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26. Other payables Other payables can be analyzed as follows: (in thousands of euros) 12/31/2007 12/31/2006 Total Non-current Current Total Non-current Current Associates and joint ventures 7,344 - 7,344 21,466 - 21,466 Trade and other accrued liabilities and deferred income 72,253 3,712 68,541 130,776 4,869 125,907 Tax payables 53,986 8,167 45,819 98,433 10,288 88,145 Payables to employees 168,244 277 167,967 131,031 77 130,954 Payables to social security agencies 38,256 3,052 35,204 48,308 2,934 45,374 Payables for stock options 10 - 10 494 - 494 Dividends payable 920 - 920 827,252 - 827,252 Advances from customers 2,284 10 2,274 4,979 - 4,979 Other payables 187,576 33,254 154,322 155,234 5,132 150,102 530,873 48,472 482,401 1,417,973 23,300 1,394,673 Dividends payable declared last year referred to the reimbursement of share capital to the shareholders of <strong>Pirelli</strong> & C. S.p.A. for Euros 826,254 thousand, approved by the shareholders’ meeting held on December 12, 2007. Other non-current payables mainly include the payables for the acquisition of stakes in Polish companies (Euros 11,210 thousand) and payables for the non-performing loan portfolio (Euros 17,661 thousand), both relating to the Real Estate sector. Other current payables comprise: —— Payables for claims under warranty arising from defects on the products marketed for Euros 26,597 thousand: —— payables for the purchase of property, plant and equipment for Euros 27,649 thousand, relating to the Tyre sector; —— payables for down-payments and advances relating to the Real Estate sector for Euros 1,763 thousand; —— payables to sales representatives, agents, professionals and consultants for Euros 9,429 thousand; —— payables of the Parent, <strong>Pirelli</strong> & C. S.p.A., to Alitalia S.p.A. for the capital subscribed by not yet paid for Euros 8,871 thousand; —— advances disbursed by the European Union to the Tyre sector for research projects for Euros 1,678 thousand; —— payables for withholding taxes at source on income of the Tyre sector for Euros 3,405 thousand. The carrying amount of other current and non-current payables is regarded as approximating fair value. 27. Derivative financial instruments This item includes the measurement at fair value of derivatives outstanding at December 31, 2008. In particular, the portion of the fair value measurement included in current assets comprises: —— Euros 90,535 thousand (Euros 56,116 thousand at December 31, 2007) relating to the fair value measurement of forward currency purchases and sales in place at December 31, 2008. ANNUAL FINANCIAL REPORT 2008 389
EXTRAORDINARY SESSION CONSOLIDATED FINANCIAL STATEMENT SUSTAINABILITY REPORT DIRECTORS' REPORT PRELIMINARY INFORMATION These are derivative transactions hedging commercial and financial transactions of the Group; the hedge accounting option was not adopted. The fair value is determined by using the forward exchange rate at the balance sheet date; —— Euros 3,507 thousand (Euros 2,210 thousand at December 31, 2007) relating principally to the measurement of other derivatives at fair value. In particular, Euros 1,934 thousand refers to the fair value measurement of futures contracts purchased on natural rubber on which the Tyre sector uses hedge accounting in accordance with IAS 39. The above hedge put into place in the last quarter of 2008 by the Tyre sector aims to limit exposure to the economic effects of an increase in natural rubber prices and contain the cost of the future provisioning of natural rubber for a limited part of the total requirements for the first half of 2009. In order to avoid fluctuations in economic results due to the volatility of the relative fair value, hedge accounting was adopted under IAS 39. The amount recognized in equity at December 31, 2008 is a positive Euros 1,934 thousand. The portion of the fair value measurement included in current liabilities comprises: —— Euros 104,106 thousand (Euros 72,513 thousand at December 31, 2007) relating to the fair value measurement of forward currency purchases and sales in place at the closing date. These are derivative transactions hedging commercial and financial transactions of the Group; the hedge accounting option was not adopted. The fair value is determined by using the forward exchange rate at the balance sheet date; —— Euros 6,367 thousand (Euros 2,210 thousand in financial instruments recorded in assets at December 31, 2007) relating to the fair value measurement of interest rate derivatives, referring mainly to the Real Estate sector for Euros 264 thousand (a positive Euros 2,210 thousand at December 31, 2007) and the Tyre sector for Euros 4,992 thousand. As far as the Real Estate sector is concerned, the line item includes the measurement of the plain vanilla interest rate collar purchased in 2006 with a notional amount of Euros 120 million to hedge an increase in interest rates. The derivative qualified for hedge accounting under IAS 39. Hedge accounting is only applied to the intrinsic value while the change in the time value is recognized in the income statement. In 2008, the amount recognized in equity is a negative Euros 2,038 thousand (a positive Euros 875 thousand at December 31, 2007), whereas that recognized in the income statement is a negative Euros 432 thousand. Details relating to the derivative financial instruments in place at December 31, 2008 are as follows: Type of financial instrument Interest rate collar Interest rate collar Interest rate collar Counterpart SoGen Barclays Morgan Stanley Notional amount for the period December 31, 2008 to March 31, 2009 40,000,000 40,000,000 40,000,000 Premium paid 360,000 333,000 360,000 Date of contracts 1/27/2006 1/30/2006 1/31/2006 Date of expiration 8/3/2010 8/3/2010 8/3/2010 Interest rate cap 3.75% 3.75% 3.75% Interest rate floor 2.20% 2.20% 2.20% Fair value at December 31, 2008 (88,150) (88,150) (88,150) As far as the Tyre sector is concerned, the line item includes the measurement of plain vanilla interest rate swaps purchased during the year to hedge an increase in the interest rates on a notional amount of Euros 100 million. The derivative qualifies for hedge accounting under IAS 39. In 2008, the amount recognized in equity is a negative Euros 4,992 thousand. 390 PIRELLI & C. S.p.A. MILAN
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Pirelli & C. S.p.A. — Milan Annua
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EXTRAORDINARY SESSION CONSOLIDATED
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Directors' report
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Directors' report on operations Sha
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Significant events in 2008 With reg
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Turin and the Pirelli Group sealed
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Yanzhou, China - Mixing department
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The Group ALTERNATIVE PERFORMANCE M
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GROUP CONSOLIDATION The highlights
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A percentage breakdown of the chang
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The change can be summarized as fol
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CAPITAL EXPENDITURES Capital expend
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Thirty years after, the Pirelli Cin
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On the other hand, the Sottozero Se
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Information systems The Information
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Pirelli Real Estate The information
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Risks and uncertainties The current
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This is accomplished by negotiating
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sustainability. A gradual introduct
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ued focus on higher-end product seg
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Instead, Pirelli Tyre has kept its
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ticipating in the championship. In
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and Turkey and the start-up of proj
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Pirelli & C. Real Estate The consol
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Assets under management have a mark
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Balance sheet and financial review
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NON-PERFORMING LOANS Collections on
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NET RESULT The net result is income
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nology) lines; 3) Innovation with t
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start-up of the factory in Romania
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Pirelli & C. S.p.A. Summary of sele
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The reason for the reclassification
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—— details of income (expenses)
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Equity investments held by Director
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Compliance with Article 36 of Conso
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Appointment of the board of statuto
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Article 16 of the bylaws The Board
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ANNUAL FINANCIAL REPORT 2008 83
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Stock Exchange Regulations: indicat
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Savings shares do not have voting r
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e) Employee shareholdings: mechanis
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ers of convertible bonds, for a max
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The composition of the Board of Dir
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When the Board of Directors is due
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Remuneration of the directors veste
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more than 10 million euros (in the
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d) if they receive, or have receive
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8. APPOINTMENTS COMMITTEE The Board
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11. The Committee for Internal Cont
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The internal control officer also r
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12.3. Organisational model ex Legis
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and the set of businesses included
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after the expiry of the date for th
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members of the Board of Statutory A
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ensure orderly discussion and votin
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and cadres employed by the Company,
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priate measures to ensure the order
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with the title of Managing Director
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ing to the regulations issued by Co
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Telecom Italia S.p.A. Telecom Itali
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6. Bodies governing the agreement,
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ANNEX E - General Criteria for the
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— the general results of operatio
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9. Direction and coordination activ
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ANNEX G - Rules of conduct for effe
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mation “in the making,” so as t
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6.3 - Inside information must also
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8.6 — The definition of “roles
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— with the markets closed or in t
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ANNEX A Notices to be sent to perso
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ANNEX B Pirelli & C. S.p.A. Group R
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—— coordinates the Registering
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We further undertake to inform prel
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ANNEX I - Insider dealing - Black-o
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Article 6 —— In the conduct of
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Pirelli and sustainable development
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In October 2004, in a letter addres
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Pirelli has adopted the traditional
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Several tools are simultaneously us
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In 2008 Pirelli commissioned indepe
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Scs Consulting Accountability Ratin
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Collaboration agreements with unive
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Pirelli one of the 100 most respect
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Customer satisfaction is the most i
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from an unprecedented crisis the po
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Social dimension Internal Community
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WORKFORCE GEOGRAPHICAL BREAKDOWN 20
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The trend in the Group’s workforc
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International mobility, which is pe
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Pirelli’s participation in the Wo
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Training and Development Performanc
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Group DEVELOPMENT CENTERS Company/C
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For the years 2006-2007 the graph i
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the Sales&Marketing departments of
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language) to explain the meaning of
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(Have you ever been to a superbike
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Details on certain important initia
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A photo exhibit on the 100th annive
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The campaign began with the deliver
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As part of the restructuring proces
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Group affiliates still provide heal
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—— effective involvement of res
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To better understand these data, it
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Pirelli Real Estate S.p.A. Over the
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Awareness raising and training Pire
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This plan calls for: —— a self-
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larly on the work of the standing c
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focusing on reinforcing young peopl
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Romania In its first year of activi
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In the medical field, Pirelli provi
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A decade ago Pirelli signed an agre
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In April 2008 Pirelli and the Milan
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This is the spirit behind the proje
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THE GLOBAL COMPACT PRINCIPLES AND G
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Page 339 and 340: EXTRAORDINARY SESSION CONSOLIDATED
Page 389: EXTRAORDINARY SESSION CONSOLIDATED
Page 409 and 410: Companies consolidated line-by-line
Page 425: Designed by Leftloft Printed by Art
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14MB - Pirelli

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