40. EARNINGS (LOSSES) PER SHARE

Basic earnings (losses) per share are given by the ratio between net income (loss) attributable to the owners of the parent (adjusted to take into account the minimum dividend allocated to savings shares) and the weighted average of the number of ordinary shares outstanding during the period, with the exclusion of treasury shares.

	2011	2010
(in thousands of euro)
Net income (loss) attributable to owners of the Parent from continuing operations	451,608	233,821
Net income (loss) attributable to savings shares reflecting 2% minimum dividend	(11,191)	(5,794)
Adjusted net income (loss) attributable to owners of the Parent from continuing operations	440,417	228,027
Weighted average of outstanding ordinary shares (in thousands)	475,389	475,389
Basic earnings (losses) per ordinary share from continuing operations (in euro per shares)	0,926	0,480
Net income (loss) attributable to owners of the Parent from discontinued operations	-	(212,069)
Net income (loss) attributable to savings shares reflecting 2% minimum dividen	-	5,255
Net income (loss) attributable to owners of the Parent from discontinued operations	-	(206,814)
Weighted average of outstanding ordinary shares (in thousands)	475,389	475,389
Basic earnings (losses) per share from discontinued operations (in euro per shares)	-	(0,435)

The diluted earnings (losses) per share at December 31, 2011 have not been calculated because, following expiration of the stock option plans, the prerequisites for such calculation are not met.

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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40. EARNINGS (LOSSES) PER SHARE

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DATAHIGHLIGHTS