Pirelli & C. S.p.A. – Summary data

Balance sheet and financial position

balance sheet (in millions of Euros)

12/31/2007

12/31/2006

Property, plant and equipment

97.2

103.4

Intangible assets

1.4

1.7

Financial assets

- Group

718.6

1,237.2

- Olimpia

3,474.9

- Third parties

540.5

641.1

Net working capital

(68.8)

(186.1)

Total

1,288.9

5,272.2

Equity

2,076.0

2,882.3

Provisions

59.2

221.4

Net financial (liquidity)/debt position

(846.3)

2,168.5

Total

1,288.9

5,272.2

The above statement presents the balance sheet and financial position of the company. The most significant changes during 2007 refer to the following:

  • financial assets, besides the entire investment held in Olimpia, register a decrease in both those of the Group (Euros 518.6 million) and third parties (Euros 100.6 million).

An analysis of the changes is presented in the following table:

GRoup (in millions of Euros)

Investments

Pirelli UK Ltd

145.6

Pirelli & C. Real Estate S.p.A.

54.3

Pirelli Broadband Solutions S.p.A.

15.0

Other companies

9.1

Reduction in share capital

Pirelli Holding N.V. (ex-Pirelli Tyre Holding N.V.)

(242.6)

Impairment losses

Pirelli Holding N.V. (ex-Pirelli Tyre Holding N.V.)

(385.7)

Pirelli Finance (Luxembourg) S.A.

(16.7)

Pirelli Broadband Solutions S.p.A.

(16.5)

Pirelli UK Ltd

29.0

Other companies

(4.3)

Reclassification of provision for impairment of investments

(105.8)

Total

(518.6)

Third parties (in millions of Euros)

Investments

RCS Mediagroup S.p.A.

10.9

Gruppo Banca Leonardo S.p.A.

3.6

Divestitures

Intek S.p.A.

(6.8)

KME Group S.p.A.

(1.8)

Consortium S.r.l.

(0.3)

Impairment losses

Telecom Italia S.p.A.

(23.7)

Euroqube S.A.

(0.9)

Changes in fair value recognized in equity

(81.6)

Total

(100.6)

  • the change in net working capital is mainly due to the payment of the liability contracted with Pirelli Holding N.V. for the purchase of the investment in Pirelli Tyre S.p.A. during the year 2006 (Euros 151.5 million);
  • equity decreased by Euros 806.3 million compared to December 31, 2006. The main changes in equity are presented in the following table:

changes in equity (in millions of Euros)

Equity at December 31, 2006

2,882.3

Effect of reduction in share capital

(826.3)

Gains (losses) recognized directly in equity:

- Change in fair value on available-for-sale financial assets

(94.8)

- Gains (losses) transferred to income upon disposal of available-for-sale financial assets or when there are impairment losses

13.2

- Actuarial gains (losses) on employees' leaving indemnity

0.9

Total income (expenses) recognized directly in equity

(80.7)

Income for the year

100.7

Equity at December 31, 2007

2,076.0

  • provisions decreased from the end of 2006 mainly as a result of the reclassification of the provision for impairment of financial investments (Euros 105.8 million), the payment of the price adjustment (Euros 39.9 million) and the settlement of some claims (Euros 25.5 million) as part of the sale of the Pirelli activities in the Energy and Telecom Cables and Systems sectors to Goldman Sachs Capital Partners in July 2005;
  • the net financial position went from a net debt position of Euros 2,168.5 million at December 31, 2006 to a net liquidity position of Euros 846.3 million at December 31, 2007. The analysis of the changes is detailed in the following table:

changes in debt position (in millions of Euros)

Net financial debt position at 12/31/2006

2,168.5

Financial investments

236.6

Price adjustment payment and claims settlement on sale of Energy and Telecom Cables and Systems businesses

49.9

Sale of investment in Olimpia S.p.A.

(3,329.0)

Sales of warrants to GSCP

(91.0)

Other financial divestitures

(259.2)

Dividends collected

(673.2)

Change in net working capital

117.3

Payable for reduction of share capital

826.3

Net financial expenses

63.6

Other changes

43.9

Net financial debt position at 12/31/2007

(846.3)

Income statement

income statement (in millions of Euros)

 

2007

2006

Net financial expenses

(63.6)

(69.1)

Income from investments

263.8

312.7

Other operating income (expenses)

(30.4)

(47.3)

Income before income taxes

169.8

196.3

Income taxes

3.7

18.2

Income from continuing operations

173.5

214.5

Income (loss) from discontinued operations

(72.8)

(1,856.8)

Income for the year

100.7

(1,642.3)

The income for the year amounts to Euros 100.7 million compared to a loss of Euros 1,642.3 million in the prior year.
The most important items are described below:

  • net financial expenses are in line with those of 2006 and include:

(in millions of Euros)

 

2007

2006

Interest expenses

(85.6)

(95.9)

Other financial expenses

(7.6)

(7.0)

Interest income

28.8

32.5

Other financial income

0.8

1.3

Total net financial expenses

(63.6)

(69.1)

  • Details of income from investments are as follows:

(in millions of Euros)

 

2007

2006

Dividends

Pirelli Holding N.V.

557.4

100.0

Pirelli & C. Real Estate S.p.A.

44.1

40.7

Pirelli Tyre S.p.A.

42.7

-

Mediobanca S.p.A.

9.8

8.7

Telecom Italia S.p.A.

6.6

6.6

Capitalia S.p.A.

-

9.9

Other companies

15.4

26.9

676.0

192.8

Impairment losses

Pirelli Holding N.V.

(385.7)

 

Pirelli Finance (Luxembourg) S.A.

(16.7)

(15.7)

Pirelli Broadband Solutions S.p.A.

(16.5)

 

Pirelli SA

(12.2)

Pirelli Uk Ltd

29.0

 

Telecom Italia S.p.A.

(23.7)

 

Other companies

(5.2)

(10.0)

(418.8)

(37.9)

Gains from disposals

Capitalia S.p.A.

154.7

Other companies

6.6

3.1

6.6

157.8

263.8

312.7

  • other operating income (expenses) show an improvement of Euros 16.9 million compared to the prior year. Details are as follows:

(in millions of Euros)

2007

2006

Operating income (excluding nonrecurring income)

119.3

128.4

Operating expenses (excluding nonrecurring expenses)

(152.4)

(172.5)

Nonrecurring income

2.8

0.0

Nonrecurring expenses

(0.1)

(3.2)

Total other operating income (expenses)

(30.4)

(47.3)

  • the reduction in income taxes compared to the prior year is principally due to the decrease in income on the national tax consolidation;
  • income (loss) from discontinued operations includes: the gain realized on the sale to Goldman Sachs International of 4,763 warrants that had been obtained as part of the sale of the Energy and Telecom Cables and Systems activities in July 2005 (Euros 91.0 million); the net loss, including transaction costs net of revenues for services rendered to Olimpia S.p.A., originating from the sale of the investment in Olimpia S.p.A. (Euros 159.7 million); the adjustment of the provision for future liabilities and charges on the guarantees provided to the buyer as part of the sale of the Energy and Telecom Cables and Systems activities (Euros 4.1 million). The comparative amount for income (loss) from discontinued operations in 2006 included: classification of the impairment loss on the investment in Olimpia S.p.A. net of the revenues for services rendered (Euros 1,826.8 million) and the accrual to the provision for future liabilities and charges for the sales price adjustment and the guarantees granted to the buyer as part of the sale of Pirelli’s activities in the Energy and Telecom Cables and Systems (Euros 30.0 million).

COMPENSATION PAID TO DIRECTORS, STATUTORY AUDITORS AND GENERAL MANAGERS (in thousands of Euros)

 

Description of post

Compensation received in 2007

Compensetion
for the year 2007
to be paid in 2008

Post held

Term of office

Compensation for the post

Non monetary benefits

Bonuses and
other incentives

Other
compensation

Compensation for the post

Bonuses and
other incentives

Tronchetti Provera Marco

Chairman

2008

2,546

1,7352

50

1,620

Pirelli Alberto

Deputy Chairman

2008

564

3543

50

1133

Puri Negri Carlo Alessandro

Deputy Chairman

2008

320

2,0894

50

3,4764

Acutis Carlo

Director

2008

50

 

Angelici Carlo

Director

2008

255

50

 

Benetton Gilberto

Director

2008

50

 

Bombassei Alberto

Director

2008

50

 

Bruni Franco

Director

2008

255

50

 

Cucchiani Enrico Tommaso 1

Director

from 07/26/07

22

Galateri di Genola Gabriele 1

Director

2008

50

 

Garraffo Mario

Director

2008

50

 

Giarda Dino Piero

Director

2008

50

 

Libonati Berardino

Director

2008

206

50

 

Ligresti Giulia Maria

Director

2008

50

 

Moratti Massimo

Director

2008

50

 

Perissinotto Giovanni

Director

2008

50

 

Pesenti Giampiero

Director

2008

206

50

 

Roth Luigi

Director

from 04/23/07

35

 

Roveri Aldo

Director

2008

206

50

 

Secchi Carlo

Director

2008

357

50

 

Vagnone Paolo 1

Director

up to 07/20/07

27

 

De Conto Claudio

General Manager

-

7

587

8428

850

Gobbi Luciano

General Manager

-

5

544

650

6,8109

Guatri Luigi

Chairman of the Board of Statutory Auditors

2009

62

 

Laghi Enrico

Standing members

2009

41

 

Lazzati Paolo

Standing members

2009

12210

41

 

1 Remuneration paid over to his company

2 Of which Euros 1.300 thousand from Pirelli Tyre S.p.A. and Euros 435 thousand from Pirelli & C Real Estate S.p.A. (PRE)

3 From Pirelli Tyre S.p.A.

4 From Pirelli Real Estate S.p.A.

5 As a member of the Internal Control and Corporate Governance Committee

6 As a member of Remuneration Committee

7 As a member of the Internal Control and Corporate Governance Committee (Euros 25 thousand) and the Supervisory Board (Euro 10 thousand)

8 Of which Euros 801 thousand from Pirelli & C and Euros 41 thousand from PRE

9 Of which Euros 6.360 thousand paid to employees’leaving indemnity due by law

10 For the post of Chairman of the Board of Satutory Auditors of Pirelli Tyre S.p.A. (Euros 22 thousand), for the post of Statutory Auditor in subsidiaries of PRE (Euros 90 thousand) and as a member of the Supervisory Board of Pirelli & C. S.p.A. (Euros 10 thousand)