13. OTHER FINANCIAL ASSETS

These amounted to euro 127,037 thousand, compared with euro 185,267 thousand at December 31, 2010.

The following changes took place during the year:

	12/31/2011	12/31/2010
(in thousands of euro)
Opening balance	185,267	221,351
Discontinued operations	-	(10,552)
Increases	1,825	23,516
Decreases	(9,273)	(1,478)
Impairment	(11,449)	(5,881)
(Gains) losses transferred to income statement for disposal or impairment losses, previously recognised in Equity	9,739	(8,656)
Fair value adjustment through Equity	(45,085)	(33,342)
Fair value adjustment through Income Statement	(3,917)	-
Reclassification	-	388
Other	(70)	(79)
Closing balance	127,037	185,267

The other financial assets include:

	12/31/2011	12/31/2010
(in thousands of euro)
Listed stock
Mediobanca S.p.A.	69,496	105,330
Prelios S.p.A. (già Pirelli & C. Real Estate S.p.A.)	47	251
Advanced Digital Broadcast Holdings SA	1,560	9,805
Altre società	156	386
	71,259	115,772
Unlisted stock
Alitalia S.p.A.	9,700	12,805
Fin. Priv. S.r.l. (az. Mediobanca)	9,728	14,399
Fondo Anastasia	12,343	13,250
Gruppo Banca Leonardo S.p.A.	-	5,155
Istituto Europeo di Oncologia S.r.l.	6,653	7,177
F.C. Internazionale Milano S.p.A.	6,017	6,017
Tlcom I LP	1,399	1,482
Equinox Two SCA	4,353	3,566
Other companies	5,585	5,644
	55,778	69,495
	127,037	185,267

The increases relate mainly to the capital increase related to the equity investment in F.C. Internazionale S.p.A. (euro 638 thousand) and in Equinox Two SCA (euro 787 thousand).

The decreases mainly refer to the equity investment in Gruppo Banca Leonardo S.p.A. for euro 5,155 thousand and in Advanced Digital Broadcast Holdings S.A. for euro 3,750 thousand.

The impairments refer principally to the equity investment in Alitalia S.p.A. (euro 10,300 thousand), F.C. Internazionale S.p.A. (euro 638 thousand) and Tiglio I S.r.l (euro 178 thousand).

The (gains) losses transferred to income statement refer to reclassification to the income statement of losses for euro 10,300 thousand related to Alitalia S.p.A. (see above) and profits of euro 421 thousand for the equity investment in Advanced Digital Broadcast Holdings S.A.

The fair value adjustments through equity, totalling a negative euro 45,085 thousand, mainly refers to Mediobanca S.p.A. (euro 35,834 thousand), Fin.Priv. S.r.l. (euro 4,671 thousand), Alitalia S.p.A. (euro 3,105 thousand) and Istituto Europeo di Oncologia S.r.l (euro 525 thousand).

The fair value adjustment through income statement refers to the negative value of the equity investment in Advanced Digital Broadcast Holdings S.A. recognised in the income statement, insofar as PIRELLI holds a put option on that equity investment, for which fair value hedge accounting was adopted. This loss was offset by the positive fair value measurement of this put option for euro 3,917 thousand (see note 28 “Derivative financial instruments” and note 35.3 “Losses from equity investments”), and thus with a net impact of zero.

The fair value of listed financial assets corresponds to their stock market price at December 31, 2011.

The fair value of unlisted financial assets and real estate investment funds was determined by making estimates on the basis of the best information available.

DATAHIGHLIGHTS

Historic trend

	2011	2010	2009 :	2008	2007
(in millions of euro)
GROUP INCOME STATEMENT
Net sales	5,655	4,848	4,067	4,660	6,076
Net sales (excluding DGAG - PRE) *				4,660	4,780
Gross operating profit	807	629	453	252	573
% of net sales	14.3%	13.0%	11.1%	5.4%	9.4%
Operating income	582	408	250	43	364
% of net sales - ROS	10.3%	8.4%	6.1%	0.9%	6.0%
Net income (loss) from continuing operations	313	228	77
Net income (loss) from discontinued operations	-	(224)	(100)
Prior period deferred tax assets - Italy	128	-	-
Total net income (loss)	441	4	(23)	(413)	324
Net income attributable to owners of Pirelli & C. S.p.A.	452	22	23	(348)	165
Total net earnings (losses) per share attributable to owners of Pirelli & C. S.p.A. (in euro)	0.926	0.045	0.047 °°	(0.065)	0.031

TYRE INCOME STATEMENT
Net sales	5,602	4,772	3,993	4,100	4,162
Gross operating profit	858	661	501	341	549
% of net sales	15.3%	13.9%	12.5%	8.3%	13.2%
Operating income	644	453	309	151	358
% of net sales - ROS	11.5%	9.5%	7.7%	3.7%	8.6%

GROUP BAlANCE SHEET
Non-current assets	3,558	3,164	3,596	3,665	3,815
Net working capital	399	303	427	600	551
% of net sales	7.1%	6.2%	10.5%	12.9%	11.5%
Total net working capital	155	117	222	418	298
% of net sales	2.7%	2.4%	5.5%	9.0%	6.2%
Net invested capital	3,713	3,281	3,818	4,083	4,113
Equity	2,192	2,028	2,495	2,374	3,804
Provisions	784	797	795	681	611
Net financial (liquidity)/debt position	737	456	529	1,028	(302)
Equity attributable to owners of Pirelli & C. S.p.A.	2,146	1,991	2,175	2,172	2,980
Equity per share attributable to owners of Pirelli & C. S.p.A. (in euro)	4.40	4.08	4.46°°	0.40	0.56

OTHER GROUP INFORMATION
Net operating cash flow	156	310	496	(147)	299
Depreciation and amortization	221	217	198	199	214
Capital expenditure - tangible	618	433	225	311	287
Capital expenditure/depreciation	2.80	2.00	1.14	1.56	1.34
Research and development expenses	170	150	137	156	173
% of net sales	3.0%	3.1%	3.4%	3.3%	3.6%
Headcount (at 12/31)	34,259	29,573	29,570	31,056	30,823
of whom temporary workers	2,649	2,426	2,245	2,913	3,642
Sales * per employee (in thousands of euro)	181	160	138	148	155
Operating income/Net invested capital ** - ROI	16.64%	11.49%	6.33%	1.05%	6.33%
Net income (loss)/Equity ** - ROE	20.89%	0.18%	(0.94%)	(13.37%)	7.63%
Net financial position/Equity - Gearing	0.34	0.22	0.21	0.43	n.s.

: Comparative income statement figures for 2009 related to Pirelli Real Estate and Pirelli Broadband Solutions business units, discontinued in 2010, have been reclassified to “net income (loss) from discontinued operations” °° 2009 per share figures have been reclassified on a comparable basis after the reverse stock split pursuant to the Shareholders’ Meeting resolution of July 15, 2010 * Excluding net sales for deconsolidation of DGAG real estate assets ** Average amounts

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13. OTHER FINANCIAL ASSETS

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DATAHIGHLIGHTS