Questions and Answers Regarding the Ferrari Spin-Off

The following questions and answers briefly address some of the more important questions you may have regarding the spin-off of the Ferrari business from Fiat Chrysler Automobiles N.V. (“FCA”). These questions and answers may not address all questions that may be important to you. These questions and answers describe several of the significant steps in the spin-off and how FCA shareholders will receive the common shares of Ferrari N.V. (formerly FE New N.V.) (“Ferrari”) and how they will be able to trade in those shares following completion of the Spin-off described below.

Importantly, these questions and answers do not constitute financial, legal or tax advice. If you are in any doubt as to any action you should take, you must seek your own independent financial and legal advice from your stockbroker, bank, accountant, legal or tax or other financial advisor.

Q: What is the spin-off?

A: On October 29, 2014, the Board of Directors of FCA announced its intention to separate the Ferrari business from FCA. The separation began with a restructuring that established Ferrari N.V. (“Predecessor Ferrari”) as the new holding company of the Ferrari group and the subsequent sale by FCA of 10% of the outstanding share capital of Predecessor Ferrari in an initial public offering (“IPO”) and concurrent listing of the common shares of Predecessor Ferrari on the New York Stock Exchange (the “NYSE”) under the symbol “RACE”. After the IPO, FCA owned approximately 80% of the outstanding share capital of Predecessor Ferrari. Through the remaining steps of the separation, FCA’s interest in the Ferrari business was transferred or “spun off” to holders of FCA shares on a pro rata basis and to holders of FCA’s 7.875% mandatory convertible securities (“MCSs”).

Q: When is the spin-off date?

A: The spin-off was completed on January 3, 2016.

Q: How will the spin-off affect the current Ferrari listing and when will the new Ferrari common shares begin to trade?

A: Ferrari common shares will continue to trade on the NYSE under the “RACE” ticker symbol. However, as a result of the separation transactions, beginning January 4, 2016, Ferrari common shares will trade under the new CUSIP N3167Y 103. Ferrari has been advised by the NYSE that those common shares of Ferrari that are being issued pursuant to the spin-off will trade on the NYSE on a “when issued” basis between January 4 and January 7, 2016 (the date on which shares being issued in the spin-off are scheduled to be allocated to shareholders accounts in the clearing systems) and will begin trading “regular way” on January 8, 2016.

Common shares of Ferrari held by shareholders of Predecessor Ferrari prior to the spin-off will continue to trade “regular way” throughout such period.

In addition, Ferrari common shares will start trading on the Mercato Telematico Azionario managed by Borsa Italiana (the “MTA”) on January 4, 2016, under the RACE ticker symbol and the ISIN code NL0011585146.

Q: What is “when issued” trading?

A: “When issued” trades are trades conditional on the allocation of the underlying shares to the shareholder selling in the trade.

Q: What will be the CUSIP and ISIN numbers of the Ferrari common shares that Iwill receive in the spin-off?

A: Beginning January 4, 2016, all Ferrari common shares trade and settle under the CUSIP code N3167Y 103 and the ISIN code NL0011585146.

Q: When will FCA common shares cease to trade “cum” Ferrari?

A: The last day of trading of FCA common shares “cum” Ferrari was December 31, 2015 on the NYSE and December 30, 2015 on the MTA (which was closed for trading on December 31, 2015). This means that any FCA common shares that you purchased on either the NYSE or the MTA up to and including the final trading day of the year included the right to receive Ferrari shares in the spin-off allotment.

Q: When will FCA common shares commence trading “ex” Ferrari?

A: FCA common shares will commence trading “ex” Ferrari on January 4, 2016 on both the NYSE and the MTA. This means that if you purchase a common share of FCA on or after January 4, 2016 on either the NYSE or the MTA, ownership of that share will not include the right to receive any Ferrari shares in the spin-off.

Q: What is the record date for the spin-off with respect to FCA common shares held in the US or Italian clearing systems?

A: The record date for the allotment will be January 5, 2016 with respect to all shares held through participants in the US or Italian clearing systems (DTC and Monte Titoli).

Q: How will the spin-off be completed?

A: Through two demerger transactions under Dutch law that became effective on January 1, 2016 and January 2, 2016, respectively, FCA transferred its remaining 80% interest in the Ferrari business to holders of its shares on a pro rata basis and to holders of the MCSs. Upon effectiveness of the demergers, each shareholder of FCA became entitled to receive one common share of Ferrari for every 10 FCA common shares and one Ferrari special voting share for every 10 FCA special voting shares held as of the record date of the demergers. In addition, Ferrari issued common shares that FCA will deliver to holders of its MCSs, pursuant to the terms of the indenture governing the MCSs.

Shortly following completion of the demergers, Predecessor Ferrari, was merged with and into Ferrari. Pursuant to the merger, each holder (other than Ferrari) of shares in Predecessor Ferrari became entitled to receive one common share in Ferrari for each common share held in Predecessor Ferrari and one special voting share in Ferrari for each special voting share held in Predecessor Ferrari. The common shares and special voting shares held by Ferrari in Predecessor Ferrari were cancelled pursuant to the merger. Ferrari (having been renamed Ferrari N.V. in connection with the merger) became the parent company of the Ferrari business upon effectiveness of the merger on January 3, 2016.

Q: How many Ferrari shares will I receive for every FCA share that I hold on the record date?

A: You will receive one common share of Ferrari for every 10 common shares of FCA and one special voting share of Ferrari for every 10 special voting shares of FCA. Fractional shares will be handled as described below.

Q: What will I receive in respect of FCA MCSs that I hold?

A: If you are a holder of FCA’s MCSs on the record date, you will receive 0.77369 common shares of Ferrari for each MCS unit (representing $100 in notional amount of MCSs) that you hold.

Q: On what date will I receive the Ferrari shares in my account at my intermediary or broker?

A: Ferrari shares will be allocated to the book entry accounts of holders of FCA shares and MCSs held through participants in the DTC system on January 7, 2016, except that Ferrari shares in respect of FCA shares held through participants in the Monte Titoli system will be allocated on January 6, 2016 to account for the different standard settlement periods on the U.S. and Italian markets.

Q: Will I receive a stock certificate for my Ferrari common shares?

A: Ferrari common shares are all held in book entry form through participants in DTC and Monte Titoli and therefore you will not receive a certificate representing your Ferrari common shares.

Q: How will I receive my Ferrari common shares?

A: If you are entitled to receive Ferrari common shares in the spin-off, you will receive your Ferrari common shares through the intermediary or nominee (bank, stockbroker, etc.) through which you currently hold your FCA common shares. Ferrari shares will be issued and delivered in book entry form through participants in DTC (including Monte Titoli).

Q: What if I want to sell the Ferrari common shares I will receive in the spin-off?

A: If you are entitled to receive Ferrari common shares in the spin-off as described above you will be able to sell your Ferrari common shares starting on January 4, 2016 on the NYSE and the MTA.

Q: How will fractional shares be treated in this spin-off?

A: No fractional shares will be delivered in connection with the spin-off. FCA has been advised by Computershare, the distribution agent for the spin-off, that any entitlements to a fraction of a Ferrari common share will be aggregated and sold in the open market by intermediaries on behalf of shareholders or by the transfer agent for Ferrari shares, with the net proceeds paid pro rata in cash to FCA shareholders or MCSs holders that would otherwise have a fractional share entitlement.

Q: Will I receive a cash payment in connection with the spin-off?

A: There is no cash portion of the spin-off. However, due to certain technical required steps in the transaction, holders of FCA shares are entitled to receive a cash payment of €0.01 for each share held as of the record date (less any applicable withholding). This payment corresponds to the nominal value of the shares issued in an interim step of the separation. Shareholders holding FCA shares (other than through Monte Titoli) will receive the cash payment in U.S. dollars determined pursuant to the official USD/EUR exchange rate reported by the European Central Bank.

Q: What is the €0.01 cash payment?

A: This payment corresponds to the nominal value of each share issued in an interim step of the Separation. For Dutch law purposes, one of the separation steps included the issue to FCA shareholders of shares in an interim Dutch company (“Interim Shares”). Those Interim Shares were redeemed but the redemption required the repayment of the nominal value of €0.01 per share to which FCA shareholders are entitled. Pursuant to the indenture governing the MCSs, entitlement of holders of MCSs in the Separation is solely to receive the Ferrari shares delivered to them as described above and they will not receive the €0.01 cash payment.

Q: Do FCA shareholders and MCSs holders need to take any further actions in order to receive the Ferrari shares?

A: FCA shareholders and MCSs holders do not need to take any action to receive shares of Ferrari to which they are entitled in the spin-off.

Q: What are the Dutch tax consequences of the spin-off?

A: For Dutch income tax purposes and Dutch corporate tax purposes the receipt of Ferrari shares pursuant to the spin off (the demergers under Dutch law) would qualify as a generally tax-free transaction. As a result, Dutch resident holders of FCA shares and non-Dutch resident holders of FCA shares subject to Dutch income taxation or Dutch corporate taxation do not have to recognize a gain or loss upon the receipt of the Ferrari shares except with respect to any cash received in lieu of fractional shares. The holder’s aggregate tax basis in its FCA shares in respect of which Ferrari shares are allotted and such Ferrari shares should equal such holder’s aggregate basis in its FCA shares immediately before the spin-off (less the tax basis reduction resulting from the repurchase price of €0.01 per share of FE interim BV), allocated between the FCA shares and the Ferrari shares allotted in the spin-off in proportion to the fair market value of each.

It is believed that for Dutch income tax and corporate tax purposes the receipt of the Ferrari shares by holders of the MCSs should be treated as a partial conversion of the MCS. Such partial conversion may give rise to a taxable gain or deductible loss for certain Dutch resident holders of MCSs and certain non-Dutch resident holders of MCSs that are subject to Dutch income taxation or corporate taxation.

The exchange of shares in Predecessor Ferrari into shares in Ferrari pursuant to the merger under Dutch law is for certain Dutch resident holders of Predecessor Ferrari shares and certain non-Dutch resident holders of Predecessor Ferrari shares considered to be a disposal of such holder's Predecessor Ferrari shares for Dutch income tax and Dutch corporate tax purposes. Such disposal will result in recognition of a capital gain or a capital loss. In general such shareholders of Predecessor Ferrari can however opt to apply a roll-over facility for the recognized capital gain. If the roll-over facility is applied, the Ferrari shares received as merger consideration must be reported in the balance sheet for Dutch tax purposes at the same tax book value as the divested shares in Predecessor Ferrari. The roll-over facility does not apply to any cash consideration received.

For a more detailed discussion of the Dutch tax consequences of the issue and delivery of Ferrari common shares in the spin-off, see Annex A – “Certain Tax Consequences of the Ferrari Separation”.

For Dutch income tax purposes and Dutch corporate tax purposes the repurchase price of the FE Interim B.V. shares of €0.01 per share in the capital of FE Interim B.V. would be treated as a dividend in the hands of certain Dutch resident holders of FE Interim B.V. shares and certain non-Dutch resident holders of FE Interim B.V. shares to the extent that the repurchase price exceeds the tax basis that such holders have in their FE Interim B.V. shares after the second Dutch law demerger. For a more detailed description of the Dutch income tax and corporate tax consequences of the repurchase price of €0.01 per share in the capital of FE Interim B.V. see Annex A – “Certain Tax Consequences of the Ferrari Separation”.

This information is not intended as tax advice. You are urged to consult your tax advisor as to the specific tax consequences to you of the spin-off under applicable tax laws.

Q: What are the Italian tax consequences of the spin-off?

A: As confirmed by the Italian Revenue Agency in the tax ruling issued on October 9, 2015 (the “Italian Tax Ruling”), the receipt of Ferrari shares pursuant to the spin-off should qualify as a generally tax-free transaction for Italian income tax purposes for holders of FCA shares and therefore:

  • An Italian holder of FCA shares should recognize no gain or loss upon the receipt of Ferrari shares except with respect to any cash received in lieu of fractional shares;
  • An Italian holder’s aggregate tax basis in its FCA shares in respect of which Ferrari shares are allotted and such Ferrari shares should equal such holder’s aggregate basis in its FCA shares immediately before the spin-off (less the tax basis reduction resulting from the distribution of €0.01 per share of FCA), allocated between the FCA shares and the Ferrari shares allotted in the spin- off in proportion to the fair market value of each;
  • An Italian holder’s holding period in Ferrari shares allotted in the spin-off should include such holder’s holding period in the FCA shares with respect to which such holder received the Ferrari shares; and
  • An Italian holder’s receipt of cash in lieu of fractional shares should give rise to taxable income for Italian tax purposes. Such Italian holder should recognize capital gain or loss measured by the difference between the cash received for the fractional share and its tax basis in that fractional share, determined as described above.

As the MCSs qualify as atypical securities (titoli atipici) for Italian tax purposes, the conversion of the MCSs into Ferrari shares may give rise to a taxable gain or deductible loss for Italian holders of MCSs. The actual tax treatment of the gain or loss depends on the individual circumstances of the Italian holder of the MCSs and in particular on the accounting principles adopted by it in drafting its financial statements.

Further, as confirmed in the Italian Tax Ruling, the merger of Predecessor Ferrari into Ferrari in connection with the spin-off should qualify as a generally tax-free transaction for Italian income tax purposes and therefore an Italian holder should recognize no gain or loss upon the receipt of Ferrari shares for Predecessor Ferrari shares for Italian income tax purposes.

For Italian income tax purposes, the distribution of €0.01 per share of FCA would be treated as a dividend in the hands of non-Italian holders (without a permanent establishment or fixed base in Italy) and of certain Italian holders to the extent that the distribution exceeds the tax basis that such holders have in their FE Interim B.V. shares after the second Dutch law demerger. For Italian corporate holders, the distribution may qualify as dividend (potentially benefiting from participation exemption) or capital gain to the extent that the distribution is paid out of, respectively, profits reserves or equity reserves.

For a more detailed description of the Italian income tax consequences of the spin-off see Annex A – “Certain Tax Consequences of the Ferrari Separation”.

This information is not intended as tax advice. You are urged to consult your tax advisor as to the specific tax consequences to you of the spin-off under applicable tax laws.

Q: What are the U.S. federal income tax consequences of the spin-off?

A: FCA expects the receipt of Ferrari shares pursuant to the spin-off to qualify as a generally tax-free transaction for U.S. federal income tax purposes. Assuming that the spin-off so qualifies:

  • A U.S. holder of FCA shares and/or MCS should recognize no gain or loss upon the receipt of Ferrari shares except with respect to any cash received in lieu of fractional shares;
  • A U.S. holder’s aggregate tax basis in its FCA shares and/or MCS in respect of which Ferrari shares are distributed and such Ferrari shares should equal such holder’s aggregate basis in its FCA shares and/or MCS immediately before the spin-off, allocated between the FCA shares and/or MCS and the Ferrari shares distributed in the spin-off in proportion to the fair market value of each; and
  • A U.S. holder’s holding period in Ferrari shares distributed in the spin-off should include such holder’s holding period in the FCA shares or MCS with respect to which such holder received the Ferrari shares. A U.S. holder receiving cash in lieu of fractional shares of Ferrari should be treated as though such holder first received a distribution of the fractional share and then sold the fractional share for the amount of cash such holder receives in lieu of fractional shares. Such U.S. holder should recognize capital gain or loss measured by the difference between the cash received for the fractional share and its tax basis in the fractional share, determined as described above, which capital gain or loss should generally be long-term capital gain or loss if such holder’s holding period in the fractional share, determined as described above, is more than one year.

Further, FCA expects that the merger of Predecessor Ferrari into Ferrari in connection with the spin-off should qualify as a generally tax-free transaction for U.S. federal income tax purposes. Assuming that the merger so qualifies, a U.S. holder should recognize no gain or loss upon the receipt of Ferrari shares for Predecessor Ferrari shares for U.S. federal income tax purposes.

The Company expects the distribution of €0.01 per share of FCA to be generally treated as a taxable dividend for U.S. federal income tax purposes.

However, the U.S. federal income tax consequences of the spin-off are complex and uncertain. For a more detailed description of the U.S. federal income tax consequences of the spin-off and a description of certain possible alternative characterizations see Annex A – “Certain Tax Consequences of the Ferrari Separation”.

This information is not intended as tax advice. You are urged to consult your tax advisor as to the specific tax consequences to you of the spin-off under applicable tax laws.

Q: Will the number of FCA shares that I own change as a result of the spin-off?

A: No. The number of FCA shares that you own will not change as a result of the spin- off.

Q: Will the terms of the MCSs that I own change after the spin-off?

A: Yes, following the spin-off, certain terms of the MCSs will be adjusted to reflect the value of the Ferrari shares allocated. These include the initial price of the FCA common shares which were offered concurrently with the MCSs, the threshold appreciation price and the stated amount (i.e., the number of FCA shares that correspond to each unit of MCSs (corresponding to $100 in notional amount)). These terms are used together to determine the conversion rate that will determine the number of FCA common shares into which each MCS will be converted at the mandatory conversion date, December 15, 2016. The initial price and threshold appreciation price will be adjusted by multiplying them by the ratio of (i) the average daily VWAP (volume-weighted average price) of the FCA common shares for the ten trading days following the spin-off (expected to be January 4th through January 15th) to (ii) the sum of (a) the average daily VWAP of the FCA common shares during the same period and (b) the average daily volume-weighted average price of the Ferrari common shares for that period, multiplied by the spin-off ratio (i.e., one Ferrari common share for every ten FCA common shares) of 1/10.

Expressed as a formula, the adjustment would work as follows:

Formula

With Value1 being the initial number value as applied in the MCS Indenture; Value2 being the value after adjustment; FCA VWAP being the average of the 10 daily VWAPs of FCA shares over the trading period and Ferrari VWAP being the average of the 10 daily VWAPs for Ferrari shares. The 1⁄10 multiplier for the Ferrari VWAP simply accounts for the one-to-ten distribution ratio in the spin-off in which one Ferrari share is to be received for every 10 FCA shares held.

These calculations will be performed by Conv-Ex, the calculation agent for the MCSs.

For illustrative purposes only, assuming that the VWAP for the relevant period of the FCA common shares and the Ferrari shares were $10 and $50, respectively, the initial price, threshold appreciation price and stated amount would be multiplied by the following:

Formula

Q: Is the spin-off subject to any conditions?

A: Completion of the spin-off required approval by shareholders of FCA. Such approval was obtained at the extraordinary general meeting of shareholders held on December 3, 2015 and the spin-off it not subject to any other conditions.

Q: Will the management of Ferrari change in connection with the spin-off?

A: The management of Ferrari will not change in connection with the spin-off.

Q: Will the rights of Ferrari shareholders change in connection with the spin-off?

A: The rights of Ferrari shareholders will not change in connection with the spin-off.

Q: Who is the distribution agent, transfer agent and registrar for Ferrari common shares?

A: The distribution agent, transfer agent and registrar for the Ferrari common shares is Computershare Trust Company, N.A.

Q: Where can shareholders get more information?

A: More information on Ferrari and the distribution can be found in the Registration Statement. In addition, in connection with the listing of Ferrari shares on the MTA, Ferrari published a listing prospectus on January 3, 2016, the spin-off date, which is available on the www.ferrari.com website.

 

For questions relating to the allotment of common shares, shareholders may contact Computershare via phone (+1-866-289-9404) or email (web.queries@computershare.com). Any shareholder that holds common shares through a bank, broker or other intermediary or nominee, should contact that institution directly.