherethese are mandatory, road tax and insurance.It is also possible to include collection anddelivery for scheduled events, or to add a FleetManagement module, within which operators aresupplied with certain key performance indices.

At year-end 2004, the Iveco Finance portfoliocontained contracts for 103,080 vehicles,amounting to Euro 2,575 million. During the year,34,292 new financial contracts were signed,27,021 of which regarded new commercialvehicles for goods transport, while 7,271 regardedbuses, used vehicles, trailers and semitrailers.

GLOBAL CUSTOMER SERVICES48- 49

2004 also saw the launch of the POWERsystem (Parts on Web Easy Research), a newonline electronic catalogue that searches for spareparts; this technology constantly updates theinformation necessary to find a particular sparepart, with the goal of optimising the overall timenecessary for the repair process.

Careful use of the indications obtainedthrough customer satisfaction surveys made itpossible to boost customer loyalty to the Ivecoafter-sales products, helping to achieve a recordoperating result, which shows an 18%improvement on 2003.

Another important area of activity regardedthe revamping of the Customer Service image andthe Network’s ability to sustain the Iveco brandon the after-sales service market. In this regard,a plan was launched to revise the commercialcommunications policies.

One last point is the development ofstructural systems to increase customer loyalty,such as maintenance and repair contracts, and the

drafting of a programme to manage the vehicle’s“life cycle”, in order to further developcommercial opportunities for the Network,by offering a service in line with the vehicle’s useand residual value.

In 2004, Customer Service continued toinvest in the quality of its human resources and in new organisational solutions:

• a new Product Parts Engineering structure to speed up the development of spare parts;

• a new Sales & Marketing organisation, thatdifferentiates between Western Europe andother markets;

• a Service structure that consolidates all thetechnical service and Customer Supportactivities.

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50-51 CONSOLIDATED FINANCIAL STATEMENTS

52 ANALYSIS OF THE ECONOMIC AND FINANCIAL SITUATION AT DECEMBER 31, 2004

59 BALANCE SHEET AT DECEMBER 31, 2004

63 2004 STATEMENT OF OPERATIONS

65 CONSOLIDATED STATEMENT OF CASH FLOWS 2004 AND 2003

66 NOTES TO THE FINANCIAL STATEMENTS

72 BREAKDOWN AND PRINCIPAL CHANGES TO ITEMS AND OTHER INFORMATION

97 EXTERNAL AUDITORS’ REPORT

98 TEN-YEAR HIGHLIGHTS 1995 - 2004

99 THE COMPANIES IN THE IVECO GROUP

CONSOLIDATED FINANCIAL STATEMENTS

Sergio Marchionne Chairman

Paolo Monferino Chief Executive Officer

Eugenio Razelli Director

Luigi Gubitosi DirectorBoard

of Directors

Net revenues for 2004 amounted to Euro 9,290 million, 10% above the previous year (Euro8,442 million in 2003). Comparison with the consolidation area of 2003 in homogeneous terms, showsa net increase of 9.74%, due to higher unit sales and improved profitability.

Revenues from services rendered, primarily the result of the activities of the financial companiesin the Iveco Group, increased by 18.9% over the previous year.

Other revenues increased by Euro 60 million (+13.5%) compared to 2003, primarily as a resultof the increase in assets under construction (+9.5%) and a 50% improvement in final inventoriescompared to the previous year.

The cost of production amounted to Euro 9,436 million (Euro 8,805 million in 2003), an increaseof 7.2% which, if compared to the 10% increase in sales, underlines the effect of the efficiency policyadopted by the group during the year.

Operating income of Euro 357 million was recorded, a considerable improvement on theprevious year. Operating profitability on net sales was 4%, four times as high as 2003 when it stood at1%. Operating income was positively influenced by the cost curbing policies implemented by Iveco in2004, and strong market growth in Western Europe, which resulted in an increase in volumes invoiced.

Net financial charges totalled Euro 120 million (Euro 126 million in 2003) primarily as a resultof the lower level of indebtedness during the year.

Income from non-consolidated investments, which presents a loss of Euro 43.9 million (aloss of Euro 0.6 million in 2003), was influenced by the writedown of financial fixed assets not held asequity investments by Iveco Participations for Euro 21.5 million, the writedown by Iveco SpA of thesubsidiary CBC for Euro 20 million and by the further writedown of Iveco Pegaso of its subsidiaryTBCO for Euro 5.4 million.

The balance of extraordinary income/expenses for the year was negative for about Euro 35million (Euro -166 million in 2003). This decrease was due to lower allocations to extraordinaryreserves compared to the previous year.

Income tax resulted in a negative balance of Euro 50 million (negative for Euro 46 million in2003). This breaks down into Euro 33 million for IRAP (Euro 29 million in 2003), Euro 38 million forother taxes (Euro 42 million in 2003), and Euro 21 million for deferred tax credits (Euro 24 million in 2003).

CONSOLIDATED FINANCIAL STATEMENTS52- 53

The following changes occurred in the consolidation scope of Iveco during 2004:

• line by line consolidation of:• Iveco Colombia Ltda• Lavorazione Plastica Srl• Irisbus Benelux Ltd• Ikarus Trade Kft

• deconsolidation by the Equity method of:• Closing Joint Stock Company “AUTO-MS”

• consolidation by the Equity method of:• Elettronica Trasporti Commerciali Srl

A summary of the operating results for the year is presented in the brief Statement of Operationsand the notes that follow:

Analysis of the economic and financial situation in theConsolidated Financial Statements at December 31, 2004

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Summary of ConsolidatedStatement of Operations(Euro/million)

2004 2003 % change

Revenues from sales 8,671.3 7,921.8 9.5%

Revenues from services rendered 618.7 520.6 18.9%

Net revenues 9,290.0 8,442.4 10.0%

Other revenues 503.1 443.1 13.5%

Value of production 9,793.1 8,885.5 10.2%

Cost of materials 5,453.5 5,024.4 8.5%

Cost of services 1,315.3 1,178.4 11.6%

Cost of labour 1,305.7 1,275.4 2.4%

Other charges 1,361.4 1,326.4 2.6%

Cost of production 9,435.9 8,804.6 7.2%

Operating income 357.2 80.9 n.s.

Financial charges and income (120.4) (126.0) (4.4)%

Adjustments to financial assets (43.9) (0.6) n.s.

Extraordinary expenses and income (34.5) (165.9) (79.2)%

Income tax (49.7) (46.2) 7.7%

Result for the year 108.7 (257.7) n.s.

Minority interest in net income (loss) 4.9 (13.8) n.s.

Result for the year after minority interest 103.8 (243.9) n.s.


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Financial results for the year are described in the brief Balance Sheet and notes that follow:

Net tangible fixed assets decreased by Euro 119 million, from Euro 1,908 million to 1,790million, primarily as a result of:

• a decrease of Euro 62 million in capital spending, from Euro 210 million to Euro 148 million.Thisdecrease was determined primarily by the reduction in long-term industrial expenditure (Euro 45million), after the significant spending of the three previous years for the important renewalprogrammes of the 3 engine ranges, and by decreased spending on long-term rental vehicles;• a decrease in depreciation and writedowns from Euro 258 million to Euro 250 million, primarilyfor lower capital spending during the period;• a decrease in disposals from Euro 54 million to Euro 21 million, including long-term rentalvehicles.Other fixed assets totalled Euro 425 million (Euro 440.5 million in 2003), and remained

substantially stable.Working capital decreased by Euro 122 million, from Euro (27) million to Euro (149) million, as

a result of:• an increase in trade receivables of Euro 240 million, due to the higher incidence of sales in thelast quarter of the year;

• inventories only increased by Euro 25 million thanks to cautious management, and thereforewithout being affected by the strong increase in sales in the latter part of the year;• current liabilities increased by Euro 350 million due to the sales and intense manufacturing ratein the final part of the year.Stockholders’ Equity increased from Euro 913 million at 31/12/2003 to Euro 1,014 million at

31/12/2004; Stockholders’ Equity pertaining to the group amounts to Euro 827 million (increasing byEuro 98 million on 2003).The Euro 98 million increase in Stockholders’ Equity is the effect of income for the year (Euro 104million).

The net financial position at 31/12/2004 revealed a lower level of net indebtedness of Euro 33million (Euro 397 million in 2003), which reflects an improvement of Euro 364 million.

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

The improvement in the net financial position is due primarily to the sizeable profit generated byordinary operations (operating income of Euro 357 million), a reduction in working capital (Euro 104million) and in capital expenditure (Euro 141 million net of amortization and depreciation), less normaluptake of liquid assets for extraordinary, financial and tax operations (a total of Euro -226 million).

Summaryof ConsolidatedBalance Sheet(Euro/million)

2004 2003 % change

Fixed assets

Tangible fixed assets 1,789.7 1,908.2 (6.2)%

of which vehicles on operating leasing 60.3 74.8 (19.4)%

Assets assigned in financial leasing 1,264.8 1,246.0 1.5 %

Other fixed assets 425.0 440.4 (3.5)%

Net current assets

Inventories 1,417.1 1,392.1 1.8 %

Trade receivables 1,130.0 890.7 26.9 %

Financial receivables 2,432.6 2,111.7 15.2 %

Liquid assets and securities 327.9 432.9 (24.3)%

Other assets 718.2 686.1 4.7 %

Total assets 9,505.3 9,108.0 4.4 %

Stockholders’ Equity 1,014.1 912.7 11.1 %

Liabilities

Reserves for risks and charges 1,059.8 1,034.4 2.5 %

Trade payables 2,343.9 1,993.9 17.6 %

Financial payables 3.882,0 4.000,9 (3.0)%

Other liabilities 1,205.5 1,166.0 3,4 %

Total liabilities and Stockholders’ Equity 9,505.3 9,108.0 4.4 %

Net financial position at 31/12/2003 (397)

Funds generated/absorbed by operations during the year

Net income plus amortization and depreciation 437

Net income from non-consolidated investments 22

Net change to reserves 31

Change to operating assets and liabilities 104

594

Funds generated/absorbed by investment activities

Investment in tangible fixed assets (148)

Investment in intangible fixed assets (68)

Disposal of tangible fixed assets 28

(188)

Changes to consolidation scope (37)

Dividends paid -

Other changes (5)

Net financial position at 31/12/2004 (33)

(Euro millions)


The structure of the Net financial position at 31/12/2004 is presented in the following table,and compared to the position at 31/12/2003:

A detailed analysis of the changes follows:

a) Financial receivables:financial receivables increased by Euro 319 million and this change is due entirely to intercompanyreceivables with the Fiat Group central Treasury, even related to liquid assets generated by the disposalof receivables, including the effect of the new securitisation operation in France, begun in April 2004,while the portfolio of financial receivables of the finance companies remains practically unchangedfrom the previous year.

b) Financial payables:short and medium-term financial payables improved by Euro 122.6 million, due primarily to the positiveeffect of the cash generated by operations during the year, which resulted in a reduction of Euro 82million in payables to banks, and of approximately Euro 39 million in payables to other financiers.

Important events occurring after year-end and forecast operating trends

In the first months of 2005 the market was stronger than in the same period of the previous year,and Iveco’s market share also benefited, maintaining the positive trend of 2004.

We also point out that we have received the go-ahead from the Spanish authorities for theproposed merger between the Spanish companies Irisbus Holding, Irisbus Iberica and Iveco Pegaso, asa consequence of the corporate rationalisation undertaken in the last two years.

Management and coordination, and Infragroup transactions

Iveco Group operates autonomously in respect of the strategic and operating guidelines imparted bythe parent company Fiat SpA, which performs management and coordination activities as per art. 2497 ofthe Italian Civil Code.

This guidance takes the shape of the definition and adaptation of the governance and internal controlmodel, the issue of a Code of Conduct adopted at Group level and the elaboration of general policies forthe management of human and financial resources, and the supply of manufacturing and communicationselements. This coordination also envisages central management of treasury, corporate and administrativeservices, internal auditing and training, by dedicated companies.

Relations with the coordinating company and the companies coordinated jointly, analysed in the Reporton Operations, consist in the customary supply of assets and services between Fiat Group companies inthe context of the coordination referred to above.

Management and coordination activities generally produce positive effects for corporate operationsand results, because they allow the company to achieve economies of scale, taking advantage of professionaland specialist skills of a very high quality, and concentrating resources on the core business.

During the year, the company did not undertake any transactions in which decisions were influencedby the coordinating company.

Relations within the Group and with related partiesAbove mentioned relations, which regard companies in other Fiat Group Sectors, involve Iveco as

the purchaser/supplier of goods and user of services.Sales refer above all to the diesel engines manufactured in the Foggia and Turin plants, which are

destined respectively to Sevel SpA and Case New Holland Italia SpA.Purchases within the Fiat Group generally regard materials and components for vehicle

production.In particular we highlight the relations with Fiat Geva SpA in the field of treasury and exchange

rate activities, those with HRSS SpA, Fiat Sepin SpA, Sadi SpA and Fiat Ges.co. SpA for administrativeactivities and with Global Value for IT services. Maintenance services are supplied to Iveco by ComauService.

Where sales and services are concerned, relations with other Group companies and with relatedparties primarily regard:

Structure of theNet financialposition(Euro/million)

31/12/2004 31/12/2003 Change

Liquid assets and negotiable securities 327.6 432.9 (105.3)

Short, medium and long-term financial receivables 2,434.1 2,114.7 319.5

Assets assigned in financial leasing 1,264.8 1,246.0 18.8

Accrued income, prepaid expenses and deferred charges 29.3 21.1 8.2

Total financial receivables 4,055.8 3,814.6 241.2

Short-term financial payables 2,338.7 2,655.3 (316.6)

Medium/long-term financial payables 1,543.6 1,345.6 198.0

Accrued expenses and deferred income 207.2 211.2 (4.0)

Total financial payables 4,089.5 4,212.1 (122.6)

Net financial position (33.7) (397.4) 363.7

Euro/’000SEVEL SPA 351,603CNH ITALIA 136,316CNH UK LTD 45,065FIAT AUTO 13,924CNH AMERICA LLC 25,449

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Purchases of raw and consumable materials and goods from companies in other Fiat Group sectors,mainly regard:

Services acquired from companies in other Fiat Group sectors primarily regard:

Trade receivables within the Group and with related parties primarily comprise:

Trade payables with other Group companies and related parties primarily comprise:

The most significant relations with subsidiary and associated companies are described in the Notesto the Financial Statements, as part of the analysis of the items in the Financial Statements.

Iveco Group does not hold own treasury stock or stock in the parent company, as per art. 2428 –paras. 3 and 4 of the Italian Civil Code.

Proposed distribution of 2004 income

Stockholders,

We ask you to approve the Financial Statements at 31.12.2004 and to carry forward therelative profit of Euro 123,750,309.

for the Board of Directors

The Managing Director

Paolo Monferino

Turin, March 18, 2005

Structure of New financialposition(Euro/million)

Euro/’000TEKSID SPA 56,322AUTOMOTIVE LIGHTING ITALIA SPA 7,020

Euro/’000COMAU SPA 88,333GLOBAL VALUE SPA 77,547FIAT GESCO SPA 15,306WORKNET SPA 17,294

Euro/’000CNH ITALIA SPA 42,767CNH UK LIMITED 14,902CNH OSTERREICH GMBH 5,654

Euro/’000TEKSID SPA 23,436COMAU SPA 28,466GLOBAL VALUE SPA 13,477

Balance Sheet as at December 31, 2004 (Art. 2424 Italian Civil Code)

ASSETS (in Euro/thousands)

Note December 31, 2004 December 31, 2003 A) Receivables from stockholders for payments still due

- part recalled- part not recalled

B) Fixed Assets, with assets assigned in financial leasing indicated separatelyI - Intangible fixed assets 1

1) Start-up and expansion costs 3,868 7,223 2) Research, development and advertising expenditure - -3) Industrial patent rights

and intellectual property rights 7,033 9,959 4) Concessions, licences, trademarks and similar rights 52,927 52,020 5) Goodwill 13,305 4,530 6) Assets under construction and advances 55,257 32,263 7) Other 7,967 10,312 8) Consolidation differences 46,345 49,053 Total Intangible fixed assets 186,703 165,360

II - Tangible fixed assets 21) Land and buildings 575,681 588,701 2) Plant and machinery 846,274 885,485 3) Industrial and commercial equipment 220,839 261,112 4) Other assets 112,350 134,452 5) Construction in progress and advances 34,551 38,408 Total tangible fixed assets 1,789,695 1,908,158

III - Financial fixed assets 31) Investments in

Unconsolidated subsidiary companies 2,649 3,769 Associated companies 183,297 203,251 Parent companies - - Other companies 9,641 13,565

Total investments 195,587 220,585

2) Receivablesa) From subsidiary companies

Due within one year - - Due beyond one year - - Total - -

b) From associated companiesDue within one year - - Due beyond one year - - Total - -

c) From parent companiesDue within one year - -Due beyond one year - - Total - -

d) From third partiesDue within one year 349 377 Due beyond one year 869 2,611 Total 1,218 2,988

Total receivables 1,218 2,988

3) Other securities 41,486 51,470 4) Treasury stock - - 5) Assets assigned in leasing 1,264,826 1,246,041 Total Financial Fixed Assets 1,503,117 1,521,084

Total Fixed Assets (B) 3,479,516 3,594,602

C) Current assets I - Inventories 4

1) Raw, ancillary and consumable materials 349,456 312,927 2) Work in progress and semi-finished products 221,875 207,653 3) Contract work in progress 4,775 2,609 4) Finished products and goods for resale 839,794 868,429 5) Advances 1,164 444 Total inventories 1,417,064 1,392,062


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ASSETS(in Euro/thousand)

Note December 31, 2004 December 31, 2003 II - Receivables 5

1) Trade receivables:Due within one year 1,069,782 835,726 Due beyond one year 22,880 11,038 Total trade receivables 1,092,662 846,764

2) From unconsolidated subsidiariesDue within one year 1,344 1,503 Due beyond one year - - Total receivables from unconsolidated subsidiaries 1,344 1,503

3) From associated companiesDue within one year 53,913 59,402 Due beyond one year - - Total receivables from unconsolidated subsidiaries 53,913 59,402

4) From parent companiesDue within one year 9,871 - Due beyond one year - - Total receivables from parent companies 9,871 -

4-bis) Tax creditsDue within one year 108,004 93,170 Due beyond one year 13,466 7,971 Total tax credits 121,470 101,141

4-ter) Tax advancesDue within one year 165,412 142,302 Due beyond one year 96,571 102,942 Total tax advances 261,983 245,244

5) From third parties:Due within one year 233,476 271,483 Due beyond one year 20,586 5,312 Total receivables from third parties 254,061 276,794

Total receivables 1,795,304 1,530,848

III - Financial assets not held as fixed assets 61) Investments in unconsolidated subsidiaries - - 2) Investments in associated companies - - 3) Investments in parent companies - - 4) Other investments - - 5) Treasury stock - - 6) Other securities 30 4,763 7) Financial receivables

a) From unconsolidated subsidiaries Due within one year - - Due beyond one year - - Total financial receivables from unconsolidated subsidiaries - -

b) From associated companiesDue within one year 182,956 181,465 Due beyond one year 176,803 216,310 Total financial receivables from associated companies 359,759 397,775

c) From parent companiesDue within one year 21,637 18,797 Due beyond one year - - Total financial receivables from parent companies 21,637 18,797

d) From third partiesDue within one year 1,488,455 1,200,539 Due beyond one year 563,077 494,633 Total financial receivables from third parties 2,051,532 1,695,172

Total financial receivables 2,432,928 2,111,744 Total financial assets not held as fixed assets 2,432,957 2,116,507

IV - Liquid assets 71) Bank and post office accounts 323,852 422,799 2) Cheques 307 3,182 3) Cash and cash equivalents 3,444 2,151 Total liquid assets 327,603 428,132

Total current assets 5,972,929 5,467,549

D) Accrued income and prepaid expenses 8- Discount on loans - -- Other accrued income and prepaid expenses 52,864 45,915

Total assets 9,505,307 9,108,066

Balance Sheet as at December 31, 2004 (Art. 2424 Italian Civil Code)

LIABILITIES AND STOCKHOLDERS’ EQUITY(Euro/thousands)

Note December 31, 2004 December 31, 2003 A) Stockholders’ Equity 9

I) - Capital stock 858,400 858,400 II) - Additional paid-in capital 230,000 230,000 III) - Revaluation reserve - -IV) - Legal reserve 39,859 39,859 V) - Statutory reserves - -VI) - Reserve for own shares in portfolio - -VII) - Other reserves (405,294) (124,511)

- Retained earnings reserve - -- Reserve as per art. 67 para. 3, DPR 917 - -- Reserve as per Law 488/92 - -

VIII) - Income (losses) carried forward - -IX) - Income (loss) for the year 103,860 (274,405)Total 826,825 729,343 Stockholders’ Equity, reserves and income attributable to minority interest 187,279 183,321 Total Stockholders’ Equity 1,014,104 912,664

B) Reserves for risks and charges 101) - Reserves for pensions and similar obligations 271,250 262,389 2) - Tax reserve, including deferred taxes

a) current 822 5,734 b) deferred 14,641 15,584

3) - Other reserves 773,052 750,714 Total 1,059,764 1,034,421

C) Employee severance indemnity reserve 11 219,661 219,432

D) Payables 121) Bonds

Due within one year - -Due beyond one year - - Total - -

2) Convertible bondsDue within one year - - Due beyond one year - - Total convertible debentures - -

3) Payable to stockholders for loansDue within one year - - Due beyond one year - - Total payables to stockholders for loans - -

4) Borrowings from banksDue within one year 423,704 517,438 Due beyond one year 148,788 136,974 Total borrowings from banks 572,492 654,412

5) Payable to other financiersDue within one year 1,912,839 2,137,639 Due beyond one year 1,394,866 1,208,712 Total payable to other financiers 3,307,705 3,346,351

6) AdvancesDue within one year 73,686 63,230 Due beyond one year - -Total advances 73,686 63,230

7) Trade payablesDue within one year 2,291,231 1,971,564 Due beyond one year 43,197 13,161 Total trade payables 2,334,428 1,984,725

8) Notes payableDue within one year 7,450 7,666 Due beyond one year 431 326 Total notes payable 7,881 7,992

9) Payables to unconsolidated subsidiariesDue within one year 360 442 Due beyond one year - - Total payables to unconsolidated subsidiaries 360 442

10) Payables to associated companies:Due within one year 10,905 8,957 Due beyond one year - - Total payables to associated companies 10,905 8,957

11) Payables to parent companies:Due within one year 1,361 52 Due beyond one year - - Total payables to parent companies 1,361 52


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LIABILITIES AND STOCKHOLDERS’ EQUITY(Euro/thousands)

Note December 31, 2004 December 31, 2003 12) Tax payables

Due within one year 144,883 145,187 Due beyond one year 11,812 10,271 Total tax payables 156,695 155,458

13) Payables to social security institutionsDue within one year 82,046 61,886 Due beyond one year - 1,358 Total payables to social security institutions 82,046 63,244

14) Other payablesDue within one year 137,392 142,561 Due beyond one year 7,012 7,110 Total other payables 144,404 149,671

Total payables 6,691,963 6,434,534

E) Accrued expenses and deferred income 13- premium on loans - -- other accrued expenses and deferred income 519,814 507,015

Total liabilities and Stockholders’ Equity 9,505,307 9,108,066

MEMORANDUM ACCOUNTS (Euro/thousands)

Note December 31, 2004 December 31, 2003 A) Guarantees granted 14

1) Unsecured guarantees a) Suretyships:

On behalf of unconsolidated subsidiaries - - On behalf of associated companies - - On behalf of third parties 384,290 345,110 Total suretyships 384,290 345,110

b) Guarantees of notesOn behalf of unconsolidated subsidiaries - - On behalf of associated companies - - On behalf of third parties 181,962 206,927 Total endorsement of notes 181,962 206,927

c) Other unsecured guarantees:On behalf of unconsolidated subsidiaries - -On behalf of associated companies 63,159 114,875 On behalf of third parties 633,925 662,199 Total other unsecured guarantees 697,084 777,074

Total 1,263,336 1,329,111

2) Secured guarantees:On behalf of unconsolidated subsidiaries - -On behalf of associated companies - - On behalf of third parties 28 - Total secured guarantees 28 -

Total guarantees granted 1,263,364 1,329,111

B) Commitments 1) Purchases of tangible fixed assets 50,144 36,370 2) Purchases of other fixed assets - -3) Commitments related to leasing instalments - -4) Contracts to hedge exchange/interest rate risk 720,088 620,280 5) Commitments related to buy-back 954,793 892,420 6) Other commitments 54,755 66,447 Total commitments 1,779,780 1,615,517

C) Third party assets held by the company 124,811 126,871 D) Company assets held by third parties 909,106 921,626 E) Other memorandum accounts - -

Total Memorandum accounts 4,077,061 3,993,125

2004 Consolidated Statement of Operations (Art. 2425 Italian Civil Code)

(Euro/thousands)Note 2004 2003

A) Value of production 151) Revenues from sales and services 9,289,993 8,442,371 2) Change to work-in-progress, semi-finished and finished products inventories (11,737) (23,801)3) Changes to contract work in progress 2,229 (2,331)4) Additions to internally produced fixed assets 235,574 215,042 5) Other income and revenues

- Operating grants 3,012 3,149 - Other 274,037 251,111

Total other income and revenues 277,049 254,260

Total value of production 9,793,108 8,885,541

B) Cost of production 166) Raw, ancillary and consumable materials and goods for resale 5,453,477 5,024,366 7) Services 1,315,280 1,178,403 8) Leases and rentals 101,306 95,225 9) Personnel costs

a) salaries and wages 929,896 926,095 b) social security contributions 277,480 272,160 c) severance indemnities 30,939 32,309 d) pensions and similar obligations 21,320 19,822 e) other costs 46,085 24,991 Total personnel costs 1,305,720 1,275,377

10) Amortization, depreciation and writedownsa) Amortization of intangible fixed assets 57,724 54,490 b) Depreciation of tangible fixed assets 250,129 249,286 c) Writedowns of fixed assets 22,413 10,578 d) Writedown of receivables included

in current assets and liquid assets 84,185 62,969 Total amortization, depreciation and writedowns 414,451 377,323

11) Changes to raw, ancillary and consumable materials and goods inventories (49,899) 39,957

12) Provisions for risks 465,967 448,526 13) Other provisions 2,477 6,833 14) Sundry operating expenses 311,329 226,464 15) Interest and charges of financial service companies 115,777 132,133

Total cost of production 9,435,884 8,804,607

Difference between value and cost of production 357,224 80,934

C) Financial income and charges 1716) Investment income from

- Unconsolidated subsidiaries 14 - - Associated companies - - - Other companies 25 40

Total investment income 39 40

17) Other financial income:a) From receivables held as fixed assets:

- From third parties - 234 b) From securities held as fixed assets

assets other than equity investments 6 21 c) From securities included in current assets

other than equity investments 7 15 d) Other income:

- Unconsolidated subsidiaries - 1 - Associated companies - -- Parent companies - -- Third parties 77,796 66,754

Total other income 77,796 66,755 Total other financial income 77,809 67,025


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Consolidated statement of cash flows for 2004 and 2003

(Euro/thousands)Note 2004 2003

18) Interest and other financial expenses from:- Unconsolidated subsidiaries 2 14 - Associated companies 1,216 13 - Parent companies 18 22 - Other 193,794 186,405 Total interest and other financial charges 195,030 186,454

18 bis) Income (losses) on exchange (3,232) (6,580)

Total financial income and charges (120,414) (125,969)

D) Adjustments to financial assets 1819) Revaluations of

a) equity investments 8,013 8,409 Total revaluations 8,013 8,409

20) Writedowns of:a) equity investments 30,128 7,397 b) financial fixed assets other than equity investments 21,500 5 c) securities included in current assets

not constituting investments - 51d) financial receivables 248 1,591 Total writedowns 51,876 9,044

Total adjustments to financial assets (43,862) (635)

E) Extraordinary income and expenses 1921) Income

- Gains on disposals 198 158 - Other income 35,825 30,991 Total income 36,023 31,149

22) Expenses- Losses on disposals 153 24,235 - Tax relating to prior years 38 3,211 - Other expenses 70,346 169,597 Total expenses 70,537 197,043 Total extraordinary income and expenses (34,514) (165,894)

Result before tax 158,433 (211,564)

23) Current, deferred and advanced income tax for the year 20 49,716 46,165

24) Income (loss) for the year 108,717 (257,729)

(Euro/thousands)December 31, 2004 December 31, 2003

A) Funds available at start of year 1,478,583 1,680,133 B) Funds generated (absorbed)

by operations during the year:Result for the year of Group and minority interest 108,716 (257,729)Amortization, depreciation and writedowns 328,670 313,877 Net change to employee severance indemnity reserve 9,091 (11,890)Net change to restructuring reserves (18,502) (8,708)Net change to other reserves 40,840 30,237 Quota of income pertaining to non consolidated investments 22,114 (1,012)Change to working capital:Trade receivables (240,256) 128,860 Net inventories (25,002) 96,551 Trade payables 349,703 (233,891)Other payables, receivables, accruals and deferrals 58,124 (62,248)Tax provision and other reserves (5,855) (163,549)Changes to consolidation scope (33,167) 505,298 Total 594,476 335,796

C) Funds generated (absorbed) by investment activities:Investments in :Tangible fixed assets (148,157) (210,343)Intangible assets and deferred charges (67,665) (67,013)Income from sale of fixed assets 27,664 86,932 Net change to financial receivables (396,433) 1,291,459 Other change (including acquisitions of consolidated companies and other changes to the consolidation scope) (4,427) (577,957)Total (589,018) 523,078

D) Funds generated (absorbed) by financing activities:New loans - 68,627 Net change to short and medium-term financial payables (120,566) (1,129,051)Distribution of dividends - -Total (120,566) (1,060,424)

E) Net change to funds (115,106) (201,550)F) Liquid assets at December 31 1,363,475 1,478,583

Liquid assets break down as follows:

(Euro/thousands)

Cash and cash equivalents 327,603 428,132 Surplus of Group current account 1,035,842 1,045,687 Securities 30 4,764 Total 1,363,475 1,478,583

In order to obtain a true and correct representation of the financial position and results of operationsof the Iveco Group, taking into account their functional integration, the financial subsidiaries have beenconsolidated on a line-by-line basis. As a result, adjustments to the balance sheet and statement ofoperations format have been made applying Article 32 of the Legislative Decree No. 127/91, which pro-vides for changes to be made to obtain a clearer, truer and more correct representation of the finan-cial position and results of operations.

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

included in the consolidated financial statements of the Iveco Group, regardless of the percentage ofownership. Carrying values of investments are eliminated against the subsidiaries’ related stockholders’equity. The portion of stockholders’ equity and results of operations attributed to minority interestsare disclosed separately.In accordance with Legislative Decree No. 127, differences arising from the elimination of investmentsagainst 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, ifpositive, is capitalised in the caption “Consolidation Differences”, and is amortised on the straight-linemethod over the estimated period of recoverability. Negative residual amounts are recorded as acomponent of stockholders’ equity “Consolidation reserve” (or as a liability “Consolidation reservefor future risks and charges”, when due to a forecast of unfavourable economic results).Unrealised intercompany profits, losses, and related tax effects are eliminated, together with allintercompany receivables, payables, revenues and expenses arising on transactions between companiesconsolidated on a line-by-line basis which have not been realised with third parties.The gross margin on intercompany sales is eliminated, with the exception of plant and equipmentproduced and sold at prices in line with market conditions, in which case such eliminations would beeffectively irrelevant and not cost-beneficial. Also subject to elimination are guarantees, commitmentsand 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 ineffect at year end.The statements of operation of foreign subsidiaries are translated using the averageexchange rates, except for those subsidiaries operating in high-inflation countries (cumulative inflationin excess of 100% in three years), in which case, if it is relevant, accounting principles for high inflationaccounting are used.Exchange differences resulting from the translation of opening stockholders’ equity at currentexchange rates and at the exchange rates used at the end of the previous year, as well as differencesbetween net income expressed at average exchange rates and that expressed at year-end exchangerates, are reflected in the stockholders’ equity caption “Cumulative Translation Adjustments”.Such reserves relating to investments in subsidiaries or associated companies are included in thestatement of operations upon the sale of the investments to third parties.


Form and content of the consolidated Financial StatementsThe consolidated financial statements for 2004 have been prepared in compliance with the

Legislative Decree no. 127 of April 9, 1991, implementing E.C. Directives IV and VII. Important eventsoccurring after year-end, that are illustrated in the Report on operations, are an integral part of thepresent Notes.The consolidated financial statements comprise the financial statements of the parent company Iveco SpA and of its Italian and foreign subsidiaries, in which Iveco directly or indirectly holds morethan 50% of the capital stock, or companies in which Iveco has control on the basis of specificagreements between shareholders.In line with the Fiat Group’s consolidation methodologies, legal requirements and Italian accountingprinciples, the companies in which Iveco holds a 50% interest with other partners were consolidatedby the equity method.

As permitted by law, minor companies for which it is not possible to obtain the necessary informationon a timely basis, or because they are insignificant, have been excluded from consolidation.

In reference to the Financial Statements formats, integrations have been made to comply with the Legislative Decree no. 6 of 2003 (“Reform of Corporate Law”) which came into force on January 1, 2004.

The principal changes in the consolidation scope in 2004 are as follows:• consolidation on a line-by-line basis of:

• Iveco Colombia Ltda• Lavorazione Plastica Srl• Irisbus Benelux Ltd• Ikarus Trade Kft

• deconsolidation by the Equity method of:• Closing Joint Stock Company “AUTO-MS”

• consolidation by the Equity method of:• Elettronica Trasporti Commerciali Srl

Consolidation methods and accounting principlesThe consolidated financial statements have been prepared from the statutory financial statements

of the Group’s single companies 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 eliminatetax-driven adjustments. The Fiat Group’s accounting policy respects the requirements set forth byLegislative Decree No. 127 of April 9, 1991, interpreted and supplemented by the Italian accountingprinciples issued by the National Boards of Dottori Commercialisti and of Ragionieri and, where thereare none and not at variance, by those laid down by the International Accounting Standards Board(I.A.S.B.).

Notes to the Financial Statements

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Main Euro exchange rates

Accounting principlesBalance SheetFixed Assets

Intangible fixed assetsIntangible 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 amortised over a period of not more than 20 years, takinginto account their expected period of recovery. Goodwill represents the contractual amount paid forgoodwill resulting from the acquisition of a company or investment. The Iveco Group periodicallyassesses that the carrying value of such assets is not higher than the estimated recovery value, inrelation to their use or realisation, as determined by reference to the most recent Group plans.

Tangible fixed assetsTangible fixed assets 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, inorder to reflect, even if only partially, changes in the purchasing power of the currency. Cost alsoincludes internal and external financing expenses incurred up to the time the tangible assets are readyfor use.Depreciation is provided on a straight-line basis with rates that reflect the estimated useful life of therelated assets. When, at the balance sheet date, tangible fixed assets show a permanent impairment invalue to below their carrying value, such assets are written down to the lower value, according to themethod indicated above for intangible assets. Ordinary repairs and maintenance expenses related totangible fixed assets are charged to the statement of operations in the year in which they are incurred,while maintenance expenses which increase the value of the assets are capitalised.Capital investment grants related to investments in fixed assets are recorded as deferred income whencollection becomes certain and credited to income over the useful life of the related asset

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

for investment purposes and other securities.Companies in which Iveco SpA directly or indirectly holds from 20% to 50% of the voting capital arevalued 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 fortheir consolidation on a timely basis without disproportionate expense or because their activities arenot significant.Less significant investments in which Iveco SpA directly or indirectly holds less than 20% of the votingcapital are valued at cost, corresponding to the cost of acquisition increased by direct charges or anyamounts paid for the value of additional shares purchased. In cases of permanent impairment, avaluation allowance is provided as a direct reduction of the corresponding asset.Financial receivables are recorded at estimated realisable 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 generallycalculated, according to the financial method based on the life of the lease and the related risk inmanaging such contracts.

Current assetsInventories 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 labour and variable and fixedindirect costs.Work in progress on long-term contracts is valued on the basis of the stage of completion and isrecorded gross of advance payments received from customers. Potential losses on such contracts arefully recorded when they become known. Provision is made for obsolete and slow-moving rawmaterials, finished goods, spare parts and other supplies based on their expected future use andrealisable value.Receivables are recorded at estimated realisable value. Unearned interest included in the nominal valueof receivables has been deferred to future periods. Receivables denominated in foreign currency aretranslated at the exchange rate in effect at year end. Resulting exchange gains and losses are includedin 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 indemnitiesThe reserve for risks and charges include provisions on an accrual basis to cover losses or

liabilities likely to be incurred but uncertain as to the amount or date on which they will arise.Provisions reflect the best possible estimate based on all the available information.The reserve for pensions and similar obligations includes provisions for long-service or other bonusespayable to employees under contractual agreements or by law, determined on an actuarial basis whereapplicable. In particular, pension funds are accounted for in accordance with IAS 19.The Iveco Groupadopts the "corridor" approach, allowed by IAS 19, chapter 92.The reserve for employee severance indemnities includes the liability for severance indemnities forItalian companies accrued at year end for each employee and determined in accordance with labourlegislation. In particular, the liability includes a portion of the employee’s annual salary and is indexedfor inflation in accordance with Italian rules.Restructuring reserves include the costs to carry out reorganisation and restructuring plans and areprovided in the year the Management formally decides to commence such plans, to the extent thatsuch costs can be reasonably estimated.

Average Final Average Final

U.S. Dollar per unit 1.244 1.362 1.131 1.263

Pound Sterling per unit 0.679 0.705 0.692 0.705

Brazilian Real per unit 3.634 3.615 3.474 3.649

Argentine Peso per unit 3.663 4.045 3.335 3.713

Australian Dollar per unit 1.690 1.746 1.738 1.680

Swedish Krone per unit 9.124 9.020 9.124 9.080

Swiss Franc per unit 1.544 1.543 1.521 1.558

2004 2003


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PayablesPayables 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 aretranslated at the exchange rate in effect at year end. Resulting exchange gains and losses are includedin the statement of operations.Taxes payable include the tax charge for the current year recorded in the statement of operations.

Accruals and deferralsAccruals and deferrals are determined using the accrual method based on the income and expense

to which they relate.

Memorandum accounts

Off-balance sheet financial instrumentsThe Cost of Financial Instruments used to hedge exchange rate risk (or “financial component”,

representing the difference between the spot exchange rate at inception date and the forwardexchange rate) is charged to the Statement of Operations as Financial income and charges, on anaccrued basis. At year end the difference between the value of the instrument at the spot exchangerate at inception date and the value at the forward exchange rate is charged to the Statement ofoperations to offset the effects of the transaction being hedged. In particular, for contracts entered tohedge the exchange risk of future transactions that are considered highly probable, the effects ofalignment at the year-end exchange rate are deferred until the year in which the hedged transactionsare recorded.For instruments used to hedge interest rate risk, the interest rate differential is charged to theStatement of operations, as Financial income and expenses, on an accrual basis, offsetting the effects ofthe hedged transaction.Derivative financial instruments hedging interest rate fluctuations used for trading purposes are valuedat market value, and the differential, if negative, is charged to the Statement of operations underFinancial income and expenses.Similar prudential accounting methods are adopted to evaluate other derivative financial instruments(for example, equity swaps) when requirements for “hedge accounting” are not met.

Statement of Operations

RevenuesRevenues from sales of products are recognised at the moment title passes to the customer, which

is generally at the time of shipment. Revenues from long-term contracts are recognised using thepercentage of completion method.Revenues also include amounts received from financing leases, net of depreciation, and income fromcompany assets on operating leases.

CostsCosts are recognised on an accrual basis.

Research and development costs are mainly charged to the statement of operations in the period inwhich they are incurred. Research-related revenue grants provided by the Government or the EU arecredited to the statement of operations when collection becomes certain. The caption Leases andrentals, relate to rentals and, according to Italian regulations, operating lease costs, including thosecarried out by Fraikin Group companies following the securitisation of the fleet, in previous years.Advertising and promotion expenses are charged to the statement of operations in the period inwhich they are incurred. Estimated product warranty costs are charged to the statement of operationsat the time of sale (accrual method).

Financial income and expenseCharges and income resulting from off-balance sheet financial instruments, and year-end exchange

differences, are recorded in the Statement of Operations using the methods mentioned above in theMemorandum Accounts caption.

DividendsDividends and the related tax credit are recorded in the year the investee company resolves their

distribution, which normally coincides with the encashment date.

TaxationIncome tax for the year is determined on the basis of existing legislation in the countries in which

Iveco companies operate.Deferred tax liabilities and deferred tax assets are determined for the most significant consolidationtransactions and all the temporary differences between the consolidated assets and liabilities and thecorresponding amounts for taxation purposes shown in the financial statements of consolidatedcompanies.Deferred tax assets are only recorded if there is reasonable certainty of their future recovery.Deferred tax liabilities are not recorded if it is unlikely that a future liability will arise. Deferred taxassets and liabilities are offset if they refer to the same company. The balance from offsetting theseamounts is recorded under Other receivables in Current Assets, if a deferred asset, and under theDeferred taxation provision, if a deferred tax liability.Starting from December 2004 Iveco has decided to apply the Italian tax consolidation procedureallowed by arts. 117/129 of the Consolidating Law (T.U.I.R.) for its Italian companies for a period ofthree years.Fiat SpA acts as the consolidating company and determines a single taxable income for the group ofcompanies that apply the tax consolidation procedure, benefiting the off-set of taxable income and taxlosses in a single tax declaration.Each company included in the tax consolidation procedure transfers its taxable income to the parentcompany, recording a debt with relation to Fiat SpA, equal to the IRES tax payable; companies thatrecord tax losses may enter a receivable in respect of Fiat SpA, equal to the IRES payable, for thatportion of the loss that is compensated at Group level.

2.Tangible fixed assets

As explained in the Accounting principles a portion of Tangible fixed assets was revalued, inprevious years. At December 31, 2004, the net book value of this revaluation amounted to Euro 81.5million (Euro 87.9 million in December 2003).The positive “Net change to consolidation scope” is of Euro 1.6 million, primarily the result of thedeconsolidation of Closing Joint Stock Company “AUTO-MS” (Euro 2.6 million), and the consolidationof Società Lavorazione Plastica Srl (Euro 4.3 million).The column “Reclassifications” basically includes the reduction in “Assets under construction” andadvances on the purchase of fixed assets at the end of the previous year, reclassified in their respectiveitems at the moment the purchase was completed and the asset has started to be used.Additions amount to Euro 148.2 million: the most significant areas affected were the new enginefamilies, the restyling of the Stralis heavy vehicle and maintenance of the bus ranges.

The depreciation rates adopted fall into the following ranges:


Fixed Assets

1. Intangible fixed assets

The item “Intangible fixed assets” shows a net increase of approximately Euro 21 million comparedto 2003. “Concessions, licenses, trademarks and similar rights” (Euro 22.8 million) refers primarily tocosts related to the SAP project.The increase in the “disposals” column of the item “Concessions, licences, trademarks and similarrights” is due to reclassifications from fixed assets in previous years to operational assets in 2004.The increase in the item “Assets under construction and advances” essentially regards further costsfor the implementation of the SAP project by Iveco SpA.The decrease in “Other intangible fixed assets” as well as in Consolidation differences compared tothe previous year, is mainly due to “depreciation”.“Consolidation differences” amount to Euro 46.3 million at December 31, 2004 and this refers almostentirely to the net goodwill from the consolidation of Irisbus (Euro 43.2 million).Where “Goodwill” and “Consolidation differences” are concerned, we point out that amortization isspread over a period of five to twenty years, on the basis of the expected recoverability of theseamounts. As a result, specific valuations were performed at year-end to verify the future recoverabilityof such amounts, considering the current prospects for profitability, in order to verify the existance, ifany, of permanent impairment of value.This analysis showed that it was necessary to partially writedown the goodwill recorded up on theacquisition of the Lavorazione Plastica Srl company, on June 1, 2004, of Euro 32.5 million (column“change to consolidation scope”).This writedown amounts to Euro 20.5 million.

Breakdown and principal changes to items and other information

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(in Euro/thousands)

Start-up and expansion costs 7,223 20 196 3,521 (49) 3,869

Research, development and advertising expenditure - - - - - -

Industrial patent rights andintellectual property rights 9,959 - 265 2,159 (1,032) 7,032

Concessions, licences,trademarks and similar rights 52,020 (889) 22,832 41,260 20,224 52,928

Goodwill 4,530 32,534 - 2,990 (20,770) 13,304

Assets under construction and advances 32,263 - 42,818 - (19,824) 55,257

Other intangible fixed assets 10,312 67 1,555 4,806 839 7,967

Consolidation differences 49,053 - 280 2,988 - 46,345

Total intangiblefixed assets 165,360 31,732 67,946 57,724 (20,612) 186,702

Net value at31/12/2003

Change toconsolidation

scope

Additions Amortization Disposals,reclassifications

and otherchanges


Depreciation rate

Land and buildings 3.0% - 5.0%

Plant and machinery 8.3% - 20.0%

Industrial and commercial equipment 16.7% - 20.0%

Other assets 12.0% - 25.0%

Euro/thousands)

Land and buildings 588,701 16,231 27,338 (1,137) 2,461 642 (3,879) 575,681

Plant and machinery 885,485 53,484 103,059 1,479 8,364 893 (372) 846,274

Industrial and commercial equipment 261,112 41,935 87,375 1,908 2,691 354 215 220,839

Other assets 59,657 13,734 17,811 (609) (460) 147 (2,613) 52,045

Vehicles assigned in operating leases 74.795 11.954 14.546 - 224 61 (12.183) 60.305

Sub-total 134,452 25,688 32,357 (609) (236) 208 (14,796) 112,350

Assets under construction and advances 38,408 10,819 - (24) (13,280) (22) (1,351) 34,550

Total tangiblefixed assets 1,908,158 148,157 250,130 1,617 0 2,076 (20,184) 1,789,695


Additions Depreciation Net change toconsolidation

scope

Reclassifi-cations

Exchangedifference

Disposals andother changes



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3. Financial fixed assets

InvestmentsThe following changes occurred to investments:

Investments in unconsolidated subsidiaries decrease of Euro -1.4 million (column “Other changes”),due essentially to the change in the method of consolidation of Irisbus Benelux Ltd (Euro -0.8 million)and Iveco Columbia Ltda from the cost method to the line by line method.Investments in associated companies decrease compared to the previous year by approximately Euro20 million; the increase of Euro 4.2 million in the column “Other changes” refers primarily to thechange in the method used to consolidate Closing Joint Stock Company “AUTO-MS” (Euro 1.8 million)from the line by line method to the Equity method.The column “Exchange rate difference” (Euro -8.6 million) relates to investments in Naveco (Euro 7.6million), Haveco (Euro -0.7 million) and Uralaz (Euro -0.3 million) companies.The column “Revaluations and writedowns” shows a loss of Euro 15 million which refers in particularto the writedown of the CBC company recorded by Iveco SpA Holding for approximately Euro 20million.Investments in “Other companies” decrease by Euro 3.9 million, due primarily to the writedowns ofinvestments in the subsidiaries Trucks & Bus Company (Euro -5.4 million) and Isvor (Euro -1.9 million),offset by a stock capital increase occurred during the year of Euro 3.9 million in Trucks & BusCompany.Investments are expressed net of any writedown reserves created in the presence of permanent lossesin value.

Dividends received and attribution of income breaks down as follows:

Investments break down as follows by method of evaluation:

(Euro/thousands)

Unconsolidated subsidiaries 3,769 (1,380) - - 259 2,649

Associated companies 203,251 4,239 (8,653) (535) (15,004) 183,298

Other companies 13,565 3,446 - - (7,370) 9,641

Total investments 220,585 6,305 (8,653) (535) (22,115) 195,588

31/12/2003 Other changes Exchange ratedifference

Dividendsreceived

Revaluationsand writedowns

31/12/2004

(Euro/thousands)

Dividends received Revaluation Writedown

Otoyol Sanayi (1,718)

Otoyol Pazarlama 69 (259)

CBC (20,000)

Isvor (1,953)

AUTO MS Motorsich 1,345

Machen 4,530

Haveco (304)

Afin Leasing AG 466 819 (437)

Iveco Uralaz 43

Elasis (8)

Truck & Bus Company (5,379)

Naveco (40)

Transolver Finance EFC 1,017

Financière Pegaso France 5

F. Pegaso S.A. 24

Eltrac 230

Other companies (30)

Total 535 8,013 (30,128)

(Euro/thousands)

31/12/2004 31/12/2003

Investments valued by the equity method 155,511 155,021

Investments valued at cost 40,075 65,564

Total investments 195,587 220,585


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Non-consolidated subsidiaries break down as follows:

In compliance with the law, the above companies were not consolidated because it would not havebeen possible to obtain the information necessary for consolidation in time, or because of theirnegligible significance.

Investments in associated companies break down as follows:

% Total % Total

Non-consolidated subsidiaries

Fias GmbH 80.00 82 80.00 82

Financière Pegaso France SA 100.00 291 100.00 286

F. Pegaso S.A. 100.00 1,417 100.00 1,393

Iveco Colombia Ltda - - 100.00 808

Irisbus Benelux Ltd - - 100.00 850

Iveco Defence Vehicles SpA 100,00 100 100.00 100

Eltrac 50.000 509 - -

Altra SpA 66.67 250 66.67 250

Total 2,649 3,769

(Euro/thousands) 31/12/2004 31/12/2003

% Total % Total

Investments in associated companies

AFIN Leasing AG 40.000 1,428 40.000 1,473

Atlas Vehicules Ind.AS 48.972 98 48.985 98

Transolver Finance EFC 50.000 15,484 50.000 14,467

CBC - IVECO Ltd 50.000 20,572 50.000 40,412

CRF Scpa 20.000 9,112 20.000 9,112

CSST SpA 30.000 155 30.000 155

Closed Joint Stock Company “AUTO-MS” 38.618 3,047 - -

Elettronica Trasporti Comm. Srl - - 50.000 66

Naveco Ltd 50.000 94,480 50.000 101,627

SADI Brasil Ltda 20.000 5 20.000 5

Haveco Ltd 33.333 6,967 33.333 7,896

Iveco Uralaz Ltd 33.333 3,335 33.333 3,353

Machen-Iveco Holding SA 30.000 16,058 30.000 11,528

Otoyol Pazarlama AS 27.000 2,070 27.000 2,311

Otoyol Sanayi AS 27.000 10,425 27.000 10,687

Coforma Consortium 50.000 26 50.000 26

Iveco Fiat – Oto Melara consortium 50.000 35 50.000 35

Total 183,299 203,251

(Euro/thousands) Al 31/12/2004 Al 31/12/2003

Where the AFIN Group is concerned, Iveco SpA controls 40% of the capital stock of Afin Leasing AGthrough Iveco International Trade Finance SA, and Afin Leasing controls the entire capital stock of a numberof Iveco sales financing companies in Eastern European countries.Iveco has an option to purchase the remaining 60% of the AFIN Group which can be exercised from January1, 2005 for a period of 3 years.The most significant financial data related to the AFIN Group were as follows on December 31, 2004:- Financial receivables Euro 469.9 million- Liquid assets Euro 12.3 million- Stockholders Equity Euro 3.6 million- Financial payables Euro 468.4 million

Investments in other companies break down as follows:

Receivables

Other securities

The change in the item “Other securities” primarily reflects the total writedown of the initial valueof the warrant included in the OBSA bond subscribed during the disposal of Fraikin, which amountsto Euro 21.5 million, offset by an increase of Euro 11.5 million (Euro 12.8 million minus Euro 1.3 millionfor partial reimbursement) due to the transfer of a long-term financial receivable to LRLIH.

Investments in other companies:

Truck & Bus Company 7,489 9,000

Elasis ScpA 654 662

Fiat Sepin ScpA 345 344

Isvor Fiat ScpA 179 2.005

Other 974 1,554

Total 9,641 13,565

(Euro/thousands) 31/12/2004 31/12/2003

Parent company - - - - - -

Non-consolidated subsidiaries - - - - - -

Other 349 869 1,218 377 2,611 2,988

Total receivables 349 869 1,218 377 2,611 2,988

(Euro/thousands) 31/12/2004 31/12/2003

Withinone year

Beyondone year

Total Withinone year

Beyondone year

Total

Securities 41,486 51,470

(Euro/thousands) 31/12/2004 31/12/2003


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Assets assigned in leasing

Assets assigned in leasing are vehicles granted in financial leasing by the Iveco Sector (Transolvercompanies).The item Assets assigned in leasing does not include vehicles destined to operating leaseswhich are included under Tangible fixed assets.

The item “Assets assigned in leasing” does not significantly increase on the previous year (Euro 20million) in spite of depreciation for Euro 482 million and disposals of Euro 390.7 million.

4. Current Assets

Inventories

The inventory writedown reserves underwent the following changes during the year:

Net inventories worth Euro 1,417 million at December 31, 2004 reflect a decrease of Euro 25million on the previous year (Euro 1,392.1 million at December 31, 2003); this is due to:

• decrease in gross stock of Euro 2.7 million, due to the increase in stocks of raw, ancillary andconsumable materials of Euro 39.2 million and of work in progress and semi-finished products for Euro18.7 million, offset by a decrease in inventories of finished products and goods for resale of Euro 56.4million and of used vehicles of Euro 7.1 million

• decrease in writedown reserve of Euro 27.7 million, which regards the finished products andgoods inventories in particular.

Assets assigned in leasing 1,246,041 890,537 481,992 - 1,000 (390,760) 1,264,826

Gross Reserve Net Gross Reserve Net

Raw, ancillary and consumable materials 377,722 (28,266) 349,456 338,502 (25,575) 312,927

Work in progress and semi-finished products 233,870 (11,995) 221,875 215,169 (7,516) 207,653

Contract work in progress 4,775 - 4,775 2,609 - 2,609

Finished products and goods for resale 818,120 (90,238) 727,883 874,501 (116,770) 757,731

Used 132,801 (20,889) 111,912 139,944 (29,246) 110,698

Advances 1,164 - 1,164 444 - 444

Total inventories 1,568,452 (151,388) 1,417,064 1,571,169 (179,107) 1,392,062

(Euro/thousands) 31/12/2004 31/12/2003

Inventory writedown reserves 179,107 (27,403) (51) (264) 151,389

(Euro/thousands) 31/12/2003 Uptake andallocation

Exchange ratedifference

Changes toconsolidation

scope

31/12/2004


Additions Depreciation Reclassifi-cations

Exchangerate

difference

Disposals and other

changes


(Euro/thousands)

5. Receivables

Receivables break down as follows by due date:

Receivables break down as follows by type:

Trade receivables 886,758 22,880 909,638 706,409 11,038 717,447

From subsidiary companies - - - - - -

From other companies 183,024 - 183,024 129,317 - 129,317

Total receivables 1,069,782 22,880 1,092,662 835,726 11,038 846,764

Receivables from third parties:

Receivables from personnel 16,840 1,022 17,862 14,263 964 15,227

Receivables from Tax authorities 108,004 13,466 121,470 93,170 7,971 101,141

Advance taxes 165,412 96,571 261,983 142,302 102,942 245,244

Receivables from Social security institutions 11,035 - 11,035 2,502 145 2,647

Other receivables:

Third parties 203,670 19,564 223,234 248,889 4,203 253,092

Subsidiary companies 1,344 - 1,344 1,503 - 1,503

Associated companies 53,913 - 53,913 59,402 - 59,402

Parent companies 9,871 - 9,871 - - -

Other companies 1,930 - 1,930 5,828 - 5,828

Total other receivables 572,019 130,623 702,642 567,859 116,225 684,084

Total receivables 1,641,801 153,503 1,795,304 1,403,585 127,263 1,530,848

(Euro/thousands) 31/12/2004 31/12/2003

Withinone year

Beyondone year


Beyondone year

Total

Trade receivables 909,638 - 909,638 717,447 - 717,447

Receivables from subsidiary companies - - - - - -

Receivables from other companies 183,024 - 183,024 129,317 - 129,317

Total receivables 1,092,662 - 1,092,662 846,764 - 846,764

Receivables from third parties:

Receivables from personnel - 17,862 17,862 - 15,227 15,227

Receivables from Tax authorities - 121,470 121,470 - 101,141 101,141

Advance taxes 261,983 261,983 245,244 245,244

Receivables from Social security institutions - 11,035 11,035 - 2,647 2,647

Other receivables: - -

Third parties - 223,234 223,234 - 253,092 253,092

Subsidiary companies - 1,344 1,344 - 1,503 1,503

Associated companies - 53,913 53,913 - 59,402 59,402

Parent companies - 9,871 9,871 - - -

Other companies - 1,930 1,930 - 5,828 5,828

Total other receivables - 702,641 702,641 - 684,084 684,084

Total receivables 1,092,662 702,641 1,795,304 846,764 684,084 1,530,848

(Euro/thousands) 31/12/2004 31/12/2003

Trade TradeOther Total Other Total

(Euro/thousands)


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Receivables are presented net of the writedown reserves which amount to Euro 172.7 million atDecember 31, 2004 (Euro 159.7 million at December 31, 2003).These reserves underwent the following changes during the year:

The amount indicated under “Changes to consolidation scope” is due primarily to theconsolidation of Lavorazione Plastica Srl that took place in 2004.Receivables from Tax authorities primarily comprise receivables from the Italian Tax authorities for VATand income tax, and include the positive balance of assets for tax payments on account equal to Euro262 million (Euro 245,2 million at December 31, 2003), booked according to the accounting principledescribed earlier. For further information on these assets we refer you to the note regarding Reservesfor risks and charges, which contains a comment on the Deferred taxation reserve.They also include tax payments on account relating to the employee severance indemnities paid byItalian companies as envisaged by current law; the interest maturing on said tax credit during the yearis recorded under Financial income and charges.

6. Financial assets not held as Fixed assets

InvestmentsInvestments reveal a balance of Euro 0.02 million (Euro 4.8 million in 2003) which was completely

zeroed with respect to the previous year following the disposal of monetary market investments,primarily SICAV subscribed by the Camiva company.

Financial receivables

Financial receivables from third parties - - - - - -

Financial receivables from unconsolidated subsidiaries - - - - - -

Financial receivables from associated companies 182,956 176,803 359,759 181,465 216,310 397,775

Financial receivables from parent companies 21,637 - 21,637 18,797 - 18,797

Financial receivables from other companies 1,488,455 563,077 2,051,532 1,200,539 494,633 1,695,172

Total financial receivables 1,693,048 739,880 2,432,928 1,400,801 710,943 2,111,744

(Euro/thousands) 31/12/2004 31/12/2003

Withinone year

Beyondone year


Beyondone year

Total

Trade receivables writedown reserve 156,329 37,351 (34,238) 1,032 160,474

Other receivables writedown reserve 3,358 2,997 5,790 49 12,194

Total 159,687 40,348 (28,448) 1,081 172,668

(Euro/thousands) 31/12/2003 Additions Utilisation and other

changes

Changes toconsolidation

scope

31/12/2004

Financial receivables amount to Euro 2,432.9 million at December 31, 2004 (Euro 2,111.7 millionat December 31, 2003), an increase of Euro 321.2 million.The increase in financial receivables was primarily a result of the net improvement in the Sector’sresult.

Such receivables are presented net of writedown reserves for Euro 93.6 million (Euro 91.5 millionat December 31, 2003).These reserves underwent the following changes during the year:

7. Liquid assets

The decrease in liquid assets of Euro 100.5 million is due entirely to Bank and post office accounts.

8. Accrued income and prepaid expenses

31/12/2003 Increase Decrease andother changes

31/12/2004

Financial receivables writedown reserve 91,494 41,230 (39,169) 93,556

Bank and post office accounts 323,852 422,799

Cheques 307 3,182

Cash and cash equivalents 3,444 2,151

Total liquid assets 327,603 428,132

(Euro/thousands) 31/12/2004 31/12/2003

Accrued trade income

Interest and commissions 72 1,923

Other 4,227 4,028

Total accrued trade income 4,299 5,951

Prepaid trade expenses

Interest 116 266

Other 19,152 18,640

Total prepaid trade expenses 19,268 18,906

Accrued financial income 6,976 1,601

Prepaid financial expenses 22,321 19,457

Total accrued income and prepaid expenses 52,864 45,915

(Euro/thousands) 31/12/2004 31/12/2003


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9. Stockholders’ Equity

Capital stockAt December 31, 2004 the capital stock is fully paid-in and consists of 858,400,000 ordinary shares

with a par value of Euro 1 each, equal to Euro 858.4 million.

Additional paid-in capitalAt December 31, 2004, the Additional paid-in capital reserve consists of 230,000,000 shares with

a par value of Euro 1 each.

Legal reserveThe Legal reserve is the result of the allocation of retained earnings, as per art. 2430 of the Italian

Civil Code.

Cumulative translation adjustmentsCumulative translation adjustments include exchange rate differences arising from the conversion

of the Stockholders’ Equity of consolidated companies whose financial statements are prepared inforeign currencies.Exchange rate differences from conversion are determined by comparison between initialStockholders’ Equity converted at current rates and the Stockholders’ Equity converted at currentrates at the end of the previous year, and the difference between operating income expressed ataverage exchange rates and at current rates.

Retained earnings and other reservesOther reserves primarily refer to the monetary revaluation reserves for certain tangible fixed

assets recorded in previous years, particularly in Italy, in compliance with local law. The net residualvalue of these revaluations is illustrated in Note 2. Under Italian law, monetary revaluation reservescan be used to cover previous years’ losses; however, if they are distributed, they become taxable. Nodeferred taxes payable have been accrued because the Group does not consider as provable thedistribution of such reserves.

Balance at January 1, 2003 858,400 230,000 (342,957) 244,002 989,445

Exchange rate differences (31,372) (31,372)

Other changes 45,675 45,675

Net result for the year (274,405) (274,405)

Balance at December 31, 2003 858,400 230,000 (374,329) 15,272 729,343

Exchange rate differences (7,071) (7,071)

Other changes 693 693

Net result for the year 103,860 103,860

Balance at December 31, 2004 858,400 230,000 (381,400) 119,825 826,825

(Euro/thousands) Capitalstock

Additional paid-in capital

Cumulativetranslation

adjustments

Retained earnings, other

reserves, net result for the year

Total

Reconciliation between Stockholders’ Equity and Net Result of the parent company Iveco SpA

Minority Stockholders’ Equity

Minority interest Stockholders’ Equity refers primarily to the following companies consolidated ona line-by-line basis:

Stockholders’ Equity attributable to minority interest did not change in relation to the previous year.

Iveco SpA statutory financial statements 816,609 123,750

Calculation of Group quota of Stockholders’ Equity and results achieved consolidated subsidiaries to offset eliminated values (938,446) 93,275

Elimination of revaluations and writedowns of consolidated byinvestments by Iveco SpA 868,289 (77,747)

Elimination of infragroup dividends - (277)

Elimination of infragroup profits and losses included in inventories,in fixed assets and other consolidation adjustments 80,373 (35,141)

Group consolidated financial statements 826,825 103,860

(Euro/thousands)

Net result2004

Stockholders’Equity at

31.12.2004

Balance at December 31, 2003 183,321 184,539

Changes during the year

Changes to consolidation scope (2,403) 6,458

Result for year 4,855 (13,782)

Exchange rate differences 266 (1,365)

Capital increase - 8,635

Dividends paid (299) (305)

Other changes 1,538 (859)

Balance at December 31 187,280 183,321

(Euro/thousands) 31/12/200331/12/2004

Company:

Amce Co, Ethiopia 30.00 30.00

Brandschutztechnik Gorlitz GmbH, Germany 12.00 12.00

Componentes Mecanicos SA, Spain 40.61 40.61

EEA Scrl, Italy 66.66 66.66

Iveco Fiat Brasil Ltda, Brazil 50.00 50.00

Ikarus Egyedi Autobusz Gy, Hungary 31.85 31.85

Iveco Magirus AG, Germany 46.34 46.34

Iveco Motor-Sich Inc, Ukraine - 44.44

Karosa AS, Slovak Republic 2.41 2.48

Lohr Magirus GmbH,Austria 5.00 5.00

Transolver Services SA, France 90.00 90.00

Zona Franca Alari Sepauto, Spain 48.13 48.13

2004 % attributable tominority interest

2003 % attributable tominority interest

10. Reserves for risks and charges

Warranty reserves increase by Euro 67.3 million, primarily due to the extension of the warrantyon light vehicles to a second year (Euro 15 million), the extension to a third year of the warranty onheavy vehicles for components such as gearboxes, front axles, etc., and for larger sales volumes (+10%),resulting in a larger fleet on the road.

Tax provisionThe substantial decrease in the “Tax provision” (Euro 4.9 million) is linked to the release of funds

related to the tax amnesty applied for in 2004, primarily by Sicca SpA (Euro 2.3 million), Iveco SpA(Euro 1 million), Irisbus Italia SpA and Astra Veicoli Industriali SpA.

Deferred tax reservesThe deferred tax reserve at December 31 2004 comprises the liabilities for deferred taxes, net of

deferred tax assets that can be offset, attributable to the individual consolidated companies.The deferred tax reserve, net of deferred tax assets recorded in the item “Receivables from thirdparties” breaks down as follows:

The Euro 17.7 million change in deferred tax reserves is due to changes in the economic environment,as well as the effect of the change in the exchange rate and changes to the consolidation scope.Receivables for deferred tax credits are recorded under “Other receivables from Tax authorities” (seeNote 5).


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Reserve for pensions and similar obligations 271,250 262,389 8,861

Tax provisions:

Tax provision 822 5,734 (4,912)

Deferred tax provision 14,641 15,584 (943)

Total tax provisions 15,463 21,318 (5,855)

Other reserves:

Warranty reserves 286,893 219,526 67,367

Reserves for ongoing restructuring 56,060 74,562 (18,502)

Buy-back reserves 145,781 167,548 (21,767)

Reserves for other risks and charges 284,318 289,078 (4,760)

Total other reserves 773,052 750,714 22,338

Total reserves for risks and charges 1,059,765 1,034,421 25,344

(Euro/thousands) 31/12/2004 31/12/2003 Change

Deferred tax reserve 14,641 15,584 (943)

Deferred tax assets (261,983) (245,244) (16,739)

Total (247,342) (229,660) (17,682)

(Euro/thousands) 31/12/2004 31/12/2003 Change

The deferred tax reserve, net of Assets for anticipated tax entered under Receivables from thirdparties, breaks down as follows:

The item “Other” under tax payments on account primarily relates to the effect of the eliminationof some tax driven adjustments related to accellerated depreciation as required by the new “Reformof Corporate Law”.This mainly affects Iveco SpA, and changes in the warranty reserve and other taxedreserves, which are not shown in detail in the table, including the reserve for exchange rate differences,primarily for Iveco Limited, and reclassifications justified by changes in the nature of individual items.When allocating deferred taxes, each company in the sector, critically evaluated the possibility of thefuture recoverability of such assets on the basis of updated strategic plans, by the indications set outin the Accounting Principles.For this reason, the total deferred tax reserve, net of deferred tax assets was reduced by Euro 151million of which Euro 117 million relates to the theoretical tax benefit on tax loss carry-forward notrecorded (Euro 83.2 million at December 31, 2003) and Euro 34 million to other temporarydifferences.

Other reservesReserves for risks and charges amount to Euro 284.3 million at December 31, 2004 (Euro 289.1

million at December 31, 2003) and represent the amounts allocated by individual companies to covercontract and commercial risks and disputes.

Deferred tax liability for:

Anticipated amortization and depreciation reserves 180,399 150,127

Capital gains with deferred taxation 5,132 10,399

Capital grants 171 506

Other 33,682 33,645

Total deferred liability 219,384 194,677

Tax payments on account for:

Taxed reserves for risks and charges 116,574 114,839

Inventories 22,633 24,817

Taxed receivables writedown reserves 9,755 18,389

Pension funds 13,950 11,738

Other 308,614 225,766

Total tax payments on account 471,526 395,549

Theoretical tax benefit related to retained losses 147,074 146,164

Adjustments for assets of uncertain recoverability (primarily retained losses) (151,874) (117,376)

Total deferred tax reserve,net of deferred tax assets (247,342) (229,660)

(Euro/thousands) 31/12/200331/12/2004

11. Employee severance indemnity reserve

The Employee severance indemnity reserve amounts to Euro 219.7 million at December 31, 2004(Euro 219.4 million at December 31, 2003) and reflects the indemnity maturing at year-end in favourof company employees as required by law.The column “Change to consolidation scope” reflects the delta related to the inclusion of LavorazionePlastica Srl in the consolidation scope.

12. Payables

Payables break down as follows by due date:


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Employee severance indemnity 219,432 30,939 (32,902) 2,192 219,661

(Euro/thousands) 31/12/2003 Additions Utilisation andother changes

Change to consolidation

scope

31/12/2004

(Euro/thousands)

Bonds - - - - - - - -

Payables to banks 423,704 148,788 15,399 572,492 517,438 136,974 7,786 654,412

Payables to other financiers 1,912,839 1,394,866 5,301 3,307,705 2,137,639 1,208,712 9,005 3,346,351

Advances 73,686 - - 73,686 63,230 - - 63,230

Trade payables 2,291,231 43,197 - 2,334,428 1,971,564 13,161 - 1,984,725

Notes payables 7,450 431 - 7,881 7,666 326 - 7,992

Payables to unconsolidated subsidiaries 360 - - 360 442 - - 442

Payables to associated companies 10,905 - - 10,905 8,957 - - 8,957

Payables to parent companies 1,361 - - 1,361 52 - - 52

Tax payables 144,883 11,812 - 156,695 145,187 10,271 - 155,458

Payables to social security institutions 82,046 - - 82,046 61,886 1,358 - 63,244

Other payables 137,392 7,012 - 144,404 142,561 7,110 - 149,671

Total payables 5,085,857 1,606,106 20,700 6,691,963 5,056,622 1,377,912 16,791 6,434,534

Within oneyear

Beyond oneyear

Of which after 5 years

Total Within oneyear

Beyond oneyear

Of which after 5 years

Total

31/12/2004 31/12/2003

Payables break down as follows by type:

The Euro 350 million increase in trade payables is due primarily to the strong demand for vehiclesin the final part of the year and the resulting strong increase in output in the plants after the Christmasholiday, requiring large stocks to meet vehicle delivery dates.Financial payables due beyond one year amount to Euro 1,543.6 million at December 31, 2004 (Euro1,345.7 million at December 31, 2003).These payables break down as follows by due date:

(Euro/thousands)

Trade Financial Other Total Trade Financial Other Total

Bonds - - - - - - - -

Payables to banks - 572,492 - 572,492 - 654,412 - 654,412

Payables toother financiers - 3,307,705 - 3,307,705 - 3,346,351 - 3,346,351

Advances - - 73,686 73,686 - - 63,230 63,230

Trade payables 2,334,428 - - 2,334,428 1,984,725 - - 1,984,725

Notespayables 7,881 - - 7,881 7,992 - - 7,992

Payables to unconsolidatedsubsidiaries - 360 - 360 - 442 - 442

Payables to associated companies 9,100 1,769 36 10,905 8,884 - 73 8,957

Payables to parent companies 61 - 1,300 1,361 52 - - 52

Tax payables - - 156,695 156,695 - - 155,458 155,458

Payablesto social security institutions - - 82,046 82,046 - - 63,244 63,244

Other payables - - 144,404 144,404 - - 149,671 149,671

Total payables 2,351,470 3,882,326 458,167 6,691,963 2,001,653 4,001,205 431,676 6,434,534

31/12/2004 31/12/2003

(Euro/thousands)

2006 2007 2008 2009 After 2009

Medium/long-term financial payables due beyond one year 885,720 476,550 93,887 24,251 63,246

13. Accrued expenses and deferred income

Accrued financial expenses comprise the postponed portion of interest payable on financial itemsfor the year. Financial deferred income includes interest income advanced on the portfolio of financialservice companies.

14. Memorandum Accounts

At December 31, 2004 the Group had granted guarantees for Euro 1,263.4 million (Euro 1,329.1million at 31.12.2003).


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Accrued trade expenses

Interest and commissions 16,727 16,879

Other 162,957 139,033

Total accrued trade expenses 179,684 155,912

Deferred trade income

Interest - 537

Other 132,949 139,345

Total deferred trade income 132,949 139,882

Accrued financial expenses 47,201 40,331

Financial deferred income 159,980 170,890

Total accrued expenses and deferred income 519,814 507,015

(Euro/thousands) 31/12/200331/12/2004

(Euro/thousands) 31/12/200331/12/2004

Guarantees granted

Unsecured guarantees

Suretyships:

On behalf of unconsolidated subsidiaries - -

On behalf of associated companies - -

On behalf of third parties 384,290 345,110

Total suretyships 384,290 345,110

Guarantees of notes:


Total guarantees of notes 181,962 206,927

Other unsecured guarantees:


On behalf of associated companies 63,159 114,875


Total other unsecured guarantees 697,084 777,074

Total 1,263,336 1,329,111

Secured guarantees


On behalf of associated companies - -

On behalf of third parties 28 -

Total secured guarantees 28 -

Total guarantees granted 1,263,364 1,329,111

CommitmentsCommitments total Euro 1,779.8 million at December 31, 2004 (Euro 1,615.5 million at December

31, 2003).Buy-back commitments, for a total of Euro 954.8 million at December 31, 2004 (Euro 892.4 million atDecember 31, 2003) represent the contract value of the repurchase of vehicles sold under this typeof contract.The financial policies of the Iveco group consider the hedging and control of financial risk to be ofprimary importance because it can significantly condition the company’s profitability.Iveco has put a series of strategies in place to hedge risks related to exchange rate fluctuations andinterest rate variations.In the context of this policy, the use of derivative financial instruments is limited to the hedging ofexchange rate and interest rate risk related to balance sheet flow assets and liabilities, and nospeculative transactions are permitted.In 2004, risk management activities related to exchange rates followed the above policy and maintainedthe character of selective risk management. The reduction in exchange exposure, substantiallyoriginating from the positive balance between exports and imports, was based on the expected trendin exchange rates and the need to hedge the exchange levels of reference without completelyforegoing the benefits deriving from a favorable trend in the rates. This year exchange rate risk wasmanaged once again by a combination of options and domestic currency swaps (DCS).

15.Value of production

Revenues from sales and services, and changes to contract work in progressRevenues from sales and services and changes to contract work in progress total Euro 9,292.2

million in 2004, compared to Euro 8,440 million in 2003, and comprise revenues from sales andservices for Euro 9,290 million (Euro 8,442.4 million in 2003) and changes to contract work inprogress for Euro +2.2 million (Euro -2.3 million in 2003).

Net revenues break down as follows by area of destination:

Italy 2,886,670 2,640,116

Europe (excl. Italy) 5,379,260 4,888,156

Mercosur + Central and South America 198,759 161,115

North America 23,055 17,080

Other areas 804,478 733,573

Total revenues 9,292,222 8,440,040

(Euro/thousands) 31/12/200331/12/2004

Personnel costsThis breaks down as follows:

Personnel costs amount to Euro 1,305.7 million in 2004, and represent 14.1% of sales (15.1% in 2003).

The average workforce breaks down as follows by category:

The workforce of the Commercial Vehicles Sector at year-end 2004 numbers 30,771 people,compared to 31,511 at year-end 2003.During 2004 a total of 1,815 people were taken on, while 2,555 left the company.

Provisions for risksProvisions for risks of Euro 465.9 million (448.5 million in 2003) refer primarily to other risk

provisions related to industrial operations.

Sundry operating expenses


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Other income and revenues

Gains from the disposal of fixed assets total Euro 6.1 million (Euro 25.8 million in 2003), duealmost entirely to the gains recorded by Iveco France.Capital grants amount to Euro 19.4 million and refer almost entirely to government contributionsreceived by Iveco SpA (Euro 19.2 million) in the form of capital spending for the Foggia plant.“Other revenues” comprise residual revenues that cannot be classified as Revenues from sales andservices. In particular they include incoming royalties, reimbursement of customs dues on exports andthe recovery of sundry expenses.

16. Cost of production

The cost of production amounts to Euro 9,435.9 million (Euro 8,804.6 million in 2003), a 7%improvement if compared to 2003.The major changes are illustrated below:

Raw, ancillary and consumable materials and goods for resaleRaw, ancillary and consumable materials and goods for resale amounts to Euro 5,453.5 million

(Euro 5,024.4 million in 2003). It accounts for 58.7% of sales, a decrease of almost one percentagepoint compared to the previous year (59.5% ).

Services The cost of services amounts to Euro 1,315.3 million (Euro 1,178.4 million at December 31, 2003).This

accounts for 14.2% of sales, a marginal increase on the previous year (13.9% in 2003).The cost of servicesincludes advertising expenses, external IT and telecommunications expenses, and external maintenance andtransport costs.

Leases and rentalsLeases and rentals amount to Euro 101.3 million (Euro 95.2 million in 2003); they include the cost

of property rents and, under Italian law, operational leasing costs.

Operating grants 3,012 3,150

Gains from disposal of fixed assets 6,137 25,870

Capital grants 19,427 14,200

Other revenues 248,473 211,040

Total other income and revenues 277,049 254,260

(Euro/thousands) 31/12/200331/12/2004

Salaries and wages 929,896 926,095

Social security contributions 277,480 272,160

Severance indemnities 30,939 32,309

Pensions and similar obligations 21,320 19,822

Other costs 46,085 24,991

Total personnel costs 1,305,720 1,275,377

(in Euro/thousands) 31/12/200331/12/2004

Losses on disposals of fixed assets 2,970 3,642

Direct and indirect taxes 34,257 33,942

Other expenses 274,102 188,880

Total other operating expenses 311,329 226,464

(Euro/thousands) 31/12/200331/12/2004

Average number of employees

Management 392 407

White collar 9,864 10,582

Blue collar 20,721 21,754

Total 30,977 32,743

Number of employees at 31/12 30,771 31,511

(Euro/thousands) 31/12/200331/12/2004


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Interest and other financial expenses

The item Interest and other financial charges decreased primarily as a result of the decrease ininterest payable to other financiers following the decrease in the relevant item in the financial payables,partially offset by higher costs to hedge exchange risks.

18. Adjustments to financial assets

Revaluations and writedowns of equity investments include the share of net income attributableto companies valued by the equity method.

Interest and other financial expenses

From unconsolidated subsidiaries 2 14

From associated companies 1,216 13

From parent companies 18 22

From third parties:

Bond interest - -

Bank interest 10,755 22,150

Interest on trade and other payables 909 6,252

Interest on payables represented by securities - -

Discounts and other expenses 202,595 193,905

Expenses for off-balance sheet financial instruments 20,651 14,631

Interest on payables to other financiers 74,661 81,600

Losses on the disposal of securities - -

Total interest and other financial expenses from third parties 309,571 384,416

Total interest and other financial expenses 310,808 384,465

of which:

Interest and other financial expenses excluding financial activities 195,030 186,454

31/12/200331/12/2004

Revaluations of:

Equity investments 8,013 8,409

Financial fixed assets other than equity investments - -

Securities held in current assets other than equity investments - -

Total revaluations 8,013 8,409

Writedowns of:

Equity investments 30,128 7,397

Financial fixed assets other than equity investments 21,500 5

Securities held as current assets other than equity investments - 51

Allocations to financial receivables writedown reserve 248 1,591

Total writedowns 51,876 9,044

Total adjustments to financial assets (43,862) (635)

(Euro/thousands) 31/12/200331/12/2004

17. Financial income and expense

Investment income

Dividends derive from minority investments valued by cost.

The balance of other financial income decreased primarily as a result of lower interest income frombanks of approximately Euro 12 million, due to the decrease in balances with banks and post offices.

Gains and losses on exchange rates

Gains and losses on exchange rates:

exchange rate balance (3,232) (6,580)

Total gains and losses on exchange rates (3,232) (6,580)

(Euro/thousands) 20032004

Dividends 39 40

Gains on disposal of investments held in current assets - -

Total income from investments 39 40

(Euro/thousands) 31/12/200331/12/2004

Investment income

From receivables from third parties held as fixed assets - 234

From securities held as fixed assets other than equity investments 6 21

From securities held as current assets other than equity investments 7 15

Other income:

From unconsolidated subsidiaries - 1

From associated companies

From third parties:

Bank and other interest 3,745 15,694

Customer interest and leasing income 208,707 210,113

Discounts and other income 34,805 31,158

Income from off-balance sheet financial instruments 6,502 10,532

Total other income from third parties 250,527 267,497

Total other income 250,527 267,498

Total other financial income 250,540 267,768

of which:

Other financial income excluding financial service companies 77,809 67,025

(Euro/thousands) 31/12/200331/12/2004

(Euro/thousands)


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19. Extraordinary income and expenses

The item “Other extraordinary expenses” almost entirely regards the release of extraordinaryprovisions allocated in previous years; it includes Euro 11 million “Allocation to cover potential futuretax risks”, Euro 8 million for the writeback of a risk fund related to the acquisition of the LavorazionePlastica Srl company, and Euro 4.2 million for the writeback of a restructuring fund for the Mataròplant.The balance of “Other expenses” primarily refers to provision of extraordinary reserves of Euro 18.7million, including the “Restructuring reserve” for Euro 8.5 million and “Other reserves” for Euro 10.2million, made up mainly of Euro 6 million to cover the risk of future law suits in a dispute betweenIrisbus Australia and the National Bank.The item “Other extraordinary expenses” of Euro 45.2 millionprimarily regards expenses accrued for restructuring and reorganisation plans (Euro 11.8 million),inventory adjustments in Iveco Venezuela for Euro 8.2 million, the recalculation of the Iveco Limitedpension fund for Euro 7.4 million, and a change of methodology for the “spare parts obsolescencefund” for Euro 3.8 million in Iveco SpA.

20. Income tax for the year

The following provisions have been made to the 2004 and 2003 Statements of Operations to covertaxation:

Extraordinary income

Gains on disposals of investments and other fixed assets 198 158

Other income:

Prior period income 1,483 17,588

Other income 34,342 13,403

Total other income 35,825 30,991

Total extraordinary income 36,023 31,149

Extraordinary expenses

Losses on disposals of investments and other fixed assets 153 24,235

Tax relating to prior years 38 3,211

Other expenses:

Extraordinary allocations to reserves 18,740 66,081

Other extraordinary expenses 45,181 84,885

Prior period expenses 6,425 18,632

Total other expenses 70,346 169,597

Total extraordinary expenses 70,537 197,043

Total extraordinary income and expenses (34,515) (165,894)

(Euro/thousands) 31/12/200331/12/2004

Income tax paid by the Iveco Group in 2004 amounts to approximately Euro 81.2 million.Income tax for the year (Euro 49.7 million) increases by Euro 3.5 million on 2003, due to an increasein IRAP of Euro 3.2 million, a decrease in other current taxes of Euro 3.1 million and a decrease ofEuro 3.4 million in the balance between deferred tax assets and deferred tax liabilities.

The Euro 3.2 million increase in IRAP was due primarily to the increase in the taxable income ofIveco SpA, while the decrease in other current taxes of Euro 3.1 million is due primarily to the use of tax loss carry-forwards, accelerated depreciation and amortization and other tax temporarydifferences.The positive balance of deferred taxes decreased by Euro 3.4 million because the provisionof deferred tax assets on tax loss carry-forward and timing differences was higher than the decreasein deferred tax assets for the use of retained losses and the provision of deferred tax liabilities onaccelerated depreciation and amortization.

21. Other information

Information by business segment

(Euro/million)

December 31, 2004

Revenues 9,260.2 636.7 (604.6) 9,292.2

Income by segment

Operating income 345.4 11.8 - 357.2

Financial expenses (118.9) (1.8) 0.3 (120.4)

Share of income from investments (32.1) 1.4 (12.9) (43.6)

Income from ordinary activities 194.5 11.4 (12.6) 193.1

Extraordinary items (34.4) (0.1) - (34.5)

Income before tax 160.1 11.3 (12.6) 158.4

Income tax (48.9) (0.8) - (49.7)

Result for the year of Group and minority interest 111.2 10.5 (12.6) 108.7

Minority interest 7.3 (1.2) (1.3) 4.9

Net result for the year 103.9 11.6 (11.4) 103.8

Total consolidated assets 7,158.7 2,978.2 (631.7) 9,505.3

Total consolidated liabilities 6,162.2 2,800.7 (471.8) 8,491.2

Stockholders’ Equity 996.6 177.5 (159.9) 1,014.1

Capital spending 139.0 9.2 148.2

Depreciation of tangible fixed assets 237.5 12.6 250.1

Amortization of intangible fixed assets 55.5 2.3 57.7

Operatingcompanies

Financial and servicecompanies

Intercompanyelimination

Group total

Current taxes:

IRAP 32.752 29.465

Other taxes 38.072 41.198

Total current taxes 70.824 70.663

Deferred taxation pertaining to the year (21.108) (24.498)

Total income tax for the year 49.716 46.165

(Euro/thousands) 31/12/200331/12/2004


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(Euro/million)

December 31, 2003

Revenues 8,377.4 655.5 (592.9) 8,440.0

Income by segment

Operating income 74.2 6.7 - 80.9

Financial expenses (115.2) (12.4) - (127.6)

Share of income from investments (45.1) 2.6 43.5 1.0

Income from ordinary activities (86.1) (3.1) 43.5 (45.7)

Extraordinary items (125.8) (40.1) - (165.9)

Income before tax (211.9) (43.2) 43.5 (211.6)

Income tax (45.7) (0.4) 0 (46.1)

Result for the year of Group and minority interest (257.6) (43.6) 43.5 (257.7)

Minority interest (13.7) 0.7 (0.8) (13.8)

Net result for the year (243.9) (44.3) 44.3 (243.9)of which:Net result for the yearattributable to Iveco NV 30.5 1.3 (1.3) 30.5 Net result for the year (274.4) (45.6) 45.6 (274.4)

Total consolidated assets 6,482.4 3,035.2 (409.6) 9,108.0

Total consolidated liabilities 5,589.7 2,845.1 (239.5) 8,195.3

Stockholders’ Equity 892.7 190.1 (170.1) 912.7

Capital spending 183.5 26.8 210.3

Depreciation of tangible fixed assets 233.6 15.7 249.3

Amortization of intangible fixed assets 52.5 2.0 54.5

Operatingcompanies

Financial andservice

companies

Intercompanyelimination

Group total

Report of the External Auditors


Ten-year highlights from 1995 to 2004

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Consolidated companies at December 31, 2004

Companies consolidated on a line by line basis

Registered Capital % of Interest % Name office Country stock Currency Group held by interest

consolid. held

Iveco SpA Turin Italy 858,400,000.00 EURO 100.000 Fiat Netherlands Holding NV 100.000

2H Energy SAS Fecamp France 2,000,000.00 EURO 100.000 Iveco SpA 100,000

Amce - Automotive Manuf. Co. Ethiopia Addis Ababa Ethiopia 3,000,000.00 ETB 70.000 Iveco SpA 70.000

Astra VI SpA Piacenza Italy 10,400,000.00 EURO 100.000 Iveco SpA 100.000

Brandschutztechnik Gorlitz GmbH Gorlitz Germany 511,291.88 EURO 51.370 Iveco MagirusBrandschutztechnik GmbH 88.000

Camiva SA Saint-Alban-Leysse France 1,870,168.50 EURO 58.260 Iveco Eurofire (Holding) GmbH 99.963

Componentes Mecanicos SA Barcelona Spain 37,405,038.00 EURO 59.387 Iveco Pegaso SA 59.387

Effe Grundbesitz GmbH Ulm Germany 10,225,837.62 EURO 58.700 Iveco Investitions GmbH 90.000Iveco SpA 10.000

Euromoteurs SA Garchizy France 2,098,560.00 EURO 100.000 Iveco France SA 100.000

European Engine Alliance Scrl Turin Italy 32,044,797.00 EURO 33.330 Iveco SpA 33.330

Heuliez Bus SA Rorthais France 9,000,000.00 EURO 100.000 Societè Charolaise SA 100.000

IAV Industrie-Anlagen-Verpachtung GmbH Ulm Germany 25,564.59 EURO 56.410 Iveco Investitions GmbH 95.000Iveco SpA 5.000

Ikarus Egyedi Autobusz Gy Budapest Hungary 350,000,000.00 HUF 68.146 Irisbus Holding SL 68.146

Ikarus Trade Kft Budapest Hungary 423,220,000.00 HUF 100.000 Ikarusbus Jamugyàrto RT 99.976Irisbus Holding SL 0.024

Ikarusbus Jamugyàrto RT Szekesfehervar Hungary 974,268,827.00 HUF 100.000 Irisbus Italia SpA 99.999Irisbus France SA 0.001

Industrial Vehicles Center Hainaut SA Charleroi Belgium 600,000.00 EURO 100.000 SA Iveco Belgium NV 95.000Iveco Nederland BV 5.000

Irisbus Australia Pty Ltd Dandenong Australia 1,500,000.00 AU$ 100.000 Irisbus Holding SL 100.000

Irisbus Benelux Ltd Leudenlange Luxembourg 594,000.00 EURO 100.000 Irisbus France SA 99.983 Societè Charolaise SA 0.017

Irisbus Deutschland GmbH Mainz Germany 22,000,000.00 EURO 100.000 Irisbus Holding SL 100.000

Irisbus France SA Venissieux France 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 99.999 Iveco 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 United Kingdom 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

Iveco Argentina SA Cordoba Argentina 26,700,000.00 ARS 100.000 Iveco SpA 99.999Astra VI SpA 0.001

Iveco Austria GmbH Vienna Austria 6,178,000.00 EURO 100.000 Iveco SpA 100.000

Iveco Bayern GmbH Norimberga Germany 742,000.00 EURO 53.660 Iveco Magirus AG 100.000

Iveco Colombia Ltda S.ta Fè di Bogotà Colombia 2,870,909,000.00 PESO COL. 100.000 Iveco Venezuela 99.974Iveco Latin America Ltda 0.026

2004 2003 2002 2001 2000 1999 1998 1997 1996 1995Pro forma

Commercial data

Sales of commercial vehicles,

buses and special vehicles (units) 162,301 146,437 161,883 160,397 164,776 149,903 136,824 124,162 119,697 124,835

Engine production (units) 434,799 378,396 361,135 413,222 457,745 404,917 363,089 292,268 274,438 330,169

Western European truck

market share GVW >= 3.5 t 16.3 16.2 17.9 17.0 17.8 16.6 17.0 18.4 20.0 19.1

Economic / financial data

(Euro/million)

Net sales 9,290.0 8,442.4 9,136.7 8,650.1 8,610.7 7,386.2 6,649.5 5,913.8 5,324.7 4,954.5

Operating income 357.2 80.9 * 102.9 270.7 489.1 311.1 261.5 204.2 154.7 247.8

Net result after

minority interest 103.9 (243.9)* (459.7) (124.6) 146.2 162.7 200.5 176.4 124.5 190.5

Cash flow (net result plus

depreciation and amortization) 434.1 70.5 * (36.0) 285.5 569.2 415.8 376.4 378.2 324.8 363.4

Net tangible fixed

assets at 31.12 1,789.7 1,908.2 2,399.7 2,286.7 2,278.9 2,305.2 1,541.3 1,465.8 1,423.0 1,300.8

Net financial position

(indebtedness) at 31.12 (33.2) (397.4) (408.2) (210.9) (222.6) (402.2) (67.8) 194.4 (54.0) 44.2

Group Stockholders’

Equity at 31.12 826.8 729.3 1,097.9 1,702.7 1,913.7 1,817.5 1,685.8 1,626.2 1,496.3 1,362.9

Ratios (%)

Operating income / Net sales 3.8 1.0 * 1.1 3.1 5.7 4.2 3.9 3.5 2.9 5.0

Net result / Net sales 1.1 (2.9)* (5.0) (1.4) 1.7 2.2 3.0 3.0 2.3 3.8

Cash flow / Net sales 4.7 0.8 * (0.4) 3.3 6.6 5.6 5.7 6.4 6.1 7.3

Other data

Gross additions to tangible fixed assets (Euro/million) 148,2 210,3 587,1 718,3 655,8 359,5 306,7 268,5 243,5 148,5

of which: vehicles under

operating leases (Euro/million) 12.0 28.3 330.9 348.3 306.1 60.7 12.4 0.0 0.0 0.0

Gross additions / Net sales (%) 1.6 2.5 6.4 8.3 7.6 4.9 4.6 4.5 4.6 3.0

Research and development

expenditure (Euro/million) 231.0 212.3 238.7 214.9 226.5 214.6 200.5 188.3 189.6 153.5

Research and development

expenditure / Net sales (%) 2.5 2.5 2.6 2.5 2.6 2.9 3.0 3.2 3.6 3.1

Number of employees at 31.12 30,771 31,511 38,113 35,340 35,852 36,217 31,912 32,074 32,448 33,390

(*) - The indices are calculated with reference to the Net result after minority interest, including the net result for the year pertaining to Iveco NV(1st half of 2003).

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Iveco Contract Services Limited Watford United Kingdom 2,000,000.00 GBP 100.000 Iveco (UK) Ltd 100.000

Iveco Danmark A/S Glostrup Denmark 501,000.00 DKK 100.000 Iveco SpA 100.000

Iveco Eurofire (Holding) GmbH Weisweil Germany 30,776,856.88 EURO 58.280 Iveco Magirus AG 90.032Iveco SpA 9.968

Iveco Fiat Brasil Ltda Sete Lagoas Brazil 170,100,000.00 BRL 50.000 Iveco SpA 48.576Iveco Latin America Ltda 1.424

Iveco Finance AG Kloten Switzerland 1,500,000.00 CHF 100.000 Iveco Schweiz 100.000

Iveco Finance GmbH Ulm Germany 40,000,000.00 EURO 53.660 Iveco Magirus AG 100.000

Iveco Finance Ltd Watford United Kingdom 100.00 GBP 100.000 Iveco (UK) Ltd 100.000

Iveco Finanziaria SpA Turin Italy 30,000,000.00 EURO 100.000 Iveco SpA 100.000

Iveco Finland OY Espoo Finland 200,000.00 EURO 100.000 Iveco SpA 100.000

Iveco France SA Trappes France 93,800,000.00 EURO 100.000 Iveco SpA 100,000

Iveco International Trade Finance SA Paradiso Switzerland 25,000,000.00 CHF 100.000 Iveco SpA 100.000

Iveco Investitions GmbH Ulm Germany 2,556,459.41 EURO 54.110 Iveco Magirus AG 99.020Iveco SpA 0.980

Iveco Latin America Ltda Sao Paulo Brazil 534,700,000.00 BRL 100.000 Iveco SpA 99.999Astra VI SpA 0.001

Iveco Lease GmbH Ulm Germany 775,000.00 EURO 53.660 Iveco Magirus AG 100.000

Iveco Limited Watford United Kingdom 117,000,000.00 GBP 100.000 Iveco (UK) Ltd 100.000

Iveco Lorraine SAS Haunconcourt France 305,600.00 EURO 100.000 Iveco France SA 100.000

Iveco LVI SaS S.Priest en Jarez France 503,250.00 EURO 100,000 Iveco France SA 100.000

Iveco Magirus AG Ulm Germany 250,000,000.00 EURO 53.660 Iveco SpA 53.660

Iveco Magirus Brandschutztechnik GmbH Ulm Germany 6,493,406.89 EURO 58.380 Iveco Eurofire (Holding) GmbH 99.764Iveco SpA 0.236

Iveco Mezzi Speciali SpA Brescia Italy 13,120,000.00 EURO 58.280 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 Motors of North America Inc Wilmington USA 1.00 US$ 100.000 Iveco SpA 100.000

Iveco Nederland BV Amersfoort Netherlands 4,537,802.00 EURO 100.000 Iveco SpA 100.000

Iveco Nord Ntz. GmbH Hamburg Germany 818,500.00 EURO 53.660 Iveco Magirus AG 100.000

Iveco Nord-Ost Ntz. GmbH Berlin Germany 2,120,000.00 EURO 53.660 Iveco Magirus AG 100.000

Iveco Norge AS Voyenenga Norway 18,600,000.00 NOK 100.000 Iveco SpA 100.000

Iveco Ntz. Nord - West GmbH Dortmund-Wambel Germany 1,355,000.00 EURO 53.660 Iveco Magirus AG 100.000

Iveco Otomotiv Ticaret AS Istanbul Turkey 5,960,707,000,000.00 TRL 100.000 Iveco SpA 99.995

Iveco Participations SA Trappes France 10,896,100.42 EURO 100.000 Iveco SpA 100.000

Iveco Pegaso SL Madrid Spain 105,213,628.00 EURO 100.000 Iveco SpA 99.999Astra VI SpA 0.001

Iveco Pension Trustee Limited Watford United Kingdom 2.00 GBP 100.000 Iveco Limited 50.000Iveco (UK) Ltd 50.000

Iveco Plan SA Buenos Aires Argentina 153,000.00 ARS 99.600 Iveco Argentina SA 99.600

Iveco Poland Ltd Warsaw Poland 46,974,500.00 PLN 99.990 Iveco SpA 99.989

Iveco Portugal SA Villa Franca de Xira Portugal 15,962,000.00 EURO 100.000 Iveco SpA 99.997Astra VI SpA 0.001

Iveco (Schweiz) AG Kloten Switzerland 9,000,000.00 CHF 100.000 Iveco Nederland BV 100.000

Iveco South Africa Ltd Wadeville Rep. South Africa 15,000,750.00 SAR 100.000 Iveco SpA 100.000

Iveco Sud-West Ntz. GmbH Mannheim-Neckarau Germany 1,533,900.00 EURO 53.660 Iveco Magirus AG 100.000

Iveco Sweden A/B Arlov Sweden 600,000.00 SEK 100.000 Iveco SpA 100.000

Iveco Trucks Australia Ltd Dandenong Australia 47,492,260.00 AUD 100.000 Iveco SpA 100.000

Iveco (UK) Ltd Watford United Kingdom 47,000,000.00 GBP 100.000 Iveco SpA 100.000

Iveco Ukraine Inc Kiev Ukraine 55,961,760.00 UAH 99.970 Iveco SpA 99.968Closed Joint Stock Company

"AUTO-MS" 0.032

Iveco Venezuela CA La Victoria Venezuela 2,495,691,000.00 VEB 100.000 Iveco SpA 100.000

Iveco West Ntz. GmbH Cologne Germany 1,662,000.00 EURO 53.660 Iveco Magirus AG 100.000

Karosa AS Vysoke Myto Czech Rep. 1,065,559,000.00 CZK 97.595 Irisbus France SA 97.595

Karosa rso Bratislava Slovak Rep. 200,000.00 CZK 97.521 Karosa AS 100.000

Lavorazione Plastica Srl Turin Italy 14,955.00 EURO 100.000 Iveco SpA 99.997Sicca SpA 0.003

Lohr-Magirus Feuerwehrtechnik GmbH Kainbach Austria 1,271,774.60 EURO 55.460 Iveco Magirus Brand. GmbH 95.000

Mediterranéa de Camiones SL Valencia Spain 48,080.00 EURO 100.000 Iveco Pegaso SL 100.000

Officine Brennero SpA Trento Italy 7,120,000.00 EURO 100.000 Iveco SpA 100.000

SA Iveco Belgium /NV Zellik Belgium 6,000,000.00 EURO 100.000 Iveco SpA 99.983Iveco Nederland BV 0.017

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 Vehicles Ltd Oldham United Kingdom 41,700,000.00 GBP 100.000 Iveco (UK) Ltd 100.000

Sicca SpA Modena Italy 5,300,000.00 EURO 100.000 Iveco SpA 100.000

Soc. Charolaise de Participations SA Venissieux France 2,370,000.00 EURO 100.000 Irisbus Holding SL 100.000

Societè de Diffusion Vehicules Industriels SAS Trappes France 7,022,400.00 EURO 100.000 Iveco France SA 100.000

Transolver Finance SA Trappes France 30,244,800.00 EURO 100.000 Iveco SpA 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 Services GmbH Heilbronn Germany 750,000.00 EURO 53.660 Iveco Magirus AG 100.000

Transolver Services SA Trappes France 38,000.00 EURO 10.000 Iveco France SA 10.000

Trucksure Services Ltd Watford United Kingdom 900,000.00 GBP 100.000 Iveco (UK) Ltd 100.000

UVIF SAS La Garenne France 1,067,500.00 EURO 100.000 Iveco France SA 100.000

Zona Franca Alari Sepauto AS Barcelona Spain 520,560.00 EURO 51.867 Iveco Pegaso SL 51.867


consolid. held


consolid. held


Companies valued by the equity method

Afin Leasing AG Vienna Austria 1,500,000.00 EURO 40.000 Iveco International Trade Finance SA 40.000

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

Closed Joint Stock Company "AUTO-MS" Zaporozhye Ukraine 26,568,000.00 UAH 38.618 Iveco SpA 38.618

Elettronica Trasporti Commerciali Srl - Turin Italy 109,200.00 EURO 50.000 Iveco SpA 50.000ELTRAC Srl

Ennore Foundries Ltd Madras India 67,899,000.00 RUPIA 17.700 LRLIH Ltd 59.090

European Engine Alliance EEIG Basildon United Kingdom - - 33.330 Iveco SpA 33.333

F.Pegaso SA Madrid Spain 993,045.00 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 Congo (Dem.Rep.) 340,235,000.00 ZRN 100.000 Iveco SpA 99.992Astra VI SpA 0.008

Iveco Uralaz Ltd Miass Russia 65,255,056.00 RUR 33.330 Iveco SpA 33.333

LRLIH Ltd Londra United Kingdom 76,075,000.00 GBP 30.000 Machen-Iveco Holding SA 100.000

Machen-Iveco Holding SA Lussemburgo Luxembourg 26,000,000.00 GBP 30.000 Iveco SpA 30.000

Naveco Ltd Nanjing Rep. of China 2,527,000,000.00 CNY 50.000 Iveco SpA 50.000

Otoyol Pazarlama AS Istanbul Turkey 1,590,000,000,000.00 TRL 27.000 Iveco SpA 27.000

Otoyol Sanayi AS Istanbul Turkey 36,750,000,000,000.00 TRL 27.000 Iveco SpA 27.000

Transolver Finance EFC SA Madrid Spain 9,315,500.00 EURO 50.000 Iveco SpA 50.000

V.IV.RE GEIE Turin Italy - - 50.000 Iveco SpA 50.000

V.IV.RE GEIE Boulogne France - - 50.000 Iveco SpA 50.000


consolid. held

Subsidiary and associated companies valued at cost


consolid. held

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Atlas Vehicules Ind.AS Casablanca Morocco 2,200,000.00 MAD 48.972 Iveco SpA 48.972

CBC-IVECO Ltd Changzhou Rep. of China 664,000,000.00 CNY 50.000 Iveco SpA 50.000

CONSAF - Consorzio Svil.Az. Fornitrici Turin Italy 250,741.33 EURO 10.300 Iveco SpA 10.300

Consorzio Coforma Turin Italy 51,646.00 EURO 51.700 Iveco SpA 50.000

Consorzio Fiat Media Center Turin Italy 222,076.44 EURO 5.560 Iveco SpA 1.852Astra VI SpA 1.852

Irisbus Italia SpA 1.852

Consorzio Iveco Fiat - Oto Melara Rome Italy 51,645.69 EURO 50.000 Iveco SpA 50.000

CRF Scpa Orbassano Italy 45,400,000.00 EURO 20.000 Iveco SpA 20.000

CSST SpA Turin Italy 520,000.00 EURO 32.200 Iveco SpA 30.000

Fias Fiat Administration und Service GmbH Ulm Germany 102,258.38 EURO 42.93 Iveco Magirus AG 80.000

GESTRANS SA Suresnes France 45,730.00 EURO 100.000 Irisbus France SA 100.000

IKAMCO Teheran Iran 100,000,000,000.00 RIALS 0.220 Iveco SpA 0.220

Iran Magirus-Deutz * Teheran Iran 180,000,000.00 IRR 53.660 Iveco Magirus AG 100.000

Irisbus North America LLC Dover US. 20,000.00 US$ 100.000 Irisbus France SA 100-000

Iveco Defence Vehicles SpA Bolzano Italy 100,000.00 EURO 100.000 Iveco SpA 100.000

IVEDEX EEIG Gainsborough United Kingdom - - 50.000 Iveco SpA 50.000

MR Fire Fighting International SA Brasov Romania 35,000,000.00 ROL 44.300 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 1.170 Iveco SpA 0.990

Sirio Consorzio per la Sicurezza Industriale Turin Italy 56,364.00 EURO 11.880 Iveco SpA 9.705Irisbus Italia SpA 1.315

Iveco Finanziaria SpA 0.038Iveco Mezzi Speciali SpA 0.121

Astra VI SpA 0.213

SOTRA SA Abidjan Ivory Coast 3,000,000,000.00 CFA 39.800 Irisbus France SA 39.800

Trucks & Bus Company Tajoura Libya 96,000,000.00 LYD 17.241 Iveco Pegaso 25.000

Zastava-Kamioni DOO * Kragujevac Serbia 1,673,505,893.00 DIN 33.677 Iveco SpA 33.677

CONSOLIDATED FINANCIAL STATEMENTS104

Investment in other companies

AQM Soc. Cons. rl Provaglio d’Iseo 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 Milan Italy 7,000,000.00 EURO 5.638 Iveco SpA 5.638

Consorzio a respons. 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 Italia 20.000.000,00 EURO 8,930 Iveco SpA 3,300

FIAT Information & Communication Services ScpA Turin Italy 800,000.00 EURO 10.000 Iveco SpA 10.000

Fiat Revi Scrl Turin Italy 300,000.00 EURO 10.000 Iveco SpA 10.000

Fiat Sepin ScpA Turin Italy 3,850,000.00 EURO 6.300 Iveco SpA 6.000

Hinduja TMT Ltd Mumbai India 355,837,000.00 RUPIA 0.084 Iveco SpA 0.084

Isfor 2000 ScpA Brescia Italy 540,000.00 EURO 1.963 Iveco SpA 1.963

Isvor Fiat ScpA Turin Italy 300,000.00 EURO 17.000 Iveco SpA 17.000

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 Madrid Spain 1,889,118.60 EURO 6.999 Iveco Pegaso SA 6.999

(*) investment fully written off


consolid. held

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Publication editedby Iveco P.R. & Communication

Publication 130000512Printed in Italy - AGESTurin - 06.05

These financial statements are also available in Italian, and may be requested from:

Iveco P.R. & CommunicationVia Puglia, 3510156 Turin (Italy)

or from individual national companies.

Design:Iveco Brand and Communication ManagementStudio Frenda Advertising (Turin)

Colour separations:Mycrom (Turin)

Iveco bilancio_completo

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