Pirelli

30. Other income

“Other income” amounts to Euros 175,928 thousand compared to Euros 274,939 thousand in 2007 and includes income from rent, commissions, royalties, compensation, insurance refunds and other minor items.

The decrease compared to 2007 is mainly in reference the subsidiary Shared Service Center, which was sold at the end of 2007 (Euros 110,011 thousand).

Total other income includes income from nonrecurring events for Euros 17,000 thousand for the consideration received by Pirelli & C. Real Estate Società di Gestione del Risparmio S.p.A. on the sale of the management of Fondo Berenice to another SGR, which, in fact, represents a advance on what would have been due as fees in future years. The percentage of income from nonrecurring events to total other income is equal to 9.7 percent. Last year, income from nonrecurring events amounted to Euros 2,818 thousand and included compensation for the expropriation of land located in Settimo Torinese for Euros 1,746 thousand and the refund of the events tax for the periods it was not due for Euros 1,072 thousand.

31. Personnel costs

Personnel costs consist of the following:

With regard to amounts relating to employees’ leaving indemnity, pension funds and medical care defined benefit plans, reference should be made to “Employee benefit obligations” (Note 23).

Personnel costs include Euros 132,352 thousand of costs from nonrecurring events, equal to 11.2 percent of total personnel costs. They refer to special employee termination benefit incentives for Euros 41,252 thousand put into place by the Real Estate sector and Euros 91,100 thousand by the Tyre sector.

In 2007, costs from nonrecurring events included Euros 5,186 thousand relating to income for curtailment relating to the provision for employees’ leaving indemnity following legislative changes which altered the nature of the provision to a defined contribution plan.

32. Amortization, depreciation and impairments

Amortization, depreciation and impairments are as follows:

Amortization, depreciation and impairments include Euros 7,100 thousand of impairments associated with the restructuring plans of the Tyre sector which qualify as a nonrecurring event. The percentage of impairments to the total line item is 3.2 percent.

33. Other expenses

Other expenses include the following:

Research expenses went from Euros 173 million in 2007 (3.6 percent of sales net of the DGAG deconsolidation) to Euros 156 million in 2008 (3.3 percent of sales). These are expensed to income since they do not meet the conditions for capitalization under IFRS.

Other expenses include costs from nonrecurring events totaling Euros 4,764 thousand (0.3 percent of total operating expenses) for the restructuring plans of the Tyre sector (Euros 1,800 thousand) and the Real Estate sector (Euros 2,964 thousand).

34. Financial income

Financial income includes the following:

Other financial income includes the gain of Euros 27,300 thousand realized on the difference between the purchase value of the minority stakes in Turkey, recognized in the third quarter of 2008, and the corresponding accounting equity drawn up according to Group accounting principles.

Gains on exchange include the adjustment to the year-end exchange rates for open positions at the end of the year expressed in currencies other than the functional currency and the gains realized on closed positions.

Gains on the disposal of available-for-sale financial assets mainly include Euros 5,584 thousand from the sale of the fund shares of Berenice Fondo Uffici –Closed-end real estate investment fund held by the subsidiary Pirelli & C. Real Estate Società di Gestione del Risparmio S.p.A. and the sale of Intek S.p.A. shares by the Parent, Pirelli & C. S.p.A., for Euros 1,151 thousand.

Gains on the disposal of investments in subsidiaries refer to the release of amounts set aside following the sale, in 2006, of the 38.9 percent stake in Pirelli Tyre S.p.A. which are no longer due under the contractual agreements with the counterparts. In 2007, the amount of Euros 11,234 thousand referred to the gain realized by the Real Estate sector on the sale of the 20 percent interest in the German-registered company Mertus AchtunddreiBigste GmbH.

The total includes Euros 48,691 thousand (equal to 8.4 percent of financial income) which qualifies as a nonrecurring event, of which Euros 21,391 thousand is for the “gains on the disposal of investments in subsidiaries” described above and Euros 27,300 thousand from the positive impact of the minority stakes purchased in the Turkish subsidiaries where the cost of acquisition was below the accounting equity, as mentioned previously.