Joint Venture

-In 2009, the Company and Russian Technologies State Corporation will establish a 50/50 joint venture for the production of tires and steel cord tire reinforcements in Russia. The two parties previously announced an agreement to build a new hub in Togliatti in the region of Samara in the second half of 2010. Under the latest agreement, it's also confirmed that an existing factory in Russia will be acquired in 2010. The new plant will be built in two phases. In the first phase a factory for radial tires will be built. The second phase foresees a factory to manufacture steelcord. In the five-year period, the new factories together with the expected acquisition will guarantee manufacturing capacity of more than 4 million pieces. Total commitment by the JV will amount to about 300 million euros. Russian Technologies is a state-owned company set up by the Government of the Russian Federation. (From a press release on Dec. 3, 2009)

R&D Expenditure

(in million euros)

	FY2009	FY2008	FY2007
Overall	133	145	148
% of Sales	3.3%	3.5%	3.6%

Technical Alliance

-The Company, Brembo and Magneti Marelli announced the cooperation for the development of applications in particular in the field of safety systems for automobiles. The Cyber Tyre, the intelligent tyre developed by Pirelli, will be integrated with Magneti Marelli electronic control systems and with Brembo's braking systems. (From a press release on Jan. 27, 2009)

Capital Expenditure

(in million euros)

	FY2009	FY2008	FY2007
Tire Sector	217	285	262

Cars
-Plans to increase manufacturing capacity in the high-range segment were carried forth in Europe and the investments begun in Romania, China and Brazil were consolidated. Actions continued on technological and qualitative product improvements, and the prototype line of the innovative "Next Mirs" process was launched for the production of high range tyres. Work also began on construction of the new Technological Hub at Settimo Torisese.

All Steel
-Manufacturing growth was consolidated in Turkey and Egypt and projects began for further growth in Brazil and Egypt. In the field of innovation processes, the installation continues of machinery for the manufacture of products with SATT technology (Spiral Advanced Technology for Trucks), deriving from MIRS technology.

Other Investments
-In September 2009, The Company signed a "Memorandum of Understanding" with Hixih Rubber Industry Group of China to build a plant for manufacturing diesel particulate filters in Yanzhou, Shandong Province. Construction work is expected to begin in the first quarter of 2010. The investment could reach 50 million euros in three years, with production capacity of around 100,000 filters per year. The facility will be located in the same area where the manufacturing sites developed by the two partners for production of truck and car tires were built. (From a press release on September 15, 2009)