PIRELLI C &S.P.A.: Highlights

The following table illustrates highlights of the Parent's main income, balance sheet and financial data:

(in millions of euro)        
  12/31/2010 12/31/2009
Operating  income (39.6) (39.5)
Net financial income and net income from equity investments 229.5 150.9
Net income of continuing operations 191.0 112.6
Net income (loss) of discontinued operations (103.6) -
Net income 87.4 112.6
Non-current financial assets 965.2 1,548.5
Equity 1,584.6 1,822.8
Net financial (liquidity)/debt position (597.2) (253.1)

Net financial income and net income from equity investments, totalling euro 229.5 million, principally consist of euro 226.6 million in dividends received from the subsidiary Pirelli Tyre S.p.A., dividends of euro 24.6 million from other subsidiaries, impairment of the subsidiary Pirelli UK Ltd for euro 21.2 million, impairment of the equity investment in the subsidiary Pirelli & C. Ambiente S.p.A. for euro 2.2 million and impairment of the equity investment in RCS MediaGroup S.p.A. for euro 8.6 million (which now has a book value of euro 1.48 per share).

Net income was negatively impacted by the assignment of former Pirelli RE (now Prelios) shares (euro 119.7 million), which was partly offset by the net gain on disposal of Pirelli Broadband Solutions S.p.A.(euro 16.1 million).

The reduction in non-current financial assets reflects not only the impairments mentioned above, but also the previously mentioned assignment of the shares held in Pirelli RE (now Prelios) to shareholders for euro 329.6 million, winding- up of the two Dutch holding companies Pirelli Holding N.V. and Sipir Finance N.V. for euro 204.2 million, and the previously mentioned sale of Pirelli Broadband Solutions S.p.A. for euro 26.3 million.

The following table summarises the carrying values of the principal non-current financial assets at December 31, 2010:

(in millions of euro) 
  31/12/10
Equity investments in subsidiaries  
Pirelli Tyre S.p.A. 585.9
Pirelli Societe Generale S.A.- Switzerland 17.5
Pirelli & C. Eco Technology S.p.A. 16.9
Pirelli Finance  (Luxembourg) S.A. - Luxembourg 13.8
Pirelli Ltda - Brazil 9.7
Pirelli & C. Ambiente  S.p.A. 3.6
Pirelli Labs S.p.A. 4.1
Other 7.9
Total equity investments in subsidiaries 659.4
Equity investments in associates and other financial assets  
Mediobanca S.p.A. 105.3
RCS Mediagroup S.p.A. 57.9
Eurostazioni  S.p.A. 52.9
CyOptics Inc.- U.S.A. 17.5
Fin. Priv. S.r.l. 14.4
Anastasia  Real Estate Investment Trust 13.3
Alitalia S.p.A. 12.8
Advanced Digital Broadcast Holdings  SA- Switzerland 9.8
lstituto Europeo di Oncologia S.r.l. 7.2
F.C. lnternazionale Milano S.p.A. 6.0
Gruppo Banca  Leonardo S.p.A. 5.2
Other 3.5
Total equity investments in associates and  other financial assets 305.8
Total non-current financial assets 965.2

Equity fell from euro 1,822.8 million at December 31, 2009 to euro 1,584.6 million at December 31, 2010. The change is illustrated as follows:

(in millions of euro)  
Equity at 12/31/2009 1,822.8
Effect of reduction in share capital (211.3)
Net income 87.4
Dividends paid (81.1)
Gains/(losses) recognised directly in Equity (33.2)
Equity at 12/31/2010  1,584.6

The following table illustrates the breakdown of Equity at December 31, 2010 and comparative figures for the year at December 31, 2009:

(in millions of euro)    
  12/31/2010 12/31/2009
Share capital 1,375.7 1,554.3
Share premium reserve 229.4 229.7
Legal reserve 99.9 94.3
Business combinations reserve 22.5 22.5
Reserve from assignment of Pirelli RE (now Prelios) shares (32.5)
IAS transition reserve (239.4) (239.4)
IAS operating reserve 15.7 48.8
Retained earnings 25.9
Net income 87.4 112.6
  1,584.6 1,822.8

The net financial position is positive for euro 597.2 million, which largely reflected the receipt of euro 258 million in dividends from subsidiaries, euro 208 million in cash received from the liquidated companies, and payment of a euro 81 million dividend to shareholders.

SURNAME AND NAME OFFICE HELD PERIOD FOR WHICH  ThE OFFICE WAS HELD OFFICE EXPIRY EMOLUMENTS FOR ThE OFFICE IN THE COMPANY THAT DRAWS UP ThE FINANCIAL STATEMENTS (9) NON-MONETARy BENEFITS BONUSES AND OTHER INCENTIVES (10) OTHER COMPENSATIOn
Tronchetti
Provera Marco
Chairman 01/01//2010 - 31/12/2010 2010 fin. statements appr. 2,490       2,385   1,075 (1)
Pirelli Alberto Deputy Chairman 01/01//2010 - 31/12/2010 2010 fin. statements appr. 640   5 (1) 110 (1) 368 (1)
Puri Negri Carlo
Alessandro
Deputy Chairman 01/01/2010 -  29/07/2010 - 224              
Malacalza Vittorio Deputy Chairman 29/07/2010 - 31/12/2010 2010 fin. statements appr. 21 (2)            
Acutis Carlo Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 50              
Angelici Carlo Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 74 (3)            
Antonelli Cristiano Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 74 (3)            
Benetton Gilberto Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 50              
Bombassei
Alberto
Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 70 (4)            
Bruni Franco Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 74 (3)            
Campiglio Luigi Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 50              
Cucchiani
Enrico Tommaso
Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 50              
Libonati Berardino Director 01/01//2010 - 30/11/2010 - 64 (6)            
Ligresti Giulia
Maria
Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 50              
Moratti Massimo Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 50              
Pagliaro Renato Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 50 (5)            
Paolucci Umberto Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 70 (4)            
Perissinotto
Giovanni
Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 50              
Pesenti Giampiero Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 70 (4)            
Roth Luigi Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 74 (3)            
Secchi Carlo Director 01/01//2010 - 31/12/2010 2010 fin. statements appr. 89 (7)            
Gori Francesco General Manager 01/01/2010 - 31/12/2010       7 (1) 901 (1) 1,350 (1)
Laghi Enrico Chairman, Board of Auditors 01/01//2010 - 31/12/2010 2010 fin. statements appr. 62              
Gualtieri Paolo Statutory auditor 01/01//2010 - 31/12/2010 2010 fin. statements appr. 42              
Sfameni Paolo
Domenico
Statutory auditor 01/01//2010 - 31/12/2010 2010 fin. statements appr. 57 (8)            
   
Other executives with strategic responsibility         11   947 1,700

1) From Pirelli Tyre
2) In office since 29 July 2010
3) Of which Euro 24 thousand as member of the Internal Control, Risks and Corporate Governance Committee
4) Of which Euro 20 thousand as member of the Remuneration Committee
5) Emoluments deposited again in the company he/she belongs to
6) Of which Euro 18 thousand as member of the Remuneration Committee
7) Member of the Internal Control, Risks and Corporate Governance Committee (Euro 24 thousand) and of the Supervisory Body (Euro 15 thousand)
8) Of which Euro 15 thousand as member of the Supervisory Body
9) The items shown in this column contain Euro 50 thousand (except for Deputy Chairman Malacalza, for whom the item contains Euro 21 thousand and for Puri Negri, for
whom it contains Euro 29 thousand) of compensation pertaining to the year 2010, to be received in 2011
10) The items shown in this column contain compensation pertaining to the year 2010, to be received in 2011
The Chairman, Deputy Chairman A. Pirelli, General Manager and the other executives with strategic responsibility are included in the LTI three-year incentive plan that according to the coinvestment mechanism, envisages disbursement of 50% of the incentive achieved for the years 2009 and 2010, while the remaining 50% accrued as a whole would be disbursed in 2012, increased by 100% in case three-year goals envisaged by the LTI 2009-2011 Plan are attained, otherwise reduced by 50% should said goals not be attained. Please refer to the text of the Corporate Governance Report, section “Remuneration of directors and remuneration policy” for more details on how the incentive plan works.