Meccanica Holdings USA, Inc. FINMECCANICA — Società Per

Meccanica Holdings USA, Inc. (incorporated in the State of Delaware) as Issuer FINMECCANICA — Società per azioni (incorporated in the Republic of Italy as a joint stock company) as Guarantor $500,000,000 6.25% Guaranteed Notes due 2040

The notes due 2040 will bear interest at a rate of 6.25% per year (the “Notes”). The Issuer will pay interest on the Notes on January 15 and July 15 of each year. The first such payment will be made on January 15, 2010. The Notes will be issued in fully registered form and only in denominations of $100,000 and in integral multiples of $1,000 in excess thereof. Meccanica Holdings USA, Inc. (“Meccanica Holdings” or the “Issuer”) may redeem the Notes in whole or in part on the terms set forth in this Listing Prospectus under “Description of the Notes”. The Issuer may also redeem all of the Notes at any time at 100% of the principal amount in the event of certain tax law changes requiring the payment of additional amounts as described in this Listing Prospectus. The Issuer will pay accrued and unpaid interest, if any, and any other amounts payable to the date of redemption. The Notes will not be subject to any sinking fund requirement. See “Description of the Notes”. The Notes are unsecured and unsubordinated obligations of Meccanica Holdings, and rank equally with each other and with all present and future unsecured and unsubordinated debt obligations of Meccanica Holdings. The Notes are unconditionally and irrevocably guaranteed by Finmeccanica — Società per azioni (the “Guarantor”). See “Description of the Notes”. Application has been made for the Notes to be admitted to trading on the regulated market of the Luxembourg Stock Exchange and to listing on the official list of the Luxembourg Stock Exchange. The regulated market of the Luxembourg Stock Exchange is a “regulated market” for the purposes of the Markets in Financial Instruments Directive 2004/39/EC. Investing in the Notes involves certain risks. See “Risk Factors” beginning on page 14 of this Listing Prospectus for a discussion of certain risks you should consider before buying the Notes.

Offering Price of the Notes: 99.836%, plus accrued interest, if any, from October 27, 2009

The Notes and the Guarantees have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and have been offered and sold in the United States only to qualified institutional buyers (“QIBs”) in reliance on Rule 144A (“Rule 144A”) under the Securities Act and to certain non-U.S. persons outside the United States in offshore transactions in reliance on Regulation S (“Regulation S”) under the Securities Act. Prospective purchasers in the United States are hereby notified that the seller of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. The Notes are not transferable except in accordance with the restrictions described under “Transfer Restrictions”.

The Notes were delivered to purchasers in book-entry form only through the facilities of the Depository Trust Company (“DTC”) and its direct and indirect participants (including Euroclear Bank S.A./ N.V. and Clearstream Banking, société anonyme) on or about October 27, 2009.

Joint Bookrunners BofA Merrill Lynch Citi Goldman Sachs International J.P. Morgan Morgan Stanley Nomura Securities Santander UBS Investment Bank

Listing Prospectus dated December 23, 2009. This Listing Prospectus has been prepared by Finmeccanica solely for use in connection with the offering of the Notes described in this Listing Prospectus. This Listing Prospectus is personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire the Notes. You are authorized to use this Listing Prospectus solely for the purpose of considering the purchase of the Notes. Distribution of this Listing Prospectus to any person other than the prospective investor and any person retained to advise such prospective investor with respect to such purchase is unauthorized, and any disclosure of any of its contents, without the Issuer’s prior written consent, is prohibited. Each prospective investor, by accepting delivery of this Listing Prospectus, agrees to the foregoing. In making an investment decision, prospective investors must rely on their own examination of Finmeccanica and the terms of the offering, including the merits and risks involved. Prospective investors should not construe anything in this Listing Prospectus as legal, business or tax advice. Each prospective investor should consult its own advisors as needed to make its investment decision. Finmeccanica has furnished the information in this Listing Prospectus. You acknowledge and agree that the initial purchasers make no representation or warranty, express or implied, as to the accuracy or completeness of such information, and nothing contained in this Listing Prospectus is, or shall be relied upon as, a promise or representation by the initial purchasers. Copies of documents referred to herein will be made available to prospective investors upon request to the Issuer. This Listing Prospectus constitutes a Prospectus for purposes of article 5(3) of the Prospectus Directive (Directive 2003/71/EC) (the “Prospectus Directive”). Each of the Issuer and the Guarantor accepts responsibility for the information contained in this Listing Prospectus. Each of the Issuer and the Guarantor declare that, having taken all reasonable care to ensure that such is the case, the information contained in this document is in accordance with the facts and contains no omission likely to affect its import. Where information contained in this Listing Prospectus has been sourced from a third party, such information has been accurately reproduced and so far as each of the Issuer and the Guarantor is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.

The distribution of this Listing Prospectus and the offering and sale of the Notes in certain jurisdictions may be restricted by law. The Issuer and the initial purchasers require persons into whose possession this Listing Prospectus comes to inform themselves about and to observe any such restrictions. This Listing Prospectus does not constitute an offer of, or an invitation to purchase, any of the Notes in any jurisdiction in which such offer or sale would be unlawful.

NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED STATES Neither the Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this Listing Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The Notes are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act and any applicable state securities laws or pursuant to registration or exemption therefrom. As a prospective purchaser, you should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time. Please refer to the sections in this Listing Prospectus entitled “Transfer Restrictions” and “Plan of Distribution”.

i NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (“RSA”) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECU- RITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE IMPLIES THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT ANY EXEMP- TION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICA- TIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

ii TABLE OF CONTENTS

Forward-Looking Statements ...... 1 Certain Defined Terms ...... 2 Presentation of Financial Information and Incorporation by Reference ...... 3 Presentation of Market Information ...... 5 Exchange Rates ...... 6 Overview ...... 7 Overview of Financial Information ...... 12 Risk Factors ...... 14 Use of Proceeds ...... 25 Capitalization ...... 26 Selected Financial Data ...... 27 Supplemental Selected Financial Data as of and for the Period Ended September 30, 2009 ...... 33 Financial Information and Non-GAAP Measures ...... 36 Management’s Discussion and Analysis of Financial Condition and Results of Operations ...... 46 Business Description ...... 99 DRS Technologies, Inc...... 144 Management ...... 147 Principal Shareholders ...... 158 Related Party Transactions ...... 161 Description of the Notes ...... 167 Transfer Restrictions...... 181 Service of Process and Enforcement of Civil Liabilities ...... 183 Tax Considerations ...... 184 Plan of Distribution ...... 194 Listing and General Information ...... 197 Independent Accountants ...... 198 Validity of Debt Securities and Guarantees ...... 199 Glossary of Terms and Definitions ...... 200 Definitions ...... 202 Unaudited Pro Forma Consolidated Financial Information ...... P-1 Index to the Financial Statements and Financial Information ...... F-1 Index to the Financial Statements and Financial Information of Meccanica Holdings USA, Inc...... M-1

iii FORWARD-LOOKING STATEMENTS This Listing Prospectus contains forward-looking statements. These forward-looking statements include, but are not limited to, all statements other than statements of historical fact including, without limitation, those with respect to the financial condition, results of operations and businesses of Finmeccanica and certain of the plans, objectives, assumptions, projections, expectations, intentions, future developments in the markets in which it participates or is seeking to participate, or beliefs of Finmeccanica with respect to these items. These statements may generally, but not always, be identified by the use of words such as “will”, “expects”, “is expected to”, “should”, “may”, “objective”, “is likely to”, “intends”, “believes”, “plans”, “we see”, or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include but are not limited to: • Finmeccanica’s ability to integrate acquisitions successfully, including the acquisition of DRS Technologies, Inc. (“DRS”); • Finmeccanica’s ability to identify acquisition targets and evaluate potential benefits and potential liabilities; • Finmeccanica’s performance, and ability to estimate costs, under long-term contracts; • Finmeccanica’s ability to raise financings and the terms of those financings; • the continuity and severity of the current global economic downturn; • the level of governmental spending in the industries in which Finmeccanica operates; • the availability of governmental funding for Finmeccanica’s research and development activities; • exchange rates and interest rates movements; • the outcome of Finmeccanica’s legal proceedings; • write downs on intangible assets and liabilities arising from pension plans; • contractual disputes and environmental liabilities; • Finmeccanica’s ability to produce and market successful new products; and • changes in competition. Finmeccanica encourages prospective investors to read the sections of this Listing Prospectus entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a more complete discussion of the factors that could affect Finmeccanica’s future performance and the markets in which it operates. In light of these risks, uncertainties and assumptions, the forward-looking events described in this Listing Prospectus may not occur. Finmeccanica undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information or future events or developments.

1 CERTAIN DEFINED TERMS In this Listing Prospectus: • References to “Finmeccanica”, the “Group”, the “Finmeccanica Group”, “we”, “our”, “ours” and “us” are to Finmeccanica — Società per azioni together with its subsidiaries, unless the context requires otherwise. • References to the “Company” and the “Guarantor” are to Finmeccanica — Società per azioni. • References to the “Issuer” and “Meccanica Holdings” are to Meccanica Holdings USA, Inc. • References to the “Trustee” are to The Bank of New York Mellon. • References to “Euro”, “A” or “euros” are to the currency of the Member States of the European Union participating in the third stage of the Economic and Monetary Union. • References to “IFRS” are to International Financial Reporting Standards as adopted by the European Union. • References to “Sterling” or “GBP” are to the currency of the United Kingdom. • References to “U.S. GAAP” are to U.S. Generally Accepted Accounting Principles. • References to “USD” or “U.S. dollars” are to the currency of the United States.

2 PRESENTATION OF FINANCIAL INFORMATION AND INCORPORATION BY REFERENCE

Disclosure of Financial Information The financial information as of and for the years ended December 31, 2008, 2007 and 2006 included in this Listing Prospectus has been derived from the Group’s audited consolidated financial statements for the same periods (hereinafter the “Annual Consolidated Financial Statements”) prepared in accordance with the International Financial Reporting Standards issued by the International Accounting Standards Board, as adopted by the European Commission for use in the European Union (“IFRS”). The Annual Consolidated Financial Statements were prepared mainly for the purposes of the offering of notes to institutional investors. The Annual Consolidated Financial Statements have been prepared in order to present homogenous financial information for the years ended December 31, 2008, 2007 and 2006. As described in the accounting principles note to the Annual Consolidated Financial Statements, during 2007 the Group changed its accounting policy with regards to the actuarial gains and losses relating to defined benefit plans. Until the end of 2006, the Group adopted the corridor approach whereby changes in the underlying assumptions of the actuarial valuation are recognized in the income statement, amortized according to the average remaining working life of the employee. Starting from the financial statements as of and for the year ended December 31, 2007, the Group has adopted the equity approach set out in IAS 19. Under this approach, any actuarial gains or losses are fully recognized in a specific equity reserve (“reserve for actuarial gains and losses”). Interim financial information as of June 30, 2009 and for the six months ended June 30, 2009 and 2008 included in this Listing Prospectus has been derived from the Group’s unaudited condensed consolidated financial information as of June 30, 2009 and for the six months ended June 30, 2009 and 2008 prepared in accordance with IAS 34 (the “Unaudited Interim Condensed Consolidated Financial Information”). Interim results are not necessarily indicative of the results of operations that may be expected for any other period or for a full year. The financial information on a pro forma basis for the year ended December 31, 2008 has been derived from the Group’s unaudited pro forma consolidated income statement for the year ended December 31, 2008 (the “Unaudited Pro Forma Consolidated Financial Information”). The Unaudited Pro Forma Consol- idated Financial Information has been prepared solely in connection with the Notes being offered hereby. In particular the Unaudited Pro Forma Consolidated Financial Information has been prepared to reflect the effect of the acquisition of DRS and the subsequent financing transactions. The Unaudited Pro Forma Consolidated Financial Information presented in this Listing Prospectus is based on available information and certain assumptions that the Group believes are reasonable. The Unaudited Pro Forma Consolidated Financial Information is presented for illustrative purposes only and does not purport to represent what the actual results of operations would have been if the events for which the pro forma adjustments were made had occurred on the dates assumed, nor does it purport to project the Group’s results of operations for any future period or the Group’s financial condition at any future date. The Group’s future operating results may differ materially from the pro forma amounts set out in this Listing Prospectus due to various factors, including changes in operating results. The rules and regulations related to the preparation of pro forma financial information in the United States or other jurisdictions may vary significantly from the requirements applicable in Italy. The pro forma financial information included in this Listing Prospectus has not been prepared in accordance with the requirements of Regulation S-X of the U.S. Securities and Exchange Commission or generally accepted practice in the United States of America. The Annual Consolidated Financial Statements, the Unaudited Interim Condensed Consolidated Financial Information and the Unaudited Pro Forma Consolidated Financial Information are contained elsewhere in this Listing Prospectus and should be read in conjunction with the relevant notes thereto. Except where indicated, references to IFRS in this Listing Prospectus are solely to IFRS as adopted by the European Commission. In making an investment decision, investors must rely upon examination of the Group and the financial statements and information included elsewhere in this Listing Prospectus and should consult their own professional advisors for an understanding of: (i) the differences between U.S. GAAP and IFRS and how those differences might affect the financial information included in this Listing Prospectus; and (ii) the impact that future additions to, or amendments of, IFRS principles may have on the Group’s results of operations and/or financial condition and on the comparability of prior periods.

3 Non-GAAP Measures This Listing Prospectus contains certain financial indicators and Non-GAAP measures, including adjusted EBITA, return on sales, free operating cash flow, return on investments, return on equity, net financial indebtedness, working capital, net invested capital and cash used in ordinary investing activities, which are not recognized as measures of financial performance or liquidity under IFRS. In addition, this Listing Prospectus includes adjusted EBITA and return on sales analyzed by business segment based on the segment reporting in the Group’s financial statements. Investors should not place any undue reliance on these Non-GAAP measures and financial indicators and should not consider these measures as: (i) an alternative to operating income or net income as determined in accordance with generally accepted accounting principles, or as measures of operating performance; (ii) an alternative to cash flows from operating, investing or financing activities (as determined in accordance with generally accepted accounting principles), or as a measure of the Group’s ability to meet cash needs; or (iii) an alternative to any other measures of performance under generally accepted accounting principles. These measures are not indicative of the Group’s historical operating results, nor are they meant to be predictive of future results. These measures are used by Finmeccanica’s management to monitor the underlying performance of the business and the operations. Since all companies do not calculate these measures in an identical manner, the Group’s presentation may not be consistent with similar measures used by other companies. Therefore, investors should not place undue reliance on this data. A more detailed explanation of each of the financial indicators and Non-GAAP measures, together with relevant reconciliations, is provided in the section “Financial Information and Non-GAAP Measures”. Certain numerical figures set out in this Listing Prospectus, including financial data presented in millions or thousands and percentages describing market shares, have been subject to rounding adjustments and, as a result, the totals of the data in this Listing Prospectus may vary slightly from the actual arithmetic totals of such information.

Incorporation by Reference Information included in the Interim Financial Report (the “Nine-Month Interim Report”) at September 30, 2009 of Finmeccanica, which was published on November 5, 2009 is incorporated by reference into this Listing Prospectus. The following information appears on the pages of the Nine-Month Interim Report as set out below:

Report on Operations at September 30, 2009 Pages 5-68 Analysis of the Financial Statements at September 30, 2009 Pages 72-131 Any information not listed in the cross-reference list above but included in the document incorporated by reference is given for information purposes only. In addition, any document incorporated by reference will be published on the website of the Luxembourg Stock Exchange (http://www.bourse.lu).

4 PRESENTATION OF MARKET INFORMATION This Listing Prospectus contains statements of Finmeccanica’s estimates related to, among other things, the following: • the size of the sectors and markets in which Finmeccanica operates as a whole and by geographic area; • growth and trends rates in the sectors and markets in which Finmeccanica operates as a whole and by geographic area; and • Finmeccanica’s relative competitive position in the sectors, markets and geographic areas in which it operates and the position of its competitors in those same sectors, markets and geographic areas. Whether or not this is stated where such information is presented, this information and these estimates are based on third party studies and surveys as well as Finmeccanica’s experience, market knowledge, accumulated data and own investigation of market conditions. While Finmeccanica believes these estimates to be reasonable, Finmeccanica cannot assure you that this data or any of the assumptions underlying these estimates are accurate or correct, and none of the internal surveys or information on which Finmeccanica has relied has been verified by any independent sources. Accordingly, undue reliance should not be placed on such information. In addition, information regarding the sectors and markets in which Finmeccanica operates is normally not available for certain periods and, accordingly, such information may not be current as of the date of this Listing Prospectus.

5 EXCHANGE RATES The following table sets forth, for the periods indicated, high, low, average and period end noon buying rates in the City of New York for cable transfers between the Euro and U.S. dollar, as certified for customs purposes by the Federal Reserve Bank of New York, expressed in Euro per U.S. dollar 1.00. The rates may differ from the actual rates used in the preparation of the consolidated financial statements and other financial information appearing in this Listing Prospectus. Finmeccanica makes no representation that the Euro or U.S. dollar amounts referred to in this Listing Prospectus have been, could have been or could, in the future, be converted to euros or U.S. dollars, as the case may be, at any particular rate, if at all. On December 11, 2009, the noon buying rate in the City of New York for cable transfers between euros and U.S. dollars as certified for customs purposes by the Federal Reserve Bank of New York was Euro 0.6849 to U.S. dollar 1.00. Euros per USD 1.00 High Low Average Period End Year 2004 ...... 0.8502 0.7320 0.8046(1) 0.7378 2005 ...... 0.8589 0.7364 0.8049(1) 0.8440 2006 ...... 0.8466 0.7481 0.7965(1) 0.7577 2007 ...... 0.7771 0.6681 0.7305(1) 0.6855 2008 ...... 0.8035 0.6246 0.6805(1) 0.7184 Month January 2009 ...... 0.7810 0.7290 0.7571(2) 0.7810 February 2009 ...... 0.7970 0.7814 0.7571(2) 0.7898 March 2009 ...... 0.7969 0.7283 0.7663(2) 0.7541 April 2009...... 0.7705 0.7430 0.7574(2) 0.7550 May 2009 ...... 0.7537 0.7079 0.7328(2) 0.7079 June 2009 ...... 0.7255 0.7008 0.7136(2) 0.7133 July 2009 ...... 0.7219 0.7003 0.7092(2) 0.7003 August 2009 ...... 0.7105 0.6937 0.7010(2) 0.6937 September 2009...... 0.7025 0.6759 0.6861(2) 0.6835 October 2009...... 0.6881 0.6654 0.6747(2) 0.6777 November 2009 ...... 0.6822 0.6629 0.6708(2) 0.6670 December 2009 through December 11 ...... 0.6849 0.6623 0.6730(2) 0.6849

(1) The average of the noon buying rates on the last business day of each month during the relevant period. (2) The average of the daily noon buying rates for each business day during the relevant period.

6 OVERVIEW

This overview highlights certain aspects of the Issuer’s and Guarantor’s business and the Notes, but potential investors should read this entire Listing Prospectus, including the financial statements and accompanying notes, before making an investment decision. This overview should be read as an introduction to this Listing Prospectus. Any decision to invest in the Notes should be based on the Listing Prospectus as a whole by the investor. Potential investors should also carefully consider the information set forth in this Listing Prospectus under the heading “Risk Factors”. Unless the context otherwise requires, the terms “Company” and “Finmeccanica” refer to Finmeccanica — Società per azioni and its subsidiaries. Under the relevant provisions of the Prospectus Directive, no civil liability will attach to the responsible persons in any such Member State solely on the basis of this overview, including any translation thereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of this Listing Prospectus. Where a claim relating to the information contained in this Listing Prospectus is brought before a court in a Member State of the EEA, the plaintiff may, under the national legislation of the Member State where the claim is brought, be required to bear the costs of translating this Listing Prospectus before the legal proceedings are initiated.

Meccanica Holdings

Meccanica Holdings is a wholly-owned subsidiary of Finmeccanica — Società per azioni and holds the common stock of DRS. The registered office of Meccanica Holdings is 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, U.S.A, and its telephone number is +1 202 292 2625. Meccanica Holdings’ purpose is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law. All of the common stock of Meccanica Holdings is owned by Finmeccanica — Società per azioni. Following completion of the acquisition of DRS, Meccanica Holdings holds the common stock of DRS.

In the future, Meccanica Holdings may provide guarantees for all or part of the Finmeccanica Group’s indebtedness.

Finmeccanica

Overview

Finmeccanica, together with its subsidiaries, is one of the leading European aerospace and defense companies in terms of revenues and a leading high technology company operating in the design and manufacture of helicopters, defense electronics and security, civil and military aircraft, aerostructures, satellites, space infrastructures, land and naval armaments, underwater defense systems and missiles. Finmeccanica participates in numerous international programs in the sector through well-established alliances with European and United States partners. The Finmeccanica Group also has significant assets and skills in the energy and transportation sectors.

Finmeccanica is listed on the Italian Mercato Telematico Azionario and operates in Italy and abroad through subsidiaries and joint ventures. In particular, Finmeccanica has a large industrial base in Italy and in the United Kingdom, both considered the Group’s domestic markets, as well as production facilities elsewhere in Europe and in the United States. As of December 31, 2008, Finmeccanica had a total workforce of approximately 73,400 people, of which 43,300 were in Italy and 30,100 were abroad. As of June 30, 2009, Finmeccanica had a total workforce of approximately 73,517 people, of which 43,370 were in Italy and 30,197 were abroad.

The registered office of Finmeccanica is Piazza Monte Grappa, 4, 00195 Rome, Italy, and its telephone number is +39 06324731.

In the year ended December 31, 2008, Finmeccanica’s consolidated revenues and net profit totaled Euro 15,037 million and Euro 621 million, respectively, while the Group’s adjusted EBITA (see “Financial Information and Non-GAAP Measures” for an explanation of adjusted EBITA and a reconciliation to net profit) was equal to Euro 1,305 million. For the first six months of 2009, Finmeccanica’s consolidated revenues and net profit totaled Euro 8,523 million and Euro 242 million, respectively, while the Group’s adjusted EBITA (see “Financial Information and Non-GAAP Measures” for an explanation of adjusted EBITA and a reconciliation to net profit) was Euro 605 million. As of June 30, 2009 and December 31, 2008, Finmeccanica had an order backlog amounting to Euro 42,980 million and Euro 42,937 million respectively.

7 As of the date of this Listing Prospectus, 30.2% of Finmeccanica’s share capital is owned by the Italian Ministry of Economy and Finance (“MEF”) and the remaining approximately 69.8% is publicly held.

Finmeccanica’s operations are organized in the following segments: Helicopters, Defense Electronics and Security, Aeronautics, Space, Defense Systems, Energy, Transportation and Other Activities.

Strategy

Finmeccanica is pursuing a growth strategy aimed at continuously consolidating its competitive position and creating value for its shareholders. Finmeccanica intends to maintain a leading position internationally by exploiting its potential in those sectors where it holds a competitive edge in terms of technological excellence, innovation capabilities and product offering through the following strategic steps:

• growing in its domestic markets (United States, United Kingdom and Italy) and strengthening its global positioning in the Aerospace and Defense sector through the expansion of the Group’s international presence;

• optimizing its product portfolio and offering integrated solutions to customers;

• enhancing industrial competitiveness and profitability; and

• maximizing the value of its subsidiaries operating in the Energy and Transportation segments.

The Offering Please refer to “Description of the Notes” on page 167 of this Listing Prospectus for more information about the Notes.

Issuer ...... Meccanica Holdings USA, Inc.

Guarantor ...... Finmeccanica — Società per azioni Notes offered ...... $500,000,000 in principal amount of 6.25% Notes due (the “Notes”).

Maturity Date ...... TheNotes will mature on January 15, 2040

Issue price...... 99.836% of the face amount of the Notes, plus accrued interest from October 27, 2009 if any.

Ranking ...... TheNotes and the Guarantees are unsecured and unsubordinated obligations of Meccanica Holdings and Finmeccanica, respectively, and will rank at least equally with all other unsecured and unsubordinated obligations of Meccanica Holdings and Finmeccanica, respectively.

Interest ...... Interest on the Notes will accrue from October 27, 2009.

Interest payment dates ...... January 15 and July 15, commencing January 15, 2010. Regular record dates for interest...... January 1 and July 1 of each year.

Payment of additional amounts ...... Subject to certain exceptions and limitations, the Issuer will pay such additional amounts under the Notes as are necessary in order that the net payment by the Issuer of the principal and interest on the Notes, after deduction for any present or future tax, assessment or governmental charge imposed by withholding with respect to payment, will not be less than the amount provided by the Notes to be then due and payable. See “Description of the Notes — Payment of Additional Amounts”.

Optional redemption ...... TheIssuer has the right to redeem the Notes, in whole or in part, at any time at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes and (ii) the sum of the present

8 values of the remaining scheduled payments of principal and interest on the Notes (exclusive of interest to the date of redemption) discounted to the redemption date on a semi-annual basis at the treasury rate plus 35 basis points for the Notes, plus in each case accrued and unpaid interest to the date of redemption. See “Description of the Notes — Optional Redemption”.

Redemption for Tax Reasons ...... Undercertaincircumstances,theNotesmayberedeemedatthe option of the Issuer, in whole but not in part, at a redemption price equal to 100% of the principal amount of the Notes, together with interest thereon to the date fixed for redemption, if the Issuer is required to pay certain additional amounts with respect to the Notes. See “Description of the Notes — Redemption for Tax Reasons”. Negative Pledge and Events of Default. . The terms and conditions of the Notes provide for certain restrictions, including a limited negative pledge and restrictions for certain events of default. There are no covenants restricting the Issuer’s or the Guarantor’s ability to make payments, incur indebtedness, dispose of assets, issue and sell capital stock, enter into transactions with affiliates or engage in business other than their present business. For further information, see “Description of the Notes — Negative Pledge” and “Description of the Notes — Events of Default”.

Substitution of Issuer ...... TheIssuer is permitted to transfer the obligations of the Issuer to the Guarantor or any subsidiary of the Guarantor so long as the obligations of any such subsidiary of the Guarantor are guaranteed by the Guarantor. It is possible that the U.S. Internal Revenue Ser- vice may deem a transfer of the Issuer’s obligation under the debt securities to cause an exchange for U.S. federal income tax purposes of debt securities for new securities by the holders of the debt securities, which could result in the recognition of taxable gain or loss for U.S. federal income tax purposes and possible other adverse tax consequences. See “Description of the Notes — Merg- ers and Similar Events”. Book-entry issuance, settlement and clearance...... TheNotes are issued in fully registered form in denominations of $100,000 and in multiples of $1,000 in excess thereof. The Notes are represented by one or more global securities registered in the name of Cede & Co., as nominee of DTC. You will hold beneficial interests in the Notes through DTC and its direct and indirect participants (including Euroclear Bank S.A./N.V. and Clearstream Banking S.A.). For information on DTC’s book-entry system, see “Description of the Notes — Book-Entry, Delivery and Form”.

Further issuances ...... TheIssuer may, at its option, at any time and without the consent of the then existing Noteholders, issue additional Notes in one or more transactions subsequent to the date of this Listing Prospectus with terms (other than the issuance date, issue price and, possibly, the first interest payment date) identical to the Notes issued hereby. These additional Notes will be deemed to be part of the same series as the Notes offered hereby and will provide the holders of these additional Notes with the right to vote together with holders of the Notes issued hereby.

9 Yield...... The yield on the Notes is the return you will receive by holding the notes for a period of time.

For example, current yield for the Notes, which calculates the percentage return that annual interest payments might provide to you, is calculated as follows:

Annual Dollar Interest Paid Current Yield = Market Price

You may wish to calculate the adjusted current yield, yields to maturity, yield to call and other yields in making an investment decision with respect to the Notes.

Risk Factors ...... Youshould carefully consider all of the information in this Listing Prospectus. In particular, you should evaluate the specific factors under “Risk Factors” beginning on page 14 of this Listing Prospec- tus for risks involved with an investment in the Notes. Risk Factors relating to Finmeccanica’s business include risks related to Finmec- canica’s ongoing and future contracts and financial indebtedness, risks posed by the accounting for long-term contracts, risks posed by a reduction in government funding and various regulatory changes, and risks related to Finmeccanica’s mergers and acquisitions, divestitures, joint ventures and relationships with partners. Other Risk Factors including those relating to the industries in which Finmeccanica operates such as a reduction in government spending, the current global economic downturn, availability and price of components, competition and changes in the political and economic climate of the countries in which the Group operates may also affect the Group’s business, results of operations and financial condition.

Paying Agent; Transfer Agent and Registrar ...... TheBank of New York Mellon

Paying Agent (Luxembourg) ...... TheBank of New York Mellon — The Bank of New York (Luxem- bourg) S.A.

Transfer Restrictions ...... TheNotes have not been and will not be registered under the Secu- rities Act and are subject to certain restrictions on resale and transfer. See “Transfer Restrictions”.

Use of proceeds...... Meccanica Holdings estimates that the net proceeds from the offering were approximately $494,000,000 after payment of underwriting commissions and other fees and expenses related to the offering. Meccanica Holdings intends to use such proceeds to refinance parent company loans to DRS Technologies and the Group will apply the proceeds to meet 2010 third parties refinancing requirements, including the repayment of the Exchangeable Bonds, with an annual coupon of 0.375%, maturing in August 2010. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Bonds Issued.”

Trustee ...... TheBank of New York Mellon

CUSIP/ISIN/COMMON CODE ...... FortheNotes (Rule 144A): 583491AC9/US583491AC98/ 046084993

For the Notes (Regulation S): U58190AA4/USU58190AA41/ 046084616

10 Governing Law ...... TheNotes, Guarantees and the Indenture will be governed by the laws of the State of New York.

11 OVERVIEW OF FINANCIAL INFORMATION The following tables set forth an overview of the financial information of the Group as of and for the periods indicated. The overview of financial information as of and for the years ended December 31, 2008, 2007 and 2006 has been derived from the Annual Consolidated Financial Statements. Summary financial information as of June 30, 2009 and for the six months ended June 30, 2009 and 2008 has been derived from the Unaudited Interim Condensed Consolidated Financial Information. Interim results are not necessarily indicative of the results that may be expected for any other interim period nor are they indicative results for a full year. The overview of financial data in the tables below should be read together with the Annual Consolidated Financial Statements and the Unaudited Interim Condensed Consolidated Financial Information including the notes thereto, which are included elsewhere in this Listing Prospectus. See also “Presentation of Financial Information and Incorporation by Reference”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Capitalization”. Six months ended Year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro) (Unaudited) Revenue...... 8,523 6,433 15,037 13,429 12,472 Operating income ...... 559 375 1,210 1,084 908 Profit before taxes and discontinued operations ...... 403 385 988 847 1,273 Net profit ...... 242 297 621 521 1,021 Net profit attributable to equity holders of the Group...... 218 278 571 484 989 Net profit attributable to minority interest ...... 24 19 50 37 32

Balance Sheet Data As of As of June 30, December 31, 2009 2008 2007 2006 (In millions of Euro) (Unaudited) Total non-current assets ...... 13,628 13,113 9,845 9,919 Total current assets ...... 16,371 16,809 14,203 13,374 Non-current assets held for sale ...... — — — 110 Total assets ...... 29,999 29,922 24,048 23,403 Total shareholders’ equity ...... 6,319 6,130 5,432 5,320 Total non-current liabilities ...... 6,387 6,750 4,237 5,313 Total current liabilities ...... 17,293 17,042 14,379 12,687 Liabilities directly correlated with assets held for sale ...... — — — 83 Total liabilities ...... 23,680 23,792 18,616 18,083 Total liabilities and shareholders’ equity...... 29,999 29,922 24,048 23,403

12 Statement of Cash Flow Data Six months ended Year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro) (Unaudited) Net cash (used in)/generated from operating activities ...... (246) (790) 1,419 1,399 1,318 Net cash used in investing activities...... (634) (378) (3,179) (1,463) (262) Net cash (used in)/generated from financing activities ...... (701) (116) 2,463 (320) (112) Net (decrease)/increase in cash and cash equivalents ...... (1,581) (1,284) 703 (384) 944 Exchange rate gains/(losses) ...... 2 (9) (13) (12) (2) Cash and cash equivalents at the beginning of the period ..... 2,297 1,607 1,607 2,003 1,061 Cash and cash equivalents at the end of the period ...... 718 314 2,297 1,607 2,003

Other Financial Information and Indicators As of and for the Six months ended As of and for the year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro) (Unaudited) Adjusted EBITA...... 605 400 1,305 1,045 942 Net financial indebtedness ...... 4,615 n.a. 3,383 1,158 858 Working capital ...... 1,366 n.a. 560 448 684 Net invested capital ...... 10,934 n.a. 9,513 6,590 6,151 Adjusted EBITA, net financial indebtedness, working capital and net invested capital are not recognized as measures of financial performance or liquidity under IFRS. Investors should not place any undue reliance on these non-GAAP measures as financial indicators and should not consider these measures as: (a) an alternative to operating income or net income as determined in accordance with generally accepted accounting principles, or as measures of operating performance; (b) an alternative to cash flows from operating, investing or financing activities (as determined in accordance with generally accepted accounting principles), or as a measure of the Group’s ability to meet cash needs; or (c) an alternative to any other measures of performance under generally accepted accounting principles. These measures are not indicative of the Group’s historical operating results, nor are they meant to be predictive of future results. These measures are used by Finmeccanica’s management to monitor the underlying performance of the business and the operations. Since all companies do not calculate these measures in an identical manner, the Group’s presentation may not be consistent with similar measures used by other companies. Therefore, investors should not place undue reliance on this data. An explanation and tabular reconciliation of adjusted EBITA, net financial indebtedness, working capital and net invested capital is provided under “Financial Information and Non-GAAP Measures”.

13 RISK FACTORS

Risks relating to Finmeccanica’s business Finmeccanica is the guarantor of the Notes, and therefore the risks relating to Finmeccanica’s business are also relevant for the Issuer.

Finmeccanica Group’s operating results and financial performance may be adversely affected by lack of or delays in the award of new long-term contracts or cancellation of contracts. Although the Finmeccanica Group enjoys a significant order backlog, the long-term sustainability of Finmeccanica’s economic and financial performance depends on its ability to service its existing contracts and to win new long-term contracts. Finmeccanica’s contracts may be completed or expire, or they may be altered or terminated. Finmeccanica may be unable to replace these contracts with new contracts of comparable size and operating margins or in a timely manner. The award of new contracts is subject to competition and is affected by factors outside of Finmeccanica’s control such as governmental spending decisions and administrative procedures. The recent “economic downturn” has not only led to a reduction in government contracts and government spending, but also a reduction in contracts in the civil sector, as demonstrated by the reduction in orders of civil aircraft, helicopters and products in the energy sector. Any failure to secure or any delay in securing a consistent number of long-term contracts or any interruption to or termination of existing contracts may cause an insufficient workload, lower operating profits and cash flow generation, and the inability to recover the carrying value of the related investments on Finmeccanica’s balance sheet that would adversely affect Finmeccanica’s business, results of operations and financial condition.

Finmeccanica Group’s operating and financial performance may suffer as a consequence of breaches of its contractual commitments. The timely and satisfactory execution of Finmeccanica’s contractual commitments depends upon numerous factors, including the Group’s ability to develop the technologies necessary to provide, directly or through third parties, the products and services required by its customers. The failure by Finmeccanica to deliver, in a timely manner or at all, the products and services it is obliged to deliver, or any fault in contract execution (including as a result of delays or breaches by the Group’s suppliers), may lead to higher costs or penalties or the calling of performance bonds. This may negatively affect the Group’s operating and financial performance. In addition, Finmeccanica’s credit exposure includes indemnities by the Finmeccanica Group in connection with bank guarantees issued in favor of its customers. These bank guarantees, which are typical in long-term production contracts, include performance guarantees and guarantees for advanced payments. The amount of these bank guarantees as of December 31, 2008 was Euro 17,353 million. If these bank guarantees were to be called, the Finmeccanica Group would be required to indemnify the banks, which event could have a negative effect on Finmeccanica’s financial position and results of operations.

Finmeccanica Group’s business segments derive significant revenue from medium- and long-term contracts and programs. Differences between estimated costs and actual costs may harm Finmeccanica’s operating results, as may disputes over the performance of such contracts. The Group’s business activities depend to a large extent upon medium-and long-term contracts and programs. In order to recognize revenue and margins resulting from such contracts and programs in the income statement of each period, the Group adopts the percentage-of-completion method, which requires: (i) an estimate of the costs necessary to perform the Group’s obligations under the contract, including an estimate of the risks of delays and of the measures to be taken in order to mitigate the risks of non-performance and (ii) monitoring progress of the activities, including with respect to preoperative development costs. Finmeccanica conducts on a quarterly basis a review of its estimated costs to complete existing contracts and to the extent that such review suggests that cost overruns will be incurred, appropriate adjustments are recorded on Finmeccanica’s financial statements in accordance with IFRS accounting principles. To the extent that cost overruns in the future exceed those estimates, Finmeccanica’s results in future periods will be materially adversely affected. Differences between the estimated costs and actual costs can have a substantial negative effect on Finmeccanica’s financial position and results of operations. These differences may arise from a number of factors including production delays, cost overruns and other items. The Group has experienced discrepancies

14 between actual and estimated costs over the last three financial years including as a result of contractual penalties and disputes with counterparties, mainly with respect to the activities of AnsaldoBreda S.p.A. in the transportation segment because of difficulties encountered in meeting customer specifications in the execution of certain contracts and delays in the delivery of products. Cost overruns as well as contractual disputes may continue to occur in the future.

The Finmeccanica Group has a substantial amount of indebtedness that will need to be repaid or refinanced; certain covenants in the Group’s facilities restrict Finmeccanica’s financial and operational flexibility. As of June 30, 2009, Finmeccanica’s net financial indebtedness totaled Euro 4,615 million, equal to 73.0% of total shareholders’ equity as of that date. As of December 31, 2008, Finmeccanica’s net financial indebtedness totaled Euro 3,383 million, equal to 55.2% of total shareholders’ equity as of that date. As of December 31, 2007, Finmeccanica’s net financial indebtedness was Euro 1,158 million, equal to 21.3% of total shareholders’ equity as of that date. The increase from December 31, 2007 to December 31, 2008 mainly relates to the payment of the amount due for the acquisition of DRS and DRS’s debt consolidation, less proceeds from the share capital increase completed in November 2008. On June 19, 2008, Finmeccanica entered into a facility agreement for the financing of the DRS acquisition (the “Facility Agreement”). As of October 20, 2009, the outstanding principal amount for the Facility Agreement is Euro 992 million of which Euro 295 million with a final maturity of June 2010 is outstanding from Tranche B and Euro 697 million with a final maturity of June 2011 is outstanding from Tranche C. Following the issuance of a Euro bond of Euro 600 million with a maturity in 2022 under the EMTN Program on October 21, 2009, Finmeccanica will immediately prepay entirely the B Tranche and reduce the C Tranche to below Euro 640 million. Under the terms of the Facility Agreement, at that point, the financial covenants and mandatory prepayment obligations included in such facility, other than mandatory prepayment in relation to asset disposals, will cease to apply. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Facility Agreement” for more details. As a result, the main refinancing requirement of Finmeccanica in 2010 is the repayment of the Euro 501 million bond due August 2010. As of June 30, 2009, 67% of the Group’s net financial indebtedness was variable rate. This included short term debt which is normally not hedged for interest rate fluctuations and fixed rate long term debt which is swapped into variable rate debt under interest rate swap transactions with different counterparties. Following the recent July 2019 USD 500 million and July 2039 USD 300 million bond issuances and the recent October 2022 Euro 600 million bond issuance under the EMTN program, the variable rate proportion of the financial indebtedness of the Group is reduced significantly. However, Finmeccanica will continue to actively manage the fixed-floating rate portion of its financial debt. Should interest rates increase, the Group’s financial expense relating to the variable rate portion of financial debt would increase and the Group’s results would be adversely affected. Based on (i) the expected level of cash flows from operations, (ii) bank credit lines that have already been confirmed or that are expected to be confirmed in the near future, (iii) the success in placing bonds in the recent past and (iv) the present market conditions, Finmeccanica believes it can meet the above repayment obligations; however a further worsening of liquidity in the capital and bank markets and other circumstances may affect Finmeccanica’s ability to generate the financial resources necessary to repay these obligations at the relevant maturity dates. If, in light of market conditions or other factors, the Group will not be able to generate or raise sufficient financial resources to meet its financial obligations when due, it would be required to renegotiate the terms of its existing debt or find alternative sources of financing. Those refinancings, if available at all, may be more costly than the current arrangements. This may adversely affect the Group’s results and financial condition.

Finmeccanica’s largest customers (including the Italian government) typically pay towards the financial year end, therefore increasing Finmeccanica’s reliance on debt-financing for short-term working capital requirements. The level of the Group’s indebtedness during the year reflects seasonal working capital requirements. This seasonality arises largely because, while expenditures are incurred regularly during the course of the year, several of Finmeccanica’s largest customers (including public sector customers) typically pay towards the financial year end (fourth quarter), therefore increasing Finmeccanica’s reliance on debt-financing for short- term working capital requirements.

15 In particular, the Group funds a significant portion of its operating expenses through advances from customers. Should the level of those advances decrease in the future, including as a result of changes in customers’ commercial practices, this may lead to a further increase in the Group’s average net financial indebtedness.

Finmeccanica’s ability to borrow in the bank or capital markets may be materially adversely affected by a financial crisis in a particular geographic region, industry or economic sector. Finmeccanica’s ability to borrow in the bank or capital markets to meet the financial requirements of the Group is dependent on favorable and prevailing market conditions. Financial crisis in particular geographic regions, industries or economic sectors have, in the recent past, led and could in the future lead to sharp declines in the currencies, stock markets and other asset prices in those geographic regions, industries or economic sectors. Global credit markets have tightened significantly as a result of concerns over the United States sub- prime mortgage crisis and the valuation and liquidity of mortgage-backed securities and other financial instruments, such as asset-backed commercial paper. This has resulted in the failure and/or the nationalization of several large financial institutions in the United States, the United Kingdom and other countries. Additionally, credit risks may continue to be larger and more pervasive than previously thought. The functioning of financial markets has also become increasingly impaired and financial volatility has increased substantially. These market developments may adversely impact Finmeccanica’s ability to borrow in the bank or capital markets and may significantly increase the costs of such borrowing, thus affecting Finmeccanica’s average cost of funding in the coming years. If sufficient sources of financing are not available in the future for these or other reasons, Finmeccanica may not be able to meet the financial requirements of the Group. This could materially and adversely affect the Group’s business, results of operations and financial condition.

Reduction of government funding in the form of loans, grants and subsidies would impair Finmeccanica’s operational funding and challenges to the legality of such funding may harm Finmeccanica’s financial position. In order to finance research and development opportunities, Finmeccanica has benefited and expects to continue to benefit — inter alia — from subsidized loans, grants and subsidies provided by the Italian government, the European Union and international agencies. In Italy, several Group companies benefit from non-interest bearing loans granted by the Italian government pursuant to Law 808/85 (“Law 808”) for programs that have a significant national security interest. There can be no assurance that these subsidies and grants will be available in the same form and in comparable amounts in the future, or that the current programs or laws under which such assistance is granted will continue in effect without amendment. The availability and terms of government loans, grants and subsidies also may be impacted by general economic conditions. Moreover, under European Union rules, non-interest bearing government funding may be granted only if certain requirements are met. In the past, the European Union has challenged compliance by the Italian government with those requirements, claiming that the funding violated European Union rules on state aid. As a result, on March 11, 2008, Finmeccanica was ordered to repay certain loans together with interest accrued thereon for a total amount of Euro 389 million. Euro 297 million was paid in May 2008 and Euro 80 million was paid in January 2009, while the remainder will be paid in later periods. Please see “Business Description — Litigation” for a description of recent and pending proceedings against Finmeccanica in this area. The European Union is continuing to consider the compliance of two additional helicopter projects of the Group and related funding under Law 808 with European Union legislation. Finmeccanica believes it has demonstrated compliance with those rules in light of the significant national security concerns of those projects. However, if any such pending challenges, or any future challenges, are decided unfavorably towards Finmeccanica, Finmeccanica may have to pay part or all of the loans and interest accrued thereon, which may have a material adverse effect on Finmeccanica’s business, results of operations and financial condition.

Fluctuations in exchange rates have negatively impacted Finmeccanica Group’s operating results and financial condition and are likely to continue to do so in the future. Because of Finmeccanica’s substantial international sales, fluctuations in the exchange rate of the Euro, which is the Group’s reporting currency, against other currencies (most notably, the U.S. dollar and, most recently, Sterling) has had and can have a significant impact on Finmeccanica’s revenues and operating

16 results. In particular, because the Group’s U.S. dollar and Sterling denominated revenues are higher than the costs incurred in those currencies, a decrease in the value of the U.S. dollar and/or Sterling compared to the Euro has affected and is likely to adversely affect the Group’s margins in Euro terms. In addition, because the Group incurs costs in euros with respect to activities that generate U.S. dollars and/or Sterling, an increase in the value of the Euro compared to the U.S. dollar and/or Sterling has negatively affected and would continue to negatively affect the Group’s results. In addition, fluctuations in exchange rates may negatively affect the competitiveness of Finmeccanica’s products and services provided outside the European Union. In order to hedge the foreign currency risk exposure under contracts which are denominated in currencies other than the functional currency of the entity performing the operation, the Group enters into forward currency transactions, swaps and options. However, there can be no assurance that future fluctuations in exchange rates, particularly the Euro/Sterling and the Euro/U.S. dollar exchange rate, will not harm the Group’s business, results of operations and financial condition (so called “Transaction Risk”). In addition, the Group has made significant investments in the United Kingdom and in the United States. Since the reporting currency of the consolidated Group financial statements is the euro, adverse changes in the exchange rates between euros and U.S. dollars and euros and Sterling have and would have a negative impact, including as a result of the translation of the financial statements of foreign subsidiaries, on the Group balance sheet and income statement and may give rise to significant changes in Finmeccanica shareholders’ equity from period to period (so called “Translation Risk”).

Any writedown of intangible assets may harm Finmeccanica’s results of operations and financial condition. Finmeccanica’s balance sheet includes significant amounts recorded as intangible assets, in particular with respect to development costs and goodwill. Goodwill grew by Euro 2,356 million in 2008, largely arising from the acquisition of DRS. Assets of indefinite life are subject to an “impairment test” at least once a year. Equally, for items subject to amortization, the impairment tests are carried out whenever there are indications that there may have been a loss in value. These evaluations are based on estimates of future cash flows and applicable discount rates. Any significant discrepancies between the estimates and actual developments may have a materially adverse effect on the Group’s results of operations and financial condition. As of June 30, 2009 and December 31, 2008, intangible assets represented 78% and 87% of the Group’s net invested capital, respectively; goodwill represented 54% and 61% of the net invested capital, respectively.

Finmeccanica may suffer losses arising from any deficit in the Group’s defined benefits plans. Finmeccanica sponsors several benefits plans for its United Kingdom and, particularly after the DRS acquisition, United States employees. Under those arrangements, the Group is committed to pay a defined level of benefits to plan participants, thereby bearing the risk that the plans’ assets, such as investments in equity and debt securities, will not be sufficient to cover the value of those benefits. In accordance with IFRS, the Group records a liability to the extent there is an expected deficit with respect to those plans. As of June 30, 2009 and December 31, 2008, that liability amounted to Euro 310 million and Euro 209 million, respectively. In addition, through the joint venture with MBDA S.A.S., the Group also participates in defined benefit pension plans in the United Kingdom where the main employer is BAE Systems Plc. (Euro 53 million of deficit as of June 30, 2009). The calculation of expected liabilities arising from defined benefit plans is based on actuarial estimates and demographic and financial assumptions. In addition, the value of plan assets is affected by, among other things, developments in the equity and bond markets. In the six months ended June 30, 2009 and the year ended December 31, 2008, Finmeccanica experienced an actuarial loss on its defined benefit plans of Euro 58 million and Euro 68 million, respectively. Future developments may differ from those estimates and assumptions and may lead to significantly higher levels of deficits, which in turn may have a material adverse effect on Finmeccanica’s business, results of operations and financial condition.

Credit ratings may not reflect all risks, are not recommendations to buy or hold securities and may be subject to revision, suspension or withdrawal at any time. Downgrades of our debt ratings could adversely affect us. One or more independent credit rating agencies may assign credit ratings to the Notes. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed herein and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time.

17 Finmeccanica’s increased level of indebtedness has had a negative impact on its credit rating and may lead to rating downgrades if the debt is not refinanced as envisaged. For example, upon announcement of the acquisition of DRS, the credit ratings given to Finmeccanica by Moody’s and Standard & Poors were placed on “credit watch” to reflect the level of indebtedness Finmeccanica was expected to incur for the acquisition. In November 2008 both Moody’s and Standard & Poors removed Finmeccanica from their “credit watch”. As of the date of this Listing Prospectus, the credit rating of the Group was A3/stable for Moody’s; BBB/stable for Standard & Poors and BBB+/stable for Fitch. These ratings could be lowered if certain profitability and cash flow to debt ratios are not met and Finmeccanica can give no assurance that such ratio will be met as of December 31, 2009 or any future period. Any improvement in Finmeccanica’s credit outlook is dependent on Finmeccanica successfully implementing its refinancing plans, including the disposal of certain assets. Con- versely, failure to fully implement that refinancing plan may lead to downgrades, which in turn may have material adverse effects on Finmeccanica’s cost of debt and ability to access sources of financing.

If Finmeccanica fails to identify, complete and manage acquisitions, including its recent acquisition of DRS, and joint ventures successfully, its business, results of operations and financial condition could be harmed. Finmeccanica routinely conducts discussions, evaluates targets and enters into agreements regarding possible acquisitions and joint ventures. As part of its business strategy, Finmeccanica seeks to identify acquisition and joint venture opportunities that it believes will expand or complement its existing products and services, or customer base, at attractive valuations. Finmeccanica often competes with others for the same opportunities. If Finmeccanica is not successful in identifying and completing these transactions, obtaining the necessary authorizations and approvals and maintaining a well-balanced capital structure, it may not be able to maintain a competitive position in its key business segments or may be required to expend additional resources to develop capabilities internally in certain segments. In addition, even if Finmeccanica identifies and executes acquisition opportunities, there is no assurance that (i) acquired companies will be successfully integrated into the Finmeccanica Group, (ii) existing customer relationship and revenue levels will be maintained or (iii) synergies and economies of scale will be achieved. Integrating acquisitions is a complex, time consuming and expensive process. The successful integration of DRS, for example, and the ability to take advantage of economies of scale will depend on Finmeccanica’s ability to (i) manage DRS, (ii) maintain DRS’s existing customer portfolio, (iii) continue existing joint ventures of DRS, (iv) maintain current revenue levels and (v) retain key employees and managers. If Finmeccanica is unable to complete the integration of DRS successfully or if integration costs are higher than expected, this will have a material adverse effect on Finmeccanica’s business, results of operations and financial condition. Failure to achieve the expected synergies or other benefits of an acquisition or a joint venture or an increase in integration costs may have an adverse impact on the Group’s business, results of operations and financial condition.

Finmeccanica plans to divest several holdings and assets; these divestitures could be impeded or delayed and may be more costly or raise lower proceeds than anticipated. As part of its business strategy, Finmeccanica plans to dispose of certain assets not related to its core aerospace and defense businesses. In addition, asset disposals are a component of the expected repayment of Finmeccanica’s indebtedness incurred to finance the acquisition of DRS. Finmeccanica can give no assurance regarding the timing or conditions of any possible divestitures. If sales are more costly, raise less proceeds than expected or take longer to execute, Finmeccanica’s results of operations may be affected and the refinancing of the residual debt incurred for the acquisition of DRS may become more costly.

Finmeccanica could face problems related to loss of control over cash flows, loss of proprietary technologies and funding requirements by participating in joint ventures. Finmeccanica is involved in joint ventures in which it shares control with other partners. The three main joint ventures in which the Group participates (directly or indirectly) in the aerospace and defense sectors are MBDA S.A.S. (held at 25% with partners BAE Systems and EADS), Thales Alenia Space S.A.S. (held at 33% with partner Thales) and Telespazio Holding S.r.l. (held at 67% with partner Thales), accounting for approximately 11% of the Group’s consolidated revenues in 2008. MBDA S.A.S., Thales Alenia Space S.A.S. and Telespazio Holding S.r.l. are consolidated in Finmeccanica Group’s financial statements using the proportional method.

18 These activities involve risks and uncertainties, including the challenges in achieving strategic objectives and expected benefits of the business arrangement, the risk of conflicts arising between Finmeccanica and its partners, the difficulty of managing and resolving such conflicts and the difficulties of interaction with partners in the day-to-day management of the business. In particular, Finmeccanica’s participation in joint ventures presents the risk of operational deadlocks because of disagreements among partners, principally when matters are subject to supermajority requirements. Disputes among partners may disrupt the operations of the joint venture, make it more difficult to achieve the joint venture’s strategy and lead to significant costs and loss of profits. Because of such difficulties, joint ventures may be dissolved prematurely. Dissolution of business ventures can be long and costly and might require Finmeccanica to share or cede any technology and know-how that it originally contributed to the venture. These disagreements, deadlocks and dissolutions may have an adverse effect on the Group’s results and financial condition, as Finmeccanica is unable to give any assurance that these joint ventures will achieve their expected level of profitability or competitiveness.

The overall productivity of the consortia in which Finmeccanica participates depends in part on Finmeccanica’s partners performing their obligations. Finmeccanica performs a substantial portion of its business as a prime contractor or sub-contractor in consortia. As prime contractor, Finmeccanica assumes responsibility to the customer in respect of work to be performed by its partners, whom Finmeccanica does not control. Failure by any of Finmeccanica’s partners to perform their obligations may affect Finmeccanica’s ability or the ability of the consortia to perform their respective obligations and may impair the consortia’s overall productivity and Finmeccanica’s ability to perform its obligations as the prime contractor. Sub-contractor performance deficiencies could result in a customer terminating a contract for default, therefore exposing Finmeccanica to liability, including pursuant to penalty clauses, which would have a material adverse effect on Finmeccanica’s results of operations and financial conditions and Finmeccanica’s ability to compete for future contracts and orders.

Product liability and other customer claims could adversely affect Finmeccanica Group’s business, results of operations and financial condition. Finmeccanica is subject to product liability and other claims from customers or third parties in connection with (i) the non-compliance of products or services with the customers specifications due to faults in design or production, (ii) the delay or failed supply of the products or the services specified in the contract, or (iii) default and/or delays in the marketing, provision of after-sales services or maintenance and revision of products. These liabilities might arise from causes that are directly attributable to Group companies or causes that are attributable to third party providers or sub-contractors of the Group. Such claims are generally covered by Finmeccanica’s insurance policies, subject to applicable insurance conditions. Finmeccanica cannot guarantee, however, that its insurance will cover all future product liability claims. Substantial claims in excess of any insurance coverage (or for which insurance is not available or was not obtained) could harm Finmeccanica Group’s business, results of operations and financial condition. Material breaches by the Group in the performance of its obligations may lead to contract termination and the calling of performance bonds. In addition, any accident, failure, incident or liability, even if fully insured, could negatively affect Finmeccanica’s reputation among its customers and the public, thereby making it more difficult for Finmeccanica to compete effectively and could significantly impact the cost and availability of adequate insurance in the future.

Finmeccanica is presently involved in legal proceedings that, if resolved to its detriment, could impact negatively on its financial condition. In the ordinary course of its activities, Finmeccanica and its subsidiaries are presently involved in a number of legal proceedings involving substantial amounts. With respect to pending litigation, Finmeccanica has made provisions considered appropriate in light of the circumstances and in accordance with IFRS. Under IFRS, provisions are made when a loss is certain or probable and reasonably quantifiable. As of June 30, 2009 the Group has recognized provisions for legal proceedings and employee disputes amounting to Euro 114 million (Euro 136 million as of December 31, 2008). However, future losses may be materially in excess of those provisions.

19 Finmeccanica Group’s business, results of operations and financial condition may be adversely affected by legal proceedings, the outcome of which cannot be predicted with certainty. For a description of Finmeccanica’s current legal proceedings, see the subsection entitled “Business Description — Litigation”.

Changes in environmental regulations and liabilities associated with existing or new regulations could require increased capital expenditures and lead to losses. Finmeccanica is subject to numerous European Union, national, regional and local environmental laws and regulations concerning emissions into the environment, discharges to surface and subsurface water, the disposal and treatment of waste materials and noise pollution. Pursuant to such laws and regulations, for certain activities, the Group must require and obtain authorization and licenses. Finmeccanica cannot anticipate whether, and to what extent, environmental regulations may become stricter over time, nor can Finmeccanica give any assurance that the cost of future compliance with existing environmental regulations will not increase. Substantial increases in environmental compliance costs could adversely affect Finmeccanica’s business, results of operations and financial condition. In addition, under applicable laws the owners and operators of a contaminated site may be liable for remediation costs and subject to fines and other sanctions, independently of the causes of such contamination. Those costs and fines may materially adversely affect the Group’s business, results of operations and financial condition.

If Finmeccanica fails to protect, or incurs significant costs in defending, its intellectual property and other proprietary rights, its business, results of operations and financial condition could be materially harmed. Finmeccanica’s success depends, in part, on its ability to protect its intellectual property and other proprietary rights. Finmeccanica relies primarily on patents, trademarks, copyrights, trade secrets and unfair competition laws, as well as license agreements and other contractual provisions, to protect its intellectual property and other proprietary rights. However, patent applications may be rejected and in any event patent protection does not prevent competitors from developing equivalent or superior products without violating the Group’s intellectual property rights. Moreover, the Group’s intellectual property rights may be challenged by third parties and, should the Group not prevail, it may be required to give or obtain licenses, cease the production of a product, transfer the intellectual property rights or be liable for significant damages. Accordingly, despite Finmeccanica’s efforts, it may be unable to prevent third parties from infringing or misappropriating its intellectual property or otherwise gaining access to its technology. If Finmeccanica fails to protect its intellectual property and other proprietary rights, then its business, results of operations and financial condition could be materially harmed. In addition, any claims, whether with or without merit, could be time consuming and expensive to defend, and could divert Finmeccanica management’s attention away from the execution of its business plan. Furthermore, governmental customers normally have the right to royalty-free use of the Group’s products and technologies that have been developed under government contracts, which weakens the Group’s intellectual property protection. For example, although DRS endeavors to protect the competitive benefits derived from its patents, proprietary information and other intellectual property, DRS does not have the right to prohibit the United States government from using certain technologies which it has developed or to prohibit third party companies, including its competitors, from using those technologies in providing products and services to the United States government. The United States government has the right to royalty-free use of technologies that DRS has developed under United States government contracts. Although DRS can commercially exploit those government-funded technologies and may generally assert its intellectual property rights to seek to block other non-government users thereof, it cannot guarantee that such attempts to protect its intellectual property will be successful.

Finmeccanica depends on the recruitment and retention of qualified personnel and any failure to attract and retain such personnel could seriously harm Finmeccanica’s business. Finmeccanica relies on senior management and other key employees to generate business, maintain good customer relations and identify new opportunities. Competition for personnel is intense and Finmeccanica may not be successful in attracting or retaining qualified personnel. In addition, certain personnel may be required to receive security clearance and substantial training in order to work on certain programs or perform

20 certain tasks. The loss of key employees, Finmeccanica’s inability to attract new qualified employees (in particular highly skilled engineers), or adequately trained employees, or a delay in hiring key personnel could seriously harm Finmeccanica’s business, results of operations and financial condition.

Transactions with related parties may expose Finmeccanica to risks. Finmeccanica has entered into and continues to enter into commercial and financial dealings with related third parties. Total revenue, other operating income and finance income of such dealings with related parties totaled Euro 646 million and Euro 632 million for the six months ended June 30, 2009 and 2008 and Euro 1.7 billion for the year 2008 and Euro 1.5 billion for the year 2007. Transactions with related parties are established on an arm’s length basis. However, there can be no assurance that if such transactions were entered into by or among third parties, the terms of those transactions would not be different.

Risks relating to Finmeccanica’s shareholding and certain by-law provisions As of the date of this Listing Prospectus, the MEF holds approximately 30.2% of Finmeccanica’s share capital. The combination of the MEF’s shareholding in Finmeccanica and of Finmeccanica’s special “voting list” mechanism (“voto di lista”) provided in the Finmeccanica by-laws for electing members of the Board of Directors has so far in practice enabled the MEF to elect two-thirds of the members of the Board of Directors. In the four Board of Directors elections since Finmeccanica was privatized in 2000, a majority of the voting shareholders have voted in favor of the MEF’s proposed list. Furthermore, applicable Italian law provides that the Italian government, through the MEF, must maintain at least a 30% minority interest (on a fully-diluted basis) in Finmeccanica’s share capital. Under Finmeccanica’s by-laws, the MEF has the power to oppose any shareholder holding 3% or more of the voting shares of Finmeccanica, as well as to oppose any shareholders’ agreement that would control 3% or more of the voting shares of the Company, if it determines that such shareholding or shareholders’ agreement is detrimental to vital interests of the State. This may in practice restrict the ability of other shareholders of Finmeccanica to affect important decisions regarding the Company’s business. See “Principal Shareholders” for further details on the special powers reserved for the Italian government.

Risks relating to the industries in which Finmeccanica operates Finmeccanica Group’s customers depend on government spending. Reductions in government spending would harm Finmeccanica Group’s business, results of operations and financial condition. A substantial portion of Finmeccanica Group’s customers consists of governments, public institutions and companies that in return rely on government spending to purchase Finmeccanica’s products and services. Finmeccanica expects that defense spending, in particular, by these customers will continue to make up a major portion of its revenue. In addition, some of Finmeccanica Group’s business segments depend on programs supported by the European Union, including programs carried out through the European Space Agency. Government programs may be delayed or amended and certain key government programs and contractual commitments have already been impacted. Accordingly, Finmeccanica often faces uncertainties in preparing its plans and managing its resources. In addition, government spending programs, even if previously approved, are generally subject to yearly review and adjustments and may therefore be cancelled at any time. Changes in political or public support for security and defense programs also may affect related government programs. The United States government may unilaterally modify or cancel its contracts. Accordingly, the portion of Finmeccanica’s order backlog represented by United States government contracts can be cancelled or reduced at the option of the United States government. In April 2009, the U.S. Department of Defense announced an overhaul in its approach to procurement, acquisition and contracting including increased budget discipline and selectivity. The proposed budget scaled back or canceled several programs, including the VH-71 Presidential helicopter. Finmeccanica’s exposure to this risk has increased with the acquisition of DRS, which derives a substantial majority of its revenues from contracts with United States government agencies. The development of DRS’s business in the future will depend upon the continued willingness of the United States government and its prime contractors to commit substantial resources to defense programs and, in particular, upon the continued purchase of DRS’s products, and other products which incorporate DRS’s products, by the United States government. A significant reduction in the purchase of DRS’s products by these agencies would have a material adverse effect on DRS’s business as well as on the Group as a whole. In the Group’s other domestic markets (Italy and United Kingdom), both the Italian and the United King- dom governments have taken measures aimed at the reduction of public expenditure. The United Kingdom budget for military spending, in particular, is expected to be under significant pressure in the next several years. As Italy and the United Kingdom represent Finmeccanica’s main customers, should these measures to reduce expenditures

21 become effective, Finmeccanica’s cash collection expectation may decline and its ability to win new orders from such governments may be harmed. In addition, existing orders may be cancelled. Moreover, cuts to the defense budgets in Finmeccanica’s domestic markets, if any, may impact the financing of research and development activities, which could affect Finmeccanica’s ability to compete successfully. The Group’s results of operations, cashflow and business prospects may be materially harmed by these developments.

The current global economic downturn may lead to lower orders, lower revenues and pressure on margins in several Finmeccanica businesses. The recent severe tightening of the credit markets, turmoil in the financial markets, and weakening global economy are contributing to economic slowdowns or recessions in the industries in which Finmeccanica operates. Many government budgets are strained by the financial crisis, and this is leading to a reduction in government spending in the military sector. See “Risk Factors — Finmeccanica Group’s customers depend on government spending. Reductions in government spending would harm Finmeccanica’s Group business, result of operations and financial condition”. In addition, the economic downturn is leading to weaker demand in the civil sector. In recent months, this has already led to a reduction in new orders for Finmeccanica of civil aircraft, civil helicopters and products in the energy sector, postal automation, and security and defense electronics and the effects of the recession may not have yet been fully reflected in the Group’s order flow nor on its overall margins and cash flows. Finmeccanica cannot predict the timing or duration of any economic slowdown, in particular with respect to any possible further deterioration in government spending for future years, or the timing or strength of a subsequent economic recovery, in general or specifically in the industries in which it operates. A continued or worsened slowdown in the global economy may materially adversely affect the Group’s growth and profitability.

Finmeccanica’s business is dependent on the price, quality, availability and timely delivery of certain components from suppliers. Finmeccanica’s business is affected by the price, quality, availability and timely delivery of the component parts that it uses to manufacture its products. Finmeccanica’s business, therefore, could be adversely impacted by factors affecting its suppliers (such as the destruction of suppliers’ facilities or their distribution infrastructure, a work stoppage or strike by suppliers’ employees or the failure of suppliers to provide materials of the requisite quality) or by increased costs of such components.

Restrictions on the export of Finmeccanica’s products and other regulations could adversely affect Finmeccanica’s business, results of operations and financial condition. Finmeccanica designs and manufactures many defense products considered to be of national strategic interest. The export of such products outside Finmeccanica’s domestic markets is subject to licensing and export controls. To the extent exports include technologies obtained from other countries, Finmeccanica may also be adversely affected by export control regulations from those countries. Failure to comply with these regulations and requirements could result in contract modifications or termination and the assessment of penalties and fines, which could negatively affect Finmeccanica’s business, results of operations and financial condition. Authorizations can be revoked and general export controls may change in response to international conflicts or other political or geopolitical factors. Reduced access to military export markets could have a material adverse effect on Finmeccanica Group’s business, results of operations and financial condition.

Several of Finmeccanica Group’s business segments operate in mature industries that are experiencing heightened competition and industry consolidation. Finmeccanica experiences significant pricing pressure as a result. The industries in which Finmeccanica is active are characterized by rapid technological innovation, intense global competition, consolidation through mergers, joint ventures and alliances and limited access to markets with local dominant players. Many of Finmeccanica’s competitors have significantly higher market shares, greater financial resources and stronger product development capabilities than Finmeccanica. Unless Finmeccanica is able to pursue its growth and internationalization strategy, succeed in its research and development efforts to produce technologically superior products and maintain a competitive cost structure, it will not be able to compete effectively on a global scale, which would harm Finmeccanica’s business, results of operations and financial condition.

22 Finmeccanica incurs and expects to continue to incur substantial research and development costs, which may not lead to satisfactory returns or to successful new products. The business environment in many of Finmeccanica Group’s principal operating segments requires extensive research and development expenses to keep pace with rapid technological changes. Finmeccanica’s growth depends on penetrating new markets, adapting existing products to new requirements and introducing new products that achieve market acceptance. Finmeccanica incurs substantial research and development costs as part of its efforts to design and develop new products and enhance existing products. Finmeccanica spent Euro 887 million, or 10% of its revenues, in the six months ended June 30, 2009 and Euro 834 million, or 13% of revenues, in the six months ended June 30, 2008 (Euro 1,809 million, or 12% of its revenues, in the year ended December 31, 2008 and Euro 1,836 million, or 14% of revenue in the year ended December 31, 2007) on research and development activities and expects to continue to spend significant funds on research and development in the future. Finmeccanica funds its research and development activities through its own funds, advances from customers and public grants. Because Finmeccanica accounts in part for research and development as an operating expense, these expenditures adversely affect its earnings. In addition, research and development absorbs a significant portion of Finmeccanica’s cash flow. Further, Finmeccanica’s research and development program may not produce successful results and its new products may not achieve market acceptance, create additional revenue or become profitable, which could materially harm Finmeccanica’s business, results of operations and financial condition. In addition, should there be a decrease in the funds available from the Group’s operations, from customer advances (for example if customers cancel the relevant contracts) or from government grants, the Group may not be able to continue an adequate level of research and development activity, which would harm its ability to develop new products and, accordingly, negatively affect the Group’s future results.

Changes in governmental policies and regulations or the failure to comply with existing regulations may harm Finmeccanica’s results. Finmeccanica operates in highly regulated business sectors. In order to sell products, Finmeccanica and its suppliers must be approved by government agencies in the countries in which Finmeccanica does business. New regulations or certification requirements may require additional expenses or may limit the Group’s operations. In Italy, the Group is subject to the Italian aerospace regulation, which is administered by the Italian Ministry of Defense, and in particular to Law 185/90 which governs the trading in armaments and imposes a strict licensing regime, and requires authorization for the importation, exportation and transport of related products. Each Group company operating in this area is subject to those authorizations and licenses. However, those authorizations and licenses may be cancelled or more stringent requirements may become applicable, which may reduce revenues or increase the costs of the Group. The commercial aeronautics industry is also highly regulated. The European Aviation Safety Agency is the principal regulator in Europe and the Federal Aviation Authority is the principal regulator in the United States. Those authorities establish requirements for aircraft components and grant licenses for the production and repair of those components. Air traffic control and railways transport and signaling are also subject to strict regulatory regimes. Should the Group fail to comply with applicable regulations or to obtain the necessary licenses, this may adversely affect the business, results and financial condition of the Group.

Risks relating to the adequacy of Finmeccanica Group’s provisions for divestitures, restructuring, guarantees and shareholdings. The Finmeccanica Group has made certain provisions in its consolidated financial statements in connection with guarantees, restructuring, penalties, and other items. The Finmeccanica Group believes that such provisions appropriately cover the related probable and quantifiable risks. Finmeccanica’s provisions recorded as of June 30, 2009 amounted to Euro 957 million and as of December 31, 2008 amounted to Euro 976 million. However, the Finmeccanica Group’s estimates of the impact of future changes in contracts and production programs, restructuring and divestiture expenses and related risks are based on expectations, beliefs and assumptions regarding future developments that are subject to inherent uncertainties. Accordingly, the Finmeccanica Group may have to further adjust the value of some of its assets or increase its provisions if its current expectations, beliefs and assumptions prove to be wrong or make further provisions relating to the categories of risks discussed above.

23 Changes in the political and economic climate of the countries in which the Group operates may expose Finmeccanica to financial and other risks. The Group is active in several countries that suffer from political, social and economic instability. Such countries may be subject to high inflation, volatile exchange rates, weak bankruptcy and creditor protection laws, and may be subject to limitations on investments and on the export and import of assets. In addition, those countries may be exposed to the risk of social unrest and political upheavals. Because of such political, social and economic instability, the Group’s activity in those countries may be adversely affected in a way that is material to the Group’s financial position and results of operations. The Group is also subject to the risk of political and legislative/regulatory changes in the countries in which it operates, which could restrict its commercial flexibility and planned business strategies.

Risks relating to an Investment in the Notes Direct creditors of subsidiaries of the Guarantor will generally have superior claims to cash flows from those subsidiaries. As a holding company, the Guarantor depends upon cash flow received from its subsidiaries to meet its payment obligations under the Notes. Since the creditors of any subsidiary of the Guarantor generally would have a right to receive payment that is superior to the Guarantor’s right to receive payment from the assets of that subsidiary, holders of the Notes will be effectively subordinated to creditors of those subsidiaries insofar as cash flows from those subsidiaries are relevant to the Notes. In particular, upon liquidation or other insolvency proceedings of Finmeccanica, claims of holders of the Notes against the assets of DRS may, de facto, be structurally subordinated to the claims of DRS bondholders, or of other creditors of DRS or of any intermediate holding company of DRS that is also a subsidiary of Finmeccanica. The terms and conditions of the Notes do not limit the amount of liabilities that Finmeccanica Group subsidiaries may incur. In addition, Finmeccanica may not necessarily have access to the full amount of cash flows generated by its operating subsidiaries, due in particular to legal or tax constraints, contractual restrictions and the subsidiary’s financial requirements.

Finmeccanica may incur substantial additional indebtedness in the future. Finmeccanica may incur substantial additional indebtedness, including in connection with future acquisitions. The terms of the Notes will not limit the amount of indebtedness Finmeccanica may incur. Any such incurrence of additional indebtedness could exacerbate the related risks that Finmeccanica now faces. For a description of further risks related to the incurrence of debt, see the risk entitled “Finmeccanica may need to incur further debt to meet the financial requirements of the Group and this may have an adverse impact on the Group’s results and financial condition”.

The Notes lack a developed public market. There can be no assurance regarding the future development of a market for the Notes or the ability of holders of the Notes to sell their Notes or the price at which such holders may be able to sell their Notes. If such a market were to develop, the Notes could trade at prices that may be higher or lower than the initial offering price depending on many factors, including, among other things, prevailing interest rates, Finmecca- nica’s operating results and the market for similar securities. The initial purchasers have advised the Issuer that they currently intend to make a market in the Notes as permitted by applicable laws and regulations. However, the initial purchasers are not obligated to do so, and any such market-making activities with respect to the Notes may be discontinued at any time without notice. Furthermore, while application has been made to have the Notes admitted to listing on the official list of the Luxembourg Stock Exchange and to trading on its regulated market there can be no assurance as to the liquidity of this or any other trading market for the Notes or that an active public market for the Notes will develop or be maintained. See “Plan of Distribution”.

You may be unable to recover from the Guarantor in civil proceedings for U.S. securities laws violations. The Guarantor is organized under the laws of Italy. Many of its assets are located outside the United States. In addition, most of the members of its Board of Directors and officers are residents of countries other than the United States. As a result, it may be impossible for investors to effect service of process within the United States upon the Guarantor or these persons, or to enforce against the Guarantor or them judgments obtained in United States courts predicated upon civil liability provisions of the U.S. securities laws. In addition, Finmeccanica cannot assure you that civil liabilities predicated upon the federal securities laws of the United States will be enforceable in Italy. See “Service of Process and Enforcement of Civil Liabilities”.

24 USE OF PROCEEDS Meccanica Holdings estimates that the net proceeds from the offering were approximately $494,000,000 after payment of underwriting commissions and other fees and expenses related to the offering. Meccanica Holdings intends to use such proceeds to refinance parent company loans to DRS Technologies and the Group will apply the proceeds to meet 2010 third parties refinancing requirements, including the repayment of the Exchangeable Bonds, with an annual coupon of 0.375%, maturing in August 2010. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Bonds Issued.”

25 CAPITALIZATION The following table sets forth the cash and cash equivalents and capitalization of the Group as of September 30, 2009. Prospective investors should also read this table in conjunction with the sections “Risk Factors”, “Use of Proceeds”, “Selected Financial Data”, “Supplemental Selected Financial Data as of and for the Period Ended September 30, 2009” and “Presentation of Financial Information and Incorporation by Reference”. As of September 30, 2009 Historical (In millions of Euro) (Unaudited) Cash and cash equivalents ...... 511 Current borrowings...... 2,644 Non-current borrowings ...... 3,791 Total financial debt(1) ...... 6,435 Share capital ...... 2,504 Other reserves ...... 3,597 Minority interests in equity ...... 184 Total shareholders’ equity ...... 6,285 Total capitalization(2) ...... 12,720

(1) Total financial debt is defined as the sum of current borrowings and non-current borrowings. (2) Capitalization is defined as the sum of total financial debt and total shareholders’ equity.

26 SELECTED FINANCIAL DATA The following tables set forth selected financial information of the Group as of and for the periods indicated. Selected financial information as of and for the years ended December 31, 2008, 2007 and 2006 has been derived from the Annual Consolidated Financial Statements. Selected financial information as of June 30, 2009 and for the six months ended June 30, 2009 and 2008 has been derived from the Unaudited Interim Condensed Consolidated Financial Information. Interim results are not necessarily indicative of the results that may be expected for any other interim period nor are they indicative results for a full year. The selected financial data in the tables below should be read together with the Annual Consolidated Financial Statements and the Unaudited Interim Condensed Consolidated Financial Information, including the notes thereto which are included elsewhere in this Listing Prospectus. See also “Presentation of Financial Information and Incorporation by Reference”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Capitalization”.

Income Statement Data Year ended December 31, 2008 2007 2006 (In millions of Euro, except per share information) Revenue ...... 15,037 13,429 12,472 Other operating income ...... 702 1,033 494 Raw materials and consumables used ...... (5,343) (5,566) (4,794) Purchase of services ...... (4,944) (3,843) (3,654) Personnel costs ...... (3,928) (3,599) (3,361) Amortization, depreciation and impairment...... (622) (709) (505) Other operating expenses ...... (686) (564) (434) Changes in inventories of work in progress, semi-finished and finished goods . . . 281 54 (24) ( — ) Work performed by the Group and capitalized ...... 713 849 714 Operating income ...... 1,210 1,084 908 Finance income ...... 1,017 624 1,194 Finance costs...... (1,255) (877) (824) Share of profit/(loss) of equity accounted investments ...... 16 16 (5) Profit before taxes and discontinued operations ...... 988 847 1,273 Income taxes ...... (367) (326) (243) Loss from discontinued operations ...... — — (9) Net profit ...... 621 521 1,021 — attributable to equity holders of the Group ...... 571 484 989 — attributable to minority interests ...... 50 37 32 Earnings per share Basic...... 1.294 1.140 2.333 Diluted ...... 1.293 1.138 2.323 Earnings per share net of discontinued operations Basic...... 1.294 1.140 2.353 Diluted ...... 1.293 1.138 2.344

27 Balance Sheet Data As of December 31, 2008 2007 2006 (In millions of Euro) Non-current assets Intangible assets ...... 8,237 5,266 5,317 Property, plant and equipment ...... 3,099 2,855 2,660 Investment properties ...... 1 1 2 Equity investments ...... 192 148 140 Financial assets at fair value ...... 154 589 857 Receivables ...... 302 169 442 Deferred taxes ...... 648 450 492 Other assets...... 480 367 9 Total non-current assets...... 13,113 9,845 9,919 Current assets Inventories ...... 4,365 3,383 3,095 Contract work in progress ...... 3,674 3,227 2,823 Trade receivables ...... 4,655 4,319 3,856 Financial assets at fair value ...... 1 13 21 Income tax receivables...... 236 277 371 Financial receivables ...... 679 606 478 Derivatives ...... 243 162 147 Other assets...... 659 609 580 Cash and cash equivalents ...... 2,297 1,607 2,003 Total current assets ...... 16,809 14,203 13,374 Non-current assets held for sale ...... — — 110 Total assets...... 29,922 24,048 23,403 Shareholders’ equity Share capital ...... 2,519 1,864 1,858 Other reserves ...... 3,455 3,465 3,381 Capital and reserves attributable to equity holders of the Group ...... 5,974 5,329 5,239 Minority interests in equity ...... 156 103 81 Total shareholders’ equity ...... 6,130 5,432 5,320 Non-current liabilities Borrowings ...... 4,095 1,675 1,979 Employee liabilities ...... 1,027 946 1,295 Provisions for risks and charges ...... 344 353 365 Deferred taxes ...... 553 442 342 Other liabilities ...... 731 821 1,332 Total non-current liabilities ...... 6,750 4,237 5,313 Current liabilities Advances from customers ...... 7,399 6,477 5,529 Trade payables ...... 4,735 4,004 3,561 Borrowings ...... 2,265 1,709 1,381 Income tax payables ...... 201 68 139 Provisions for risks and charges ...... 632 545 571 Derivatives ...... 236 109 104 Other liabilities ...... 1,574 1,467 1,402 Total current liabilities ...... 17,042 14,379 12,687 Liabilities directly correlated with assets held for sale...... — — 83 Total liabilities ...... 23,792 18,616 18,083 Total liabilities and shareholders’ equity ...... 29,922 24,048 23,403

28 Statement of Cash Flow Data Year ended December 31, 2008 2007 2006 (In millions of Euro) Cash flow from operating activities: Gross cash flow from operating activities ...... 1,968 1,711 1,600 Changes in working capital ...... (169) 318 347 Collection of ENEA settlement ...... 296 — — Changes in other operating assets and liabilities and provisions for risks and charges ...... (349) (273) (257) Finance costs paid ...... (127) (116) (160) Income taxes paid...... (200) (241) (212) Net cash generated from operating activities ...... 1,419 1,399 1,318 Cash flow from investing activities: Acquisitions of subsidiaries, net of cash acquired...... (82) (434) (181) Acquisition of DRS ...... (2,372) — — Sale of STM shares ...... 260 — — Purchase of property, plant and equipment and intangible assets ...... (989) (1,128) (873) Proceeds from sale of property, plant and equipment and intangible assets ...... 23 74 94 IPO Ansaldo STS ...... — — 458 Avio operation ...... — — 303 Other investing activities...... (19) 25 (63) Net cash used in investing activities ...... (3,179) (1,463) (262) Cash flow from financing activities: Share capital increase ...... 1,206 — — Repayment of DRS’s convertible bond and bank payables ...... (315) — — Repayments of bonds ...... (297) (6) — Issue of bonds ...... 745 — — Proceeds from Facility Agreement...... 3,015 — — Repayment of Facility Agreement ...... (1,205) — — Net change in other borrowings...... (499) (163) 102 Dividends paid to Company’s shareholders ...... (174) (149) (211) Dividends paid to minority interests ...... (13) (2) (3) Net cash generated from/(used in) financing activities ...... 2,463 (320) (112) Net increase/(decrease) in cash and cash equivalents ...... 703 (384) 944 Exchange losses on cash and cash equivalents ...... (13) (12) (2) Cash and cash equivalents as of January 1, ...... 1,607 2,003 1,061 Cash and cash equivalents as of December 31, ...... 2,297 1,607 2,003

29 Unaudited Interim Condensed Consolidated Financial Information Income Statement Data Six months ended June 30, 2009 2008 (In millions of Euro, except per share information) (Unaudited) Revenue...... 8,523 6,433 Purchases and personnel costs...... (7,621) (5,820) Amortization, depreciation and impairment ...... (320) (220) Other operating income/(expenses) ...... (23) (18) Operating income ...... 559 375 Finance income/(costs) ...... (168) — Share of profit/(loss) of equity accounted investments ...... 12 10 Profit before taxes ...... 403 385 Income taxes ...... (161) (88) Net profit ...... 242 297 — attributable to equity holders of the Group ...... 218 278 — attributable to minority interests ...... 24 19 Earnings per share Basic ...... 0.378 0.623 Diluted ...... 0.377 0.622

30 Balance Sheet Data As of As of June 30, December 31, 2009 2008 (In millions of Euro) (Unaudited) Non-current assets Intangible assets ...... 8,516 8,237 Property, plant and equipment ...... 3,185 3,099 Financial assets at fair value ...... 180 154 Deferred taxes ...... 662 648 Other assets ...... 1,085 975 Total non-current assets ...... 13,628 13,113 Current assets Inventories ...... 4,876 4,365 Trade receivables, including net work in progress ...... 8,729 8,329 Financial receivables ...... 758 679 Derivatives ...... 302 243 Other assets ...... 988 896 Cash and cash equivalents ...... 718 2,297 Total current assets ...... 16,371 16,809 Total assets ...... 29,999 29,922 Shareholders’ equity Share capital ...... 2,508 2,519 Other reserves ...... 3,643 3,455 Capital and reserves attributable to equity holders of the Group ...... 6,151 5,974 Minority interests in equity ...... 168 156 Total shareholders’ equity ...... 6,319 6,130 Non-current liabilities Borrowings ...... 3,743 4,095 Employee liabilities ...... 1,032 1,027 Provisions for risks and charges ...... 386 344 Deferred taxes ...... 527 553 Other liabilities ...... 699 731 Total non-current liabilities ...... 6,387 6,750 Current liabilities Trade payables, including advances from customers, net ...... 12,239 12,134 Borrowings ...... 2,349 2,265 Income tax payables ...... 338 201 Provisions for risks and charges ...... 571 632 Derivatives ...... 95 236 Other liabilities ...... 1,701 1,574 Total current liabilities ...... 17,293 17,042 Total liabilities ...... 23,680 23,792 Total liabilities and shareholders’ equity ...... 29,999 29,922

31 Statement of Cash Flow Data Six months ended June 30, 2009 2008 (In millions of Euro) (Unaudited) Cash flow from operating activities: Gross cash flow from operating activities ...... 1,019 635 Changes in working capital ...... (1,024) (1,135) Changes in other operating assets and liabilities and provisions for risks and charges ..... (109) (183) Finance costs paid ...... (97) (40) Income taxes paid ...... (35) (67) Net cash used in operating activities...... (246) (790) Cash flow from investing activities: Acquisitions of subsidiaries, net of cash acquired ...... (11) (78) Sale of STM shares ...... — 260 Purchase of property, plant and equipment and intangible assets...... (475) (541) Proceeds from sale of property, plant and equipment and intangible assets ...... 6 6 Subscription of SCAC and other equity investments...... (149) — Other investing activities...... (5) (25) Net cash used in investing activities ...... (634) (378) Cash flow from financing activities: Share capital increase ...... — 1 Dividends paid to Company’s shareholders ...... (237) (174) Dividends paid to minority interests ...... (17) (13) Repayment of DRS’s convertible bond and bank payables ...... (868) — Issue of bonds ...... 696 — Net change in other borrowings ...... (275) 70 Net cash used in financing activities ...... (701) (116) Net decrease in cash and cash equivalents ...... (1,581) (1,284) Exchange gains/(losses) on cash and cash equivalents ...... 2 (9) Cash and cash equivalents at the beginning of the period ...... 2,297 1,607 Cash and cash equivalents as of the period ...... 718 314

32 SUPPLEMENTAL SELECTED FINANCIAL DATA AS OF AND FOR THE PERIOD ENDED SEPTEMBER 30, 2009 The following tables set forth selected financial information of the Group as of and for the periods indicated. Selected financial information as of and for the years ended December 31, 2008 has been derived from the Annual Consolidated Financial Statements. Selected financial information as of and for the period ended September 30, 2009 and 2008 has been derived from the September Unaudited Interim Condensed Consolidated Financial Information. Interim results are not necessarily indicative of the results that may be expected for any other interim period nor are they indicative results for a full year. The selected financial data in the tables below should be read together with the Annual Consolidated Financial Statements and the Unaudited Condensed Consolidated Financial Information for the period ended September 30, 2009 including the notes thereto, which are included elsewhere in this Listing Prospectus or are incorporated by reference. See also “Presentation of Financial Information and Incorporation by Reference”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Capitalization”.

Unaudited Interim Condensed Consolidated Financial Information Income Statement Data Nine months ended September 30, 2009 2008 (In millions of Euro, except per share information) (Unaudited) Revenue ...... 12,640 9,688 Purchase and personnel costs ...... (11,325) (8,754) Amortization, depreciation and impairment ...... (473) (343) Other operating income/(expenses) ...... (28) (30) Operating income ...... 814 561 Finance income/(costs) ...... (244) (39) Share of profit/(loss) of equity accounted investments ...... 14 14 Profit before taxes ...... 584 536 Income taxes ...... (220) (140) Net profit ...... 364 396 — attributable to equity holders of the Group — attributable to minority interests ...... 328 365 Earnings per share Basic ...... 0.568 0.818 Diluted...... 0.567 0.817

33 Balance Sheet Data As of As of September 30, 2009 December 31, 2008 (In millions of Euro) (Unaudited) Non-current assets Intangible assets ...... 8,419 8,237 Property, plant and equipment ...... 3,129 3,099 Financial assets at fair value ...... 218 154 Deferred taxes ...... 662 648 Other assets ...... 1,057 975 Total non-current assets ...... 13,485 13,113 Current assets Inventories ...... 4,889 4,365 Trade receivables, including net work in progress ...... 8,800 8,329 Financial receivables ...... 683 679 Derivatives ...... 315 243 Other assets ...... 1,065 896 Cash and cash equivalents ...... 511 2,297 Total current assets...... 16,263 16,809 Total assets ...... 29,748 29,922 Shareholders’ equity Share capital ...... 2,504 2,519 Other reserves ...... 3,597 3,455 Capital and reserves attributable to equity holders of the Group ... 6,101 5,974 Minority interests in equity ...... 184 156 Total shareholders’ equity ...... 6,285 6,130 Non-current liabilities Borrowings ...... 3,791 4,095 Employee liabilities ...... 1,053 1,027 Provisions for risks and charges ...... 389 344 Deferred taxes ...... 518 553 Other liabilities ...... 674 731 Total non-current liabilities ...... 6,425 6,750 Current liabilities Trade payables, including advances from customers, net ...... 11,919 12,134 Borrowings ...... 2,644 2,265 Income tax payables ...... 232 201 Provisions for risks and charges ...... 571 632 Derivatives ...... 87 236 Other liabilities ...... 1,585 1,574 Total current liabilities ...... 17,038 17,042 Total liabilities ...... 23,463 23,792 Total liabilities and shareholders’ equity ...... 29,748 29,922

34 Statement of Cash Flow Data Nine months ended September 30, 2009 2008 (In millions of Euro) (Unaudited) Cash flow from operating activities: Gross cash flow from operating activities ...... 1,445 980 Changes in working capital ...... (1,483) (1,227) Changes in other operating assets and liabilities and provisions for risks and charges ...... (178) (315) Finance costs paid ...... (171) (55) Income taxes paid ...... (299) (119) Net cash used in operating activities ...... (686) (736) Cash flow from investing activities: Acquisitions of subsidiaries, net of cash acquired ...... (23) (82) Sale of STM shares ...... — 260 Purchase of property, plant and equipment and intangible assets ...... (658) (844) Proceeds from sale of property, plant and equipment and intangible assets...... 43 22 Subscription of SCAC and other equity investments ...... (145) (9) Other investing activities ...... (9) 146 Net cash used in investing activities ...... (792) (507) Cash flow from financing activities: Share capital increase ...... — 2 Dividends paid to Company’s shareholders ...... (237) (174) Dividends paid to minority interests ...... (17) (13) Repayment of DRS’s convertible bond and bank payables ...... (868) — Issue of bonds ...... 1,262 — Net change in other borrowings ...... (435) 240 Net cash used in financing activities ...... (295) 55 Net decrease in cash and cash equivalents ...... (1,773) (1,188) Exchange losses on cash and cash equivalents ...... (13) (7) Cash and cash equivalents at the beginning of the period ...... 2,297 1,607 Cash and cash equivalents as of the period, ...... 511 412

35 FINANCIAL INFORMATION AND NON-GAAP MEASURES

Financial Information and Non-GAAP Measures This section contains financial indicators and non-GAAP measures including adjusted EBITA, return on sales, funds from operations, free operating cash flow, return on investments, return on equity, net financial indebtedness, working capital, net invested capital and cash used in ordinary investing activities, which are not recognized as measures of financial performance or liquidity under IFRS. In addition, this section includes adjusted EBITA and return on sales analyzed by business segment based on the segment reporting in the Group’s financial statements. Investors should not place any undue reliance on these non-GAAP measures and financial indicators and should not consider these measures as: (a) an alternative to operating income or net income as determined in accordance with generally accepted accounting principles, or as measures of operating performance; (b) an alternative to cash flows from operating, investing or financing activities (as determined in accordance with generally accepted accounting principles), or as a measure of the Group’s ability to meet cash needs; or (c) an alternative to any other measures of performance under generally accepted accounting principles. These measures are not indicative of the Group’s historical operating results, nor are they meant to be predictive of future results. These measures are used by Group’s management to monitor the underlying performance of the business and the operations. Since all companies do not calculate these measures in an identical manner, the Group’s presentation may not be consistent with similar measures used by other companies. Therefore, investors should not place undue reliance on this data.

Summary Financial Information Derived from the Balance Sheet As of June 30, As of December 31, 2009 2008 2007 2006 (In millions of Euro) (Unaudited) Net financial indebtedness(1) ...... 4,615 3,383 1,158 858 Working capital(2) ...... 1,366 560 448 684 Net invested capital(3) ...... 10,934 9,513 6,590 6,151

Other Financial Information and Measures Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except as indicated) (Unaudited) Adjusted EBITA(4) ...... 605 400 1,305 1,045 942 Return on sales(5) ...... 7.1% 6.2% 8.7% 7.8% 7.6% Funds from operations(6) ...... 778 345 1,588 1,081 971 Cash used in ordinary investing activities(7) ...... (449) (557) (950) (1,024) (812) Free operating cash flow(8) ...... (695) (1,347) 469 375 506 Return on investments(9) ...... n.a. n.a. 21.4% 18.9% 19.2% Return on equity(10) ...... n.a. n.a. 10.5% 9.7% 20.8% Dividends paid ...... 254 187 187 151 214 Research and development costs ...... 887 834 1,809 1,836 1,783 Employees (in number) ...... 73,517 61,909 73,398 60,748 58,059

(1) Net financial indebtedness is defined as the sum of current borrowings and non-current borrowings less the sum of cash and cash equivalents, financial assets at fair value and financial receivables.

36 The following table presents net financial indebtedness for each of the periods indicated as defined in CESR recommendation 05-05b, implemented by EC regulation 809/2004: As of June 30, As of December 31, 2009 2008 2007 2006 (In millions of Euro) (Unaudited) Cash and cash equivalents...... (718) (2,297) (1,607) (2,003) Securities held for trading...... (1) (1) (13) (21) Liquidity ...... (719) (2,298) (1,620) (2,024) Current financial receivables ...... (758) (679) (606) (478) Current bank payables ...... 1,041 178 133 81 Bonds issued ...... 181 966 351 78 Due to related parties ...... 703 652 560 500 Other current borrowings ...... 424 469 665 722 Current borrowings ...... 2,349 2,265 1,709 1,381 Net current financial indebtedness/(position) ...... 872 (712) (517) (1,121) Non-current bank payables ...... 784 1,880 149 195 Bonds issued ...... 2,856 2,115 1,407 1,670 Other non-current payables ...... 103 100 119 114 Non-current borrowings ...... 3,743 4,095 1,675 1,979 Net financial indebtedness ...... 4,615 3,383 1,158 858

(2) The following table provides the calculation of working capital: As of June 30, As of December 31, 2009 2008 2007 2006 (In millions of Euro) (Unaudited) Inventories ...... 4,876 4,365 3,383 3,095 Total trade receivables(2(I))...... 8,729 8,329 7,546 6,679 Total trade payables(2(II)) ...... (12,239) (12,134) (10,481) (9,090) Working capital ...... 1,366 560 448 684

2(I) Total trade receivables includes trade receivables and contract work in progress. 2(II) Total trade payables include trade payables and advances from customers. (3) Net invested capital is defined as non-current assets less non-current liabilities (excluding non-current borrowings) plus working capital less provision for short-term risks and charges, and other net current liabilities.

37 The following table provides the calculation of net invested capital: As of June 30, As of December 31, 2009 2008 2007 2006 (In millions of Euro) (Unaudited) Non-current assets ...... 13,628 13,113 9,845 9,919 Non-current liabilities(3(I))...... (2,644) (2,655) (2,562) (3,334) 10,984 10,458 7,283 6,585 Inventories ...... 4,876 4,365 3,383 3,095 Total trade receivables ...... 8,729 8,329 7,546 6,679 Total trade payables ...... (12,239) (12,134) (10,481) (9,090) Working capital ...... 1,366 560 448 684 Provisions for short-term risks and charges ...... (571) (632) (545) (571) Other net current liabilities(3(II)) ...... (845) (873) (596) (547) Net invested capital ...... 10,934 9,513 6,590 6,151

3(I) The Group has calculated non-current liabilities as total non-current liabilities less non-current borrowings. 3(II) Other net current liabilities is defined as the sum of income tax receivables, derivative assets and other current assets less the sum of other current liabilities, derivatives liabilities and income tax payables. (4) The Group has calculated Adjusted EBITA as net profit adjusted for total finance costs/(income), share of (profit)/loss of equity accounted investments, income taxes, loss from discontinued operations and further adjusted for: (i) any impairment in goodwill; (ii) amortization of the intangible assets identified in the purchase price allocation in business combinations, as required by IFRS 3; (iii) restructuring costs that are a part of significant defined plans; and (iv) other exceptional costs or income connected to significant events that are not related to the ordinary performance of the business. The following table provides a reconciliation of net profit to adjusted EBITA: Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro) (Unaudited) Net profit ...... 242 297 621 521 1,021 Total finance costs/(income)...... 168 — 238 253 (370) Share of (profit)/loss of equity accounted investments ...... (12) (10) (16) (16) 5 Income taxes ...... 161 88 367 326 243 Loss from discontinued operations ...... — — — — 9 Impairment of goodwill(4(I)) ...... — — 40 — — Amortization of intangible assets acquired as part of business combinations(4(II))...... 39 11 34 26 24 Restructuring costs(4(III))...... 7 14 41 58 10 Unusual (income)/cost ...... Impairment related to the closure of the Law 808 dispute(4(IV))...... — — — 125 — Write-up of receivables from ENEA(4(V)) ...... — — (20) (248) — Adjusted EBITA ...... 605 400 1,305 1,045 942

4 (I) Impairment of goodwill The impairment charges in 2008 mainly relate to the recognition of impairment of Euro 40 million in the communications division of the Defense Electronics and Security segment.

38 4 (II) Amortization of intangible assets acquired as part of business combinations Relates to the amortization of intangible assets identified in the course of business combinations, in accordance with IFRS 3 and in particular the acquisition of a further 50% of AgustaWestland for the Helicopters segment in 2004, the acquisition of Selex Sensors and Airborne Systems Ltd. in 2006 and the acquisition of DRS in 2008 for the Defense Electronics and Security segment.

4 (III) Restructuring costs The Group has been involved in some restructuring programs through the different businesses and segments with the aim of reducing indirect costs, increasing productive efficiency and rationalizing production sites. As the restructuring costs relate to clearly identified projects which are not considered recurring in nature, management has considered these costs as unusual in nature and adjusted for them in adjusted EBITA. The main programs were as follows: Defense Electronics and Security. Restructuring programs are being performed mainly at Selex Commu- nications S.p.A., with the aim of increasing efficiency and reducing redundancies. Costs charged to the income statement amounted to Euro 9 million for the year ended December 31, 2006, Euro 30 million for the year ended December 31, 2007, Euro 22 million for the year ended December 31, 2008, Euro 8 million for the six months ended June 30, 2008, and Euro 2 million for the six months ended June 30, 2009. The increase of 2007 compared to 2006 is due to incentives paid to employees for voluntary redundancy and to the incentives and contributions paid or to be paid under the plan agreed in 2007 with employees and trade unions. Defense Systems. Restructuring costs were incurred as a consequence of redundancies and site restructuring relating to Oto Melara for the year ended December 31, 2008 and the MBDA S.A.S. joint venture amounting to a total of Euro 10 million, Euro 7 million and Euro 15 million for the years ended December 31, 2008, 2007 and 2006, respectively, and a total of Euro 1 million and Euro 5 million for the six months ended June 30, 2009 and 2008, respectively. Aeronautics. Restructuring costs were incurred as a consequence of site restructuring relating to Alenia Aeronavali amounting to Euro 4 million for the year ended December 31, 2008 and Euro 1 million for the six months ended June 30, 2009. The amount of restructuring costs for the six months ended June 30, 2008 was nil. Transportation. Restructuring programs were performed in 2007 and 2008 in the vehicle business to reduce redundancies and as part of the significant current changes mainly of AnsaldoBreda S.p.A. In 2007, the Group and employees of AnsaldoBreda S.p.A. agreed to a restructuring plan. Therefore, the Group provided for all the incentives and contributions paid or to be paid in future years amounting to Euro 3 million for the year ended December 31, 2008, Euro 19 million for the year ended December 31, 2007, Euro 2 million for the six months ended June 30, 2009 and Euro 1 million for the six months ended June 30, 2008. Space. Restructuring costs were incurred in the manufacturing business, due to overlap between the entities in the joint venture. Therefore, site restructuring and redundancy costs were incurred amounting to Euro 6 million for the year ended December 31, 2007, Euro 2 million for the year ended December 31, 2008, and Euro 1 million for the six months ended June 30, 2009. The amount of restructuring costs for the six months ended June 30, 2008 was nil.

4 (IV) Impairment related to the closure of the Law 808 dispute Pursuant to Law 808, the Group had received non-interest bearing loans from the Italian government for research and development programs. The repayment schedule was connected to the achievement of estimated sales under the research and development programs. In 2003 the European Commission notified the Italian government of an infringement procedure for undue state aids. In December 2007 the Italian government, the Competition Directorate General of the European Commission and the Group agreed to a new repayment schedule and the methods to calculate past interest charges. As a consequence, the Group reviewed the costs which had been capitalized in connection with these projects to take into account that the risk-sharing mechanisms of Law 808 no longer apply. This led to impairment of assets by Euro 125 million, of which Euro 87 million relates to intangible assets, Euro 25 million relates to property, plant and equipment and Euro 13 million relates to inventory.

39 4 (V) Write-up of receivables from Ente Nationale Energia Atomica (“ENEA”) On November 29, 2007 pursuant to Law 222/2007, the Italian Government identified the financial resources necessary to let ENEA pay, by way of settlement, the amounts due to Finmeccanica for the settlement of the dispute between ENEA and Finmeccanica regarding the expenses borne by Finmeccan- ica following the termination under Law 321/1988 of the contract with ENEA for the construction of the PEC nuclear plant. Following various court rulings, both parties jointly reviewed the individual items claimed by Finmeccanica. In 2007, although no formal agreement has been entered into, based on the review, a range of possible settlement amounts was determined, of which the minimum claim was Euro 340 million. As a result, the previously impaired receivable of Euro 53 million as of December 31, 2006 was written-up by Euro 287 million and an amount of Euro 39 million was recorded for expected legal fees, with a net income recognized in 2007 income statement amounting to Euro 248 million. On December 12, 2008 the settlement agreement between Finmeccanica S.p.A. and ENEA was signed. The effect on 2008 operating income of the settlement net of tax was Euro 20 million. Following the settlement, Finmeccanica collected Euro 296 million, net of tax, with Euro 64 million recorded as receivables as of December 31, 2008. The whole amount has been repaid as of June 30, 2009. (5) The Group has calculated return on sales as adjusted EBITA divided by revenue. (6) Funds from operations is defined as the sum of gross cash flow from operating activities, changes in other operating assets and liabilities and provisions for risks and charges, finance costs paid and income taxes paid. For the year ended December 31, 2008 the amount also includes collection of the ENEA settlement. The following table provides the calculation of funds from operations: Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro) (Unaudited) Gross cash flow from operating activities ...... 1,019 635 1,968 1,711 1,600 Collection of ENEA settlement...... — — 296 — — Changes in other operating assets and liabilities and provisions for risks and charges ...... (109) (183) (349) (273) (257) Finance costs paid ...... (97) (40) (127) (116) (160) Income taxes paid ...... (35) (67) (200) (241) (212) Funds from operations ...... 778 345 1,588 1,081 971

(7) Cash used in ordinary investing activities has been defined as cash flow used in investment of intangible assets, property, plant and equipment, and equity investments, net of cash flows from the purchase or sale of equity investments that, due to their nature or significance, are considered “strategic investments”. The following table provides the calculation of cash used in ordinary investing activities: Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro) (Unaudited) Investments in property, plant and equipment ...... (255) (242) (497) (630) (566) Investments in intangible assets ...... (220) (299) (492) (498) (307) Disposal of property, plants and equipment and intangible assets ...... 6 6 23 74 94 Other ...... 20 (22) 16 30 (33) Cash used in ordinary investing activities ...... (449) (557) (950) (1,024) (812)

(8) Free operating cash flow is defined as the sum of the cash flow generated by or used in operating activities less cash used in ordinary investing activities.

40 The following table provides the calculation of free operating cash flow: Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro) (Unaudited) Net cash (used in)/generated from operating activities ...... (246) (790) 1,419 1,399 1,318 Cash used in ordinary investing activities ...... (449) (557) (950) (1,024) (812) Free operating cash flow ...... (695) (1,347) 469 375 506

(9) The Group has calculated return on investments as the ratio of adjusted EBITA to the average value of capital invested during the two periods being compared, net of investments in STM microelectronics (“STM”) and Avio S.p.A. (“Avio”). The following table provides the calculation of return on investment: Year ended December 31, 2008 2007 2006 (In millions of Euro) Adjusted EBITA...... 1,254 1,045 942 Average value of capital invested ...... 6,354 6,371 5,864 Investments in STM and Avio (average) ...... (499) (843) (955) 5,855 5,528 4,909 Return on investments ...... 21.4% 18.9% 19.2%

The figures associated with DRS were not used in calculating ROI for 2008. (10) Return on equity has been calculated as net profit divided by the average of the opening and closing total shareholders’ equity. The following table provides the calculation of return on equity: Year ended December 31, 2008 2007 2006 (In millions of Euro) Net profit ...... 605 521 1,021 Average total shareholders’ equity ...... 5,773 5,376 4,913 Return on equity ...... 10.5% 9.7% 20.8%

The figures associated with DRS were not used in calculating ROE for 2008.

Segment Financial Indicators The following tables present financial indicators based on the segmental reporting in the Group’s financial statements:

Helicopters Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except as indicated) (Unaudited) New orders ...... 1,821 1,618 5,078 3,970 4,088 Order backlog ...... 10,610 8,874 10,481 9,004 8,572 Revenue ...... 1,646 1,469 3,035 2,980 2,727 Operating income ...... 158 154 344 340 293 Adjusted EBITA(11) ...... 162 158 353 377 296 Return on sales(12)...... 9.8% 10.8% 11.6% 12.7% 10.9% Research and development costs ...... 162 126 273 322 356 Employees (in number) ...... 10,335 10,021 10,289 9,556 8,899

41 Defense Electronics and Security Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except as indicated) (Unaudited) New orders ...... 3,306 1,951 4,418 5,240 4,197 Order backlog ...... 11,239 8,759 10,700 8,725 7,676 Revenue ...... 3,075 1,628 4,362 3,826 3,747 Operating income ...... 238 84 357 382 314 Adjusted EBITA(11) ...... 274 98 442 427 338 Return on sales(12) ...... 8.9% 6.0% 10.1% 11.2% 9.0% Research and development costs ...... 323 272 619 557 541 Employees (in number) ...... 30,277 19,487 30,330 19,589 19,185

Aeronautics Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except as indicated) (Unaudited) New orders ...... 651 844 2,720 3,104 2,634 Order backlog ...... 7,829 7,841 8,281 8,248 7,538 Revenue ...... 1,208 1,062 2,530 2,306 1,908 Operating income ...... 59 70 246 150 209 Adjusted EBITA(11) ...... 60 70 250 240 209 Return on sales(12) ...... 5.0% 6.6% 9.9% 10.4% 11.0% Research and development costs ...... 212 245 508 581 486 Employees (in number) ...... 13,849 13,778 13,907 13,301 12,135

Space Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except as indicated) (Unaudited) New orders ...... 565 416 921 979 851 Order backlog ...... 1,546 1,407 1,383 1,423 1,264 Revenue ...... 435 451 994 853 764 Operating income ...... 12 15 62 48 46 Adjusted EBITA(11) ...... 13 15 65 61 42 Return on sales(12) ...... 3.0% 3.3% 6.5% 7.2% 5.5% Research and development costs...... 30 29 64 62 64 Employees (in number) ...... 3,673 3,531 3,620 3,386 3,221

42 Defense Systems Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except as indicated) (Unaudited) New orders ...... 566 506 1,087 981 1,111 Order backlog...... 3,982 3,997 3,879 4,099 4,252 Revenue ...... 514 513 1,116 1,130 1,127 Operating income ...... 40 36 116 116 92 Adjusted EBITA(11) ...... 42 42 127 125 107 Return on sales(12) ...... 8.2% 8.2% 11.4% 11.1% 9.5% Research and development costs ...... 119 122 258 241 279 Employees (in number) ...... 4,036 4,049 4,060 4,149 4,275

Energy Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except as indicated) (Unaudited) New orders ...... 398 1,063 2,054 1,801 1,050 Order backlog ...... 3,311 3,733 3,779 3,177 2,468 Revenue ...... 820 512 1,333 1,049 978 Operating income ...... 76 37 122 93 65 Adjusted EBITA(11) ...... 76 37 122 93 65 Return on sales(12) ...... 9.3% 7.2% 9.2% 8.9% 6.6% Research and development costs...... 16 12 32 20 17 Employees (in number) ...... 3,409 3,184 3,285 2,980 2,856

Transportation Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except as indicated) (Unaudited) New orders ...... 1,190 578 1,557 1,786 2,127 Order backlog...... 5,118 4,836 4,849 5,108 4,703 Revenue ...... 895 836 1,759 1,356 1,368 Operating income ...... 53 46 123 (129) 17 Adjusted EBITA(11) ...... 55 47 126 (110) 17 Return on sales(12) ...... 6.1% 5.6% 7.2% (8.1)% 1.2% Research and development costs ...... 24 28 51 47 40 Employees (in number) ...... 7,135 7,087 6,838 6,669 6,677 From the date of preparation of the March interim financial information, the results of Breda Menarinibus S.p.A. have been included in the transportation segment results. Prior to this date the results of this entity were included in the other activities segment. In accordance with IFRS, the comparative information for June 30, 2008 shown in the Unaudited Interim Condensed Consolidated Financial Information has been restated to reflect this reclassification. The annual information shown in the table above as of and for the years ended December 31, 2008, 2007 and 2006 has not been restated. The annual information will be adjusted prospectively for the financial statements as of and for the year ended December 31, 2009.

43 Other Activities and Elimination Six months ended June 30, Year ended December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except as indicated) (Unaudited) New orders ...... (170) (167) (260) 55 (333) Order backlog ...... (655) (442) (415) (480) (663) Revenue ...... (70) (38) (92) (71) (147) Operating income ...... (77) (67) (160) 84 (128) Adjusted EBITA(11) ...... (77) (67) (180) (168) (132) Return on sales(12) ...... 110.0%. n.a. n.a. n.a. 89.8% Research and development costs ...... — — 4 6 — Employees (in number) ...... 803 772 1,069 1,118 811 From the date of preparation of the March interim financial information, the results of Breda Menarinibus S.p.A. have been included in the transportation segment results. Prior to this date the results of this entity were included in the other activities segment. In accordance with IFRS, the comparative information for June 30, 2008 shown in the Unaudited Interim Condensed Consolidated Financial Information has been restated to reflect this reclassification. The annual information shown in the table above as of and for the years ended December 31, 2008, 2007 and 2006 has not been restated. The annual information will be adjusted prospectively for the financial statements as of and for the year ended December 31, 2009.

(11) The Group has calculated segment adjusted EBITA as segment operating income/(loss) adjusted for: (i) any impairment in goodwill; (ii) amortization of the intangible assets identified in the purchase price allocation of the intangible assets acquired in business combinations, as required by IFRS 3; (iii) restructuring costs that are a part of significant defined plans; and (iv) other exceptional costs or income connected to significant events that are not related to the ordinary performance of the business. The following table provides a reconciliation of segment adjusted EBITA to segment operating income/ (loss): Other Defense Activities Electronics and Defense and Helicopters Security Aeronautics Space Systems Energy Transportation Eliminations Total (In millions of Euro except as indicated) Operating income 2008 ...... 344 357 246 62 116 122 123 (160) 1,210 Amortization of intangibles as part of a business combination (PPA)(1) .. 9 23 — 1 1 — — — 34 Impairment of goodwill ...... — 40 — — — — — — 40 Restructuring costs ...... — 22 4 2 10 — 3 — 41 Write-up of receivables from ENEA...... — — — — — — — (20) (20) Adjusted EBITA 2008 ...... 353 442 250 65 127 122 126 (180) 1,305

% segment total revenue ...... 11.6% 10.1% 9.9% 6.5% 11.4% 9.2% 7.2% n.a. 8.7% Operating income/(loss) 2007 . .... 340 382 150 48 116 93 (129) 84 1,084 Amortization of intangibles as part of a business combination (PPA)(1) .. 9 15 — — 2 — — — 26 Impairment related to Law 808 .... 28 — 90 7 — — — — 125 Restructuring costs ...... — 30 — 6 7 — 19 (4) 58 Write-up of receivables from ENEA...... — — — — — — — (248) (248) Adjusted EBITA 2007 ...... 377 427 240 61 125 93 (110) (168) 1,045

% segment total revenue ...... 12.7% 11.2% 10.4% 7.2% 11.1% 8.9% (8.1)% n.a. 7.8% Operating income/(loss) 2006 . .... 293 314 209 46 92 65 17 (128) 908 Amortization of intangibles as part of a business combination (PPA)(1) .. 9 15 — — — — — — 24 Restructuring costs ...... (6) 9 — (4) 15 — — (4) 10

Adjusted EBITA 2006 ...... 296 338 209 42 107 65 17 (132) 942

% segment total revenue ...... 10.9% 9.0% 11.0% 5.5% 9.5% 6.6% 1.2% 89.8% 7.6%

44 Defense Other Electronics Activities and Defense and Helicopters Security Aeronautics Space Systems Energy Transportation Eliminations Total (In millions of Euro) (Unaudited) Operating income June 30, 2009 ...... 158 238 59 12 40 76 53 (77) 559 Amortization of intangibles as part of a business combination combination (PPA)(1) ...... 4 34 — — 1 — — — 39 Restructuring costs ...... — 2 1 1 1 — 2 — 7 Adjusted EBITA June 30, 2009 ...... 162 274 60 13 42 76 55 (77) 605

% segment total revenue ...... 9.8% 8.9% 5.0% 3.0% 8.2% 9.3% 6.1% 110.0% 7.1% Operating income June 30, 2008 ...... 154 84 70 15 36 37 46 (67) 375 Amortization of intangibles as part of a business combination combination (PPA)(1) ...... 4 6 — — 1 — — — 11 Restructuring costs ...... — 8 — — 5 — 1 — 14 Adjusted EBITA June 30, 2008 ...... 158 98 70 15 42 37 47 (67) 400

% segment total revenue ...... 10.8% 6.0% 6.6% 3.3% 8.2% 7.2% 5.6% n.a. 6.2%

(1) Amortization of intangibles as part of a business combination is the amortization of the intangible assets identified in the course of business combinations in accordance with IFRS 3.

(12) The Group has calculated segment return on sales as segment adjusted EBITA divided by segment revenue. The following table presents financial indicators based on the geographical segmentation: As of and for the year ended December 31, 2008 2007 2006 (In millions of Euro) Revenue Europe ...... 10,345 10,139 9,241 North America ...... 1,809 1,468 1,408 Other ...... 2,883 1,822 1,823 15,037 13,429 12,472 Capital expenditure Europe ...... 815 983 893 North America ...... 69 34 18 Other ...... 5 11 3 889 1,028 914

45 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion and analysis of the Group’s results of operations and financial condition as of and for the years ended December 31, 2008, 2007 and 2006 as derived from the Annual Consolidated Financial Statements and as of and for the six months ended June 30, 2009 and 2008 as derived from the Unaudited Interim Condensed Consolidated Financial Information. You should read this discussion in conjunction with the sections entitled “Presentation of Financial Information”, “Selected Financial Data”, “Capitalization”, “Unaudited Pro Forma Consolidated Financial Information”, “Annual Consolidated Financial Statements”, and “Unaudited Interim Condensed Consolidated Financial Information” all of which are included elsewhere in this Listing Prospectus. This discussion includes forward-looking statements, which, although based on assumptions that the Group considers reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those expressed or implied by the forward-looking statements. See “Forward-Looking Statements” and for a discussion of risks and uncertainties facing the Group, you should also see “Risk Factors”.

Overview Finmeccanica, together with its subsidiaries, is one of the leading European aerospace and defense companies in terms of revenues and a leading high technology company operating in the design and manufacture of helicopters, defense electronics and security, civil and military aircraft, aerostructures, satellites, space infrastructures, land and naval armaments, underwater systems and missiles. The Group’s operations are currently divided into the following eight reporting business segments: (i) Helicopters; (ii) Defense Electronics and Security; (iii) Aeronautics; (iv) Space; (v) Defense Systems; (vi) Energy; (vii) Transportation; and (viii) Other Activities. Finmeccanica participates in numerous international programs in the sector through well-established alliances with European and U.S. partners. The Group also has significant assets and activities in the energy and transportation sectors.

Consolidation Principles Finmeccanica fully consolidates any investment when it directly or indirectly exercises control or de facto control over the financial and operating polices of the investee entity. The portion of shareholders’ equity and income for the year attributable to minority interests are disclosed separately in the balance sheet and the income statement. Entities over which Finmeccanica exercises joint control with other entities are consolidated using the proportionate method. Based on this method, Finmeccanica recognizes its share of assets, liabilities, revenues and expenses on a line by line basis. Finally, entities over which the Group has significant influence are accounted for using the equity method whereby the Group’s share of post acquisition profits or losses is recognized in the income statement under “share of profit (loss) of equity accounted investments” and its share of post-acquisition movements in equity are recognized in equity on the balance sheet. The following are the Group’s main investments including respective subsidiaries and associates that are not fully consolidated: • Helicopters — the Group holds a 50.0% stake in Aviation Training International Ltd. and uses the proportionate method for consolidation; • Defense Electronics and Security — the Group holds a 49.0% stake in Orizzonte — Sistemi Navali S.p.A., and a 31.3% stake in Elettronica S.p.A. and both are consolidated using the equity method; • Aeronautics — the Group holds a 44.2% stake in Global Aeronautica LLC and a 50.0% stake in the EEIG ATR consortium, which are both consolidated using the proportionate method and a 21.0% stake in Eurofighter Jagdflugzeug GmbH (Eurofighter J. GmbH), which is consolidated using the equity method; • Space — the Group holds a 67.0% stake in Telespazio Holding S.r.l. and a 33.0% stake in Thales Alenia Space S.A.S. and both are consolidated using the proportionate method; and

46 • Defense Systems — the Group holds a 25.0% stake in MBDA S.A.S. and uses the proportionate method for consolidation. • In the Energy and Transportation segments, all main investments are fully consolidated, including Ansaldo STS S.p.A., in which Finmeccanica holds a 40.0% stake. Refer to Note 3.1 of the Annual Consolidated Financial Statements for a list of consolidated entities and the related method of consolidation.

Development Costs and Government Grants The Group’s financial position and cash flows are affected by the availability of government grants and subsidized loans and funds, which influence the amount of Group self-funded capital expenditures and research and development costs. Law 808 finances research and development costs incurred to develop, design and start-up innovative technologies for aerospace and security programs. Under Law 808, as amended in 2006, funded programs are classified into two main categories, “National Security” or “Other”, based on their sensitivity to security issues. When programs are classified as National Security, the Italian government is entitled to receive royalties when products embedding the funded technology are actually sold. If the program is eligible for funding but does not qualify as National Security, loans by the Italian government are repaid based on a repayment schedule linked to an expected sales plan. Development costs related to these projects are capitalized within intangible assets, as described below: • For National Security programs, the costs are capitalized as “non-recurring costs” and are shown net of the funds collected or to be collected from the Italian government. The portion of capitalized costs for which funding approval is pending is reported separately as “non-current assets” until the legal requirements for the governmental funding are satisfied. Royalties to be paid to the Italian government are recognized in the income statement when the products embedding the funded technology are actually sold; and • For Other programs, the full development costs are capitalized as “non-recurring costs” within intangible assets. Funds received are recognized as “Current liabilities” and “Non-current liabilities” based on the repayment schedule. In both cases capitalized development costs are amortized using the units of production method over the period during which future earnings are expected to be realized for the specific project, up to a maximum of 10 years. Capitalized development costs are tested for impairment at least on an annual basis until development is complete. When the development is complete, the asset is tested for impairment whenever contract prospects change or when expected orders are no longer made or are delayed. The impairment test is performed on expected sales plans, which are generally for a period greater than five years due to the long life of the products under development. Finally, as described in “Business Description — Litigation”, the European Commission has been investigating certain non-interest bearing loans granted by the Italian government to Group companies under Law 808 for research and development programs, which were being treated by the European Commission as state aid. In December 2007, the Italian Ministry for Economic Development (the “MED”), the Competition Directorate-General of the European Commission and the Group agreed upon methods for determining repayment plans. In light of the above, the Group recognized the following items in its financial statements as of and for the year ended December 31, 2007: • Interest charges amounting to Euro 105 million; • Reclassification of payables under Law 808 for a total amount of Euro 389 million (relating to the reclassification of Euro 284 million from other liabilities and Euro 105 million relating to interest costs, as explained above). This amount was re-classified to other current borrowings in accordance with the repayment schedule; and • Impairment of assets amounting to Euro 125 million in connection with costs capitalized in respect of Law 808 programs, to take into account that the risk-sharing mechanisms of Law 808 no longer apply following the European Commission’s review.

47 Of the total amount of Euro 389 million to be repaid under Law 808, Euro 297 million was paid during 2008 and approximately Euro 80 million was paid in January 2009, in accordance with the applicable payment schedules.

Critical Accounting Estimates Revenue Recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group. The Group derives most of its revenues from long-term contracts. The Group recognizes revenue and the related expected profit when such revenue can be reliably measured and it is probable that future economic benefits will flow to the entity, in accordance with the specific criteria set forth below.

Long-Term Contracts The majority of revenues are generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products, and to provide related engineering, technical and other services according to customer specifications. The Group is involved with long-term contracts for both construction and services, which may be fixed-price or cost plus. Revenues from fixed-price contracts are recognized using the percentage-of-completion method. Under the percentage-of-completion method, revenue is recognized based on the amount of activities performed to date as a percentage of the total activities to be performed under the contract. Such progress is mainly measured based on the ratio of total actual costs incurred to date to the total estimated costs for each contract. Therefore, accounting for revenues on a fixed-price contract requires the preparation of estimates of: (i) the costs at completion, which are equal to the sum of the actual costs incurred to date on the contract and the estimated costs to complete; and (ii) the measurement of progress towards completion. The estimated profit or loss at completion on a contract is equal to the difference between the total contract revenue and the total estimated cost at completion. In the case of a contract for which the total estimated contract costs exceed the total revenues, a loss arises and a provision for the entire loss is recorded in the period in which it becomes evident. The unrecoverable costs on a loss contract that are expected to be incurred in future periods are charged against the carrying amount of that contract as part of “Contract work in progress” or “Advances from customers” and are reflected in the income statement as a reduction to revenue. The Group reviews cost performance and estimates to complete on its contracts at least quarterly. Adjustments to original estimates for a contract’s revenue, estimated costs at completion and estimated profit or loss are often required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of the work required under the contract may not change, or if contract modifications occur. The impact of revisions in profit estimates for all types of contracts are recognized on a cumulative catch-up basis in the period in which the revisions are made. The Group generally receives progress payments from customers. In the event that the value of work performed under a contract exceeds the amount of payments received, the difference is recorded as a receivable from customers in “Contract work in progress” on the balance sheet and when the Group has received more payments than work has been performed under a contract, the difference is recorded as a liability under “Advances from customers”. Revenue from cost-plus contracts is recognized by adding a contractual margin to the costs incurred.

Sales of Goods and Services Sales of goods are recognized when the product has been delivered to the customer and all the significant risks and rewards have been transferred. Sales of services are recognized based on the percentage- of-completion method, measured based on the amount of services rendered to date compared to the total amount of services to be provided under the contract.

Financing for EEIG ATR Aircraft EEIG ATR is a joint venture between Finmeccanica and EADS to produce ATR aircraft. In certain instances EEIG ATR facilitates access to funding for its customers by providing guarantees to third parties. If it is determined that substantially all risks and benefits attached to the aircraft sale have not been passed to the

48 customer due to the guarantees provided or other contractual provisions, the sale is not recognized. In this instance, the transaction is recognized as a lease and recorded as deferred income and the asset is capitalized on the Group’s balance sheet and depreciated over the useful life of the asset. If the contract is structured in such a way that the risks are transferred to the customer, it is treated as a finance lease whereby the sale is recognized on delivery and the financial component is recorded as finance income on an accruals basis. In the case of a buy-back clause or a residual value guarantee, the transaction is recognized as a sale only if the present value of the guarantees can be considered immaterial with respect to the overall transaction; otherwise the asset is capitalized by the Group and depreciated over the useful life of the asset. All likely risks associated with operations carried out by EEIG ATR are measured on the basis of prudent valuations conducted by Finmeccanica’s management on a quarterly basis and are either deducted directly from the carrying value of the asset or recognized under provisions for risks and charges.

Hedging Long-Term Contracts Against Foreign Exchange Risk In order to hedge exposure to changes in the value of receipts and payments for long-term contracts denominated in currencies other than the functional currency of the entity performing the transaction, the Group enters into specific hedges at the level of the relevant entity with respect to the specific expected cash flows for each such contract. The hedge is entered into at the time the contract is finalized or earlier if the contract is considered highly probable due to existing framework contracts. Exchange rate risk is usually hedged using plain vanilla derivatives such as forward contracts. However, in certain instances the Group has entered into more complex derivative transactions to protect the Group against the persistent adverse trend in the U.S. dollar that prevailed until the second half of 2008. These complex derivatives do not qualify for hedge accounting under IFRS. In these instances, as with ineffective hedges, changes in the fair value of the instruments are recognized immediately in the income statement within financial income and expense and the underlying asset is valued as if it were exposed to the exchange rate fluctuations. Plain vanilla contracts that qualify for hedge accounting are recorded as cash flow hedges and the part related to the premium or discount for forwards or the time value of money for options is recognized in financial income and expense.

Recognition of the Equity Investments in STM The Group’s equity investment indirectly held in STM is classified as available for sale. Accordingly, the carrying value is adjusted at each balance sheet date to the market value (bid price) with changes in the fair value recognized in the equity reserve for assets available for sale. This reserve is released to the income statement when the investment is sold or when the asset is impaired. The Group utilizes derivatives to mitigate the risk of fluctuations in the market price of STM shares and bond options. Refer to “— Quantitative and Qualitative Disclosures about Market Risk — Equity Price Risks” below and “Financial Assets at Fair Value” in the notes to the financial statements for further details.

Provisions for Risks and Charges As mentioned above, the Group operates in sectors with complex long-term contracts and where many disputes are settled after considerable periods of time, especially when the customer is a government entity. As a result, it is necessary for Finmeccanica’s management to estimate the outcome of such disputes. The amounts provided for in the financial statements represent Finmeccanica’s management’s best estimate at the relevant reporting date of probable and reasonably quantifiable losses.

Liabilities from Defined Benefit Pension Plans The Group is a sponsor of two United Kingdom defined benefit pension plans and has the obligation to ensure a given level of benefits to the plan participants. As a result, the Group carries the risk that the plan assets will not be adequate to cover the benefits. When the funds are in deficit, the trustee managing the fund requests the Group to fund the plan. The deficit from actuarial valuations is recognized as a liability. However, the actuarial valuations stem from actuarial, demographic, statistical and financial assumptions that are highly volatile and that have limited future visibility. In addition, the Group participates in a defined benefit plan through the MBDA joint venture, where the main employer is BAE Systems Plc. (“BAE”). The Group recognizes MBDA’s share of the deficit amount based on information provided by BAE.

49 Refer to Note 26 to the Annual Consolidated Financial Statements for further details of surpluses and deficits related to these plans.

Impairment of Assets Assets with an indefinite life are tested for impairment at least annually or more often if there are indications of impairment. Assets with a definite useful life that are subject to depreciation and amortization are tested for impairment whenever there are indications of impairment. Impairment tests are generally performed using the discounted cash flow method. This method is highly sensitive to the estimate made in deriving future cash flows and the interest rate applied. In performing the valuations, the Group uses plans that have been approved by corporate bodies and financial parameters that are in line with current performance of the reference markets.

Recent Accounting Pronouncements For an explanation of the recent accounting pronouncements applicable to the Group, see Note 3.26 of the Annual Consolidated Financial Statements.

Principal Factors Affecting the Results of Operations Revenues and operating profit growth During recent years, the Group has continued to pursue its growth strategy through large investment programs and acquisitions, particularly in the United Kingdom, starting at the end of 2004 with the acquisition of a 50.0% stake in AgustaWestland, formerly held by GKN Plc, and in the United States with the acquisition of DRS in October 2008. During recent periods the main investments have been in the Defense Electronics and Security segment as discussed below. As a result of its acquisition strategy as well as its organic growth, in the past, the Group reported significant growth in both revenues and operating margins. However, as a consequence of the recent global economic downturn, there is no assurance that such growth will continue over the next years and that the overall margin and cash flow generation of the Group will not be negatively affected. See “Risk factors — The current global economic downturn may lead to lower orders, lower revenues and pressure on margins in several Finmeccanica businesses” above.

Acquisition of DRS On October 22, 2008, the Group completed the acquisition of DRS, a leader in the United States in providing integrated products, services and support in the Defense Electronics and Security sector. The total cost of the acquisition was USD 3,600 million, or Euro 2,342 million based on the hedged rate, plus transaction costs of Euro 43 million. In addition, the Group assumed financial indebtedness of DRS amounting to Euro 1,250 million. From the date of acquisition, DRS has been included in the Group’s scope of consolidation on a line-by-line basis within the Defense Electronics and Security segment. The main impacts of the DRS acquisition on the Defense Electronics and Security segment for the year ended December 31, 2008 can be summarized as follows: • new orders for Euro 251 million; • order backlog of Euro 2,404 million; • revenues of Euro 551 million for the period from acquisition until December 31, 2008; • net income of Euro 16 million for the period from acquisition until December 31, 2008; • adjusted EBITA of Euro 51 million for the period from acquisition until December 31, 2008; • goodwill of Euro 2,901 million as of December 31, 2008; and • workforce of 10,789 personnel as of December 31, 2008. As a result of the acquisition of DRS, the financial information presented as of and for the year ended December 31, 2008 and as of and for the six months ended June 30, 2009 may not be directly comparable with the financial information presented for previous periods.

50 Other Acquisitions in Subsidiaries and Equity Investments The Group made acquisitions in subsidiaries and equity investments for a total of Euro 160 million in the six months ended June 30, 2009, Euro 123 million, excluding the DRS acquisition, in 2008, Euro 441 million in 2007 and Euro 225 million in 2006, including transaction costs, net of cash acquired and counterparty adjustments (refer to “The Annual Consolidated Financial Statements” for an analysis by period). The key acquisitions in these periods have been: • The acquisition of a 75.0% stake in Selex Sensors and Airborne Systems Ltd., operating in the Defense Electronics and Security segment, at the end of April 2005 and the subsequent exercise of a call option on the remaining 25.0% stake, for full ownership in March 2007 for a total of Euro 938 million; • The acquisition of a 52.7% stake in Datamat S.p.A., operating in the Defense Electronics and Security segment, at the beginning of October 2005 and the subsequent increase in the investment to 100.0% by August 1, 2007 for a total of Euro 258 million; • The formation of the Space Alliance on July 1, 2005 with Alcatel S.A. through the creation of two joint ventures, Alcatel Alenia Space S.A.S., now Thales Alenia Space S.A.S., and Telespazio Holding S.r.l. for a total cost of Euro 151 million (including acquisition cost and the subsequent price adjustment of Euro 47 million in September 2006). Finmeccanica has 33.0% ownership of Thales Alenia Space S.A.S. and 67.0% ownership of Telespazio Holding S.r.l.; • The acquisition of a 28.2% stake in Vega Group Plc., operating in the Defense Electronics and Security segment, on November 30, 2007 for a total of Euro 21 million and the subsequent acquisition of the remaining 71.8% on January 16, 2008 through a public tender offer for an additional consideration of Euro 63 million; • The 2008 acquisitions of: (i) a 67.0% share in Aurensis SL by the Telespazio joint venture for Euro 4 million, which is consolidated proportionally; (ii) an additional 18.0% stake of Sirio Panel by Selex Communications S.p.A. for Euro 12 million; and (iii) 100.0% of the Italian company ISAF by Telespazio for Euro 3 million; and • The acquisition in April 2009 of 25% plus one share in Joint Stock Company Sukhoi Civil Aircraft (SCAC) by Alenia Aeronautica for an amount of US$183 million (Euro 142 million). As a result of these investments, the Group’s results of operations across the periods have been affected by both strategic and organic growth. Refer to “Business Combinations” in the Notes to the “Annual Consolidated Financial Statements” for further details on all acquisitions. Following the acquisition of new subsidiaries and investments in joint ventures, the Group has launched a number of restructuring programs to integrate its businesses, reduce direct costs and improve efficiency. Total costs charged to the income statement in connection with restructuring costs amounted to Euro 41 million in 2008, Euro 58 million in 2007 and Euro 10 million in 2006. The main program in 2008 and 2007 related to the Defense Electronics and Security segment for the integration of Selex Communications S.p.A. and amounted to Euro 22 million and Euro 30 million, respectively. Further explanation of the main restructuring programs and their effects is provided in “Financial Information and Non-GAAP Measures”.

Medium and Long-Term Projects and Backlog The Group generates most of its revenue from medium and long-term contracts whereby work is performed over a period of more than twelve months. Once the Group enters into a binding contract with a customer, it considers the value of that project as backlog. Backlog is an operational measure and refers to the total revenues on a specified date remaining to be earned under contracts held by the Group. The amount of backlog is not necessarily indicative of future revenue as cancellation and scope adjustments may occur. If any contract is terminated, the backlog would be reduced by the expected value of the remaining terms of such contracts. As work on the project progresses, revenue is recognized using the percentage-of-completion method and backlog decreases accordingly. The amount of revenue that is recognized in any period depends, in part, on the timing of when the costs for the contract have been incurred. The timing of the costs and revenue depends on the nature of the contract and when the resources are employed. In general, greater costs are incurred in the design, engineering and manufacturing phases of a project than on the testing, commissioning and warranty phases near the end of the project. There is inherent risk within the business due to the complexity and long-term nature of contracts entered into by the Group, which impacts the estimate of total costs. Therefore, continuous analysis of estimated costs is performed as changes in particular segments can

51 occur on a contract by contract basis. Adjustments to estimated costs can lead to losses. Refer to “— Critical Accounting Estimates — Long-Term Contracts”. However, the Group believes that it mitigates the risk of the need to re-estimate costs by risk assessment and life-cycle management techniques. The Group’s approach to risk management is to reduce the likelihood and consequences of risks before they occur and put in place appropriate and timely actions to deal with them. In accordance with such procedures, all the significant contract risks are assessed starting with the bid, monitored on an ongoing basis and factored within estimated costs at completion, while the progress and the consistency of estimated costs is verified by comparing recognized revenue to physical progress. This process involves top management, program managers, quality and product managers and finance managers and is known as “phase review”. The outcome of such review is factored within estimated costs at completion, which are revised on a quarterly basis.

Exchange Rates When the Group sells domestic production in domestic markets, this helps reducing the exposure to exchange rate fluctuations between Euros and the relevant local currency. For example, the Group generates revenues which are denominated in Sterling through subsidiaries in the United Kingdom. However, the Group also incurs costs associated with these revenues which are denominated in Sterling. Nonetheless, in some of the Group’s businesses, revenues are generated in currencies, in particular in the U.S. dollar, other than those in which costs are incurred. The relative movements in the exchange rates between the currencies in which revenues are generated and the currencies in which costs are incurred affect the profits of those businesses and could have an adverse impact on the Group’s financial position and results of operations. However, the Group has implemented practices and procedures for exchange rate hedging to mitigate foreign currency translation effects. Further information is provided in “— Quantitative and Qualitative Disclosures about Market Risk — Foreign Currency Exchange Rate Risk” below. With the acquisition of DRS, the impact of foreign currency exchange rate risks with respect to the U.S. dollar exposure is increasing significantly. In addition, the Group’s consolidated financial statements are expressed in Euros and are therefore subject to movements in exchange rates on translation of the financial statements of entities whose operational currencies are not Euros. As a result, significant fluctuations in the exchange rates between Euros and the currencies of the businesses whose operational currencies are not Euros could significantly affect the Group’s reported results from year to year. As noted above, the translation exposure with respect to the U.S. dollar has increased following completion of the acquisition of DRS. Additionally, the Group’s results of operations have been affected by the negative impact of the translation of the financial statements of entities whose functional and reporting currency is Sterling, due to the weakening of the relevant exchange rates in the historical periods considered.

Seasonality The Group experiences seasonality in respect of the collection of cash received from customers. A significant portion of the cash collections is obtained towards the end of the year, while expenditures are incurred regularly during the course of the year, which significantly impacts the cash flows of the business. The Italian government, one of the Group’s largest customers, for example typically pays towards the end of the year, contributing to this seasonality. In light of this seasonality, cash requirements for operating and investing activities are funded by a number of sources of financial indebtedness during most of the year. As a consequence of the cash profile of the business, sub-contractors’ costs are usually concentrated at the end of the year; therefore, external costs are higher in the last half of the year if compared to the first half, thus affecting both revenue and margins realized by the Group.

52 Results of Operations Income Statement Data The table below sets forth the results of operations for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro) Revenue ...... 15,037 100.0% 13,429 100.0% 12,472 100.0% 12.0% 7.7% Other operating income ...... 702 4.7% 1,033 7.7% 494 4.0% (32.0)% 109.1% Raw materials and consumables used ...... (5,343) (35.5)% (5,566) (41.4)% (4,794) (38.4)% (4.0)% 16.1% Purchase of services ...... (4,944) (32.9)% (3,843) (28.6)% (3,654) (29.3)% 28.6% 5.2% Personnel costs...... (3,928) (26.1)% (3,599) (26.8)% (3,361) (26.9)% 9.1% 7.1% Amortization, depreciation and impairment . . . . (622) (4.1)% (709) (5.3)% (505) (4.0)% (12.3)% 40.4% Other operating expenses...... (686) (4.6)% (564) (4.2)% (434) (3.5)% 21.6% 30.0% Changes in inventories of work in progress, semi-finished and finished goods ...... 281 1.9% 54 0.4% (24) (0.2)% n.a. n.a. ( — ) Work performed by the Group and capitalized ...... 713 4.7% 849 6.3% 714 5.7% (16.0)% 18.9% Operating income ...... 1,210 8.0% 1,084 8.1% 908 7.3% 11.6% 19.4% Finance income ...... 1,017 6.8% 624 4.6% 1,194 9.6% 63.0% (47.7)% Finance costs ...... (1,255) (8.3)% (877) (6.5)% (824) (6.6)% 43.1% 6.4% Share of profit/(loss) of equity accounted investments ...... 16 0.1% 16 0.1% (5) 0.0% 0.0% n.a. Profit before taxes and discontinued operations ...... 988 6.6% 847 6.3% 1,273 10.2% 16.6% (33.5)% Income taxes ...... (367) (2.4)% (326) (2.4)% (243) (1.9)% 12.6% 34.2% Loss profit from discontinued operations ...... — 0.0% — 0.0% (9) (0.1)% n.a. (100.0)% Net profit ...... 621 4.1% 521 3.9% 1,021 8.2% 19.2% (49.0)% — attributable to equity holders of the Group . . 571 3.8% 484 3.6% 989 7.9% 18.0% (51.1)% — attributable to minority interests ...... 50 0.3% 37 0.3% 32 0.3% 35.1% 15.6%

Revenue 2008 v 2007 Revenue increased by Euro 1,608 million, or 12.0%, from Euro 13,429 million in 2007 to Euro 15,037 million in 2008. Excluding the Defense Systems segment, whose revenue marginally decreased in 2008 by Euro 14 million (or 1.2%) compared to the previous year, revenue increased across all segments primarily due to a generalized increase in the volume of activities. The most significant drivers of revenue growth were the Defense Electronics and Security and Transportation segments, which together represented an increase in revenue of Euro 939 million, primarily due to: (i) the inclusion in 2008 of DRS activities in the Defense Electronics and Security segment (accounting for revenue of Euro 551 million) and (ii) the improvement in the Transportation segment, in each case, as explained below. The revenue growth in the remaining segments was mainly attributable to the Aeronautics segment due to the increased contribution of the civil business (increase in production of the ATR, B787 and A380) and to the Energy segment due to the increased orders for plants and for services relating to maintenance, spare parts and flow solutions. Defense Systems segment revenue marginally decreased from Euro 1,130 million in 2007 to Euro 1,116 million in 2008 mainly as a result of the increased activity in the underwater systems and land, sea and air weapons systems business, which were more than offset by the decline in production of missile systems.

53 2007 v 2006 Revenue increased by Euro 957 million, or 7.7%, from Euro 12,472 million in 2006 to Euro 13,429 million in 2007. With the exception of Transportation, revenue increased across all segments primarily due to increased volume of activities. The most significant contributions to the increase in revenue were recorded in the Aeronautics and Helicopters segments, which together accounted for an increase in revenue of Euro 651 million, primarily due to increased production activities under existing contracts and the commencement of new contracts. The revenue growth in the remaining segments was mainly attributable to increased production following the launch of new activities, such as the Original Service Provider (OSP) brand in the Energy segment and diversification into new markets such as Russia, South Africa and Finland. The table below sets forth a breakdown of the Group’s revenue by segment for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro) Helicopters ...... 3,035 20.2% 2,980 22.2% 2,727 21.9% 1.8% 9.3% Defense Electronics and Security ...... 4,362 29.0% 3,826 28.5% 3,747 30.0% 14.0% 2.1% Aeronautics ...... 2,530 16.8% 2,306 17.2% 1,908 15.3% 9.7% 20.9% Space ...... 994 6.6% 853 6.4% 764 6.1% 16.5% 11.6% Defense Systems...... 1,116 7.4% 1,130 8.4% 1,127 9.0% (1.2)% 0.3% Energy ...... 1,333 8.9% 1,049 7.8% 978 7.8% 27.1% 7.3% Transportation...... 1,759 11.7% 1,356 10.1% 1,368 11.0% 29.7% (0.9)% Other activities ...... 425 2.8% 345 2.6% 229 1.8% 23.2% 50.7% Eliminations ...... (517) (3.4)% (416) (3.1)% (376) (3.0)% 24.3% 10.6% Revenue...... 15,037 100.0% 13,429 100.0% 12,472 100.0% 12.0% 7.7%

Helicopters 2008 v 2007 Helicopters segment revenue marginally increased by Euro 55 million, or 1.8%, from Euro 2,980 million in 2007 to Euro 3,035 million in 2008 as follows: • Civil and government revenue increased due to increased production related to the AW139, AW109 and AW119 contracts; and • Military revenue decreased due to the decline in the product support business, mainly driven by the decline in spare parts and servicing activities due to the completion of international contracts and of the AW129 contract for the Italian Army.

2007 v 2006 Helicopters segment revenue increased by Euro 253 million, or 9.3%, from Euro 2,727 million in 2006 to Euro 2,980 million in 2007 as follows: • Civil revenue increased due to increased production related to the AW139, AW109 and AW119 contracts; and • Military revenue increased due to an increase in Integrated Operational Support (IOS) activities related to the Integrated Merlin Operational Support (IMOS) and Sea King Integrated Opera- tional Support (SKIOS) contracts and to a new project, Future Lynx, all of which were with the United Kingdom Ministry of Defense.

54 Defense Electronics and Security 2008 v 2007 Defense Electronics and Security segment revenue increased by Euro 536 million, or 14.0%, from Euro 3,826 million in 2007 to Euro 4,362 million in 2008. The increase in Defense Electronics and Security segment revenue is mainly due to the acquisition of DRS. Excluding the consolidation of DRS and Vega, Defense Electronics and Security segment revenue remained relatively stable as the increase in underlying segment revenue was more than offset by the unfavorable impact from translating the financial statements of the foreign subsidiaries denominated in Sterling due to the continued weakening in the Sterling compared to the Euro. This effect accounted for a decrease in revenue of Euro 210 million (calculated as the difference obtained by translating revenue for the year ended December 31, 2008 using the average exchange rate for the year ended December 31, 2007). As previously noted, the Group acquired DRS on October 22, 2008 and the revenue of DRS has been consolidated in the Defense Electronics and Security segment from the date of acquisition. Additionally, on January 16, 2008, the Group acquired the remaining 71.8% of Vega Group, which has been consolidated in the Defense Electronics and Security segment since January 1, 2008. In 2008, DRS contributed revenue of Euro 551 million to the Defense Electronics and Security segment. Therefore, the effect of such acquisition impacts the comparability of 2008 and 2007. Excluding the impacts of the acquisition of DRS and currency changes, the underlying increase in Defense Electronics and Security segment revenue in 2008 of Euro 195 million was mainly attributable to the increased activity in information technology and security and avionics and electro-optical systems, which offset the drop in production volumes due to delays in starting activity on programs in communications and in command and control systems.

2007 v 2006 Defense Electronics and Security segment revenue increased by Euro 79 million, or 2.1%, from Euro 3,747 million in 2006 to Euro 3,826 million in 2007. The increase in revenue was mainly attributable to an increase in integrated communication systems and networks revenue as a result of increased activity for the Italian Police Forces Network. In addition, integrated communications systems and network revenue increased due to the development and production of equipment for the Eurofighter program (“EFA”), NH90 and the provision of communication systems for the military both in Italy and the United Kingdom. Revenue attributable to avionics and electro-optical systems, radar and command and control systems, information technology and security remained substantially unchanged.

Aeronautics 2008 v 2007 Aeronautics segment revenue increased by Euro 224 million, or 9.7%, from Euro 2,306 million in 2007 to Euro 2,530 million in 2008, as follows: • Revenue from civil activities increased due to an increase in production of ATR aircraft (aircraft deliveries in 2008 increased to 55 units compared to 42 units delivered in the previous year) together with the increase in production of aerostructures for the B787 (sections of fuselage and horizontal tail wings) and A380 (central section of the fuselage) aircrafts; and • Revenue from military activities was substantially stable, with increased production of the second lot of the EFA program together with logistical support services and production of MB339 training crafts.

2007 v 2006 Aeronautics segment revenue increased by Euro 398 million, or 20.9%, from Euro 1,908 million in 2006 to Euro 2,306 million in 2007, as follows: • Revenue from civil activities increased due to an increase in orders and deliveries of the ATR aircraft. In particular, new aircraft deliveries increased from 24 in 2006 to 42 in 2007. Additionally, activities related to the B787 contract increased as certain sections of the aircraft were delivered during 2007 (six fuselage sections and two horizontal tail wings); and

55 • Revenue from military activities increased primarily due to the commencement of the second phase of development and production for the EFA program together with an increase in associated logistical support services.

Space 2008 v 2007 Space segment revenue increased by Euro 141 million, or 16.5%, from Euro 853 million in 2007 to Euro 994 million in 2008 as follows: • Revenue from satellite manufacturing activities increased due to the increase in activities mainly related to programs within the telecommunication commercial satellite business, the SICRAL 1B program in the telecommunications military satellite business and the GALILEO program within the navigation business; and • Revenue from satellite services activities increased due to the increase in activities for the development of ground infrastructure for the SICRAL 1B program as well as the provision of telecommunications satellite services together with the resale of satellite capacity.

2007 v 2006 Space segment revenue increased by Euro 89 million, or 11.6%, from Euro 764 million in 2006 to Euro 853 million in 2007 as follows: • Revenue from satellite manufacturing activities increased due to the increase in activities related to the Yahsat and Globalstar programs within the telecommunication commercial satellite business, the SICRAL 1B program in the telecommunications military satellite business and the GALILEO program within the navigation business; and • Revenue from satellite services activities increased due to the increase in activities for the development of ground infrastructure for the COSMO-SkyMed and SICRAL 1B programs.

Defense Systems 2008 v 2007 Defense Systems segment revenue slightly decreased by Euro 14 million, or 1.2%, from Euro 1,130 million in 2007 to Euro 1,116 million in 2008 as a result of the increase in underwater defense systems and land, sea and air weapons systems revenue, which was more than offset by the decline in volumes in missile systems activity, as follows: • Underwater defense systems revenue increased due to increased activity related to the Black Shark heavy torpedo program that passed the acceptance tests (20 units invoiced in various countries), the MU90 light torpedo production mainly for Australia and the A244 light torpedoes countermeasures systems mainly for Singapore; • Land, sea and air weapons systems revenue increased due to the ongoing production of the PZH2000 howitzer and the commencement of production of Medium Armored Vehicles (MAV), both for the Italian Army. Further, revenues increased due to the increase in production of Hitfist turrets for the Polish Army and of 76/62 naval cannons for various foreign customers; and • Missile systems revenue declined mainly due to the completion in 2008 of important production orders, mainly the Storm Shadow/SCALP EG cruise missiles and Brimstone anti-tank missiles, and some delays in the start-up of aircraft package for Tornado from an export customer.

2007 v 2006 Defense Systems segment revenue remained substantially unchanged compared with 2006 with an increase of Euro 3 million, or 0.3%, from Euro 1,127 million in 2006 to Euro 1,130 million in 2007.

56 The lack of substantial change in Defense Systems segment revenue was substantially due to an increase in underwater defense systems revenue which was offset by a decrease in land, naval and air armaments revenue as follows: • Underwater defense systems revenue increased due to increased activity related to the MU90 light torpedo production contract and the A244 light torpedoes contract for the United Arab Emirates together with an increase in revenue for an anti-torpedo countermeasures system for India; • Decreased land, naval and air armaments revenue due to lower activity related to the Hitfist turrets contract for the Polish Army as this project was nearing completion; and • Missile systems revenue remained substantially unchanged.

Energy 2008 v 2007 Energy segment revenue increased by Euro 284 million, or 27.1%, from Euro 1,049 million in 2007 to Euro 1,333 million in 2008. Energy segment revenue increased as follows: • Plants and components revenue increased mainly due to the delivering of 45 equipments, including those for four turn-key plants (located in Algeria and Italy), two power blocks (located in Spain and Greece) and 30 stand alone equipments. • Services revenue increased due to the progress in the solutions proposals business (revamping, upgrading and turbine parts modification). Services revenue from Long-Term Service Agree- ments (LTSA) increased due to the commencement of contracts for recently installed plants; and • Nuclear revenue increased mainly driven by the launch of the Sanmen project in China.

2007 v 2006 Energy segment revenue increased by Euro 71 million, or 7.3%, from Euro 978 million in 2006 to Euro 1,049 million in 2007. Energy segment revenue changed as follows: • Plants and components revenue increased due to the delivery of four plants in Algeria and Italy for which provisional acceptance certificates were received and the completion of the contract with Enipower, for which the final acceptance certificate for the remaining seven sites was received; • Services business revenue increased due to growth in both the production of spare parts and on-site service activities; and • Nuclear revenue decreased due to delays in orders for the Sanmen project in China, which were anticipated to commence in the first half of 2007, but did not start until the last quarter of 2007. Decommissioning activities decreased in Italy due to difficulties in obtaining government authorization.

Transportation 2008 v 2007 Transportation segment revenue increased by Euro 403 million, or 29.7%, from Euro 1,356 million in 2007 to Euro 1,759 million in 2008. The increase is attributable to both the signaling and transport systems business, whose revenues each increased by approximately 14%, and to the vehicles business, as follows: • Vehicles revenue increased mainly due to the reassessment of some contracts estimated costs at completion that had affected revenue in 2007 and to a gradual recovery in production volumes. Revenue increased by Euro 279 million, or 71.7%, from Euro 389 million in 2007 to Euro 668 million in 2008;

57 • Signaling revenue increased mainly due to increased activities in the Asia Pacific region, in particular in Australia; and • Transport systems revenue increased mainly due to the commencement of contracts from the previous order backlog.

2007 v 2006 Transportation segment revenue decreased by Euro 12 million, or 0.9%, from Euro 1,368 million in 2006 to Euro 1,356 million in 2007. The decrease in revenue was mainly due to a decrease in vehicles revenue which was partially offset by an increase in signaling revenue as follows: • Vehicles revenue decreased mainly due to the reassessment of costs to complete some contracts to take into account additional activities required to resolve certain technical issues; in detail, AnsaldoBreda S.p.A. revenue decreased by Euro 71 million, or 15.4%, from Euro 460 million in 2006 to Euro 389 million in 2007; • Signaling revenue increased mainly due to increased activities in the Asia Pacific region and Australia; and • Systems revenue remained substantially unchanged.

Other Activities 2008 v 2007 Other Activities segment revenue increased by Euro 80 million, or 23.2%, from Euro 345 million in 2007 to Euro 425 million in 2008, mainly due to the progress made on the smelter lines (Hormozal, Hormozal phase 2 and Quatalum).

2007 v 2006 Other Activities segment revenue increased by Euro 116 million, or 50.7%, from Euro 229 million in 2006 to Euro 345 million in 2007, due to the progress on Fata S.p.A. contracts.

Revenue by Geographical Segment The table below sets forth a breakdown of the Group’s revenue by geographical segment for the years ended December 31, 2008, 2007 and 2006. Geographical segmentation is based on the location of the customer. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro) Italy ...... 3,775 25.1% 4,262 31.7% 4,001 32.1% (11.4)% 6.5% Other European countries ..... 6,570 43.7% 5,877 43.8% 5,240 42.0% 11.8% 12.2% North America ...... 1,809 12.0% 1,468 10.9% 1,408 11.3% 23.2% 4.3% Other countries ...... 2,883 19.2% 1,822 13.6% 1,823 14.6% 58.2% (0.1)% Revenue ...... 15,037 100.0% 13,429 100.0% 12,472 100.0% 12.0% 7.7%

2008 v 2007 Revenue generated in Europe increased by Euro 206 million in 2008 amounting to Euro 10,345 million compared to Euro 10,139 million in 2007. In 2008, revenue in Europe accounted for 68.8% of the Group revenue. Revenue growth in 2008 in European countries, other than Italy, amounted to Euro 693 million and was offset by the decrease in revenue in Italy of Euro 487 million. Revenue generated in Italy decreased in 2008 by Euro 487 million mainly as a result of decreases relating to the completion of certain contracts in the Energy and Aeronautics segments which were partially offset by an increase in revenue for the Helicopters segment relating to increased activities for Italian programs.

58 Revenues generated in other European countries increased in 2008 mainly due to increased revenues in the Energy, Helicopters, Aeronautics and Defense Electronics and Security segments. Energy segment activities increased due to the commencement of contracts for four turbines in Russia and orders for three turbines in Hungry, Belgium and Greece. Helicopters segment revenue in other European countries increased due to increased activities in regards to the NH90, AW139 and Grand helicopters. Aeronautics segment revenue in other European countries included increased volumes pertaining to the ATR program and Airbus contracts, specifically, the A321 and A380 aircraft. Effective January 1, 2008, the Vega Group’s revenues were included in the Defense Electronics and Securities segment. Revenue in North America increased by Euro 341 million, or by 23.2%, from Euro 1,468 million in 2007 to Euro 1,809 million in 2008. Of the Euro 341 million increase, Euro 551 million relates to the consolidation of DRS, which was offset by a decrease in revenue of Euro 210 million mainly due to decreased revenue within the Aeronautics, Helicopters and Defense Electronics and Security segments in North America. Aeronautics segment revenues in North America experienced a decrease in modification activities related to the B767 Tanker aircraft and the cargo conversion activity for the DC10 and B767 aircraft. In the Helicopters segment, revenue in North America decreased due to the VH-71 program as there was limited funding by the US government in 2008. Revenues realized in other countries increased by Euro 1,061 million from Euro 1,822 million in 2007 to Euro 2,883 million in 2008 as a result of the continued focus on selected growing markets, mainly in Asia and the Middle East (China, Japan, India, United Arab Emirates and Malaysia), Australia and Africa. In particular, Aeronautics segment contributed to the increase from activities in Nigeria and the supply of eight MB339 vehicles to the Royal Malaysian Air Force. Helicopters segment activities pertained to post-sale support relating to African contracts. Energy segment contributed to the increase with the activity from Algerian contracts, whilst Transportation segment contributed to the increase with activities in China and India. Revenues generated in other European countries were also affected by the negative impact deriving from the translation effects due to unfavorable Euro/Sterling exchange rates.

2007 v 2006 Revenue generated in Europe increased by Euro 898 million in 2007, consisting of an increase in revenue in Italy of Euro 261 million and Euro 637 million in other European countries. Revenue generated in European countries other than Italy increased mainly as a result of the strong growth in the United Kingdom market which generated revenues of Euro 2,096 million in the year ended December 31, 2007, in particular following the acquisition of the avionics business of BAE. Revenue in North America marginally increased from Euro 1,408 million in 2006 to Euro 1,468 million in 2007 mainly due to the start-up of activities related to contracts awarded to the Group (mainly US101, C27J and B787), which included sites in the United States (Philadelphia and Charleston). Revenues realized in other countries remained substantially consistent in 2007 and 2006. Revenues generated in other European countries were also affected by the negative impact deriving from the translation effects due to unfavorable Euro/Sterling exchange rates.

59 Other Operating Income The table below sets forth a breakdown of the Group’s other operating income for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro) Exchange rate difference on operating items ...... 308 2.0% 216 1.6% 121 1.0% 42.6% 78.5% Reversal of deferred income under Law 808/1985 ...... 113 0.8% 169 1.3% — 0.0% (33.1)% n.a. Reversal of provisions for risks ..... 85 0.6% 128 1.0% 138 1.1% (33.6)% (7.2)% Write-up of receivables from ENEA...... 31 0.2% 287 2.1% — 0.0% (89.2)% n.a. Sundry operating income...... 164 1.1% 231 1.7% 228 1.8% (29.0)% 1.3% Total ...... 701 4.7% 1,031 7.7% 487 3.9% (32.0)% 111.7% Other operating income from related parties...... 1 0.0% 2 0.0% 7 0.1% (50.0)% (71.4)% Other operating income ...... 702 4.7% 1,033 7.7% 494 4.0% (32.0)% 109.1%

2008 v 2007 Other operating income decreased by Euro 331 million, or 32.0%, from Euro 1,033 million in 2007 to Euro 702 million in 2008 mainly due to the substantially lower impact of the write-up of receivables from ENEA, lower reversal of deferred income under Law 808 and the decrease in sundry operating income, partially offset by an increase in exchange rate differences from operating items. On November 29, 2007 pursuant to Law 222/2007, the Italian government identified the financial resources necessary to let ENEA pay, by way of settlement, the amounts due to Finmeccanica for the closing of the dispute between ENEA and Finmeccanica regarding the expenses borne by Finmeccanica following the termination under Law 321/1988 of a contract with ENEA for the construction of a nuclear plant. The parties had earlier jointly reviewed the individual items claimed by Finmeccanica. Although no formal agreement had been entered into, based on the review, a range of possible settlement amounts were determined against a total claim of Euro 670 million as of December 31, 2007. As a result, the previously impaired receivable of Euro 53 million was written-up by Euro 287 million to Euro 340 million (which represented the minimum in the range of reasonably possible settlement amounts as of December 31, 2007). Further information is provided under “Business Description — Litigation” and “Financial Information and Non-GAAP Measures”. On December 12, 2008, a settlement agreement was signed between the Group and ENEA in relation to the above mentioned dispute. The settlement agreement was for an amount of Euro 371 million, and in 2008 the receivable was accordingly written up by a further Euro 31 million. In 2008, reversal of deferred income under Law 808 in the amount of Euro 113 million related to the portion of Law 808 funds which is granted in respect to funded expenses which are not capitalized as an asset in connection with programs of National Security, in order to cover the costs expensed in the income statement. The decrease in sundry operating income from Euro 231 million in 2007 to Euro 164 million in 2008 was mainly related to the following: (i) decrease of Euro 27 million on gains on sales of assets and (ii) decrease of Euro 14 million on reversal of impairment of receivables. Exchange rate difference on operating items increased by Euro 92 million, or 42.6%, from Euro 216 million in 2007 to Euro 308 million in 2008. This item relates to the translation of trade and other payables and receivables which are denominated in foreign currencies, principally the U.S. dollar, and the effect of cash flow hedging instruments on work in progress denominated in a foreign currency. However, the exchange rate gains in other operating income were offset by exchange rate losses of Euro 207 million in 2007 and Euro 308 million in 2008, which were included in other operating expenses. See “— Other Operating Expenses” below. Therefore, the net effect of the exchange rate differences was Euro 9 million in 2007 and nil in 2008.

60 2007 v 2006 Other operating income increased by Euro 539 million, or 109.1%, from Euro 494 million in 2006 to Euro 1,033 million in 2007 mainly due to the write-up of receivables from ENEA, as discussed above, an increase in exchange rate differences from operating items and the reversal of deferred income under Law 808. Exchange rate difference on operating items increased by Euro 95 million, or 78.5%, from Euro 121 million in 2006 to Euro 216 million in 2007. The exchange rate gains in other operating income were offset by exchange rate losses of Euro 98 million in 2006 and Euro 207 million in 2007, which were included in other operating costs. Therefore, the net effect of the exchange rate differences was Euro 23 million in 2006 and Euro 9 million in 2007. In 2007, reversal of deferred income under Law 808 amounting to Euro 169 million related to the amounts recognized in the income statement pursuant to Law 808 in connection with programs of National Security, in order to cover the costs expensed in the income statement in prior years.

Raw Materials and Consumables Used The table below sets forth a breakdown of the Group’s raw materials and consumables used for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro) Purchase of materials from third parties ...... 5,746 38.2% 5,725 42.6% 4,998 40.1% 0.4% 14.5% Change in inventories ...... (427) (2.8)% (169) (1.3)% (210) (1.7)% n.a. (19.5)% Costs for purchases from related parties ...... 24 0.2% 10 0.1% 6 0.0% 140.0% 66.7% Total ...... 5,343 35.5% 5,566 41.4% 4,794 38.4% (4.0)% 16.1%

2008 v 2007 Raw materials and consumables used decreased by Euro 223 million, or 4.0%, from Euro 5,566 million in 2007 to Euro 5,343 million in 2008. As a percentage of revenue, raw materials and consumables decreased from 41.4% of revenue in 2007 to 35.5% in 2008. This change is mainly attributable to a reclassification of certain costs (costs associated with engineering activities embedded into goods being purchased) in 2008 from raw materials and consumables to purchase of services. Excluding this reclassification, raw materials and consumables as a percentage of revenue would have been substantially consistent with the previous year.

2007 v 2006 Raw materials and consumables used increased by Euro 772 million, or 16.1%, from Euro 4,794 million in 2006 to Euro 5,566 million in 2007. As a percentage of revenue, raw materials and consumables increased from 38.4% of revenue in 2006 to 41.4% in 2007. The increase in raw materials and consumables used was in line with the increase in production volumes.

61 Purchase of Services The table below sets forth a breakdown of the Group’s purchases of services for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro) Services rendered by third parties...... 4,525 30.1% 3,470 25.8% 3,274 26.3% 30.4% 6.0% Costs of rents and operating leases ...... 138 0.9% 118 0.9% 113 0.9% 16.9% 4.4% Costs of acquiring satellite capacity ..... 70 0.5% 68 0.5% 70 0.6% 2.9% (2.9)% Royalties ...... 48 0.3% 45 0.3% 40 0.3% 6.7% 12.5% Rental fees ...... 19 0.1% 24 0.2% 21 0.2% (20.8)% 14.3% Software fees...... 13 0.1% 14 0.1% 11 0.1% (7.1)% 27.3% Costs of airplane leases ...... 9 0.1% 10 0.1% 12 0.1% (10.0)% (16.7)% Costs of performance share plan relating to non-employees ...... 1 0.0% 3 0.0% 2 0.0% (66.7)% 50.0% Costs from related parties ...... 121 0.8% 91 0.7% 111 0.9% 33.0% (18.0)% Total...... 4,944 32.9% 3,843 28.6% 3,654 29.3% 28.6% 5.2%

2008 v 2007 Purchase of services increased by Euro 1,101 million, or 28.6%, from Euro 3,843 million in 2007 to Euro 4,944 million in 2008 predominantly due to an increase in services rendered by third parties which increased by Euro 1,055 million, or 30.4%, from Euro 3,470 million in 2007 to Euro 4,525 million in 2008. As a percentage of revenue, purchase of services increased from 28.6% in 2007 to 32.9% in 2008, substantially mirroring the movement, over the same period, in raw materials and consumables driven by the aforementioned costs reclassification. Excluding this cost reclassification, the purchase of services as a percentage of revenue and the year-on-year change in services rendered by third parties would be consistent with the previous year.

2007 v 2006 Purchase of services increased by Euro 189 million, or 5.2%, from Euro 3,654 million in 2006 to Euro 3,843 million in 2007 mainly due to increases in services rendered by third parties. Services rendered by third parties increased by Euro 196 million, or 6.0%, from Euro 3,274 million in 2006 to Euro 3,470 million in 2007. The increase in purchases of services was consistent with the increase in production activities representing 29.3% and 28.6% of revenue in 2006 and 2007, respectively.

62 Personnel Costs The table below sets forth a breakdown of the Group’s personnel costs for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro, except employee numbers) Wages and salaries...... 2,866 19.1% 2,653 19.8% 2,456 19.7% 8.0% 8.0% Social security contributions...... 725 4.8% 679 5.1% 637 5.1% 6.8% 6.6% Costs related to defined contribution plans ...... 122 0.8% 107 0.8% 35 0.3% 14.0% n.a Costs related to defined benefit plans ...... 60 0.4% 52 0.4% 78 0.6% 15.4% (33.3)% Net reorganization costs ...... 33 0.2% 52 0.4% 5 0.0% (36.5)% n.a. Costs of performance share plan.... 25 0.2% 40 0.3% 20 0.2% (37.5)% 100.0% Costs of long term incentive plan . . . 5 0.0% 7 0.1% 6 0.0% (28.6)% 16.7% Costs of severance pay...... 1 0.0% (50) (0.4)% 64 0.5% (102.0)% n.a. Other costs ...... 91 0.6% 59 0.4% 60 0.5% 54.2% (1.7)% Total ...... 3,928 26.1% 3,599 26.8% 3,361 26.9% 9.1% 7.1% Average number of employees ..... 62,791 n.a. 58,700 n.a. 56,653 n.a. 7.0% 3.6%

2008 v 2007 Personnel costs increased by Euro 329 million, or 9.1%, from Euro 3,599 million in 2007 to Euro 3,928 million in 2008 mainly due to an increase in wages and salaries, social security contributions and costs of severance pay in line with the increase in revenue. Wages and salaries increased by Euro 213 million, or 8.0%, from Euro 2,653 million in 2007 to Euro 2,866 million in 2008 mainly due to the increase in the average number of employees from 58,700 in 2007 to 62,791 in 2008. The increase in the average number of employees was mainly due to the full year effect of the acquisition of the Vega Group and DRS which had a headcount of 10,789 employees as of December 31, 2008. Social security contributions increased by Euro 46 million, or 6.8%, in line with previous year growth mainly due to an increase in wages and salary costs. As a percentage of wages and salary costs, social security contributions remained consistent in 2008 and 2007 at 25.3% and 25.6%, respectively. Net reorganization costs of Euro 33 million in 2008 mainly relate to costs incurred by the Defense Electronics and Security, Aeronautics, Defense Systems, Transportation and Space segments. (See “Adjusted EBITA”).

2007 v 2006 Personnel costs increased by Euro 238 million, or 7.1%, from Euro 3,361 million in 2006 to Euro 3,599 million in 2007 mainly due to an increase in wages and salaries, social security contributions and costs related to defined contribution plans. Wages and salaries increased by Euro 197 million, or 8.0%, from Euro 2,456 million in 2006 to Euro 2,653 million in 2007 mainly due to the increase in the average number of employees from 56,653 in 2006 to 58,700 in 2007. The increase in the number of employees was a result of an increase in activities, the development of new programs in certain sectors and changes in contractual forms whereby a new type of training contract was introduced together with the inclusion of the Vega Group Plc which had a headcount of 751 employees as of December 31, 2007. Social security contributions increased by Euro 42 million, or 6.6%, due to an increase in wages and salary costs. As a percentage of wages and salary costs, social security contributions remained consistent in 2007 and 2006 at 25.6% and 25.9%, respectively.

63 Following the introduction of Law 296 of December 27, 2006, Italian severance pay (TFR) has been subject to substantial changes. Until December 31, 2006, accruals for severance pay were recorded in the line item costs of severance pay less curtailment effect. As a consequence of the changes in law, since January 1, 2007 the actuarial calculation does not include future salary increases. The difference between the calculation under the previous actuarial method and the calculation under the new method has been recognized in the income statement. Following the new law, from 2007, the accrual for severance pay has been recorded in costs related to defined contribution plans. The increase in costs related to defined contribution plans of Euro 72 million and the decrease in cost of severance pay, less curtailment of Euro 114 million was mainly attributable to this change. Net reorganization costs of Euro 52 million in 2007 mainly related to costs incurred by the Defense Electronics and Security, Transportation and Space segments. Out of the Euro 52 million, Euro 45 million related to reorganization projects in Italy and Euro 7 million to projects abroad. (See “Financial Information and Non-GAAP Measures”).

Amortization, Depreciation and Impairment The table below sets forth a breakdown of the Group’s amortization, depreciation and impairment costs for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro) Depreciation and amortization: — property, plant and equipment.... 304 2.0% 293 2.2% 310 2.5% 3.8% (5.5)% — intangible assets ...... 236 1.6% 210 1.6% 172 1.4% 12.4% 22.1% Total depreciation and amortization ...... 540 3.6% 503 3.7% 482 3.9% 7.4% 4.4% Impairment: — intangible assets ...... 55 0.4% 144 1.1% — 0.0% (61.8)% n.a. — operating receivables ...... 27 0.2% 37 0.3% 23 0.2% (27.0)% 60.9% — property, plant and equipment.... — 0.0% 25 0.2% — 0.0% (100.0)% n.a. Total impairment ...... 82 0.5% 206 1.5% 23 0.2% (60.2)% n.a. Total ...... 622 4.1% 709 5.3% 505 4.0% (12.3)% 40.4%

Refer to “Accounting Policies Adopted — Summary of Significant Accounting Policies” in the notes to the financial statements for details regarding amortization and depreciation methodologies by category of asset.

2008 v 2007 Amortization, depreciation and impairment decreased by Euro 87 million, or 12.3%, from Euro 709 million in 2007 to Euro 622 million in 2008 mainly due to the high impairment charges in 2007, as explained below. The impairment charges in 2008 mainly relate to an impairment of Euro 40 million in the communications business of the Defense Electronics and Security segment due to a change in the discount rate applied and to the delays in orders in the Defense Electronics and Security segment as mentioned above. Impairment charges in 2007 are summarized as follows: • Following the change in regulations concerning Law 808 (as described above under “— Devel- opment Costs and Government Grants”), an impairment review was performed and a total impairment of Euro 125 million was recorded. Of this total amount, Euro 25 million was recorded as impairments of property, plant and equipment and Euro 87 million was recorded as impairments of intangible assets. The remaining amount of Euro 13 million related to the write- down of inventory and was recorded in changes in inventories of work in progress, semi- finished and finished goods. Refer to “Financial Information and Non-GAAP Measures” for further details;

64 • Other intangible assets were impaired in 2007 by Euro 57 million, mainly relating to the write- down of development costs within the Other Activities segment and the Helicopters segment; and • Impairment charges of operating receivables amounting to Euro 37 million in 2007. Amortization of intangible assets increased by Euro 26 million, or 12.4%, from Euro 210 million in 2007 to Euro 236 million in 2008. The increase was mainly attributable to: (i) an increase of Euro 8 million in amortization of assets acquired through business combination and concessions; (ii) an increase of Euro 8 million in amortization of concessions, licenses and trademarks and (iii) an increase of Euro 6 million in amortization of development costs. Depreciation of property, plant and equipment increased by Euro 11 million, or 3.8%, from Euro 293 million in 2007 to Euro 304 million in 2008 mainly attributable to the increase in the depreciation of the category “Equipment” and “Plant and Machinery” following the consolidation of DRS and Vega Group and an increase in investments in the previous year.

2007 v 2006 Amortization, depreciation and impairment increased by Euro 204 million, or 40.4%, from Euro 505 million in 2006 to Euro 709 million in 2007 mainly due to impairment charges of intangible assets. The main impairment charges in 2007 are explained above. Amortization of intangible assets increased by Euro 38 million, or 22.1%, from Euro 172 million in 2006 to Euro 210 million in 2007. The increase was mainly attributable to an increase of Euro 31 million in amortization of development costs (mainly related to Aeronautics and Defense Electronics and Security programs), primarily due to higher amounts being capitalized. Depreciation of property, plant and equipment decreased by Euro 17 million, or 5.5%, from Euro 310 million in 2006 to Euro 293 million in 2007. The decrease in depreciation of property, plant and equipment was mainly attributable to the decrease in the depreciation of the category “Other property, plant and equipment” as certain assets were fully depreciated.

Other Operating Expenses The table below sets forth a breakdown of the Group’s other operating expenses for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro) Exchange rate difference on operating items . . . 308 2.0% 207 1.5% 98 0.8% 48.8% 111.2% Accruals of provisions for risks ...... 200 1.3% 198 1.5% 162 1.3% 1.0% 22.2% Sundry operating costs ...... 176 1.2% 157 1.2% 173 1.4% 12.1% (9.2)% Other operating costs from related parties ..... 2 0.0% 2 0.0% 1 0.0% 0.0% 100.0% Total ...... 686 4.6% 564 4.2% 434 3.5% 21.6% 30.0%

2008 v 2007 Other operating expenses increased by Euro 122 million, or 21.6%, from Euro 564 million in 2007 to Euro 686 million in 2008 mainly due to the increase in exchange rate difference on operating items. Exchange rate difference on operating items increased by Euro 101 million, or 48.8%, from Euro 207 million in 2006 to Euro 308 million in 2008. This item related to the translation of trade and other payables and receivables which were denominated in foreign currencies, principally the U.S. dollar and, to a lesser extent, the Sterling, and the effect of cash flow hedging instruments on work in progress denominated in a foreign currency. The exchange rate expenses accounted for in other operating expenses in 2008 were entirely offset by exchange rate gains of the same amount which were included in other operating income. In 2007, the exchange rate expenses in other operating expenses were offset by exchange rate gains Euro 216 million included in other operating income. Therefore, the net effect of the exchange rate differences was Euro 9 million in 2007 and nil in 2008.

65 Accruals of provisions for risks remained substantially unchanged in 2007 and 2008 slightly increasing by Euro 2 million from Euro 198 million in 2007 to Euro 200 million in 2008. Accruals of provisions mainly relate to provision for disputes with third parties, product guarantees, guarantees given, penalties and contractual risk and charges.

2007 v 2006 Other operating expenses increased by Euro 130 million, or 30.0%, from Euro 434 million in 2006 to Euro 564 million in 2007 mainly due to the increase in exchange rate difference on operating items and accruals of provisions for risks partially offset by the decrease in sundry operating costs. Exchange rate difference on operating items increased by Euro 109 million, or 111.2%, from Euro 98 million in 2006 to Euro 207 million in 2007. This item related to the translation of trade and other payables and receivables which were denominated in foreign currencies and the effect of cash flow hedging instruments on work in progress denominated in a foreign currency. The exchange rate expenses in other operating expenses were offset by exchange rate gains of Euro 121 million in 2006 and Euro 216 million in 2007 which were included in other operating income. Therefore, the net effect of the exchange rate differences was Euro 23 million in 2006 and Euro 9 million in 2007. The variance offset the change recorded by the same item as other income (see “— Other Operating Income”). Accruals of provisions for risks increased by Euro 36 million, or 22.2%, from Euro 162 million in 2006 to Euro 198 million in 2007 mainly due to accruals for legal fees and amounts due to third parties mainly connected with the ENEA dispute.

Changes in Inventories of Work in Progress, Semi-Finished and Finished Goods 2008 v 2007 Changes in inventories of work in progress, semi-finished and finished goods changed from Euro 54 million in 2007 to Euro 281 million in 2008, principally as a result of the increase in the closing inventory of work in progress, semi-finished goods. The increase is mainly attributable to the Helicopters and Energy segments. Helicopters experienced an increase in production activities in 2008 and an increase in expected future deliveries which impacted inventory volume. Energy experienced an increase in orders and a change in policy which requires stock to be acquired once an order is obtained to ensure compliance with delivery terms.

2007 v 2006 Changes in inventories of work in progress, semi-finished and finished goods changed from a cost of Euro 24 million in 2006 to an income of Euro 54 million in 2007 and were mainly attributable to an increase in the closing inventory of finished goods and merchandise from Euro 134 million as of December 31, 2006 to Euro 150 million as of December 31, 2007. In addition, in 2007, changes in inventories of work in progress, semi-finished and finished goods also included write-down of inventories amounting to Euro 13 million in connection with the review of amounts capitalized relating to the Law 808 program (see “— Amortization, Depreciation and Impairment”).

Work Performed By the Group and Capitalized The table below sets forth a breakdown of the Group’s work performed by the Group and capitalized for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro) Personnel costs ...... 300 2.0% 359 2.7% 312 2.5% (16.4)% 15.1% Materials ...... 92 0.6% 161 1.2% 121 1.0% (42.9)% 33.1% Other costs ...... 321 2.1% 329 2.4% 281 2.3% (2.4)% 17.1% Total ...... 713 4.7% 849 6.3% 714 5.7% (16.0)% 18.9%

2008 v 2007 Work performed by the Group and capitalized decreased by Euro 136 million, or 16.0%, from Euro 849 million in 2007 to Euro 713 million in 2008. Work performed by the Group and capitalized related

66 to costs incurred by the Group in connection with development programs and the development of equipment and intangible assets subsequently capitalized in the balance sheet. The main projects in 2008 and 2007 related to activities within the Helicopters, Defense Electronics and Security and Aeronautics segments. Aeronautics activities in both 2008 and 2007 included tooling and technologies for innovative aerostructures using composite materials for the B787 and development programs for the A380, M346 and C27J military aircraft. In addition, 2007 activities included work related to the SuperJet 100 program and development of plant and equipment for the Grottaglie and Charleston locations. Helicopter activities in both 2008 and 2007 related to the AW139 and AW149. In addition, 2007 activities included work on the EH101 and development of property, plant and equipment for the Philadelphia plant. Defense Electronics and Security activities in 2008 and 2007 mainly related to the Kronos radar and the Terrestrial Trunked Radio (“TETRA”). In addition, 2007 activities included the FADR/DADR (long range fixed and deployable radars) programs and 2008 activities included work on air traffic management.

2007 v 2006 Work performed by the Group and capitalized increased by Euro 135 million, or 18.9%, from Euro 714 million in 2006 to Euro 849 million in 2007. The main projects in 2007 and 2006 related to activities within the Helicopters, Defense Electronics and Security, and Aeronautics segments. Helicopters activities in 2007 and 2006 related to the AW139. In addition, activities in 2007 included work on the EH101, AW149, and property, plant and equipment development for the Philadelphia plant. Defense Electronics and Security activities in 2007 and 2006 mainly related to FADR/DADR (long range fixed and deployable radars) and the TETRA. Aeronautics activities in 2007 and 2006 included technologies for innovative aerostructures using composite materials, such as for the B787, development of plant and equipment for the Grottaglie and Charleston locations, and development in programs such as the A380 and C27J military aircraft. In 2007, activities also included work related to the SuperJet 100 program. In 2006, activities also included the EFA and avionics systems and flight control systems programs.

Operating Income and Adjusted EBITA Operating income increased by Euro 126 million, or 11.6%, from Euro 1,084 million in 2007 to Euro 1,210 million in 2008 due to an increase in operating income across all segments, with the exception of Defense Electronics and Security. The key contributors to the improved performance are discussed in further detail below. Operating income increased by Euro 176 million, or 19.4%, from Euro 908 million in 2006 to Euro 1,084 million in 2007 due to an increase in operating income across all segments, with the exception of Transportation as further discussed below. Group management controls and monitors the underlying performance of the business and operations using adjusted EBITA as the key measure of operating performance. Adjusted EBITA is calculated by making certain adjustments that Group’s management considers appropriate in order to eliminate the effects of unusual items. Group’s management considers adjusted EBITA a useful measure for reviewing the performance of the business as it eliminates the effects of unusual items. The discussion in the following section has focused on adjusted EBITA. Adjusted EBITA is not recognized as a measure of operating performance under IFRS. This measure should not be considered as an alternative to operating income as determined in accordance with generally accepted accounting principles, or as a measure of operating performance or as an alternative to any other measures of performance under generally accepted accounting principles. Since all companies do not calculate this measure in an identical manner, the Group’s presentation may not be consistent with similar measures used by other companies. A reconciliation of net profit to adjusted EBITA on a consolidated level, a reconciliation of operating income to adjusted EBITA on a segmental level and an explanation of the unusual items is provided in “Financial Information and Non-GAAP Measures”.

2008 v 2007 Adjusted EBITA increased by Euro 260 million, or 24.9%, from Euro 1,045 million in 2007 to Euro 1,305 million in 2008.

67 The increase in adjusted EBITA in 2008 was due to an increase across all segments, with the exception of the Helicopters segment. The improvement of adjusted EBITA excluding DRS (whose contribution to Defense Electronics and Security segment adjusted EBITA accounted for Euro 51 million for the period from October 22, 2008 to December 31, 2008) was primarily related to (i) the Aeronautics segment, mainly related to civil activities and to the EFA program; (ii) the Space segment, due to increase in volumes and to the efficiency actions put in place, both in the manufacturing (mainly site restructuring) and service business (iii) the Transportation segment mainly due to the increased production volumes and profitability in the signaling and systems business; and (iv) the Energy segment due to the increase in production volumes and greater profitability of a number of foreign plant engineering contracts. As a result of these factors, adjusted EBITA as a percentage of revenue improved from 7.8% in 2007 to 8.7% in 2008

2007 v 2006 Adjusted EBITA increased by Euro 103 million, or 10.9%, from Euro 942 million in 2006 to Euro 1,045 million in 2007. The increase in adjusted EBITA was due to an increase across all segments, with the exception of the Transportation segment. The improvement to adjusted EBITA in most segments was primarily attributable to the increase in revenues and to the efficiencies generated following restructuring programs implemented in previous periods. Further explanation of the main restructuring programs and their effects is provided in “Financial Information and Non-GAAP Measures”. As a result of these factors, adjusted EBITA as a percentage of revenue increased slightly from 7.6% in 2006 to 7.8% in 2007. The table below sets forth a breakdown of the Group’s operating income and adjusted EBITA by segment for the years ended December 31, 2008, 2007 and 2006. Defense Other Electronics Activities and Defense and Helicopters Security Aeronautics Space Systems Energy Transportation Eliminations Total (In millions of Euro) Operating income 2008 ...... 344 357 246 62 116 122 123 (160) 1,210 Amortization of intangibles as part of a business combination (PPA)(1) ..... 9 23 — 1 1 — — — 34 Impairment of goodwill ...... — 40 — — — — — — 40 Restructuring costs ...... — 22 4 2 10 — 3 — 41 Write-up of receivables from ENEA. . . — — — — — — — (20) (20) Adjusted EBITA 2008 ...... 353 442 250 65 127 122 126 (180) 1,305

% segment revenue ...... 11.6% 10.1% 9.9% 6.5% 11.4% 9.2% 7.2% n.a. 8.7% Operating income 2007 ...... 340 382 150 48 116 93 (129) 84 1,084 Amortization of intangibles as part of a business combination (PPA)(1) ..... 9 15 — — 2 — — — 26 Impairment related to the closure of the Law 808 dispute ...... 28 — 90 7 — — — — 125 Restructuring costs ...... — 30 — 6 7 — 19 (4) 58 Write-up of receivables from ENEA. . . — — — — — — — (248) (248) Adjusted EBITA 2007 ...... 377 427 240 61 125 93 (110) (168) 1,045

% segment revenue ...... 12.7% 11.2% 10.4% 7.2% 11.1% 8.9% (8.1)% n.a. 7.8% Operating income 2006 ...... 293 314 209 46 92 65 17 (128) 908 Amortization of intangibles as part of a business combination (PPA)(1) ..... 9 15 — — — — — — 24 Restructuring costs ...... (6) 9 — (4) 15 — — (4) 10 Adjusted EBITA 2006 ...... 296 338 209 42 107 65 17 (132) 942

% segment revenue ...... 10.9% 9.0% 11.0% 5.5% 9.5% 6.6% 1.2% 89.8% 7.6%

(1) Amortization of intangibles as part of a business combination is the amortization of the intangible assets identified in the course of business combinations in accordance with IFRS 3.

68 Helicopters 2008 v 2007 Helicopters segment adjusted EBITA decreased by Euro 24 million, or 6.4%, from Euro 377 million in 2007 to Euro 353 million in 2008. As a percentage of segment revenue, adjusted EBITA decreased from 12.7% in 2007 to 11.6% in 2008. The decrease in adjusted EBITA was mainly attributable to (i) the negative impact, amounting to Euro 14 million, arising from the translation of financial statements of the foreign subsidiaries denominated in Sterling into Euro, due to the continued wakening in the Sterling compared to the Euro; (ii) the expenses incurred relating to the contract signed with Bell Helicopter Textron Inc. to acquire all of its rights for the AW139 helicopter, and (iii) the reduced contribution of spare parts and service contracts.

2007 v 2006 Helicopters segment adjusted EBITA increased by Euro 81 million, or 27.4%, from Euro 296 million in 2006 to Euro 377 million in 2007. As a percentage of segment revenue, adjusted EBITA increased from 10.9% in 2006 to 12.7% in 2007. The increase in adjusted EBITA was mainly due to (i) the change in product mix as a result of the completion of some programs (EH101 Denmark and the second tranche of the Italian Navy contract); (ii) the increase in production of the US101 and civil contracts, specifically the AW139 and AW109 products; and (iii) efficiency benefits arising from integration of British and Italian activities contributing to lower costs, such as joint management of procurement, reorganization of the industrial capacity and streamlining of the decision process.

Defense Electronics and Security 2008 v 2007 Defense Electronics and Security segment adjusted EBITA increased by Euro 15 million, or 3.5%, from Euro 427 million in 2007 to Euro 442 million in 2008. As a percentage of segment revenue, adjusted EBITA decreased from 11.2% in 2007 to 10.1% in 2008. Excluding the contribution of DRS, whose positive impact on adjusted EBITA accounted for Euro 51 million, adjusted EBITA decreased in 2008 by Euro 36 million compared to previous year. Such decrease is mainly due to the following factors: • The unfavorable effect of the change in the Euro/Sterling exchange rate, which had a roughly Euro 25 million impact on adjusted EBITA and the write-down of certain working capital items in the communications business primarily relating to obsolete items; and • The positive impact on 2007 adjusted EBITA of gains on disposal of properties (Euro 13 million) and release of provisions which had been accrued in the past for projects that were nearing completion.

2007 v 2006 Defense Electronics and Security segment adjusted EBITA increased by Euro 89 million, or 26.3%, from Euro 338 million in 2006 to Euro 427 million in 2007. As a percentage of segment revenue, adjusted EBITA increased from 9.0% in 2006 to 11.2% in 2007. The increase in adjusted EBITA was due to: • Improvements in avionics and electro-optical systems, particularly in the United Kingdom, and the improvement in the profitable mix of projects in information technology and security activities and command and control systems; • Initiatives launched in previous periods to increase efficiency and integrate the various businesses, in particular, Elsag Datamat S.p.A. and the Italian and British avionics businesses and the release of excess provisions which had been accrued in the past for projects that were nearing completion; • Gain of Euro 13 million on the disposal of a property previously occupied by Galileo Avionica S.p.A.; and • A decrease in operating income for communications systems due to low activity levels which were insufficient to absorb the fixed costs and which partially offset the increases discussed above.

69 Aeronautics 2008 v 2007 Aeronautics segment adjusted EBITA increased by Euro 10 million, or 4.2%, from Euro 240 million in 2007 to Euro 250 million in 2008. As a percentage of segment revenue, adjusted EBITA decreased from 10.4% in 2007 to 9.9% in 2008. The increase in absolute value of adjusted EBITA was mainly due to the increased civil business activities related to the ATR aircraft production and A380 aerostructures and the increased military business activities related to the second phase of the EFA program and MB389 training aircraft contracts. As a percentage of segment revenue, EBITA slightly decreased mainly due to the different mix of products, the difficulties in start-up of production and to delays in a number of projects, particularly for the B787 program.

2007 v 2006 Aeronautics segment adjusted EBITA increased by Euro 31 million, or 14.8%, from Euro 209 million in 2006 to Euro 240 million in 2007. As a percentage of segment revenue, adjusted EBITA decreased from 11.0% in 2006 to 10.4% in 2007. The increase in adjusted EBITA was mainly due to the increased deliveries for ATR aircraft and increased development and production and logistics services related to the second phase of the Eurofighter program. These increases in operating income were partially offset by higher costs for the B767 Tanker and the B767 Cargo programs which are in a prototype phase. In addition, the Group incurred increased costs for the early closure of the DC-10 cargo transformation program.

Space 2008 v 2007 Space segment adjusted EBITA increased by Euro 4 million, or 6.6%, from Euro 61 million in 2007 to Euro 65 million in 2008. As a percentage of segment revenue, adjusted EBITA decreased from 7.2% in 2007 to 6.5% in 2008. The increase, in absolute value, of adjusted EBITA was due to the increased volumes in both satellite manufacturing and satellite services business. As a percentage of revenue, adjusted EBITA slightly decreased mainly driven by cost overruns and lower productivity experienced in a number of manufacturing activities in France.

2007 v 2006 Space segment adjusted EBITA increased by Euro 19 million, or 45.2%, from Euro 42 million in 2006 to Euro 61 million in 2007. As a percentage of segment revenue, adjusted EBITA increased from 5.5% in 2006 to 7.2% in 2007. The increase in adjusted EBITA was due to increased efficiency achieved both by Telespazio and Thales Alenia Space and to the operational synergies of the Space Alliance. The efficiencies resulted from improvements in the production and purchasing process and cost reductions from the elimination of some duplicate procedures. The increase in adjusted EBITA was also due to improvements in profitability of satellite services, in particular those related to the EGNOS and GALILEO programs in the navigation and infomobility activities and those related to the Earth observation activity.

Defense Systems 2008 v 2007 Defense Systems segment adjusted EBITA remained substantially unchanged, increasing by Euro 2 million, or 1.6%, from Euro 125 million in 2007 to Euro 127 million in 2008. As a percentage of segment revenue, adjusted EBITA increased from 11.1% in 2007 to 11.4% in 2008. The increase in adjusted EBITA was mainly due to the improvement in land, sea and air weapons systems and in underwater systems business, together with the higher profitability of the missile systems business.

70 2007 v 2006 Defense Systems segment adjusted EBITA increased by Euro 18 million, or 16.8%, from Euro 107 million in 2006 to Euro 125 million in 2007. As a percentage of segment revenue, adjusted EBITA increased from 9.5% in 2006 to 11.1% in 2007. The increase in adjusted EBITA was mainly due to the successful conclusion of an agreement signed with the Italian Ministry of Defense relating to past disputes which contributed Euro 18 million to adjusted EBITA in 2007 and an improvement in underwater defense systems performance due to an increase in overhead absorption resulting from the increase in volumes.

Energy 2008 v 2007 Energy segment adjusted EBITA increased by Euro 29 million, or 31.2%, from Euro 93 million in 2007 to Euro 122 million in 2008. As a percentage of segment revenue, adjusted EBITA increased from 8.9% in 2007 to 9.2% in 2008. Adjusted EBITA increased due to the increase in volumes and the greater profitability of certain plant engineering contracts (foreign contracts in particular) owing to continuing efficiency and production improvements

2007 v 2006 Energy segment adjusted EBITA increased by Euro 28 million, or 43.1%, from Euro 65 million in 2006 to Euro 93 million in 2007. As a percentage of segment revenue, adjusted EBITA increased from 6.6% in 2006 to 8.9% in 2007. Adjusted EBITA increased due to the increase in volumes and the higher profitability of certain contracts due to continuing efficiency and production improvements.

Transportation 2008 v 2007 Transportation segment adjusted EBITA increased by Euro 236 million, from a negative adjusted EBITA of Euro 110 million in 2007 to a positive value of Euro 126 million in 2008. As a percentage of segment revenue, adjusted EBITA improved from a negative 8.1% in 2007 to a positive 7.2% in 2008. Adjusted EBITA increased due to (i) the growth in production volumes and in operating profitability of the signaling and systems business (accounting for an increase in adjusted EBITA of Euro 19 million); and (ii) the achievement of a substantial operating break-even for the vehicles business, whose adjusted EBITA increased by Euro 217 million (related adjusted EBITA accounting for Euro 5 million in 2008 compared to a negative Euro 212 million in 2007).

2007 v 2006 Operating performance of the Transportation segment decreased by Euro 127 million, from an adjusted EBITA of Euro 17 million in 2006 to a negative adjusted EBITA of Euro 110 million in 2007. As a percentage of segment revenue, adjusted EBITA decreased from 1.2% in 2006 to negative 8.1% in 2007. The segment generated a negative adjusted EBITA in 2007 due to the significant loss incurred by vehicles activities (negative adjusted EBITA of Euro 212 million in 2007 compared to Euro 76 million in 2006). In 2007, a review of the estimated costs at completion was performed to take into account new issues on some contracts, as a consequence of difficulties in achieving customers’ requirements. Therefore, the Group assessed the amount of additional activities to be performed and penalties payable under the new schedule. Furthermore, management entered into a wider review aimed at improving the engineering process and resolving the outstanding issues. The new estimates included the impacts of such remediation plans. The loss from vehicles activities was partially offset by increased volumes and growth in profitability in signaling activities; specifically, a favorable mix of the activities realized by the French entity and in the Asia Pacific region and the wayside SCMT projects in Italy. The performance of systems activities remained consistent from 2006 to 2007.

71 Finance Income and Costs The table below sets forth a breakdown of the Group’s net finance costs for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % Change %of %of %of 2008- 2007- 2008 Revenue 2007 Revenue 2006 Revenue 2007 2006 (In millions of Euro) Exchange rate differences ...... 642 4.3% 275 2.0% 322 2.6% 133.5% (14.6)% Fair value adjustments through profit or loss ...... 156 1.0% 82 0.6% 47 0.4% 90.2% 74.5% Interest income ...... 99 0.7% 99 0.7% 75 0.6% 0.0% 32.0% Capital gain on sale of STM ...... 56 0.4% — 0.0% — 0.0% n.a. n.a. Income from Ansaldo STS IPO ...... — 0.0% — 0.0% 416 3.3% n.a. (100.0)% Gain from the sale of AvioGroup ..... — 0.0% — 0.0% 291 2.3% n.a. (100.0)% Other finance income...... 62 0.4% 165 1.2% 40 0.3% (62.4)% n.a. Finance income from related parties . . . 2 0.0% 3 0.0% 3 0.0% (33.3)% 0.0% Finance income ...... 1,017 6.8% 624 4.6% 1,194 9.6% 63.0% (47.7)% Exchange rate differences ...... (630) (4.2)% (272) (2.0)% (340) (2.7)% 131.6% (20.0)% Interest expense ...... (261) (1.7)% (182) (1.4)% (269) (2.2)% 43.4% (32.3)% Impairment of STM ...... (111) (0.7)% — 0.0% — 0.0% n.a. n.a. Fair value adjustments through profit or loss ...... (60) (0.4)% (44) (0.3)% (54) (0.4)% 36.4% (18.5)% Value adjustments to equity investments ...... (6) 0.0% (51) (0.4)% (22) (0.2)% (88.2)% 131.8% Other finance costs ...... (161) (1.1)% (306) (2.3)% (123) (1.0)% (47.4)% 148.8% Finance costs from related parties .... (26) (0.2)% (22) (0.2)% (16) (0.1)% 18.2% 37.5% Finance costs ...... (1,255) (8.3)% (877) (6.5)% (824) (6.6)% 43.1% 6.4% Net finance income/(costs) ...... (238) (1.6)% (253) (1.9)% 370 3.0% (5.9)% n.a.

2008 v 2007 Net finance costs decreased by Euro 15 million, or 5.9%, from Euro 253 million in 2007 to Euro 238 million in 2008. Net finance income and cost related to the fair value adjustments through profit or loss changed from a net income of Euro 38 million in 2007 to a net income of Euro 96 million in 2008 mainly due to the income of Euro 83 million originating from the fair value valuation of embedded derivatives, which are related to commercial contracts denominated in currencies other than the currencies of the Finmeccanica entities or counter parties that are party to the relevant contract or generally used in the relevant markets. Under IFRS, the embedded derivatives component is separated from the commercial contract and recorded at fair value. The Group recorded a gain of Euro 56 million in 2008 on the sale of 26 million STM shares and gains on derivative instruments relating to its STM holding of Euro 22 million. However, the Group also recorded an impairment of Euro 111 million on its remaining stake in STM as a result of market conditions. Net interest expense increased by Euro 79 million, increasing from Euro 83 million in 2007 to Euro 162 million in 2008 primarily due to the increase in the Group’s average financial indebtedness in 2008 (net financial indebtedness increased from Euro 1,158 million in 2007 to Euro 3,383 million in 2008, mainly as a consequence of the debt incurred to finance the DRS acquisition). Interest expense is expected to increase significantly in 2009 as the average interest payable on the bonds issued in December 2008, January 2009 and in this offering is substantially higher than the average interest paid in 2008. See “— Bonds Issued”.

2007 v 2006 Net finance costs increased by Euro 623 million, from net finance income of Euro 370 million in 2006 to net finance costs of Euro 253 million in 2007, mainly due to finance income in the amount of Euro 416 million relating to the Group’s sale of 60.0% of Ansaldo STS S.p.A. in connection with the listing

72 on Borsa Italiana S.p.A. (“Borsa Italiana”) and Euro 291 million from the sale of a 30.0% stake in AvioGroup and subsequent repurchase of a 15.0% investment. Net interest cost decreased from Euro 194 million in 2006 to Euro 83 million in 2007 mainly due to a one-off interest expense of Euro 114 million on advances received by AnsaldoBreda S.p.A. from customers in 2006. Net exchange rate differences changed from a net loss of Euro 18 million in 2006 to a net gain of Euro 3 million in 2007. In 2006 exchange rate differences were affected by the translation of the foreign currency accounts of EEIG ATR consortium (primarily denominated in U.S. dollars) which were not subject to hedging transactions. Starting from 2007 the exchange rate risk was partially mitigated by the use of forward contracts. Value adjustments to equity investments in 2007 mainly related to the write-down of investments to reflect losses incurred. This included Consorzio Trevi which was held by AnsaldoBreda S.p.A. (Euro 12 million), Galileo Vacuum System S.p.A. held by Fata S.p.A. (Euro 16 million) and Ansaldo Trasmissione and Distribuzione S.p.A. held by SOGEPA S.p.A. (Euro 13 million). Net finance income and cost related to the fair value adjustments through profit or loss changed from a net cost of Euro 7 million in 2006 to net income of Euro 38 million in 2007 mainly due to gains of Euro 44 million in 2007 compared to Euro 9 million in 2006, relating to the STM options following the decrease in the underlying share price. Other finance income increased by Euro 125 million in 2007 compared to 2006, mainly due to the settlement of the STM options of Euro 103 million. Other finance costs increased by Euro 183 million in 2007 compared to 2006, mainly due to the interest costs of Euro 105 million arising from the review of the Law 808 program by the European Commission and costs connected to the settlement of STM options of Euro 80 million.

Share of Profit/(Loss) of Equity Accounted Investments 2008 v 2007 The share of profit/(loss) of equity accounted investments remained unchanged in 2008 and 2007 and amounted to a profit of Euro 16 million. In 2008, this included: (i) Euro 6 million relating to the investment in Eurofighter J. GmbH in which the Group holds an investment of 21.0%; (ii) Euro 5 million relating to the investment in Elettronica S.p.A. in which the Group holds an investment of 31.3% and (iii) Euro 5 million relating to a number of other investments.

2007 v 2006 The share of profit/(loss) of equity accounted investments amounted to a profit of Euro 16 million in 2007 and comprised Euro 8 million relating to the investment in Eurofighter J. GmbH in which the Group holds an investment of 21.0% and Euro 8 million relating to a number of investments. The share of profit/ (loss) of equity accounted investments amounted to a net loss of Euro 5 million in 2006 related to the Group’s share of profit and loss from a number of investments.

73 Income Taxes The table below sets forth a breakdown of the Group’s income taxes for the years ended December 31, 2008, 2007 and 2006. Year ended December 31, % of Profit % of Profit % of Profit before taxes before taxes before taxes and and and % Change discontinued discontinued discontinued 2008- 2007- 2008 operations 2007 operations 2006 operations 2007 2006 (In millions of Euro) Corporate income tax (IRES) .... 231 23.4% 253 29.9% 232 18.2% (8.7)% 9.1% Regional tax on productive activities (IRAP) ...... 129 13.1% 124 14.6% 126 9.9% 4.0% (1.6)% Deferred tax — net ...... (65) (6.6)% 82 9.7% (63) (4.9)% n.a. n.a. Provisions for tax disputes ...... 11 1.1% 14 1.7% 14 1.1% (21.4)% 0.0% Tax related to previous periods . . . (17) (1.7)% (28) (3.3)% (4) (0.3)% (39.3)% n.a. Benefit under consolidated tax mechanism ...... (72) (7.3)% (216) (25.5)% (151) (11.9)% (66.7)% 43.0% Substitute taxes ...... 30 3.0% — 0.0% — 0.0% n.a. n.a. Other income taxes...... 120 12.1% 97 11.5% 89 7.0% 23.7% 9.0% Total ...... 367 37.1% 326 38.5% 243 19.1% 12.6% 34.2%

2008 v 2007 The Group’s income taxes increased by Euro 41 million in 2008 compared to 2007, from Euro 326 million in 2007 to Euro 367 million in 2008. The effective tax rate marginally decreased from 38.5% to 37.1% due to a decrease in IRES (the corporate income tax) and IRAP (the regional income tax).

2007 v 2006 The Group’s income taxes and effective tax rate increased by Euro 83 million in 2007 compared to 2006, from Euro 243 million and 19.1% in 2006 to Euro 326 million and 38.5% in 2007. Income taxes in 2006 benefited from an exemption on capital gains tax in connection with the capital gain of Euro 416 million on the listing of Ansaldo STS S.p.A. and Euro 291 million on the sale of the investments in AvioGroup (sale of 30.0% investment followed by subsequent purchase of a 15.0% investment), of which only 9.0% of the gains were taxable at the ordinary tax rate, thus reducing the effective tax rate to 19.1%. The increase in income taxes in 2007 compared to 2006 was mainly due to higher taxable income at the enacted tax rate.

(Loss)/Profit From Discontinued Operations Net loss from discontinued operations of Euro 9 million in 2006 relates to the subsidiary BredaMenarinibus S.p.A. In 2006, this subsidiary was classified as discontinued operations as management had the intention of selling it. However the Group has not yet finalized a purchase offer by third parties and the implementation of the disposal plan cannot be considered highly probable. As required by IFRS 5, the activities in 2007 in respect of the subsidiary no longer qualified as discontinued operations and were therefore represented within continuing operations.

Net Profit For the reasons described above net profit increased from Euro 521 million in 2007 to Euro 621 million in 2008 and decreased from Euro 1,021 million in 2006 to Euro 521 million in 2007.

2008 v 2007 Net profit increased by Euro 100 million, or 19.2%, from Euro 521 million in 2007 to Euro 621 million in 2008. As described above, the increase in net profit was primarily driven by the increase in operating income of Euro 126 million and the decrease in net finance costs by Euro 15 million, which was partially offset by an increase in income taxes amounting to Euro 41 million.

74 2007 v 2006 Net profit decreased by Euro 500 million, or 49.0%, from Euro 1,021 million in 2006 to Euro 521 million in 2007. As described above, the decrease in net profit was primarily due to a decrease of Euro 570 million in finance income, which was partially offset by the increase in operating income of Euro 176 million. In 2006, finance income included Euro 416 million relating to the Ansaldo STS S.p.A. IPO and the gain of Euro 291 million from the sale of AvioGroup which was partially offset by a one-off interest expense of Euro 114 million on advances received by AnsaldoBreda S.p.A. from customers.

Results of Operations for the six months ended June 30, 2009 and 2008 Condensed Consolidated Income Statement Data The table below sets forth the condensed consolidated results of operations for the six months ended June 30, 2009 and 2008. Six months ended June 30, %of %of 2009 Revenue 2008 Revenue % Change (In millions of Euro, except per share information) (Unaudited) Revenue ...... 8,523 100.0% 6,433 100.0% 32.5% Purchases and personnel costs ...... (7,621) (89.4)% (5,820) (90.5)% 30.9% Amortization, depreciation and impairment ...... (320) (3.8)% (220) (3.4)% 45.5% Other operating income/(expenses) .... (23) (0.3)% (18) (0.3)% 27.8% Operating income ...... 559 6.6% 375 5.8% 49.1% Finance income/(costs) ...... (168) (2.0)% — 0.0% n.a. Share of profit/(loss) of equity accounted investments ...... 12 0.1% 10 0.2% 20.0% Profit before taxes and discontinued operations ...... 403 4.7% 385 6.0% 4.7% Income taxes...... (161) (1.9)% (88) (1.4)% 83.0% Profit/(loss) from discontinued operations ...... — 0.0% — 0.0% n.a. Net profit...... 242 2.8% 297 4.6% (18.5)% — attributable to equity holders of the Group ...... 218 2.6% 278 4.3% (21.6)% — attributable to minority interests .... 24 0.3% 19 0.3% 26.3%

As noted previously, DRS was acquired on October 22, 2008. The contribution of DRS to the Group’s condensed consolidated income statement impacted the results for the six months ended June 30, 2009 compared to the same period in 2008. DRS is consolidated within the Defense Electronics and Security segment; therefore, the segment comparability is also impacted. In order to illustrate the internal growth of the Group as a whole and within the Defense Electronics and Security segment, the impact of DRS has been isolated where appropriate in the discussion below.

Revenue Revenue increased by Euro 2,090 million, or 32.5%, from Euro 6,433 million for the six months ended June 30, 2008 to Euro 8,523 million for the same period in 2009. Of the Euro 2,090 million increase in revenue, Euro 1,466 million (70.1%) related to the consolidation of DRS. Excluding the impact of DRS, the most significant contributions to the Group’s internal growth in revenues were recorded in the Energy, Aeronautics and Helicopters segments, which together accounted for an increase in revenues of Euro 631 million. The revenue growth of the Defense Electronics and Security segment was adversely impacted by the translation of the financial statements of foreign subsidiaries into Euro.

75 The table below sets forth a breakdown of the Group’s revenue by segment for the six months ended June 30, 2009 and 2008. Six months ended June 30, %of %of 2009 revenue 2008 revenue % Change (In millions of Euro) (Unaudited) Helicopters ...... 1,646 19.3% 1,469 22.8% 12.0% Defense Electronics and Security ...... 3,075 36.1% 1,628 25.3% 88.9% Aeronautics...... 1,208 14.2% 1,062 16.5% 13.7% Space ...... 435 5.1% 451 7.0% (3.5)% Defense Systems ...... 514 6.0% 513 8.0% 0.2% Energy ...... 820 9.6% 512 8.0% 60.2% Transportation ...... 895 10.5% 836 13.0% 7.1% Other activities ...... 198 2.3% 150 2.3% 32.0% Eliminations ...... (268) (3.1)% (188) (2.9)% 42.6% Revenue ...... 8,523 100.0% 6,433 100.0% 32.5%

Helicopters Helicopters segment revenue increased by Euro 177 million, or 12.0%, from Euro 1,469 million for the six months ended June 30, 2008 to Euro 1,646 million for the same period in 2009 due to growth in helicopter component volumes and product support activities. Production volumes for helicopter components increased by 14% for the six months ended June 30, 2009 when compared to the same period in 2008. Specifically, there was an increase in AW139 and AW101 volumes as a result of programs in Algeria, and the MK3A program in the United Kingdom, which are in full production, while volumes declined for the AW109 (Power and LUH). Product support activities increased by 9% for the six months ended June 30, 2009 when compared to the same period in 2008. This growth principally related to the IOS contracts for the British Ministry of Defense, which grew in volume by 11%.

Defense Electronics and Security Defense Electronics and Security segment revenue increased by Euro 1,447 million, or 88.9%, from Euro 1,628 million for the six months ended June 30, 2008 to Euro 3,075 million for the same period in 2009. The contribution of DRS to revenue during the period amounted to Euro 1,466 million. This increase was partially offset by the negative effect from the translation of financial statements denominated in a foreign currency. Excluding the contribution of DRS and the negative impact of the translation of the financial statements denominated in foreign currencies, revenues increased slightly, mainly driven by an increase in activity in both avionics and electro-optical systems and command and control systems activities.

Aeronautics Aeronautics segment revenue increased by Euro 146 million, or 13.7%, from Euro 1,062 million for the six months ended June 30, 2008 to Euro 1,208 million for the same period in 2009 due to increased military activities, specifically, increased production for the EFA program and for trainers programs. Civil activities included production of aero-structures in line with the prior period and a slight increase in revenues for ATR aircraft compared to the prior period.

Space Space segment revenue decreased by Euro 16 million, or 3.5%, from Euro 451 million for the six months ended June 30, 2008 to Euro 435 million for the same period in 2009 mainly due to lower production in both manufacturing and satellite services in particular, the Yahsat and Globalstar programs.

Defense Systems Defense Systems segment revenue remained substantially in line in each of the six month periods, amounting to Euro 513 million for the six months ended June 30, 2008 and Euro 514 million for the same period in 2009.

76 Energy Energy segment revenue increased by Euro 308 million, or 60.2%, from Euro 512 million for the six months ended June 30, 2008 to Euro 820 million for the same period in 2009 due to an increase in manufacturing activity and service activities. Growth in manufacturing volume was due to the continued construction of plants (in particular, Turano, San Severo and Bayet). Growth in service activities related to the increase in spare parts, upgrading and solutions.

Transportation Transportation segment revenue increased by Euro 59 million, or 7.1%, from Euro 836 million for the six months ended June 30, 2008 to Euro 895 million for the same period in 2009 due primarily to increased activity in signaling and transportation systems, and in particular in transport systems.

Other Activities Other Activities segment revenue increased by Euro 48 million, or 32.0%, from Euro 150 million for the six months ended June 30, 2008 to Euro 198 million for the same period in 2009 mainly due to Fata S.p.A.’s increased production volumes of their aluminum smelter business.

Purchases and Personnel Costs The table below sets forth a breakdown of the Group’s purchases and personnel costs for the six months ended June 30, 2009 and 2008. Six months ended June 30, %of %of 2009 revenue 2008 revenue % Change (In millions of Euro) (Unaudited) Costs of purchases ...... 3,091 36.3% 2,363 36.7% 30.8% Cost of services ...... 2,667 31.3% 2,019 31.4% 32.1% Personnel costs ...... 2,359 27.7% 1,911 29.7% 23.4% Costs attributable to related parties ...... 58 0.7% 31 0.5% 87.1% Capitalized costs for internal production . . (328) (3.8)% (349) (5.4)% (6.0)% Changes in inventories of work in progress, semi-finished and finished goods ...... (226) (2.7)% (155) (2.4)% 45.8% Purchases and personnel costs...... 7,621 89.4% 5,820 90.5% 30.9%

Purchases and personnel costs increased by Euro 1,801 million, or 30.9%, from Euro 5,820 million for the six months ended June 30, 2008 to Euro 7,621 million for the same period in 2009. As a percentage of revenue, purchases and personnel costs marginally decreased from 90.5% to 89.4%. As a percentage of revenues, cost of purchases was 36.3% for the six months ended June 30, 2009, which was substantially in line with the same period in 2008 (36.7%). As a percentage of revenues, cost of services was 31.3% for the six months ended June 30, 2009, which was substantially in line with the same period in 2008 (31.4%). Personnel costs increased by Euro 448 million, or 23.4%, from Euro 1,911 million for the six months ended June 30, 2008 to Euro 2,359 million for the same period in 2009 mainly due to an increase in wages, salaries and contributions from the consolidation of DRS. Wages, salaries and contributions increased by Euro 398 million, or 22.4%, from Euro 1,778 million for the six months ended June 30, 2008 to Euro 2,176 million for the same period in 2009 mainly due to the increase in the average number of employees by 19.7% from 60,641 employees for the six months ended June 30, 2008 to 72,600 employees for the same period in 2009. The increase in the average number of employees was mainly due to the acquisition of DRS at the end of 2008.

Amortization, Depreciation and Impairment Amortization, depreciation and impairment increased by Euro 100 million, or 45.5%, from Euro 220 million for the six months ended June 30, 2008 to Euro 320 million for the same period in 2009.

77 The increase is attributable to amortization and depreciation mainly due to the acquisition and consolidation of DRS. Amortization increased by Euro 58 million, or 78.4%, from Euro 74 million for the six months ended June 30, 2008 to Euro 132 million for the same period in 2009 and depreciation increased by Euro 31 million, or 21.8%, from Euro 142 million for the six months ended June 30, 2008 to Euro 173 million for the same period in 2009. Specifically, of the Euro 58 million increase in amortization, Euro 28 million related to amortization of acquired intangible assets in connection with the acquisition of DRS and Euro 24 million related to development costs which were capitalized in previous years.

Other Operating Income / (Expenses) The table below sets forth a breakdown of the Group’s other operating income / (expenses) for the six months ended June 30, 2009 and 2008. Six months ended June 30, 2009 2008 Income Expenses Net Income Expenses Net (In millions of Euro) (Unaudited) Exchange rate gains/(losses) on operating items ...... 108 (116) (8) 117 (125) (8) Reversal/ (accruals) of provisions for risks ...... 32 (61) (29) 47 (44) 3 Other operating income/(expenses) ...... 98 (84) 14 53 (66) (13) Total ...... 238 (261) (23) 217 (235) (18)

Net other operating expenses increased by Euro 5 million, or 27.8%, from Euro 18 million for the six months ended June 30, 2008 to Euro 23 million for the same period in 2009 due to changes in “Reversal / (accruals) of provisions for risks” related to increased provisions for product guarantees, risks, contractual charges and other provisions.

Operating Income and Adjusted EBITA Operating income increased by Euro 184 million, or 49.1%, from Euro 375 million for the six months ended June 30, 2008 to Euro 559 million for the same period in 2009 mainly due to the consolidation of DRS. Adjusted EBITA increased by Euro 205 million, or 51.3%, from Euro 400 million for the six months ended June 30, 2008 to Euro 605 million for the same period in 2009. The consolidation of DRS contributed Euro 176 million to the increase in adjusted EBITA. The adjusted EBITA of the Helicopters and Defense Electronics and Securities segments were adversely affected by the weakening of the U.S. dollar and sterling exchange rates compared to Euros, which was reflected in the translation of the financial statements of foreign subsidiaries into Euros. The table below sets forth a reconciliation of the Group’s operating income and adjusted EBITA by segment for the six months ended June 30, 2009 and 2008. Other Defense activities Electronics Defense and Helicopters and Security Aeronautics Space Systems Energy Transportation eliminations Total (In millions of Euro) (Unaudited) Operating income June 30, 2009 . .... 158 238 59 12 40 76 53 (77) 559 Amortization of intangibles as part of a business combination ...... 4 34 — — 1 — — — 39 Restructuring costs ...... — 2 1 1 1 — 2 — 7 Adjusted EBITA June 30, 2009 ..... 162 274 60 13 42 76 55 (77) 605

% segment total revenue ...... 9.8% 8.9% 5.0% 3.0% 8.2% 9.3% 6.1% 110.0% 7.1% Operating income June 30, 2008 . .... 154 84 70 15 36 37 46 (67) 375 Amortization of intangibles as part of a business combination ...... 4 6 — — 1 — — — 11 Restructuring costs ...... — 8 — — 5 — 1 — 14

Adjusted EBITA June 30, 2008 ..... 158 98 70 15 42 37 47 (67) 400

% segment total revenue ...... 10.8% 6.0% 6.6% 3.3% 8.2% 7.2% 5.6% n.a. 6.2%

78 Helicopters Helicopters segment adjusted EBITA was substantially in line with the same period of the previous year, amounting to Euro 158 million and Euro 162 million for the six months ended June 30, 2008 and 2009, respectively. As a percentage of segment revenue, adjusted EBITA amounted to 10.8% and 9.8% for the six months ended June 30, 2008 and 2009, respectively. Adjusted EBITA was negatively affected by the translation effect of financial statements in foreign currencies into Euros and lower profitability resulting from the different mix of service and production projects.

Defense Electronics and Security Defense Electronics and Security segment adjusted EBITA increased by Euro 176 million from Euro 98 million to Euro 274 million for the six months ended June 30, 2008 and 2009, respectively, despite the negative effect of the translation of financial statements denominated in a foreign currency. As a percentage of segment revenue, adjusted EBITA increased from 6.0% to 8.9% for the six months ended June 30, 2008 and 2009, respectively. DRS contributed Euro 176 million to adjusted EBITA for this segment for the six months ended June 30, 2009. Adjusted EBITA was otherwise positively impacted by increased production volumes as well as higher profitability in a mix of command and control systems business activities which were entirely offset by the negative translation effects on financial statements in currencies other than the Euro and lower results from the information technology and security activities.

Aeronautics Aeronautics segment adjusted EBITA decreased by Euro 10 million, or 14.3%, from Euro 70 million to Euro 60 million for the six months ended June 30, 2008 and 2009, respectively. As a percentage of segment revenue, adjusted EBITA decreased from 6.6% to 5.0% for the six months ended June 30, 2008 and 2009, respectively. The decrease in adjusted EBITA was mainly due to lower profitability of several export orders for the C27J aircraft as a result of the revision of estimated supply costs.

Space Space segment adjusted EBITA decreased by Euro 2 million, or 13.3%, from Euro 15 million to Euro 13 million for the six months ended June 30, 2008 and 2009, respectively. As a percentage of segment revenue, adjusted EBITA amounted to 3.3% and 3.0% for the six months ended June 30, 2008 and 2009, respectively. The decrease in adjusted EBITA is mainly attributable to lower production volumes and cost overruns for a number of manufacturing activities, such as Globalstar in France.

Defense Systems Defense Systems segment adjusted EBITA remained unchanged at Euro 42 million for the six months ended June 30, 2008 and 2009. As a percentage of segment revenue, adjusted EBITA also remained unchanged at 8.2% for the six months ended June 30, 2008 and 2009.

Energy Energy segment adjusted EBITA increased by Euro 39 million, or 105.4%, from Euro 37 million to Euro 76 million for the six months ended June 30, 2008 and 2009, respectively. As a percentage of segment revenue, adjusted EBITA increased from 7.2% to 9.3% for the six months ended June 30, 2008 and 2009, respectively. Adjusted EBITA increased due to increased production volumes and greater industry profitability of plants contracts, as previously noted.

Transportation Transportation segment adjusted EBITA increased by Euro 8 million, or 17.0%, from Euro 47 million to Euro 55 million for the six months ended June 30, 2008 and 2009, respectively. As a percentage of segment revenue, adjusted EBITA increased from 5.6% to 6.1% for the six months ended June 30, 2008 and 2009, respectively.

79 Adjusted EBITA increased mainly due to increased production volumes and higher profitability in signaling and transport activities.

Finance Income and Costs The table below sets forth a breakdown of the Group’s finance income and costs for the six months ended June 30, 2009 and 2008. Six months ended June 30, 2009 2008 Income Costs Net Income Costs Net (In millions of Euro) (Unaudited) Interest income/(expense)...... 28 (213) (185) 47 (101) (54) Gain on the sale of STM ...... — — — 56 — 56 Fair value adjustments through profit or loss ...... 138 (53) 85 72 (23) 49 Exchange rate differences ...... 430 (456) (26) 244 (244) — Other finance income/(costs) ...... 26 (68) (42) 28 (67) 39 Finance income/(costs) ...... 622 (790) (168) 447 (435) 12 Finance income/(costs) from related parties) ...... 6 (6) — 1 (13) (12) Net finance income/(costs) ...... 628 (796) (168) 448 (448) —

Net finance costs increased from a net cost of nil for the six months ended June 30, 2008 to a net cost of Euro 168 million for the same period in 2009, mainly due to a significant increase in finance debt. In addition, the refinancing of the Facility Agreement with new long term bond issuances increases interest expense. Specifically, net interest expense increased by Euro 131 million from Euro 54 million for the six months ended June 30, 2008 to Euro 185 million for the same period in 2009. The net interest costs include Euro 88 million of interest (Euro 43 million for the six months ended June 30, 2008) mainly relating to recent bond issuances. See “— Liquidity and Capital Resources”, for recent bond issuances. Net interest costs also includes premiums collected/paid on the hedging of interest rate risk in the amount of Euro 38 million (Euro 8 million for the six months ended June 30, 2008). In the six months ended June 30, 2008, the Group disposed of a 2.9% stake in STM (approximately 26 million shares), which generated a capital gain of Euro 56 million. There was no similar transaction in the six months ended June 30, 2009. Net fair value adjustments through the income statement increased by Euro 36 million, or 73.5%, from a net income of Euro 49 million for the six months ended June 30, 2008 to a net income of Euro 85 million for the six months ended June 30, 2009, mainly due to increases in gains on the measurement of foreign-currency swaps, interest rate swaps and foreign-currency options. Net exchange rate losses amounted to Euro 26 million for the six months ended June 30, 2009 and relate to foreign currency losses realized on settlement of transactions and unrealized exchange losses on payables and receivables denominated in currencies other than the Euro, which were largely offset by the net income on foreign-currency swaps, incorporated in the results valued at fair value through the income statement.

Income Taxes The Group’s income taxes and effective tax rate for the six months ended June 30, 2008 and 2009 increased from Euro 88 million and 22.9%, respectively, to Euro 161 million and 40.0% The main reasons for the increase in the effective tax rate were as follows: • In the six months ended June 30, 2008, capital gains were recorded as a result of the disposal of a 2.9% stake in STM amounting to Euro 56 million, of which only 5% was taxable at the applicable tax rate (27.5%). There was no similar transaction in the six months ended June 30, 2009; • Growth in the current period’s tax base; and • Decrease in the available tax losses carried forward from previous years.

80 Net Profit Net profit decreased by Euro 55 million, or 18.5%, from Euro 297 million for the six months ended June 30, 2008 to Euro 242 million for the same period in 2009.

Liquidity and Capital Resources Cash flows for the years ended 2008, 2007 and 2006 The table below sets forth the Group’s cash flows for the years ended December 31, 2008, 2007 and 2006 Year ended December 31, 2008 2007 2006 (In millions of Euro) Net cash generated from operating activities ...... 1,419 1,399 1,318 Net cash used in investing activities ...... (3,179) (1,463) (262) Net cash generated from/(used in) financing activities ...... 2,463 (320) (112) Net increase/(decrease) in cash and cash equivalents ...... 703 (384) 944 Exchange rate losses on cash and cash equivalents ...... (13) (12) (2) Cash and cash equivalents as of January 1, ...... 1,607 2,003 1,061 Cash and cash equivalents as of December 31,...... 2,297 1,607 2,003

Net cash generated from operating activities Year ended December 31, 2008 2007 2006 (In millions of Euro) Cash flow from operating activities: Gross cash flow from operating activities...... 1,968 1,711 1,600 Changes in working capital ...... (169) 318 347 Collection of ENEA settlement ...... 296 — — Changes in other operating assets and liabilities and provisions for risks and charges...... (349) (273) (257) Finance costs paid...... (127) (116) (160) Income taxes paid ...... (200) (241) (212) Net cash generated from operating activities ...... 1,419 1,399 1,318

2008 v 2007 Net cash generated from operating activities increased by Euro 20 million from Euro 1,399 million in 2007 to Euro 1,419 million, primarily due to: • Proceeds of Euro 296 million from the collection of the ENEA receivable in 2008; • An increase of Euro 257 million in gross cash flow from operating activities mainly driven by the write-back of the ENEA receivable included in the 2007 and not the 2008 balances; partially offset by • A decrease of Euro 487 million in changes in working capital, mainly due to an increase in inventories in the Energy and Helicopters segments. The Energy segment’s increase in inventory in 2008 is due to an increase in orders and a change in policy which required stock to be acquired once an order was obtained to ensure compliance with delivery terms. The Helicopters segment experienced an increase in production activities in 2008 and an increase in expected future deliveries which impacted inventory volume.

2007 v 2006 Net cash generated from operating activities increased by Euro 81 million from Euro 1,318 million in 2006 to Euro 1,399 million, primarily due to: • An increase of Euro 111 million in gross cash flow from operating activities mainly driven by the increase in operating income before depreciation and amortization of the Energy and Defense Systems segments;

81 • A decrease of Euro 44 million in financial charges paid in 2007 due to an increase in proceeds from the settlement of STM options from Euro 9 million in 2006 to Euro 44 million in 2007; • A decrease of Euro 29 million in changes in working capital mainly driven by an increase in progress billings for the Energy segment as a result of the significant amount of contracts awarded; and • An increase of Euro 29 million in income tax paid due to an increase in income before tax expense in 2006, compared to 2005.

Net cash used in investing activities Year ended December 31, 2008 2007 2006 (In millions of Euro) Cash flow from investing activities: Acquisitions of subsidiaries, net of cash acquired ...... (82) (434) (181) Acquisition of DRS ...... (2,372) — — Sale of STM shares ...... 260 — — Purchase of property, plant and equipment and intangible assets . . (989) (1,128) (873) Proceeds from sale of property, plant and equipment and intangible assets ...... 23 74 94 IPO Ansaldo STS...... — — 458 Avio operation ...... — — 303 Other investing activities ...... (19) 25 (63) Net cash used in investing activities ...... (3,179) (1,463) (262)

2008 v 2007 Net cash used in investing activities increased by Euro 1,716 million from Euro 1,463 million in 2007 to Euro 3,179 million in 2008, primarily due to the following factors: • In 2008, the Group completed the acquisition of DRS for a total cash expenditure of Euro 2,372 million, which comprises the acquisition price of Euro 2,342 million, transaction costs of Euro 17 million paid by the Group (total transaction costs were Euro 43 million, of which Euro 26 million remained unpaid at the end of 2008) and transactions costs of Euro 57 million paid by DRS following the acquisition, net of cash acquired of Euro 44 million; • In 2008, cash used for investing activities included Euro 82 million for the acquisition of subsidiaries, net of the cash acquired, primarily related to the initial acquisition and subsequent squeeze out process to acquire 100.0% of Vega Group plc. In 2007, cash used for investing activities included Euro 434 million for the acquisition of subsidiaries, net of the cash acquired as further explained in the section 2007 v 2006; • Investments in property, plant and equipment and intangibles amounted to Euro 1,128 million in 2007 and Euro 989 million in 2008 and mainly related to the decrease, from Euro 161 million in 2007 to Euro 75 million in 2008, in investments of equipments to support the B787 and A380 programs made by Aeronautics segment; and • The cash outflow for investments was partially offset by the proceeds of Euro 260 million from the sale of 2.9% of our investment in STM.

2007 v 2006 Net cash used in investing activities increased by Euro 1,201 million from Euro 262 million in 2006 to Euro 1,463 million in 2007, primarily due to the following factors: • In 2006, the disposal of 60.0% of Ansaldo STS S.p.A. in connection with the listing on Borsa Italiana generated proceeds of Euro 458 million and the disposal of 15.0% of the investment in AvioGroup generated proceeds of Euro 303 million. There were no similar transactions in 2007; • In 2007, investing activities used Euro 434 million in the acquisition of subsidiaries, net of the cash acquired, primarily due to the exercise of the call option for the remaining 25.0% interest

82 in Selex Sensors and Airborne Systems Ltd. for an amount of Euro 408 million and the acquisition of the Vega Group Plc. for an amount of Euro 21 million. In 2006, investing activities used cash of Euro 181 million, net of the cash acquired primarily due to the step acquisition of Datamat S.p.A. for an amount of Euro 112 million; and • Investments in property, plant and equipment and intangible assets increased by Euro 255 million in 2007 compared to 2006, mainly relating to increased expenditure in equipment and intangibles to support the development of new programs. In each of the periods the key investments in property, plant and equipment related to the Aeronautics, Defense Electronics and Security and Helicopters segments. In particular, in 2007 and 2006, the Aeronautics segment made significant investments in plant and equipment at the plants in Grottaglie (TA) and Charleston to support the B787 program. Further information on the Group’s capital expenditure is provided in “— Capital Expenditure and Investments” below.

Net cash generated from/(used in) financing activities Year ended December 31, 2008 2007 2006 (In millions of Euro) Cash flow from financing activities: Share capital increase ...... 1,206 — — Repayment of DRS’s convertible bond and bank payables ...... (315) — — Repayments of bonds ...... (297) (6) — Issue of bonds ...... 745 — — Proceeds from Facility Agreement...... 3,015 — — Repayment of Facility Agreement ...... (1,205) — — Net change in other borrowings...... (499) (163) 102 Dividends paid to Company’s shareholders ...... (174) (149) (211) Dividends paid to minority interests ...... (13) (2) (3) Net cash generated from/(used in) financing activities ...... 2,463 (320) (112)

2008 v 2007 Net cash generated from and used in financing activities changed from net cash used of Euro 320 million in 2007 to net cash generated of Euro 2,463 million in 2008. Cash generated from/(used in) financing activities included the following principal items:

Proceeds • The Group drew down an amount of Euro 3,015 million under the Facility Agreement related to the financing for the acquisition of DRS (— “Facility Agreement” below); • In November 2008, the Group completed the capital increase and received proceeds of Euro 1,206 million (— “Capital Increase” below) , which was used to partially repay the above mentioned Facility Agreement; and • In November 2008, Finemeccanica Finance S.A. placed bonds in the Euro market for an aggregate principal amount of Euro 750 million. Proceeds, net of transaction costs, amounted to Euro 745 million. Such proceeds were used for the repayment of the DRS bonds as further explained in “Bonds Issued — DRS Bonds”.

Payments • In December 2008 the Group reimbursed the 2002 EMTN Bond for an amount of Euro 297 million; • Following the DRS acquisition, the Group reimbursed convertible debt issued from DRS and its bank debt for an aggregate amount of Euro 315 million, in view of “change of control provisions” in the terms and conditions of these debt instruments; • Net change in other borrowings amounted to a net repayment of Euro 499 million in 2008 which mainly relates to the May 2008 repayment of Law 808 loans amounting to Euro 297 million.

83 2007 v 2006 Net cash used in financing activities increased by Euro 208 million from Euro 112 million in 2006 to Euro 320 million in 2007 primarily due to an increase in financial receivables (included within net change in other borrowings and financial receivables). In particular cash used in financing activities was affected by the following factors: • In 2007, financial receivables increased by Euro 123 million (thus absorbing cash) relating to amounts due from other participants in the MBDA S.A.S. and Thales Alenia Space S.A.S. joint ventures in respect of deposits of cash and cash equivalents. In addition in 2006, the Group had financial payables from non-consolidated related parties and in particular from Eurofighter J. GmbH amounting to Euro 78 million and Eurosystem amounting to Euro 20 million; and • Dividends paid decreased from Euro 214 million in 2006 to Euro 151 million in 2007. In 2006 an extraordinary dividend of Euro 80 million was paid following the Ansaldo STS S.p.A. listing.

Cash flows for the six months ended June 30, 2009 and 2008 The table below sets forth the Group’s cash flows for the six months ended June 30, 2009 and 2008. Six months ended June 30, 2009 2008 (In millions of Euro) (Unaudited) Net cash used in operating activities ...... (246) (790) Net cash used in investing activities ...... (634) (378) Net cash used in financing activities ...... (701) (116) Net decrease in cash and cash equivalents ...... (1,581) (1,284) Exchange gains/(losses) ...... 2 (9) Cash and cash equivalents at the beginning of the period ...... 2,297 1,607 Cash and cash equivalents at the end of the period ...... 718 314

Net cash used in operating activities Six months ended June 30, 2009 2008 (In millions of Euro) (Unaudited) Cash flow from operating activities Gross cash flow from operating activities ...... 1,019 635 Changes in working capital ...... (1,024) (1,135) Changes in other operating assets and liabilities and provisions for risks and charges ...... (109) (183) Finance costs paid ...... (97) (40) Income taxes paid ...... (35) (67) Net cash used in operating activities...... (246) (790)

Net cash used in operating activities decreased by Euro 544 million from Euro 790 million to Euro 246 million for the six months ended June 30, 2008 and 2009, respectively. As previously explained, the Group experiences seasonality in respect of cash collection from customers. A significant portion of the cash collections are obtained in the last quarter of the year, while expenditures are generally incurred during the second and third quarters of the year. This mismatch significantly impacts the cash flows of the business, generating negative operating cash flows in the first six months of the year which are off-set by cash collection in the second six months of the year. The decrease of Euro 544 million in net cash used in operating activities is mainly due to (i) an increase of Euro 384 million in gross cash flow from operating activities primarily resulting from the increase of Euro 205 million in Adjusted EBITA and (ii) a decrease of Euro 111 million in cash absorbed from movements in working capital mainly due to a decrease of Euro 345 million in movements in inventories, trade receivables and payables, which was partially offset by an increase of Euro 234 million from changes in contract work in progress and advances received.

84 Net cash used in investing activities Six months ended June 30, 2009 2008 (In millions of Euro) (Unaudited) Cash flow from investing activities Acquisitions of subsidiaries, net of cash acquired ...... (11) (78) Sale of STM shares ...... — 260 Purchase of property, plant and equipment and intangible assets ...... (475) (541) Proceeds from sale of property, plant and equipment and intangible assets ...... 6 6 Subscription of SCAC and other equity investments ...... (149) — Other investing activities ...... (5) (25) Net cash used in investing activities ...... (634) (378)

Net cash used in investing activities increased by Euro 256 million from Euro 378 million for the six months ended June 30, 2008 to Euro 634 million for the six months ended June 30, 2009. For the six months ended June 30, 2008 net cash used in investing activities benefited from the proceeds of Euro 260 million related to the sale of the STM shares. There were no similar transactions in the six months ended June 30, 2009.

Net cash used in financing activities Six months ended June 30, 2009 2008 (In millions of Euro) (Unaudited) Cash flow used in financing activities Share capital increase ...... — 1 Dividends paid to Company’s shareholders ...... (237) (174) Dividends paid to minority interests ...... (17) (13) Repayment of DRS’s convertible bonds...... (868) — Issue of bonds ...... 696 — Net change in other borrowings ...... (275) 70 Net cash used in financing activities ...... (701) (116)

Net cash used in financing activities increased by Euro 585 million from Euro 116 million for the six months ended June 30, 2008 to Euro 701 million for the same period in 2009, mainly due to the repayment of DRS’s convertible bonds in the amount of Euro 868 million which was partially offset by the proceeds of Euro 696 million from the issuance of EMTN bonds. In addition, net repayments in other borrowings amounted to Euro 275 million and mainly related to repayments of the Facility Agreement.

Working Capital As of December 31, 2008 2007 2006 (In millions of Euro) Inventories ...... 4,365 3,383 3,095 Contract work in progress ...... 3,674 3,227 2,823 Total trade receivables(1) ...... 4,655 4,319 3,856 Total trade payables(2) ...... (4,735) (4,004) (3,561) Advances from customers ...... (7,399) (6,477) (5,529) Working capital ...... 560 448 684

(1) Trade receivables include trade receivables and current trade receivables due from related parties. (2) Total trade payables include trade payables and current trade payables due to related parties.

85 2008 v 2007 Working capital increased from Euro 448 million in 2007 to Euro 560 million in 2008. The change in working capital is related to the consolidation of DRS due to the acquisition during 2008. The amount of working capital attributed to DRS as of December 31, 2008 is Euro 237 million, which includes Euro 326 million related to inventories, Euro 68 million related to contract work in progress, Euro 358 million related to trade receivables, Euro 221 million related to total trade payables, and Euro 294 million related to advances from customers.

2007 v 2006 Working capital decreased from Euro 684 million in 2006 to Euro 448 million in 2007. The change in working capital is related to significant advance payments received from customers which partially funded significant capital expenditure, especially with respect to the Aeronautics programs. Advance payments represent contracts where the amounts received from the customers are greater than the recognized progress of the contract. The increase in advance payments in 2007 was due to the progress of certain significant programs, mainly in the Aeronautics segment, and contracts awarded. Movements in other working capital items were in line with the increased activity of the business.

Capital Expenditure and Investments The table below sets forth a breakdown of total investments made by the Group for the six months ended June 30, 2009 and for the years ended December 31, 2008, 2007 and 2006. Six months ended June 30, Year ended December 31, % total % total % total % total 2009 investments 2008 investments 2007 investments 2006 investments (In millions of Euro) (Unaudited) Development costs ...... 103 16.1% 212 6.3% 148 10.1% 118 10.4% Non-recurring costs ...... 61 9.6% 35 1.0% 140 9.5% 156 13.7% Concessions, licenses and trademarks ...... 13 2.0% 47 1.4% 10 0.7% 21 1.8% Other ...... 48 7.5% 93 2.7% 100 6.8% 53 4.7% Investments in intangible assets ...... 225 35.3% 387 11.4% 398 27.1% 348 30.6% Land and buildings ...... 21 3.3% 30 0.9% 28 1.9% 56 4.9% Plant and machinery ...... 28 4.4% 69 2.0% 171 11.6% 87 7.6% Equipment ...... 38 6.0% 130 3.8% 343 23.3% 73 6.4% Other ...... 166 26.0% 273 8.1% 88 6.0% 350 30.7% Investments in property, plant and equipment ...... 253 39.7% 502 14.8% 630 42.9% 566 49.7% Total investments in property, plant and equipment and intangible assets...... 478 74.9% 889 26.3% 1,028 70.0% 914 80.2%

Acquisition of Selex Sensors & Airborne Systems(1) ...... — 0.0% — 0.0% 408 27.8% — 0.0% Acquisition of the Vega Group(1) ...... — 0.0% 63 1.9% 21 1.4% — 0.0% Acquisition of DRS(1) ...... — 0.0% 2,372 70.0% — 0.0% — 0.0% Acquisition of ISAF(1) ...... — 0.0% 3 0.1% — 0.0% — 0.0% Acquisition of Aurensis(1) ...... — 0.0% 4 0.1% — 0.0% — 0.0% Acquisition of Sirio Panel(1) ...... — 0.0% 12 0.4% — 0.0% — 0.0% Acquisition of Datamat(1) ...... — 0.0% — 0.0% 11 0.7% 112 9.8% Alcatel Space Joint Venture(1) ...... — 0.0% — 0.0% — 0.0% 47 4.1% Acquisition of LFK Group(1) ...... — 0.0% — 0.0% — 0.0% 6 0.5% Other subsidiaries(1) ...... — 0.0% — 0.0% (6) (0.4)% 16 1.4% Equity investments ...... 160 25.1% 41 1.2% 7 0.5% 44 3.9% Total investments ...... 638 100.0% 3,384 100.0% 1,469 100.0% 1,139 100.0%

(1) Amounts include transaction costs incurred, net of cash acquired and counterparty adjustments.

Investments in Property, Plant and Equipment and Intangible Assets Investments in property, plant and equipment and intangible assets increased from Euro 914 million in 2006 to Euro 1,028 million in 2007 and decreased to Euro 889 million in 2008. Investments in property, plant and equipment and intangible assets amounted to Euro 478 million for the six months ended June 30, 2009.

86 The table below sets forth a breakdown of investments in property, plant and equipment and intangible assets by geographical segmentation for the years ended December 31, 2008, 2007 and 2006. As of and for the year ended December 31, % total % total % total 2008 investments 2007 investments 2006 investments (In millions of Euro) Europe ...... 815 91.7% 983 95.6% 893 97.7% North America ...... 69 7.8% 34 3.3% 18 2.0% Other ...... 5 0.6% 11 1.1% 3 0.3% 889 100.0% 1,028 100.0% 914 100.0%

Investments in Europe increased from Euro 893 million in 2006 to Euro 983 million in 2007 and decreased to Euro 815 million in 2008. The substantial decrease in investments in Europe in 2008 compared to 2007 was mainly related to the lower amount capitalized with respect to B787 tooling and A380 development activities in the Aeronautics segment. The increase in investments in Europe in 2007 compared to 2006 was mainly related to the EH101 and AW149 programs in the Helicopters segment which also continued in 2008 and the continued activity in the FADR and TETRA programs in the Defense Electronics and Security segment. The investments in North America in 2008 amounted to Euro 69 million, an increase from Euro 34 million in 2007, following the acquisition of DRS. The investments in North America for the year ended December 31, 2007 included principally those in the Aeronautics segment for the B787 program in the Charleston plant and in the Helicopters segment for the AW139 program in the Philadelphia plant. The tables below set forth a breakdown of investments in property, plant and equipment and intangible assets by segment for the six months ended June 30, 2009 and for the years ended December 31, 2008, 2007 and 2006. Six months ended June 30, Year ended December 31, % total % total % total % total 2009 investments 2008 investments 2007 investments 2006 investments (In millions of Euro) (Unaudited) Helicopters ...... 60 12.6% 193 21.7% 127 12.4% 89 9.7% Defense Electronics and Security . . 108 22.6% 199 22.4% 206 20.0% 150 16.4% Aeronautics ...... 227 47.5% 298 33.5% 523 50.9% 554 60.6% Space ...... 17 3.6% 31 3.5% 53 5.2% 16 1.8% Defense Systems ...... 22 4.6% 56 6.3% 48 4.7% 51 5.6% Energy ...... 26 5.4% 65 7.3% 20 1.9% 15 1.6% Transportation...... 13 2.7% 33 3.7% 25 2.4% 22 2.4% Other activities ...... 5 1.0% 14 1.6% 26 2.5% 17 1.9% Total ...... 478 100.0% 889 100.0% 1,028 100.0% 914 100.0%

In each of the periods the main investments in property, plant and equipment and intangibles were in the Helicopters, Defense Electronics and Security and Aeronautics segments. In particular: • The investments in the Helicopters segment in 2008 mainly related to the AW139 program in the Philadelphia plant. The investments continued during the six months ended June 30, 2009. The investments in the Helicopters segment also related to the EH101 and the AW149 programs for the year ended December 31, 2007; • The investments in the Defense Electronics and Security mainly related to the TETRA program starting from the year ended December 31, 2006; and • The investments in the Aeronautics segment mainly related to investments in intangible assets for the B787 (mainly in the Grottaglie (TA) and Charleston plants), the C27J, Eurofighter and U.S. Fight Control System programs. Starting from 2007, the investments in the segment also related to the commencement of the A380 and SuperJet 100 programs. Investments amounted to Euro 148 million and Euro 155 million for the year ended December 31, 2008 and the six months ended June 30, 2009, respectively, related to aircraft owned by the EEIG ATR group, as well aircraft where the risk of ownership criteria has not yet transferred to the customer.

87 Research and Development Costs Research and development costs amounted to Euro 1,809 million in 2008, Euro 1,836 million in 2007 and Euro 1,783 million in 2006. Within research and development costs, the Group classifies all costs, internal and external, incurred for projects that are intended to result in the obtainment or the use of new technologies, knowledge, materials, products and processes. These costs can be reimbursed by clients in whole or in part, financed by public institutions though grants or other subsidies or incurred by the Group. Research and development costs are: • Recorded as work in progress if they are reimbursed by the client and if related to ongoing contracts; • Expensed through the income statement in the period when they are incurred if they refer to research activities where it is not possible to demonstrate that they would generate future economic benefits; or • Capitalized within intangible assets if they qualify as development activities and it is possible to demonstrate the technical feasibility, the ability and willingness to complete them and the availability of a potential market that is reasonably expected to generate future economic benefits. Amounts capitalized are shown net of grants received or to be received.

Net Financial Indebtedness As of June 30, 2009, the Group’s net financial indebtedness amounted to Euro 4,615 million as compared to Euro 3,383 million as of December 31, 2008. Net financial indebtedness as a percentage of total shareholders’ equity amounted to 73.0% as of June 30, 2009 compared to 55.2% as of December 31, 2008. The increase compared to December 31, 2008 mainly relates to the financing associated with the acquisition of DRS, as further explained below. As of June 30, 2009, approximately 67% of the Group’s net financial indebtedness was at variable interest rates due to the use of the short term variable rate credit lines mentioned below and the impact of interest rate swaps. The following table provides an analysis of the Group’s net financial indebtedness as of June 30, 2009 and as of December 31, 2008, 2007 and 2006. As of June 30, As of December 31, 2009 2008 2007 2006 (In millions of Euro) (Unaudited) Cash and cash equivalents ...... (718) (2,297) (1,607) (2,003) Securities held for trading ...... (1) (1) (13) (21) Liquidity ...... (719) (2,298) (1,620) (2,024) Current financial receivables ...... (758) (679) (606) (478) Current bank payables...... 1,041 178 133 81 Bonds issued ...... 181 966 351 78 Due to related parties ...... 703 652 560 500 Other current borrowings ...... 424 469 665 722 Current borrowings ...... 2,349 2,265 1,709 1,381 Net current financial indebtedness / (position) . . 872 (712) (517) (1,121) Non-current bank payables ...... 784 1,880 149 195 Bonds issued ...... 2,856 2,115 1,407 1,670 Other non-current payables ...... 103 100 119 114 Non-current borrowings ...... 3,743 4,095 1,675 1,979 Net financial indebtedness...... 4,615 3,383 1,158 858

88 Seasonality of Working Capital Requirements and External Sources of Liquidity The Group finances a large portion of operating costs with advance payments from customers. Net financial indebtedness as of June 30, 2009 mainly reflected seasonal working capital requirements, due to the fact that operating costs by the Group are regularly incurred throughout the year while cash collection is concentrated in the fourth quarter of the year. As a consequence, net financial indebtedness usually increases during the financial reporting year, due to the use of cash available and use of existing short term variable rate credit lines described below. In the absence of exceptional expenditures such as strategic acquisitions, net financial indebtedness significantly decreases at the end of the financial year, also due to the sale of receivables without recourse. The Group’s external sources of liquidity consist principally of short and medium term credit facilities, bonds issued, minor finance leases and factoring agreements. As of June 30, 2009, the Group had a medium term revolving facility of Euro 1,200 million (of which an amount of Euro 90 million was drawn down at that date). The Group also had other short term lines of credit amounting to approximately Euro 1,150 million (of which Euro 825 million is unconfirmed and Euro 325 million is confirmed). As of June 30, 2009 no amount was drawn down under these facilities. In order to reduce liquidity risk and optimize management of financial resources, the Group’s treasury activities are controlled and managed centrally by Finmeccanica Societá per azioni, with respect to monetary resources and relations with banking and financial markets. Finmeccanica distributes the resources to the subsidiaries in order to finance their activities, net of the cash generated by their subsidiaries, through daily bank cash pooling arrangements and intercompany financings.

Current Financial Receivables The following table provides a breakdown of current financial receivables as of June 30, 2009 and as of December 31, 2008, 2007 and 2006.

As of June 30, As of December 31, 2009 2008 2007 2006 (In millions of Euro) (Unaudited) Financial assets due from other partners in joint ventures ...... 631 629 552 429 Financial assets due from related parties ...... 38 26 20 26 Other ...... 89 24 34 23 Total ...... 758 679 606 478

Current financial receivables mainly relate to the portion of financial assets that MBDA S.A.S. and Thales Alenia Space S.A.S. joint ventures have with other joint venture participants, related to the Group’s share of cash pooling agreements. Current financial receivables related to MBDA S.A.S. increased by Euro 17 million from Euro 546 million as of December 31, 2008 to Euro 563 million as of June 30, 2009. Current financial receivables related to Thales Alenia Space S.A.S. decreased by Euro 14 million from Euro 82 million as of December 31, 2008 to Euro 68 million as of June 30, 2009.

Bank Payables The following table provides a breakdown of current and non-current portion of bank payables as of June 30, 2009 and as of December 31, 2008, 2007 and 2006.

As of June 30, As of December 31, 2009 2008 2007 2006 (In millions of Euro) (Unaudited) Facility Agreement...... 1,527 1,830 — — ATIL Ltd joint venture ...... 48 71 80 96 EEIG ATR joint venture ...... 8 9 15 14 Other borrowings ...... 242 148 187 166 Total ...... 1,825 2,058 282 276

89 As of June 30, 2009, an amount of Euro 1,527 million was outstanding relating to the Facility Agreement provided for the purposes of the acquisition of DRS. Further details are provided below under the section “— Financing Related to the Acquisition of DRS”. In July 2009, subsequent to the issuance of USD 800 million notes, the amount due under the Facility Agreement was reduced to a principal amount of Euro 992 million. Following the issuance of Euro 600 million notes under the EMTN program, Finmeccanica intends to reduce the amount due under the Facility Agreement to below a principal amount of Euro 640 million. Amounts relating to the ATIL Ltd. joint venture and the EEIG ATR consortium relate to the Group’s share of bank borrowings by these joint ventures consolidated on a proportional basis. Other borrowings amounting to Euro 242 million, as of June 30, 2009, mainly included bank borrowings attributable to the Group and subsidized borrowings under various laws supporting technological investment programs.

Bonds Issued The following table provides a breakdown of current and non current portion of bonds issued.

Outstanding Annual June 30, December 31, December 31, December 31, Issuer Maturity Nominal Coupon 2009 2008 2007 2006 (In millions of Euro, except percentages and otherwise stated) (Unaudited) Exchangeable bonds . . . . Finmeccanica Finance S.A. August 8, 2010 501 0.375% 481 470 451 432 Bonds 2002...... Finmeccanica Finance S.A. December 30, 2008 297 Euribor + 0.9% — — 296 299 Bonds 2003...... Finmeccanica Finance S.A. December 12, 2018 500 5.75% 512 497 497 497 Bonds 2005...... Finmeccanica SpA March 24, 2025 500 4.875% 502 515 514 514 Bonds 2008...... Finmeccanica Finance S.A. December 3, 2013 1,000(1) 8.13% 1,050 749 Bonds 1997...... Finmeccanica Finance S.A. January 16, 2007 900JPY 3.33% — — — 6 DRS — Bonds — 2003 . . . DRS November 1, 2013 550USD 6.88% 9 403 — — DRS — Bonds — 2006 . . . DRS February 1, 2016 350USD 6.63% 8 260 — — DRS — Bonds — 2006 . . . DRS February 1, 2018 250USD 7.63% 4 187 — — Bonds 2009...... Finmeccanica Finance S.A. December 16, 2019 400GBP 8.00% 471 — — — Total ...... 3,037 3,081 1,758 1,748

(1) Euro 750 million was issued in November 2008 and Euro 250 million in January 2009. Subsequent to June 30, 2009, the Group made further bond issuances, in particular: (i) in July 2009, Meccanica Holdings USA, Inc. issued notes for a principal amount of USD 800 million, and (ii) in October 2009, Finmeccanica Finance issued notes for an amount of Euro 600 million under the Group’s EMTN program. See “— Recent Developments” for further details.

Exchangeable Bonds Exchangeable bonds relate to bonds which were issued in 2003 by Finmeccanica Finance S.A. The notes are exchangeable, at the option of the bondholder, into 20,000,000 shares of STMicroelectronics N.V., at a price of Euro 25.07 per share. The bond can be exchanged, starting from the third anniversary of issue, if the average price of STM shares during the 30 working days prior to the date of notice to the bond holders exceeds 125.0% of the conversion price. At the maturity date, Finmeccanica Finance S.A. can repay in cash, or upon prior notice of at least 15 working days, through a combination of STM shares and cash based on the average price recorded in the last 5 working days. The carrying value of the bond is recorded using an effective interest rate of 4.36%, which is the rate at which the bond would have been issued had it not had the exchangeable component. The option is separated from the value of the debt and is measured at fair value through the income statement. On June 1, 2005 the Group entered into a derivative transaction to hedge the income volatility arising from the embedded option in the exchangeable bond by purchasing an offsetting call option with the same underlying position and the same basic parameters. The income statement effect is therefore neutral. See “— Quantitative and Qualitative Disclosures about Market Risk — Exchangeable Bond Risk” for further information.

Bonds 2002, Bonds 2003, Bonds 2005, Bonds 2008 and Bonds 2009 These bonds were issued by Finmeccanica Finance S.A. in 2002, 2003, 2008 and 2009 and by the Company in 2005. The bonds issued in 2002, which were repaid in December 2008 with the proceeds of a new EMTN issue, were listed on the Trans-Lux Corporation (TLX) market managed by Trading Lab Banca S.p.A (UniCredit group), while listing is made on the official list of the Luxembourg Stock Exchange for the bonds issued in 2003, 2005, 2008 and 2009. These bonds were offered as part of the Euro Medium Term

90 Notes (“EMTN”). A total of Euro 1,750 million had been issued under the EMTN program as of December 31, 2008 and Euro 2.6 billion as of June 30, 2009 following the additional issuance of Euro 250 million in January 2009 and a sterling bond for an amount of £400 million in April 2009. See “EMTN Bond Issue” for further details. All of the bonds which have been issued by Finmeccanica Finance S.A. are irrevocably and unconditionally guaranteed by the Company. The bonds do not include financial covenants but have, inter alia, the following negative pledge and cross default clauses: • Finmeccanica Finance S.A., Finmeccanica and their material subsidiaries (companies whose issuer or guarantor owns more than 50.0% of share capital, or represent at least 10.0% of revenue and 10.0% of total assets) are prohibited from pledging collateral security to secure financial transactions subject to exceptions and a basket; and • The cross default clause gives the bondholders the right to request early redemption in the event of default by the Group of any financial obligation above certain thresholds. See “—Recent Developments” for bonds issued since June 30, 2009.

DRS Bonds As a result of the acquisition of DRS in 2008, the Group assumed three series of outstanding bonds maturing in 2013, 2016 and 2018, respectively, for an aggregate principal outstanding amount of about USD 1.5 billion including a convertible bond, with a nominal value of USD 345 million. All three bonds issued contained change of control clauses that gave the bondholders a put option requiring the accelerated repayment of the principal in the event of a change of control of the issuer. In November and December 2008, the convertible bond of USD 345 million was extinguished as a result of the change of control provision. Therefore, as of December 31, 2008, the consolidated debt of the Group included an amount of Euro 1,183 million related to the consolidation of DRS bonds. In January 2009 an additional USD 1.1 billion of DRS bonds was repaid following the exercise of the change of control provision by the bondholders. Therefore after this payment, only USD 30 million of DRS bonds remain outstanding (approximately Euro 21 million).

Amounts due to Related Parties The following table provides a breakdown of amounts due to related parties as of June 30, 2009 and as of December 31, 2008, 2007 and 2006. As of June 30, As of December 31, 2009 2008 2007 2006 (In millions of Euro) (Unaudited) Due to joint ventures ...... 596 578 544 386 Due to associates ...... 106 73 16 111 Due to subsidiaries ...... 1 1 — 1 Due to consortia ...... — — — 2 Total...... 703 652 560 500

As of June 30, 2009, amounts due to related parties mainly related to an amount of Euro 562 million due to MBDA S.A.S., (Euro 544 million, Euro 494 million and Euro 358 million as of December 31, 2008, 2007 and 2006) and related to cash advanced to the Group in connection with cash pooling arrangements. A full analysis of amounts due to related parties is provided under “Related Party Transactions”. As of June 30, 2009, amounts due to associates included an amount of Euro 96 million related to Eurofighter J. GmbH (Euro 62 million as of December 31, 2008, nil as of December 31, 2007 and Euro 78 million as of December 31, 2006).

91 Other Borrowings The following table provides a breakdown of other borrowings as of June 30, 2009 and as of December 31, 2008, 2007 and 2006. As of June 30, As of December 31, 2009 2008 2007 2006 (In millions of Euro) (Unaudited) Payables for non-recourse financing ...... 109 109 109 116 Law 808 payables ...... 20 100 389 — Finance leases ...... 14 16 20 25 Other sundry borrowings ...... 384 344 266 695 Total...... 527 569 784 836

• Law 808 payables relate to amounts due to the MED in connection with the Law 808 funding, together with the related interest payable. Until December 31, 2006 this payable was included in other liabilities. During 2008 and in January 2009 payments of Euro 297 million and roughly Euro 80 million, respectively, were made to the MED as a result of the decisions made concerning the methods for complying with the scheduled repayment plans and the corresponding finance costs related to programs funded by Law 808; • Payables for non-recourse financing relate to receivables which were sold without recourse as their terms and conditions do not envisage repurchase or reversion clauses or guarantees that could require reimbursement of the amounts received. However, they do not meet the accounting requirement for de-recognition of financial assets. Therefore, the receivable is recorded among assets (even though the Group no longer has control over the asset) and a corresponding financial liability is recognized. The associated financial liability and receivable will be eliminated from the balance sheet when the assignee receives payment from the assigned debtor. The item as of June 30, 2009, December 31, 2008, 2007 and 2006 mainly relates to tax receivables of Euro 106 million which were assigned by the Group in prior years; • Finance leases are related to property, plant and equipment and intangible assets held by the Group under finance leases; and • Other sundry borrowings as of June 30, 2009, December 31, 2008, 2007 and 2006 mainly related to interest payable on advances received by AnsaldoBreda S.p.A. from customers. As of December 31, 2006, other sundry borrowings also include an amount of Euro 401 million relating to the put and call options with BAE relating to the remaining 25.0% of Selex Sensors and Airborne Systems Ltd. This option was exercised during 2007.

Maturity of Borrowings The following table provides the maturity of the borrowings by period as of June 30, 2009 Due to related Bank borrowings Bonds parties Other Variable Fixed Variable Fixed Variable Fixed Variable Fixed rate rate Rate rate Rate rate rate rate Total (In millions of Euro) Within one year ...... 1,041 — 118 63 703 — 411 13 2,349 2 — 5 years ...... 773 — 952 894 — — 63 1 2,683 More than 5 years ...... 11 — 440 570 — — 39 — 1,060 Total borrowings ...... 1,825 — 1,510 1,527 703 — 513 14 6,092

The information in the table above is presented after considering the effects of hedging transactions. In relation to variable rate bonds, the amount due within one year and between 2 and 5 years as of June 30, 2009 related the portion of Bonds 2005, Bonds 2008 and Bonds 2009 which were converted to variable rate under the interest rate swap. The amount due in more than five years as of June 30, 2009 related to Bonds 2005 and Bonds 2009 for the portion which is converted to variable rate under the interest rate swap.

92 Financing Transactions Related to the Acquisition of DRS On October 22, 2008, Finmeccanica completed the acquisition of DRS for a consideration of Euro 2.4 billion (including transaction costs). As part of the acquisition of DRS, the Group also assumed debt of DRS (mostly bonds) in the amount of USD 1.7 billion, (equivalent to Euro 1.3 billion based on the exchange rate at the date of the acquisition). The DRS Bonds assumed included put clauses in the case of a change of control of the issuer. Following repayments that occurred between October 2008 and January 2009, an amount of approximately Euro 21 million (USD 30 million) remains outstanding (based on the exchange rate at the date of acquisition) under such DRS bonds. The acquisition of DRS was financed by the draw-down of proceeds from the bridge financing (Facility Agreement), which subsequently was partially reimbursed through the proceeds of a capital increase in November 2008, of a Sterling bond issuance under the EMTN program in April 2009, and of a USD bond issuance in July 2009 and will be further reimbursed through the proceeds of a Euro bond issuance under the EMTN program in October 2009. In addition, consolidated borrowings of DRS have been re-financed from the proceeds of the EMTN bond issues in November 2008 and January 2009.

Facility Agreement In order to secure the financing for the acquisition of DRS, on June 19, 2008 Finmeccanica entered into a Facility Agreement for an aggregate available amount of Euro 3.2 billion. The Facility Agreement is for an aggregate maximum amount of Euro 3.2 billion and comprises the following three tranches: • Facility A — Euro 1 billion with final maturity on the 364th day after the date of the Facility Agreement; • Facility B — Euro 1.5 billion with final maturity on the 364th day after the date of the Facility Agreement subject to extension at the option of Finmeccanica for a further 364 days on payment of an extension fee equal to 0.15%. This option to extend was exercised by the Company in May 2009; and • Facility C — Euro 700 million with final maturity three years after the date of the Facility Agreement. The interest payable on the loans is Euribor plus a margin that initially equal to 0.70% per annum for Facility A, 0.70% per annum for Facility B and 0.85% per annum for Facility C. The margin will be adjusted up or down to reflect any upgrades or downgrades of Finmeccanica’s credit rating. As of June 30, 2009, an amount of approximately Euro 1.5 billion was outstanding under the Facility Agreement. Subsequent to June 30, 2009, Finmeccanica has further reduced the amount outstanding under the Facility Agreement to Euro 992 million through the proceeds of the USD 800 million institutional bond issued in July 2009. Following the recent issuance of the Euro 600 million notes in October 2009 Finmeccanica intends to reduce the outstanding amount of the Facility Agreement to below Euro 640 million. See “Recent Developments” for further information. Pursuant to the Facility Agreement, Finmeccanica is required to ensure that it meets certain financial covenants (tests applied on a consolidated basis) with respect to a maximum ratio of total net debt to EBITDA (less than or equal to 3) and a minimum ratio of EBITDA to net interest expense (equal to or greater than 5), to be tested once yearly with respect to certain specified periods. Pursuant to the Facility Agreement, Finmeccanica is required to prepay any loans outstanding or cancel available commitments to the extent it receives proceeds from capital increases of Finmeccanica or from subsidiary IPOs, new debt incurred, including bonds issued, by Finmeccanica or any of its subsidiaries or the disposal of assets other than in the ordinary course of business. These financial covenants and mandatory prepayment obligations, other than mandatory prepayment in relation to asset disposals, will cease once the loans outstanding under the Facility Agreement are less than Euro 640 million, provided that Finmeccanica continues to be rated investment grade by the rating agencies and no default is continuing under the Facility Agreement. The mandatory prepayment obligations do not apply to: (i) the refinancing of certain existing indebtedness; (ii) new debt incurred to finance strategic investments up to a maximum amount of Euro 1.05 billion over the life of the Facility Agreement; (iii) new debt to finance the Group’s working capital and ordinary course capital expenditures; and (iv) certain new debt incurred by Thales Alenia Space, MBDA and certain listed subsidiaries of Finmeccanica in which Finmeccanica holds less than a 50% interest.

93 Other covenants under the Facility Agreement include restrictions on Finmeccanica’s ability, among other things, to incur indebtedness at the subsidiary level, pledge its assets, make disposals, merge and change its business, each such covenant being subject to qualifications and exceptions. The Facility Agreement also contains representations, warranties, covenants and events of default customary for a facility of this type. Finmeccanica intends to refinance the amount remaining under the Facility Agreement, subject to market conditions, through asset disposals.

Capital Increase On November 27, 2008, Finmeccanica completed a capital increase by way of a rights offering to Finmeccanica shareholders. The capital increase was completed with a full subscription of 152,921,430 ordinary shares, equivalent to 26.45% of the new total share capital. The new shares were offered to Finmeccanica shareholders at the ratio of 9 ordinary shares for every 25 shares held at an issue price of Euro 8 per share. On completion of the transaction, Finmeccanica received Euro 1,223 million, gross of expenses and fees. The Company has used such proceeds from the capital increase towards repayment, on November 20, 2008, of Tranche A and a portion of Tranche B of the Facility Agreement.

EMTN Bond Issue In November 2008, Finmeccanica Finance S.A., as part of its EMTN Program, issued a fixed-rate bond with maturity on December 3, 2013, for a nominal amount of Euro 750 million, net of transaction costs of Euro 5 million. Euro 297 million of this bond was used to repay the 2002 bond in December 2008. Thus the net proceeds from this EMTN bond issue, after transaction costs and the repayment of the 2002 bond, were Euro 448 million and were used to repay DRS bonds. Furthermore, in January 2009, Finmeccanica Finance S.A. issued a further fixed rate bond under the EMTN Program with maturity on December 3, 2013 for a nominal amount of Euro 250 million. The net proceeds were used to repay DRS bonds. In addition, in April 2009, Finmeccanica Finance S.A. issued a new fixed rate bond which will mature on December 16, 2019, for a nominal amount of Sterling 400 million with a coupon of 8.0% paid semi-annually. Listing is made on the official list of the Luxembourg Stock Exchange for the bonds. The bonds are irrevocably and unconditionally guaranteed by Finmeccanica — Societá per azioni. Net proceeds of Sterling 394 million from the issuance of the bonds were used to pay down part of the Facility Agreement, which reduced the amount outstanding to approximately Euro 1,527 million. See “— Recent Developments” for financing transactions performed subsequent to June 30, 2009.

Quantitative and Qualitative Disclosures about Market Risk In the ordinary course of business the Group is exposed to a variety of market risks arising from fluctuations in interest rates and changes in the prices of listed securities, as well as liquidity risk and credit risk. The Group monitors and manages these risks as an integral part of the overall risk management program, which recognizes the unpredictability of financial markets and seeks to reduce the potential adverse effects on the results of operations and net financial indebtedness of the Group.

Interest Rate Risk The interest rate risk to which the Group is exposed derives mainly from long-term indebtedness relating to borrowings which have been issued at floating interest rates and in particular, Euribor denominated borrowings. In particular, borrowings with a floating interest rate expose the Group to risk, related to the volatility of market interest rates. The management of interest rate risk is aimed at reducing the risk of volatility to interest rate movements whilst minimizing the financing cost. The Group hedges such risk through interest rate swaps which either convert a floating interest rate into a fixed rate or vice versa. As of June 30, 2009, the total notional value of the Group’s interest rate swaps was Euro 1,869 million related to covering positions for bonds issued. Short term lines of credit are not covered by hedging instruments.

94 The following table shows the notional and fair value of the Group’s interest rate derivative contracts as of June 30, 2009 and December 31, 2008. As of June 30, 2009 As of December 31, 2008 Notional Underlying Notional Underlying Amount Position Fair value Amount Position Fair value (In millions of Euro) (Unaudited) Fixed/floating swap ...... 400 Bonds - 2003 10 400 Bonds - 2003 4 Fixed/floating swap and options . . 250 Bonds - 2005 6 250 Bonds - 2005 13 Fixed/floating ...... 750 Bonds - 2008 49 750 Bonds - 2008 — Fixed/floating ...... 469 Bonds - 2009 (15) — Bonds - 2009 — Other ...... n.a. (3) n.a. (3) Total ...... 1,869 47 1,400 14

The following table illustrates the effect of a 50 basis points change in interest rates on the net profit and shareholders’ equity of the Group. As of and for the year ended December 31, 2008 December 31, 2007 Increase Decrease Increase Decrease 50 basis points 50 basis points 50 basis points 50 basis points (In millions of Euro) Net profit...... (15) 21 3 (3) Shareholders’ equity(1) ...... (15) 20 3 (3)

(1) Includes the effects of the cash flow hedge reserve.

Foreign Currency Exchange Rate Risk Due to the nature of its business operations, the Group is exposed to the risk of fluctuations in the currencies in which orders are denominated, primarily with respect to the U.S. dollar, and to a lesser extent, Sterling, due to the fact that costs are mainly denominated in Euro and Sterling. The exposure to foreign exchange risk is governed by specific risk management policies with the aim of maintaining risks within specific limits by continually assessing foreign currency positions. In particular, contracts for purchases or sales that are denominated in a currency different from the functional currency of the entity that is party to the transaction are hedged using forward contracts of amounts, maturities and key parameters that are similar to the underlying position. At the time of receiving payment from a customer (or making payments to a supplier), which will take place at the spot rate on that day, the related hedging transaction will be extinguished in order to substantially offset the effects of the difference between the spot rate and the rate of the hedging instrument. An explanation of the accounting treatment of the hedging instruments is provided in Note 3 to the Annual Consolidated Financial Statements. As of June 30, 2009 and December 31, 2008, the Group had the following outstanding foreign currency derivatives: As of June 30, 2009 As of December 31, 2008 Notional Notional Sales Purchases Total Fair value Sales Purchases Total Fair value (In millions of Euro) (Unaudited) Swaps and forwards ..... 4,603 2,402 7,005 97 3,532 1,707 5,239 (58) Options ...... 590 — 590 (11) 365 — 365 (36) Total ...... 5,193 2,402 7,595 86 3,897 1,707 5,604 (94)

The table below shows the effects of a 50 basis points change in the exchange rates of the Euro against Sterling and U.S. dollar on the net profit and shareholders’ equity as of and for the years ended December 31, 2008 and 2007.

95 In particular, the European Central Bank Euro/Sterling exchange rate was 0.9525 as of December 31, 2008 compared to 0.7333 as of December 31, 2007, and the Euro/U.S. dollar exchange rate was 1.3917 as of December 31, 2008 compared to 1.4721 as of December 31, 2007. As of December 31, 2008 As of December 31, 2007 Effect of Change in Euro/GBP Effect of Change in Euro/USD Effect of Change in Euro/GBP Effect of Change in Euro/USD Increase Decrease Increase Decrease Increase Decrease Increase Decrease Description 50 basis points 50 basis points 50 basis points 50 basis points 50 basis points 50 basis points 50 basis points 50 basis points (In millions of Euro) Net profit ...... 6 (6) 9 (26) 17 (17) 2 13 Shareholders’ equity. . . 12 (13) 60 (83) 17 (17) 30 (22)

The Group is also exposed to translation risk in relation to subsidiaries which have a reporting currency other than Euro (mainly Sterling and to a lesser extent U.S. dollars). The risk relates to the fact that assets and liabilities of these entities have different values in Euros depending on the exchange rates movements. The Group monitors this risk, however, as of June 30, 2009, there were no hedging transactions in place.

Equity Price Risk As of June 30, 2009, the Group held 33.7 million shares of STM (33.7 million as of December 31, 2008) which are classified as available for sale and, accordingly, are carried at fair value. The movements in the fair value of these shares are recorded in a specific reserve in shareholders’ equity. During the first half of 2009, a fair value gain of Euro 26 million was recorded due to the increase in value of the STM shares from Euro 154 million as of December 31, 2008 to Euro 180 million as of June 30, 2009. As of June 30, 2009, the fair value of the shares was Euro 180 million. The Group utilizes derivatives to hedge the risk of fluctuations in the market price of the STM shares. This is a derivative instrument which is considered as not being for hedging purposes and changes in fair value are recognized in the income statement. The implemented strategy is to use put and call options to allow the Group to limit the negative impact of the partial depreciation of STM shares while leaving open the possibility of benefiting, within certain limits, from any appreciation in the shares and exposing the Group to potential lost revenues in the event this limit is exceeded.

Exchangeable Bond Risk In 2003, Finmeccanica Finance S.A. issued notes convertible into 20,000,000 shares of STM at a price of Euro 25.07 per share. Further details on this transaction are provided in the paragraph “Exchangeable Bonds”. The option to convert is considered as an embedded derivative. The debt and conversion component are separated and the embedded option is valued at fair value through profit and loss. In 2005 Finmeccanica acquired a virtually identical option to hedge the option sold to bondholders thereby neutralizing the effects (because both the option purchased and the option sold as a part of the bond are valued at fair value through profit and loss) and obtaining full availability of the STM shares which were locked up for eventually servicing the conversion. The following table shows the impact of a 10 percent appreciation and depreciation of the STM share price on net income and shareholders’ equity as of and for the year ended December 31, 2008: As of and for the year ended December 31, 2008 Appreciation Depreciation 10% 10% (In millions of Euro) Net profit ...... 15 (15) Shareholders’ equity ...... 15 (15)

Liquidity risk The Group is exposed to liquidity risk, namely the risk that it cannot manage efficiently its ordinary commercial and investment activity and that it cannot repay its payables at maturity. In order to support growth in its business based on an adequate prospective analysis and an analysis of return on investments, Finmeccanica adopted measures with the aim of optimizing the management of financial resources. Such measures include the centralization of treasury (achieved through cash pooling procedures with Group companies), which results in easier maintenance of cash and cash equivalents levels, selling receivables with

96 longer collection times, and entering in financial markets to obtain sufficient short-term and long-term credit lines, which are added to the availability of non-strategic assets. Finmeccanica has obtained credit lines and facilities for contractual guarantees sufficient to meet Group needs. As of June 30, 2009, the Group had a medium-term revolving credit line of Euro 1,200 million agreed in 2004 with a syndicate of national and international banks. The interest rates margin and maturity of the facility (current maturity 2012) were renegotiated in 2005. As of June 30, 2009, an amount of Euro 90 million was drawn down under this facility. As of June 30, 2009, Finmeccanica also has additional short-term credit lines amounting to around Euro 1,150 million (of which around Euro 825 million is unconfirmed and Euro 325 million is confirmed). There are also unconfirmed facilities for contractual guarantees available amounting to around Euro 1,830 million.

Credit risk The Group is exposed to credit risk, both to the counterparties of its commercial transactions and for financing and investing activities, as well as for guarantees given on payables or third-party commitments. In terms of commercial transactions, the most significant transactions are in the Euro-zone area, the United Kingdom and the United States. These programs are mainly with public sector companies, or similar agencies. Counterparty risks for contracts with countries where there are no regular significant commercial relations are analyzed at the time of the order. Customers who are public sector companies in Europe and the United States present limited credit risk. However, the time to collect the receivable is generally longer. When appropriate the Group considers procedures to unblock these debts, including factoring.

Off-Balance Sheet Arrangements The following table summarizes the Group’s off-balance sheet arrangements as of December 31, 2008 and 2007. As of December 31, 2008 As of December 31, 2007 (In millions of Euro) Guarantees in favor of Group companies . . . 11,245 9,749 Guarantees given to third parties...... 5,541 4,151 Other unsecured guarantees given to third parties ...... 567 577 17,353 14,477

If awarded a project, including long-term operation and maintenance contracts, the Group is usually required to provide guarantees, such as advance payment bonds, performance bonds, retention money bonds and warranty bonds. The bonds may be related to project deadlines and/or performance of equipment to certain standards or specifications. Additionally, customers typically require guarantees issued by a financial institution or insurance company in the form of a letter of credit, surety bond or other financial guarantee. Therefore, obtaining financial guarantees on reasonable terms is a critical element in bidding for a contract.

Contractual Commitments As of December 31, 2008, the Group had contractual commitments to repay debt, make payments under finance and operating leases, settle obligations related to agreements to purchase goods and services and settle other liabilities. Payments due under these obligations and commitments are as follows.

97 As of December 31, 2008 Payments Due By Period Less than 1 More than 5 Total year 2 - 5 years years (In millions of Euro) Debt Obligations(1) ...... 5,271 1,065 3,190 1,016 Estimated Interest Payments on Debt Obligations(2) ...... 1,150 190 522 438 Finance Lease Obligations ...... 16 14 2 — Operating Lease Obligations ...... 721 143 300 278 Purchase Obligations(3) ...... 383 191 102 90 Other Financial Liabilities(4) ...... 1,208 1,107 60 41 Total contractual obligations ...... 8,749 2,710 4,176 1,863

(1) Debt Obligations consist of principal payments for bonds and borrowings from financial institutions. (2) Represents expected interest payments on the Group’s debt balance as of December 31, 2008, using the stated interest rate on fixed-rate debt and the variable interest rate in effect as of December 31, 2008 on the outstanding borrowings. The calculation assumes that current borrowings are repaid based upon the scheduled repayment dates. (3) Includes amounts under legally enforceable agreements for goods and services with defined terms as to quantity, price and timing of delivery. The amounts include those relating to satellite capacity business conducted by Telespazio Holding S.r.l., EEIG ATRs airplane leasing and sub-leasing, and property, plant and equipment. (4) Consists primarily of financial liabilities related to grants obtained under Law 808 on civil programs to be repaid to the MED, financial payables to related parties and payable for non-recourse factoring.

Recent Developments In early July 2009, Meccanica Holdings USA, Inc. issued bonds to the United States institutional investor market in the amount of USD 800 million, which are wholly and unconditionally guaranteed by Finmeccanica. The bond offering was divided into two tranches which consisted of a USD 500 million tranche with a ten year maturity and coupon rate of 6.25% and a USD 300 million tranche with a 30-year maturity and a coupon rate of 7.375%. The proceeds were used to repay a portion of outstanding debt under the Facility Agreement. On July 24, 2009, the European Investment Bank (“EIB”) and Finmeccanica entered into a loan agreement for Euro 500 million amortizing on an annual basis in 10 installments with a twelve year final maturity. Finmeccanica has not yet drawn funds under the facility, and has until January 31, 2011 to request disbursement of the funds, which will eventually be utilized by Finmeccanica’s wholly-owned subsidiary, Alenia Aeronautica S.p.A. The purpose of the loan is to expand manufacturing facilities in southern Italy and undertake research and development activities. On October 14, 2009, the Group announced that Finmeccanica Finance S.A. has agreed to issue bonds in the amount of Euro 600 million with a coupon rate of 5.25% and a maturity date of January 21, 2022. The bonds will be issued under the EMTN program and will be listed on the Luxembourg Stock Exchange. The proceeds from this transaction were received on October 21, 2009 and will be partially used to repay a portion of the Facility Agreement and the remainder will be used to meet 2010 third party refinancing requirements including the repayment of the Exchangeable Bonds maturing on August 2010.

98 BUSINESS DESCRIPTION The Issuer Meccanica Holdings USA, Inc. is a Delaware corporation having its registered office at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, U.S.A. Meccanica Holdings was incorporated in the State of Delaware on October 14, 2008 with registration number 4611365. Pursuant to the laws of the State of Delaware, the duration of Meccanica Holdings is unlimited. Meccanica Holdings’ purpose is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law. All of the common stock of Meccanica Holdings is owned by Finmeccanica — Società per azioni. Following completion of the acquisition of DRS, Meccanica Holdings holds the common stock of DRS. The members of the Board of Directors of Meccanica Holdings are Pier Francesco Guarguaglini, Luigi Calabria and Simone Bemporad. The business address of the directors of Meccanica Holdings is 1625 I Street, NW, 12th Floor, Washington, D.C. 20006, and its telephone number is +1 202 292 2625. No conflicts of interest exist between any duties of the persons referred to above to Meccanica Holdings USA, Inc. and their private interests and/or other duties. In the future, Meccanica Holdings may provide guarantees for all or part of the Finmeccanica Group’s indebtedness.

The Finmeccanica Group Overview Finmeccanica, together with its subsidiaries, is one of the leading European aerospace and defense companies in terms of revenues and a leading high technology company operating in the design and manufacture of helicopters, defense electronics and security, civil and military aircraft, aerostructures, satellites, space infrastructures, land and naval armaments, underwater defense systems and missiles. Finmeccanica participates in numerous international programs in the sector through well-established alliances with European and United States partners. The Group also has significant assets and activities in the energy and transportation sectors. In 2008, Finmeccanica acquired DRS Technologies, Inc., a major supplier of defense electronic products, systems and military support services in the United States. See “DRS Technologies, Inc.” for further information. Finmeccanica is listed on the Italian Mercato Telematico Azionario and operates in Italy and abroad through subsidiaries and joint ventures. In particular, Finmeccanica has a large industrial base in Italy and in the United Kingdom, both considered the Group’s domestic markets, as well as production facilities elsewhere in Europe and in the United States. As of December 31, 2008, Finmeccanica had a total workforce of approximately 73,400 people, of which approximately 43,300 are in Italy; 10,100 are in the United Kingdom; 3,600 are in France; and 12,300 are in the United States. As of June 30, 2009, the Group had a total workforce of approximately 73,517 people, of which approximately 43,370 are in Italy; 10,006 are in the United Kingdom; 3645 are in France; and 12,580 are in the United States. The registered office of Finmeccanica is Piazza Monte Grappa, 4, 00195 Rome, Italy, and its telephone number is +39 06324731. In the year ended December 31, 2008, Finmeccanica’s consolidated revenues and net profit totaled Euro 15,037 million and Euro 621 million, respectively, while the Group’s adjusted EBITA (see “Financial Information and Non-GAAP Measures” for an explanation of adjusted EBITA and a reconciliation to net profit) was equal to Euro 1,305 million. For the first six months of 2009, Finmeccanica’s consolidated revenues and net profit totaled Euro 8,523 million and Euro 242 million, respectively, while the Group’s adjusted EBITA (see “Financial Information and Non-GAAP Measures” for an explanation of adjusted EBITA and a reconciliation to net profit) was Euro 605 million. As of June 30, 2009 and December 31, 2008, Finmeccanica had an order backlog amounting to Euro 42,980 million and Euro 42,937 million respectively. Approximately 30.2% of Finmeccanica’s share capital is owned by the MEF and the remaining approximately 69.8% is publicly held.

99 The following table contains the key financial and operating data relating to the Group operations for the periods represented. As of and for the six month period ended As of and for the year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except number of employees) (Unaudited) New Orders ...... 8,327 6,809 17,575 17,916 15,725 Order Backlog ...... 42,980 39,005 42,937 39,304 35,810 Revenue ...... 8,523 6,433 15,037 13,429 12,472 Adjusted EBITA(*) ...... 605 400 1,305 1,045 942 Net Profit ...... 242 297 621 521 1,021 Research and Development ...... 887 834 1,809 1,836 1,783 Employees ...... 73,517 61,909 73,398 60,748 58,059

(*) For an explanation of adjusted EBITA see “Financial Information and Non-GAAP Measures”.

Organization and Structure Finmeccanica’s operations are currently grouped as follows: (i) AEROSPACE AND DEFENSE, which includes the following segments: Helicopters, Defense Electronics and Security, Aeronautics, Space, and Defense Systems; Helicopters (both civil and military platforms), Defense Electronics and Security (including radar, electro-optics, electronic warfare, integrated systems, information and communication technology systems) and Aeronautics (military aircraft, aerostructures, unmanned aerial vehicles (UAVs), regional aircraft) represent the three strategic pillars which are the focus of Finmeccanica’s business. In addition, Finmeccanica is active in (a) the Space sector, through the Space Alliance, encompassing Finmeccanica’s two joint ventures with the French company, Thales S.A., for both satellite manufacturing (Thales Alenia Space S.A.S., which is majority held by Thales); and space services (Telespazio Holding S.r.l., which is majority held by Finmeccanica) and (b) in Defense Systems, which includes other defense segments such as missiles, underwater defense systems and land and naval armaments; and (ii) CIVIL, which includes Energy and Transportation segments, where Finmeccanica holds specialized technological capabilities and manufactures a variety of products, with the objective to increase the value of its relevant assets. Finmeccanica’s other activities include, mainly, the activities of the subsidiaries Fata S.p.A., BredaMenarinibus S.p.A. and minority interests in Avio S.p.A., held by Finmeccanica’s subsidiary Aeromec- canica S.A. As of March 31, 2009 the activities of BredaMenarinibus have been included in the Transportation segment. In 2008, Finmeccanica acquired DRS Technologies, Inc. See “DRS Technologies, Inc”. Furthermore, in order to support the Group’s activities in the United Kingdom and in the United States, in accordance with its strategy and in light of the importance of those markets for the Group, Finmeccanica has established two subsidiaries, Finmeccanica U.K. Ltd. and Finmeccanica North America Inc. In addition, as of the date of this Listing Prospectus, Finmeccanica holds an interest of 3.7% in STMicrolectronics, a leading semiconductor company.

100 The following chart illustrates the organizational structure of the Group’s principal operating segments and other activities, including its percentage ownership in certain subsidiaries as of the date of this Listing Prospectus:

Helicopters Defence Electronics and Security Aeronautics Space Defence Systems

AgustaWestland (100%) Selex Sensors & Airborne Syst. (100%) Alenia Aeronautica (100%) Thales Alenia Space (33%) OTO Melara (100%) AW North America (100%) Galileo Avionica (100%) Alenia Aermacchi (100%) Telespazio (67%) WASS (100%) DRS Technologies (100%) Alenia Aeronavali (100%) MBDA (25%) Selex Sistemi Integrati (100%) EEIG ATR (50%) Selex Communications (100%) SuperJet International (51%) Elsag Datamat (100%) Alenia North America (100%) Selex Service Management (100%) Seicos (100%)

Aerospace and Defence

Energy Transportation Other Activities

AnsaldoBreda (100%) Finmeccanica UK (100%) Ansaldo Energia (100%) Ansaldo STS (40%) Finmeccanica North America (100%) BredaMenarinibus (100%) Finmeccanica Finance (100%) Fata (100%) Avio (15%) STMicrolelectronics (3.7%)

Strategy Finmeccanica is pursuing a growth strategy aimed at continuously consolidating its competitive position and creating value for its shareholders. Finmeccanica intends to maintain a leading position internationally by exploiting its potential in those sectors where it holds a competitive edge in terms of technological excellence, innovation capabilities and product offering through the following strategic steps: • growing in the United States, the United Kingdom and Italy, the Group’s domestic markets, and strengthening its global positioning in the Aerospace and Defense sector through the expansion of the Group’s international presence; • optimizing its product portfolio and offering integrated solutions to customers; • enhancing industrial competitiveness and profitability; and • maximizing the value of its subsidiaries operating in the Energy and Transportation segments. Consistent with such guidelines, over the past years, Finmeccanica has achieved significant results in pursuing its strategy by (i) consolidating its global positioning as a leading global company in the Helicopters, Defense Electronics and Security and Aeronautics businesses and achieving full control of its core defense assets, which were previously held through joint ventures with third parties; (ii) increasing its internationalization through strategic acquisitions and increasing its export orders; (iii) managing its portfolio by building up the Group’s product range through substantial investments in research and development and selected acquisitions to strengthen the core activities of its strategic pillars, as well as by divesting non-core assets in specific sectors; and (iv) maintaining a well-balanced capital structure.

Growing in the United States, the United Kingdom and Italy, the Group’s domestic markets, and strengthening its global position in the Aerospace and Defense sector through the expansion of the Group’s international presence Finmeccanica intends to pursue this strategic objective by: (a) Driving further profitable growth in Helicopters, Defense Electronics and Security and Aeronau- tics, both organically and through selected acquisitions, strengthening its position in the United Kingdom and in the United States by leveraging on DRS’s position in the United States. As of the date of this Listing Prospectus, Finmeccanica’s order intake continues to drive organic growth and Finmeccanica’s market share in each of its three strategic pillars. Finmeccanica also aims to target

101 selected opportunities for external growth, particularly in the United Kingdom and the United States, whilst maintaining a balanced capital structure. In the United Kingdom, which is Finmeccanica’s second largest market, Finmeccanica’s strategy is to complete further acquisitions and consolidate its role as a major United Kingdom defense company. In the United States, where it already has a significant position in the Helicopters and Aeronautics sectors, Finmeccanica is targeting its industrial presence and increasing its market share in Defense Electronics and Security. With the acquisition of DRS in October 2008, Finmeccanica believes it has taken a major step towards strengthening its position internationally as a key supplier of integrated systems for Defense Electronics and Security and consolidating its role in the United States market as a significant player in the strategic pillars, by also leveraging on DRS’s positioning. (b) Entering into new strategic alliances and strengthening current alliances in order to develop areas of technological excellence, particularly in the Defense Systems segment. Finmeccanica aims to leverage on its Defense Systems technological capabilities, in both land and naval armaments and underwater defense systems, through strategic alliances with other European companies with the goal of (i) improving the Group’s competitive position, (ii) widening its product portfolio and (iii) improving market access. These alliances are also intended to create integrated structures and will focus on optimizing the parties’ respective technological strengths and complementary product capabilities. For example, in the area of underwater defense systems, Finmeccanica is strengthening the position of its subsidiary Whitehead Alenia Sistemi Subacquei S.p.A. (“WASS”) by pursuing a French-Italian alliance with DCNS and Thales Underwater Systems. (c) Targeting attractive international markets through initiatives aimed at strengthening its local footprint. In addition to its growth strategy in the United Kingdom and in the United States, Finmeccanica is targeting attractive international markets through (i) long-term commercial and industrial commitments, (ii) partnerships with domestic industries and/or (iii) local investments with the objective of optimizing local skills based on contributions of its know-how and technologies. Finmeccanica aims to seize the opportunities provided by these markets and to take advantage of lower production costs whilst also satisfying any potential offset obligations in those countries. Finmeccanica’s initiatives in those markets include the following: • strengthening production capability in North America (such as a new plant in Philadelphia for US101 assembly, and a new plant in Charleston for B787, and leveraging on those of DRS); • establishing local partnerships in Russia for civil applications, such as air traffic management, regional aircraft, helicopters, railways, postal services and energy and in India for helicopters, defense electronics and security, aeronautics and underwater defense systems; • expanding its presence in China, with particular emphasis on civil helicopters, signaling, air traffic control and port security; and • cooperating with local partners in the Middle East (such as United Arab Emirates and Saudi Arabia) in aeronautics and security systems. In addition, Finmeccanica, the Libyan Investment Authority (“LIA”), the Libyan sovereign wealth fund, and an affiliate of LIA have signed a memorandum of understanding for the development of a strategic cooperation in Libya and other countries in the Middle East and Africa. The memorandum of understanding contemplates the creation of a joint venture company held equally by Finmeccanica and LIA that will pursue investment opportunities in the aerospace, electronics, transportation and energy sectors for civil applications. Finmeccanica and LIA will also consider potential minority investments by LIA in existing Finmeccanica projects in the business sectors covered by the memorandum of understanding.

Optimizing its product portfolio and offering integrated solutions to customers Finmeccanica intends to pursue this strategic objective in order to selectively innovate and optimize its product portfolio in a sustainable manner by continuing to (i) invest in new specific technologies and (ii) improve the relevant processes on the basis of rigorous financial and risk analyses. Finmeccanica’s goal is to proactively anticipate market needs and customer expectations and enhance industrial efficiency. In particular, Finmeccanica is focused on (i) products, through enabling technologies with respect to both

102 individual components and systems and (ii) industrial processes, through key technologies that improve design and manufacturing activities. Furthermore, Finmeccanica is offering integrated solutions encompassing both platforms and sub-systems in order to satisfy new market requirements and to increase customer loyalty. Integrated solutions are tailored to customer-specific needs, leveraging on the Group’s technological knowledge and linking a wide range of individual platforms and sub-systems into a single effective network. For example, in the Helicopters segment (civil applications), Finmeccanica is in the process of developing sophisticated technology through wind tunnel testing in order to reduce noise levels in the cabin and deliver higher levels of on-board comfort. In Defense Electronics and Security, Finmeccanica is offering complex electronic systems that enhance real-time operational capabilities, such as sensor-track and data fusion systems for monitoring and managing data processing and communications (for example encrypted communications, wireless communications, etc.) used within homeland security applications. In Aeronautics, Finmeccanica delivered the first carbon fiber sections for the B787, improving competitiveness in the growing market of civil aeronautics through the Group’s development of innovative manufacturing processes.

Enhancing industrial competitiveness and profitability Finmeccanica intends to pursue this strategic objective by addressing cost and performance issues through efficiency measures, internal restructuring and industrial partnerships. As Finmeccanica operates in a challenging competitive environment, both in terms of costs and the need to satisfy increasingly sophisticated demands from clients, the reduction of industrial and management costs has become a priority. Finmeccanica aims to strengthen its industrial competitiveness with the objective to improve its cash generation, in line with its achieved profitability. In order to further improve its cost structure, Finmeccanica has assigned specific actions and targets to its subsidiaries. This is intended to improve production structure and processes, as well as optimizing its supply chain, from the purchase of finished products to the purchase of complex product components. Any new potential investment is evaluated based on stringent returns on invested capital criteria. In recent years Finmeccanica has completed restructuring programs for its space manufacturing and services business (Thales Alenia Space and Telespazio), its security and automation business (Elsag Datamat S.p.A.) and its military communications business (Selex Communications S.p.A.). Finmeccanica is also currently in the process of reorganizing its aircraft modification and maintenance business (Alenia Aeronavali S.p.A.) by focusing on the most profitable activities and resizing the workforce to reflect actual requirements. Furthermore, Finmeccanica is focused on restoring the profitability of its transportation vehicles business (AnsaldoBreda S.p.A.) by optimizing production processes and sites, optimizing its product portfolio and forming international partnerships. More generally, Finmeccanica aims to increase profitability by extracting the potential benefits of vertical integration of its businesses in the several segments in which it operates (i.e., AgustaWestland, Selex Galileo).

Maximizing the value of subsidiaries in the Energy and Transportation segments Over the past few years, whilst focusing growth on the strategic pillars of the Group, Finmeccanica has also launched a reorganization and rationalization program with the goal of maximizing the value of its subsidiaries in the Energy and Transportation segments. Finmeccanica aims to leverage on its subsidiaries’ capabilities in the civil engineering sectors to capture and extract value in growing its businesses. To this end, Finmeccanica intends to: (i) in the Energy segment, reduce its participation in Ansaldo Energia S.p.A. (“Ansaldo Energia”) in order to extract value from the skills acquired and the market position reached thus far; and (ii) in the Transportation segment, with respect to AnsaldoBreda S.p.A., to complete the rationalization and reorganization process in order to recover profitability levels; and with respect to Ansaldo STS S.p.A., to support the organic growth strategy of the relevant businesses in order to improve its profitability and global competitive position by entering into new growing markets.

103 History of the Finmeccanica Group The history of the Finmeccanica began on March 18, 1948 with the incorporation by the Istituto per la Ricostruzione Industriale (“IRI” — a holding company for Italian state-owned industrial and commercial interests) of a company named Società Finanziaria Meccanica — Finmeccanica Società per azioni, as the holding company for the Italian government’s automotive, mechanical, electromechanical and shipyard industrial activities. In 1987 the activities of this company were contributed to a new company named Finmeccanica — Società Finanziaria per azioni, incorporated on May 21, 1987. In 1989, Finmeccanica began coordinating IRI’s activities in the high technology manufacturing industry. In 1992, Finmeccanica — Società Finanziaria per azioni merged into Società Immobiliare Finanziaria per azioni, or SIFA (previously named Società delle Miniere di Mercurio del Monte Amiata), a company created in 1897 and listed on the Mercato Telematico Azionario (“MTA”). Following such mergers, SIFA changed its name to Finmeccanica — Società per azioni. During the course of 1993, the following companies that were previously Finmeccanica subsidiaries were merged and became divisions of Finmeccanica: (i) Alenia Aeritalia & Selenia S.p.A., a company engaged in the aeronautics, space and defense electronics segments, that resulted from the merger of Aeritalia S.p.A. and Selenia S.p.A. and the acquisition of the defense business of Elsag S.p.A; (ii) Ansaldo S.p.A., a company engaged in the production of component parts and plants for the production of power stations; and (iii) Elsag Bailey S.p.A., a company active mainly in the field of postal automation and process automation. In the same year, Finmeccanica’s subsidiary Elsag Bailey Process Automation N.V. (“EBPA”) was listed on the New York Stock Exchange (the “NYSE”). This company was active in control systems for plants with continuous processes (i.e., paper mills, power stations, iron and steel plants, etc.). Following its NYSE listing, EBPA acquired Fischer & Porter in the United States and Hartmann & Braun in Germany, thereby becoming a significant global player in the sector. In 1994, Finmeccanica acquired the defense companies of the Ente Partecipazioni e Finanziamento Industrie Manifatturiere (“EFIM”), which served to consolidate its leading position in the Italian defense industry. Over time, Finmeccanica transformed itself from a diversified conglomerate into an industrial holding company focused on specific sectors with high technology content. Following a strategic review of its activities in 1997, Finmeccanica adopted a plan designed to strengthen its competitiveness, profitability and financial position. As part of these restructuring efforts, Finmeccanica completed the divesture of its less profitable activities, such as the industrial automation activities, including EBPA. Finmeccanica’s portfolio of high-tech assets significantly increased after Finmecca- nica’s merger with Microelettronica Italiana — MEI S.r.l in 1999 because, as a result of the merger, Finmeccanica acquired a 50% shareholding in ST Holding, which indirectly held a stake of approximately 22% of STM, a leading semiconductor company. Finmeccanica’s interest in STM was sold over time in recent years and it is currently equal to 3.7%. Finmeccanica’s strategic focus became the growth of its Aerospace and Defense businesses and Finmeccanica continued its efforts to reduce its exposure to other business segments. To that end, Finmeccanica began negotiations for the implementation of strategic alliances in the Aerospace and Defense business, with the aim of improving its competitive position and international presence. In 1998, Finmeccanica and GEC Plc entered into a joint venture for the production of civil and military radars for use on land, at sea and in air traffic control systems, as well as the production of missile systems. In the same year, Finmeccanica and GKN Plc signed a memorandum of understanding for the formation of a joint venture in the helicopters sector that would comprise the activities of Agusta S.p.A. and Westland Helicopters Plc. Such joint venture was then set up in 2001. Finmeccanica’s privatization process was initiated by a Decree issued by the Italian Prime Minister on September 28, 1999 (the “Decree”). The Decree provided that the Italian government, through the MEF, must maintain at least a 30% minority interest (on a fully-diluted basis) in Finmeccanica’s share capital. In June 2000, IRI sold over 50% of Finmeccanica’s outstanding ordinary shares in the capital markets. Following that offering, IRI transferred additional shares to the MEF. Following the Rights Offering, which was completed on November 27, 2008, the MEF holds 30.2% of the share capital, whereas the remaining shares are publicly held.

104 Between 2000 and 2002, Finmeccanica accelerated the corporate reorganization of the businesses of the Group by contributing several activities previously operated as separate divisions into wholly owned subsidiaries. The helicopter business was contributed to Agusta S.p.A., the space business to Alenia Spazio S.p.A., the land and naval armaments systems business to OTO Melara S.p.A.; the avionics business to Galileo Avionica S.p.A.; and the aeronautics business to Alenia Aeronautica S.p.A. From 2001 onwards, Finmeccanica’s growth continued with a number of significant acquisitions and joint ventures: • In 2001, Finmeccanica, EADS and BAE agreed to contribute their respective missile businesses to a joint venture named MBDA S.A.S., in which Finmeccanica holds a 25% interest. • In 2003, Finmeccanica acquired Aeronautica Macchi S.p.A., a company active in the military training aircraft sector, and merged with it its wholly-owned subsidiary, Aermacchi S.p.A. (now renamed Alenia Aermacchi S.p.A.). • In 2004, Finmeccanica acquired GKN Plc’s share in the helicopters joint venture thereby becoming the sole owner of AgustaWestland. • In 2005, Finmeccanica and BAE finalized the Eurosystems agreements in the field of avionics, radar, military communications systems and air traffic control systems (ATC). As part of those agreements, Finmeccanica acquired the U.K. activities of BAE. • In 2005, Finmeccanica and Alcatel S.A. (then replaced by Thales in 2007) created two separate joint ventures in the Space segment: Alcatel Alenia Space S.A.S. (then renamed Thales Alenia Space S.A.S.) and Telespazio Holding S.r.l. • In 2007, Finmeccanica completed the acquisition of Datamat S.p.A., an Italian-listed information technology company specializing in integrated solutions in the defense, space, government banking, finance and telecommunications sectors, and merged it with Elsag S.p.A. (now renamed Elsag Datamat S.p.A.). • In 2008, Finmeccanica completed the acquisition of DRS Technologies, Inc. See “DRS Technologies, Inc.” for more information. Further information on Finmeccanica’s segments key events and recent developments is provided under “— Business Segments” in this Listing Prospectus.

Business Segments Helicopters Overview In the Helicopters segment, Finmeccanica’s operations are carried out through AgustaWestland N.V. and its subsidiaries (“AgustaWestland”). Finmeccanica is one of the leading global competitors in the design and production of helicopters, with the capacity to develop a complete range of products for both the civil and military applications. AgustaWestland’s civil products include: the AW139, the AW109 Power and the Agusta Grand. The only mono-turbine helicopter model produced by AgustaWestland is the AW119 Koala. AgustaWestland’s military products include: the AW101, the AW129 Combat, the Lynx family, the Apache and the Chinook (built under Boeing’s license). AgustaWestland is also participating in the European NH90 transport and naval helicopter production program. Furthermore, AgustaWestland is currently finalizing the development phase of the BA609, an innovative tilt-rotor vehicle that enables vertical take-off followed by horizontal flight in the manner of a traditional fixed-wing aircraft. Further information on Finmeccanica’s principal products and programs is provided under “— Main Products and Programs” below. AgustaWestland owns the technology and expertise necessary for all phases of helicopter production including the preliminary analysis and identification of operational requirements for designing, engineering and manufacturing transmissions, rotors, blades, metal and composite material structures and avionics, as well as final assembly, systems integration and product support activities. With respect to product support activities, AgustaWestland offers an Integrated Operational Support (“IOS”) for different platforms. IOS is AgustaWestland’s “turn-key” solution that includes comprehensive

105 technical support services, supply of spare parts, repairs and overhaul. IOS represents a core element of the strategic partnership between AgustaWestland and the United Kingdom Ministry of Defence. AgustaWestland and its subsidiaries operate through main plants in Italy (Vergiate (VA); Cascina Costa (VA); Frosinone; Benevento; Brindisi; Anagni (FR)), in the United Kingdom (Yeovil) and in the United States and Belgium. These facilities are organized according to a network organization model, through which AgustaWestland strives to make each plant a specialized center for efficient manufacturing with a specific functional focus. The table below summarizes key financial and operating data of the Finmeccanica’s Helicopters segment for the periods represented: As of and for the six month period ended As of and for the year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except number of employees) (Unaudited) New Orders ...... 1,821 1,618 5,078 3,970 4,088 Order Backlog ...... 10,610 8,874 10,481 9,004 8,572 Revenues ...... 1,646 1,469 3,035 2,980 2,727 Adjusted EBITA(*) ...... 162 158 353 377 296 Research and Development...... 162 126 273 322 356 Employees(no) ...... 10,335 10,021 10,289 9,556 8,899

(*) For an explanation of adjusted EBITA see “Financial Information and Non-GAAP Measures”.

Order backlog: The order backlog of the Helicopters segment at December 31, 2008 (Euro 10,481 million, with a 16% increase compared to 2007) breaks down into 79% for helicopters (NH90, AW101, T129, AW139), 20% for support activities (SKIOS, IMOS), and 1% for engineering activities. At June 30, 2009, the order backlog of the Helicopters segment was Euro 10,610 million, substantially unchanged compared to December 31, 2008. In April 2009, the U.S. Department of Defense proposed the cancellation of the VH-71 helicopter program for the President of the United States of America. The first phase of the contract (Increment 1) has already been funded by the United States Congress and involved the production of nine helicopters (five pilot-production and four test vehicles), which have already been delivered by AgustaWestland to its American partner, Lockheed Martin System Integrator Ltd (in its role as prime contractor). In May 2009, the final customer Nav Air notified Lockheed Martin of the termination for convenience of the contract. AgustaWestland, in its role of supplier to Lockheed Martin, is entitled to receive termination payments as per contractual provisions once the contract is formally terminated. This contract was formally terminated on June 3, 2009. The remaining part of the contract (Increment 2) has not been included in Finmeccanica’s budget or multi-year plan.

New orders: New orders in the Helicopters segment in 2008 were Euro 5,078 million, with a 28% increase compared to 2007. The most significant orders acquired in 2008 related to: (i) in the military sector, the supply of 51 tactical reconnaissance and attack helicopters for the Turkish ATAK program and to the second tranche of the Future Lynx program for the U.K. Ministry of Defence and (ii) in the civil sector, new orders of a total of 312 helicopters. New orders for the first six months of 2009 increased 13% compared to the same period in 2008 mainly as a result of an order from the Italian army for 16 ICH-47F Chinook aircrafts.

Industry In 2008, the global helicopter market had an estimated total value of approximately Euro 13 billion, including production, product support and services as well as research and development activities, which account for approximately Euro 5 billion (Source: Finmeccanica estimates based on Forecast International February 2008). The market for military helicopters, which represents roughly 75% of the total helicopters market, is expected to remain stable in the coming years (Source: Finmeccanica estimates based on Forecast International 2008). In the United States, demand is driven by the need to replace and upgrade a fleet largely made up of

106 older generation aircraft. In Europe and in the United Kingdom in particular, demand is driven by the utilization flexibility of helicopters in operational situations and reflected by the increase in “out-of-theatre” helicopter capacity, which has grown 60% over the last two years in the United Kingdom. (Source: Finmeccanica estimates based on publicly available data). The U.K. government has recently confirmed orders for the Future Lynx program. Another significant growth area is in medium-range transport/utility helicopters and naval helicopters, which are used for search and rescue missions (Source: Finmeccanica estimates based on Forecast International 2008). Border protection defense and maritime patrols are also driving international growth in the military helicopters market. In the civil market, demand in 2008 has remained stable after several years of significant market expansion, but a gradual decline is expected over the next period. In particular, Finmeccanica believes the demand will likely drop in the Corporate/VIP helicopters market. Partnership agreements in newly industrialized nations, such as Russia, China, Turkey and India, are also generating growth. Programs underway relating to high-speed flight innovation, with the roll-out of the convertiplane, could stimulate new areas of demand in the sector. In this industry, the five largest competitors by revenues — Sikorsky, Boeing and Bell Helicopters in the United States and Eurocopter and AgustaWestland in Europe — represented approximately 95% of the global market in 2008 (Source: Finmeccanica estimates based on publicly available data). Competition is driven by several factors such as (i) the technological superiority of product offering; (ii) the emergence of new players in specific areas of the market; and (iii) an increasing trend to outsource structural components in light of cost-cutting plans.

Strategy In the Helicopters segment, Finmeccanica aims to consolidate its leadership position globally through continuous improvement of its products and processes by enhancing its internal production capabilities and supply chain management. Finmeccanica intends to pursue this goal by (i) increasing its product range, (ii) accessing new markets and expanding its presence in existing markets, and (iii) optimizing internal production processes along the entire production value chain. Furthermore, Finmeccanica believes it can extract benefits from a higher vertical integration among its Helicopters segment and the avionics, electronic warfare, communications, missile, torpedoes and sonar businesses of the Group. In order to strengthen its position in the European market, AgustaWestland is in negotiations for the acquisitions of other companies in their sector.

Key events and recent developments • In February 2007, AgustaWestland and Boeing entered into a memorandum of understanding for the joint production of the next generation of Chinook transport helicopters for the Italian Army and other vertical take off and landing (VTOL) aircraft under development, both for the Italian market and for international opportunities. • In February 2007, Finmeccanica opened its new AgustaWestland facility in Philadelphia, United States, where the medium twin-turbine AW139 helicopter will be assembled and where the assembly line for the single-turbine AW119 Koala is already active. The Philadelphia plant covers an area of 10,000 square meters and, together with the existing facility (Vergiate (VA)), will allow AgustaWestland to meet the global demand of AW139, and in particular, demand from the United States. The Philadelphia facility will reach a steady state production rate capability of some 30 AW139 helicopters per year. • In September 2007, AgustaWestland, in partnership with the Turkish Aviation Industry (TAI), entered into an agreement with the Turkish government for the Tactical Reconnaissance and Attack Helicopter program (ATAK) for the Turkish Armed Forces. Under the terms of the contracts, AgustaWestland will supply 51 AW129 helicopters and the Turkish government will have the option to request a further 41 helicopters. • In November 2007, the United Kingdom Ministry of Defence awarded the first contract for Phase II of the Sea King Integrated Operational Support (SKIOS) to AgustaWestland. This program relates to operating support for the Sea King helicopters used by the British Armed Forces. In 2005, the United Kingdom Ministry of Defence awarded the first IOS contract to AgustaWestland.

107 • In May 2008, AgustaWestland and the Russian company Oboronprom Corporation entered into a long-term contract and distribution agreement related to the procurement of several civil helicopter models, such as the AW119, the AW109 Power, the Grand and the AW139, and the commercialization of AgustaWestland helicopters for various applications (i.e., VIP, Corporate, medical transport, etc.) within Russia and the CIS area. Cooperation with Oboronprom Corpo- ration is then expected to expand to include maintenance services both in Russia and internationally. On November 6, 2008, Agusta Westland and Oboronprom Corporation entered 50 into an agreement for a ⁄50 joint venture to create a final assembly line in Russia for the civil helicopter AW 139. • In February 2009, AgustaWestland and Tata Sons, an Indian business group active in the ICT, engineering, materials, services and energy sectors, signed a memorandum of understanding to form an Indian joint venture for the final assembly of the AW119 helicopter. The new joint venture will be responsible for AW119 final assembly, customization and worldwide delivery, while AgustaWestland will remain responsible for worldwide marketing and sales. • In May 2009, AgustaWestland was awarded a contract by the General Directorate of Air Armaments (ARMAEREO) for 16 ICH — 47F Chinook helicopters plus options to acquire four additional helicopters. The contract value is approximately Euro 900 million. These aircraft will be operated by the Italian Army. • In June 2009, AgustaWestland entered into a dealership agreement with Fittipaldi Aircraft (a joint venture between Emerson Fittipaldi and State Capital, a boutique investment banking group with a presence in the United States and Latin America) for ten AgustaWestland helicopters including nine Grand light twins and one AW139 medium twin helicopter for VIP transport. Under this agreement, Fittipaldi Aircraft will act as a non-exclusive dealer to the US VIP helicopter market, working in close coordination with AgustaWestland Philadelphia and its established sales force. Deliveries are scheduled to take place in 2011 and 2012. • In July 2009, AgustaWestland was awarded a contract by the government of Trinidad and Tobago for the supply of 4 AW139 helicopters. The contract, which also includes an extensive training and logistical support service for five years, is valued at USD 348 million. • In August 2009, AgustaWestland entered into an agreement to purchase 87.61% of PZLS´widnik, a Polish company which produces helicopters and aerostructures. This stake is in addition to the 6.2% already owned by AgustaWestland and will bring Agusta Westland’s stake in PZLS´widnik to 93.81%. The acquisition, which comes after the privatisation process launched by the Polish treasury’s industrial development agency, is subject to antitrust approval, and is expected to be completed by the end of the year. • In September 2009, AgustaWestland was awarded the Apache IOS contract by the UK Ministry of Defense for the supply of 67 Apache AH Mk.1 helicopters to the British Army. The IOS program will continue for 22 years throughout the operational life of the helicopters. The contract will run from 2010 to 2014 and is valued at GBP 439 million.

Main Products and Programs Finmeccanica’s principal products and programs in the Helicopters segment include the following:

Helicopters for civil applications: • AW139 — New generation medium twin-turbine helicopter designed for multi-role capability and flexibility of operation. The AW139 is capable of carrying up to 15 passengers and, due to its aerodynamic and digitally controlled engines, is a versatile helicopter capable of meeting the demands posed by different types of missions; • AW109 family — Light twin-turbine helicopters for different applications. The AW109 Power version is used for a wide range of civil and paramilitary roles; the AW109 Light Utility Helicopter (LUH) is used for a wide range of military requirements, such as advanced training; the Grand version is designed to offer maximum cabin space and increased maximum load to enable it to carry out a range of possible missions; and

108 • AW119 Koala — Light single-turbine helicopter with an interior that is easy to configure for missions of various types, including a single/dual litter configuration with full patient access for up to two medical staff.

Helicopters for military applications: • BA609 — Developed together with Bell Helicopters. Due to the innovative tilt-rotor technology, this model combines the vertical take-off characteristics of a helicopter with the speed and comfort of an airplane. It can carry up to nine passengers and is designed for military use in national security matters. AgustaWestland is responsible for designing, testing and producing important structural segments and transmission components. In addition, it will design, assemble and certify the kits destined for a different version of the model that will be marketed. The first prototype flew in 2003, the first flight was successfully completed in October 2007 and the initial certification is expected by the end of 2011; • AW101 — Medium lift helicopter that offers long-range, increased capacity and advanced technology. The AW101 fulfils wide-ranging military and commercial requirements, being both available in various different configurations and suitable for various different missions; • AW129 — Multi-role attack helicopter for day/night and all-weather combat that features a state-of-the-art cockpit and integration of the armaments, sensors, protection systems and helicopter sub-systems into a single mission system; • Super Lynx 300 — Twin-turbine military helicopter, designed to carry out both land and naval missions. The Lynx family includes over a dozen different models. These versatile products are used in 24 countries mainly for anti-submarine warfare (ASW), anti-surface warfare and search and rescue (SAR) and utility missions; and • NH90 — Twin-engine multi-role helicopter, developed to meet the military requirements of Italy, Germany, France and the Netherlands. The NH90, which was introduced in 1990, is managed through NH Industries, which includes AgustaWestland, Eurocopter and Stork Fokker. AgustaWestland has an approximate 32% production interest in this program. Within the NH90 program, AgustaWestland is developing and manufacturing the main transmission, tail rotor line, hydraulic systems, automatic fire control systems, rear rump and fuselage, electric systems and on-board computer. AgustaWestland also has the responsibility for the development of the basic avionics and the avionics for the naval version of the product, which is the most complex from the point of view of systems integration. In addition, AgustaWestland prepares the final assembly line for all transport helicopters commissioned by the Italian Army and Air Force and for all helicopters for the Italian and Dutch Naval Forces.

Research and Development Research and development expenditures amounted to Euro 273 million in 2008, and are primarily related to: • technological research and development activities including (i) the ELIMAT project, which relates to studies concerning innovative technologies for composite materials and structures; (ii) the EVS (Enhanced Vision System) project, which relates to research on “all weather” helicopter technologies to improve platform comfort (internal noise and vibration reduction); (iii) research activities on innovative electrical system technologies, avionics systems and flight management systems; and (iv) development activities on Health & Usage Monitoring Systems (HUMS); and • research and development activities applied to products including (i) pre-competitive research which includes the development of a new helicopter for military use, in the 6/7-tonne class, named AW149, and the development of multi-role versions of the BA609 convertiplane for national security; (ii) product improvement research which includes, with respect to the EH101, for development and testing of the new tail rotor, and (iii) research and development into variants of base models, in connection with government/military and civil contracts.

109 Defense Electronics and Security Overview In the Defense Electronics and Security segment, Finmeccanica’s operations are carried out through Selex Sensors and Airborne Systems Ltd.; Galileo Avionica S.p.A.; Selex Sistemi Integrati S.p.A. (which now integrates the former Vega Group Plc.); Elsag Datamat S.p.A.; Selex Communications S.p.A.; Selex Service Management S.p.A. and Seicos S.p.A.. The Group also has 49% shareholding in Orizzonte — Sistemi Navali S.p.A. and a 31.3% shareholding in Elettronica S.p.A.. As of October 22, 2008, Finmeccanica’s Defense Electronics and Security segment also includes DRS Technologies Inc., see “DRS Technologies, Inc.”. This segment includes activities pertaining to the design, development and manufacture of avionics and electro-optical equipment and systems, unmanned aircraft (UAV), radar systems, land and naval command and control systems, air traffic control systems, integrated communications equipment and systems and networks for land, naval, satellite and avionic applications, professional mobile radio communications apparatus and systems, value added services (“VAS”) and information technology (“IT”) and security activities. In addition to the provision of electronic equipment and systems for defense and security solutions, Finmeccanica is also engaged in the provision of large-scale integrated systems based on complex architectures and network-centric techniques. The goal is to meet the growing needs of customers for large-scale systems and to integrate a variety of functions, platforms and sets of sensors in order to ensure effective performance in the surveillance, control and protection of critical areas and infrastructures. To that end, Selex Sistemi Integrati S.p.A. has engaged in marketing efforts, especially in the export market, in order to promote large- scale homeland protection systems, particularly for applications related to border control and security management in conjunction with major events, such as international political summits. This effort leverages on the skills of the various Group subsidiaries and takes advantage of the long-standing presence of a number of these companies in the various countries concerned. Further information on Finmeccanica’s principal products and programs is provided under “— Main Products and Programs” below. The plants of Finmeccanica’s subsidiaries in this segment are principally located in Italy (Rome, Fusaro (NA), Giugliano (NA), Milan, Florence, Genoa and Nerviano (MI)), the United Kingdom (Basildon, Luton, Edinburgh, Portsmouth, Liverpool, York), Germany (Neuss-Rosellen, Backnang), Turkey (Ankara), Romania (Bucharest) and the United States (Overland Park, Kansas, Parsipanny, New Jersey and several sites for DRS). The table below summarizes the key financial and operating data of the Finmeccanica’s Defense Electronics and Security segment for the periods represented: As of and for the six month period ended As of and for the year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except number of employees) (Unaudited) New Orders ...... 3,306 1,951 4,418 5,240 4,197 Order Backlog ...... 11,239 8,759 10,700 8,725 7,676 Revenues ...... 3,075 1,628 4,362 3,826 3,747 Adjusted EBITA(*) ...... 274 98 442 427 338 Research and Development ...... 323 272 619 557 541 Employees(no) ...... 30,277 19,487 30,330 19,589 19,185

(*) For an explanation of adjusted EBITA see “Financial Information and Non-GAAP Measures”.

Order backlog The order backlog of the Defense Electronics and Security segment as of December 31, 2008 was Euro 10,700 million, with a 23% increase compared to 2007. Excluding the contribution of DRS (approximately Euro 2,400 million), order backlog was lower compared to 2007, essentially due to depreciation of the Sterling against Euro, which had a negative impact of Euro 760 million, and progress made with respect to significant orders that were acquired in 2007 for avionics systems and devices for the EFA program in Saudi Arabia. Approximately half of the backlog related to avionics and electro-optical systems. At June 30, 2009, the order backlog of the Defense Electronics and Security segment was Euro 11,239 million, a 5% increase

110 compared to December 31, 2008. Avionics and electro-optics accounted for approximately a third of this total and the DRS Group accounted for approximately a quarter.

New Orders: New orders in the Defense Electronics and Security segment in 2008 were Euro 4,418 million. Excluding the contribution of DRS (approximately Euro 252 million) and the negative impact of the Euro to Sterling exchange rate movements, this represented a 17% decrease compared to 2007. The most significant orders acquired in 2008 related to (i) simulator and avionic and communication systems for the Eurofighter program, (ii) command and control systems in relation to the FREMM program for the Italian Navy, (iii) development, management and maintenance of an integrated emergency management system for the Italian government (Protezione Civile), (iv) an integrated systems for air traffic control in Qatar, and (v) the renewal of the contract with Poste Italiane for the maintenance and management of IT systems and automated letter sorting systems. New orders for the first six months of 2009 increased 69% compared to the same period in 2008 as a consequence of the contribution of DRS, which accounted for Euro 1,959 million, more than offset the Euro 604 million decrease in orders compared with the first half of 2008, which in turn had benefited from orders relating to the FREMM programme and IT and security activities.

Industry The Defense Electronics and Security market is a leading industry in the defense sector in terms of size (estimated by Finmeccanica on the basis of Teal Group 2008 and Civitas Group 2006 data to be roughly Euro 120 billion in 2008 including the homeland security market), with considerably higher growth opportunities for activities connected with security than for those related to defense. Alongside the traditional demand for military systems, there is a new demand in the market for integrated security systems, with applications in border control for all types of threats (including immigration and illegal activities), in the protection of critical infrastructures, transport systems and virtual networks from terrorist threats, and in the management of important events, such as international summits (Source: Finmeccanica estimates based on publicly available data). The global financial crisis is leading to reduced investment growth rates in the defense market, where spending levels were already declining or stabilizing before the onset of the crisis. Despite considerable budgetary constraints, Italy has confirmed its major military programs. In the meantime, the United Kingdom is focusing its investments within sectors that ensure better support for “out-of-theatre” operations. In the United States, the U.S. Department of Defense recently proposed a defense budget that would scale back major weapons systems, such as fighter jets and missile defense, and increase spending on resources aimed at fighting unconventional conflicts such as the wars in Iraq and Afghanistan, including surveillance, training special forces and medium and short-range missiles. The products and systems in the Defense Electronics and Security sector contain advanced technologies. While technology acts as a high entry barrier, it shortens product life-cycles and leads to rapid obsolescence. Recent demand trends suggest that simulating and training will continue to be growth areas, particularly those simulations and training that employ artificial intelligence techniques and are designed for specific operating environments (e.g., preparation of scenarios for complex systems) and for training personnel in the use of equipment and systems. The major players in the industry are increasingly adopting a competitive model that is increasingly focused on offering integrated solutions (rather than supplying individual equipment) in line with customers’ specific needs, and bringing together a broad spectrum of platforms and sub-systems within a single operating network. Recent product offerings also suggest a new and integrated approach to logistics, which is no longer considered as post supply maintenance of equipment and systems, but rather as a fundamental component that spans the product’s operating life. As a result, growth rates are tied to demand for advanced, complex network — centric systems in the military sector for different kinds of applications such as (i) battlefield management, (ii) the collection, analysis and secure dissemination of information; (iii) the control of airspace and waterways; (iv) the intelligent management of armaments and supplies; and (v) the reduction of reaction time between when a threat is detected and when counter-measures are implemented. In this industry, the ten largest competitors by revenues — Northrop Grumman, Lockheed Martin, Raytheon, L-3 Communications, General Dynamics, Boeing and Rockwell Collins in the United States and BAE, Thales and Finmeccanica in Europe — represented approximately 75% of the global market in 2008 (Source: Finmeccanica estimates based on publicly available data). Competition is driven by several factors, such as (i) the ownership of “system architecture” capabilities and relevant enabling technologies; (ii) the

111 ability to supply integrated solutions encompassing terrestrial, naval and air platforms and sub-systems; and (iii) the ability to penetrate new attractive markets through the establishment of local production sites, investments and/or industrial partnerships.

Strategy In the Defense Electronics and Security segment, Finmeccanica aims to further strengthen its global competitive positioning and leverage on DRS’s presence in the United States. Finmeccanica’s objective is to consolidate its role as a leading player in the defense and security solutions and integrated systems market by exploiting capabilities that reside throughout the Group, including the area of sensors, communication systems and IT. Moreover, Finmeccanica intends to build a new, independent production capability in certain growth areas. In particular, Finmeccanica expects significant growth opportunities to be driven by avionics, electro- optical systems, TETRA and the C4I systems. In addition, significant prospects for growth are expected to result from the commercial success of the Eurofighter program, for which Finmeccanica already provides a large percentage of the avionics and on-board sensors.

Key Events and Recent Developments • In February 2007, Selex Sistemi Integrati S.p.A. and the Indian firm Bharat Heavy Electricals Ltd (“BHEL”) entered into a memorandum of understanding for a partnership in the field of radar and other technologies. • In March 2007, Finmeccanica entered into a memorandum of understanding with the Libyan government for the potential creation of a joint venture in the field of Defense Electronics and Security to develop innovative solutions for the Libyan market and other African markets. The goal is to use Finmeccanica’s know-how in collaboration with local industrial companies in order to develop integrated systems to monitor critical infrastructures, communications and homeland security systems and integrated postal automation systems. • In March 2007, Finmeccanica completed the acquisition from BAE of the remaining 25% stake in the Selex Sensors and Airborne Systems Ltd., thus becoming its sole shareholder. • In November 2007, Finmeccanica announced a public tender offer for the acquisition of Vega Group Plc, a U.K. firm listed on the London Stock Exchange and active in the defense, aerospace and government services sectors. As of the end of March 2008, Finmeccanica owned 100% of Vega Group Plc. In January 2009, as part of the process of strengthening Selex Sistemi Integrati’s role as a system integrator, Finmeccanica transferred the entire share capital of Vega Group Plc (renamed Vega Consulting Services Ltd) to Selex Systems Integration Ltd (a United Kingdom subsidiary of Selex Sistemi Integrati). The systems business belonging to Vega Consulting Services Ltd was also transferred to Selex Systems Integration Ltd. Only the highly specialized consulting services targeted at the U.K. Ministry of Defence in the Defense and Government divisions and customer care services remain with Vega Consulting Services Ltd. • In November 2007, Finmeccanica and Thales entered into a memorandum of understanding in order to develop an integrated European Maritime Security and Safety project. This is part of a joint initiative known as SEASAME relating to the management of European maritime zones and the environmentally sustainable development of maritime activities. • In March 2008, Poste Italiane and Egypt Post entered into an agreement for the technological development and expansion of the Egyptian postal service with Elsag Datamat, which was chosen to act as the project’s technological partner. The goal is to provide solutions to improve the postal service’s organization, automation and the distribution of correspondence and deliveries, security systems, applications for the peripheral network of Egyptian post offices, ICT innovation and training of personnel. • In April 2008, Selex Communications acquired an 18% interest in Sirio Panel S.p.A., a company involved in the design and production of cockpits and panels for aeronautic platforms. Before this acquisition, Selex Communications held 75% of the stock of Sirio Panel S.p.A., and the terms of this transaction give Selex Communications the possibility to acquire the remaining 7% by 2011. • In May 2008, Finmeccanica resolved to acquire an interest in Eurotech S.p.A. (“Eurotech”), an Italian listed company. Eurotech is engaged in the research, development, production and

112 marketing of miniaturized computers and computers with increased calculation capabilities. Finmeccanica agreed to acquire approximately 11.1% of the share capital of Eurotech from certain founding partners. The sale and purchase agreement was signed on May 26, 2008, together with a shareholders agreement with the current management of Eurotech (who hold an approximately 10.7% interest in Eurotech). The acquisition was completed on November 5, 2008. The purchase of this share capital by Finmeccanica strengthens its strategic partnership with Eurotech, which began in July 2006 with a commercial and scientific collaboration agreement. • In October 2008, Finmeccanica completed the acquisition of DRS. The acquisition of DRS allows Finmeccanica to expand its product platform in the United States and to improve its competitive positioning in the Defense Electronics and Security segment. For further information on DRS and the acquisition of DRS, see “DRS Technologies, Inc.”. • In April 2009, Selex Sistemi Integrati and the Russian companies Scartel LLC and Russian Electronics OJSCo, which belong to the Russian Technologies public group, entered into an agreement for the creation of a consortium to design and produce systems for the management of the security of large events and the protection of critical infrastructures (such as industrial and oil plants, ports, airports and train stations. • In April 2009, Finmeccanica entered into a Memorandum of Understanding with Elettronica (an Italian electronic defense warfare company, in which Finmeccanica holds a 31.3% interest) and Havelsan (a Turkish company active in C4ISR systems and simulation products) to pursue industrial, technological and commercial opportunities in the areas of control systems, naval systems, air defense, electronic warfare and homeland security systems for the Turkish, Italian and third country markets. • In May 2009, DRS Technologies, through its subsidiary DRS Signal Solutions, entered into an agreement for the acquisition of Soneticom Inc., a U.S. company active in the sector of military telecommunications. Following approval by the Committee for Foreign Investments in the United States (CFIUS), the closing of the transaction occurred in September 2009. • In July 2009, Finmeccanica transferred to its subsidiary Selex Sistemi Integrati its 49% stake in Orizzonte — Sistemi Navali S.p.A.’s share capital. • In September 2009, DRS Technologies was selected, together with another supplier, for a USD1.9 billion contract to supply infrared Driver’s Vision Enhancers (DVEs) for vehicles. The contract, awarded by the U.S. Army Communications and Electronics Command (CECOM) covers orders from the U.S. Army, Navy, Marine Corps, Air Force and Special Operations Command. • In October 2009, Selex Sistemi Integrati signed an agreement worth EUR 300 million with the Libyan General People’s Committee for General Security for a large Boarder Security and Control System, with the first tranche of EUR 150 million already in progress. Selex Sistemi Integrati will design, install and integrate all of the subsystems of the program, and will provide all the functions of a C3 (Command, Control & Communication) system, such as command decision support tools, information processing, data integration, and emergency management. Selex Sistemi Integrati will also be responsible for the training of operators and maintenance staff as well as the completion of all the civil infrastructures required.

Main Products and Programs Finmeccanica’s principal products in the Defense Electronics and Security segment include the following: Avionics and Electro-optical Systems: • GRIFO — Multimode mechanical scanning combat radar, which operates in the X-band and is designed for air superiority aircraft; • VIXEN-E — Fire control combat radar with E-scan antenna used in fighter and training aircraft; • SEASPRAY — Compact surveillance and electronic scanning radar for air-to-surface use; • APS-784 — X-band pulse compression radar for anti-surface vessel and anti-submarine warfare;

113 • PICOSAR — Lightweight, low-volume sensor surveillance radar that can be easily installed on a wide range of platforms and is particularly useful for tactical UAV; provides an all weather, day and night high resolution synthetic aperture radar (SAR) imaging capability coupled with the detection of ground moving vehicles; • ATOS (Airborne Tactical Observation and Surveillance) — Open and modular architecture mission system for aircraft and helicopters; ATOS C has been improved to offer a lighter structure, in composite fibers, assembled as single or multiple operators configuration; • HIDAS (Helicopter Integrated Defensive Aids System) — Electronic warfare system that provides rotary wing platforms with increased survivability and utilizes multi-spectral sensors and pre-loaded intelligence to produce comprehensive tactical pictures of the operating environment; • DASS (Defensive Aids Sub-System) — Complex electronic warfare system for electro-magnetic defense against radars and missiles to be used on fixed wing platform; • SIREN — Naval off-board active radar decoy; • LINAPS (Laser Inertial Artillery Pointing Systems) — Self-contained, gun-mounted navigation pointing and weapon management system; LINAPS enables rapid and accurate artillery deployment in all weather conditions both day and night; • UAVs and Aerial Targets — FALCO (Medium Altitude and Tactical systems for electronic surveillance), NIBBIO (high subsonic reconnaissance); MIRACH 100/5 (high subsonic aerial target, for advanced training of surface-to-air missile battery groups and weapon system qualification); and • LOAM (Laser Obstacle Avoidance System) — Navigational aid system for rotary wing platforms; • GS207/GS410 Stabilizer Multi-Sensors Systems — Gyroscopically stabilized vision and targeting systems; • Mass Mounted Sight — Multi-sensor, fully integrated electro-optical sighting system with visible and infrared capability; and • AN/PAS-13D (V) Family Thermal Weapon Sights — Uncooled infrared technology that provides the warfighter a crisp thermal image of target information, thereby increasing situational awareness and reducing mission-critical decision time. Sensors and ATC Systems: • ATCR 33 44 — Primary radar in the S and L band for the use in the terminal area and in monitoring the course of radars; • SIR S — Secondary radar in band S; and • SATCAS (Standard Air Traffic Control Automatic System) — System that facilitates management and control of the entire airspace, and a sophisticated level of automation and coordination between civilian and military air traffic controllers. Communication systems, computing and CNI: • Single and Multichannel Radio Systems, Switching and Network Management; • Satellite Terminals VHF/EHF/SHF; VHF/UHF/HF Radio family including encryption communications systems; • ARMOR C12 Rugged Convertible Notebook — Ruggedized laptop computer that meets military specification. ARMOR offers WI-FI (LAN) Ethernet and a Type II PCMCIA communications options; • RVS -330 Rugged Vehicle Systems (JV-5) — Ultra-rugged vehicle computing system for Force XXI battlefield command brigade and Blue Force Tracking Digitization programmes; • SHINCOM 3100 Shipboard Integrated Communications — All digital Secure Voice System (SVS) providing voice and data communications; and

114 • MIDS (Multiple Information Distribution System) — Communication, navigation and information (CNI) system. Land Radar and Command, Control, Communication, Computer and Intelligence (C4I) Systems: • PAR 2090 Fixed/Mobile — X band, ground-controlled, precision-approach radar; • RAT 31 DL — L Band advanced radar system designed to operate in modern, and complex military air defense systems, in two versions fixed (FADR — Fixed Air Defense Radar) and mobile (DADR — Deployable Air Defense Radar); and • HALO (Hostile Artillery Locating System) — Autonomous system that, by using acoustics, provides highly accurate localization of indirect fire systems, explosive detonations and heavy direct fire weapons. Naval Radar and Systems: • RAN 40L — Advanced 3D radar for aerial and land long-range surveillance (developed in D band), with a 400 kilometer horizontal range and 30 kilometer vertical range; • EMPAR (European Multifunction Phased Array Radar) — Multifunctional radar which has various uses, including surveillance, target tracking and missile guides; • KRONOS — Array radar family operating in C band (in the land and naval versions Kronos 3D and subsequently in the MFRA version); and • SPN720 — Ship-borne precision approach L band Doppler radar. Homeland Security: • POSS (Port Surveillance System) — System designed and developed in order to protect national borders and infrastructures through the early detection and identification of threats; • LYRA — Radar family for use in homeland protection. They are smaller and lighter than other radars (their dimensions are 70x40x25 and weight approximately 25 kilograms), and are to be fixed to towers, or into aircraft or used as portable devices; • TETRA (Terrestrial Truncked Radio) integrates turn-key analogue and digital simulcast GSM-R; • Integrated Video Surveillance & Security System (S3I) — Complex security and surveillance management system which gives a real-time overview of the security status of areas under surveillance and provides for 360™ panoramic vision, optical character recognition (OCR) for vehicle access control (car plate reader systems) and biometric identification systems (finger- print identification system); • VTMS (Vessel Traffic Management Systems) — System for the management of coastal maritime traffic and port movements, and is used in Exclusive Economic Zone applications; • Distant Sentry — Flexible border security system configured with various ground/maritime radars, electro-optic/infrared cameras, unattended ground sensors, extended range wireless communications and hybrid power systems; • Integrated Swimmer Defence (ISD) — Provides harbour security and defends ship from threat posed by swimmers through an integrated deployment radars, cameras and sonar systems; • Secure communications products (routers, switch, set top box, etc) and Secure Networking Systems; • Information Systems for Logistic Support; and • Simulation and Training Systems.

Research and Development Research and development expenditures amounted to Euro 619 million in 2008, and are primarily related to: • technological research and development activities including: (i) the MOVPE (Metal Organic Vapor Phase Epitax) project related to studies concerning innovative technologies for the design and production of infra-red sensors for advanced thermal imaging cameras; (ii) the TeraHertz

115 project related to the use of high frequency technologies for several applications (such as detection of chemical and biological engineering threats); (iii) studies relating to nanotechnology applications; and (iv) development in the field of sensor networks; and • research and development applied to products including: (i) avionics and electro-optical systems: the development of new surveillance radars PICOSAR and SEA-SPRAY; the development of new generation of DIRCM (Direct Infrared Counter Measures) for active protection of military and civil aircraft; and the development of active images observation systems based on burst illuminator lasers (BIL); (ii) Communication Systems: the development of Crypto module for the new generation Software Defined Radio (SDR) and of new generation high speed code decipherers; the development of innovative equipment based on the Super Conductive Electron- ics (SCE) technology; and the development of the WIMAX (Worldwide Interoperability for Microwave Access) system for broadband fixed and mobile communications; studies related to full internet protocol (IP) convergence and to new generation Internet Protocol IPV6; (iii) Command and Control: the development of the new Combat Management System (CMS) Standard which will provide an effective modular solution for the new generation command and control systems market for naval applications; definition of the detailed architectural project relating to the Forza NEC; and (iv) Homeland Security: the development of a centre of excellence for major systems, both for experimentation purposes and in order to demonstrate to institutional clients the potential of major defense and homeland security systems based on a network-centric approach; and the development of biometric sensors and data protection.

Aeronautics Overview In the Aeronautics segment, Finmeccanica’s operations are carried out through Alenia Aeronautica S.p.A. and its wholly owned subsidiaries (such as Alenia Aermacchi S.p.A. and Alenia Aeronavali S.p.A.). With respect to certain international programs, Alenia Aeronautica also operates through international joint ventures, such as: (i) EEIG ATR, a consortium with EADS, for the development and production of regional turboprop aircraft; (ii) GMAS LLC (in which it has a 51% interest), a joint venture with L-3 Communications, for the Joint Cargo Aircraft program; (iii) Global Aeronautica LLC (in which it has a 50% interest), a joint venture with Boeing, for the final assembly of B787 fuselage; and (iv) Superjet International S.p.A. (in which it has a 51% interest), a joint venture with Sukhoi, for the commercialization of the SuperJet100 regional jet. In particular, the Group’s activities in this segment include (i) the production of military aircraft for combat, transport, training and special missions; (ii) the production of civil aircraft (regional turboprop and jet propelled aircraft) and components, such as aerostructures and engine nacelles; and (iii) aircraft conversions and maintenance. Finmeccanica is active in all principal segments of the military aeronautics industry: combat (with participation in important programs such as Eurofighter, MRCA Tornado and JSF (Joint Strike Fighter)); advanced trainers (M346, now named Master); tactical transport with the C27J aircraft; aircraft for special missions (particularly for surveillance and patrol); and unmanned aircraft (UAV). Finmeccanica is active in the civil aeronautics industry in (i) aerostructures (for Boeing B767, B777 and B787 aircraft and for Airbus A380, A321 and A340 aircraft), (ii) regional transport turboprop aircrafts (ATR42 and ATR72) and jets (SuperJet 100), and (iii) transformations of passenger aircraft to aircraft for other uses. Further information on Finmeccanica’s principal products and programs is provided under “— Main Products and Programs” below. The plants of Finmeccanica’s subsidiaries and joint ventures in this segment are principally located in Italy (Caselle (TO)), Turin — Corso Marche, Varese, Venezia, Nola (NA), Pomigliano d’Arco (NA), Naples — Capodichino, Grottaglie (TA), Foggia and Brindisi), France (Toulouse) and in the United States (Charleston, South Carolina). Each plant has a specific functional focus in the overall organizational structure of the Group in this segment.

116 The table below summarizes the key financial and operating data of the Finmeccanica’s Aeronautics segment for the periods represented. The EEIG ATR consortium is accounted for on a proportional consolidation basis: As of and for the six month period ended As of and for the year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except number of employees) (Unaudited) New Orders ...... 651 844 2,720 3,104 2,634 Order Backlog ...... 7,829 7,841 8,281 8,248 7,538 Revenue ...... 1,208 1,062 2,530 2,306 1,908 Adjusted EBITA(*) ...... 60 70 250 240 209 Research and Development ...... 212 245 508 581 486 Employees(no) ...... 13,849 13,778 13,907 13,301 12,135

(*) For an explanation of adjusted EBITA see “Financial Information and Non-GAAP Measures”.

Order backlog: The order backlog of the Aeronautics segment as of December 31, 2008 was Euro 8,281 million, substantially unchanged from the previous year. The order backlog as of December 31, 2008 includes orders relating to the EFA program (approximately 45% of the total), the B787 program (approximately 16% of the total), the C27J program (approximately 7% of the total) and the ATR aircraft for different applications (approximately 6% of the total). At June 30, 2009, the order backlog of the Aeronautics segment was Euro 7,829 million, a 6% decrease compared to December 31, 2008, as a consequence of lower orders in the civil segment. The composition of the order backlog remained unchanged.

New Orders: New orders in the Aeronautics segment in 2008 were Euro 2,720 million, with a 12% decrease compared to 2007, when orders had benefited from significant orders for the ATR and the EFA. The most significant orders acquired in 2008 related to (i) in the military sector, 15 C27J tactical transport aircraft for Romania, Morocco and the United States, 4 Maritime Patrol ATR42 aircraft for the Italian Air Force, a contract for 18 reconditioned G222 transport aircraft for the United States Air Force and logistical support activities for the EFA program; and (ii) in the civil sector, ATR regional aircraft, aerostructures for B767, B777, A380, A321 and Falcon aircraft and engine nacelles. New orders for the first six months of 2009 decreased 23% compared to the same period in 2008. The decline is due primarily to reduced orders from the civil business, reflecting a decline in demand in the air transport market. Certain delays, which are expected to be temporary, on orders in the military segment also affected the number of new orders.

Industry The global military aeronautics market was valued at approximately Euro 21 billion in 2008, excluding logistics and retrofit activities (Source: Finmeccanica estimates based on Forecast International 2008). Despite budget cutbacks in a number of countries, the military aeronautics sector is expected to follow an overall positive trend in all major product segments. The most significant growth segment is combat aircraft, with growth supported by a limited number of significant manufacturing programs (Eurofighter, Rafale) and development programs (Joint Strike Fighter). Aircraft for special missions (particularly, maritime surveillance and in-air refuelling) and for tactical transport are also areas of growth. The U.S. Department of Defense recently announced a defense budget that would discontinue the F22 program beyond the 187 aircraft already planned and expand the F35 program. Alenia Aeronautica is not involved in the F22 program but is a partner in the F35 program. New operating requirements, together with limitations on spending, are driving demand for maintenance and retrofitting services in major countries. Important development programs are underway in both Europe and the United States in relation to unmanned and unattended systems for combat applications and strategic reconnaissance and surveillance, which is expected to be a significant growth area in the medium-long term. In the military aeronautics industry the five largest competitors by revenues, excluding Russian and Asian companies — Boeing, Lockheed Martin and Northrop Grumman in the United States and BAE and

117 EADS in Europe — represented approximately 90% of the global market in 2008 (Source: Finmeccanica estimates based on publicly available data). The global civil aeronautics market was worth approximately Euro 57 billion in 2008 (Source: Finmeccanica estimates on the basis of Forecast International 2008). Finmeccanica expects the market will continue to grow in the medium to long term based on expectations of rising demand for transport and progress in programs currently in development (B787, A350) and in production (A380) in the sector of medium and large capacity aircraft. In the short term, the sharp increase in oil prices in the first part of 2008 and the current financial crisis are having a negative impact on the industry, resulting in delayed deliveries under existing orders and a slowdown in new orders. These negative impacts may be mitigated by actions taken by some governments to boost demand and by the recent drop in oil prices. In 2008, there were net orders for 1,439 aircraft (of which 777 Airbus and 662 Boeing) compared to the record for 2007 (orders for 2,756 units) (Source: Flight International, January 2009). In the aerostructures business, the trend continues to be for an increase in the outsourcing of design and production. The aerostructures segment was worth approximately Euro 17 billion in 2008, approximately 34% of which was outsourced) and its growth rates are higher than the civil aircraft sector as a whole (Source: Finmeccanica estimates on the basis of Aerostructures 2008). In the civil aeronautics industry the largest five competitors by revenues — Boeing, Textron, General Dynamics and Bombardier in the United States and Canada, and Airbus in Europe — represented approximately 90% of the global market in 2008 (Source: Finmeccanica estimates based on publicly available data). The Group plays a significant role in the niche regional aircraft market through its interest in the EEIG ATR consortium. Competition is characterized by a high concentration of supply, as there are two companies with a monopoly in the civil aircraft market (i.e., Boeing and Airbus) and three significant players in the regional aircraft market (i.e., Embraer, ATR and Bombardier). With respect to the outsourced aerostructures business, competition is highly fragmented. The main competitors are Spirit AeroSystems and Vought in the United States, Alenia Aeronautica and GKN in Europe and Mitsubishi in Asia.

Strategy In the Aeronautics segment, Finmeccanica intends to strengthen Alenia Aeronautica’s positioning as a global player in both the military and civil markets. In the military aeronautics market, Finmeccanica is using its technology and capabilities to participate in the principal European programs for combat aircraft, (e.g., Eurofighter) and unmanned aircraft (e.g., Neuron). In particular, Finmeccanica intends (i) to strengthen its current positioning in the combat aircraft area, (ii) to pursue a strong competitive position in the tactical transport aircraft area (through C27J) and in the trainer aircraft area (through M346 Master) and (iii) to establish a significant position in the UAV and UCAV markets, which present significant prospects for future growth. In the civil aeronautics market, Finmeccanica’s main objective is to improve its role as independent prime partner in the civil aerostructures area, leveraging on its capabilities in (i) systems development and integration and (ii) aerostructures technologies, in order to develop cutting-edge capabilities in the structuring of composite materials. Furthermore, Finmeccanica intends to strengthen its position in the regional aircraft area, by pursuing selected partnerships.

Key events and recent developments • In February 2005, Alenia North America and Vought Aircraft Industries entered into an agreement for the establishment of a joint venture, Global Aeronautica, in support of the B787. Global Aeronautica, with its plant in Charleston (South Carolina) is responsible for the integration of a proportion of the B787 fuselage section. Alenia Aeronautica is involved in the B787 program also through its Grottaglie (TA) plant, which is a high technology centre for the production of carbon-fiber structure and the B787 horizontal stabilizer (one- piece barrel technology). In June 2008, Boeing purchased the shareholding interest of Vought Aircraft Industries in Global Aeronautica. Therefore, as of the date of this Listing Prospectus, each of Boeing and Alenia Aeronautica hold a 50% shareholding in Global Aeronautica. In June 2008,

118 Boeing announced delays in the first flight of the 787. Boeing has announced the first flight of the 787 has been tentatively scheduled for November 2009. • In February 2007, the Italian Ministry for Economic Development and the Russian Federation’s Ministry of Industry and Energy entered into an inter-governmental agreement in relation to the SuperJet 100 program, on the basis of a strategic partnership agreement signed in November 2006. In June 2007 Finmeccanica, Alenia Aeronautica, Sukhoi Aviation Holding Company and SCAC entered into an agreement according to which Alenia Aeronautica will acquire a 25% plus one share stake in SCAC. This acquisition was completed in April 2009. Furthermore, in July 2007, Alenia Aeronautica and Sukhoi established the joint venture company, Superjet International S.p.A. (51% of which is indirectly owned by Alenia Aeronautica, Sukhoi owns the remaining shareholding), which is responsible for the marketing, sales and delivery, as well as global technical support for the SuperJet 100. Alenia Aeronautica and therefore Finmeccanica might be required to be part of the SCAC financing structures for the commercialization of SuperJet 100. • In June 2007, the C27J aircraft, which was designed, developed and manufactured by Finmeccani- ca’s subsidiary Alenia North America, was selected by the United States military as the new aircraft for tactical transport within the Joint Cargo Aircraft (JCA) program. The C27J team, comprising L-3, Alenia North America, Boeing Integrated Defense Systems and Global Military Aircraft Systems — GMAS, were awarded an initial contract for the manufacture of 78 aircraft. In accordance with the U.S. Department of Defense announcement of an overhaul in its procurement, acquisition and contracting, the existing C27J contract may be subject to changes. • In April 2008, L-3 sold to Alenia North America a 1% interest in the joint venture with GMAS. This joint venture, entered into in 2005, is engaged in the Joint Cargo Aircraft (JCA) program. As a result of this acquisition, Alenia North America currently holds a 51% interest in the joint venture. • In September 2008, Alenia Aeronautica, through its subsidiary Alenia North America, was awarded a contract by the United States Air Force (USAF) for the refurbishment of G.222 tactical transport aircraft to be supplied to the Afghanistan National Army Air Corps (ANAAC). The aircraft will be delivered commencing in 2009 and deliveries will continue through 2011. • In October 2008, Finmeccanica and Mubadala Development Company (Mubadala), an Abu Dhabi-based (United Arab Emirates — UAE) business development and investment company, entered into an agreement for a high technology industrial partnership to manufacture aerospace composite components for civil aircrafts at a new Abu Dhabi-based composites plant. Alenia Aeronautica will provide technology, technical assistance and specialized training and will transfer composite aerostructure manufacturing work to the new composites plant. Alenia Aeronautica will also support the development of the manufacturing processes that are required for international industrial certifications. Activities are expected to begin this year and to reach capacity by 2011. • In November 2008, Finmeccanica and Russian Technologies State Corporation entered into a partnership agreement relating to the production of carbon fiber components on the basis of Alenia Aeronautica’s expertise in the field. • In February 2009, the United Arab Emirates (UAE) announced the start of negotiations for the acquisition of 48 advanced M346 Master trainers from Alenia Aermacchi. The parties contemplate the creation of a joint venture in the UAE between Alenia Aermacchi and Mubadala Development Company for the development of a final assembly line for the M346 Master. • In June 2009, Alenia Aeronautica and MAS Aerospace Engineering (MAE), a subsidiary of Malaysia Airlines, entered into an agreement to create a joint venture for the provision of MRO (maintenance, repair and overhaul) services for turboprop commercial aircraft. The joint venture headquarters will be in Malaysia and MAE will hold the majority stake of its share capital. • In July 2009, NETMA (NATO Eurofighter and Tornado Management Agency), Eurofighter GmbH and Eurojet Turbo GmbH entered into a production contract for the Eurofighter Typhoon Aircraft. The contract, worth a total of Euro 9 billion (including engines), relates to a third tranche of production of 112 aircraft for the four partner nations: Germany, Italy, Spain and the United Kingdom. Approximately Euro 3 billion of the contract value relates to Finmeccanica

119 and includes the industrial activities relating to the multi-role fighter aircraft that are carried out in Italy (Euro 1.6 billion) and the United Kingdom (Euro 1.4 billion). The Finmeccanica Group’s participation in the Eurofighter programme’s industrial activities amounts to around 36% of the total program (excluding engines) and the Group plays an important role in defining, designing, developing and producing the aerostructure (for example, left wing, rear fuselage and wing pylons), assembly of the Italian aircraft and avionics for the aircraft. • In July 2009, Finmeccanica, along with Alitalia — Compagnia Aerea Italiana and Manutenzioni Aeronautiche, tabled a firm and irrevocable offer to acquire the entire stake of Atitech, an Italian company which operates in maintenance, repair and overhaul of civilian aircrafts. Under the offer, which is subject to the occurrence of certain conditions precedent, Finmeccanica shall acquire 10% of Atitech’s stake. Finmeccanica’s investment amounts to A 2.5 million.

Main Products and Programs Finmeccanica’s principal products in the military aeronautics area include the following: • C27J — Military aircraft for tactical transport. It carries over 11 tons and operates from short and rough airstrips in remote areas, without external support. Sharing the glass-cockpit, engines and propellers with the C130J, it has inbuilt communication systems to facilitate coordination with other military transports. The C27J has been ordered by Italy, Greece, Lithuania, Romania, Bulgaria and United States (within the scope of JCA program); • Eurofighter (EFA) — European program for the development of advanced combat aircraft. Alenia Aeronautica has a 19.5% work share in the product, which is now deployed by the Italian, British, German and Spanish air forces and has also been ordered by Austria and Saudi Arabia and selected by Greece. Alenia Aeronautica is in charge of final assembly for the 121 Italian aircraft. Its responsibilities include the design and manufacturing of the left wing, rear fuselage and wing pylons and the system design of the navigation, armament, utility control, propulsion and secondary power systems for all aircraft; • M346 (now named Master) — New generation advanced and lead-in fighter trainer, which was designed with a new generation avionics system, using innovative design-to-cost and design-to-maintain criteria. The M346 Master has a high thrust to weight ratio of almost 1 to 1, vortex-lift aerodynamics, full authority and a quadruplex fly-by-wire flight control system which give the M346 Master flying qualities similar to modern frontline fighters and also improve its teaching effectiveness. It is an ideal platform for integrated training of future generations; • MB339 — Fully acrobatic, two-seater, single-turbojet advanced/LIFT trainer. The MB339 is in service with nine different nations and the 223 example models have already covered 600 thousand flight-hours. Due to its highly sophisticated on-board systems and maneuverability, this aircraft is particularly well-suited to advanced and lead- in fighter phases of the training schemes for pilots and for training on managing military systems. A customized version (MB339 PAN) is operated by the Italian Air Force acrobatic team, “Frecce Tricolori”; • SF260 — Fully acrobatic, two seater, side-by-side propeller-driven aircraft with an additional third seat. It is principally used for non-acrobatic missions. To date, the SF260 has covered 1,900,000 flight-hours; 880 units of the SF260 have been sold to 27 military clients thus far; and. • ATR42/72 — Family of turboprop regional aircraft: the MP Surveyor version is used for maritime and coastal surveillance and the ASW version is used for searching, detecting, identifying, tracking and attacking both underwater and surface targets. Negotiations for the sale of the ATR72 ASW are currently in progress with the naval forces of various countries. The ATR42 has been ordered by the Italian, Nigerian, and Libyan governments; the ATR72 has been ordered by the Italian and Turkish governments. Finmeccanica’s principal products in the civil aeronautics area include the following:

Aerostructures/Components • Boeing 787 (B787) — Alenia Aeronautica participates as a risk sharing partner in the development of the aircraft and is responsible for development and manufacture of the center-rear fuselage and the horizontal stabilizer. To this end, Alenia Aeronautica built a pre-integration

120 plant in Charleston (South Carolina) for the assembly of the fuselage sections with Boeing (which has recently replaced Vought). In the Grottaglie (TA) plant, an innovative and automatic production line has been set up for the manufacture of the fuselage components (as a single piece), which are each made of 380 individual elements; • Airbus 380 (A380) — Alenia Aeronautica participates as a risk sharing partner in this program for the world’s largest commercial aircraft and the only twin-deck, four aisle airliner. The participation of Alenia Aeronautica in the program accounts for 4% of the airframe; and • Airbus 321 (A321) /Airbus 340 (A340) — Alenia Aeronautica is responsible for a fuselage section and for the tail cone and mechanical components.

Regional aircraft • ATR42/72 — Family of turboprop, bimotor regional aircraft used for short haul passenger flights. This aircraft has a fast acceleration for take-off, low fuel consumption (about one-fifth of the usual amount) and the ability to use short runways. These aircraft are manufactured in joint venture with EADS by the EEIG ATR consortium; and • SuperJet 100 — Family of new generation regional jets (75-100 seats) manufactured via a joint venture with the Russian company Sukhoi.

Research and Development Research and development expenditures amounted to Euro 508 million in 2008, and are primarily related to: • technological research and development activities including: (i) studies and development relating to innovative aerostructures which use composite materials and fiber optics sensors; (ii) studies on the impact of nanotechnologies through the use of carbon nanotubes, incomposite materials and nanostructuring of metal alloys; and (iii) the Clean Sky JTI project for the development and validation of technologies relating to low environmental impact (key green technologies); and • research and development applied to products including: (i) the development of aerostructures dedicated to A380; (ii) the development of training aircraft with regards to M346 Master; (iii) studies and development relating to UAVs, such as the study of feasibility of an advanced Unmanned Combat Air Vehicle (UCAV), and for the prototype Sky-Y, a modern UAV MALE (Medium Altitude Long Endurance), with the scope of increasing its the capabilities of independent flights (to reach a flight-time of 14 hours, altitude of 25,000 feet, distance of 500 nautical miles and speed of 140 knots) and data gathering by such plane; and (iv) the TIAS (Tecnologie Integrazione AeroStrutture) project for coordinating the development of innovative aerostructural technologies at a global center.

Space Overview In the Space segment, Finmeccanica’s operations are mainly carried out through the Space Alliance between Finmeccanica and Thales, which comprises two joint ventures dedicated respectively to: • satellite services — Telespazio Holding S.r.l., which is based in Italy and has its main subsidiaries industrial plants in Italy (Rome, Fucino (AQ), Gera Lario (CO), Matera, Scanzano (PA)), France (Paris, Toulose), Spain (Madrid, Barcelona) and Germany (Munich), in which Finmeccanica holds 67% and Thales holds 33%; and • satellite manufacturing — Thales Alenia Space S.A.S., which is based in France and has its main subsidiaries industrial plants in France (Toulose, Cannes and Colombes), Italy (Rome, Turin, L’Aquila and Milan), Belgium (Charlesroi, Antwerpen) and Spain (Madrid), in which Finmeccanica holds 33% and Thales holds 67%. Telespazio Holding S.r.l. and its subsidiaries focus on (i) defense and security services, (ii) satellite navigation and info-mobility, (iii) Earth observation, (iv) provision of telecommunications networks and services, (v) in-orbit control of satellites and operations of ground centers and (vi) multimedia and high value applications, based on space infrastructures.

121 Thales Alenia Space S.A.S. and its subsidiaries focus on the design, development and production of space systems, satellites, orbital infrastructures, space transport systems, equipment, and instruments. Thales Alenia Space products are used for a range of applications (for example telecommunications, Earth observation, science and defense and security). Thales Alenia Space is also a major contributor to the European Space Agency (“ESA”), the French space agency (“CNES”), the Italian space agency, Agenzia Spaziale Italiana (“ASI”) and to the Italian, French and German Ministry of Defense. Moreover, Thales Alenia Space exports Koreasat 5 and Koreasat 6 satellites in South Korea, Star One in Brazil and Yahsat in the United Arab Emirates. The table below summarizes the key financial and operating data of the Finmeccanica’s Space segment for the periods represented. The Thales Alenia Space and Telespazio joint ventures are consolidated on a proportional basis. As of and for the six month period ended As of and for the year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except number of employees) (Unaudited) New Orders ...... 565 416 921 979 851 Order Backlog ...... 1,546 1,407 1,383 1,423 1,264 Revenue ...... 435 451 994 853 764 Adjusted EBITA(*) ...... 13 15 65 61 42 Research and Development ...... 30 29 64 62 64 Employees ...... 3,673 3,531 3,620 3,386 3,221

(*) For an explanation of adjusted EBITA see “Financial Information and Non-GAAP Measures”.

Order backlog: The order backlog of the Space segment as of December 31, 2008 was Euro 1,383 million, with a 3% decrease compared to 2007. The order backlog breaks down into 63% for satellite manufacturing activities (53% satellites and payloads, 10% space infrastructures and equipment) and 37% for satellite services. At June 30, 2009, the order backlog of the Space segment was Euro 1,546 million, a 12% increase compared to December 31, 2008. Of this total, 65% consists of manufacturing activity, while the remaining 35% relates to satellite services.

New Orders: New orders in the Space segment as of December 31, 2008 were Euro 921 million, with a 6% decrease compared to 2007, as a result of lower orders in satellite manufacturing for commercial telecommunication applications, partially offset by the resilience of orders for satellite services. The most significant orders acquired in 2008 related to (i) in the military and institutional telecommunications sector, first tranche of SICRAL 2 and further lots of the Syracuse 3 program, (ii) in the navigation and infomobility sector, further orders relating to the IOV phase of the Galileo program and (iii) in the satellite operation sector, new orders for in-orbit satellite management and for the supply of ground-based operations services and telemetry and command services. New orders for the first six months of 2009 increased 36% compared to the same period in 2008 as a result of an increase in orders for both satellite services and manufacturing activities.

Industry In 2008, the space systems market was valued at approximately Euro 63 billion, of which 57% related to manufacturing (Euro 17 billion for the civil and government segment, Euro 14 billion for military and approximately Euro 5 billion for commercial applications), 22% related to satellite services and the remaining related to general space agency spending (Source: Finmeccanica estimates on the basis of Space Industry 2008). Government programs are the driving factor in the market, accounting for almost 90% of manufacturing. The predominance of the United States is significant, accounting for more than half of the global government budgets in the civil segment and nearly 90% of the budgets in the military segment (Source: Finmeccanica estimates on the basis of Euroconsult 2008 — Government Space Markets). However, a number of emerging nations, such as India and China, have launched important programs to acquire their own space-

122 access capabilities. The technological capability of Russia is also being redeveloped after a number of years of reduced spending. Although the space sector has been affected by the current financial crisis, Finmeccanica believes its long-term growth potential remains unchanged. 900 new satellites are expected to be placed into orbit over the next ten years, considerably more than over the past decade. In addition, the European Space Agency (ESA) has expressed its willingness to support the development of space programs along with the European Commission and confirmed the continuation of current programs. Growth is expected in navigation and global positioning systems (GPS, GALILEO), defense and security communications systems and Earth observation and homeland security systems. These programs tend to have both military and civil applications, although military applications may be limited in Europe due to European Union policy and specific limitations relating to the Galileo and Kopernikus programs. The launch systems segment is also expected to experience slight growth over the next few years, both in the launchers market (mostly in the United States and Europe), and vectors dedicated to the launch of small satellites which are becoming increasingly specialized (Source: Finmeccanica estimates on the basis of Euroconsult 2007 — World Market Survey). In the space services segment, which is based on the prevalent use of telecommunications, Earth observation, navigation and global positioning satellite platforms, the context is more varied. This market, excluding the television broadcasting segment, which has its own peculiar market dynamics, is worth approximately Euro 14 billion annually and is expected to grow at a rate of around 7% annually for the period 2008 — 2016. The space services area is expected to post stable growth in the coming years (Source: Finmeccanica estimates based on Euroconsult 2008 and 2007) The greatest demand is for networking and connectivity applications, particularly for innovative solutions based on terrestrial mobile platforms and dual-purpose (civil and military) systems, as well as for Earth observation and, over the longer term, navigation and infomobility applications, particularly for critical safety systems in air, land and sea transport. In telecommunications applications, the customer base is predominantly in the private sector, although military telecommunications programs continue to increase in number. The Earth observation segment includes all types of customers, although government use is predominant, while navigation, global positioning programs and scientific applications are almost always for government clients. The more traditional television broadcasting segment, on the other hand, has reached maturity, although there are new needs related to the digital divide, the provision of high-definition programs, and mobile entertainment. The main geographic areas that are requiring satellite capacity are North America, Western Europe, and Asia-Pacific, which currently account for nearly 75% of the global market. The space manufacturing market is characterized by a highly concentrated supply structure both in the United States, with Lockheed Martin, Boeing and Northrop Grumman, and in Europe, with EADS Astrium and Thales Alenia Space. The space services market is also highly fragmented, with specialized competitors in specific areas. These competitors often operate in the individual domestic markets and therefore tailor the production of services and equipment to the demands of such local markets (Source: Finmeccanica estimates based on publicly available data). For instance, in the Telecommunication/Television services area, Tele- spazio’s competitors are Globecast, Arquiva and EADS Astrium (Source: Finmeccanica estimates based on available public data). In the Earth observation area, the competitors are GeoEye, DigitalGlobe and Infoterra — Astrim and in the in-orbit satellite control area, the competitors are the European space agencies (Source: Finmeccanica estimates based on publicly available data).

Strategy In the Space segment, Finmeccanica aims to strengthen its competitive position as a major European player in satellite and orbital infrastructures manufacturing and space services. In particular, in the space manufacturing area, Thales Alenia Space plans to strengthen its presence in the major European military programs (i.e., SICRAL), participates in the European satellite navigation program GALILEO and maintains a primary role in European and national commercial and scientific programs. In the space services area, Telespazio intends to (i) focus on the development of the ground segment of a number of important military programs and (ii) develop services related to the GALILEO program and value-added services in the Earth observation and satellite navigation sector, leveraging on the Group’s technologies and infrastructures.

123 Key events and recent developments Following receipt of the authorization from European Commission granted in April 2007, Thales substituted Alcatel Partecipation S.A. as the French shareholder of Thales Alenia Space. In October 2007, Telespazio S.p.A. acquired 85% of FILEAS, a French company active in satellite broadcasting. The remaining 15% of the shares may be transferred through the exercise of various put and call options, which are exercisable in the next 3 years. During the course of 2007 there were significant developments regarding the European satellite navigation program GALILEO, which resulted from the European Authority’s decision to re-define the organizational and contractual schemes, in respect of services and infrastructure. With respect to services management, the setting up of an industrial consortium in the form of a concessionary company was originally envisaged, in which Finmeccanica and the other major players in the sector would participate. This consortium would have had responsibility for operating the satellite systems through a license to be negotiated with the Galileo Supervisory Authority (GSA). However, due the difficulties encountered by the relevant parties in agreeing on the terms and scope of a concessionary contract, this plan was ultimately abandoned and the European Authorities ended these negotiations. The financing of the system entirely by public funds is nonetheless envisaged for the future. With respect to the manufacturing of the satellite system, ESNIS (European Satellite Navigation Industries) GmbH (formerly called Galileo Industries GmbH) had the role of sole prime contractor in the assignation of contracts to the national manufacturing industries in the respective segments, based on a method for allocating business contracts to the various groups and countries participating in the program. Finmeccanica had a stake in ESNIS, together with EADS Astrium GmbH, EADS Astrium Ltd, Thales ATM GmbH, Thales Communications S.A., Thales ATM Ltd, Thales Alenia Space France S.a.S and Galileo Sistemas y Servicios S.L. However, following delays and difficulties in managing this program, Regulation 683/2008 was issued by the European Commission. This regulation revised the timescale for completion of the EGNOS and GALILEO projects and prescribed that the system for the allocation of contracts be managed by ESA under the supervision of the Commission. The system for the allocation of contracts is to operate in line with the standard public competition standards, taking into account the experience and capabilities which the relevant parties have gained from their participation in the various phases of the GALILEO program to date. GALILEO is a project of major importance both in terms of the technology and satellite navigation application development, with particular reference to the security and information mobility sectors. In April 2008, Telespazio S.p.A. acquired the entire issued share capital of Aurensis, a Spanish company active in terrestrial technology and satellite Earth observation services. Through this acquisition, Telespazio is progressing its plans to increase its international presence and strengthen its European leadership position in the Earth observation sector. In July 2008, E-GEOS, a joint venture formed by the ASI and Telespazio S.p.A., began the commercialization of the satellite system COSMO-SkyMed Earth observation products. The company aims to reach a position of global significance in the geospatial information sector, offering integrated solutions, components and services, based on radar data (SAR) and high resolution optics (VHR). In July 2008, Telespazio S.p.A. acquired the entire issued share capital of ISAF, an Italian company active in the geographical technology sector of information systems. ISAF participates in the consortium of companies which was awarded the bid issued by the Agenzia per le Erogazioni in Agricoltura (AGEA) for the development and management of the national agricultural information system. In August 2008, Telespazio S.p.A. completed the acquisition of approximately 40% of the share capital of Novacom Services S.A. This French company, in which Collecte Localisation Satelites S.A. (CLS) has a shareholding of 60%, engages in the creation, management, consultation, distribution and sale of all services and products for the transmission of messages and remote localization using satellite and terrestrial applications. In December 2008, Telespazio signed a framework agreement with its recently acquired subsidiary, DRS Technologies, to provide telecommunication services via the Italian SICRAL satellites and the Telespazio satellite telecommunications centre in Fucino. In July 2009, Telespazio was awarded a contract of over Euro 250 million for the construction of the Gokturk satellite system by the Turkish government. The agreement includes (i) the supply of an Earth observation satellite equipped with a high-resolution optical sensor, (ii) an integration and test centre for satellites to be built in Turkey and (iii) the entire ground segment of the system, which will carry out in-orbit

124 operation, data acquisition and data processing. The Gokturk programme will be managed by Telespazio as prime contractor (responsible for the satellite launch, early orbit and test services), Thales Alenia Space (responsible for the satellite) and local industrial partners including Tai A.S., Tubitak Uekae, Maleri, Aselan A.S. and Roketesan A.S.

Main Products and Programs Finmeccanica’s principal products and programs in the Space segment include the following: • Navigation and Infomobility — Telespazio is taking part in the development of the European satellite navigation program GALILEO, which involves launching a constellation of 30 satellites by the end of 2010. For this project, Telespazio will set up two control centers (one for the constellation, the other for the mission) at the Fucino Space Centre, as well as one of the two signal performance evaluation centers, located near Rome. Telespazio is also the responsible party in Italy for setting up the Galileo Test Range (GTR) — a technological infrastructure for validating the GALILEO signal and developing new applications; • COSMO-SkyMed — Low-orbit dual-use (for civil and military applications) Earth observation satellite system operating in the X-band. Co-funded by the Italian Ministry of Education, University and Research (MIUR) and Ministry of Defense, the program is managed by the ASI and will exploit the most advanced remote sensing technology with the four SAR (Synthetic Aperture Radar) satellites — two of which launched in 2007, one within 2008 and one within 2009 — and a complex and geographically distributed ground segment. Thales Alenia Space, as prime contractor, is responsible for the development of the whole constellation; • SICRAL — First Italian system for secure military communications, in UHF, SHF and EHF/Ka Band. The system has been in service since May 2001 and is based on innovative technologies that enable the satellite to adapt promptly to emergency conditions. It is also highly flexible, with a large capacity and can be used for land, sea and air operations. Thales Alenia Space has designed, built and integrated the satellite and its various elements — bus, payload and antennas — as well as the telecommunications networks with the radio stations for the Mission Control Centre and Satellite Control Centre. Thales Alenia Space is now building SICRAL 1B, to extend the operative capability of the first SICRAL up to 2019; • Mars Express — European scientific probe designed to study the atmosphere of Mars and map the geology of its surface. Thales Alenia Space was responsible for the integration and testing of this satellite and the building of the MARSIS instrument, capable of detecting the presence of water beneath the surface with a high level of resolution, as well as the MARSIS Operation Center; • Cassini-Huygens — NASA/ESA/ASI program to study Saturn and its nine major moons. The spacecraft reached Saturnian orbit in July 2004 and the Huygens probe descended on Titan in January 2005. Thales Alenia Space built the antenna and radar systems for the mission to provide high reliability and high performance; and • Rosetta — Probe designed to reach and study the nucleus of Comet 67P/Churyumov- Gerasimenko during one of its periodic visits to the inner solar system. It was launched in 2004 and should reach the comet in 2014. Thales Alenia Space was responsible for building the satellite’s special digital S and X band transponder, which is vital for the link between the probe and Earth, and was the main contractor for the integration and testing.

Research and Development Research and development expenditures amounted to Euro 64 million in 2008, and are primarily related to: • technological research and development activities including: (i) studies relating to heat-conducting materials for microelectronic packaging; and (ii) propedeutic studies relating to space exploration; and • research and development applied to products including: (i) Orbital infrastructures: studies on environmental control and life-support systems (water, air) for future long-term missions and on protection from micro-meteorites and ionizing radiation for missions to planets; studies on new, materials capable of combining thermal, mechanical and electrical capacities for innovative use

125 in manned satellite platforms, capsules, and re-entry vehicles; (ii) Earth observation: definition of the mission of the Sentinel-1 satellite; development within the context of ESA on the platform, radar payload, active antenna and onboard data recording and transmission system; preparatory studies on the Sentinel-3 mission, specifically concerning the microwave radiometer, the onboard computer and onboard data recording and transmission system; (iii) In-orbit satellite control and Space Services: activities related to monitoring of sensitive areas (including security through the Kopernikus program) using differential radar interferometry; and important research relating to navigation and infomobility; and (iv) Space exploration: studies to define scientific lunar and planetary missions; and design and validation of a measurement system based on laser interferometry has continued in preparation for a new-generation gravimetric mission.

Defense Systems Overview In the Defense Systems segment, Finmeccanica’s operations are mainly carried out through OTO Melara S.p.A. (“OTO Melara”) and its subsidiaries, WASS and the joint venture MBDA S.A.S. (together with BAE and EADS, in which Finmeccanica holds a 25% stake) and its subsidiaries. OTO Melara operates in the field of land and naval armaments, with particular technological strengths in the development and production of naval guns and turrets. Furthermore, OTO Melara has twenty years of experience in the design, development and manufacture of main battle tanks, wheeled armored and tracked vehicles through CIO, a consortium with Iveco. WASS is active in the field of underwater defense systems and its technological excellence in this field is globally recognized (Source: Finmeccanica estimates based on available publicly available data). WASS is active in the field of underwater defense systems in selected market segments such as torpedoes (heavy and light weight) and anti-torpedo countermeasures, countermine and underwater surveillance equipment. With regards to light weight torpedoes (MU90), WASS operates through the EEIG Eurotorp, together with DCNS and Thales Underwater Systems. The MBDA joint venture was created in 2001 by BAE (37%), EADS (37%) and Finmeccanica (25%) combining the missiles and missile systems activities of Matra BAE Dynamics, EADS Aerospatiale Matra Missiles and Alenia Marconi Systems. MBDA offers more than 40 missile systems in production or in development. The combination of air-to-air, air-to-surface, anti-ship and surface-to-air missile systems make MBDA by revenues the leading player in the European Union and the second in the world (Source: Finmeccanica estimates based on publicly available data). OTO Melara has its main plants in Italy (La Spezia and Brescia) and a limited local presence in Spain and in the United States. WASS has its main plants in Italy (Livorno and Naples), with an international presence in France (Sophia Antipolis) through the EEIG Eurotorp. MBDA has its main plants in the United Kingdom (Stevenage, Bristol and Lostock), in France (Paris), in Italy (Rome, Fusaro (NA) and La Spezia) and in Germany (Schrobenhausen, Unterschleissheim, Ulm and Aschau). The Finmeccanica Group is not involved in the development, production, selling or testing of cluster bombs, anti personnel mines (APM) or land mines. The table below summarizes the key financial and operating data of the Finmeccanica’s Defense Systems segment for the periods presented. The MBDA joint venture is consolidated on a proportional basis.

126 As of and for the six month As of and for period ended the year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except number of employees) (Unaudited) New Orders ...... 566 506 1,087 981 1,111 Order Backlog ...... 3,982 3,997 3,879 4,099 4,252 Revenue ...... 514 513 1,116 1,130 1,127 Adjusted EBITA(*) ...... 42 42 127 125 107 Research and Development ...... 119 122 258 241 279 Employees ...... 4,036 4,049 4,060 4,149 4,275

(*) For an explanation of adjusted EBITA see “Financial Information and Non-GAAP Measures”.

Order backlog: The order backlog of the Defence Systems segment as of December 31, 2008 was Euro 3,879 million, with a 5% decrease compared to 2007. Approximately two thirds of backlog related to missile systems. The decrease in 2008 was due to flat demand in the worldwide missile system market coupled with new entrants into the market; the heavy budget pressure in the Group’s domestic markets and intense competition in export markets; and the depreciation of the Euro against the U.S. dollar. At June 30, 2009, the order backlog of the Defense Systems segment was Euro 3,982 million, a 3% increase compared to December 31, 2008. The composition of the backlog remained unchanged.

New Orders: New orders of the Defence Systems segment in 2008 were Euro 1,087 million, with a 11% decrease compared to 2007. The most significant orders acquired in 2008 related to (i) the missile systems sector (Euro 584 million), with orders for Spada air defence system for the Pakistani Air Force and a contract from the U.K. Ministry of Defence for through-life support for Seawolf air defence naval systems; (ii) the land, naval and air armaments sector (Euro 339 million), with further orders for the Italian FREMM program, and (iii) the underwater defence systems sector (Euro 167 million), with orders for an additional lot for the FREMM program and A244 light torpedoes for Singapore. New orders for the first six months of 2009 increased 12% compared to the same period in 2008 due to good results in missile systems, particularly in the export market, and in land, naval and air weapon systems. Underwater systems, by contrast, suffered a decline relative to the first six months of 2008, when the segment benefited from sizeable orders under the FREMM programme.

Industry (a) Land, naval and air armaments The global market for land, naval and air armaments expanded in 2008 and was estimated to be worth approximately Euro 16 billion (Source: Finmeccanica estimates on the basis of Forecast International 2008). Demand in the sector was revitalised by recent military experiences which highlighted the need for ensuring greater protection for military personnel engaged in asymmetrical war scenarios. These needs led to programs to upgrade existing fleets of vehicles and programs for the development of weapons systems based on a network centric approach, including the United States Future Combat System (FCS) program, the British Future Rapid Effects System (FRES) program and the Forza NEC program in Italy. As part of the projects to modernize and upgrade operating fleets, there has also been a rising demand for all-protected tactical vehicles that are capable of guaranteeing total protection of personnel, including from landmines or attacks with explosives. In the naval systems segment, despite the continuing reduction in the number of new platforms produced, the gun market remained stable across product areas. Small caliber guns represent the main solution for assymetrical threat scenarios, while developments in medium and large caliber guns have focused on implementing guided and intelligent ammunition systems capable of ensuring greater flexibility, of broadening possible operating environments and of providing accuracy comparable to the most advanced missile systems. The industry is dominated by two global competitors (General Dynamics in the United States and BAE for land and naval systems in Europe) and a smaller number of national players (KMW, Rheinmetall,

127 Nexter) operating in major European countries. Several local firms are also active in the Middle East, Asia, Latin America and Eastern Europe, mainly focused on their respective domestic markets. Competition is characterized by fragmentation of supply and by the fact that national markets are often dominated by national players and penetration by international companies is difficult.

(b) Underwater defense systems The global underwater defense systems segment was estimated to be worth approximately Euro 2 billion in 2008 (Source: Finmeccanica estimates on the basis of public available data) While limited overall in size, this area is expected to grow steadily and presents opportunities due to (i) new requirements for the development and installation of a new generation of anti-torpedo protection systems for naval platforms and for integrated systems dedicated to the protection of both civilian and military ports for homeland security devices; (ii) rising demand for anti-torpedo protection systems for major surface and submarine naval units, both electronic and those based on a missile/anti-missile approach; and (iii) market opportunities for modernizing the torpedo fleets of major international navies and for selling new weapons systems in newly industrialised countries. Unlike in the land, naval and air weapons systems segment, there are significant, ongoing collaboration programs underway in Europe for both torpedoes and countermeasure systems. Some of these programs also form the basis of strategic collaboration agreements or agreements to form joint ventures among a number of the major operators in the sector. The main competitors in this segment are Raytheon, Lockheed Martin, L-3 Communications and Northrop Grumman in the United States and Thales Underwater Systems, DCNS, Atlas Elektronik, Ultra Electronics, BAE and WASS in Europe. Competition is driven by several factors, such as price and performance and the ability to provide integrated surveillance systems, including for homeland security purposes. Entry into several national markets is difficult due to the longstanding presence of local providers and the specific nature of demand, which is often tied to the local national security requirements.

(c) Missile Systems In the missile systems segment, demand remained substantially stable in 2008 with a global market value of approximately Euro 14 billion, including logistics activities (Source: Finmeccanica estimates on the basis of Teal Group 2008). More than half of the market is concentrated in the United States. The greatest factor driving demand continues to be the need to ensure the national defense of industrialized nations from ballistic missiles. Additional drivers of demand are the tactical protection of forces engaged in asymmetrical battle operations and the capability of making precision strikes. The short-term dynamics of the various product segments are affected by new technological developments and by the timetables for major development program (THAAD, Patriot, MEADS), often carried out as part of international collaboration programs. Supply in the area of missile systems is concentrated around three large global competitors, Raytheon, MBDA and Lockheed Martin, with a limited number of other European and Israeli companies such as Thales, Saab SBD and Diehl BGT Defense, Rafael and IAI operating in niche markets for certain product segments or areas of technological expertise on sub-systems (seekers, data links, propulsion and guidance systems). An increasing number of competitors from high growth economies, such as India and South Korea, are also entering the market. Competition is characterized by (i) the small number of missile systems prime contractors accounting for 70% of the total worldwide market in 2008 (Source: Finmeccanica estimates based on publicly available data) (ii) a high level of competition in the area of technological sub-systems among a significant number of small players, and (iii) a new requirement for integrated solution driven by a network centric warfare approach.

Strategy In the Defense Systems segment, Finmeccanica intends to exploit specific technological excellences to form wider strategic alliances. In particular, (i) in land and naval armaments, to leverage on the positioning of OTO Melara as the principal supplier of the Italian Ministry of Defense and its leadership in certain niche naval gun/land turrets markets, (ii) in underwater defense systems, to strengthen the worldwide leadership

128 position of WASS by pursuing the pending French — Italian alliance with DCNS and Thales Underwater Systems and (iii) in missile systems, to maintain and strengthen the position of MBDA.

Key events and recent developments In May 2007, MBDA entered into an agreement with EADS and Thales to acquire Bayern-Chemie/ Protac, a German company owned 50% by EADS and 50% by Thales. The company is active in the development and production of missile propulsion systems. The contract has become effective as of August 31, 2007, after the obtainment of the required authorizations by the competent national and international 50 authorities. In 2008, Bayern-Chemie sold Protac to Roxel SA, a ⁄50 French joint venture between MBDA and SNPE Matériaux Energétiques S.A. In September 2007, the Turkish shipyard Daersan awarded a contract to OTO Melara for the supply of naval gun systems to the Turkish navy, to be installed on board the new 57 meters patrol boats built by the Turkish shipyard. In November 2007, Thales and DCNS entered into an agreement for the creation of a French-Italian partnership in underwater defense systems. The agreement will focus on the creation of three joint ventures: (i) a Torpedo program joint venture, which will be responsible for the engineering, design and development, as well as for the marketing and sale of underwater defense systems. This joint venture will be jointly controlled by Finmeccanica (51%) and DCNS (49%); (ii) a Torpedo manufacturing joint venture, which will focus on the manufacture of torpedoes and related support activities and on the engineering and manufacturing of energy modules. This joint venture will be jointly controlled by DCNS (51%) and Finmeccanica (49%); and (iii)a Sonar joint venture which will be responsible for the design, development and production of acoustic heads. This joint venture will be jointly controlled by Thales (51%) and Finmeccanica (49%). In June 2008, OTO Melara and DOOSAN Infracore (South Korea) entered into a marketing cooperation agreement for the joint commercialization and co-production of the full spectrum of turrets inclusive of the 105mm HitFact anti-tank turret for medium-size wheeled and tracked vehicles. In the same month, OTO Melara and PT. PINDAD PERSEO of Indonesia entered into a memorandum of understanding for the joint commercialization and co-production for the 105m\m Pack Howitzer and small caliber artillery turrets for medium-size wheeled and tracked vehicles. In August 2009, Finmeccanica, through its subsidiaries Selex Sistemi Integrati, OTO Melara and WASS, was selected by the United Arab Emirates Navy to supply naval and underwater systems for a new Abu Dhabi class ship. In particular, OTO Melara will supply two 30-mm Marlin Weapons Stations and a Stealth version of the Super Rapid 76/62 naval gun, and WASS, as the prime contractor, in partnership with Thales Underwater Systems, will build an ASW (Anti-Submarine-Warfare) system.

Main Products and Programs Finmeccanica’s principal products and programs in the Defense Systems Segment include the following:

Land and naval armaments • Vehicles (through CIO consortium) — PUMA 4x4 and 6x6: light-wheeled armored fighting vehicles suitable for combat roles such as reconnaissance and anti-tank. They also perform combat support roles like command post and ambulance; 8x8 CENTAURO AFV: highly mobile and protected vehicle that combines the firepower of a main battle tank with the speed and agility of a wheeled vehicle; DARDO: armored IFV designed to provide infantry support; its armaments consists of a 25 mm gun plus two TOW launchers that allow suitable firepower, even against MBTs; ARIETE: armored fighting vehicles designed to satisfy the Italian army requirements, highly protected and suitable for power; • Land Turrets — HitFact (105-120 mm): three-man, power operated turret armed with a 120mm, 45 caliber or 105 mm 52 caliber low-recoil-force gun for light and medium weight tanks and wheeled; HitFist (25-30 mm): two-man, power operated turret armed with a 25 or 30 mm automatic gun; HitRole (7.62, 12.7, 40 mm): one-man, electrically power-operated turret for light vehicles; • Naval Guns — Large Calibers: 127/54 compact gun mount dual purpose, rapid fire, 5-inch for frigates and destroyers; 127/64 Lightweight: rapid fire suitable for large and medium size ships; Medium Caliber: 76/62 family in the Compact version (lightweight, rapid fire gun mount for all

129 types of ships for anti-surface and anti-ship role) and Super Rapid version (lightweight, rapid fire for air-defense and anti-surface role); small calibers: 12.7 mm, 25 mm, 30mm and 40mm naval guns; and • Land and Naval Ammunitions — Vulcano family: Extended Range (ER) unguided ammunition and Long Range (LR) guided ammunition for 127 naval guns; Strales system, an evolution for the 76/62 naval artilleries, which uses the DART intelligence ammunition.

Underwater defense systems • MU90 — Light, “NATO standard” caliber torpedo developed through an international cooperation program based on the requirements of the Italian and French navy. It is being sold in many countries within and outside Europe. MU90 can be launched from ships, helicopters and from naval patrol towers and, together with a similar product manufactured by the American company Raytheon, it is the most significant product in its category on an international level; • BLACK SHARK — Heavy Weight Torpedo: multipurpose weapon designed to be launched by surface vessels or submarines. It is meant to counter the threat posed by any type of surface or underwater target. The BLACK SHARK is a new generation of powerful, long-range, wire guided and self- homing heavyweight torpedoes; • C310 — Anti-torpedo countermeasures system designed to cope with active and/or passive torpedoes, available both in non wire-guided and self-homing models; and • C303/S — Anti-torpedo countermeasures system designed to counter attacks of acoustic homing torpedoes, active/passive, lightweight and heavyweight, wire and non wire-guided, through the use of light-weight, high-performance stationary jammers and mobile decoys.

Missile systems • Marte — Medium-range anti-ship missile designed for the new generation of naval anti-surface warfare helicopters employed to support maritime operations in coastal as well as in complex open water scenarios; • ASTER — Family of vertically launched missiles developed by MBDA within the Franco-Italian FSAF program. Aster 30 will feature in a family of air defense systems for the armed forces of both France and Italy as well as for the British Royal Navy; • METEOR — An air-to-air missile system intended to meet the requirements of six European nations for future combat scenarios and capable of being integrated on Europe’s major platforms, Eurofighter, Gripen and Rafale; and • MEADS (Medium Extended Air Defense System) — Multi-national NATO program to develop a future divisional air defense system to replace existing systems such as the Patriot and HAWK. The original partners of the program included the United States, Germany, France and Italy, but France withdrew from the program due to budgets problems. Under the balance, the United States has 58% of the program, with Germany 25% and Italy 17%. The participants to the program are EADS, EADS/LFK and MBDA Italia.

Research and Development Research and development costs for the defense systems segment were Euro 258 million in 2008, and are primarily related to: • technological research and development activities including: the study of high resistance nano- structured ceramics to create missiles operating in the millimetric band; and • research and development applied to products including: (i) the development of guided ammunitions Vulcano and DART; (ii) the development of the 127/64 LW naval gun; (iii) the development relating to heavy weight torpedo Black Shark; (iv) the upgrading of the activities of light weight torpedo A244; (v) the development activities related to FREMM frigates in relation to surface-to-surface and air-to-surface; (vi) studies on the use of phased array antennas for missile-based applications; (vii) the development of new digital receivers in order to further develop existing seekers (ASTER and METEOR); and (viii) the development of the multinational MEADS air-to-air missile program.

130 Energy Overview In the Energy segment, Finmeccanica’s operations are mainly carried out through Ansaldo Energia S.p.A. and its subsidiaries (Ansaldo Nucleare S.p.A., Ansaldo Fuel Cells S.p.A., Ansaldo Ricerche S.p.A., Asia Power Projects Private Ltd., Energy Service Group Gmbh and Thomassen Turbine Systems BV.). In addition, Finmeccanica Group has a 49% shareholding in Europea Microfusioni Aerospaziali S.p.A. (EMA); the remaining 51% is held by Rolls Royce Plc. Finmeccanica is engaged in engineering and manufacturing activities in the field of power generation, such as: (i) generation systems (“New Units”) (gas and steam turbines, generators, plants and applications); (ii) services (assistance and spare parts for gas turbines and combined cycles, steam services); and (iii) nuclear (new plants for nuclear and geothermal energy, services, decommissioning). The Group has installed capacity exceeding 172,000 MW in over 90 countries and covers a wide range of power generation plants technologies. The Group has its main plants in Italy (Genoa), Holland (Rheden) and Switzerland (Wuerenlingen). The table below summarizes the key financial and operating data of Finmeccanica’s Energy segment for the periods represented: As of and for the six month As of and for period ended the year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except number of employees) (Unaudited) New Orders ...... 398 1,063 2,054 1,801 1,050 Order Backlog ...... 3,311 3,733 3,779 3,177 2,468 Revenue ...... 820 512 1,333 1,049 978 Adjusted EBITA(*) ...... 76 37 122 93 65 Research and Development ...... 16 12 32 20 17 Employees ...... 3,409 3,184 3,285 2,980 2,856

(*) For an explanation of adjusted EBITA see “Financial Information and Non-GAAP Measures”.

Order backlog: The order backlog of the Energy segment as of December 31, 2008 was Euro 3,779 million, with a 19% increase compared to 2007. The increase related to machine and components supplies for the export market and new orders for three combined-cycle plants in Italy and abroad. Plants and components, service activities and nuclear activities represented respectively 52%, 47% and 1% of the order backlog as of December 31, 2008. At June 30, 2009, the order backlog of the Energy segment was Euro 3,311 million, a 13% decrease compared to December 31, 2008 mainly due to delays in the awarding of contracts by Sorgenia. About 47% of backlog at June 30, 2009 was accounted for by plant and manufacturing work, 52% by service work (largely routine maintenance contracts) and the remaining 1% by nuclear activities.

New Orders: New orders of the Energy segment in 2008 were Euro 2,054 million, with a 14% increase compared to 2007, mainly as a result of new orders in the New Unit activities with regards to turbines and components and three combined cycles plants in Italy (Turano and San Severo) and abroad (Bayet, France), together with the related Long Term Service Agreements (LTSA) contracts. Plant and components, service activities and nuclear activities represented respectively 67%, 31% and 2% of new orders as of December 31, 2008. In the first six months of 2009, new orders decreased 63% compared to the same period in 2008 due mainly to temporary delays in acquisitions under major contracts and weaker demand in the industry.

Industry With regard to the world energy market, the demand for new plants depends on electricity consumption trends, both industrial and private, which are, in turn, linked to a number of macroeconomic and geopolitical variables, such as industrial production, population increase and urbanisation. In addition to these

131 factors, technological developments also have an impact, and in particular the increased efficiency of the major components and the need to reduce the plants’ impact on the environment. The energy sector is expected to post moderate growth in the coming years, with new installed capacity expected to be in excess of 200 GW per year. Growth is, however, affected by the reduction in industrial output caused by the current economic crisis (Source: Finmeccanica estimates based on publicly available data). North America and Western Europe are mature markets where demand principally arises from the need to modernize and gradually replace obsolete plants. The Asia Pacific and Middle East regions are expected to experience strong demand in the medium to long term, driven by the need to expand their installed capacity. However, the growth in these regions is expected to be delayed in the near term due to the current economic environment. The Russian and eastern European markets are characterized by a weakness of local manufacturers and market liberalization, which present growth opportunities. Overall, in terms of power consumption, 85% of growth is forecast in the non-OECD countries over the next 20 years, compared with growth of lower than 20% in the industrialised countries. Demand in this sector is expected to continue to be met mostly by fossil fuels (coal, natural gas and fuel oil). The area of highest relative growth is renewable energy sources, which are expected to meet approximately 30% of total demand between 2015 and 2020 (along with the more traditional hydroelectric stations). The non-conventional (nuclear) power station sector is expected to remain marginal for some years before it benefits from new technology developments currently underway. Another area of growth is in service-related activities, which are designed to lengthen the life cycles of plants and enhance their efficiency and reduce their impact on the environment. The demand for such activities is stronger in areas with larger numbers of older plants, primarily in the United States and Europe. Gas-fired plants — whether open-cycle or combined-cycle — show more attractive growth rates than the more traditional steam systems. In the energy industry, the largest five original equipment manufacturers (OEM) by revenues — General Electric in the United States, Siemens and Alstom in Europe and Mitsubishi and Toshiba in Japan — represented 55% of the global market in 2008 (Source: Finmeccanica estimates based on publicly available data). Competition in this sector is characterized by the presence of an increased number of small and medium players, such as BHEL, Rolls Royce and Ansaldo Energia.

Strategy In the Energy segment, Finmeccanica intends to maintain the existing production capabilities of Ansaldo Energia S.p.A., and to increase the range of offering and profitability in the service area, as an original service provider. Furthermore, Finmeccanica aims to (i) maintain its market share of new units in the Italian market; (ii) increase export activities to CSI and Middle East countries; and (iii) strengthen the nuclear and renewable energy areas.

Key Events and Recent Developments In June 2007, Ansaldo Energia S.p.A. was awarded two important contracts in Algeria for the turn- key production of two power stations (each for 300MW), equipped with two gas turbines V94.2 in Larba (near Algeri), and Batna (approximately 150km from Algeri). Moreover, in July 2007, Sonelgaz, the Algerian gas and electricity authority, awarded Ansaldo Energia two further contracts for the production of turn-key electricity plants in M’Sila (for 500mw). In October 2007, Ansaldo Fuel Cells S.p.A. and L-3 Communications Combat Propulsion Systems entered into a collaboration agreement for the development and marketing of energy generation systems with fuel cells. The agreement contemplates cooperation in the development and production for the military sector, marketing of the product in the United States and the possibility of incorporating a joint venture to offer products and services to the United States government. In February 2008, Ansaldo Fuel Cells S.p.A. and Enel S.p.A entered into an agreement to develop, build and test an integrated trigeneration system with a molten carbonate fuel cells generation plant. In March 2008, Ansaldo Energia S.p.A. entered into 2 important contracts with Enplus S.r.l. and 3CB S.a.s. (subsidiaries of Atel, one of the main Swiss energy production groups) for the turn-key manufacture of twin combined cycle plants (400MW ) with a single shaft. Such plants will be installed in Italy (San Severo

132 (FG)) and in France (Bayet). These contracts also contemplate long-term service agreements with Ansaldo Energia S.p.A. In September 2008, Ansaldo Energia S.p.A. entered into a service contract with Enel S.p.A., for the replacement of Westinghouse low-pressure steam turbines at the Brindisi Sud thermoelectric plant with the latest generation technologies. In October 2008, Ansaldo Energia S.p.A. entered into a contract with Power Machines, the main Russian producer of electric generation systems, for the supply of four V64.3A gas turbines with related generators, auxiliary systems and spare parts for the combined cycle power station to be built in Russia. In July 2009, Ansaldo Energia S.p.A. was awarded a Euro 100 million contract by Iride Energia — a company which produces electricity and thermal energy for district heating — to supply a gas turbine with generator and ancillary systems for the North Turin (Italy) thermoelectric plant and the provision of maintenance services for 14 years based on a Long-Term Service Agreement. In July 2009, Ansaldo Energia S.p.A was awarded a contract by Sorgenia, Italy’s leading private operator in the national electricity and gas market, for the construction of a “turn-key” 800 MW combined- cycle power station in the municipality of Aprilia, Italy; Ansaldo Energia was also assigned the multi-year maintenance contract for gas turbines and related generators.

Main Products and Programs Finmeccanica’s main products and programs in the Energy segment include the following: • power plants for energy generation — Conventional, co-generative, geothermal and simple and combined cycles, up to a power of 800 MW; • gas turbines (from 70 MW to 280 MW) — Featuring advanced technological solutions and designed to satisfy clients’ requirements in terms of efficiency, reliability, flexibility and a low environmental impact; • steam turbines (from 80 MW to 1,200 MW) — Covering the entire range of applications for the generation of geothermal, co-generation, fossil fuel cycle and combined cycle energy; and • turbo-generators and hydro-generators — Including air, water and hydrogen cooling models using widely tested technological solutions.

Research and Development Research and development expenditures amounted to Euro 32 million in 2008 and, and are primarily related to: • gas turbines: development projects for the V94.3A, which aim to increase efficiency and power while maintaining and enhancing competitiveness; • steam turbines: international projects to study the performance of special materials aimed at the development of the “ultra-supercritical” turbine (with power of over 300 MW); • generators: development activities for the new 400 MVA air-cooled model aimed at completing the large size gas turbine and related services; and • services: development of incinerators, control systems and re-engineering gas turbines.

Transportation Overview In the Transportation segment, Finmeccanica’s operations are mainly carried out through Ansaldo STS S.p.A. group (in the Signaling and Transport Systems areas) and AnsaldoBreda S.p.A. and its subsidiaries (in the Vehicles area). Since March 31, 2009, BredaMenarinibus has been included within the Transportation segment. Ansaldo STS S.p.A. is active in the design, manufacture, management and maintenance services of railway and mass transit signaling and integrated “turn-key” transportation systems. Since 2006, Ansaldo STS S.p.A. has been publicly listed on the Milan Stock Exchange. Currently, its public float is 60%.

133 AnsaldoBreda S.p.A. is active in the manufacture of technologically advanced rolling stock for railway and urban transit systems. AnsaldoBreda builds complete trains, including high-speed trains, diesel and electrical locomotives, double-deck electric trains, electric multiple unit, diesel multiple unit, single and double-deck passenger cars, metro vehicles and Sirio trams. BredaMenarinibus S.p.A. is active in the manufacture of urban and intercity buses. This company’s operations are undergoing reorganization in contemplation of a potential strategic repositioning. Ansaldo STS S.p.A. has its main facilities in Italy (Genoa, Naples, Tito Scalo (PZ) and Piossasco (TO)), France (Les Uils, Riom), United States (Pittsburgh, Pennsylvania, Batesburgh, South Carolina) and Australia (Brisbane, Karratha). AnsaldoBreda has its main plants in Italy (Naples, Pistoia and Reggio Calabria). BredaMenarinubus S.p.A. has its main plant in Italy (Bologna). The table below summarizes the key financial and operating data of Finmeccanica’s Transportation segment for the periods represented: As of and for the six month As of and for period ended the year ended June 30, December 31, 2009 2008 2008 2007 2006 (In millions of Euro, except number of employees) (Unaudited) New Orders ...... 1,190 578 1,557 1,786 2,127 Order Backlog ...... 5,118 4,836 4,849 5,108 4,703 Revenue ...... 895 836 1,759 1,356 1,368 Adjusted EBITA(*) ...... 55 47 126 (110) 17 Research and Development ...... 24 28 51 47 40 Employees ...... 7,135 7,087 6,838 6,669 6,677

(*) For an explanation of adjusted EBITA see “Financial Information and Non-GAAP Measures”

Order backlog: The order backlog of the Transportation segment as of December 31, 2008 was Euro 4,849 million, with a 5% decrease compared to 2007. The decrease mainly related to the vehicles business. Signalling and transport systems area and vehicles area represented respectively 64% and 36% of backlog. At June 30, 2009, the order backlog of the Transportation segment was Euro 5,118 million, a 6% increase compared to December 31, 2008. Signalling and systems accounted for 66% of backlog at June 30, 2009, vehicles accounted for 33% and buses accounted for the remaining 1%.

New Orders: New orders in the Transportation segment in 2008 were Euro 1,557 million, with a 13% decrease compared to 2007, mainly as a result of lower orders in signalling and transport systems, which in the prior period had benefited from a particularly significant order (Naples Metro Line 6 project). The most significant orders acquired in 2008 related to: (i) the signalling area, orders for railway lined and for the Ankara metro in Turkey, and for a high speed line in China; (ii) the transport systems area, the order for a new railway line in northern Malaysia; and (iii) the vehicle area, the orders for Sirio trams for Samsun in Turkey and vehicles for the Milan metro. New orders for the first six months of 2009 were 106% higher compared to the same period in 2008 as a result of an increase in new orders in all segments.

Industry The transportation market includes railways and mass transit rolling stock (vehicles), signaling systems and complete transport systems. The global vehicles market is worth approximately Euro 25 billion per year. It is a mature market characterized by low growth rates (2% to 3% per year) in recent years, and stable growth is expected over the coming years. Within the vehicles segment, high growth rates in the area of railways and urban systems are driven by mounting congestion in newly urbanized nations and overpopulation in metropolitan areas. Railways accounts for approximately 20% of the vehicles segment.

134 Western Europe is traditionally the largest geographic market and the market from which the most significant technological and product-related innovation originates. Eastern Europe also presents growth opportunities driven by the need to replace obsolete fleets and the development of new infrastructures. The product categories showing the most significant growth are distributed power trains, and in particular electrical multiple units for urban and regional use, as well as metropolitan transport systems (both heavy and light rail vehicles). The demand for high-speed trains has slightly decreased and has been largely offset by a growing demand for ultrahigh-speed vehicles, on which major investment is planned over the coming years. These systems often compete with air transport, especially on domestic routes. The demand for maintenance and service activities continues to increase, driven by the increasing tendency to outsource management and maintenance service and the gradual liberalization of rail and urban transport operators. The overall signaling and transport systems market has grown faster than the vehicles market, driven by increasing urbanization and the need for high safety, efficiency and reliability. As a result, the signalling and traffic supervision systems market and the transport system design and building market have experienced average growth rates in excess of 5% per year in recent years. Whereas this business was largely local in the past, with high levels of customization and different design and implementation architectures specific to geographical areas, demand is now increasing for turn-key systems based on cross- border technology standards and modular architectures. The growing demand for homeland security protection is also giving impulse to the market.

Strategy In the Transportation segment, with respect to the vehicles area, Finmeccanica is currently restructuring AnsaldoBreda S.p.A. in order to restore its profitability in the short term, while leveraging on a strong order backlog. In the systems and signaling areas, Finmeccanica intends to support Ansaldo STS S.p.A. in its stated growth strategy in order to increase its earning potential. In particular, Ansaldo STS S.p.A. intends to (i) pursue synergies by further integrating the signaling and transportation activities; (ii) access new markets with significant growth prospects (such as China, Saudi Arabia and Russia); and (iii) broaden its signaling and transportation systems offering in order to satisfy the new demand relating to homeland security requirements.

Key Events and Recent Developments In February 2007, the National Rail System of Russia (RZD) and Ferrovie dello Stato S.p.A. entered into an agreement with Finmeccanica in relation to international projects (high speed trains). In March 2007, Finmeccanica entered into a further agreement with the National Rail System of Russia for industrial collaboration, which set out the time schedules and approach for specific projects (development of a new regional train). In May 2007, Finmeccanica, the National Rail System of Russia and the Russian National Institute of Science (VNIIAS) entered into an agreement for collaboration in the railway signaling sector in order to create a new rail signaling system, produced by Ansaldo STS, to be used on existing Russian railway lines and stations. In June 2008, the board of directors of Ansaldo STS S.p.A. approved the merger of Ansaldo STS S.p.A. with Ansaldo Trasporti Sistemi Ferroviari S.p.A. and Ansaldo Segnalamento Ferroviario S.p.A.. This merger, which is currently being completed, marks the final stage of the plan introduced at the end of 2007 for the rationalization and improvement of the Ansaldo STS group. In September 2008, AnsaldoBreda S.p.A. and Bombardier Transportation entered into an agreement for the development, manufacture and marketing of a new high-speed train (up to 300 Km/h). This new model is to exceed the existing standard model in terms of safety, efficiency, seating space and compliance with recent European regulations. In November 2008, Finmeccanica and RZD entered into a multi-year partnership agreement in relation to the installation of a high technology system of signaling equipment for the control and safety of rail traffic. The agreement also relates to satellite remote sensing systems, TETRA telecommunications systems and the use of the internet on trains.

135 In July 2009, AnsaldoBreda S.p.A and Chongqing Chuanyi Automation Corporation entered into a Memorandum of Understanding with Chongqing Rail Transit General Corporation for a program related to the development of metro trains for the Chongquing city metro system. In July 2009, Ansaldo STS was awarded a Euro 541 million contract for rail signaling, telecommunications and power supply systems for the coastal rail line (from Ras Ajdir to Sirt) and the inland line (from Al-Hisha to Sabha) in Libya, becoming the main partner of Libyan Railroads for the construction of the new national rail network.

Main Products and Programs Finmeccanica’s main products and programs in the Transportation segment include the following:

Ansaldo STS • Interlocking System — Systems that manage the movement and position of trains in stations and the complex networks on which they operate; • Automatic Train Control (ATC) — Systems that manage the movement of trains under security conditions, which automatically enforce a speed limit which is consistent with the circulation conditions ahead (block conditions) and, in specified circumstances, also enforces a penalty train stop with full brake application; • European Railway Traffic Management System (ERTMS) — European standard applied to ATC systems. The system enables the supervision, in real-time, of the train operation according to the traffic conditions, taking into account the European network interoperability. The ERTMS standards contemplate three different levels of applications (ERTMS 1, 2 and 3); • Centralized Train Control (CTC) — Modular systems which allow supervision and command of train and metro traffic (for a single line or for an entire network) providing effective traffic optimization with forecasting and conflict display and resolution; and • Automated metro (i.e., Copenhagen, Brescia, Milan Line 5, Salonicco, etc.).

AnsaldoBreda • SIRIO — Tram which originates from the modular platform of tram products developed by AnsaldoBreda. SIRIO features low internal noise levels, low floor on the entire inner surface, wide doors, devices for the disabled and an air conditioning system for passengers; • 9000 and 7000 series vehicles — Metro vehicles designed by Pininfarina with clear and defined lines to increase aerodynamic efficiency and the design focuses on two issues: passenger safety and access for the disabled; • ETR 500 — Politensione trains with new generation locomotives to satisfy recent stricter requirements; the electric power part of the locomotive can be powered with three different voltages (3kV, 25kV and 1500V). Each train can transport 590 passengers in first and second class carriages; and • V250 — High speed train characterized by increased services and compliance with European interoperability rules and for the reliability of its component parts. This train is currently being manufactured for the Dutch and Belgian railways.

Research and Development Research and development expenditures amounted to Euro 6,838 million in 2008, and are primarily related to: • railway signaling: projects related to systems based on European standards for traffic management, aimed at guaranteeing the interoperability of lines (ERTMS — European Rail Traffic Management System); and • mass transit: a project related to the development of a CBTC (Communications Based Train Control) system, based on radio communications system for metro-type applications.

136 Other Activities In the Other Activities segment, Finmeccanica’s operations are mainly carried out through: • Fata S.p.A., a wholly owned Finmeccanica subsidiary, which operates in the area of plants for processing aluminum and steel flat rolled products and engineering design in the electricity generation area for engineering, procurement and construction (EPC) activities. Fata S.p.A. recently completed a reorganization process that began in 2005. In 2008, Fata S.p.A. had revenues of approximately Euro 264 million; • Avio S.p.A.: Aeromeccanica S.A., a wholly owned Luxembourg subsidiary of Finmeccanica, holds an approximately 15% interest in BCV Investments S.A. which in turn holds 100% of the share capital of Avio S.p.A.. The remaining interest is held by Cinven Funds, a private equity group. The company designs and produces components of aeronautical engines, space propulsion systems for launchers and control systems for naval devices. It also performs aeroengine maintenance, repair and overhaul. Avio was formerly the aerospace division of FiatAvio S.p.A, the leading Italian manufacturer of aircraft and naval engines; • STMicroelectronics: Finmeccanica holds an indirect interest in STM of 3.7%. STM is a global independent semiconductor company that designs, develops, manufactures and markets a broad range of semiconductor products used in a wide variety of microelectronic applications, including automotive products, computer peripherals, telecommunications systems, consumer products, industrial automation and control systems. Finmeccanica’s interest in STM is held through a holding company and is subject to a shareholders agreement with FT1CI S.A., Cassa Depositi e Prestiti S.p.A. and Areva; and • Other entities which provide financial support and management services to Finmeccanica, such as: Finmeccanica Group Services S.p.A. (the Group service management company) and Finmeccanica Finance S.A. (which provides financial support to the Group).

Research and Development The business environment in many of Finmeccanica’s principal operating segments is characterized by rapid technological change and requires extensive research and development activities. Finmeccanica has an ongoing commitment to focusing its research and development activities and launching new programs and product development plans. With respect to the Aerospace and Defense sector, the research and development activities are subdivided into two areas: (i) technological research and development activities which are strategic and long-term in nature and require highly qualified staff and specialized facilities; and (ii) research and development activities applied to products, with the aim to maintain, improve and streamline the Finmeccanica’s subsidiaries’ range of products, increasing their competitiveness and improving customer satisfaction ratings. Further information on Finmeccanica’s key research and development activities per segment in both the Aerospace and Defense sector and the Civil sector, is provided above under “— Business Segments”.

Employees As of December 31, 2008, the Group employed 73,398 employees consisting of 43,267 in Italy and 30,131 abroad. As of June 30, 2009, the Group employed 73,517 employees comprising 43,370 in Italy and 30,147 abroad. The following table sets forth the number of Group employees as at June 30, 2009 and as at December 31, 2008, 2007 and 2006 and the number of those employees in Italy.

As of June 30, As of December 31, 2009 2008 2007 2006 Total number of employees ...... 73,517 73,398 60,748 58,059 Number of employees in Italy ...... 43,370 43,304 42,666 41,669 Number of employees outside Italy...... 30,147 30,093 18,082 16,390

137 Finmeccanica’s employees worldwide include the categories set forth in the following table.

As of June 30 As of December 31 2009 2008 2007 2006 Senior Manager ...... 2,243 2,328 2,071 2,014 Middle Managers ...... 7,936 8,232 6,671 6,913 “White Collar” (including clerical and administrative workers, professionals and engineers) ...... 40,957 43,569 37,102 34,867 “Blue Collar”/Manual Workers ...... 22,381 19,269 14,904 14,265 Total ...... 73,517 73,398 60,748 58,059 Finmeccanica’s Italian employees are employed pursuant to collective bargaining contracts. Finmeccanica has experienced work stoppages from time to time, principally in connection with the renegotiation of national collective contracts. These stoppages have not had a material adverse effect on its operations. The national collective contract for metal engineering workers, which governs the terms and conditions of employment of most of Finmeccanica’s employees, will expire on December 31, 2011. Employees in Italy have the benefit of provisions of Italian law providing for severance payment upon termination of employment. Under law, these employees are entitled to receive a severance payment based on annual salary, length of employment and inflation. Finmeccanica maintains reserves for such payments in accordance with Italian law. In 2008, the Finmeccanica Group unionization rate was substantially unchanged from the prior year and approximately equal to 41%.

Litigation In the ordinary course of its activities, Finmeccanica and its subsidiaries are presently involved in a number of legal proceedings involving substantial litigation exposure. Finmeccanica believes that the extent of the litigation to which it is subject is a direct result of its size and history, as well as the business sectors in which it operates. Finmeccanica has conducted a review of its ongoing litigation and has made provisions considered appropriate in light of the circumstances when a loss is certain or probable and reasonably estimable, in accordance with accounting principles. As of December 31, 2008 Finmeccanica has recognized provisions for legal proceedings amounting to Euro 136 million in its consolidated financial statements. The Group’s most significant legal proceedings are summarized below.

Dennis A. Reid/Finmeccanica and Alenia Spazio (now SOGEPA) In 2001, Dennis Reid sued Finmeccanica and its subsidiary Alenia Spazio (now SOGEPA S.p.A.) in a Texas court to object to alleged breaches by the former Finmeccanica-Space Division of agreements relating to the implementation of the Gorizont satellite program. The Texas courts dismissed the case for lack of jurisdiction but Reid commenced a new lawsuit against Finmeccanica and SOGEPA S.p.A. before the Delaware Chancery Court. In the new suit, Reid claims the same damages he was claiming in the Texas lawsuit. A counterclaim action has been brought by Finmeccanica in the Tribunale of Rome. On June 29, 2007, Finmeccanica filed a motion to dismiss the case for being time barred under the statute of limitations and the lack of jurisdiction of the Delaware Chancery Court. In March 2008, the Court issued an order accepting Finmeccanica’s motion and ruling that the action is time-barred. The plaintiff has filed an appeal before the Supreme Court of Delaware against such order. In April 2009, the Supreme Court of Delaware issued a ruling reversing the Chancery Court’s decision on the statute of limitation motion and remanding the decision on Finmeccanica’s jurisdictional motion to the Delaware Chancery Court. Currently, the discovery relating to the jurisdiction is pending, and the next hearing is scheduled for November 18, 2009.

European Commission state aid investigations The European Commission is investigating the potential violation of EU rules on state aid with respect to certain loans granted by the Italian government under Law No. 808/1985. The Commission issued a ruling on this matter on March 11, 2008. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Development Costs and Government Grants”. Following the ruling, Finmeccanica repaid the portion of the loans under investigation that were due on the agreed repayment schedule. In the context of that ruling, the Commission indicated it is continuing to review two helicopter projects of the Group and their compliance with state aid rules. Should the Commission find those projects incompatible with

138 EU state aid rules, Finmeccanica may be required to repay the Italian government part or all of the loans received in connection with those projects plus accrued interest. The Group believes that these projects have been proven to be fully compatible with EU law, since they are both essential to national security.

Finmeccanica/Procura Regionale of the National Audit Office (Corte dei Conti) In 1995 the public prosecutor with the National Audit Office, the Procura Generale, sued the directors of the company Azienda Tranvie Autofile Napoli (now called Azienda Napoletana Mobilitá) and the company then known as Ansaldo Trasporti, for damages in a total amount of approximately Euro 100 million in relation to works undertaken to construct line 6 of the Naples underground rail network. In the first instance, the National Audit Office rejected the claim for lack of jurisdiction. The public prosecutor appealed against this ruling bringing an action against Finmeccanica, as successor entity to Ansaldo Trasporti following the merger of the latter into Finmeccanica in 2001. Finmeccanica objected that, prior to the merger, the contractual relationship underlying the dispute had been transferred to Ansaldo Trasporti Sistemi Ferroviari (now Ansaldo STS) and that this company should bear any liability in connection with the claim. The appellate section of the National Audit Office affirmed that the National Audit Office held jurisdiction including with respect to the action against the directors of Ansaldo Trasporti and deferred the case to the Territorial Department to decide on the merits. The Corte di Cassazione, affirmed this ruling in July 2008. The Procura Generale of the National Audit Office resumed the proceeding before the judges of the National Audit Office for it to decide on the merits, and the hearing is due to take place on June 22, 2010.

Finmeccanica/Royal Thai Army In 1999, the Royal Thai Army sued Finmeccanica in Bangkok claiming compensatory damages in an amount of USD 37,375,564 plus interest of USD 20 million in respect of technical faults in the missile system “Spada Aspide”. This missile system was supplied to the Royal Thai Army by Selenia Industrie Elettroniche Associate and the supply contract was later transferred in 1998 to AMS S.p.A. (now Selex Sistemi Integrati) who will be liable for the outcome of the proceedings. The defendant has asserted that the statute of limitation bars the plaintiff’s claim and that the court lacks jurisdiction in light of an arbitration clause in the supply contract. On March 10, 2009, the case was dismissed by the court for lack of jurisdiction. The Royal Thai Army cannot appeal the case dismissed by the court for lack of jurisdiction but could seek to arbitrate the matter under the arbitration clause in the supply contract.

Ansaldo Energia/Abengoa In November 1997, in relation to a contract commissioned by PREPA (the Puerto Rican Electric Power Authority), the Spanish company Abengoa awarded to Ansaldo Energia a subcontract for expansion work on the San Juan, Puerto Rican power plant. In connection with the contract between Abengoa and Prepa, the American International Insurance Company of Puerto Rico (“AIIP”), a member of the AIG group, issued a performance bond and an advanced payment bond, each in the amount of USD 125 million, in favor of PREPA which Ansaldo Energia, as a supplier, counter-guaranteed with respect to its activity. In 2000, Abengoa unilaterally terminated its contract without informing Ansaldo Energia and filed suit against the customer in a Puerto Rican court seeking compensation for damages it allegedly suffered. PREPA brought a claim requesting that Abengoa pay compensatory damages and in-pleaded AIIP for payment of the performance bonds. Ansaldo Energia is not a party to that proceeding. In 2001, Ansaldo Energia initiated arbitration proceedings in Paris seeking a finding that Abengoa breached the contract by terminating its agreement with PREPA without notifying Ansaldo Energia in advance. The arbitration award, issued in March 2003, was in favor of Ansaldo Energia. In order to avoid enforcement of the aforementioned counter-guarantees, on May 13, 2005, Ansaldo Energia brought an action against Abengoa, AIG and AIIP before the Tribunal of Milan, requesting that its counter-guarantees be found void, or, in the alternative, that the amount of the guarantee be capped at USD 36 million and that the indemnity by Abengoa be enforced. Finmeccanica believes that, even if the court does not accept Ansaldo Energia’s arguments and if the counter-guarantees are called, Finmeccanica could seek indemnification against Abengoa, including in light of the arbitration award described above. The Tribunal scheduled another hearing for December 22, 2009.

Ansaldo Energia/Pont Ventoux In January 2009 Pont Ventoux initiated arbitration proceedings against an association of companies that included Ansaldo Energia, as representative (with an interest of 31%), Alstom Power Italia S.p.A. (with an interest of 17%) and Voith Siemens Hydro Power Generation S.p.A. (with an interest of 52%) in connection with a contract to produce two electric generators for the hydro-electric power station in Val di Susa. A

139 contractual clause was included in the contract limiting damages to Euro 15 million, but the plaintiff claims damages of Euro 90 million for breach of contract and asserts that the limitation on liability in the contract of which Ansaldo Energia would be liable for 31%, does not apply due to gross negligence. Ansaldo Energia believes that it has fulfilled its obligations under the contract and that the alleged damages do not relate to the activities performed by Ansaldo Energia. The next hearing is scheduled for December 22, 2009.

Alenia Aeronautica/EADS ATR In December 2007, EADS ATR initiated arbitration proceedings in accordance with the rules of the International Chamber of Commerce of Paris (with its seat of arbitration in Lausanne, Switzerland) claiming that Alenia Aeronautica had not performed its contractual obligations under an agreement dated May 2001 for the provision of aircraft parts ATR 42 and ATR 72, manufactured by Alenia Aeronautica and EADS ATR, to EEIG ATR. EADS ATR and Alenia each own 50% of the shares of EEIG ATR. The plaintiff claims that Alenia Aeronautica failed to renegotiate the contractual sale prices, which were allegedly no longer applicable after the year 2003, as required by the contract. The plaintiff requested the defendant to pay damages of USD 32 million plus interest for the alleged contract violation and also asked the arbitration panel to establish the new sale prices based on production costs. Alenia Aeronautica is defending the claim and made certain counterclaims in its arbitration brief. On September 29, 2008, the plaintiff filed a pleading asking for their requested damages to be increased from USD 32 million to USD 55 million. The arbitration decision is expected in the next few months.

Fata Engineering S.p.A. — Fata S.p.A/Hezar Aluminium Industries On January 25, 2001, Fata Engineering and the Iranian company Hezar Aluminium Industries (“Hezar”) entered into a contract for the provision of a plant for production of aluminium continuous casting and rolling and the assembly, commission and training in relation thereto for an aggregate value of approximately Euro 73 million. In January 2006, Fata Engineering initiated arbitration proceedings in Geneva, demanding compensation in an amount of approximately Euro 9 million in respect of delays in completion of the contract due to the counterparty’s non-performance and failure to cooperate. With regard to that same contract, in 2007 Hezar initiated a second arbitration procedure in Geneva for damages in an amount of approximately Euro 55 million claiming that Fata Engineering and Fata S.p.A. are responsible for the delays (with Fata S.p.A. as de facto contractor operating through Fata S.p.A.’s division, Fata Hunter). Both arbitration proceedings are now consolidated in a single proceeding, and Finmeccanica is confident on the grounds of Fata’s claims. Even if Fata were found to be in default, Finmeccanica believes that the liability cap of approximately Euro 11 million, established for the benefit of Fata Engineering, in the contract for the production of services should not be exceeded, unless Hezar can prove that Fata Engineering acted with gross negligence. The investigation is on-going but neither evidence of gross negligence on the part of Fata Engineering, nor concrete evidence of any actual damage caused, has been provided to date. Moreover, Hezar has called the advance payment and performance bond issued by Fata Engineering S.p.A. in relation to the contract for the provision of services, and the bond has been paid by the counter guarantor Bank Mellat in an amount of approximately Euro 8 million. Such amount was provided for in Finmeccanica’s balance sheet. Finmeccanica is disputing that such sum be paid or refunded to Bank Mellat because of the wrongful execution of the bond.

Selex Service Management/Istituto Poligrafico e Zecca dello Stato Selex Service Management, a Finmeccanica subsidiary, is a minority shareholder together with the Italian State Polygraph (Poligrafico dello Stato) and the Italian postal service (Poste Italiane) of Innovazione e Progetti S.p.A., a project company engaged in the Italian electronic identity card project. Following the dissolution of Innovazione e Progetti, the Poligrafico launched a public tender for the award of the project contract. In January 2008, Selex Service Management requested the Administrative Tribunal of Lazio to annul, and temporarily suspend, the public tender process. Subsequently, the Administrative Tribunal of Lazio annulled the public tender process, such ruling has been appealed to the Council of State, which, on July 7, 2009, issued a judgment rejecting the appeal. Selex Service Management is also requesting the Tribunal of Rome to annul the resolution dissolving Innovazione e Progetti. The Tribunal has temporarily annulled the resolution and a hearing to discuss the merits is scheduled for February 10, 2010.

Finmeccanica — Calyon/Italian Internal Revenue Service (Agenzia delle Entrate) In May 2007, Finmeccanica joined Calyon S.p.A. in proceedings brought against the Italian Internal Revenue Service (Agenzia delle Entrate) in the Tribunal of Rome (Tribunale di Roma) for the payment of a

140 tax credit of Euro 71 million plus interest of Euro 34 million. Such tax credit was sold by Finmeccanica to Calyon in 2004. The Italian Internal Revenue Service objected that Calyon would lack a right of action and that the claim is barred by the statute of limitations. Finmeccanica joined Calyon in the proceedings in light of its potential exposure to Calyon for any losses that may arise for Calyon in the litigation. The next hearing is due to take place on October 28, 2009.

Finmeccanica/Banca di Roma/Agenzia delle Entrate These proceedings relate to the sale of a receivable by Finmilano S.p.A., a former subsidiary of Finmeccanica., in 1987. The receivable was sold at a discount to its face value against deferred payment by the buyer. The Italian tax authorities claimed that the transaction had the nature of a financing transaction and that, accordingly, the loss recorded by Finmilano in connection with the sale could not be deducted in its entirety in the year of the sale but, rather, had to be recognized over the following periods until payment of the consideration by the buyer. Finmeccanica is part of these proceedings as a result of the indemnity provided to Banca di Roma, which subsequently acquired Finmilano from Finmeccanica. As at the date of this Listing Prospectus, the case is currently pending before the Italian Supreme Court and the hearing date has not yet been fixed.

Finmeccanica/Agenzia delle Entrate These proceedings relate to stamp duty of Euro 10 million in connection with Finmeccanica’s capital increase in 1998. Although a tax payable for that amount was recorded in Finmeccanica’s balance sheet at the time, Finmeccanica subsequently declined to pay because it believed the payment demand from the Italian tax authority had been invalidated by procedural violations. Following proceedings before the Commissione Tributaria Centrale di Roma, and appeal against the first degree decision, the Commissione Tributaria Regionale di Roma, which functions as appellate court on tax matters, decided in favor of Finmeccanica. The Italian tax authorities have appealed against that decision and the case is now pending before the Italian Supreme Court. As at the date of this Listing Prospectus, the hearing date has not yet been fixed.

Telespazio/Agenzia delle Entrate The Agenzia delle Entrate, Rome District 4, a branch of the Italian tax authority, has filed a tax claim for Euro 30 million against Telespazio S.p.A in respect of the tax assessment for direct income taxation (IIDD) for the year 2000. The Tax Authority is challenging the legal right of the company to deduct, for tax purposes, certain losses incurred in connection with a sale of receivables. No provision has been made in the financial statements for this claim as the Company believes the transaction was properly accounted for. In February 2008 the Company received a demand for the provisional payment of Euro 8.3 million for additional tax accrued plus interest pending the decision of the court of first instance. The Company requested that this payment be suspended until November 2008. The hearing at the tax court of first instance took place in May 2008 and, on September 25, 2008, a ruling was issued in Finmeccanica’s favor. The Tax Authorities have appealed the decision but a hearing date has not yet been scheduled.

Telespazio/Agenzia delle Entrate This proceeding relates to the tax treatment of a contract dispute by Telespazio. In 2001, Astrolink, then a client of Telespazio, cancelled a contract with Telespazio thus becoming liable to Telespazio for a penalty which, under the contract, was equal to the costs that Telespazio would have incurred as a result of the cancellation plus 20%, subject to agreement among the parties. Telespazio estimated in 2001 that the penalty due from the client would amount to Euro 48.5 million and concurrently recorded a provision for the same amount in light of the fact that discussions with the client regarding the amount of the penalty were still ongoing. The Italian tax authorities claimed that Telespazio should have been able to establish in 2001 that the penalty owed from the client amounted, instead, to Euro 58.2 million and, accordingly, that Telespazio’s income in 2001 should have been higher by Euro 9.7 million. That additional income would offset part of the tax losses recorded by Telespazio in 2001, which were utilized in 2002. The exposure of Finmeccanica under this claim amounts to Euro 7 million, including additional taxes due, fines and interests. Any loss suffered by Finmeccanica would be covered by an indemnity provided by Telecom Italia, which was the owner of Telespazio in 2001, in connection with the sale of Telespazio to Finmeccanica. On September 25, 2008, a ruling was issued in Finmeccanica’s favor. The Tax Authorities may appeal against the decision.

141 SOGEPA/Agenzia delle Entrate SOGEPA S.p.A. initiated a dispute against the Agenzia delle Entrate, Rome District 4, challenging a tax assessment regarding direct income taxation (IIDD) for the year 2001, which included a claim for approximately Euro 18 million consisting of additional taxes, penalties and interest. This relates to a tax audit completed in 2004 against ALS S.p.A., a Finmeccanica Group company that merged into SOGEPA in 2006. The Tax Authority alleged that SOGEPA improperly accounted for certain work in progress inventories relating to the long-term contract for the Atlantic Bird1 satellite in 2000. On October 28, 2008, a ruling was issued in Finmeccanica’s favor. The Tax Authorities have appealed against the decision, but a hearing date has not yet been scheduled.

Production Facilities The table below shows the Group’s main production facilities. Of which, Surface Office Description/Name of Facilities Location Used By Type Area Space (Square (Square meters) meters) Property/Finmeccanica Genova — Torre Fiumara Selex Communications Offices 31,012 19,929 Property/Finmeccanica Samarate — Cascina Costa AgustaWestland Industrial 127,540 41,088 Property/Finmeccanica Vergiate (VA) AgustaWestland Industrial 95,148 13,336 Property/Alenia Aermacchi Venegono Superiore e Inferiore Alenia Aermacchi Industrial 128,105 15,681 Property/Alenia Aeronautica Nola (NA) Alenia Aeronautica Industrial 142,208 7,003 Property/Alenia Aeronautica Pomigliano Di Arco (NA) Alenia Aeronautica and Industrial 158,641 32,456 others Property/Alenia Aeronautica San Maurizio Canavese Alenia Aeronautica and Industrial 106,946 22,496 others Property/Alenia Aeronautica Torino and Collegno Alenia Aeronautica and Industrial 155,075 53,748 others Property/Elsag Datamat Genova — Puccini Datamat and others Offices 61,546 48,738 Property/Ansaldo Energia Genova — Lorenzi Ansaldo Energia and others Industrial 149,590 44,700 Property/Ansaldo S.T.S. Genova — Palazzaccio Ansaldo Segnalamento Offices 22,344 16,871 Ferroviario and Others Property/AnsaldoBreda Napoli — Brecce/Argine AnsaldoBreda and others Industrial 79,655 14,675 Property/OTO Melara La Spezia OTO Melara Industrial 130,427 17,829 Property/AgustaWestland Yeovil (United Kingdom) AgustaWestland Industrial 202,793 41,227 Lease/Selex Sensors and Basildon (United Kingdom) Selex Sensors and Airborne Industrial 38,374 15,942 Airborne Systems Systems/Selex Communications Lease/Selex Sensors and Luton (United Kingdom) Selex Sensors and Airborne Industrial 12,796 8,601 Airborne Systems Systems Lease/Selex Sensors and Edinburgh Selex Sensors and Airborne Industrial 40,640 24,020 Airborne Systems Systems Property/Finmeccanica Roma — Tiburtina Selex Sistemi Integrati Industrial 63,269 26,364 Group Services Property/Telespazio Roma — Tiburtina Telespazio Offices 23,310 12,423 Property/Finmeccanica Fusaro (NA) Selex Sistemi Integrati Industrial 67,118 12,258 Property/Finmeccanica Giugliano (NA) Selex Sistemi Integrati Industrial 36,342 4,632 Property/Alenia Aeronautica Grottaglie (TA) Alenia Aeronautica Industrial 120,799 9,243 and land grant Property/Finmeccanica Nerviano (MI) Galileo Avionica Industrial 32,076 10,545 Group Real Estate Property/Finmeccanica Campi Bisenzio (FI) Galileo Avionica Industrial 50,986 11,732 Group Real Estate Lease/Alenia Aeronautica Charleston (USA) Alenia Aeronautica Industrial 31,029 4,366 Property/AgustaWestland Philadelphia AgustaWestland Industrial 15,600 n.a.

142 Of which, Surface Office Description/Name of Facilities Location Used By Type Area Space (Square (Square meters) meters) Property/AnsaldoBreda Pistoia AnsaldoBreda Industrial 104,366 8,428 Property/DRS Power & Milwaukee, WI (USA) DRS Power & Control Industrial 56,745 n.a. Control Technologies, Inc. Technologies, Inc. Lease/DRS Test & Energy Huntsville, AL (USA) DRS Test & Energy Industrial 20,019 n.a. Management, LLC Management, LLC Property/DRS Sustainment West Plains, MO (USA) DRS Sustainment Systems, Industrial 41,534 n.a. Systems, Inc. Inc. Property/DRS Sustainment St. Louis, MO (USA) DRS Sustainment Systems, Industrial 24,155 n.a. Systems, Inc. Inc. Property/DRS Sustainment Florence, KY (USA) DRS Sustainment Systems, Industrial 25,089 n.a. Systems, Inc. Inc.

143 DRS TECHNOLOGIES, INC.

Overview of DRS On October 22, 2008, Finmeccanica completed the acquisition of DRS Technologies, Inc. The total value of the transaction was USD 5.2 billion, including the assumption of USD 1.6 billion of DRS’s net debt. DRS, incorporated in the State of Delaware, is a supplier of defense electronic products, systems and military support services. DRS provides high-technology products, services and support to all branches of the U.S. military, major aerospace and defense prime contractors, government intelligence agencies, certain international military forces and industrial markets. In its fiscal year 2008 (twelve months ended March 31, 2008), DRS posted USD 3,295 million and USD 166 million of revenues and net income respectively. In the financial year 2008, DRS’s earnings before interest expense and taxes (“EBIT”) were equal to USD 360 million. DRS focuses on several key areas of importance to the U.S. Department of Defense (“DoD”), such as command and control, intelligence, surveillance, reconnaissance, power management, battlefield digitization, advanced communications and networks, military vehicle diagnostics, troop sustainment and technical support. Incorporated in 1968, DRS has served the defense industry for over 39 years. DRS currently employs approximately 10,500 people worldwide. DRS’s products are currently deployed on a wide range of high-profile military platforms, such as DDG-51 Aegis destroyers, M1A2 Abrams Main Battle Tanks, M2A3 Bradley Fighting Vehicles, OH-58D Kiowa Warrior helicopters, AH-64 Apache helicopters, F/A-18E/F Super Hornet and F-16 Fighting Falcon jet fighters, F-15 Eagle tactical fighters, C-17 Globemaster II and C-130 Hercules cargo aircraft, Ohio, Los Angeles and Virginia class submarines, and on several other platforms for military and non-military applications. DRS has contracts that support future military platforms, such as the DDG-1000 Zumwalt destroyer, CVN-78 next-generation aircraft carrier and Future Combat System. DRS provides sustainment products that support military forces, such as environmental control systems, power generators, water and fuel distribution systems, chemical/biological decontamination systems and heavy equipment transport systems. DRS also provides support services to the military, including security and asset protection system services, telecommunication and information technology services, training and logistics support services for all branches of the United States armed forces and certain foreign militaries, homeland security forces, and selected government and intelligence agencies. The process of strategic integration of DRS into Finmeccanica is currently underway and a number of working groups have been created to assess the products of DRS and identify ways to optimize the product portfolio of the Group subject to the terms of the Special Security Agreement and Proxy Agreement described below. The substantial majority of DRS’s revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products and to provide related engineering, technical and other services according to the specifications of its customers. DRS’s primary “end-use” customer is the DoD. For the year ended March 31, 2008, sales directly to the DoD and indirect sales to the DoD through its prime contractors and sub-contractors generated over 90% of DRS’s consolidated revenues. DRS’s other customers include foreign governments, commercial and industrial customers and other United States federal, state and local government agencies. On October 2, 2006, DRS implemented a new organizational operating structure that realigned its key businesses into four operating segments. The four operating segments are: • the Command, Control, Communications, Computers and Intelligence (C4I) Segment; • the Reconnaissance, Surveillance and Target Acquisition (“RSTA”) Segment; • the Sustainment Systems Segment; and • the Technical Services Segment. All other operations, primarily DRS’s corporate headquarters, are grouped in “Other”.

C4I Segment The C4I Segment is comprised of the following business areas: Command, Control and Communica- tions (C3), which includes naval display systems, ship communications systems, radar systems, technical support, electronic manufacturing and system integration services, secure voice and data communications, air combat training, electronic warfare and ship network systems; Power Systems, which includes naval and industrial power generation, conversion, propulsion, distribution and control systems; Intelligence

144 Technologies, which includes signals intelligence, communications intelligence, data collection, processing and dissemination equipment, high-speed digital data and imaging systems, and mission and flight recorders; Tactical Systems, which includes battle management tactical computer systems, peripherals, electronic test diagnostics and vehicle electronics; and Homeland Security, which includes integration of traditional security infrastructures into a single, comprehensive border security suite for the Department of Homeland Security.

RSTA Segment The RSTA Segment develops and produces electro-optical sighting, targeting and weapon sensor systems, and image intensification (I2) night vision, combat identification and laser aimers/illuminator products, and provides electronic manufacturing services.

Sustainment Systems Segment The Sustainment Systems Segment designs, engineers and manufactures integrated military electronics and other military support equipment, primarily for the DoD, as well as related heat transfer and air handling equipment, and power generation and distribution equipment for domestic commercial and industrial users.

Technical Services Segment The Technical Services Segment provides engineering services, logistics and training services, advanced technology services, asset protection systems and services, telecommunication systems, integration and information technology services, power generation and vehicle armor kits for military, intelligence, humanitarian, disaster recovery and emergency responder applications.

Summary Selected Financial Information for DRS The table below shows related financial and operating data for DRS for the periods presented. DRS prepares its consolidated financial statements in accordance with U.S. GAAP, which differ in certain respects from IFRS. Accordingly, the financial information of DRS presented below is not directly comparable to the financial information of Finmeccanica presented in this Listing Prospectus, since Finmeccanica prepares its financial information in accordance with IFRS. As DRS uses the U.S. dollar as its reporting currency, amounts are set forth in U.S. dollars. As of and for the As of and for the year ended six months ended 31 March 30 September 2008 2007 2006 2008 2007 (U.S. Dollars million) Total Assets...... 4,316 4,189 4,019 4,299 4,152 Financial Debt ...... 1,633 1,788 1,833 1,630 1,712 Cash and cash equivalent ...... 86 96 1 118 52 Total Revenues ...... 3,295 2,821 1,736 1,939 1,519 Operating income ...... 360 271 193 165 160 Net earnings ...... 166 104 81 79 68 Stockholders’ equity ...... 1,684 1,479 1,352 1,775 1,568 Backlog...... 3,607 3,038 2,396 3,909 3,587

Acquisition Rationale Finmeccanica believes that the acquisition of a significant presence in the United States in the Defense Electronics and Security segment through the acquisition of DRS will allow it to (i) acquire a technologically advanced industrial base in the United States through which the Group will strengthen its competitive position internationally and channel to the U.S. market the Group’s core competencies, (ii) grow in the strategic segment of Defense Electronics and Security and (iii) strive for the role of preferred supplier for prime contractors in major U.S. defense programs. Finmeccanica’s current presence in the United States is related to significant contracts for the supply of tactical transport aircraft (C27J). Finmeccanica’s targets further growth in the United States in the Defense Electronics and Security segment in order to strengthen its global presence and pursue its growth strategy in the Aerospace and Defense sector.

145 Finmeccanica believes that the growth strategy implemented through the acquisition of DRS will allow it to (i) access the U.S. Department of Defense budget for procurement and R&D (which in 2007 represented approximately a third of global defense spending (Source: Finmeccanica estimates based on Teal Group 2007), (ii) become a reference point in the supply of defense systems to the United States army and governmental agencies and (iii) access product development and export support programs (Foreign Military Sales).

The Special Security Agreement and the Proxy Agreement Prior to closing of the acquisition of DRS, Finmeccanica obtained clearances by the United States Committee on Foreign Investments in the United States (CFIUS). As agreed with the U.S. Department of Defense in connection with the approval process, DRS will operate, going forward, in accordance with the terms of a Special Security Agreement (“SSA”) and a Proxy Agreement. These agreements were executed at the end of July 2009. A SSA is an agreement limiting the right of non-U.S. shareholders to access classified information that protects the secrecy of such information through certain governance mechanisms. Such mechanisms include: (i) the appointment of directors and officers with U.S. security clearances; and (ii) the establishment of a governing committee supervising the management of classified information. Finmeccanica, along with DRS and Meccanica Holdings, agreed upon the terms and conditions of a SSA with the U.S. Department of Defense. Under the SSA, the directors are appointed by Meccanica Holdings, but a majority of the directors must have had no prior relationship with the DRS or Finmeccanica Group and be approved by the Department of Defense (the outside directors) and at least one officer must serve as an executive director. The SSA establishes a government security committee consisting of the outside directors and the officer director which ensures that DRS maintains policies and procedures to safeguard certain U.S. government sensitive information through the implementation of a technology control plan. However, under the SSA, Finmeccanica maintains full control of DRS’ management and the ability to direct its policies subject at all times to the full compliance of policies and practices to ensure the safeguarding of classified and controlled unclassified information. A Proxy Agreement is an agreement which prevents the sharing of classified information with non-U.S. shareholders or affiliates, by the appointment of a proxy board comprised solely of American citizens with U.S. security clearances (Proxy Holders), approved by DSS. Certain DRS sensitive assets were placed into a subsidiary of DRS, DRS Defense Solutions, LLC (“DRS Defense Solutions”), and the terms and conditions of a Proxy Agreement among the U.S. Department of Defense, DRS, Meccanica Holdings and Finmeccanica have been agreed with respect to such assets. Under the Proxy Agreement, DRS appointed three Proxy Holders of DRS Defense Solutions. These individuals are responsible for the oversight of DRS’ security arrangements, including the separation of the relevant DRS assets from Finmeccanica. Those Proxy Holders have the obligation to act prudently to protect the legitimate economic interests of DRS in DRS Defense Solutions and DRS Defense Solutions shall comply with the policies and requirements arising as a result of being a Finmeccanica subsidiary. The proxy board has authority to manage the company affairs independently of the DRS Board of Directors, with the exception of: (i) the sale, lease or disposition of the assets of DRS Defense Solutions, other than in the ordinary course of business; (ii) the incurrence of debt and granting of security, other than in the ordinary course of business; (iii) a company reorganization or dissolution or decision to merge or consolidate with another company; and (iv) insolvency petitions. Assets which account for approximately 30% of DRS revenues will be managed under this arrangement. Under the Proxy Agreement, a government security committee is established which consists of at least the three Proxy Holders, to ensure that DRS Defense Solutions complies with the provisions of the Proxy Agreement, the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulation (“EAR”), and the National Industrial Security Program Operating Manual (“NISPOM”). Also DRS Defense Solutions is required to develop and implement a technology control plan which shall prescribe measures to prevent unauthorized disclosure or export of controlled unclassified information consistent with applicable United States laws and regulations. In addition, the Proxy Agreement and SSA establish procedures regarding meetings, visits and communications between DRS Defense Solutions, DRS and Finmeccanica. The U.S. Department of Defense continually reviews the technology control plan and receives an annual report from the proxy holders (in the case of the Proxy Agreement) and the directors (in the case of the SSA).

146 MANAGEMENT

Directors Finmeccanica’s Board of Directors is responsible for the management of the Company. It has the power to take all actions consistent with Finmeccanica’s corporate purpose, except for actions that are reserved for shareholders’ meetings by law or by the by-laws. Certain powers have also been delegated to the Chairman and Chief Executive Officer. Each board member is elected for a maximum three year term. Under Finmeccanica’s by-laws, certain fundamental resolutions can be vetoed by the MEF acting in conjunction with the MED, which have been given special powers based on the importance of Finmeccanica’s operations for the national strategic interests. The current Board of Directors consists of 12 members, 11 of which were elected by the shareholders’ meeting held on June 6, 2008 for the three year term 2008-2010. An additional member without voting rights has been appointed by the MEF in agreement with the MED and in accordance with Finmeccanica’s by-laws for the same period. The three year terms of these current board members will expire upon approval of the financial statements for the year 2010. The following table sets forth the name, age, position and date of appointment of the current members of the Board of Directors. First Appointment to Current Name Age Management Position Position Pier Francesco Guarguaglini ...... 72 Chairman and Chief Executive 2002 Officer Piergiorgio Alberti ...... 66 Director 2005 Franco Bonferroni ...... 71 Director 2005 Andrea Boltho von Hohenbach .... 70 Director 2008 Maurizio De Tilla ...... 68 Director 2000 Dario Galli ...... 52 Director 2008 Richard Greco ...... 40 Director 2008 Francesco Parlato ...... 48 Director 2007 Nicola Squillace...... 45 Director 2008 Riccardo Varaldo ...... 74 Director 2005 Guido Venturoni ...... 75 Director 2005 Giovanni Castellaneta(1) ...... 67 Director 2005

(1) Appointed by the MEF, in agreement with MED, through its special powers granted by Law 474/1994 and subsequent amendments. This Director does not have voting rights. The business address of each member of Finmeccanica’s Board of Directors is Piazza Monte Grappa 4, 00195 Rome, Italy. No conflicts of interest exist between any duties of the persons referred to above to Finmeccanica and their private interests and/or other duties.

Biographies of Directors Short biographies of each of the directors are set out below.

Pier Francesco Guarguaglini — Chairman and Chief Executive Officer Pier Francesco Guarguaglini was born in Castangneto Carducci (LI), Italy on February 25, 1937. He has been the Chairman and Chief Executive Officer of Finmeccanica since April 24, 2002. His mandate was renewed by the shareholders’ meetings of May 16, 2003, July 12, 2005 and June 6, 2008. Pier Francesco Guarguaglini graduated in Electronic Engineering at the University of Pisa and was awarded a Ph.D in electrical engineering at the University of Pennsylvania. He is also a lecturer at the University of Rome. He is a member of the board of the European Association of Aerospace Industries (AECMA) and The Institute of Electrical and Electronics Engineers (IEEE), and he also sits on the councils of Confindustria. Pier Francesco Guarguaglini is a member of the Management Board for relations between Italy and the United States and

147 Independent Director of Eutelsat Communications. He has occupied a number of offices, including: General Manager and later Chief Executive Officer of Officine Galileo (1984-1994); Chief Executive Officer of OTO Melara and Breda Meccanica Bresciana (1994-1996); Group Head of the Defense Sector Companies of Finmeccanica (1996-1999); Chairman of the Board of Directors of Alenia Marconi Systems (1998-2000); and Chief Executive Officer of Fincantieri Cantieri Navali Italiani (1999-2002). He currently serves as president of the Aerospace and Defence Industries Association of Europe.

Piergiorgio Alberti — Director Piergiorgio Alberti was born in Sanremo (IM), Italy on March 28, 1943. He has been a Director of Finmeccanica since July 12, 2005 and his term in office was renewed by the shareholders’ meeting of June 6, 2008. He is a lecturer in administrative law at the Faculty of Law of the University of Genoa, where he also teaches European Administrative Law. He is the author of a number of monographs, articles in Italian and foreign scientific publications. He is a member of the board of cassation lawyers at the Senior Council of Magistrates and the founder of the law firm Alberti & Associati. He is currently a Director of Parmalat S.p.A., the Ospedali Galliera Hospital Trust, Genoa and of the Ansaldo Foundation. He has also acted as Director of: Banca Carige S.p.A.; Locat S.p.A.; Mediocredito Ligure; Sina S.p.A.; and the Italian Association of Motorway and Tunnel Licensee Companies (AISCAT). He has also acted as Vice-Chairman of Autostrada dei Fiori S.p.A.; Autostrada Ligure Toscana S.p.A.; and Finligure S.p.A. He has been a member of the Technical and Scientific Committee that was set up by the government for the application of section V of the Constitution. Piergiorgio Alberti is a member of various associations (including IISA — the Italian Institute of Administra- tive Sciences, AIDU — the Italian Association of Town Planning Law, and AIPDA — the Italian Association of Lecturers in Administrative Law). He is also a joint editor of Economia e Diritto del Terziario.

Franco Bonferroni — Director Franco Bonferroni was born in Reggio Emilia, Italy on October 10, 1938. He has been a Director of Finmeccanica since July 12, 2005 and his term in office was renewed by the shareholders’ meeting of June 6, 2008. He is a chartered accountant and statutory auditor and he has been both a Member of Parliament at the Chamber of Deputies (1979-1992) and a Senator (1992-1994). He has been a freelance practitioner since 1976; he was a member of the Council of the Chamber of Commerce of Reggio Emilia (1966-1974), of which he was later Chairman (1974-1979). Franco Bonferroni has acted as a Director of a number of companies, including Autostrada del Brennero S.p.A. (1966-1974), Fidenza Vetraria S.p.A. and Montedil S.p.A. (Montedison Group) (1977-1979). He is currently a Director of Alerion Industries S.p.A. and Cassa di Risparmio di Bra. He has been Chairman of IFOA, the training institute for company operators (1975-1989), and from 1989 to 1992 he was Deputy Secretary of State at the Ministry of Trade and Industry and the Ministry of Foreign Trade.

Andrea Boltho von Hohenbach — Director Andrea Boltho von Hohenbach was born in Berlin, Germany on October 13, 1939. He has been a fellow and Tutor in Economics at Magdalen College at Oxford University since 1977. He received degrees from the London School of Economics, the University of Paris and Oxford University. In 1966, he began his professional collaboration at the OCSE in the Economics and Statistics Department. He was a visiting professor at the Collège d’Europe at Bruges, the Universities of Paris, Venice, Turin, Siena and the University of Rome Tor Vergata; he also taught at the Bologna Center of the Johns Hopkins University and the International University of Japan. He was a consultant for the World Bank and he has collaborated with some prominent international groups such as the ABB, Arthur Andersen, Ericsson, FIAT, Generali, IBM, KPMG, Pirelli and Siemens. He is the author of numerous economics publications.

Maurizio De Tilla — Director Maurizio De Tilla was born in Naples, Italy on April 6, 1941. He has been a Director of Finmeccanica since October 25, 2000. His term in office was renewed by the shareholders’ meetings of May 16, 2003, July 12, 2005 and June 6, 2008. He is a civil lawyer at the Court of Cassation and Chairman of the National Social Security and Court Assistance Fund. He is Chairman of the Association of Private Social Security Bodies; the Italian Institute of Forensic Culture; and Senior Vice-Chairman of the Federation of Associations of European Advocates. Maurizio De Tilla chaired the Council of the Association of Solicitors of Naples from 1993 to 1994. He was formerly Chairman of the European Court of Arbitration for Southern Italy and is currently Chairman of the Naples Interdisciplinary Consultancy Board and Board of Arbiters of the Italy-USA Association of Solicitors. He is Chairman of Lextel, Director of Alleanza Assicurazioni and

148 member of the board of Assicurazioni Generali. He contributes to a number of legal publications and newspapers and is the author of numerous publications. He is a joint director of Immobili e Diritto (published by Il Sole 24 Ore). As a journalist, he is also a member of the Council of Journalists of Campania.

Dario Galli — Director Dario Galli was born in Tradate (VA), Italy on May 25, 1957. He has a degree in Mechanical Plant Engineering from the Politecnico of Milan, and has been Provincial President of Varese since April 2008. He has been a Member of Parliament at the Chamber of Deputies (1997-2006); a Senator (2006-2008); and Mayor of Tradate (1993-2002). He was assistant to the General Administrative Office of the company FAST in Tradate, Manager in charge of the manufacturing system at the Aermacchi in Varese and Head of Production and Logistics at the Replastic, Milan. He is currently a mechanical contractor. Furthermore, he was previously a professor for the postgraduate course at the Varese Chamber of Commerce.

Richard Greco — Director Richard Greco was born in New York, United States on May 3, 1969. He has a degree in Chemistry from Fordham University. He obtained an MBA in finance from the University of Chicago and a Masters degree in American Foreign Policy from the Johns Hopkins University. He established Filangieri Advisory Corp., of which he is President, and is Director of Mediware Information Systems, Boliven LLC and Performance Metals, Inc. He was an associate at The Scowcroft Group (Washington, D.C. 1996-1997); practiced corporate finance at Stern Stewart & Co (1997-2002); and, in 2002, he was appointed by the President of the United States as a White House Fellow and assigned to the Office of the Secretary of Defense as a special assistant. He was also Chief Financial Officer of the Naval Department. He is the author of numerous articles on finance, education and foreign policy, and has been elected a lifetime member of the Council on Foreign Relations.

Francesco Parlato — Director Francesco Parlato was born in Rome, Italy on April 17, 1961. He has been a Director of Finmeccanica since September 12, 2007 and his term in office was renewed by the shareholders’ meeting of June 6, 2008. He graduated in Economics and Commerce at LUISS, Rome. In July 2007, he was appointed to the role of Head of the General Finance and Privatization section of the Treasury Department, where he had been Head of the Department responsible for the privatization of groups and companies. For a number of years, he occupied management posts at the IRI Finance Department. He is currently a member of the Board of Directors of the electrical services body GSE S.p.A. (where he is Chairman of the Compensation Committee) and Fincantieri S.p.A., and a member of the Steering Committee of Cassa Depositi & Prestiti S.p.A. He has also been a Director of Tirrenia di Navigazione S.p.A. and Mediocredito del Friuli Venezia Giulia S.p.A.

Nicola Squillace — Director Nicola Squillace was born in Crotone, Italy on August 6, 1964. He has a law degree from La Sapienza University of Rome. He is a lawyer admitted to the Milan Court and he currently provides legal advice in finance and acquisition to companies at the Studio Legale Libonati — Jaeger in Milan. He worked as a lawyer for Studio Legale Schlesinger — Lombardi and Studio Brosio, Casati e Associati. He has been a director of UniCredit Banca per la Casa S.p.A, as well as Director and member of the executive committee of Milano Assicurazioni S.p.A. He is currently a Director of Mediocredito Italiano (formerly Banca Intesa Mediocredito). He is the author of numerous articles on corporate and financial law, and in addition, he has been associated with the Corporate Law Department of the University of Milan.

Riccardo Varaldo — Director Riccardo Varaldo was born in Savona, Italy on June 17, 1935. He has been a Director of Finmeccanica since July 12, 2005 and his term in office was renewed by the shareholders’ meeting of June 6, 2008. He has an Economics degree from the University of Pisa, where he was a lecturer in Economics and Company Management from 1972 onwards. In 1987, he became a member of the staff of Scuola Superiore Sant’Anna for University and Postgraduate Studies. He is currently Chairman of that organization, after previously acting as Director (Rector) from 1993 to 2004. He is an honorary Professor of the Chongqing University in China. He has been a member of the Board of the Italy-Japan Business Group since 2004. He has also been a board member of the Scientific Committee of the Lucchini Foundation and the Think Tank of

149 Unioncamere. He is currently both a Director of Piaggio S.p.A. (since 2006) and a member of the Supervisory Board of Intesa Sanpaolo S.p.A. (since April 30, 2008). He was Director of Cassa di Risparmio di Firenze (until March 2008), Targetti Sankey (until April 2006), OTO Melara (2003-2005), Alleanza Assicurazioni, Gruppo Generali (1990-1993); and Nuovo Pignone (1989-1992). Riccardo Varaldo is Chairman of the Italian Society of Marketing and a member of a number of other associations, including the Italian Society of Economists and the Italian Academy of Company Economics. He occupied a number of roles in ministries and public bodies and is currently a member of the Commission MIUR for establishing research companies. He is the author of a number of monographs and articles in Italian and foreign publications. He is the editor of Mercati e Competitività and Joint Editor of Economia e Politica Industriale, and a member of the scientific committees of a number of other scientific publications.

Guido Venturoni — Director Guido Venturoni was born in Teramo, Italy, on April 10, 1934. He has been a Director of Finmeccanica since July 12, 2005 and his term in office was renewed by the shareholders’ meeting of June 6, 2008. Guido Venturoni attended the Livorno Naval Academy, where he became an officer in 1956. In 1959, he obtained a pilot’s license from the Naval Aviation Branch, authorizing him to operate from aircraft carriers. Promoted to Rear-Admiral in 1982, he later went on to assume roles of increasing responsibility, including Head of Operations at the Navy and later at the Ministry of Defense, Commander of the 1st Naval Division, Deputy Head of the Naval General Staff and Commander in Chief of the Naval Squadron in the Central Mediterranean. In 1992, he was appointed Head of the Naval General Staff and in 1994, Head of the General Defense Staff. In 1999, he was appointed to the role of President of the Military Committee of NATO. Admiral Venturoni completed his mandate in Brussels in 2002 and retired from active service after 50 years in the forces. He occupied various important roles and conducted a number of military operations at national and international levels, for which he was awarded several Italian and foreign decorations. More specifically, he was in charge of the multinational strategic and operational intervention led by Italy in Albania in 1997. From 2002 to November 2005, he was Chairman of Selenia Communications S.p.A. (formerly Marconi Selenia Communications S.p.A.).

Giovanni Castellaneta — Director Giovanni Castellaneta was born in Gravina di Puglia (BA), Italy, on November 9, 1942. He read law at La Sapienza University in Rome and entered the diplomatic service in 1967. He has held numerous posts both in Italy and abroad. He has been, inter alia, Secretary-General with the Ministry of Foreign Affairs, Press and Cultural Attaché in Paris, Deputy Permanent Representative for Geneva-based international organizations, Head of the Press and Information Service at the Ministry of Foreign Affairs and Ambassador to Iran and Australia. He has held the post of Diplomatic Advisor to the Italian Prime Minister and has acted as the Prime Minister’s Personal Representative for G7/G8 summits. Until recently, he acted as Italy’s Ambassador to the United States. He is currently the Chairman of SACE.

Proceedings Against a Director Guido Venturoni, director of Finmeccanica, in his capacity as Chief of the Italian Navy, is currently involved in pending criminal proceedings at the Padova Criminal Court (Tribunale Penale di Padova). Together with other chiefs and senior officers of the Italian Navy, Venturoni is accused of breaching certain legal obligations in his failure to inform employees of occupational hazards (in this case, the presence of asbestos) and his failure to take sufficient measures to manage this risk.

Governance and Board Committees Consiglio di Amministrazione — The Board of Directors The Board of Directors (the Consiglio di Amministrazione) manages the affairs of Finmeccanica. It defers to shareholders where required to do so under law or pursuant to the Company’s by-laws and in such cases, the shareholders participate in some management decisions. The Board of Directors has numerous powers including the following: (a) to carry out mergers and de-mergers in cases provided by law; (b) to create or close secondary establishments; (c) to reduce share capital in the event of withdrawal of one or more shareholder; (d) to adapt the by-laws to legislative changes; and (e) to transfer the registered office within the national territory.

150 The Board of Statutory Auditors — Collegio Sindacale Pursuant to Italian law and the applicable CONSOB rules, the Board of Statutory Auditors must oversee: the Company’s compliance both with the law and its by-laws; the observance of the principles of correct administration; ensure the adequacy of the Company’s organizational structure for matters within the scope of its authority; ensure the adequacy of the internal control system and the administrative and accounting system and the reliability of the latter in correctly representing the Company’s transactions; ensure the implementation of corporate governance rules as contained in the Code of Conduct or trade association with which the Company has publicly disclosed it is in compliance; and ensure the adequacy of provisions regarding information supplied by the subsidiaries. Members of the Board of Statutory Auditors may carry out inspections at any time and may require directors to supply information regarding the subsidiaries’ business performance or particular transactions. After notifying the chairman of the Board of Directors, the Board of Statutory Auditors may call a shareholders’ meeting and meetings of the Board of Directors and request the co-operation of Company employees in performing its duties. Such powers may also be exercised by at least two members of the Board of Statutory Auditors with regard to shareholders’ meetings and by at least one member of the Board of Statutory Auditors with regard to meetings of the Board. At the annual general meeting of shareholders, the Board of Statutory Auditors must inform shareholders of any irregularities identified during the course of its supervision. In addition, the Board of Statutory Auditors must promptly report any material issues to CONSOB, the shareholders and the Italian courts.

Internal Audit Committee — Comitato per Controllo Interno The role of the Internal Audit Committee involves assisting the Board of Directors in its periodic audits of the adequacy and effectiveness of internal control systems, for which the Board of Directors is responsible. The committee is composed of a number of individuals, one of whom has experience in finance and accountancy. It may avail itself of the support of external advisors, whose expenses are paid by Finmeccanica. The committee meets at least bi-annually and, in its surveillance capacity, both makes proposals to and is consulted by the Board on matters on internal audit. The committee assists the Board of Directors in: (i) the definition of the guidelines of Finmeccanica’s internal control system; (ii) the appointment of the executive administrator in charge of supervising the internal audit system; (iii) evaluating on an annual basis (at least) the efficiency, effectiveness and appropriateness of the internal audit system in practice; and (iv) describing the internal audit system in an annual report on corporate governance. The Internal Audit Committee is intended, together with the regulations, procedures and organizational structures, to create an appropriate process to identify, quantify, monitor and manage the main risks to ensure that Finmeccanica is a sound business operating in accordance with its objectives. The responsibilities of the Internal Audit Committee include, among others, the following: • to work together with the manager responsible for drafting company financial reports, to ensure the suitability of the accounting principles and the consistency of the application of those principles for the purposes of drafting the consolidated balance sheet; • upon the request of an executive Director, to advise on specific issues that assist in the identification of the main risks to the Company, as well as the planning, execution and management of the internal audit system; • to examine the work plan prepared by internal audit and its periodic reports; • to report to the Board of Directors at least on a half-yearly basis with updates on the meetings held for the approval of the draft balance sheet in relation to the activities carried out by the Company and the adequacy of the internal audit procedures; and • perform any other tasks as the Board of Directors may require. In fulfilling its duties set out above, the Internal Audit Committee may: (i) examine and discuss with management and the head of internal control the suggestions made to the committee, the most significant issues that have arisen and the reasons therefore and the potential difficulties that may arise when certain plans are put into action; and (ii) meet with the management to examine the main risks to the Company that have been identified and the measures adopted to avert, monitor and control them.

151 The President of the Board of Statutory Auditors, or another entity specified by him, may participate in the work of the Internal Audit Committee. The President and the Managing Director can also participate in the committee’s work, as can the Head of Internal Control upon being so invited by the Internal Audit Committee. As of the date of this Listing Prospectus, the Internal Audit Committee is composed of four members: Piergiorgio Alberti (President); Franco Bonferroni; Nicola Squillace; and Maurizio De Tilla. The committee members are all independent, non-executive Directors.

Compensation Committee — Comitato per la remunerazione The Compensation Committee has the following responsibilities: • to determine the compensation of the President and Managing Director of Finmeccanica on the advice of the Board of Statutory Auditors, where required, in accordance with the requirements of Article 2389 of the Italian Civil Code, based on their employment contract with the Company, if any; • to assess the proposals of the President and Managing Director regarding the general criteria of remuneration and incentives, as well as the plans and systems of managerial development, for key Group employees and for the executive Directors; • to support the corporate summit of Finmeccanica in decisions concerning the best possible policies for the management of the Group; • to prepare for the review and approval of the Board of Directors, the remuneration plans based on the assignment of shares and options to buy shares in Finmeccanica of which the Directors, senior managers of the Company and other companies of the Group may avail themselves; and • to define the regulations that apply to these remuneration plans and the management section of the previous share incentive plans. In the first quarter of 2008, the committee presided over the current short and medium to long-term incentive plans and approved the granting of the Management by Objectives (“MBO”) to the management of the Group. The committee also granted incentives in line with the Non-Corporate Incentive Plan 2008-2010. The committee also specifically examined and assessed the key features of the Group’s remuneration policy. Finally, it analyzed the changing employment dynamics and fluctuations in employment cost with regard to national and international operations. As of the date of this Listing Prospectus, the Compensation Committee is comprised of five members: Riccardo Varaldo (President); Piergiorgio Alberti; Franco Bonferroni; Dario Galli and Francesco Parlato. The committee members are all non-executive Directors, four of which are independent.

Strategy Committee — Comitato per le Strategie The President and the Managing Directors assess potential strategies and related business plans for the furtherance of the development of the Group. The role of the Strategy Committee is to undertake preliminary assessments of those proposed strategies and business plans for submission to the Board of Directors. In these meetings, the committee carried out in-depth analysis of the development of the industry and the competitive position of each of the various business sectors of Finmeccanica, to ensure that they were in line with the strategies which had been presented to the Board of Directors. Moreover, in furtherance of its duties, on January 25, 2007, the Board of Directors established a Senior Defense Advisory Committee (the “SDAC”). The SDAC was set up in order to gain the support of experts and other significant individuals in the aerospace and defense sector on an international level. The SDAC was also intended to assist the Board of Directors and the Company’s senior management in the evaluation and determining of strategies for the aerospace and defense sectors.

Appointment of members of the Board of Directors, Board Meetings and super-majority requirements The Board of Directors must consist of no less than eight and no more than twelve members, in addition to the Director without voting rights appointed by the MEF. The Board of Directors currently consists of twelve members: eleven members were appointed at the shareholders’ meeting on June 6, 2008 plus one director without voting rights, appointed by the MEF. These Board members will remain in office until the shareholders’ meeting to approve the financial statements for the year 2010. The other members of the Board of Directors are elected by the shareholders according to voting lists.

152 Directors serve for a maximum three year term and are eligible for re-election. When a Director resigns, is removed or is otherwise unable to serve, an alternate Director will be selected based on the list provided by the shareholders represented by the outgoing director. If, however, the Director selected in connection with the special government powers resigns, is removed or is otherwise unable to serve, the MEF will appoint a substitute in agreement with the MED. If at any time more than one third of the members of the Board of Directors resign or otherwise cease to be Directors, without taking into account the member appointed by the MEF, the entire Board of Directors will be considered lapsed. In that event, Finmeccanica’s shareholders will immediately select a new Board of Directors according to the procedures for initial election and appointment and the MEF, acting in conjunction with the MED, shall appoint the director without voting rights. The quorum for a Board of Directors meeting is a majority of the members in office. The member appointed by the MEF is not counted for a quorum and does not have voting rights. Resolutions are generally adopted by a majority of votes cast by those present. Resolutions concerning the following matters require approval by a qualified majority of 70% of the Directors in office: • proposal to place the Company in voluntary liquidation; • the approval of plans for the merger or de-merger of the Company; • proposal to amend any clause of the by-laws or to adopt new by-laws; • divestitures, transfers, leases, grants of usage rights, contributions to joint ventures or other actions that would bind or limit the defense operations of the Company or its divisions; • divestitures, transfers, licenses, contributions to joint ventures or other actions that would bind or limit the Company’s rights in technology, production processes, know-how patents, industrial plans and any other creative works in any way relating to the Company’s defense operations; • transfers of defense research and development activities outside of Italy; • divestitures, transfers, pledges, grants of usage rights, contributions to joint ventures or other actions that would bind or limit Finmeccanica’s interests in subsidiaries, affiliates or other companies in which it holds equity participations that operate in the defense sector; • communication from the issuer regarding public tender offers; and • votes at the shareholders’ meetings of Finmeccanica’s subsidiaries and affiliates (and other companies in which it holds equity interests) in the defense sector that involve any of the foregoing actions. If a vote is tied, the vote of the Chairman, or the director who chairs the meeting in his absence, prevails. A meeting of Finmeccanica’s Board of Directors may be called by the Chairman on his or her own initiative, and must be called upon a request of the majority of the members of Finmeccanica’s Board of Directors or Board of Statutory Auditors (or one member of the Board of Statutory Auditors).

Principal Executive officers The table below sets forth the Group’s executive officers, their positions within Finmeccanica and its subsidiaries and their age. Finmeccanica’s current Chief Executive Officer (amministratore delegato) is Pier Francesco Guarguaglini, who was re-appointed by Finmeccanica’s Board of Directors on June 6, 2008. Finmeccanica’s Chief Executive Officer has been entrusted with broad management powers, including the authorization to legally bind the Company subject to certain restrictions. Name Age Position Pier Francesco Guarguaglini ...... 72 Chairman and Chief Executive Officer Giorgio Zappa ...... 64 Chief Operating Officer Alessandro Pansa ...... 47 Co-General Manager Short biographies of Alessandro Pansa and Giorgio Zappa are set out below.

Giorgio Zappa — Chief Operating Officer Giorgio Zappa, born in Casatenovo (LC), Italy, on February 5, 1945, received a law degree from La Sapienza in Rome. In 1971, he joined Terni Siderurgica and became the Deputy Director General of Personnel and Administration at Finmeccanica in 1975. In 1983, he served as General Director of Personnel

153 and Administration at Ansaldo, and in 1987, he became the Deputy Director of Finsider, where he worked until he joined Ilva in 1989. In 1990, Mr. Zappa returned to Terni Siderurgica as the Director General of Special Steel Sectors and Mechanics and President of Terni Siderurgica e Società Cogne S.p.A. In 1993, he again joined Finmeccanica as the General Director of Alenia and was promoted to CEO in 1995, where he worked until he later took on the same role at both Alenia Aerospazio and Alenia Spazio, where he subsequently became Chief Executive and Chairman of the company, President of Telespazio and Vice President of Aermacchi. On February 18, 2005, he became the President of Alenia Aeronautica and became the Chairman of the Board of the Italian-French joint venture Alcatel Alenia Space S.a.S on July 1, 2005. Currently, he is Vice-President of the Industrial Union of Rome and a Board Member of the Industrial Union of Turin. He has been appointed to serve in leadership positions of both Italian and international aerospace associations such as AIAD, where he has served as President since July 2004, and AECMA.

Alessandro Pansa — Co-General Manager Alessandro Pansa, born in Mortara (PV), Italy, on June 22, 1962, received a degree in Economics from Bocconi University in Milan and attended the Graduate School of Business Administration of New York University. He is Chief Financial Officer (since July 2001) and Co-General Manager (since October 2004) of Finmeccanica, in charge of Finance, Planning and Control, Administration, Tax Planning, Investor Relations, M&A and Business Development, and Legal and Corporate Affairs. Previously he was Managing Director and Partner of Lazard, an investment bank. Before joining Lazard, Alessandro Pansa worked at Vitale Borghesi, an Italian investment bank.

Board of Statutory Auditors Under Italian law, in addition to electing the Board of Directors, Finmeccanica’s shareholders also elect a Board of Statutory Auditors composed of 5 members according to the by-laws. Finmeccanica’s shareholders also elect two alternate statutory auditors who will automatically substitute auditors who resign or are otherwise unable to serve as auditors. The entire Board of Statutory Auditors is elected by the shareholders’ meeting according to the voting list. At least two of the regular auditors and one of the alternate auditors are chosen from the register of auditors which have worked on the legal compliance of accounts for a period of not less than 3 years. Auditors who do not fulfill such criteria are selected from among those who have at least 3 years experience in the following areas: (a) administration or control or management tasks for companies with a share capital of at least Euro 2 million; (b) a professional role or a university teaching role in jurisprudence, economics, finance and technical sciences, aligned to the business of Finmeccanica; or (c) a directors’ role in a public entity or public administrative entity operating in the credit, finance and insurance sectors or in other sectors aligned to the business and objectives of the company as set out in Article 4 of the by-laws. The Chairman is appointed by the shareholders’ meeting among those auditors elected by the minority. The current members of the Board of Statutory Auditors were appointed at the shareholders’ meeting on April 29, 2009 and their term of office will expire upon the convening of the shareholders’ meeting to approve the financial statements for the year 2011. The following table sets forth the name, age, position and date of appointment of the current members of the Board of Statutory Auditors of Finmeccanica. Appointed to Current Name Age Management Position Position Luigi Gaspari ...... 52 Chairman 2006 Giorgio Cumin ...... 71 Auditor 2000 Antonio Tamborrino ...... 69 Auditor 2003 Silvano Montaldo ...... 51 Auditor 2006 Maurilio Fratino ...... 56 Auditor 2009 Maurizio Dattilo ...... 45 Alternate Auditor 2006 Piero Santoni ...... 72 Alternate Auditor 2006

154 External auditors Under Italian securities regulations, Finmeccanica’s accounts must be audited by external auditors appointed by the shareholders on the basis of the Board of Statutory Auditors’ proposal. The appointment is communicated to CONSOB. The external auditors examine Finmeccanica’s accounts and issue an opinion regarding whether Finmeccanica’s financial statements are presented fairly in all material respects. Their opinion is available to the shareholders prior to the annual shareholders’ meeting. Under Italian securities laws, as amended by Legislative Decree No. 303 of 29 December 2006, listed companies may not appoint the same external auditors for more than a nine-year term. Consequently, on May 16, 2003 the shareholders’ meeting appointed PricewaterhouseCoopers S.p.A. as new auditors for a three- year period. The shareholders’ meeting held on May 23, 2006 appointed PricewaterhouseCoopers S.p.A. as external auditors for a six year period until the approval of the financial statements for 2011.

Remuneration For the year ended December 31, 2008, the aggregate compensation paid to the Board of Directors was approximately Euro 6,3 million and that paid to the Board of Statutory Auditors was approximately Euro 0.45 million. The Finmeccanica Annual Executive Incentive Scheme is a MBO. The system is based on objectives assigned typically on an annual basis at the beginning of the year and reviewed at year end. On the basis of the final performance level, a cash bonus is paid, which is calculated through a pre-defined mechanism factoring: (i) potential payouts; (ii) weights; and (iii) incentive curves. Set forth below is the annual compensation amounts approved by the shareholders and the Board of Directors with respect to the Directors and the auditors of Finmeccanica in charge during the year 2008. Gross Name Position Annual Amount (Euro Thousand) Board of Directors (Consiglio di Amministrazione) Pier Francesco Guarguaglini...... Chairman and 5,560(1) Chief Executive Officer Piergiorgio Alberti ...... Director 142(2) Andrea Boltho Von Hohenbach ...... Director 36(*) Franco Bonferroni ...... Director 87 Giovanni Castellaneta ...... Director 55 Maurizio De Tilla ...... Director 102 Dario Galli ...... Director 36(*) Richard Greco ...... Director 36(*) Francesco Parlato...... Director 67(3) Nicola Squillace ...... Director 45(*) Riccardo Varaldo ...... Director 74 Guido Venturoni ...... Director 74 Board of Statutory Auditors (Collegio Sindacale) Luigi Gaspari ...... Chairman 114(4) Giorgio Cumin ...... Auditor 88(5) Francesco Forchielli ...... Auditor 74(6) Silvano Montaldo ...... Auditor 52 Antonio Tamborrino...... Auditor 128(7) Executive Officers Giorgio Zappa ...... Chief Operating Officer 2,376(7) Alessandro Pansa ...... Co-General Manager 2,215(8)

* Directors nominated by the shareholder meeting of June 6, 2008 1. Euro 5,560,000 of which: (i) Euro 85,000 is for the office of Chairman of Finmeccanica; (ii) Euro 9,000 is non-cash benefits; (iii) Euro 3,966,000 is a bonus and other benefits (variable remuneration, to be paid, are

155 shown at their estimated value recorded in the company’s financial statement); and (iv) Euro 1,500,000 is remuneration under Article 2389, paragraph 3 of the Civil Code other duties. 2. Euro 142,000 of which: (i) Euro 92,000 is remuneration for the office of director of Finmeccanica; and (ii) Euro 50,000 is remuneration for performance of other services. 3. Euro 67,000, of which Euro 61,000 paid to the Ministry of Economy and Finance 4. Euro 114,000 of which: (i) Euro 78,000 is for the office of President of the Board of Statutory Auditors of Finmeccanica (Collegio Sindacale); and (ii) Euro 36,000 is remuneration for the office of statutory auditor in other companies of the Group. 5. Euro 88,000 of which: (i) Euro 52,000 is remuneration for the office of member of the Board of Statutory Auditors of Finmeccanica (Collegio Sindacale); (ii) Euro 36,000 is remuneration for other duties for the office of statutory auditor in other companies of the Group. 6. Euro 74,000 of which: (i) Euro 59,000 is remuneration for the office of member of the Board of Statutory Auditors of Finmeccanica (Collegio Sindacale) and (ii) Euro 15,000 is remuneration for the office of statutory auditor in other companies of the Group. 7. Euro 128,000 of which: (i) Euro 71,000 is remuneration for the office of member of the Board of Statutory Auditors (Collegio Sindacale) and (ii) Euro 57,000 is remuneration for the office of statutory auditor in other companies of the Group. 8. Euro 2,376,000 of which: (i) Euro 152,000 is non-cash benefits; (ii) Euro 1,158,000 is his bonus and other benefits (variable remuneration, to be paid, are shown at their estimated value recorded in the company’s financial statement); and (iii) Euro 1,066, 000 is compensation for other duties (of which Euro 55,000 is in respect of fees earned for work undertaken in relation to companies within the Group). 9. Euro 2,215,000, of which: (i) Euro 145,000 is non-cash benefits; (ii) Euro 1,070,000 is a bonus and other benefits (variable remuneration, to be paid, are shown at their estimated value recorded in the company’s financial statement); and (iii) Euro 1,000,000 is compensation for other duties (of which Euro 40,000 is for fees earned for work undertaken in relation to companies within the Group).

Share ownership by the Board of Directors and Executive Officers

The table that follows shows the shares and stock options held, directly or indirectly, by the Officers of Finmeccanica as of the date of this Listing Prospectus. Number of Stock Exercise Period of Name Title Shares Owned Options Stock Options Pier Francesco Chairman and Guarguaglini ...... Chief Executive 141,993 130,810 December 31, 2009 Officer Giorgio Zappa ...... Chief Operating 128,941 77,375 December 31, 2009 Officer Alessandro Pansa ...... Co-General 37,987 — — Manager

Stock Option Plans

The 2002-2004 Stock Option Plan is an option-based plan addressing initially 271 Finmeccanica Group key executives. The vesting of the options is subject to the achievement of specific performance targets. Following review of the 2002-2004 results, 60% of the granted options vested. All unexercised options will expire on December 31, 2009. There are currently 566,911 vested and unexercised options with an exercise price of Euro 14. The strike price has been adjusted to take into account the capital increase to Euro 12.28.

The 2008-2010 Performance Share Plan is a recently approved share-based plan which will be available to approximately 600 of the Group’s key and high potential executives. In continuity with the 2005-2007 Performance Share Plan, granted shares are released and transferred free of charge subject to the achievement of specific annual and cumulative orders and EVA over the relevant performance period, at the Group level or operating company level, as appropriate. As of May 22, 2009, the Finmeccanica Remuneration Committee has resolved to grant a total of 6,064,537 Finmeccanica shares; such grant is conditional upon the satisfaction of the above-mentioned performance conditions.

156 In January 2008, Finmeccanica authorized a share buyback program. Under the program, Finmeccan- ica has acquired a total of 2,573,000 ordinary shares (approximately 0.4450% of the share capital) for a total purchase price of around Euro 34,728,037.50. Following these purchases and taking into account the shares already used to service the stock option plans, Finmeccanica currently holds a total of 1,795,209 of its own shares, equivalent to approximately 0.3105% of its share capital. Finmeccanica believes that the shares it owns, together with any further purchases it may make as part of the share buyback program through its expiration on July 16, 2009, will be sufficient to service its stock based compensation plans for the year 2009. Total Amounts set aside or accumulated by Finmeccanica or other companies in the Group for contributory pensions, severance payments or equivalent benefits

As of December 31, 2008, Euro 1,027 million was set aside in the consolidated balance sheet in respect of TFR (severance payments) and other obligations to employees. As of December 31, 2007, that amount totaled Euro 946 million.

157 PRINCIPAL SHAREHOLDERS Following the Rights Offering, the MEF holds approximately 30.2% of Finmeccanica’s share capital. Finmeccanica’s new share capital following completion of the Rights Offering, effective as of December 31, 2008, is Euro 2,543,861,738.00, comprising 578,150,395 ordinary shares. Based on information available in Finmeccanica’s shareholders’ register, regulatory filings and other sources available to Finmeccanica, the following persons owned, directly or indirectly, in excess of 2% of Finmeccanica’s ordinary shares as of the date of this Listing Prospectus: Percentage of Number of Shareholder Share Capital Shares Ministry of Economy and Finance ...... 30.20% 174,626,554 Capital Research and Management Company ...... 2.80% 16,212,583 The Income Fund of America, Inc...... 2.06% 11,928,933 Finmeccanica’s by-laws prohibit any natural or legal person, except for the Italian State public entities or other person controlled by them, from holding, directly or indirectly together with its affiliates, more than 3% of Finmeccanica’s share capital. Ordinary shares held over this limit may not be voted. The MEF shareholding de facto allows the MEF to play a key role in the election of two-thirds of the Directors of Finmeccanica by means of a special mechanism (the “slate voting system” or “voto di lista”) provided for in Finmeccanica’s by-laws. Furthermore, by decree of the Italian Prime Minister, the MEF holds certain special powers with respect to Finmeccanica as discussed below. Finmeccanica’s privatization process was formally initiated by the decree issued by the Italian Prime Minister on September 29, 1999. This decree provided that the Italian government, through the MEF (formerly the Treasury Ministry) must maintain at least a 30% minority interest (on a fully-diluted basis) in Finmeccanica’s share capital, as confirmed by Law No. 133 of August 6, 2008. In June 2000, IRI (a holding company for Italian state-owned industrial and commercial interests) sold over 50% of Finmeccanica’s outstanding share capital in the market. Following that offering, IRI transferred additional shares to the MEF. As Finmeccanica operates in strategic sectors such as defense, the Decree also required amendment to Finmeccanica’s by-laws in order to grant the MEF special powers to be exercised in conjunction with the MED (formerly the Productive Activities Ministry). Accordingly, by means of Decree 332/94 dated 30 July 1994 the Italian Government determined that these special powers, to be exercised by the MEF in conjunction with the MED, should consist principally of the following: (i) the power to veto (in circumstances where vital state interests are involved and may be prejudiced) any merger, de-merger, liquidation, transfer of assets, transfer of the registered office abroad, change of corporate objects, amendment to the by-laws of Finmeccanica which imply the deletion of or amendment to such special powers;(ii) the right for the MEF, in conjunction with the MED to nominate one member of the Board of Directors without voting rights; and (iii) the power to object to any shareholding (other than by the Republic of Italy or any entity it controls) in excess of 3% of the share capital of Finmeccanica, as well as to any shareholders’ agreement in connection with any such shareholding and the exercise of the related voting rights. The special powers have been incorporated in Finmeccanica’s by-laws. Such powers must be exercised according to certain criteria identified by the Italian Prime Minister’s Decree dated June 10, 2004 and issued pursuant to Article 4, paragraph 230 of Law No. 350 of December 24, 2003 and, therefore, their exercise must be limited to cases where vital state interests are involved and may be prejudiced. Further, Finmeccanica’s by-laws require qualified majorities by Finmeccanica’s Board of Directors and shareholders’ meetings for the approval of certain resolutions.

Limitations on shareholding Finmeccanica’s by-laws prohibit any natural or legal person from holding, directly or indirectly together with its affiliates, more than 3% of Finmeccanica’s share capital. Ordinary shares held over this limit may not be voted. This restriction does not apply to shareholdings held by the Italian government, public entities, or other entities controlled by the Italian government. Under Italian law, this restriction does not apply if the 3% threshold is exceeded pursuant to a tender offer in which the offeror acquires at least 75% of the voting rights entitled to vote for the appointment or removal of Directors. In addition, in connection with the special

158 government powers described below, Finmeccanica’s by-laws provide that no legal or natural person may hold 3% or more of Finmeccanica’s share capital. In the event that ordinary shares held or controlled in excess of the first 3% threshold discussed above are voted, any shareholders’ resolution adopted pursuant to this vote may be challenged if the majority required to approve this resolution would not have been reached without the vote of ordinary shares exceeding this threshold. Ordinary shares that are not entitled to be voted are nevertheless counted for the purpose of determining the quorum at a shareholders’ meeting. If more than 3% of Finmeccanica’s ordinary shares are held by these affiliated persons, the voting rights of each person will be reduced pro rata to arrive at the 3% limit. See “— Special powers of the Italian government” below for further details regarding the approval process for shareholdings that exceed 3% of Finmeccanica’s voting share capital.

Special powers of the Italian government The principal Italian privatization law, Law No. 474 of 1994, as subsequently amended, provides that certain special government powers may be introduced into the by-laws of firms considered strategic by the Italian Treasury. In the case of Finmeccanica, these powers were established in decrees adopted by the MEF on November 8, 1999 and reflected in amendments to the Company’s by-laws which were approved at the extraordinary shareholders’ meeting held on November 23, 1999. The following special powers of the MEF (which acts in agreement with the Minister of Industry) will apply regardless of its percentage shareholding: • Right to oppose material acquisitions of shares. The MEF has the right to oppose the acquisition of material interests in Finmeccanica’s share capital. Finmeccanica’s by-laws define ‘material interests’ as interests representing 3% or more of its voting share capital. This limit is based on the limit currently set in decrees of the MEF. Finmeccanica’s Board of Directors must file a notice with the MEF at the time an acquirer of a material interest files a request for registration with the register of shareholders. Approval or disapproval by the MEF must be given within 10 days of the date of this notice. The MEF can only exercise its veto powers if it determines, and adequately illustrates, that the transaction would be detrimental to vital state interests. During the period in which the right of opposition may be exercised, the purchaser must not exercise any rights, including voting rights, other than economic rights pertaining to the ordinary shares representing the material interest. If the right of opposition is exercised, the purchaser must sell the ordinary shares representing the material interest within one year and must not exercise any rights, including voting rights, other than economic rights pertaining to these ordinary shares. In the event of failure to comply with this requirement, the MEF may petition the courts to order the forced sale of the ordinary shares representing the material interest. • Right to oppose the signing of material shareholders’ agreements. The MEF has the right to oppose the signing of material shareholders’ agreements or other arrangements, which are currently defined in Finmeccanica’s by-laws as shareholders’ pacts or agreements relating to 3% or more of Finmeccanica’s voting share capital. The right of opposition must be exercised within 10 days of the date of CONSOB’s notice to the MEF following notification of the material shareholders’ agreement or other arrangements to CONSOB. The MEF can only exercise its veto powers if it determines, and adequately illustrates, that the transaction would be detrimental to vital state interests. During the period in which the right of opposition may be exercised, shareholders that are parties to the agreement must not exercise any rights, including voting rights, other than economic rights pertaining to the ordinary shares subject to the agreement or other arrangement. If the right of opposition is exercised by the Ministry of the Treasury, the agreement is deemed ineffective. If the conduct of shareholders during a shareholders’ meeting nevertheless supports an inference that the shareholders are acting pursuant to the terms of a shareholders’ agreement or other arrangement, then any resolutions adopted at that meeting that would not have been adopted but for the vote of these shareholders can be challenged within 60 days. • Appointment of one member of the Board of Directors without voting rights. The MEF has the power to appoint one member of the Board of Directors in addition to any members elected by the MEF in its capacity as a shareholder. Should a Director thus appointed leave office, the

159 MEF jointly with the MED, shall appoint a replacement. The Director so appointed is non- executive and has no voting rights. • Veto powers. If detrimental to the vital interests of the state, the MEF may, upon a duly reasoned motivation, veto resolutions to wind up the Company, transfer the business, proceed with mergers or de-mergers, relocate the Company’s head office to a different country, alter the corporate objects or amend the by-laws, where such resolutions abolish or alter the special powers of the MEF provided for by the by-laws. As a result and regardless of the Italian government’s interest in Finmeccanica’s share capital, neither Finmeccanica’s shareholders nor Finmeccanica may enter into change of control transactions without the approval of the MEF. This may limit an investor’s ability to benefit from a premium in connection with a change of control transaction. There are no other limitations imposed by Italian law or Finmeccanica’s by-laws on the rights to hold or vote Finmeccanica’s ordinary shares. Finmeccanica maintains a register of the holders of ordinary shares at its head office in Rome, Italy, as required by Italian law. On March 26, 2009, the Court of Justice of the European Community, while not questioning the validity of the special MEF powers, declared that in defining the criteria for the exercise of the special MEF powers, Italy had breached its obligations arising from Article 43 (freedom of establishment) and Article 56 (free circulation of capital) of the European Community Treaty in that the criteria are too discretionary and indeterminable.

160 RELATED PARTY TRANSACTIONS The Group’s revenue deriving from trade and financial transactions with related parties amounted to Euro 1.7 billion for the year ended December 31, 2008 and Euro 646 million for the six months ended June 30, 2009. In general, the Group’s trade transactions with related parties are conducted at arms’ length (i.e., under conditions that would have been applied between two independent parties), as is settlement of the interest- bearing receivables and payables which are not governed by specific contractual conditions. The following is a description of the Group’s principal transactions with related parties for the years ended December 31, 2008, 2007 and 2006 and for the six months ended June 30, 2009 and 2008. The following table sets forth the effects to the balance sheet of the transactions with related parties as of December 31, 2008, 2007 and 2006 and as of June 30, 2009: Joint Subsidiaries(1) Associates Ventures(2) Consortia(3) Total Ratio(4) (In millions of Euro) Non-current financial receivables as of: June 30, 2009...... — 1 11 — 12 13.5% December 31, 2008 ...... — 2 11 — 13 16.5% December 31, 2007 ...... — 2 9 — 11 18.3% December 31, 2006 ...... — 5 11 — 16 29.1% Current financial receivables as of: June 30, 2009...... 13 1 19 5 38 5.0% December 31, 2008 ...... 13 1 7 5 26 3.8% December 31, 2007 ...... 9 — 3 8 20 3.3% December 31, 2006 ...... 8 9 3 6 26 5.4% Trade receivables as of: June 30, 2009...... 6 264 116 59 445 5.1% December 31, 2008 ...... 8 284 126 100 518 11.1% December 31, 2007 ...... 7 244 115 85 451 10.4% December 31, 2006 ...... 6 210 69 92 377 9.8% Other current receivables as of(5): June 30, 2009...... 1 1 56 2 60 7.8% December 31, 2008 ...... 1 1 11 1 14 2.1% December 31, 2007 ...... 1 2 11 1 15 2.5% December 31, 2006 ...... 1 — 34 — 35 6.0%

161 Joint Subsidiaries(1) Associates Ventures(2) Consortia(3) Total Ratio(4) (In millions of Euro) Current financial payables as of: June 30, 2009...... 1 106 596 — 703 29.9% December 31, 2008 ...... 1 73 578 — 652 28.8% December 31, 2007 ...... — 16 544 — 560 32.8% December 31, 2006 ...... 1 111 386 2 500 36.2% Trade payables as of: June 30, 2009...... 13 34 26 5 78 0.6% December 31, 2008 ...... 16 41 19 8 84 1.8% December 31, 2007 ...... 8 37 26 11 81 2.0% December 31, 2006 ...... 12 18 23 22 75 2.1% Other current payables as of(5): June 30, 2009...... 1 25 4 — 30 1.8% December 31, 2008 ...... 1 29 4 — 34 2.2% December 31, 2007 ...... 1 12 — 12 25 1.7% December 31, 2006 ...... 2 17 — — 19 1.4%

162 The following table sets forth the effects to the income statement of the transactions with related parties for the years ended December 31, 2008, 2007 and 2006 and for the six months ended June 30, 2009 and 2008: Joint Subsidiaries(1) Associates ventures(2) Consortia(3) Total Ratio(4) (In millions of Euro) Revenue for the: Six months ended June 30, 2009.... 9 460 119 52 640 7.5% Six months ended June 30, 2008.... 2 458 113 57 630 9.8% Year ended December 31, 2008 .... 13 1,297 262 133 1,705 11.3% Year ended December 31, 2007 .... 11 1,124 247 131 1,513 11.3% Year ended December 31, 2006 .... — 1,078 165 50 1,293 10.4% Other operating income for the: Six months ended June 30, 2009.... — — — — — 0.0% Six months ended June 30, 2008.... — 1 — — 1 0.5% Year ended December 31, 2008 .... — 1 — — 1 0.1% Year ended December 31, 2007 .... — 1 — 1 2 0.2% Year ended December 31, 2006 .... — 6 — 1 7 1.4% Purchase and services costs for the: Six months ended June 30, 2009.... 13 35 8 2 58 1.1% Six months ended June 30, 2008.... 10 11 6 4 31 0.7% Year ended December 31, 2008 .... 29 90 19 9 147 1.3% Year ended December 31, 2007 .... 22 45 17 19 103 1.1% Year ended December 31, 2006 .... 33 20 8 57 118 1.3% Finance income for the: Six months ended June 30, 2009.... — 6 — — 6 0.9% Six months ended June 30, 2008.... — — 1 — 1 0.2% Year ended December 31, 2008 .... — — 2 — 2 0.2% Year ended December 31, 2007 .... 1 1 1 — 3 0.5% Year ended December 31, 2006 .... — 2 1 — 3 0.3% Finance costs for the: Six months ended June 30, 2009.... — 1 5 — 6 0.7% Six months ended June 30, 2008.... — 2 11 — 13 3.0% Year ended December 31, 2008 .... — 4 22 — 26 2.2% Year ended December 31, 2007 .... — 6 16 — 22 2.5% Year ended December 31, 2006 .... — 7 9 — 16 1.9%

(1) Amounts refer to controlled but not consolidated subsidiaries. (2) Amounts refer to the portion which is not eliminated on consolidation. (3) Consortia over which the Group has considerable influence or which are subject to joint control. (4) Ratio has been calculated as related party income or cost as a percentage of the relevant line item. The Group’s related party transactions with subsidiaries, associates, joint ventures and consortia mainly relate to: • trade transactions connected with sale of products and the supply of services, mainly with associates; and • financial transactions mainly relating to transactions with joint ventures. Revenue from related parties mainly relates to transactions with associates. In particular, the Group’s revenue from Eurofighter J. GmbH amounted to Euro 805 million, Euro 772 million, and Euro 764 million for the years ended December 31, 2008, 2007, and 2006, respectively, and Euro 285 million and Euro 258 million the six months ended June 30, 2009 and 2008, respectively.

163 Financial payables due to joint ventures include payables to MBDA S.A.S. amounting to Euro 544 million, Euro 494 million, and Euro 358 million as of December 31, 2008, 2007, and 2006, respectively, and Euro 562 million as of June 30, 2009. Financial payables to associates included payables to Eurofighter J. GmbH amounting to Euro 96 million as of June 30, 2009, Euro 62 million as of December 31, 2008 and Euro 78 million as of December 31, 2006. Financial payables to associates also included payables due to Eurosysnav S.A.S. amounting to Euro 7 million, Euro 9 million, Euro 13 million and Euro 20 million as of June 30, 2009 and as of December 31, 2008, 2007 and 2006, respectively. In the period dating from June 30, 2009, to the date of this Listing Prospectus, the Group did not conduct transactions with related parties, different from the usual ordinary activities. With regards to annual compensation amounts approved by the shareholders and the Board of Directors with respect to the Directors of Finmeccanica, see the section entitled “Management”. Finally, the Group has no transactions with related parties other than those included in the section entitled “Management”.

164 The following table sets forth the effects to the cash flows of transactions with related parties for the years ended December 31, 2008, 2007, and 2006: Year ended December 31, of which of which of Which 2008 related parties 2007 related parties 2006 related parties (In millions of Euro) Gross cash flow from operating Activities ...... 1,968 — 1,711 — 1,600 — Changes in working capital .... (169) (68) 318 (74) 347 (46) Collection of ENEA settlement ...... 296 — — — — — Changes in other operating assets and liabilities and provisions for risks and charges ...... (349) (8) (273) 26 (257) 23 Finance costs paid ...... (127) (24) (116) (19) (160) (13) Income tax paid ...... (200) — (241) — (212) — Net cash generated from operating activities ...... 1,419 1,399 1,318 Acquisitions of subsidiaries, net of cash acquired ...... (82) — (434) — (181) — Purchase of property, plant and equipment and intangible assets ...... (989) — (1,128) — (873) — Proceeds from sale of property, plant and equipment and intangible assets ...... 23 — 74 — 94 — IPO Ansaldo STS ...... — — — — 458 — Sales of STM Shares ...... 260 — — — — — Acquisition of DRS ...... (2,372) — — — — — Avio operation ...... — — — — 303 — Other investing activities ...... (19) (9) 25 (2) (63) (3) Net cash used in investing activities ...... (3,179) (1,463) (262) Net change in borrowings ..... (499) 108 (163) 55 102 110 Share capital increase ...... 1,206 — — — — — Repayments of DRS’s convertible bond and bank payables ...... (315) — — — — — Repayments of bonds ...... (297) — (6) — — — Issue of bonds ...... 745 — — — — — Opening of bridge loan ...... 3,015 — — — — — Repayment of bridge loan ..... (1,205) — — — — Dividends paid ...... (187) — (151) — (214) — Net cash generated from/(used in) financing activities ..... 2,463 (320) (112)

165 The following table sets forth the effects to the cash flows of transactions with related parties for the six months ended June 30, 2009 and 2008: Six months ended June 30, of which of which 2009 related parties 2008 related parties (In millions of Euro) Gross cash flow from operating activities . . . 1,019 635 Changes in working capital ...... (1,024) 70 (1,135) (50) Changes in other operating assets and liabilities and provisions for risks and charges ...... (109) (39) (183) (19) Finance costs paid ...... (97) — (40) (12) Income tax paid...... (35) (67) Net cash generated from operating activities ...... (246) (790) Acquisitions of subsidiaries, net of cash acquired ...... (11) (78) Sale of STM shares ...... — 260 Purchase of property, plant and equipment and intangible assets ...... (475) (541) Proceeds from sale of property, plant and equipment and intangible assets ...... 6 6 Subscription of SCAC and other equity investments ...... (149) — Other investing activities ...... (5) — (25) (10) Net cash used in investing activities ...... (634) (378) Share capital increase ...... — 1 Dividends paid to Company’s shareholders . . (237) (174) Dividends paid to minority interests ...... (17) (13) Repayments of DRS’s convertible bond .... (868) — Issue of bonds ...... 696 — Net change in other borrowings ...... (275) (20) 70 (34) Net cash generated used in financing activities ...... (701) (116)

166 DESCRIPTION OF THE NOTES The following includes a description of the material provisions of the Indenture, the Notes and Guarantees. This section does not purport to be a complete description of the provisions of the Indenture, the Notes and Guarantees and is qualified in its entirety by reference to all of the provisions of the Indenture, the Notes and Guarantees, copies of which will be available for inspection during normal business hours at any time after the closing date at the offices of the Trustee. Any terms used herein but not defined shall have the meaning assigned to such term in the Indenture.

General The Notes covered by the Listing Prospectus were issued by Meccanica Holdings USA, Inc. and guaranteed by Finmeccanica — Società per azioni. Meccanica Holdings USA, Inc. issued the Notes under an indenture dated 2009 (the “Indenture”), as supplemented from time to time. The Indenture is a contract entered into among Meccanica Holdings USA, Inc., as Issuer, Finmeccanica — Società per azioni, as Guarantor, and The Bank of New York Mellon, as trustee (the “Trustee”). The Guarantor will, pursuant to a guarantee (the “Guarantee”) to be issued in respect of each of the Notes, unconditionally and irrevocably guarantee the obligations of the Issuer in relation to the Notes. The Indenture will not be qualified under the U.S. Trust Indenture Act. By its terms, however, the indenture will incorporate certain provisions of the Trust Indenture Act. The Notes will be issued only in fully registered form without coupons in denominations of USD100,000 and integral multiples of USD1,000 in excess thereof. The Notes will constitute unsubordinated and unsecured indebtedness of the Issuer. The Notes will rank equally with all other of the Issuer’s existing and future unsubordinated and unsecured indebtedness (save for certain obligations required to be preferred by law). The obligations of the Guarantor under the Guarantees are unconditional, unsubordinated and unsecured obligations of the Guarantor and (subject to any obligations required to be preferred by any applicable law) rank equally with all other present and future unsecured obligations of the Guarantor from time to time outstanding. The ISIN code of the Notes is US583491AC98 (Rule 144A) and USU58190AA41(Regulation S), the CUSIP is 583491AC9 (Rule 144A) and U58190AA4 (Regulation S) and the COMMON CODE IS 046084993 (Rule 144A) and 046084616 (Regulation S). The Notes will be issued on October 27, 2009 and mature on January 15, 2040. Application has been made for the Notes to be admitted to trading on the regulated market of the Luxembourg Stock Exchange and to listing on the official list of the Luxembourg Stock Exchange. Nevertheless no assurances can be given that an active public market for the Notes will develop. The absence of an active public market could have an adverse effect on the liquidity and value of the Notes. The Issuer may, from time to time, without giving notice to or seeking the consent of the holders of the Notes, issue additional notes having the same ranking and the same interest rate, maturity and other terms except for the public offering price and the issue date. Any additional notes having such similar terms will constitute a single series of notes under the Indenture. The following briefly summarizes the material provisions of the Indenture, the Notes and the Guarantees. You should read the more detailed provisions of the Indenture, including the defined terms, for provisions that may be important to you. In this “Description of the Notes and Guarantees”, the term “holder”, “Noteholder” and other similar terms are each equivalent to “registered holder”, unless the context otherwise clearly requires.

Principal and Interest The Issuer issued USD500,000,000 initial principal amount of 6.25% notes due January 15, 2040. The Notes bear interest from October 27, 2009 at the applicable rate per annum indicated at the cover page of this Listing Prospectus. Interest on the Notes will be payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2010, to the holders in whose names the Notes are registered at the close of business on January 1 and July 1, as applicable, immediately preceding the related interest payment date. For so long as the Notes are represented by global notes, the Issuer will make payments of interest by wire transfer to the Depository Trust Company or its nominee, which will distribute payments to its participants (including Clearstream and Euroclear) in accordance with its customary procedures. The yield on the Notes is the return you will receive by holding the Notes for a period of time.

167 For example, current yield for the Notes, which calculates the percentage return that annual interest payments might provide to you, is calculated as follows: Annual Dollar Interest Paid Current Yield = Market Price You may wish to calculate the adjusted current yield, yields to maturity, yield to call and other yields in making an investment decision with respect to the Notes. The Issuer will pay interest on the Notes on the interest payment dates stated above and at maturity. Each payment of interest due on an interest payment date or at maturity will include interest accrued from and including the last date to which interest has been paid or made available for payment, or from the issue date, if none has been paid or made available for payment, to but excluding the relevant payment date. The Issuer will compute interest on the Notes on the basis of a 360 day year of twelve 30 day months. If any payment is due on the Notes on a day that is not a business day, the Issuer will make the payment on the day that is the next business day. Payments postponed to the next business day in this situation will be treated under the Indenture as if they were made on the original due date. Postponement of this kind will not result in a default under the Notes, and no interest will accrue on the postponed amount from the original due date to the next day that is a business day. Business day means any day other than a Saturday or Sunday or a day on which banking institutions in The City of New York, New York are generally authorized or obligated by law, regulations or executive order to close. Unless previously purchased or redeemed by or on behalf of the Issuer or the Guarantor, and cancelled, the Notes will become due and payable on January 15, 2040, in an amount equal to their principal amount plus accrued and unpaid interest thereon.

Payment and Paying Agents The Issuer will pay interest, principal and any other money due on the Notes at the corporate trust office of the Trustee in New York City. That office is currently located at 101 Barclay Street, Floor 4 East, New York, New York 10286. In the event a Noteholder holds the Notes in definitive form, the Noteholder must make arrangements to have payments picked up or wired from that office or such other paying agency as the Issuer may establish. The Issuer may also arrange for additional payment offices and may cancel or change these offices, including the Issuer’s use of the Trustee’s corporate trust officer. These offices are called paying agents. The Issuer may also choose to act as its own paying agent. The Issuer must notify any Noteholder of changes in the paying agents for the Notes. The paying agent in Luxembourg will be The Bank of New York Mellon — The Bank of New York (Luxembourg) S.A. Corporate Trust Services, Aerogolf Center, 1A, Hoehenhof, L-1736 Senningerberg, Luxembourg. Regardless of who acts as paying agent, all money that the Issuer pays to a paying agent that remains unclaimed at the end of two years after the amount is due to direct holders will be repaid to the Issuer or to the Guarantor, if the payment was made by the Guarantor. After that two year period, you may look only to the Issuer, or its successor, for payment and not to the Trustee, any other paying agent or anyone else.

Street name and other indirect holders should consult their banks or brokers for information on how they will receive payments.

Guarantees Finmeccanica will fully, unconditionally and irrevocably guarantee the due and punctual payment of the principal of, premium, if any, and interest on the Notes issued by Meccanica Holdings USA, Inc. (or any successor person under the Indenture), including any additional amounts which may be payable by the Issuer in respect of the Notes, as described under “— Payment of Additional Amounts”. The Guarantor will guarantee the payment of such amounts when such amounts become due and payable, whether at the stated maturity of the Notes, by declaration or acceleration, call for redemption or otherwise. The obligations of the Guarantor under the Guarantees are unconditional, unsubordinated and unsecured obligations of the Guarantor and (subject to any obligations required to be preferred by any applicable law) rank equally with all other present and future unsecured obligations of the Guarantor from time to time outstanding. To the extent such is a requirement of the applicable law in force at the relevant time, the Guarantor shall only be liable up to an

168 amount which is the aggregate of 200% of the aggregate principal amount of the Notes and 200% of interest on such Notes accrued and not paid as at any date on which the Guarantor’s liability under the Guarantees falls to be determined.

Payment of Additional Amounts All payments of principal and interest in respect of the Notes by or on behalf of the Issuer or, where applicable, the Guarantor shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed by the United States or the Republic of Italy, as the case may be, or any political subdivision or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In that event, the Issuer or (as the case may be) the Guarantor shall pay such additional amounts as will result in the receipt by the Noteholders of such amounts as would have been received by them if no such withholding or deduction had been required, except that no such additional amounts shall be payable in respect of any Note presented for payment: • by or on behalf of a Noteholder which is liable for such taxes, duties, assessments or governmental charges in respect of such Note by reason of its having some connection with the United States or (as the case may be) the Republic of Italy other than the mere holding of such Note; • by any Noteholder who would be able to avoid or minimize such withholding or deduction by making a declaration of residence or non-residence or other similar claim or administrative procedures for exemption or to benefit from the application of a more favorable regime set out, inter alia, by double taxation conventions and fails to do so; • where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive; • by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note to another Paying Agent in a Member State of the European Union; • more than 30 days after the Relevant Date except to the extent that the relevant holder would have been entitled to such additional amounts if it had presented such Note on the last day of such period of 30 days; • if the holder is a United States person and the United States government or any political subdivision of the United States government is the entity that is imposing the tax or governmental charge. For this purpose, a United States person is any person who, for United States federal income tax purposes, is a citizen or resident, a domestic corporation, an estate whose income is subject to taxation regardless of its source, or a trust if a United States court can exercise supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust; • if the holder is subject to any tax, assessment or other governmental charge imposed by the United States government or any political subdivision of the United States government by reason of the holder’s past or present status for U.S. federal income tax purposes as (i)a personal holding company, (ii) a corporation that accumulates earnings to avoid U.S. federal income tax, (iii) a controlled foreign corporation that is related to the Issuer or Guarantor through stock ownership, (iv) the owner, actually or constructively, of 10% or more of the total combined voting power of all classes of stock of the Issuer or Guarantor entitled to vote or (v)a bank receiving interest described in Section 881(c)(3)(A) of the United States Internal Revenue Code of 1986 (26 U.S.C. §§ 1 et seq.), as amended; • in relation to any payment or deduction on principal, interest or other proceeds of any Note on account of imposta sostitutiva pursuant to Italian Legislative Decree No. 239 of April 1, 1996 as amended or supplemented from time to time; or • in the event of payment to a non-Italian resident legal entity or a non-Italian resident individual, to the extent that interest or other amounts are paid to a non-Italian resident legal entity or a non-Italian resident individual which is resident in a country that does not allow for a

169 satisfactory exchange of information with the United States of America or the Republic of Italy as the case may be. If the Issuer or, where applicable, the Guarantor takes any action or allows something to be done to it which results in it being subject at any time to any taxing jurisdiction other than the United States or the Republic of Italy, as the case may be, references in the Indenture described under “— Payments of Additional Amounts” to the United States or the Republic of Italy shall be construed as references to the United States or (as the case may be) the Republic of Italy and/or such other jurisdiction.

Optional Redemption The Notes will be redeemable as a whole or in part, at the option of the Issuer at any time, at a redemption price equal to the greater of: • 100% of the principal amount of such Notes; or • the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 35 basis points for the Notes, plus in each case accrued interest thereon to the date of redemption. Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of Notes to be redeemed. Unless the Issuer defaults in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption.

Redemption for Tax Reasons The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time on giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable), at their principal amount, together with interest accrued (if any) to the date fixed for redemption, if: (1) the Issuer has or will become obliged to pay additional amounts under the Indenture and described under “— Payment of Additional Amounts” as a result of any change in, or amendment to, the laws or regulations of the United States or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after October 20, 2009 and (2) such obligation cannot be avoided by the Issuer taking reasonable measures available to it; and/or (2) (where applicable) the Guarantor has or (if a demand was made under the guarantee of the Notes) would become obliged to pay additional amounts under the Indenture and described under “— Payment of Additional Amounts” as a result of any change in, or amendment to, the laws or regulations of the Republic of Italy or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after October 20, 2009 and (2) such obligation cannot be avoided by the Guarantor taking reasonable measures available to it, provided, however, that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or the Guarantor would be obliged to pay such additional amounts if a payment in respect of the Notes were then due or (as the case may be) a demand under the Guarantees of the Notes were then made. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver or procure that there is delivered to the Trustee: (1) a certificate signed by any authorized director of the Issuer or, as the case may be, the Guarantor, stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred; and

170 (2) an opinion of legal advisers of recognized standing to the effect that the Issuer or (as the case may be) the Guarantor has or will become obliged to pay such additional amounts as a result of such change or amendment. Upon the expiry of any such notice, the Issuer shall redeem the Notes in accordance with the Indenture.

Book-Entry, Delivery and Form The Notes sold in reliance on Rule 144A under the Securities Act will be represented by beneficial interests in Rule 144A Global Notes (the “Rule 144A Global Notes”). The Notes sold in reliance on Regulation S under the Securities Act will be represented by beneficial interests in Regulation S Global Notes (the “Regulation S Global Notes”, and together with the Rule 144A Global Note, the “Global Notes”). Each Global Note will be deposited with the paying agent as custodian for and registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). On or before the end of the Distribution Compliance Period (as defined in Regulation S), a beneficial interest in a Regulation S Global Note may be exchanged for a beneficial interest in a Rule 144A Global Note only upon receipt by the Trustee of a written certification from the transferor to the effect that such transfer is being made to a person whom the transferor reasonably believes is a Qualified Institutional Buyer (“QIB”) within the meaning of Rule 144A under the Securities Act and in a transaction otherwise meeting the requirements of Rule 144A and any applicable securities laws of any state of the United States or any other jurisdiction. Beneficial interests in a Rule 144A Global Note may be transferred to a person who takes delivery in the form of an interest in a Regulation S Global Note, whether before or after the end of the Distribution Compliance Period, only upon receipt by the Trustee of a written certification from the transferor to the effect that such transfer is being made in accordance with Rule 903 of Regulation S or Rule 144A under the Securities Act (if available). After the end of the Distribution Compliance Period, the certification requirement will no longer apply to such transfers, but transfers will continue to be subject to all applicable transfer restrictions under the federal securities laws of the United States and the securities laws of other relevant jurisdictions. Except under the circumstances described below, Global Notes will not be exchangeable at the option of the holder for certificated notes and Global Notes will not otherwise be issuable in definitive form. Upon issuance of the Global Notes, DTC will credit the respective principal amounts of the Notes represented by the Global Notes to the accounts of institutions that have accounts with DTC or its nominee (called participants of DTC), including Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream, Luxembourg (“Clearstream”). The accounts to be credited shall be designated by the initial purchasers. Ownership of beneficial interests in the Global Notes will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interest in the Global Notes will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to participants’ interests) or by participants or persons that hold through participants. Such beneficial interest shall be in denominations of USD$100,000 and in multiples of USD$1,000 in excess thereof. So long as DTC, or its nominee, is the registered owner or holder of the Global Notes, DTC or its nominee, as the case may be, will be considered the sole owner and holder of the Global Notes for all purposes under the Indenture. Except as set forth below, owners of beneficial interests in the Global Notes: • will not be entitled to have the Notes represented by the Global Notes registered in their names; and • will not receive or be entitled to receive physical delivery of Notes in definitive form and will not be considered the owners or holders thereof under the Indenture. Accordingly, each person owning a beneficial interest in the Global Notes must rely on the procedures of DTC, and indirectly Euroclear and Clearstream, and, if such person is not a participant on the procedures of the participant through which such person owns its interest, to exercise any rights of a holder under the Indenture. Principal and interest payments on Global Notes registered in the name of or held by DTC or its nominee will be made to DTC or its nominee, as the case may be, as the registered owner of the Global Note. Neither the Issuer nor the paying agent for such Global Note will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

171 The Issuer expects that DTC, upon receipt of any payments of principal or interest in respect of the Global Notes, will credit the accounts of the related participants (including Euroclear and Clearstream), with payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global Notes as shown on the records of DTC. Payments by participants to owners of a beneficial interest in the Global Notes held through such participants will be the responsibility of the participants, as is now the case with securities held for the accounts of customers in bearer form or registered in “street name”. Unless and until it is exchanged in whole or in part for Notes in definitive form in accordance with the terms of the Indenture, a Global Note may not be transferred except as a whole by the depositary to a nominee of the depositary or by a nominee of DTC to DTC or another nominee of DTC. If any note, including a Global Note, is mutilated, defaced, stolen, destroyed or lost, such note may be replaced with a replacement note at the office of the registrar or any successor registrar or transfer agent, on payment by the noteholder of such costs and expenses as may be incurred in connection with the replacement, and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes must be surrendered before replacement notes will be issued.

Exchanges of Global Notes for Definitive Notes Global Notes shall be exchangeable for definitive notes registered in the names of persons other than DTC or its nominee for such Global Notes only if: • DTC has notified the Issuer that it is unwilling or unable to continue as depositary or has ceased to be a clearing agency registered under the Exchange Act, and in either case the Issuer has failed to appoint a successor depositary within 90 days of such notice; • there shall have occurred and be continuing an event of default (as defined in the Indenture) with respect to the Notes; or • the Issuer and/or the Guarantor executes and delivers to the Trustee an order signed by the board of directors of either that such Global Notes shall be so exchangeable. Any Global Note that is exchangeable for definitive notes pursuant to the preceding sentence shall be exchangeable for notes issuable in denominations of USD$100,000 and in multiples of USD$1,000 in excess thereof and registered in such names as DTC shall direct. Subject to the foregoing, a Global Note shall not be exchangeable, except for a Global Note of like denomination to be registered in the name of DTC or its nominee. Bearer notes will not be issued.

Transfers from Definitive Notes to Global Notes Definitive notes, if any, may be transferred or exchanged for a beneficial interest in the relevant Global Note in accordance with the procedures described in the Indenture.

Description of DTC, Euroclear and Clearstream The information in this section concerning DTC, Euroclear and Clearstream, Luxembourg (referred to herein as Clearstream) and their book entry systems has been obtained from sources that the Issuer believes to be reliable, but neither the Issuer nor the initial purchasers takes any responsibility for or makes any representation or warranty with respect to the accuracy of this information. DTC, Clearstream and Euroclear are under no obligation to follow the procedures described herein to facilitate transfer of interest in Global Notes among participants and account holders of DTC, Clearstream and Euroclear, and such procedures may be discontinued or modified at any time. Neither the Issuer, the paying agents nor the transfer agents will have any responsibility for the performance of DTC, Clearstream and Euroclear or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. DTC, Euroclear and Clearstream have advised the Issuer as follows:

DTC DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.

172 DTC was created to hold securities for its participants and to facilitate the clearance and settlement of transactions between its participants through electronic book entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. DTC participants include the initial purchasers, the U.S. depositaries, the principal payment agent, securities brokers and dealers, banks, trust companies and clearing corporations and may in the future include certain other organizations. Indirect access to the DTC system is also available to others that clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly (“indirect participants”). Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the Global Notes among participants of DTC, it is under no obligation to perform such procedures, and such procedures may be discontinued at any time. Neither the Issuer nor the Trustee will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Transfers of ownership or other interests in Global Notes in DTC may be made only through DTC participants. The address of DTC is 55 Water Street, New York, New York, 10041-0004.

Euroclear and Clearstream, Luxembourg Euroclear and Clearstream each hold securities for their account holders and facilitate the clearance and settlement of securities transactions through electronic book entry changes between their respective account holders, thereby eliminating the need for physical movement of certificates. Euroclear and Clearstream each provide various other services, including services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream each also deal with domestic securities markets in several countries through established depositary and custodial relationships. Account holders in both Euroclear and Clearstream are financial institutions around the world, including the initial purchasers described under “— Plan of Distribution,” other securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to both Euroclear and Clearstream is also available to others that clear through or maintain a custodial relationship with an account holder in either system. An account holder’s overall contractual relations with either Euroclear or Clearstream are governed by the respective rules and operating procedures of Euroclear or Clearstream and any applicable laws. Both Euroclear and Clearstream act under such rules and operating procedures only on behalf of their respective account holders, and have no record of or relationship with persons holding through their respective account holders. The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium, and the address of Clearstream is 42 Avenue JF Kennedy, L-1855 Luxembourg.

Negative Pledge So long as any Note remains outstanding, neither the Issuer nor, where relevant, the Guarantor shall, and the Issuer and, where relevant, the Guarantor shall, procure that no Material Subsidiary will create or permit to subsist (other than by operation of law) any Security Interest upon the whole or any part of its present or future undertaking, assets or revenues to secure any Relevant Indebtedness without (a) at the same time or prior thereto securing the Notes equally and rateably therewith or (b) providing such other security for the Notes as shall be approved by an act of the holders holding at least a majority of the principal amount of Notes then outstanding provided that nothing shall prevent the Issuer, if applicable, the Guarantor or any Material Subsidiary from (i) creating or permitting to subsist any Security Interest over any revenues or receivables which is created pursuant to any securitization or like arrangement whereby in the event of a failure to repay amounts advanced in connection therewith or any interest thereon, the Person or Persons providing such finance are entitled to have recourse only to the revenues or receivables derived from the assets forming the subject of such securitization or like arrangement and/or, in the case of the Guarantor, (ii) segregating assets of the Guarantor for the payment of debt incurred for specific business activities and/or agreeing that any financings entered into for specific business activities would be reimbursed through the revenues of such business activities, in both cases pursuant to, and within the limits set forth in, Articles 2447-bis and related provisions of the Italian Civil Code.

173 Article 2447-bis and related provisions of the Italian Civil Code provide that (i) assets of the Guarantor which have been segregated for the exclusive purpose of specific business activities may not exceed 10 per cent. of the Guarantor’s unconsolidated net assets and (ii) revenues deriving from specific business activities that are designated for the reimbursement of financings entered into for such business activities (as well as proceeds and investments deriving therefrom) are protected from creditors’ (other than the relevant lenders’) claims and that such creditors may only take attachment or preventive measures against the assets instrumental to the specific business activities until the financings have been repaid.

Mergers and Similar Events Each of the Issuer and the Guarantor is generally permitted to consolidate or merge with another company or firm. Each of the Issuer and the Guarantor is also permitted to sell or lease all or substantially all of its assets to another company or to buy or lease all or substantially all of the assets of another company. In addition, the Issuer is permitted to transfer the obligations of the Issuer to the Guarantor or any subsidiary of the Guarantor so long as the obligations of any such subsidiary of the Guarantor are guaranteed by the Guarantor. No vote by holders of debt securities approving any of these actions is required, unless as part of the transaction the Issuer or the Guarantor make changes to the applicable indenture requiring Noteholder approval, as described below under “— Modification and Waiver”. The Issuer or the Guarantor, as the case may be, may take these actions as part of a transaction involving outside third parties or as part of an internal corporate reorganization. The Issuer or the Guarantor may take these actions even if they result in a lower credit rating being assigned to the Notes or additional amounts becoming payable in respect of withholding tax. However, neither the Issuer nor the Guarantor may consolidate or merge with, and the Guarantor may not sell or lease all or substantially all of its assets to, another person (including another company or firm), and the Issuer may not transfer the Issuer’s obligations to the Guarantor or any subsidiary of the Guarantor, unless all of the following conditions are met: • Where the Issuer or the Guarantor merges out of existence or where the Guarantor sells or leases all or substantially all of its assets, the acquiring or resulting company, as the case may be, must assume its obligations, including the obligations arising from the Guarantor’s guarantee of the Notes either by law or contractual arrangements. Where the Issuer transfers its obligations to the Guarantor or any subsidiary of the Guarantor, the Guarantor or any subsidiary of the Guarantor, as the case may be, must assume the Issuer’s obligations by contractual arrangements. In the event the jurisdiction of incorporation of the successor or substitute obligor is not the United States or Italy, as the case may be, such successor or substitute obligor will also agree to be bound to the obligations described under “— Payment of Additional Amounts” but shall substitute the successor’s or substitute obligor’s jurisdiction of incorporation for the United States or Italy, as the case may be. • The Issuer or the Guarantor, as the case may be, must provide the Trustee with an officer’s certificate and an opinion of counsel as to compliance with the merger or assumption, or (in the case of the Issuer) the transfer of obligations to the Guarantor or a subsidiary of the Guarantor, with provisions of the Indenture; provided that if the Issuer transfers its obligations to an Italian company, the Issuer is required to deliver the additional opinions of counsel described below. • Such consolidation, merger or sale or lease, or the transfer of the Issuer’s obligations, must not cause a default on the Notes, and the Issuer and the Guarantor, as the case may be, must not already be in default. For purposes of this no-default test, a default would include an event of default that has occurred and not been cured, as described under “— Events of Default”. A default for this purpose would also include any event that would be an event of default if the requirement for giving the Issuer and the Guarantor default notice or their default having to exist for a specific period of time were disregarded. An Italian company may only become the obligor under the Notes, if the Issuer (or any successor) delivers to the Trustee a legal opinion, reasonably satisfactory to the Trustee, of Italian counsel to the effect

174 that the provisions of the Indenture are not in conflict with mandatory provisions of Italian law applicable to holders of debt securities of Italian companies. It is possible that the U.S. Internal Revenue Service may deem a transfer of the Issuer’s obligation under the debt securities to cause an exchange for U.S. federal income tax purposes of debt securities for new securities by the holders of the debt securities. This could result in the recognition of taxable gain or loss for U.S. federal income tax purposes and possible other adverse tax consequences.

Notices The Issuer and the Trustee will send notices only to direct holders, using their addresses as listed in the Trustee’s records. Such notices will be mailed to holders of registered securities. As long as the Notes are listed on the official list of the Luxembourg Stock Exchange and admitted to trading on the regulated market of the Luxembourg Stock Exchange and the applicable rules and regulations require the publication of a notice, such notices will be published on the website of the Luxembourg Stock Exchange (www.bourse.lu) and may also be published in one or more leading newspapers having general circulation which facilitate(s) disseminating the information to all holders. Any such notice shall be deemed to have been given, in the case of mailed notices, on the date of delivery to the relevant address or 5 business days after mailing or, in the case of published notices where applicable, on the date of such publication on the website of the Luxembourg Stock Exchange or, if published more than once or on different dates, on the date of the first such publication.

Modification and Waiver There are three types of changes the Issuer, or its successors, can make to the Indenture and the Notes.

Changes Requiring Noteholder Approval First, there are changes that cannot be made to the Notes without the specific approval of each affected Noteholder. The following is the list of those changes: • change the stated maturity of the principal of the Notes; • change the interest on the Notes; • reduce the principal amount due on the Notes; • reduce the amount of principal payable upon acceleration of the maturity of the Notes following a default; • change the place of payment of the Notes; • impair Noteholders’ right to sue for payment; • reduce the percentage of the outstanding aggregate principal amount of the Notes whose holder’s consent is needed to modify or amend the Indenture; • reduce the percentage of the outstanding aggregate principal amount of the Notes whose holder’s consent is needed to waive compliance with various provisions of the Indenture or to waive various defaults; • modify any other aspect of the provisions dealing with modification and waiver of the Indenture; and • change the obligations of the Guarantor with respect to payment of principal, premium, if any, and interest payments in any manner adverse to the interests of the Noteholders.

Changes Requiring Majority Consent The second type of change to the Indenture and the Notes is the kind that requires a vote in favor by the Noteholders, as applicable, owning a majority of the outstanding principal amount of affected series of Notes. Most changes fall into this category, except for clarifying changes, changes made to correct a manifest error and other changes that would not adversely affect the Noteholders in any material respect. The same consent of the majority of the outstanding principal amount of the Notes would be required for the Issuer to obtain a waiver of all or part of the covenants described herein and in the Indenture, or a waiver of a past default. However, the Issuer cannot obtain a waiver of a payment default or any other aspect of the Indenture

175 or the Notes listed in the first category described under “— Changes Requiring Noteholder Approval” unless the Issuer obtains individual consent to the waiver.

Changes Not Requiring Approval The third type of change does not require any consent by Noteholders. This type is limited to clarifications, changes made to correct a manifest error and other changes that would not adversely affect the Noteholders in any material respect.

Further Details Notes will not be considered outstanding, if the Issuer has deposited or set aside in trust money for their payment or redemption or if the Notes have been fully defeased as described under “— Legal Defeasance and Covenant Defeasance”. The Issuer will generally be entitled to set any day as a record date for the purpose of determining the Noteholders that are entitled to take action under the Indenture. If the Issuer sets a record date for action to be taken by Noteholders, that action may be taken only by persons who are Noteholders on the record date and must be taken within 90 days following the record date or a shorter period that the Issuer may specify.

Street name and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if the Issuer seeks to change the terms of the Indenture or request a waiver.

Legal Defeasance and Covenant Defeasance The Issuer or the Guarantor may at any time terminate all of their respective obligations under the Notes and the Indenture (“Legal Defeasance”), except for certain obligations, including those respecting the Defeasance Trust (as defined below) and obligations to: • register the transfer and exchange of the Notes; • replace mutilated, destroyed, lost or stolen Notes; • maintain paying agencies; and • hold money for payment in trust. In addition, the Issuer or the Guarantor may at any time terminate: (1) their respective obligations described under “Negative Pledge”; and (2) their respective obligations under the covenants described in the Indenture under “Events of Default” (Subsection (4)), “Reports by Guarantor”, “Company or Guarantor May Consolidate, Etc., Only on Certain Terms”, “Successor Corporation Substituted” and “Statement by Executive Officers as to Compliance” (“Covenant Defeasance”). The Issuer or the Guarantor may exercise their respective Legal Defeasance option notwithstanding the prior exercise of their respective Covenant Defeasance option. In order to exercise either defeasance option, the Issuer or the Guarantor must, in addition to other actions, put in place the following arrangements: • The Issuer or the Guarantor deposits in trust (the “Defeasance Trust”) for the benefit of all Noteholders a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, premium, if any, principal and any other payments on the Notes on their various due dates. • The Issuer or the Guarantor delivers to the Trustee legal opinions of their counsel to the effect that Noteholders will not recognize income or gain for U.S. Federal or any Italian income tax purposes as a result of such deposit and defeasance and will be subject to U.S. Federal or any Italian income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of Legal Defeasance only, such opinions must be based on a ruling of the U.S. Internal Revenue Service or other change in applicable U.S. Federal income tax law).

176 • If the Notes have been admitted to the official list of the Luxembourg Stock Exchange and to trade on the regulated market of the Luxembourg Stock Exchange or another exchange, the Issuer or the Guarantor must deliver to the Trustee a legal opinion of their counsel confirming that the deposit, defeasance and discharge will not cause the Notes to be delisted from such exchange.

Events of Default A Noteholder will have special rights if an event of default occurs with respect to its Notes and is not cured, as described later in this subsection. An “Event of Default” with respect to a series of Notes is defined in the Indenture as one or more of the following events occurring and be continuing: (1) the Issuer fails to pay any amount of principal in respect of such series of Notes within three (3) days of the due date for payment thereof or fails to pay any amount of interest in respect of such series of Notes within thirty (30) days of the due date for payment thereof; (2) default is made by the Issuer or the Guarantor in the performance or observance of any obligation, condition or provision binding on the Issuer under such series of Notes or on the Guarantor under the Guarantees in relation to, or in respect of, such series of Notes (other than any obligation for payment of any principal or interest in respect of such series of Notes) and (except in any case where the default is incapable of remedy when no continuation or notice as is hereinafter mentioned will be required) such default continues for thirty (30) days after written notice thereof to the Issuer or the Guarantor, as the case may be, requiring the same to be remedied; (3) any Indebtedness for Borrowed Money of the Issuer, the Guarantor or any Material Subsidiary, becomes due and repayable prematurely by reason of an event of default (howsoever described) or the Issuer, the Guarantor or any Material Subsidiary, fails to make any payment in respect of any Indebtedness for Borrowed Money on the due date for payment (as extended by any originally applicable grace period), or any security given by the Issuer, the Guarantor or any Material Subsidiary for any Indebtedness for Borrowed Money becomes enforceable by reason of an event of default (howsoever described), or if default is made by the Issuer, the Guarantor or any Material Subsidiary in making any payment due under any guarantee and/or indemnity given by it in relation to any Indebtedness for Borrowed Money of any other person (as extended by any originally applicable grace period), provided that no such event shall constitute an Event of Default unless the aggregate Indebtedness for Borrowed Money relating to all such events which shall have occurred and be continuing shall amount to at least Euro 25,000,000 (or its equivalent in any other currency); (4) the Issuer, the Guarantor or any Material Subsidiary shall be adjudicated or becomes insolvent or shall stop payment or announce that it shall stop payment or shall be found by a court or similar body of competent jurisdiction to be unable to pay its debts, or any order shall be made by any competent court or other competent body (unless such order is being contested in good faith for a period not to exceed 240 days) for, or any resolution shall be passed by the Issuer, the Guarantor or any Material Subsidiary for judicial composition proceedings with its creditors or for the appointment of a receiver, administrative receiver or trustee or other similar official in insolvency proceedings in relation to the Issuer, the Guarantor or any Material Subsidiary; (5) the Issuer, the Guarantor or any Material Subsidiary fails to pay a final judgment of a court of competent jurisdiction within sixty (60) days from the receipt of a notice that a final judgment in excess of an amount equal to the value of a substantial part of the assets or property of the Issuer, the Guarantor or any Material Subsidiary has been entered against it or an execution is levied on or enforced upon or sued out in pursuance of any such judgment against any substantial part of the assets or property of the Issuer, the Guarantor or any Material Subsidiary; (6) the Issuer, the Guarantor or any Material Subsidiary shall be wound up or dissolved (otherwise than for the purpose of a solvent amalgamation, merger or reconstruction under which the assets and liabilities of the Issuer, the Guarantor or the Material Subsidiary, as the case may be, are assumed by the entity resulting from such amalgamation, merger or reconstruction and such entity assumes the obligations of the Issuer, the Guarantor or the Material Subsidiary, as the case may be, in respect of such series of Notes or the Guarantees of such series of Notes, as the case may be, and an opinion of a legal adviser of recognized standing in the relevant jurisdiction has been delivered to the Trustee confirming the same prior to the effective date of such amalgamation, merger or reconstruction);

177 (7) the Issuer, the Guarantor or any Material Subsidiary shall cease or announce that it shall cease to carry on its business (otherwise than for the purpose of a solvent amalgamation, merger or reconstruction under which the assets and liabilities of the Issuer, the Guarantor or the Material Subsidiary, as the case may be, are assumed by the entity resulting from such amalgamation, merger or reconstruction and such entity assumes the obligations of the Issuer, the Guarantor or the Material Subsidiary, as the case may be, in respect of such series of Notes or the Guarantees of such series of Notes, as the case may be, and an opinion of a legal adviser of recognized standing in the relevant jurisdiction has been delivered to the Trustee confirming the same prior to the effective date of such amalgamation, merger or reconstruction); (8) any event occurs which under the laws of the United States, the Republic of Italy or the relevant jurisdiction of incorporation of the relevant Material Subsidiary has an analogous effect to any of the events referred to in paragraphs (4) to (7) above; (9) any action, condition or thing at any time after the issue date required to be taken, fulfilled or done in order to ensure that those obligations are legal, valid, binding and enforceable is not taken, fulfilled or done; or (10) the Guarantees of such series of Notes ceases to be, or is claimed by the Guarantor not to be, in full force and effect. If an event of default has occurred and has not been cured, the Trustee or the holders of not less than 25% in principal amount of such series of outstanding Notes may declare the entire principal amount of all such series of Notes to be due and immediately payable. This is called a declaration of acceleration of maturity. A declaration of acceleration of maturity may be cancelled by the holders of at least a majority in principal amount of such series of outstanding Notes. Except in cases of default, where the Trustee has some special duties, the Trustee is not required to take any action under the Indenture at the request of any holders unless the holders offer the Trustee reasonable protection from expenses and liability. This protection is called an indemnity. If reasonable indemnity is provided, the holders of a majority in principal amount of such series of outstanding Notes may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the Trustee. These majority holders may also direct the Trustee in performing another action under the Indenture. Before a Noteholder can bypass the Trustee and bring its own lawsuit or other formal legal action or take other steps to enforce its rights or protect its interests relating to such series of Notes, the following must occur: • The Trustee must have been given written notice that an event of default has occurred and remains uncured. • The holders of not less than 25% in principal amount of all such series of outstanding Notes must make a written request that the Trustee take action because of the default, and must offer reasonable indemnity to the Trustee against the cost and other liabilities of taking that action. • The Trustee must have not taken action for sixty (60) days after receipt of the above notice and offer of indemnity. Nothing, however, will prevent an individual holder from bringing suit to enforce payment. Each of the Issuer and the Guarantor will furnish to the Trustee every year, within 120 days after the end of the Guarantor’s fiscal year, a written statement from its designated officers certifying that, to their knowledge, it is in compliance with the Indenture and such series of Notes, or else specifying any default.

Street name and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request of the Trustee and to make or cancel a declaration of acceleration.

Governing Law The Indenture, the Guarantees and the Notes will be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws thereof.

178 Submission to Jurisdiction and Enforceability of Judgments The Issuer and Guarantor will appoint CT Corporation System, located in The City of New York, as their process agent for any action brought by a holder based on Notes, the Indenture or the Guarantees instituted in any state or federal court in the Borough of Manhattan, The City of New York. The Issuer and Guarantor will irrevocably submit to the non-exclusive jurisdiction of any state or federal court in the Borough of Manhattan, The City of New York in respect of any action brought by a holder based on the Notes, the Guarantees or the Indenture. The Issuer and Guarantor will also irrevocably waive, to the extent permitted by applicable law, any objection to the venue of any of these courts in an action of that type. Holders of the Notes may, however, be precluded from initiating actions in courts other than those mentioned above. The Issuer and Guarantor will, to the fullest extent permitted by law, irrevocably waive and agree not to plead any immunity from the jurisdiction of any of the above courts. Since a substantial portion of the Issuer and the Guarantor’s assets are outside the United States, any judgment obtained in the United States, including judgments with respect to the payment of principal, premium, interest and any redemption price and any purchase price with respect to the Notes, may not be collectable within the United States.

Definitions “Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such Notes. “Comparable Treasury Price” means, as determined by the Company, with respect to any redemption date, (a) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (b) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations. “Indebtedness for Borrowed Money” means any present or future indebtedness (whether being principal, premium, interest or other amounts) for or in respect of (i) money borrowed, (ii) liabilities under or in respect of any acceptance or acceptance credit or (iii) any notes, bonds, debentures or other securities offered, issued or distributed whether by way of public offer, private placing, or acquisition consideration and whether issued for cash or in whole or in part for a consideration other than cash. “Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Issuer. “Material Subsidiary” means, in respect of any company at any particular time, any company more than 50 percent. of whose issued share capital (or equivalent) is then beneficially owned by Finmeccanica., whose gross revenues (consolidated in the case of a company which itself has subsidiaries within the meaning of Article 2359 of the Italian Civil Code) and gross assets (consolidated in the case of a company which itself has subsidiaries within the meaning of Article 2359 of the Italian Civil Code) represent 10 per cent or more of Finmeccanica’s consolidated gross revenues and consolidated gross assets as calculated on the basis of its latest Statutory Accounts. “Person” means any individual, company, corporation, firm, partnership, joint venture, association, organization, state or agency of a state or other entity, whether or not having separate legal personality. “Reference Treasury Dealer” means Banc of America Securities LLC or their affiliates and four other persons which are primary U.S. Government securities dealers, and their respective successors; provided, however, that if any of the foregoing or their affiliates shall cease to be a primary U.S. Government securities dealer in The City of New York (a “Primary Treasury Dealer”), the Issuer shall substitute therefore another Primary Treasury Dealer. “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m. New York time on the third business day preceding such redemption date.

179 “Relevant Date” means, in relation to any payment, whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received by the Paying Agent on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Trustee. “Relevant Indebtedness” means (a) any Indebtedness for Borrowed Money of the Issuer, or where relevant, the Guarantor which is in the form of or represented by any bond, note, debenture, certificate or other instrument which is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market (including, without limitation, any over-the-counter market) and (b) any guarantee in respect of any such Relevant Indebtedness. “Security Interest” means any mortgage, charge, pledge, lien or other encumbrance including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction. “Statutory Accounts” means the audited, consolidated financial statements of Finmeccanica. which are prepared in accordance with accounting regulations, as interpreted by and integrated with the accounting principles established by the Italian accounting profession. “Treasury Rate” means, as determined by the Company, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

Available Information So long as the Notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Issuer and the Guarantor will furnish upon request of a holder of Notes or a prospective purchaser the information required to be delivered under Rule 144A(d)(4) of the Securities Act if at the time of such request neither the Issuer or the Guarantor is a reporting company under Section 13 or Section 15(d) of the United States Securities Exchange Act of 1934, as amended, or is not exempt from reporting pursuant to Rule 12g3-2(b) thereunder.

180 TRANSFER RESTRICTIONS Because of the following restrictions, purchasers are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of the Notes offered hereby. The Notes and the Guarantees have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, the Notes offered hereby are being offered and sold only (i) outside the United States in offshore transactions to persons other than U.S. persons in reliance on Regulation S under the Securities Act and (ii) within the United States to QIBs in accordance with Rule 144A. Each purchaser of Notes in the United States will be deemed to have acknowledged, represented to and agreed with the Issuer and the initial purchasers as follows: (1) It understands and acknowledges that the Notes and the Guarantees have not been registered under the Securities Act or any other applicable securities law, are being offered for sale in transactions not requiring registration under the Securities Act or any other securities law, including sales pursuant to Rule 144A under the Securities Act, and may not be offered, sold or otherwise transferred except in compliance with the registration requirements of the Securities Act or any other applicable securities law, pursuant to an exemption therefrom or in any transaction not subject thereto and in each case in compliance with the conditions for transfer set forth in paragraphs (4) and (5) below. (2) It is not an “affiliate” (as defined in Rule 144 under the Securities Act) of Finmeccanica or acting on Finmeccanica’s behalf and it is a QIB and is aware that any sale of Notes to it will be made in reliance on Rule 144A under the Securities Act, of which the acquisition will be for its own account or for the account of another QIB. (3) It understands that the Notes may not be reoffered, resold, pledged or otherwise transferred except (A) (i) to a person who it reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, (ii) in an offshore transaction in compliance with Rule 903 or Rule 904 of Regulation S, (iii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) or (iv) pursuant to an effective registration statement under the Securities Act, and (B) in accordance with all applicable securities laws of the states of the United States. (4) Each purchaser acknowledges that the Notes will bear a legend substantially to the following effect: “THE NOTES AND THE GUARANTEE EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHAS- ING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITU- TIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES”. (5) It agrees that it will give to each person to whom it transfers the Notes notice of any restrictions on transfer of such Notes. (6) It acknowledges that the Trustee will not be required to accept for registration of transfer any Notes except upon presentation of evidence satisfactory to the Issuer and the Trustee that the restrictions set forth therein have been complied with. (7) It acknowledges that Finmeccanica, the initial purchasers and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations, warranties and agreements and agrees that if any of the acknowledgements, representations, warranties and agreements deemed to have been made by its purchase of the Notes are no longer accurate, it shall promptly notify the

181 initial purchasers. If it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such investor account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such investor account. Each purchaser of Notes outside of the United States pursuant to Regulation S will be deemed to have represented, acknowledged and agreed as follows: (1) It understands and acknowledges that the sale of the Notes to it is being made pursuant to and in accordance with Rule 903 or Rule 904 of Regulation S under the Securities Act and it is, or at the time such Notes are purchased, will be, the beneficial owner of such Notes and (a) it is not a U.S. person (as defined in Regulation S) and it is located outside the United States (within the meaning of Regulation S) and (b) it is not an affiliate of Finmeccanica or a person acting on behalf of such affiliates. (2) It understands and acknowledges that the Notes have not been and will not be registered under the Securities Act and, during the Distribution Compliance Period (defined as 40 days after the later of the commencement of the offering and the issuance of the Notes), may not be offered, sold, pledged or otherwise transferred except (i) in an offshore transaction in compliance with Rule 903 or Rule 904 of Regulation S, (ii) to a person who it reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, (iii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) or (iv) pursuant to an effective registration statement under the Securities Act, and (B) in accordance with all applicable securities laws of the states of the United States. (3) Each purchaser acknowledges that the Notes will bear a legend substantially to the following effect: “THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, PRIOR TO THE EXPIRATION OF FORTY DAYS FROM THE LATER OF (1) THE DATE ON WHICH THESE SECURITIES WERE FIRST OFFERED AND (2) THE DATE OF ISSUANCE OF THESE SECURITIES, MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT (A) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE OTHER QUALIFIED INSTITUTIONAL BUYERS IN ACCORDANCE WITH RULE 144A, OR (B) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENE- FIT OF THE ISSUER THAT IT WILL NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE”. (4) It agrees that it will give to each person to whom it transfers the Notes notice of any restrictions on transfer of such Notes. (5) It acknowledges that the Trustee will not be required to accept for registration of transfer any Notes except upon presentation of evidence satisfactory to the Issuer and the Trustee that the restrictions set forth therein have been complied with. (6) It acknowledges that Finmeccanica, the initial purchasers and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations, warranties and agreements and agrees that if any of the acknowledgements, representations, warranties and agreements deemed to have been made by its purchase of the Notes are no longer accurate, it shall promptly notify the initial purchasers. If it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such investor account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such investor account.

182 SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES The Guarantor and some of its subsidiaries are joint stock companies (società per azioni or S.p.A.) incorporated under the laws of the Republic of Italy. Most of the Directors, officers and other executives of the Guarantor are not residents or citizens of the United States. Furthermore, a substantial part of the assets of the Guarantor are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon the Guarantor or the persons listed above or to enforce judgments of U.S. courts predicated upon the civil liability provisions of U.S. federal or state securities laws against them. It may be possible for investors to effect service of process within the Republic of Italy upon those persons or the Guarantor or its subsidiaries provided that the requirements of The Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of November 15, 1965 are complied with. The Guarantor has been advised by its Italian counsel that in general, final, enforceable and conclusive judgments rendered by U.S. courts, even if obtained by default, may not require retrial and will be enforceable in the Republic of Italy, provided that pursuant to Article 64 of Italian Law No. 218 of May 31, 1995 (Riforma del sistema italiano di diritto internazionale privato) the following conditions are met: • the U.S. court which rendered the final judgment had jurisdiction according to Italian law principles of jurisdiction; • the relevant summons and complaint was appropriately served on the defendants in accordance with U.S. law and during the proceedings the essential rights of the defendants have not been violated; • the parties to the proceedings appeared before the court in accordance with U.S. law or, in the event of default by the defendants, the U.S. court declared such default in accordance with U.S. law; • the judgment is final and not subject to any further appeal in accordance with U.S. law; • there is no conflicting final judgment previously rendered by an Italian court; • there is no action pending in the Republic of Italy among the same parties and arising from the same facts and circumstances which commenced prior to the action in the United States; and • the provisions of such judgment would not violate Italian public policy. In addition, the Guarantor has been advised by its Italian counsel that if an original action is brought before an Italian court, the Italian court may refuse to apply U.S. law provisions or to grant some of the remedies sought (for example punitive damages) if their application violates Italian public policy.

183 TAX CONSIDERATIONS

United States Federal Income Taxation United States Internal Revenue Service Circular 230 Notice: To ensure compliance with Internal Revenue Service Circular 230, prospective investors are hereby notified that: (a) any discussion of United States federal tax issues contained or referred to in this Listing Prospectus or any document referred to herein is not intended or written to be used, and cannot be used by prospective investors for the purpose of avoiding penalties that may be imposed on them under the United States Internal Revenue Code; (b) such discussion is written for use in connection with the promotion or marketing of the transactions or matters addressed herein; and (c) prospective investors should seek advice based on their particular circumstances from an independent tax advisor. The following summary of certain United States income tax considerations contains a description of certain material United States income tax consequences of this offering and the ownership and disposition of the Notes, but does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to participate in this offering. This summary does not describe any tax consequences arising under the laws of any state, locality or taxing jurisdiction other than the United States. This summary is based on the tax laws of the United States as in effect on the date of this Listing Prospectus, as well as on rules and regulations of the United States available on or before such date and now in effect. The foregoing are subject to change, which change could apply retroactively and could affect the continued validity of this summary. Prospective investors should consult their own tax advisers as to the United States or other tax consequences of the ownership and disposition of the Notes, including, in particular, the application to their particular situations of the tax considerations discussed below, as well as the application of state, local, foreign or other tax laws. Prospective purchasers of the Notes are advised to consult their own tax advisers as to the consequences under the tax laws of the country of which they are residents of the purchase, ownership and disposition of the Notes. The following is a general description of certain tax laws relating to the Notes as in effect and as applied by the relevant tax authorities on the date hereof and does not purport to be a comprehensive discussion of the tax treatment of the Notes. This section describes the material United States federal income tax consequences of owning the notes we are offering. It applies to a noteholder only if such noteholder acquire notes in the offering at the offering price and holds the notes as capital assets for tax purposes. This section does not apply to noteholders if such noteholders are a member of a class of holders subject to special rules, such as: • a dealer in securities or currencies, • a trader in securities that elects to use a mark-to-market method of accounting for securities holdings, • a bank, • a life insurance company, • a tax-exempt organization, • a person that owns notes that are a hedge or that are hedged against interest rate risks, • a person that owns notes as part of a straddle or conversion transaction for tax purposes, or • a United States holder (as defined below) whose functional currency for tax purposes is not the U.S. dollar. If a noteholder purchase notes at a price other than the offering price, the amortizable bond premium or market discount rules may also apply to such noteholder. Such noteholder should consult its tax advisor regarding this possibility. This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations under the Internal Revenue Code, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis.

A noteholder should consult its tax advisor concerning the consequences of owning these notes in such particular circumstances under the Internal Revenue Code and the laws of any other taxing jurisdiction.

184 United States Holders This subsection describes the tax consequences to a United States holder. A holder is a United States holder if the holder is a beneficial owner of a note and is: • a citizen or resident of the United States, • a corporation created or organized under the laws of the United States or any State thereof, • an estate whose income is subject to United States federal income tax regardless of its source, or • a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust. If a holder is not a United States holder, this subsection does not apply and such holder should refer to “United States Alien Holders” below. Payments of Interest. A holder will be taxed on interest on its note as ordinary income at the time the holder receives the interest or when it accrues, depending on the holder’s method of accounting for tax purposes. Purchase, Sale and Retirement of the Notes. The holder’s tax basis in the holder’s note generally will be its cost. The holder will generally recognize capital gain or loss on the sale or retirement of your note equal to the difference between the amount the holder realizes on the sale or retirement, excluding any amounts attributable to accrued but unpaid interest, and the holder’s tax basis in your note. Capital gain of a noncorporate United States holder that is recognized in taxable years beginning before January 1, 2011 is generally taxed at a maximum rate of 15% where the holder has a holding period greater than one year. Substitution of Issuer. It is possible that the Internal Revenue Service may deem a transfer of the Issuer’s obligation under the notes to cause an exchange for U.S. federal income tax purposes of notes for new notes by the holders of notes, which could result in the recognition of taxable gain or loss for U.S. federal income tax purposes and possible other adverse tax consequences.

United States Alien Holders This subsection describes the tax consequences to a United States alien holder. A holder is a United States alien holder if the holder is a beneficial owner of a note and the holder is, for United States federal income tax purposes: • a nonresident alien individual; • a foreign corporation; • a foreign partnership; or • an estate or trust that in either case is not subject to United States federal income tax on a net income basis on income or gain from a note. If the holder is a United States holder, this subsection does not apply to the holder. Payments of Interest. Under United States federal income and estate tax law, and subject to the discussion of backup withholding below, if the holder is a United States alien holder of a note the Issuer and its paying agents will not be required to deduct U.S. withholding tax from payments of principal, interest and any additional amounts to the holder if, in the case of interest and additional amounts: (1) the holder does not actually or constructively own 10 percent or more of the total combined voting power of all classes of stock of the Issuer entitled to vote; (2) the holder is not a controlled foreign corporation that is related to the Issuer through stock ownership; and (3) the holder is not a bank receiving interest described in section 881(c)(3) of the Internal Revenue Code; (4) the U.S. payor does not have actual knowledge or reason to know that the holder is a United States person, and: (a) the holder has furnished to the U.S. payor an Internal Revenue Service Form W-8 or an acceptable substitute form upon which the holder certifies, under penalties of perjury, that

185 the holder is (or, in the case of a U.S. alien holder that is a partnership or an estate or trust, such forms certifying that each partner in the partnership or beneficiary of the estate or trust is) not a United States person; (b) in the case of payments made outside the United States to the holder at an offshore account (generally, an account maintained by the holder at a bank or other financial institution at any location outside the United States), the holder has furnished to the U.S. payor documentation that establishes the holder’s identity and the holder’s status as the beneficial owner of the payment for U.S. federal income tax purposes and as a non-United States person; (c) the U.S. payor has received a withholding certificate (furnished on an appropriate Internal Revenue Service Form W-8 or an acceptable substitute form) from a person claiming to be: • a withholding foreign partnership (generally a foreign partnership that has entered into an agreement with the Internal Revenue Service to assume primary withholding responsibility with respect to distributions and guaranteed payments it makes to its partners); • a qualified intermediary (generally a non-United States financial institution or clearing organization or a non-United States branch or office of a United States financial institution or clearing organization that is a party to a withholding agreement with the Internal Revenue Service); • a U.S. branch of a non-United States bank or of a non-United States insurance company; and the withholding foreign partnership, qualified intermediary or U.S. branch has received documentation upon which it may rely to treat the payment as made to a non-United States person that is, for U.S. federal income tax purposes, the beneficial owner of the payment on the notes in accordance with U.S. Treasury regulations (or, in the case of a qualified intermediary, in accordance with its agreement with the Internal Revenue Service); (d) the U.S. payor receives a statement from a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business: • certifying to the U.S. payor under penalties of perjury that an Internal Revenue Service Form W-8BEN or an acceptable substitute form has been received from the holder by it or by a similar financial institution between it and the holder; and • to which is attached a copy of the Internal Revenue Service Form W-8BEN or acceptable substitute form; or (e) the U.S. payor otherwise possesses documentation upon which it may rely to treat the payment as made to a non-United States person that is, for U.S. federal income tax purposes, the beneficial owner of the payment on the notes in accordance with U.S. Treasury regulations. Sale or Exchange of the Note. No deduction for any United States federal withholding tax will be made from any gain that the holder realizes on the sale or exchange of the holder’s note. The holder will generally not be subject to U.S. federal income tax on any gain or income realized upon the sale, exchange, retirement or other disposition of the holder’s note, provided that (i) such gain is not effectively connected with the conduct by the holder of a United States trade or business and (ii) in the case of a Non U.S. Holder who is an individual, the holder is not present in the United States for a total of 183 days or more during the taxable year in which the gain is realized and certain other conditions are met. Further, a note held by an individual, who at death is not a citizen or resident of the United States will not be includible in the individual’s gross estate for U.S. federal estate tax purposes if: • the decedent did not actually or constructively own 10 percent or more of the total combined voting power of all classes of stock of the Issuer entitled to vote at the time of death; and • the income on the note would not have been effectively connected with a United States trade or business of the decedent at the same time.

186 Backup Withholding and Information Reporting If the holder is a noncorporate United States holder, information reporting requirements, on Internal Revenue Service Form 1099, generally will apply to: • payments of principal and interest on a note within the United States, including payments made by wire transfer from outside the United States to an account the holder maintains in the United States, and • the payment of the proceeds from the sale of a note effected at a United States office of a broker. Additionally, backup withholding will apply to such payments if the holder is a noncorporate United States holder that: • fails to provide an accurate taxpayer identification number, • is notified by the Internal Revenue Service that the holder has failed to report all interest and dividends required to be shown on the holder’s federal income tax returns, or • in certain circumstances, fails to comply with applicable certification requirements. In general, if the holder is a United States alien holder, payments of principal, premium and interest made by the Issuer and other payors to the holder will not be subject to backup withholding and information reporting, provided that the certification requirements described under “— United States Alien Holders” above are satisfied or the holder otherwise establishes an exemption. However, the Issuer and other payors are required to report payments of interest on the holder’s notes on Internal Revenue Service Form 1042-S even if the payments are not otherwise subject to information reporting requirements. In addition, payment of the proceeds from the sale of notes effected at a United States office of a broker will not be subject to backup withholding and information reporting provided that: • the broker does not have actual knowledge or reason to know that the holder is a United States person and the holder has furnished to the broker: (1) an appropriate Internal Revenue Service Form W-8 or an acceptable substitute form upon which the holder certifies, under penalties of perjury, that the holder is not a United States person; or (2) other documentation upon which it may rely to treat the payment as made to a non-United States person in accordance with U.S. Treasury regulations; or • the holder otherwise establishes an exemption. If the holder fails to establish an exemption and the broker does not possess adequate documentation of the holder’s status as a non-United States person, the payments may be subject to information reporting and backup withholding. However, backup withholding will not apply with respect to payments made to an offshore account maintained by the holder unless the broker has actual knowledge that the holder is a United States person. Payment of the proceeds from the sale of a note effected at a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, a sale of a note that is effected at a foreign office of a broker will be subject to information reporting and backup withholding if: • the proceeds are transferred to an account maintained by the holder in the United States; • the payment of proceeds or the confirmation of the sale is mailed to the holder at a United States address; or • the sale has some other specified connection with the United States as provided in U.S. Treasury regulations; unless the broker does not have actual knowledge or reason to know that the holder is a United States person and the documentation requirements described above are met or the holder otherwise establishes an exemption. In addition, a sale of a note effected at a foreign office of a broker will be subject to information reporting if the broker is: • a United States person • a controlled foreign corporation for United States tax purposes

187 • a foreign person 50 percent or more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period, or • a foreign partnership, if at any time during its tax year: • one or more of its partners are “U.S. persons”, as defined in U.S. Treasury regulations, who in the aggregate hold more than 50 percent of the income or capital interest in the partnership, or • such foreign partnership is engaged in the conduct of a United States trade or business, unless the broker does not have actual knowledge or reason to know that the holder is a United States person and the documentation requirements described above are met or the holder otherwise establishes an exemption. Backup withholding will apply if the sale is subject to information reporting and the broker has actual knowledge that the holder is a United States person.

Italian Taxation The statements herein regarding taxation summarize the principal Italian tax consequences of the purchase, the ownership and the disposition of the Notes. They apply to a holder of the Notes only if such holder purchases its Notes under this Listing Prospectus. It is a general summary that does not apply to certain categories of investors and does not purport to be a comprehensive description of all the tax considerations which may be relevant to a decision to purchase, own or dispose of the Notes. It does not discuss every aspect of Italian taxation that may be relevant to a holder of the Notes if such holder is subject to special circumstances or if such holder is subject to special treatment under applicable law. This summary also assumes that the Issuer and/or the Guarantor are organized and that the Issuer’s and/or the Guarantor’s business will be conducted as outlined in this Listing Prospectus. Changes in the Issuer’s and/or the Guarantor’s tax residence, organizational structure or the manner in which the Issuer and/or the Guarantor conduct their business may invalidate this summary. The statements herein regarding taxation are based on the laws in force in Italy as of the date of this Listing Prospectus and are subject to any changes in law occurring after such date, which changes could be made on a retroactive basis. Neither the Issuer nor the Guarantor will update this summary to reflect changes in laws and if any such changes occur the information in this summary could become invalid. Prospective purchasers of the Notes are advised to consult their own tax advisors concerning the overall tax consequences of their ownership of the Notes.

Payments made by the Issuer Interest and other proceeds Notes that qualify as “obbligazioni” or “titoli similari alle obbligazioni” with an original maturity of 18 months or more To the extent that the Notes qualify as “obbligazioni” or “titoli similari alle obbligazioni”, as defined hereunder, interest, premium and other proceeds (including the difference between the redemption amount and the issue price, hereinafter collectively referred to as “Interest”) deriving from the Notes having an original maturity of eighteen months or more, are subject to the tax regime provided for by Legislative Decree No. 239 of 1 April 1996, as amended (“Decree No. 239”). In particular, Decree No. 239 applies only to such Notes which fall within the category of bonds (obbligazioni) or debentures similar to bonds (titoli similari alle obbligazioni) pursuant to Article 44 of Italian Presidential Decree No. 917 of 22 December 1986, as amended (“Decree No. 917”). For this purpose, debentures similar to bonds are securities that incorporate an unconditional obligation to pay, at maturity, an amount not lower than that indicated thereon and that do not allow direct or indirect participation in the management of the issuer or of the business in relation to which they have been issued.

Non-Italian resident Noteholders Interest payments relating to the Notes issued by Issuer and received by non-Italian resident beneficial owners are not subject to taxation in Italy. If the Notes issued by the Issuer and beneficially owned by non- Italian residents are deposited with an Italian bank or other resident intermediary (or permanent establishment in Italy of foreign Intermediary) or are sold through an Italian bank or other resident intermediary (or permanent establishment in Italy of foreign intermediary) or in any case an Italian resident intermediary (or

188 permanent establishment in Italy of foreign intermediary) intervenes in the payment of Interest on such Notes, to ensure payment of Interest without application of Italian taxation a non-Italian resident Noteholder may be required to produce to the Italian bank or other intermediary a self-assessment (autocertizione) stating that he or she is not resident in Italy for tax purposes.

Italian resident Noteholders Decree 239 regulates the tax treatment of interest, premiums and other income from Notes issued, inter alia, by non-Italian resident entities. The provisions of Decree 239 only apply to Interest from those Notes issued by the Issuer which qualify as obbligazioni or titoli similari alle obbligazioni pursuant to Article 44 of Decree No. 917. Where the Italian resident holder of the Notes (which qualify as obbligazioni or titoli similari alle obbligazioni and have a maturity of eighteen months or more), and the beneficial owner of such Notes is: (a) an individual holding the Notes otherwise than in connection with entrepreneurial activity, (unless he has entrusted the management of his financial assets, including the Notes, to an authorized intermediary and has opted for the asset management option); or (b) a partnership (other than a società in nome collettivo or società in accomandita semplice or similar partnership), de facto partnership not carrying out commercial activities or professional association; or (c) a private or public institution not carrying out mainly or exclusively commercial activities; or (d) an investor exempt from Italian corporate income taxation, interest payments relating to the Notes are subject to a tax, referred to as imposta sostitutiva, levied at the rate of 12.5 percent (either when Interest is paid or when payment thereof is obtained by the holder on a sale of the Notes). All the above categories are qualified as “net recipients”. Where the Italian resident holders of the Notes described above under (a) and (c) are engaged in an entrepreneurial activity to which the Notes are connected, imposta sostitutiva applies as a provisional income tax and may be deducted from the taxation on income due. Pursuant to Decree 239, the 12.5 percent imposta sostitutiva is applied by Intermediaries or by permanent establishments in Italy of banks or intermediaries resident outside Italy. Pursuant to Decree 239, Intermediaries (or permanent establishments in Italy of foreign intermediaries) must intervene in any way in the collection of Interest or, also as transferees, in transfers or disposals of the Notes. Where the Notes are not deposited with an authorized Intermediary (or with a permanent establishment in Italy of a foreign Intermediary), the imposta sostitutiva is applied and withheld by any Italian bank or any Italian intermediary paying Interest to the Noteholders. Payments of Interest in respect of Notes that qualify as obbligazioni or titoli similari alle obbligazioni and have a maturity of eighteen months or more, are not subject to the 12.5 percent imposta sostitutiva if made to beneficial owners who are: (i) Italian resident corporations or permanent establishments in Italy of foreign corporations to which the Notes are effectively connected; (ii) Italian resident collective investment funds, SICAVs, Italian resident pension funds referred to in Decree No. 252 of December 5, 2005 (“Decree No. 252”), Italian resident real estate investment funds; and (iii) Italian resident individuals holding the Notes not in connection with entrepreneurial activity who have entrusted the management of their financial assets, including the Notes, to an authorized financial intermediary and have opted for the asset management option. Such categories are qualified as “gross recipients”. To ensure payment of Interest in respect of the Notes without the application of 12.5 percent, imposta sostitutiva, gross recipients indicated above under (i) to (iii) must (a) be the beneficial owners of payments of Interest on the Notes and (b) timely deposit the Notes directly or indirectly with an Italian authorized financial intermediary (or permanent establishment in Italy of foreign intermediary). Where the Notes are not deposited with an authorized Intermediary (or permanent establishment in Italy of a foreign intermediary), the imposta sostitutiva is applied and withheld by any Italian bank or any Italian intermediary paying Interest to the Noteholder and gross recipients that are Italian resident corporations or permanent establishments in Italy of foreign corporations to which the Notes are effectively connected are entitled to deduct imposta sostitutiva from income taxes due. Interest accrued on the Notes would be included in the corporate taxable income (and in certain circumstances, depending on the “status” of the Noteholder, also in the net value of production for purposes of

189 regional tax on productive activities — “IRAP”) of beneficial owners who are Italian resident corporations or permanent establishments in Italy of foreign corporations to which the Notes are effectively connected, subject to tax in Italy in accordance with ordinary tax rules, and such beneficial owners should be generally entitled to a tax credit for any withholding taxes applied outside Italy on Interest on Notes issued by such Issuer. Italian resident individuals holding Notes not in connection with entrepreneurial activity who have opted for the asset management option are subject to the 12.5 percent annual asset management tax on the increase in value of the managed assets accrued at the end of each tax year (which increase would include Interest accrued on the Notes). The asset management tax is applied on behalf of the taxpayer by the managing authorized intermediary. Italian collective investment funds and SICAVs are subject to the 12.5 percent annual Collective Investment Fund Tax on the increase in value of the managed assets accrued at the end of each tax year (which increase would include Interest accrued on the Notes). Italian resident pension funds subject to the regime provided by Decree No. 252, are subject to an 11 percent annual Pension Fund Tax on the increase in value of the managed assets accrued at the end of each tax year (which increase would include Interest accrued on the Notes). Under the current regime provided by Law Decree No. 351 of 25 September 2001 converted into law with amendments by Law No. 410 of 23 November 2001, as clarified by the MEF through Circular No. 47/E of 8 August 2003, payments of interest, premium and other income in respect of the Notes made to Italian resident real estate investment funds established pursuant to Article 37 of Legislative Decree No. 58 of 24 February 1998, as amended and supplemented, and Article 14-bis of Law No. 86 of 25 January 1994, are subject neither to imposta sostitutiva nor to any other income tax in the hands of such real estate investment funds, provided that the Notes are timely deposited with an authorized Intermediary. However, a 1 percent property tax has been recently introduced by Law Decree No. 112 of 25 June 2008 (converted into Law No. 133 of 6 August 2008) which applies, upon certain conditions, on the net value of certain real estate investment funds. Where Interest on the Notes with maturity of eighteen months or more issued by the Issuer and beneficially owned by the Noteholders qualifying as net recipients, as defined above, are not collected through the intervention of an Italian resident intermediary and as such no imposta sostitutiva is applied, the Italian resident beneficial owners qualifying as net recipients will be required to declare Interest in their yearly income tax return and subject them to final substitute tax at a rate of 12.5 percent, unless option for a different regime is allowed and made. Italian resident net recipients that are individuals not engaged in entrepreneurial activity may elect instead to pay ordinary personal income taxes at the progressive rates applicable to them in respect of Interest on such Notes. If so, the beneficial owners should be generally entitled to a tax credit for withholding taxes applied outside Italy, if any.

Early Redemption of Notes with an original maturity of eighteen months or longer Without prejudice to the above provisions, in respect of Notes issued by the Issuer with an original maturity of eighteen months or longer which are redeemed in full or in part within eighteen months from the date of issue, Italian resident beneficial owners will be required to pay an additional amount equal to 20 percent of the interest and other proceeds accrued up to the time of the early redemption pursuant to Article 26, 3rd paragraph, of Presidential Decree No. 600 of September 29, 1973, as amended (“Decree 600”). If Italian withholding agents intervene in the collection of interest and other proceeds on the Notes or in the redemption of the Notes, this additional amount will be levied by such withholding agents. According to one interpretation of Italian tax law, the above 20 percent additional amount may also be due in the event of any purchase of the Notes by the Issuer or Guarantor, with subsequent cancellation thereof prior to eighteen months from the date of issue.

Notes with a maturity of less than eighteen months Pursuant to Decree 239, Interest payments relating to Notes with a maturity of less than 18 months are subject to imposta sostitutiva, levied at a rate of 27 percent, if made to the following Italian resident Noteholders: (i) individuals, (ii) non-commercial partnerships, (iii) non-commercial private or public institutions, (iv) investors exempt from Italian corporate income tax, (v) Pension Funds and (vi) Funds. Interest payments received by: (a) Italian resident companies or similar commercial entities (including a permanent establishment in Italy of a foreign entity to which the Notes are effectively connected) and (b) Italian resident commercial partnerships, form part of their aggregate income subject to the ordinary

190 applicable corporate income taxes. In certain cases, said Interest may also be included in the taxable net value of production for IRAP purposes

Atypical securities Interest payments relating to the Notes that are not deemed to fall within the category of bonds (obbligazioni) or securities similar to bonds (titoli similari alle obbligazioni) may be subject to a withholding tax, levied at the rate of 27 percent. For this purpose, securities similar to bonds are securities that incorporate an unconditional obligation to pay, at maturity, an amount not lower than their nominal value. If the Notes are issued by a non-Italian resident Issuer, the 27 percent withholding tax mentioned above does not apply to interest payments made to a non-Italian resident noteholder and without a permanent establishment in Italy to which the Notes are effectively connected. If the Notes are deposited with an Italian bank or other resident intermediary or are sold through an Italian bank or other resident intermediary or in any case an Italian resident intermediary as defined by Italian law intervenes in the payment of interest and other proceeds on the Notes, to ensure payment of interest and other proceeds without application of Italian taxation a non-Italian resident Noteholder may be required to produce to the Italian bank or other intermediary as defined by Italian law a self-declaration certifying to be the beneficial owner of payments of interest and other proceeds on the Notes and not to be resident in Italy for tax purposes. In the case of an Italian resident beneficial owner which is (i) a company or similar commercial entity (including the Italian permanent establishment of foreign entities), (ii) a commercial partnership or (iii) a commercial private or public institution, payments received on the Notes will not be subject to any “entrance” withholding tax and will form part of their aggregate taxable business income (and, in certain cases, depending on the status of the noteholders, may also be included in the taxable net value of production subject to regional tax on productive activities — IRAP) subject to tax in Italy according to ordinary tax provisions.

Payments made by the Guarantor With respect to payments made by the Italian resident Guarantor under the Guarantees, in accordance with an interpretation of Italian fiscal law, any such payments should be treated as payments by the Issuer and made subject to the tax treatment described above under paragraphs “Interest and other proceeds — Notes that qualify as “obbligazioni”or“titoli similari alle obbligazioni” with an original maturity of 18 months or more” or “Notes with a maturity of less than eighteen months” or “Atypical Securities”, as the case may be. However, there is no authority directly regarding the Italian tax regime of payments on Notes made by an Italian resident guarantor. Accordingly, there can be no assurance that the Italian tax authorities will not assert an alternative treatment of such payments than that set forth herein or that the Italian court would not support such an alternative treatment. With respect to payments made by the Guarantor in respect of Notes issued by the Issuer, in accordance with one interpretation of Italian fiscal law, any such payments may be subject to Italian withholding tax at the rate of 12.5 percent levied as a final tax or a provisional tax (“a titolo d’imposta o a titolo di acconto”) depending on the residential “status” of the Noteholder, pursuant to Decree No. 600. In the case of payments to non-Italian residents, the withholding tax should be final and may be applied at the rate of 27 percent if, in certain circumstances, payments are made to non-Italian residents who are resident in a country with a “privileged tax regime”. Double taxation treaties entered into by Italy may apply allowing for a lower (or in certain cases, nil) rate applicable of the withholding tax in case of payment to non-Italian residents.

Capital Gains Non-Italian resident holders of Notes Capital gains realized by beneficial owners who are not resident in Italy for tax purposes from the sale or redemption of the Notes are not subject to Italian taxation, provided that the Notes are held outside Italy. In case the Notes are held in Italy, in principle, capital gain realized by non-Italian resident entities without a permanent establishment in the Republic of Italy to which the Notes are effectively connected may be taxable in Italy with the same rules as those set out below in “Italian Residents Noteholders”, which apply to Italian resident private individuals holding Notes not in connection with entrepreneurial activity. However, Article 23 of Decree No. 917 provides for a general exemption from Italian taxation on capital gains for noteholders (either individuals or corporations) who are not resident in Italy for tax purposes and do not have a permanent establishment in Italy to which the Notes are effectively connected, in respect of

191 capital gains realized on the sale or redemption of Notes listed on a regulated market in Italy or abroad (e.g., the regulated market of the Luxembourg Stock Exchange), even though the Notes are held in Italy and regardless of the provisions of any applicable double tax treaty. Moreover, pursuant to Legislative Decree No. 461 of 21 November, 1997 (“Decree No. 461”), any capital gain realized upon disposal of Notes not listed on a regulated market shall not be taxable in Italy (even though the Notes are held in Italy) if realized by non-Italian residents (either individuals or corporations) without a permanent establishment in Italy to which the Notes are effectively connected that are resident, for tax purposes, in a country that allows an adequate exchange of information with Italy. This exemption from Italian tax on capital gains applies upon condition that they promptly file with the Italian authorized financial intermediary a self-declaration certifying the beneficial owner of the Notes to be resident, for tax purposes, in a country that allows an adequate exchange of information with Italy. Exemption from Italian imposta sostitutiva on capital gains realized upon disposal of Notes not listed on a regulated market also applies to non-Italian residents who are (a) international bodies and organizations established in accordance with international agreements ratified in Italy; (b) foreign institutional investors, even though not subject to income tax or to other similar taxes, established in countries which allow an adequate exchange of information with Italy; and (c) Central Banks or entities also authorized to manage official reserves of a State. In addition, the provisions of Decree No. 461 do not preclude the application of any more favorable provision of a Tax Treaty entered into by Italy. In accordance with the OECD model, certain double tax treaties entered into by Italy provide that capital gains realized upon the disposal of securities are subject to taxation only in the country of residence of the seller.

Italian Resident Noteholders Pursuant to Decree No. 461, as amended, a 12.5 percent capital gains tax (the “CGT”) is applicable to capital gains realized on any sale or transfer of the instruments for consideration or on redemption thereof by Italian resident individuals (not engaged in a business activity to which the instruments are effectively connected), regardless of whether the instruments are held outside of Italy. For the purposes of determining the taxable capital gain, any Interest on the Notes accrued and unpaid up to the time of the purchase and the sale of the Notes must be deducted from the purchase price and the sale price, respectively. In the case of instruments that qualify as atypical securities, the aforesaid capital gains would be subject to the 27 percent withholding tax mentioned under paragraph “Atypical Securities”, above. Taxpayers can opt for certain alternative regimes in order to pay the CGT. The aforementioned regime does not apply to the following subjects: (A) Corporate investors (including banks and insurance companies). Capital gains realized by Italian resident corporate entities (including a permanent establishment in Italy of a foreign entity to which the instruments are effectively connected) on the disposal or redemption of the instruments will form part of their aggregate income subject to IRES. In certain cases, capital gains may also be included in the taxable net value of production of Italian resident corporate entities (including a permanent establishment in Italy of a foreign entity to which the instruments are effectively connected) for IRAP purposes. The capital gains are calculated as the difference between the sale price and the relevant tax basis of the instruments. Upon fulfillment of certain conditions, the gains may be taxed in equal installments over up to five fiscal years both for IRES and for IRAP purposes. (B) Funds. Capital gains realized by the Funds on the instruments will contribute to determining the annual net accrued result of those same Funds, which is subject to a 12.5 percent substitutive tax (see under paragraph “Italian resident Noteholders”, above). (C) Pension Funds. Capital gains realized by Pension Funds on the instruments will contribute to determining the annual net accrued result of those same Pension Funds, which is subject to an 11 percent substitutive tax (see “Italian resident Noteholders”). (D) Real Estate Investment Funds. Capital gains on Notes held by Italian Real Estate Investment Funds generally are not taxable at the level of same Real Estate Investment Funds. However, upon certain conditions, a 1 percent property tax applies on the net value of certain real estate investment funds (see also paragraph “Italian resident Noteholders”).

192 Inheritance and gift taxes Subject to certain conditions, transfer of Notes, mortis causa or by reason of donation, are subject to inheritance and gift taxes, provided that the issuer is resident in Italy. Inheritance and gift taxes apply according to the following rates and exclusions: (i) transfers to spouse and to direct relatives: 4 percent of the value of the notes exceeding A1 million for each beneficiary; (ii) transfers to brothers and sisters: 6 percent of the value of the notes exceeding A100,000 for each beneficiary; (iii) transfers to relatives (parenti) within the fourth degree, to direct relatives in law (affini in linea retta), indirect relatives in law (affini in linea collaterale) within the third degree other than the relatives indicated above: 6 percent of the value of the notes; and (iv) other transfers: 8 percent of the value of the notes. If the heir/beneficiary is affected by a handicap deemed as “critical” pursuant to Law No. 104 of 5 February 1992, inheritance and gift taxes apply only on the value of assets (net of liabilities) exceeding A1,500,000.

Transfer tax Article 37 of Law Decree No 248 of 31 December 2007, converted into Law No. 31 of 28 February 2008, has abolished the Italian transfer tax (fissato bollato) previously applicable on certain transfers of securities, provided for by Royal Decree No. 3278 of 30 December 1923, as amended and supplemented. Following the repeal of the Italian transfer tax, as from 31 December 2007, contracts relating to the transfer of securities are subject to the registration tax as follows: (i) public deeds and notarized deeds (atti pubblici e scritture private autenticate) executed in Italy should be subject to fixed registration tax at a rate of A168; (ii) private deeds (scritture private non autenticate) should be subject to registration tax at a rate of A168 only in case of use or voluntary registration.

Implementation in Italy of the EU Savings Directive Italy has implemented the EU Savings Directive through Legislative Decree No. 84 of 18 April 2005 (“Decree No. 84”). Under Decree No. 84, subject to a number of important conditions being met, in the case of interest paid to individuals which qualify as beneficial owners of the interest payment and which are resident for tax purposes in another Member State, Italian qualified paying agents shall report to the Italian Tax Authorities details of the relevant payments and personal information relating to the individual beneficial owner. Such information is transmitted by the Italian Tax Authorities to the competent foreign tax authorities of the beneficial owner’s State of residence.

193 PLAN OF DISTRIBUTION Subject to the terms and conditions set forth in the purchase agreement dated October 20, 2009 between Meccanica Holdings, Finmeccanica and the initial purchasers named below, the Issuer agreed to sell to each of the initial purchasers, and each of the initial purchasers severally agreed to purchase, the principal amount of Notes set forth opposite the name of such initial purchaser below. Principal Amount of Notes Initial Purchaser $ Banc of America Securities LLC ...... 69,048,000 Citigroup Global Markets Inc...... 69,048,000 Goldman Sachs International ...... 69,048,000 J.P. Morgan Securities Inc...... 69,048,000 Morgan Stanley & Co. Incorporated ...... 69,048,000 Nomura Securities International, Inc...... 69,048,000 Santander Investment Securities Inc...... 69,048,000 UBS Securities LLC ...... 16,664,000 Total ...... $500,000,000

The initial purchasers initially offered to sell the Notes at the offering price set forth on the cover of this Listing Prospectus. The initial purchasers may sell the Notes to securities dealers at a discount from the offering price of up to 0.50% of the principal amount of the Notes. If the initial purchasers did not sell all the Notes at the offering price, they could have changed the offering price and the other selling terms. The obligations of the initial purchasers under the purchase agreement, including their agreement to purchase Notes from us, are several and not joint. In the purchase agreement, the initial purchasers have agreed, subject to the terms and conditions set forth in the purchase agreement, to purchase all of the Notes if any of the Notes are purchased. Any initial purchaser of the Notes that is not a U.S. registered broker-dealer will agree that they will offer and sell the Notes within the United States only through registered broker-dealers. If an initial purchaser defaults, the purchase agreement provides that, in certain circumstances, the underwriting commitments of the non-defaulting initial purchasers may be increased or the purchase agreement may be terminated. Meccanica Holdings and Finmeccanica have agreed to indemnify the initial purchaser against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the initial purchasers may be required to make in respect of those liabilities. The initial purchasers are offering the Notes, subject to prior sale, when, as and if issued to and accepted by them, subject to certain conditions contained in the purchase agreement, including the receipt by the initial purchasers of officer’s certificates and legal opinions, being satisfied. The initial purchasers reserve the right to withdraw, cancel or modify offers to investors and to reject orders in whole or in part. The Notes were a new issue of securities with no established trading market. Finmeccanica agreed with the initial purchasers to make an application for the Notes to be admitted to trading on the regulated market of the Luxembourg Stock Exchange and to listing on the official list of the Luxembourg Stock Exchange. The initial purchasers have advised the Issuer and Finmeccanica that they presently intend to make a market in the Notes after completion of this offering. However, they are under no obligation to do so and may discontinue any market-making activities at any time without any notice. A liquid or active public trading market for the Notes may not develop. If an active trading market for the Notes does not develop, the market price and liquidity of the Notes may be adversely affected. If the Notes are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, our performance and other factors. In connection with the offering, the initial purchasers may engage in transactions that stabilize the market price of the Notes. Such transactions consist of bids or purchases to peg, fix or maintain the price of the Notes. If the initial purchasers create a short position in the Notes in connection with the offering, i.e., if they sell more Notes than are listed on the cover page of this Listing Prospectus, the initial purchasers may reduce that short position by purchasing Notes in the open market. Purchases of a security to stabilize the price or to reduce a short position may cause the price of the security to be higher than it might be in the absence of these purchasers.

194 Neither the Issuer, the Guarantor nor any of the initial purchasers makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Notes. In addition, neither the Issuer, the Guarantor nor any of the initial purchasers makes any representation that the initial purchasers will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice. Certain of the initial purchasers (and/or certain of their affiliates) have performed and in the future may perform services, including commercial banking, investment banking, advisory and/or consulting services, for Finmeccanica or its affiliates in the ordinary course of business, for which they have received or will receive customary compensation. The initial purchasers may, from time to time, continue to engage in transactions with and perform services for Finmeccanica and its affiliate in the ordinary course of business, for which they will receive customary compensation. The initial purchasers may have held and in the future may hold securities of Finmeccanica for investment purposes in the ordinary course of their business. In addition, in connection with the Facility Agreement, an affiliate of Morgan Stanley & Co. Incorporated and Goldman Sachs International are acting as a mandated lead arranger and affiliates of Banc of America Securities LLC, J.P. Morgan Securities Inc., Goldman Sachs International, UBS Securities LLC, Nomura Securities Interna- tional, Inc. and Santander Investment Securities Inc. are lenders under the Facility Agreement pursuant to a syndication agreement, dated July 14, 2008, between Finmeccanica and the original lenders named in the Facility Agreement. Also, certain affiliates of initial purchasers are lenders in connection with the Euro 1.2 billion medium-term revolving credit line granted to Finmeccanica which expires in 2012. We expect that delivery of the Notes and the Guarantees will be made against payment therefore on or about the Closing Date, which will be the fifth business day following the date of pricing of the Notes. Pursuant to Rule 15c6-1 under the Exchange Act, trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes on the date of pricing or the next succeeding business day will be required, by virtue of the fact that the Notes initially will settle five business days following the pricing date (T+5), to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of Notes who wish to trade Notes on the date of pricing or the next succeeding business day should consult their own advisor.

Selling Restrictions No initial purchaser is authorized to make any representation or use any information in connection with the issue, offering and sale of the Notes other than as contained in this Listing Prospectus.

General No action has been or will be taken by Meccanica Holdings or by Finmeccanica or on behalf of any initial purchaser which would permit a public offering of any of the Notes or distribution of a prospectus or offering materials in any jurisdiction where there are requirements for such purpose to be complied with. Accordingly, Notes may not be offered or sold, directly or indirectly, and neither this Listing Prospectus nor any advertisement or other offering material may be distributed or published in any jurisdiction except under an exemption that would result in compliance with any applicable laws and regulations. Each initial purchaser will to the best of its knowledge comply with all relevant laws, regulations and directives in each jurisdiction in which it offers, sells, or delivers Notes or has in its possession or distributes the offering memorandum or this Listing Prospectus or any amendment or supplement thereto or any other offering material.

United States The Notes and the Guarantees have not been and will not be registered under the Securities Act, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S. Each initial purchaser has agreed that, except as permitted by the Purchase Agreement, it will not offer or sell the Notes (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, within the United States or to, or for the account or benefit of, U.S. persons, and it will have sent to each dealer to which it sells the Notes (other than a sale pursuant to Rule 144A) during the distribution compliance period a confirmation or other notice setting forth

195 the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons. Each initial purchaser has also agreed that (i) no general solicitation or general advertising (within the meaning of Rule 502(c) under the 1933 Act) will be used in the United States in connection with the offering or sale of the Notes and the Guarantees; (ii) neither the initial purchasers, nor their affiliates nor any persons acting on behalf of any of them have engaged or will engage in any directed selling efforts with respect to Notes and the Guarantees sold hereunder pursuant to Regulation S; and (iii) the initial purchasers, their affiliates and any person acting on behalf of any of them have complied and will comply with the offering restriction requirements of Regulation S. Terms used in this paragraph have the meanings given to them by Regulation S. The Notes are being offered and sold outside of the United States to non-U.S. persons in reliance on Regulation S. The Purchase Agreement provides that the initial purchasers may directly or through their respective U.S. broker-dealer affiliates arrange for the offer and resale of the Notes within the United States only to qualified institutional buyers in reliance on Rule 144A. In addition, until 40 days after the commencement of the offering of the Notes, an offer or sale of the Notes within the United States by a dealer that is not participating in the offering may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A.

United Kingdom Each initial purchaser has represented and agreed that: (a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer or the Guarantor; and (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom.

Italy The offering of the Notes has not been cleared by or registered with the Commissione Nazionale per le Società e la Borsa (“Consob”), in accordance with Italian securities legislation. Accordingly, the Notes may not be offered or sold, and copies of this Listing Prospectus or any other document relating to the Notes may not be distributed in Italy except (i) to qualified investors, as defined in Article 34-ter of Consob’s Regulation 11971/1999 (the “Issuers’ Regulation”) or (ii) in any other circumstance where an exemption from the public offering restrictions provided by Legislative Decree No. 58 of February 24, 1998 (the “Consolidated Financial Act”), or the Issuers’ Regulation, is applicable. Any offer or sale of the Notes or distribution of copies of this Listing Prospectus or any other document relating to the Notes in Italy must (i) be made in accordance with all applicable Italian laws and regulations, (ii) be conducted in accordance with any relevant limitations or procedural requirements that Consob may impose upon the offer or sale of the Notes, and (iii) be made only by (a) banks, investment firms or financial companies enrolled in the special register provided for in Article 107 of Legislative Decree No. 385 of September 1, 1993 (the “Banking Act”), or (b) foreign banks or financial institutions, all to the extent duly authorized to engage in the placement and/or underwriting of financial instruments in Italy in accordance with the Consolidated Financial Act, the Banking Act and the relevant implementing regulations.

New Issue of Notes The Notes are a new issue of securities with no established trading market. Neither the Issuer nor the Guarantor intends to apply for listing of the Notes on any U.S. national securities exchange or for quotation of the Notes on any U.S. automated dealer quotation system. The initial purchasers have advised the Issuer and the Guarantor that they presently intend to make a market in the Notes after completion of this offering. However, they are under no obligation to do so and may discontinue any market-making activities at any time without any notice. A liquid or active public trading market for the Notes may not develop. If an active trading market for the Notes does not develop, the market price and liquidity of the Notes may be adversely affected. If the Notes are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, the performance of the Issuer and the Guarantor and other factors.

196 LISTING AND GENERAL INFORMATION

Listing and Admission to Trading Application has been made for the Notes to be admitted to trading on the regulated market of the Luxembourg Stock Exchange and to listing on the official list of the Luxembourg Stock Exchange. The listing agent in Luxembourg is Dexia Banque lnternationale à Luxembourg, société anonyme (the “Listing Agent”). The address of the Listing Agent is 69, route d’ Esch, L-2953 Luxembourg. The total expenses related to the admission to trading are estimated to be EUR 25,000.

Authorizations The Notes were authorized by an action taken by unanimous consent of the Board of Directors of Meccanica Holdings dated as of October 19, 2009. The Guarantees was authorized by a resolution of the Board of Directors of Finmeccanica passed on November 13, 2008.

Documents Available for Inspection For so long as any Notes shall be outstanding, copies and, where appropriate, English translations of the following documents may be inspected (and in the case of (d) and (e), obtainable free of charge) during normal business hours at the registered offices of the Issuers and the Guarantor and the corporate trust office of the Trustee and the office of the Paying Agent in Luxembourg, namely: (a) the Indenture; (b) the Guarantees; (c) the Purchase Agreement; (d) the Listing Prospectus; (e) the most recently published audited consolidated financial statements beginning with such financial statements for the years ended December 31, 2006, December 31, 2007 and December 31, 2008 of the Guarantor; (f) the unaudited condensed consolidated financial information as of and for the three months ended March 31, 2009 of the Guarantor; (g) the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2009 of the Guarantor; (h) the unaudited condensed consolidated financial information as of and for the nine months ended September 30, 2009 of the Guarantor; (i) the audited consolidated financial statements at December 31, 2008 of the Issuer; and (j) the by-laws of the Issuer and the Guarantor. Additional Information About the Guarantor Finmeccanica was incorporated and registered in Italy on June 20, 1897 with registration number 00401990585 under the name Società delle Miniere di Mercurio del Monte Amiata. There has been no material adverse change in the financial position, results of operations or prospects of the Guarantor since December 31, 2008, except as it may otherwise be indicated in this Listing Prospectus. There has been no significant change in the financial or trading position of the Guarantor since September 30, 2009, except as it may otherwise be indicated in this Listing Prospectus. Additional Information About the Issuer There have been no governmental, legal, or arbitration proceedings, of which Meccanica Holdings is aware, that will cause any significant effect on its financial position or profitability since its date of incorporation except as it may otherwise be indicated in this Listing Prospectus. There has been no material adverse change in the financial position, results of operations or prospects of the Issuer since December 31, 2008, except as it may otherwise be indicated in this Listing Prospectus. There has been no significant change in the financial or trading position of the Issuer since December 31, 2008, except as it may otherwise be indicated in this Listing Prospectus.

197 INDEPENDENT ACCOUNTANTS The Annual Consolidated Financial Statements of the Guarantor as of and for the years ended December 31, 2008, 2007 and 2006 included in this Listing Prospectus have been audited by Pricewaterhou- seCoopers S.p.A., independent accountants, as stated in their report appearing herein. The Annual Consolidated Financial Statements of the Issuer at December 31, 2008 included in this Listing Prospectus have been audited by PricewaterhouseCoopers S.p.A., independent accountants, as stated in their report appearing herein. PricewaterhouseCoopers S.p.A. is a member of Registro dei Revisori Contabili, PCAOB and the special register held by CONSOB (Albo CONSOB).

198 VALIDITY OF DEBT SECURITIES AND GUARANTEES The validity of the debt securities and guarantees under New York law will be passed upon for the Issuer and the Guarantor by Sullivan & Cromwell LLP, London, England. Chiomenti Studio Legale has advised the Guarantor on certain Italian legal matters related to the offering. Gianni, Origoni, Grippo & Partners has advised the Guarantor on certain Italian tax matters related to the offering.

199 GLOSSARY OF TERMS AND DEFINITIONS

Terms AFV Armored Fighting Vehicle APS Avionics Process Systems ASI Agenzia Spaziale Italiana ASW Anti-Submarine Warfare ATC Automatic Train Control or Air Traffic Control ATM Air Traffic Management ATOS Airborne Tactical Observation and Surveillance AWACS Airborne Warning and Control Systems BIL Burst Illuminator Laser C3 Command, Control & Communications C4I Command, Control, Communications, Computers and Intelligence CFIUS Committee on Foreign Investment in the United States CMS Combat Management System CNI Communication Navigation and Identification COSMO Constellation of Small Satellites for the Mediterranean Basin Observation CTC Centralized Train Control DARD Deployable Air Defence Radar DASS Defensive Aids Sub-System DIRCM Direct Infra-red Counter Measures DoD Department of Defense DSS Defence Security Service EFA European Fighter Aircraft EHF Extremely High Frequency EMPAR European Multifunction Phased Array Radar EO Electro-optics EPC Engineering Procurement and Construction ESA European Space Agency EW Electronic Warfare FADR Fixed Air Defence Radar FCS Future Combat System FLIR Forward Looking Infra-red FREMM Frégates Européennes Multi-Missions FRES Future Rapid Effects Systems FSAF Future Surface to Air Systems Family GPS Global Positioning System GSM-R Global System for Mobile Railway GTR Galileo Test Range HALO Hostile Artillery Locating Systems HF High Frequency HIDAS Helicopter Integrated Defensive Aids Systems

200 HUMS Health & Usage Monitoring Systems ICT Information, Communication and Technology IFV Infantry Fighting Vehicle IP Internet Protocol IT Information Technology JCA Joint Combat Aircraft JSF Joint Strike Fighter LIFT Lead In Fighter Trainer LINAPS Laser Inertial Artillery Pointing System LOAM Laser Obstacle Avoidance Systems LUH Light Utility Helicopter MAE Medium Altitude Endurance MALE Medium Altitude Long Endurance MBT Main Battle Tank MEADS Medium Extended Air Defense System MEMS Micro Electro-Mechanical Systems MIDS Multiple Information Distribution Systems MOC MARSIS Operation Center MOVPE Metal Organic Vapor Phase Epitax NASA National Aeronautics and Space Agency NFH NATO Frigate Helicopter PAN Pattuglia Acrobatica Nazionale PAR Precision Approach Radar POSS Port Surveillance System RSTA Reconnaissance, Surveillance & Target Acquisition SAR Search and Rescue SAR Synthethic Aperture Radar SCE Super Conductive Electronics SDR Software Defined Radio SHF Super High Frequency TETRA Terrestrial Truncked Radio TOW Tube-launched, Optically-tracked, Wire-guided Missile TTH Tactical Transport Helicopter UAV Unmanned Aerial Vehicle UCAV Unmanned Combat Air Vehicle U.K. MoD U.K. Ministry of Defence VAS Value Added Services VH VIP Helicopter VHF Very High Frequency VIP Very Important Persons VTMS Vessel Traffic Management Systems WIMAX Worldwide Interoperability for Microwave Access

201 DEFINITIONS

Active Image Advanced Infra-red-based day/night vision system with image generation capability. Aircraft flight control system System consisting of flight control surfaces, the respective cockpit controls, connecting linkages and the necessary operating mechanisms to control the direction of an aircraft in flight. Aircraft engine controls, and control speed are therefore also flight controls to this extent. Arrays Directly accessible data structure/element group used in computer programming. ASW (Anti Submarine Warfare) Surveillance, identification, monitoring and tracking/attack of underwater targets. ASuW (Anti-Surface Warfare) Surveillance, identification, monitoring and tracking/attack of naval surface targets. ATC (Air Traffic Control) Systems and equipment for air traffic control. ATM (Air Traffic Management) Management system for air traffic flows. Ballistic missile Missile that follows a sub-orbital ballistic flight path to deliver a warhead to a pre-determined target. (The missile is only guided during the relatively brief initial powered phase of flight; its course is subsequently determined by orbital mechanics and ballistics). BIL (Burst Illuminator Laser) Laser-based system for high-resolution day/night vision and surveillance. BVR (Beyond Visual Range) Long-range missile control and guidance (normally based on radar technology). CMS (Combat Management System) Command and control system, usually for naval application. C4I (Command, Control, Communication, Computer, Intelligence) Complex systems devoted to battlefield control based on high flexibility information and communication gathering and distribution architecture. Complex network-centric systems New military doctrine or theory of war pioneered by the United States Department of Defense, designed to use information technology to gain an advantage in terms of information to use as a competitive war-fighting advantage through the robust networking of well-informed, geographically-dispersed forces. Cruise missile Guided missile carrying an explosive payload and using a lifting wing and a propulsion system (usually a jet engine) to facilitate sustained flight. Cruise missiles are generally designed to carry a large conventional or nuclear warhead many hundreds of miles with high accuracy. Design Authority Design, engineering and development activities. Design-to-cost Product design based on an efficient cost structure. Design- to-maintain Product design based on a total cost estimation through whole operative life. DMU (Diesel Multiple Unit) Diesel-propulsed train based on distributed power systems. EEZ (Exclusive Economic Zone) Maritime area which a national state owns specific political and economic rights. EHF (Extremely High Frequency) Radio frequency range between 30 and 300 GHz.

202 Electronic warfare The use of the electromagnetic spectrum to effectively deny the use of this medium by enemies, while optimizing its use by friendly forces. It has three main components: electronic support; electronic attack; and electronic protection. EMU (Electric Multiple Unit) Electric propulsed train based on distributed power systems. FCS (Future Combat System) United States Army program based on network-centric architecture system, capable of controlling software and hardware of military brigades and connecting soldiers, vehicles and command/control centres. Flare dispenser A countermeasure to infra-red guided heat-seeking missiles when the helicopter is airborne. At the core of the system is a flare dispenser assembly, consisting of a dispenser, electronics module, and payload module. Other components are a remote test panel; timer; cockpit control panel; six firing switches; and a safety relay. FLIR (Forward Looking Infra-red) Infra-red-based system for day/night vision and target acquisition. Fly-by-wire control system A solely electrically-signaled control system. (The term is also used generally for computer-configured controls where a computer system is interposed between the operator and the final control actua- tor or surface. This modifies the inputs of the pilot in accordance with software programs, which are carefully developed in order to produce maximum operational effect without compromising safety.) Forza NEC An Italian Army program based on a network-centric architecture system, capable of controlling software and hardware of military brigades and connecting soldiers, vehicles and command/control centres. FREMM (Frégetes Europèennes Multi- Missions) Collaborative Italian and French naval program to develop and produce frigates for air-defense and anti-submarine warfare application. FRES (Future Rapid Effects Systems) U.K.MoD program to develop, produce and manage a new fleet of medium-weight armored vehicles. Fuselage An aircraft’s main body section that holds crew and passengers or cargo. In a single-engine aircraft, it will usually contain an engine, although in some amphibious aircraft the single engine is mounted on a pylon attached to the fuselage, which in turn is used as a floating hull. Glass cockpit An aircraft cockpit that features electronic instrument displays. Where a traditional cockpit relies on numerous mechanical gauges to display information, a glass cockpit utilizes several computer displays that can be adjusted to display flight information as required. This simplifies aircraft operation and navigation and allows pilots to focus on the most pertinent information. GTR (Galileo Test Range) Technological infrastructure dedicated to validation of Galileo navigation satellite signal. HF (High Frequency) Radio frequency range between 3 and 30 MHz. High subsonic aerial target Unmanned vehicle mainly for training purposes. IOS (Integrated Operational Support) Turn-key system for technical support, spare parts supply, maintenance and overhaul activities. Infomobility Application of technologies to the automotive field. IP (Internet Protocol) Network protocol for advanced communication.

203 LTSA (Long-Term Service Agreement) Long-term contractual typology for maintenance and support activities. Ka-band Frequency range between 18 and 40 GHz, typically used for satellite communication. Multi-spectral sensor A sensor capable of capturing light from frequencies beyond the visible light range, such as infra-red. Nacelle A term commonly used in aviation, nautical and spacecraft design, to refer to a covered housing (separate from the fuselage) that holds engines, fuel, or equipment. In some cases an aircraft’s cockpit is also housed in a nacelle. The covering typically has an aerodynamic shape. Narrow Body A medium capacity commercial aircraft with narrow fuselage and single aisle. NBC (Nuclear Biological and Chemical) Equipment for nuclear, biological and chemical detection and protection. PAR (Precision Approach Radar) A radar system specifically used for take-off and landing on unpre- pared runways or aircraft carriers, mainly for military application. Payload The carrying capacity of an aircraft or space ship, including cargo, munitions, scientific instruments or experiments, or fuel (excluding fuel for use on-board). Phased-array scanning system System using phased array — a group of antennae in which the relative phases of the respective signals feeding the antennae are varied in such a way that the effective radiation pattern of the array is reinforced in the desired direction and suppressed in the undesired directions. Radar interferometry A radar using the interferometry technology; the technique of using the pattern of interference created by the superposition of two or more waves to diagnose the properties of the aforementioned waves. The instrument used to interfere the waves together is called an interferometer. Radiation hardening A method of designing and testing electronic components and systems to make them resistant to damage or malfunctions caused by high-energy subatomic particles and electromagnetic radiation, such as would be encountered in outer space, high-altitude flight, around nuclear reactors or during warfare. Remote sensing Broadly, the small- or large-scale acquisition of information of an object or phenomenon, through the use of either recording or real- time sensing devices which are not in physical or intimate contact with the object (such as by way of aircraft, spaceCraft, satellite, buoy, or ship). In practice, remote sensing is the stand-off collection through the use of a variety of devices for gathering information on a given object or area. Rotor The rotating part of a helicopter which generates an aerodynamic force. Satellite constellation A group of electronic satellites working in coordination with one another. This could be a number of satellites with coordinated ground coverage, operating together under shared control, synchro- nized to overlap well in coverage and complement, rather than interfere with, coverage of other satellites. Seeker Radar or infra-red autonomous guidance system for missile application.

204 Sensor- to-shooter systems Advanced target acquisition and tracking system. SHF (Super High Frequency) Frequency range between 3 and 30 GHz. Signals intelligence Intelligence-gathering by interception of signals, either between people (i.e., COMINT or communications intelligence) or machines (i.e., ELINT or electronic intelligence), or between combination of both. Signals intelligence often involves the use of cryptanalysis as sensitive information is often encrypted. Situation Awareness Data/signal acquisition, processing and display, to get a total vision of external environment. Tilt rotor helicopter A tiltrotor helicopter combines the vertical lift capability of a helicopter with the speed and range of a turboprop airplane. A tiltrotor helicopter uses tiltable (rotating) propellers, or proprotors, for lift and propulsion. For vertical flight the proprotors are angled to direct their thrust downwards, providing lift. As the craft gains speed, the proprotors are slowly tilted forward, eventually becoming perpendicular to the ground. In this mode the wing provides the lift, and the wing’s greater efficiency helps the tiltrotor achieve its high speed, rendering the craft essentially a turboprop aircraft.. Torpedo A self-propelled explosive projectile weapon launched above or below the water surface, propelled underwater toward a target, and designed to detonate on contact with or in proximity to a target. Turbofan engine A type of jet engine, similar to a turbojet. It essentially consists of a ducted fan with a smaller diameter turbojet engine mounted behind it to power the fan. Part of the airstream from the ducted fan passes through the turbojet where it is burnt to power the fan, but part (usually most) of the flow bypasses it. This produces thrust more efficiently. Unmanned aircraft An unpiloted aircraft which can be remote controlled or can fly autonomously based on pre-programmed flight plans or more complex dynamic automation systems. Unmanned aircrafts are currently used in a number of military roles, including reconnaissance and attack. They are also used in a small but growing number of civil applications such as firefighting when human life would be at risk, police observation of civil disturbances and crime scenes; and reconnaissance support in natural disasters. WIMAX (Worldwide Interoperability for Microwave assets) Technology system which allows broadband wireless telecommunication network access.

205 FINMECCANICA S.p.A.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

1. OVERVIEW The unaudited pro forma consolidated income statement of Finmeccanica S.p.A. (the “Company” and together with its subsidiaries the “Finmeccanica Group”) for the year ended December 31, 2008, with the related notes (the “Unaudited Pro Forma Consolidated Financial Information”) has been prepared to reflect the effect of the acquisition of DRS Technologies Inc. (“DRS”) and the subsequent financing transactions (together the “Transactions”). In particular, the Unaudited Pro Forma Consolidated Financial Information has been prepared in order to simulate the effect of the Transactions on the consolidated income statement of the Company, assuming that they had occurred as of January 1, 2008. The pro forma financial information is presented solely in respect of the consolidated income statement, as the DRS acquisition, which was completed on October 22, 2008, is already reflected in the consolidated balance sheet of the Finmeccanica Group as of December 31, 2008, included in the consolidated financial statements as of and for the year ended December 31, 2008 while the financing transactions performed during 2009 do not significantly affect the consolidated balance sheet. As previously indicated, the information included in the Unaudited Pro Forma Consolidated Financial Information represents a simulation performed to illustrate retrospectively the effects of the Transactions. However, although the pro forma information is prepared using reasonable assumptions, there are limitations that are inherent to the nature of pro forma information; hence, had the Transactions occurred on the date assumed, the results could have been different from those represented in the Unaudited Pro Forma Consolidated Financial Information. It should be noted that the Unaudited Pro Forma Consolidated Financial Information does not purport to predict or estimate the future results of the Finmeccanica Group and should not be used for this purpose. The pro forma financial information has not been prepared in accordance with the requirements of Regulation S-X of the U.S. Securities and Exchange Commission or generally accepted practice in the United States of America.

2. BASIS OF PREPARATION AND ACCOUNTING PRINCIPLES The Unaudited Pro Forma Consolidated Financial Information is prepared on the basis of the historical financial information derived from the consolidated financial statements of the Finmeccanica Group for the year ended December 31, 2008, adjusted to reflect the effects of the Transactions. The accounting principles used in the preparation of the Unaudited Pro Forma Consolidated Financial Information are, unless otherwise specified, consistent with those used in the preparation of the consolidated financial statements of the Finmeccanica Group as of and for the year ended December 31, 2008, which have been prepared in accordance with International Financial Reporting Standards, as adopted by the European Commission (“IFRS”). The Unaudited Pro Forma Consolidated Financial Information should be read together with the audited consolidated financial statements of the Finmeccanica Group as of and for the year ended December 31, 2008, approved by the Board of Directors on March 10, 2009.

3. THE TRANSACTIONS On October 22, 2008 the Company completed the acquisition of DRS. The purchase price for the DRS shares amounted to approximately Euro 2,385 million, including the fees and expenses associated with the acquisition. In addition, at the date of acquisition DRS had recorded borrowings, net of cash acquired, amounting to USD 1,605 million. These borrowings mainly related to bonds and credit facilities which included put and call obligations, exercisable in the event of a change of control. Subsequent to the date of acquisition, the majority of DRS borrowings have been repaid. On the date of acquisition the Company drew down an amount of Euro 3,041 million under a syndicated financing agreement (the “Facility Agreement”) to initially finance the acquisition and the repayment of a portion of the DRS borrowings. An additional amount of Euro 149 million under the Facility

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION — (Continued)

Agreement was drawn down in the following period. Subsequently the Facility Agreement and the DRS borrowings were refinanced with the proceeds from the following securities operations: a) Rights offering of Euro 1,226 million completed on November 27, 2008 (the “Rights Offering”), whose net proceeds of Euro 1,205 million were used to partially repay the Facility Agreement;

1 b) Euro 750 million 8 ⁄8% Bond due 2013 issued at 99.758% in November 2008, under the Euro Medium Term Note Program (“EMTN”). Net proceeds amounting to Euro 745 million (net of fees, expenses and discount) were used to repay the Euro 297 million outstanding 2008 bond issued by Finmeccanica Group, with maturity December 2008 (the “2008 Bond”) and, for the remaining part, the DRS borrowings;

1 c) Euro 250 million 8 ⁄8% Bond due 2013 issued at 103.93% in January 2009, under the EMTN Program (together with the Euro 750 million Bond detailed above the “Euro Bonds”). Net proceeds of Euro 259 million (net of fees and expenses and gross of premium received) were used to repay part of the DRS borrowings; d) GBP 400 million 8% bond due 2019 issued at 99.022% under the EMTN Program (the “Sterling Bond”) in April 2009. The net proceeds of Euro 443 million, based on the actual exchange rate at the date of receipt of the proceeds from the issuance were used to partially repay the Facility Agreement; e) USD 500 million 6.25% bond due 2019 issued at 99.224% (the “2019 Notes”) and USD 300 million 7.375% bond due 2039 (the “2039 Notes”) issued at 98.278% (the 2019 Notes and the 2039 Notes, together the “USD Bonds”). The USD Bonds were issued on July 8, 2009. The net proceeds from the issuance of the USD Bonds of Euro 550 million, based on the actual exchange rate at the date of receipt of the net proceeds from the issuance were used to partially repay the Facility Agreement; and f) Euro 600 million 5.25% bond due 2022 issued at 99.19% (the “2022 Bond”) under the EMTN program in October 2009. The net proceeds of Euro 592 million (net of fees, expenses and discount) will partially be used to repay a portion of the Facility Agreement (until the amount outstanding under the Facility Agreement is equal to Euro 640 million, which is the threshold below which the related covenant and mandatory prepayment obligations, other than mandatory prepayments in relation to assets disposals, cease to apply) and the remainder will be held to meet 2010 third party refinancing requirements, including the repayment of a portion of the exchangeable bond which matures in August 2010 ( the “Exchangeable Bond”). The Exchangeable Bond is for a principal amount of Euro 501 million. The aggregate principal amount of the Notes has been estimated to be USD 350 million for the sole purpose of the preparation of this Unaudited Pro Forma Consolidated Financial Information. For the same purposes the interest payable on the Notes has been illustratively and preliminarily assumed to be 6.5% only to give effect to the issuance of the Notes on the pro forma income statement, while the expenses associated with the offering have been assumed to be USD 3.8 million. The size of the offering of the Notes, the associated expenses and the interest rate will only be determined at the time of sale of the Notes, and may be different from those stated herein.

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION — (Continued)

4. PRO FORMA CONSOLIDATED INCOME STATEMENT The following table sets forth the pro forma adjustments by nature to illustrate the significant effects of the Transactions on the Finmeccanica Group consolidated income statement for the year ended December 31, 2008.

Unaudited pro forma consolidated income statement for the year ended December 31, 2008

Finmeccanica Pro forma adjustments Finmeccanica Group DRS DRS Acquisition Group Historical Pro forma Post Acquisition financing Pro forma (In millions of Euro) AB C D Revenue ...... 15,037 2,647 (551) — 17,133 Operating expenses ...... (13,205) (2,350) 494 — (15,061) Amortization, depreciation and impairment ...... (622) (90) 17 — (695) Operating income ...... 1,210 207 (40) — 1,377 Finance income ...... 1,017 2 (1) — 1,018 Finance costs ...... (1,255) (2) 15 (146) (1,388) Share of profit of equity accounted investments ...... 16 — — — 16 Profit before taxes...... 988 207 (26) (146) 1,023 Income taxes ...... (367) (91) 10 40 (408) Net profit ...... 621 116 (16) (106) 615 - equity holders of the Group ...... 571 115 (16) (106) 564 - minority interests ...... 50 1 — — 51

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION — (Continued)

5. NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION The following notes include a description of the pro forma adjustments and the basis of preparation for the Unaudited Pro Forma Consolidated Financial Information. (A) This column includes the Finmeccanica Group consolidated income statement for the year ended December 31, 2008, extracted from the audited consolidated financial statements as of and for the year ended December 31, 2008. (B) DRS prepared its consolidated financial statements using generally accepted accounting principles in the United States of America (“US GAAP”) and had a reporting year end of March 31, while the Company prepares its consolidated financial statements using IFRS and has a reporting year end of December 31. This column provides the pro forma adjustments made in order to have a DRS consolidated income statement for the year ended December 31, 2008, adjusted as indicated below to reflect the Transactions. No significant differences between US GAAP and IFRS were identified in the circumstances; accordingly, no pro forma adjustments were made in this respect. The table below provides the calculation of the DRS pro forma income statement for the year ended December 31, 2008: DRS unaudited historical Three months Six months Three months ended ended ended Pro forma March 31, 2008 September 30, 2008 December 31, 2008 Adjustments DRS Pro Forma USD million USD million USD million USD million USD million Euro million B.1 B.2 B.3 B.4 B.5 Revenue ...... 939 1,939 1,015 — 3,893 2,647 Operating expenses ...... (810) (1,734) (993) 81 (3,456) (2,350) Amortization, depreciation and impairment ...... (21) (40) (30) (41) (132) (90) Operating income...... 108 165 (8) 40 305 207 Finance income ...... 1 1 1 — 3 2 Finance costs ...... (27) (48) (27) 99 (3) (2) Profit before taxes ...... 82 118 (34) 139 305 207 Income taxes ...... (27) (39) (16) (52) (133) (91) Net profit ...... 55 79 (50) 87 172 116 – equity holders of the Group . . 55 78 (51) 87 169 115 – minority interests ...... — 1 1 — 2 1

B.1 DRS HISTORICAL — MARCH 31, 2008 This column includes DRS consolidated income statement for the three months ended March 31, 2008, as derived from the consolidated financial information as of and for the three months ended March 31, 2008 prepared by DRS.

B.2 DRS HISTORICAL — SEPTEMBER 30, 2008 This column includes DRS consolidated income statement for the six months ended September 30, 2008, as derived from the unaudited interim consolidated financial information as of and for the six months ended September 30, 2008, published by DRS.

B.3 DRS HISTORICAL — DECEMBER 31, 2008 This column includes DRS unaudited consolidated income statement for the three months ended December 31, 2008, prepared exclusively for the purposes of this Unaudited Pro Forma Consolidated Financial Information.

B.4 PRO FORMA ADJUSTMENTS This column includes the following pro forma adjustments: (i) additional amortization charge of USD 41 million, related to the higher amount recognized as intangible assets following the acquisition and identified as a result of the provisional

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION — (Continued)

DRS purchase price allocation. In this respect, it should be noted that the purchase price allocation process is still underway; hence, had this process been completed and the final fair value of all the identifiable assets, liabilities and contingent liabilities acquired been determined, additional income statement adjustments may have been required;

(ii) elimination of non-recurring costs incurred by DRS in connection with the Transaction, amounting to USD 81 million;

(iii) elimination of finance costs of USD 4 million on intercompany financing provided by the Company subsequent to the Acquisition;

(iv) elimination of finance costs of USD 95 million, related to the outstanding DRS convertible bonds and credit facility, which were reimbursed as a result of the Transactions; and

(v) tax effects related to the previously described adjustments, using the theoretical tax rate applicable to DRS of 37.5%.

B.5 DRS PRO FORMA

The Euro amounts included in the column have been calculated by applying the Euro/USD average exchange rate of Euro 1.470755 for the period from January 1, 2008 to December 31, 2008 to the relevant USD amounts.

(C) This column relates to the elimination of the post acquisition results of DRS, which were consolidated in the Group’s results of operations from the date of Acquisition.

(D) This column includes the pro forma adjustments deriving from the financing by 1) the Facility Agreement, 2) the proceeds of the Rights Offering, 3) the Sterling bond proceeds 4) the US Bonds proceeds and 5) a portion of the proceeds from the 2022 Bond, net of repayment of DRS debt and the Company’s 2008 Bond.

The following table and footnotes provide an analysis of the outstanding Facility Agreement, after all repayments made since the original drawdown: Amount Note (In millions of Euro) Drawdown to finance the Acquisition, net of proceeds from the Rights Offering .... 1,836 1 Additional drawdown to finance repayment of DRS borrowings ...... 149 2 Proceeds EMTN GBP issuance — April 2009 ...... (443) 3 Proceeds US Bonds issuance — July 2009...... (550) 4 Partial proceeds 2022 Bond — October 2009 ...... (352) 5 Total ...... 640

(1) At the DRS acquisition date, the Company drew down the Facility Agreement for an amount of Euro 3,041 million to finance the acquisition and repay a portion of the DRS debt. On November 27, 2008, the Company completed a capital increase by way of a rights offering to Finmeccanica shareholders. The capital increase was completed with a full subscription of 152,921,430 ordinary shares, equivalent to 26.45% of the new total share capital. On completion of the transaction, Finmeccanica received Euro 1,226 million, gross of expenses and fees of Euro 21 million, which was entirely used to repay a portion of the Facility Agreement on November 20, 2008. (2) In January 2009, the Company drew down the Facility Agreement for an additional Euro 149 million, in order to repay an additional portion of the DRS debt. (3) In April 2009, the Finmeccanica Group, as part of the EMTN program, issued the Sterling Bond. The net proceeds of the issuance amounting to Euro 443 million, were used to repay an additional portion of the Facility Agreement.

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION — (Continued)

(4) In July 2009, Meccanica Holdings USA, Inc, a subsidiary of Finmeccanica S.p.A. issued the US Bonds in reliance upon Rule 144A. The net proceeds amounting to Euro 550 million, based on the exchange rate at the date of settlement, were used to repay an additional portion of the Facility Agreement. (5) In October 2009, the Finmeccanica Group issued the 2022 Bond. The net proceeds from the issuance amounting to Euro 592 million will partially be used to repay the Facility Agreement (until the amount outstanding is equal to Euro 640 million) and the remainder will be held as cash to finance future repayments of debt. In addition, in November 2008 and January 2009 the Company issued Euro Bonds for a total amount of Euro 1 billion, under the EMTN program. Net proceeds amounting to Euro 1,004 million (net of fees, expenses and discount) were used to repay the 2008 Bond for an amount of Euro 297 million and to partially repay DRS borrowings. The following table shows the adjustment to the finance cost to reflect the assumed repayment of the Facility Agreement explained above and the assumed finance cost of the financing transactions explained above, as if they had occurred on January 1, 2008. The elimination of the DRS finance cost as a result of the early reimbursement is reflected in the DRS Pro Forma column, as discussed in Note B. Amount Increase/ Amount charged Annual (decrease) drawn/ to income interest in finance (repaid) statement charge costs (in millions of Euro) Notes offered hereby(1) ...... 233 — 15 15 Residual amount of the Facility Agreement after the Transactions(2) ...... 640 35 14 (21) Euro Bonds- November 2008(3) ...... 745 4 60 56 Euro Bonds — January 2009(4) ...... 259 — 21 21 Sterling Bond — April 2009(5) ...... 443 — 40 40 US Bonds — July 2009(6)...... 550 — 37 37 2022 Bond — October 2009(7) ...... 592 — 32 32 Exchangeable Bond — Assumed repayment(8)...... (477) 21 1 (20) 2008 Bond repayment — December 2008(9) ...... (297) 14 — (14) Total ...... 74 220 146

(1) The estimated principal amount of the Notes offered hereby has been translated at the Euro/USD exchange rate of 1.4864 as of October 15, 2009, whilst the annual interest cost has been translated at the average Euro/USD exchange rate for the year ended December 31, 2008. As previously indicated, the aggregate principal amount of the Notes has been estimated to be USD 350 million for the sole purpose of the preparation of this Unaudited Pro Forma Consolidated Financial Information. For the same purposes the interest payable on the Notes has been illustratively and preliminarily assumed to be 6.5% only to give effect to the issuance of the Notes on the pro forma income statement, while the expenses associated with the offering have been assumed to be USD 3.8 million. (2) As of December 31, 2008, an amount of Euro 35 million was included in the consolidated income statement of Finmeccanica relating to the interest cost on the outstanding Facility Agreement from the date of acquisition of DRS until December 31, 2008. Assuming that the Transactions had occurred on January 1, 2008 the amount of the Facility Agreement would have been Euro 640 million (as calculated above) and the annual interest cost would have been Euro 14 million, including the amortization of the fees and expenses associated with the outstanding Facility Agreement. Therefore, the adjustment of Euro 21 million relates to the reduction in the interest cost to be included in the unaudited pro forma consolidated income statement. The Facility Agreement bears 6 month Euribor plus a spread of 0.85%. Considering the 6 month Euribor of 1.024% as of October 15, 2009 plus the relevant spread and the amortization effect of the fees and expenses, the annual interest charge has been calculated based on an effective interest rate for the Facility Agreement of 2.20%.

P-6 FINMECCANICA S.p.A.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION — (Continued)

(3) As of December 31, 2008, an amount of Euro 4 million was included in the consolidated income statement of the Finmeccanica Group relating to the interest cost on the Euro 750 million Euro Bonds issued in 1 November 2008. This bond bears fixed rate interest of 8 ⁄8%. Assuming that such bond had been issued on January 1, 2008, the annual interest cost would have been Euro 60 million, calculated using the effective interest rate of 8.04%, to consider the amortization of fees, expenses and discount. Therefore, the adjustment of Euro 56 million represents the additional interest cost to be included in the unaudited pro forma consolidated income statement. (4) This adjustment relates to the assumed annual interest cost for the Euro 250 million Euro Bonds assuming 1 that such bond had been issued on January 1, 2008. This bond bears fixed rate interest of 8 ⁄8%. As this bond was issued in January 2009, there was no interest cost reflected in the consolidated income statement of the Finmeccanica Group for the year ended December 31, 2008. Therefore, the adjustment of Euro 21 million represents the additional interest cost to be included in the unaudited pro forma consolidated income statement, calculated using the effective interest rate of 8.04% to consider the amortization of fees, expenses and premium. (5) This adjustment relates to the annual interest cost for the Sterling Bond assuming that such bond had been issued on January 1, 2008. This bond bears fixed rate interest of 8%. As this bond was issued in April 2009, there was no interest cost reflected in the consolidated income statement of the Finmeccanica Group for the year ended December 31, 2008. The assumed interest rate cost of the Sterling Bond has been translated using the average Euro/GBP exchange rate of 0.79625 for the year ended December 31, 2008. There- fore, the adjustment of Euro 40 million represents the additional interest cost to be included in the unaudited pro forma consolidated income statement calculated using the effective interest rate of 8.21%, to consider the amortization of fees, expenses and discount. (6) This adjustment relates to the annual interest cost for the US Bonds assuming that such bonds had been issued on January 1, 2008. The 2019 Notes bear fixed rate interest of 6.25% and the 2039 Notes bear fixed rate interest of 7.375%. As the US Bonds were issued in July 2009, there was no interest cost reflected in the consolidated income statement of the Finmeccanica Group for the year ended December 31, 2008. The assumed interest rate for the US Bonds has been translated using the average Euro/USD exchange rate for the year ended December 31, 2008. Therefore, the adjustment of Euro 37 million represents the additional interest cost to be included in the unaudited pro forma consolidated income statement calculated using the effective interest rate of 6.46% for the 2019 Notes and 7.58% for the 2039 Notes, to consider the amortization of fees, expenses and discount. (7) This adjustment relates to the annual interest cost for the 2022 Bond assuming that such bond had been issued on January 1, 2008. This bond bears fixed rate interest of 5.25%. As this bond was issued in October 2009, there was no interest cost reflected in the consolidated income statement of the Finmeccan- ica Group for the year ended December 31, 2008. Therefore, the adjustment of Euro 32 million represents the additional interest cost to be included in the unaudited pro forma consolidated income statement calculated using the effective interest rate of 5.39%, to consider the amortization of fees, expenses and discount. (8) As of December 31, 2008 an amount of Euro 21 million was included in the consolidated income statement of Finmeccanica relating to the interest cost on the Exchangeable Bond. As previously explained, Finmeccanica intends to use a portion of the proceeds from the issuance of the 2022 Bond and the proceeds from the Notes offered hereby to meet 2010 third party refinancing requirements, including the repayment of a portion of the Exchangeable Bond which matures in August 2010. The Exchangeable Bond is for principal of Euro 501 million. The adjustment of Euro 20 million relates to the reduction in interest cost assuming that such proceeds of Euro 477 million had been used to partially repay the Exchangeable Bond on January 1, 2008. It should be noted that Finmeccanica will invest this cash until the Exchange- able Bond matures in August 2010 and will continue to incur the interest cost on such bond until it matures. However, this interest cost will be partially offset by the interest income on the invested cash. (9) During the year ended December 31, 2008 an amount of Euro 14 million was included in the consolidated income statement of the Finmeccanica Group relating to the interest cost on the 2008 Bond for the period from January 1, 2008 until reimbursement in December 2008. The adjustment of Euro 14 million represents the elimination of this interest cost assuming that the 2008 Bond had been reimbursed on January 1, 2008.

P-7 The tax effect of the above adjustment on the consolidated income statement for the year ended December 31, 2008 has been determined using the tax rate applicable to the Company of 27.5%. An increase/decrease of 0.125% in Euribor compared to the one calculated on the Facility Agreement described above would result in an increase/decrease in annual interest expense of approximately Euro 0.8 million. An increase/decrease of 0.125% in the annual interest rate of the Notes compared to the assumed interest rate of 6.5% (as explained above) would result in an increase/decrease in annual interest expense of approximately USD 0.4 million. INDEX TO THE FINANCIAL STATEMENTS AND FINANCIAL INFORMATION

Pages Consolidated Financial Statements as of and for the years ended December 31, 2008, 2007 and 2006 Independent Auditors’ Report...... F-2 Consolidated Balance Sheet ...... F-3 Consolidated Income Statement ...... F-4 Consolidated Statement of Cash Flows ...... F-5 Consolidated Statement of Recognized Income and Expenses ...... F-6 Notes to the Consolidated Financial Statements ...... F-7

Unaudited Interim Condensed Consolidated Financial Information as of and for the six months ended June 30, 2009 Unaudited Interim Condensed Consolidated Income Statement ...... F-117 Unaudited Interim Condensed Consolidated Balance Sheet ...... F-118 Unaudited Interim Condensed Consolidated Statement of Cash Flows ...... F-119 Unaudited Interim Condensed Consolidated Statement of Changes in Shareholders’ Equity ...... F-120 Unaudited Interim Condensed Consolidated Statements of Recognized Income and Expenses ...... F-121 Notes to the Unaudited Interim Condensed Consolidated Financial Information ...... F-122

F-1 INDEPENDENT AUDITORS REPORT To the Board of Directors of Finmeccanica SpA 1 We have audited the accompanying consolidated financial statements of Finmeccanica SpA (the “Company”) and its subsidiaries (together “Finmeccanica Group”) as of and for the years ended December 31, 2008, 2007 and 2006, which comprise the consolidated balance sheet as of December 31, 2008, 2007 and 2006, and the related consolidated statements of income, of recognized income and expense, of cash flows for the years then ended and related notes (the “Annual Consolidated Financial Statements”). The directors of Finmeccanica SpA are responsible for the preparation of the Annual Consolidated Financial Statements in compliance with the International Financial Reporting Standards as adopted by the European Union. Our responsibility is to express an opinion on the Annual Consolidated Financial Statements based on our audit. These Annual Consolidated Financial Statements have been prepared for the inclusion in the offering memorandum of the Company in connection with the planned offering of notes to institutional investors. 2 We conducted our audit in accordance with the auditing standards and criteria recommended by CONSOB. Those standards and criteria require that we plan and perform the audit to obtain the necessary assurance about whether the Annual Consolidated Financial Statements are free of material misstatement and, taken as a whole, are presented fairly. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Annual Consolidated Financial Statements. An audit also includes assessing the accounting principles used and the significant estimates made by the directors. We believe that our audit provides a reasonable basis for our audit opinion. 3 In our opinion, the Annual Consolidated Financial Statements of the Finmeccanica Group comply with the International Financial Reporting Standards as adopted by the European Union; accordingly, they have been drawn up clearly and give a true and fair view of the financial position, the results of operations, the changes in equity and cash flows of the Finmeccanica Group as of and for the years ended December 31, 2008, 2007 and 2006.

Rome, July 7, 2009 PricewaterhouseCoopers SpA

/s/ Corrado Testori Corrado Testori (Partner)

F-2 FINMECCANICA S.p.A. CONSOLIDATED BALANCE SHEET As of December 31, 2008, 2007 and 2006

As of December 31, of which of which with with of which related related with related Notes 2008 parties 2007 parties 2006 parties (In millions of Euro) Non-current assets Intangible assets ...... 8 8,237 — 5,266 — 5,317 — Property, plant and equipment ...... 9 3,099 — 2,855 — 2,660 — Investment properties ...... 10 1 — 1 — 2 — Equity investments ...... 11 192 — 148 — 140 — Financial assets at fair value ...... 13 154 — 589 — 857 — Receivables ...... 14;15 302 13 169 11 442 16 Deferred taxes ...... 40 648 — 450 — 492 — Other assets ...... 15 480 — 367 — 9 — Total non-current assets ...... 13,113 9,845 9,919 Current assets Inventories ...... 16 4,365 — 3,383 — 3,095 — Contract work in progress ...... 17 3,674 — 3,227 — 2,823 — Trade receivables ...... 18 4,655 518 4,319 451 3,856 377 Financial assets at fair value ...... 19 1 — 13 — 21 — Income tax receivables ...... 20 236 — 277 — 371 — Financial receivables ...... 18 679 26 606 20 478 26 Derivatives...... 29 243 — 162 — 147 — Other assets ...... 21 659 14 609 15 580 35 Cash and cash equivalents ...... 22 2,297 — 1,607 — 2,003 — Total current assets ...... 16,809 14,203 13,374 Non-current assets held for sale ...... 41 — — — — 110 — Total assets ...... 29,922 24,048 23,403 Shareholders’ equity Share capital ...... 2,519 — 1,864 — 1,858 — Other reserves ...... 3,455 — 3,465 — 3,381 — Capital and reserves attributable to equity holders of the Group...... 5,974 5,329 5,239 Minority interests in equity ...... 156 — 103 — 81 — Total shareholders’ equity ...... 23 6,130 5,432 5,320 Non-current liabilities Borrowings ...... 24 4,095 — 1,675 — 1,979 — Employee liabilities ...... 26 1,027 — 946 — 1,295 — Provisions for risks and charges ...... 25 344 — 353 — 365 — Deferred taxes ...... 40 553 — 442 — 342 — Other liabilities...... 27 731 — 821 — 1,332 — Total non-current liabilities ...... 6,750 4,237 5,313 Current liabilities Advances from customers ...... 17 7,399 — 6,477 — 5,529 — Trade payables ...... 28 4,735 84 4,004 81 3,561 75 Borrowings ...... 24 2,265 652 1,709 560 1,381 500 Income tax payables ...... 20 201 — 68 — 139 — Provisions for risks and charges ...... 25 632 — 545 — 571 — Derivatives...... 29 236 — 109 — 104 — Other liabilities...... 27 1,574 34 1,467 25 1,402 19 Total current liabilities ...... 17,042 14,379 12,687 Liabilities directly correlated with assets held for sale ...... 41 — — — — 83 — Total liabilities ...... 23,792 18,616 18,083 Total liabilities and shareholders’ equity . . . 29,922 24,048 23,403

(The accompanying notes are an integral part of these consolidated financial statements.)

F-3 FINMECCANICA S.p.A.

CONSOLIDATED INCOME STATEMENT For the years ended December 31, 2008, 2007 and 2006

Year ended December 31, of which of which of which with related with related with related Notes 2008 parties 2007 parties 2006 parties (In millions of Euro, except per share information) Revenue...... 32 15,037 1,705 13,429 1,513 12,472 1,293 Other operating income ...... 33 702 1 1,033 2 494 7 Raw materials and consumables used ...... 34 (5,343) (24) (5,566) (10) (4,794) (6) Purchase of services ...... 34 (4,944) (121) (3,843) (91) (3,654) (111) Personnel costs...... 35 (3,928) — (3,599) — (3,361) — Amortization, depreciation and impairment ...... 36 (622) — (709) — (505) — Other operating expenses ...... 33 (686) (2) (564) (2) (434) (1) Changes in inventories of work in progress, semi-finished and finished goods ...... 281 — 54 — (24) — (-) Work performed by the Group and capitalized ...... 37 713 — 849 — 714 — Operating income ...... 1,210 1,084 908 Finance income ...... 38 1,017 2 624 3 1,194 3 Finance costs ...... 38 (1,255) (26) (877) (22) (824) (16) Share of profit/(loss) of equity accounted investments...... 39 16 — 16 — (5) — Profit before taxes and discontinued operations ...... 988 847 1,273 Income taxes ...... 40 (367) — (326) — (243) — Loss from discontinued operations . . . 41 — — — — (9) — Net profit...... 621 521 1,021 - equity holders of the Group ...... 571 — 484 — 989 — - minority interests ...... 50 — 37 — 32 — Earnings per share ...... 42 Basic ...... 1.294 — 1.140 — 2.333 — Diluted ...... 1.293 — 1.138 — 2.323 — Earnings per share net of discontinued operations ...... 42 Basic ...... 1.294 n.a. 1.140 n.a. 2.353 n.a. Diluted ...... 1.293 n.a. 1.138 n.a. 2.344 n.a.

(The accompanying notes are an integral part of these consolidated financial statements.)

F-4 FINMECCANICA S.p.A.

CONSOLIDATED STATEMENT OF CASH FLOWS For the years ended December 31, 2008, 2007 and 2006

Year ended December 31, of which with of which with of which related related with related Notes 2008 parties 2007 parties 2006 parties (In millions of Euro) Cash flow from operating activities: Gross cash flow from operating activities ...... 43 1,968 — 1,711 — 1,600 — Changes in working capital ...... 43 (169) (68) 318 (74) 347 (46) Collection of ENEA settlement ..... 6 296 — — — — — Changes in other operating assets and liabilities and provisions for risks and charges ...... 43 (349) (8) (273) 26 (257) 23 Finance costs paid ...... (127) (24) (116) (19) (160) (13) Income taxes paid ...... (200) — (241) — (212) — Net cash generated from operating activities ...... 1,419 1,399 1,318 Cash flow from investing activities: Acquisitions of subsidiaries, net of cash acquired ...... 12 (82) — (434) — (181) — Acquisition of DRS ...... 12 (2,372) — — — — — Sale of STM shares ...... 6 260 — — — — — Purchase of property, plant and equipment and intangible assets . . . (989) — (1,128) — (873) — Proceeds from sale of property, plant and equipment and intangible assets ...... 23 — 74 — 94 — IPO Ansaldo STS ...... — — — — 458 — Avio operation ...... — — — — 303 — Other investing activities ...... (19) (9) 25 (2) (63) (3) Net cash used in investing activities ...... (3,179) (1,463) (262) Cash flow from financing activities: Share capital increase ...... 23 1,206 — — — — — Repayment of DRS’s convertible bond and bank payables ...... 24 (315) — — — — — Repayments of bonds ...... 24 (297) — (6) — — — Issue of bonds ...... 24 745 — — — — — Opening of bridge loan ...... 24 3,015 — — — — — Repayment of bridge loan ...... 24 (1,205) — — — — — Net change in other borrowings ..... (499) 108 (163) 55 102 110 Dividends paid to Company’s shareholders ...... 23 (174) — (149) — (211) — Dividends paid to minority interests . . 23 (13) — (2) — (3) — Net cash generated from /(used in) financing activities ...... 2,463 (320) (112) Net increase/(decrease) in cash and cash equivalents...... 703 (384) 944 Exchange losses on cash and cash equivalents ...... (13) (12) (2) Cash and cash equivalents as of January 1, ...... 22 1,607 2,003 1,061 Cash and cash equivalents as of December 31, ...... 2,297 1,607 2,003

(The accompanying notes are an integral part of these consolidated financial statements.)

F-5 FINMECCANICA S.p.A.

CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSES For the years ended December 31, 2008, 2007 and 2006

Year ended December 31, 2008 2007 2006 (In millions of Euro) Reserves of income (expense) recognized in equity — Financial assets available for sale: — sale of shares ...... (57) — — — fair value adjustment...... (175) (251) (66) — impairment of stock ...... 111 (121) — (251) — (66) — Actuarial gains (losses) on defined-benefit plans: — plan discounting ...... (111) 224 — — exchange gains/losses ...... (40) (151) — 224 82 82 — Changes in cash-flow hedges: — fair value adjustment...... 383 31 152 — transferred to the Income Statement ...... 2 (18) (18) — transferred to investment in DRS...... (460) — — — exchange gains/losses ...... 13 (62) — 13 — 134 — Revaluation of assets acquired in prior years ...... — — 5 Exchange gains/losses ...... (675) (188) 29 Tax on expense (income) recognized in equity ...... 53 (75) (59) Income (expense) recognized in equity ...... (956) (277) 125 Profit for the year ...... 621 521 1,021 Total income and expense for the year ...... (335) 244 1,146 Attributable to: - equity holders of the Group...... (387) 215 1,120 - minority interests ...... 52 29 26

(The accompanying notes are an integral part of these consolidated financial statements.)

F-6 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of and for the years ended December 31, 2008, 2007 and 2006

1. GENERAL INFORMATION Finmeccanica S.p.A. (hereinafter “Finmeccanica”) is a company limited by shares based in Rome (Italy), at Piazza Monte Grappa 4, and is listed on the Milan stock market (S&P/MIB). The Finmeccanica Group (hereinafter the “Finmeccanica Group” or, simply, the “Group” or the “Company”) is a major Italian high technology organization. Finmeccanica, the holding company responsible for guiding and controlling industrial and strategic operations, coordinates its subsidiaries, which are especially concentrated in the fields of Helicopters, Defense Electronics and Security, Aeronautics, Space, Defense Systems, Energy and Transportation. This document includes the consolidated financial statements of the Group as of and for the years ended December 31, 2008, 2007 and 2006.

2. BASIS OF PREPARATION This document has been prepared in order to present homogeneous financial information for the years ended December 31, 2008, 2007 and 2006 and mainly for the purposes of the offering of notes to institutional investors. These financial statements have been prepared based on the consolidated financial statements of the Company as of and for the year ended December 31, 2008 approved by the Board of Directors on March 19, 2009, the consolidated financial statements of the Company as of and for the year ended December 31, 2007 approved by the Board of Directors on March 17, 2008 and the consolidated financial statements of the Company as of and for the year ended December 31, 2006 approved by the Board of Directors on March 27, 2007. As described in the accounting principles note of the consolidated financial statements of the Group as of and for the year ended December 31, 2007 detailed above, during 2007 the Group changed its accounting policy with regards to the actuarial gains and losses relating to defined benefit plans. In particular, until the end of 2006, the Group adopted the “corridor approach” whereby changes in the underlying assumptions of the actuarial valuations are recognized in the income statement, amortized according to the average remaining working life of the employee. Starting from the consolidated financial statements as of and for the year ended December 31, 2007, the Group has adopted the equity approach envisaged by IAS 19, as amended in 2006. Under this approach, the liability reported in the balance sheet is in line with the valuation of the same liability and any actuarial gains and losses are fully recognized in a specific equity reserve (“reserve for actuarial gains and losses”) in the period when they occur. The 2006 comparative reported in the consolidated financial statements as of and for the year ended December 31, 2007 was restated to reflect the change in accounting policy. The effect on the consolidated income statement for the year ended December 31, 2006, approved by the Board of Directors on March 27, 2007 was as follows: For the year-ended For the year-ended December 31, 2006 December 31, 2006 before restatement(*) after restatement (*) (In millions of Euro) Personnel costs...... (3,391) (3,361) Operating income ...... 878 908 Finance costs ...... (795) (824) Profit before taxes and the effect of discontinued operations ..... 1,272 1,273 Net profit ...... 1,020 1,021

(*) As reported in the consolidated financial statements as of and for the year ended December 31, 2007

F-7 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The effects on the consolidated balance sheet as of December 31, 2006 are as follows: As of As of December 31, December 31, 2006 before 2006 after restatement(*) restatement(*) (In millions of Euro) Non-current assets Deferred taxes ...... 470 492 Total non-current assets ...... 9,897 9,919 Total assets ...... 23,381 23,403 Shareholders’ equity Other reserves...... 3,418 3,381 Capital and reserves attributable to equity holders of the Company ...... 5,276 5,239 Total shareholders’ equity...... 5,357 5,320 Non-current liabilities Severance pay and other employee liabilities ...... 1,238 1,295 Deferred taxes ...... 340 342 Total non-current liabilities...... 5,254 5,313 Total liabilities...... 18,024 18,083 Total liabilities and shareholders’ equity ...... 23,381 23,403

(*) As reported in the consolidated financial statements as of and for the year ended December 31, 2007 In application of EC Regulation 1606/2002 of July 19, 2002 and legislative decree no. 38 of February 28, 2005, the consolidated financial statements of the Finmeccanica Group as of and for the years ended December 31, 2008, 2007 and 2006 were prepared in accordance with the international accounting standards (IFRS) endorsed by the European Commission, supplemented by the relevant interpretations (Standing Interpretations Committee — SIC and International Financial Reporting Interpretations Commit- tee — IFRIC) issued by the International Accounting Standard Board (IASB). In certain respects, at the date of the preparation of these notes, the official bodies had not yet completed their adaptation and interpretations. As a result, there may be further modifications or amendments to these standards and interpretations that could require or permit the Finmeccanica Group to modify the accounting, measurement and classification standards adopted in preparing these consolidated financial statements. The general principle used in preparing these consolidated financial statements is the cost method, except for financial assets available for sale and financial liabilities (including derivatives) valued at fair value through profit and loss. The changes introduced by IAS39 amendment, approved in October 2008, allowing for certain financial assets to be reclassified between the individual financial asset categories has not been applied by the Group. Among the options permitted by IAS 1, the Group has chosen to present its balance sheet by separating current and non-current items and its income statement by the nature of the items. Instead, the cash flow statement was prepared using the indirect method. Compared with the information presented in the consolidated financial statements as of and for the years ended December 31, 2007 and the 2006, the format of the accounting statements has been modified, and the related party amounts have been reported in the balance sheet and income statement captions with a separate column showing the portion attributable to related parties. The cash flow statement has been modified accordingly. All figures are shown in millions of Euros unless otherwise indicated.

F-8 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Preparation of the consolidated financial statements required management to make certain estimates. The main areas affected by estimates or assumptions of particular importance or that have significant effects on the balances shown are described in Note 4.

3 ACCOUNTING POLICIES ADOPTED 3.1 STANDARDS AND SCOPE OF CONSOLIDATION The consolidated financial statements as of and for the years ended December 31, 2008, 2007 and 2006 include the financial statements of the companies/entities included in the scope of consolidation (hereinafter “Consolidated Entities”), which have been prepared in accordance with the IFRS adopted by the Finmeccanica Group. Below is a list of the consolidated entities and the respective shares held either directly or indirectly by the Group:

List of companies consolidated on a line-by-line basis % Group ownership % Group Company name Registered office Direct Indirect shareholding 3083683 NOVA SCOTIA LIMITED ...... Halifax, Nova Scotia (Canada) 100 100 ABS TECHNOLOGY SPA ...... Florence 60 60 AEROMECCANICA SA...... Luxembourg 99.967 100 AGUSTA AEROSPACE CORP. USA ...... Wilmington Delaware (USA) 100 100 AGUSTA AEROSPACE SERVICES A.AS SA ...... Grace Hollogne (Belgium) 98 98 AGUSTA HOLDING BV ...... Amsterdam (the Netherlands) 100 100 AGUSTA SPA ...... Cascina Costa (Varese) 100 100 AGUSTA US INC ...... Wilmington, Delaware (USA) 100 100 AGUSTAWESTLAND AUSTRALIA PTY LTD ...... Melbourne (Australia) 100 100 AGUSTAWESTLAND BELL LLC...... Wilmington, Delaware (USA) 51 51 AGUSTAWESTLAND DO BRASIL LTDA. . Sa˜o Paulo (Brazil) 100 100 AGUSTAWESTLAND INTERNATIONAL LTD ...... Yeovil, Somerset (UK) 100 100 AGUSTAWESTLAND HOLDINGS LTD . . . Yeovil, Somerset (UK) 100 100 AGUSTAWESTLAND INC ...... Nex Castle,Wilmington, Delaware (USA) 100 100 AGUSTAWESTLAND MALAYSIA SDN BHD ...... Kuala Lumpur (Malaysia) 100 100 AGUSTAWESTLAND NORTH AMERICA INC...... Wilmington, Delaware (USA) 100 100 AGUSTAWESTLAND NV ...... Amsterdam (the Netherlands) 100 100 AGUSTAWESTLAND PORTUGAL SA . . . . Lisbon (Portugal) 100 100 AGUSTAWESTLAND PROPERTIES LTD . . Yeovil, Somerset (UK) 100 100 ALENIA AERMACCHI SPA...... Venegono Superiore (Varese) 99.998 99.998 ALENIA AERONAUTICA SPA...... Pomigliano (Naples) 100 100 ALENIA AERONAVALI SPA ...... Tessera (Venice) 100 100 ALENIA COMPOSITE SPA ...... Grottaglie (Taranto) 97 97 ALENIA IMPROVEMENT SPA ...... Pomigliano D’Arco (Naples) 98 98 ALENIA NORTH AMERICA-CANADA CO ...... Halifax, Nova Scotia (Canada) 100 88.409 ALENIA NORTH AMERICA INC...... Nex Castle,Wilmington, Delaware (USA) 88.409 88.409 ALENIA SIA SPA ...... Turin 100 100 AMTEC SPA...... Piancastagnaio (Siena) 100 100 ANSALDO ENERGIA SPA ...... Genoa 100 100 ANSALDO ESG AG ex ENERGY SERVICE GROUP AG ...... Wurenlingen (Switzerland) 100 100 ANSALDO FUEL CELLS SPA ...... Genoa 94.37 94.37 ANSALDO NUCLEARE SPA ...... Genoa 100 100

F-9 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

% Group ownership % Group Company name Registered office Direct Indirect shareholding ANSALDO RICERCHE SPA ...... Genoa 100 100 ANSALDO SEGNALAMENTO FERROVIARIO SPA...... Tito (Potenza) 100 40.0655 ANSALDO SIGNAL NV (IN LIQ.) ...... Amsterdam (the Netherlands) 100 40.0655 ANSALDO STS AUSTRALIA PTY LTD . . . Brisbane (Australia) 100 40.0655 ANSALDO STS BEIJING LTD ...... Beijing (China) 80 32.0524 ANSALDO STS DEUTSCHLAND GMBH . . Berlin (Germany) 100 40.0655 ANSALDO STS ESPANA SAU ...... Madrid (Spain) 100 40.0655 ANSALDO STS FINLAND OY...... Helsinki (Finland) 100 40.0655 ANSALDO STS FRANCE SA...... Les Ulis (France) 100 40.0655 ANSALDO STS HONG KONG LTD ...... Kowloon Bay (China) 100 40.0655 ANSALDO STS IRELAND LTD ...... CO KERRY (Ireland) 100 40.0655 ANSALDO STS MALAYSIA SDN BHD . . . Kuala Lumpur (Malaysia) 100 40.0655 ANSALDO STS SWEDEN AB ...... Solna (Sweden) 100 40.0655 ANSALDO STS TRASP. SYST. INDIA PRIV. LTD ex UNION SWIT. & SIGN. PRIV. LTD ...... Bangalore (India) 100 40.0655 ANSALDO STS UK LTD ...... Barbican (UK) 100 40.0655 ANSALDO STS SPA ...... Genoa 40.0655 40.0655 ANSALDO THOMASSEN BV ex THOMASSEN TURBINE SYSTEMS BV ...... Rheden (the Netherlands) 100 100 ANSALDO TRASPORTI — SISTEMI FERROVIARI SPA ...... Naples 100 40.0655 ANSALDOBREDA ESPANA SLU...... Madrid (Spain) 100 100 ANSALDOBREDA SPA ...... Naples 100 100 ANSALDOBREDA INC ...... Pittsburg, California (USA) 100 100 ASIA POWER PROJECTS PRIVATE LTD . . Bangalore (India) 100 100 AUTOMATISMES CONTROLES ET ETUDES ELECTRONIQUES ACELEC SA ...... Les Ulis (France) 99.999 40.0651 BREDAMENARINIBUS SPA ...... Bologna 100 100 DAVIES INDUSTRIAL COMMUNICATIONS LTD ...... Chelmsford, Essex (UK) 100 100 DRS C3 SYSTEMS INC...... Plantation, Florida (USA) 100 100 DRS CODEM SYSTEMS INC ...... Wilmington, Delaware (USA) 100 100 DRS DATA & IMAGING SYSTEMS INC . . Wilmington, Delaware (USA) 100 100 DRS HOMELAND SECURITY SOLUTIONS INC ...... Wilmington, Delaware (USA) 100 100 DRS INTELLIGENCE & AVIONIC SOLUTIONS INC ...... Cleveland, Ohio (USA) 100 100 DRS INTERNATIONAL INC ...... Wilmington, Delaware (USA) 100 100 DRS MOBILE ENVIRONMENTAL SYSTEMS CO ...... Cleveland, Ohio (USA) 100 100 DRS POWER & CONTROL TECHNOLOGIES INC ...... Wilmington, Delaware (USA) 100 100 DRS POWER TECHNOLOGY INC ...... Wilmington, Delaware (USA) 100 100 DRS SENSORS & TARGETING SYSTEMS INC...... Wilmington, Delaware (USA) 100 100 DRS SIGNAL SOLUTIONS INC...... Wilmington, Delaware (USA) 100 100 DRS SONAR SYSTEMS LLC...... Wilmington, Delaware (USA) 51 51 DRS SURVEILLANCE SUPPORT SYSTEMS INC ...... Wilmington, Delaware (USA) 100 100

F-10 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

% Group ownership % Group Company name Registered office Direct Indirect shareholding DRS SUSTAINMENT SYSTEMS INC . . . . . Wilmington, Delaware (USA) 100 100 DRS SYSTEMS MANAGEMENT LLC . . . . Wilmington, Delaware (USA) 100 100 DRS SYSTEMS INC ...... Wilmington, Delaware (USA) 100 100 DRS TACTICAL SYSTEMS GLOBAL SERVICES INC ...... Plantation, Florida (USA) 100 100 DRS TACTICAL SYSTEMS INC ...... Plantation, Florida (USA) 100 100 DRS TECHNICAL SERVICES GMBH & CO KG ...... Baden, Wurttemberg (Germany) 100 100 DRS TECHNICAL SERVICES INC...... Baltimore, Maryland (USA) 100 100 DRS TECHNOLOGIES CANADA INC . . . . Wilmington, Delaware (USA) 100 100 DRS TECHNOLOGIES CANADA LTD . . . . Kanata, Ontario (Canada) 100 100 DRS TECHNOLOGIES UK LIMITED . . . . . Farnham, Surrey (UK) 100 100 DRS TECHNOLOGIES VERWALTUNGS GMBH ...... Baden, Wurttemberg (Germany) 100 100 DRS TECHNOLOGIES INC ...... Wilmington, Delaware (USA) 100 100 DRS TEST & ENERGY MANAGEMENT LLC ...... Wilmington, Delaware (USA) 100 100 DRS UNMANNED TECHNOLOGIES INC...... Wilmington, Delaware (USA) 100 100 ED CONTACT SRL ...... Rome 100 100 ELECTRON ITALIA SRL ...... Rome 80 80 ELSACOM NV ...... Amsterdam (the Netherlands) 100 100 ELSACOM SPA...... Rome 100 100 ELSAG DATAMAT SPA...... Genoa 100 100 ELSAG NORTH AMERICA LLC ex REMINGTON ELSAG LAW ENFORCEMENT SYST...... Madison, North Carolina (USA) 100 100 ENGINEERED COIL COMPANY ...... Clayton, Missouri (USA) 100 100 ENGINEERED ELECTRIC COMPANY. . . . Clayton, Missouri (USA) 100 100 ENGINEERED SUPPORT SYSTEMS INC . . Clayton, Missouri (USA) 100 100 E-SECURITY SRL...... Montesilvano (Pescara) 79.688 79.688 ESSI RESOURCES LLC ...... Louisville, Kentucky (USA) 100 100 FATA ENGINEERING SPA ...... Pianezza (Turin) 100 100 FATA GROUP SPA (IN LIQ.) ...... Pianezza (Turin) 100 100 FATA HUNTER INC ...... Riverside, California (USA) 100 100 FATA LOGISTIC SYSTEMS SPA ...... Pianezza (Turin) 100 100 FATA SPA...... Pianezza (Turin) 100 100 FINMECCANICA FINANCE SA...... Luxembourg (Luxembourg) 73.6395 26.3575 99.997 FINMECCANICA GROUP REAL ESTATE SPA...... Rome 100 100 FINMECCANICA GROUP SERVICES SPA...... Rome 100 100 GALILEO AVIONICA SPA...... Campi Bisenzio (Florence) 100 100 GLOBAL MILITARY AIRCRAFT SYSTEMS LLC ...... Wilmington, Delaware (USA) 51 45.0886 ITALDATA INGEGNERIA DELL’IDEA SPA...... Rome 51 51 LARIMART SPA ...... Rome 60 60 LAUREL TECHNOLOGIES PARTNERSHIP ...... Wilmington, Delaware (USA) 80 80 MECCANICA HOLDINGS USA INC . . . . . Wilmington, Delaware (USA) 100 100 MECFINT (JERSEY) SA ...... Luxembourg (Luxembourg) 99.999 99.996 MSSC COMPANY ...... Philadelphia, Pennsylvania (USA) 51 51

F-11 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

% Group ownership % Group Company name Registered office Direct Indirect shareholding NET SERVICE SRL...... Bologna 70 70 NIGHT VISION SYSTEMS LLC...... Wilmington, Delaware (USA) 100 100 OTE MOBILE TECHNOLOGIES LIMITED ...... Chelmsford, Essex (UK) 100 100 OTO MELARA IBERICA SA ...... Loriguilla, Valencia (Spain) 100 100 OTO MELARA NORTH AMERICA INC . . . Dover, Delaware (USA) 100 100 OTO MELARA SPA ...... La Spezia 100 100 PCA ELECTRONIC TEST LTD ...... Grantham, Lincolnshire (UK) 100 100 PIVOTAL POWER INC ...... Halifax, Nova Scotia (Canada) 100 100 QUADRICS LTD ...... Bristol (UK) 100 100 SEICOS SPA ...... Rome 100 100 SELENIA MARINE CO LTD (IN LIQ.) . . . . Chelmsford, Essex (UK) 100 100 SELENIA MOBILE SPA ...... Chieti Scalo (Chieti) 100 100 SELEX COMMUNICATIONS DO BRASIL LTDA ...... Rio de Janeiro (Brazil) 100 100 SELEX COMMUNICATIONS GMBH . . . . . Backnang (Germany) 100 100 SELEX COMMUNICATIONS HOLDINGS LTD ...... Chelmsford (UK) 100 100 SELEX COMMUNICATIONS INC ...... San Francisco, California (USA) 100 100 SELEX COMMUNICATIONS INTERNATIONAL LTD ...... Chelmsford, Essex (UK) 100 100 SELEX COMMUNICATIONS LTD ...... Chelmsford, Essex (UK) 100 100 SELEX COMMUNICATIONS ROMANIA SRL ...... Bucarest (Romania) 99.976 99.976 SELEX COMMUNICATIONS SPA ...... Genoa 100 100 SELEX COMMUNICATIONS SECURE SYSTEMS LTD ...... Chelmsford, Essex (UK) 100 100 SELEX KOMUNIKASYON AS...... Golbasi (Turkey) 99.999 99.999 SELEX SENSORS AND AIRBORNE SYSTEMS SPA ...... Campi Bisenzio (Florence) 100 100 SELEX SENSORS AND AIRBORNE SYSTEMS LTD ...... Essex (UK) 100 100 SELEX SENSORS AND AIRBORNE SYSTEMS (US) INC ...... Wilmington, Delaware (USA) 100 100 SELEX SERVICE MANAGEMENT SPA . . . Rome 100 100 SELEX SISTEMI INTEGRATI GMBH . . . . Neuss (Germany) 100 100 SELEX SISTEMI INTEGRATI INC ...... Delaware (USA) 100 100 SELEX SYSTEMS INTEGRATION LTD ex SELEX SISTEMI INTEGRATI LTD . . . . . Portsmouth, Hampshire (UK) 100 100 SELEX SISTEMI INTEGRATI SPA...... Rome 100 100 S.C. ELETTRA COMMUNICATIONS SA . . Ploiesti (Romania) 50.5 50.4997 SIRIO PANEL SPA ...... Montevarchi (Arezzo) 93 93 SISTEMI E TELEMATICA SPA ...... Genoa 92.793 92.793 SO.GE.PA. SOC. GEN. DI PARTECIPAZIONI SPA ...... Genoa 100 100 SPACE SOFTWARE ITALIA SPA ...... Taranto 100 100 SUPERJET INTERNATIONAL SPA ...... Tessera (Venice) 51 51 T — S HOLDING CORPORATION ...... Dallas, Texas (USA) 100 100 TECH-SYM CORPORATION ...... Reno, Nevada (USA) 100 100 THOMASSEN SERVICE GULF LLC . . . . . Abu Dhabi, United Arab Emirates 48.667 100 TRANSCONTROL CORPORATION ...... Wilmington, Delaware (USA) 100 40.0655 UNION SWITCH & SIGNAL INC (CAN) . . Burlington, Ontario (Canada) 100 40.0655

F-12 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

% Group ownership % Group Company name Registered office Direct Indirect shareholding UNION SWITCH & SIGNAL INC (USA)(*) ...... Wilmington, Delaware (USA) 100 40.0655 UNION SWITCH & SIGNAL INT. CO(**). . . Wilmington, Delaware (USA) 100 40.0655 UNION SWITCH & SIGNAL INT. PROJECTS CO(***) ...... Wilmington, Delaware (USA) 100 40.0655 UNIVERSAL POWER SYSTEMS INC . . . . Wilmington, Delaware (USA) 100 100 VEDECON GMBH ex ANITE TRAVEL SYSTEMS GMBH ...... Cologne (Germany) 100 100 VEGA CONSULTING & TECHNOLOGY SL ...... Madrid (Spain) 100 100 VEGA CONSULTING SERVICES LTD ex VEGA GROUP PLC ...... Hertfordshire (UK) 100 100 VEGA DEUTSCHLAND GMBH & CO KG ex ANITE DEUTSCHLAND GMBH & CO KG ...... Cologne (Germany) 100 100 VEGA DEUTSCHLAND HOLDING GMBH ex ANITE DEUTSCHLAND MANAG. GMBH ...... Cologne (Germany) 100 100 VEGA DEUTSCHLAND MANAGEMENT GMBH ex ANITE DEUTSCHL. HOLD. GMBH ...... Cologne (Germany) 100 100 VEGA SERVICES LTD ex CREW GROUP LTD ...... Hertfordshire (UK) 100 100 VEGA SPACE LTD ex VEGA SPACE SYSTEMS ENGINEERING LTD ...... Hertfordshire (UK) 100 100 VEGA TECHNOLOGIES SAS ...... Ramonville Saint Agne (France) 100 100 WESTLAND HELICOPTERS INC ...... Wilmington, Delaware (USA) 100 100 WESTLAND HELICOPTERS LTD ...... Yeovil, Somerset (UK) 100 100 WESTLAND INDUSTRIES LTD ...... Yeovil, Somerset (UK) 100 100 WESTLAND SUPPORT SERVICES LTD. . . Yeovil, Somerset (UK) 100 100 WESTLAND TRANSMISSIONS LTD . . . . . Yeovil, Somerset (UK) 100 100 WHITEHEAD ALENIA SIST. SUBACQUEI SPA...... Leghorn (Italy) 100 100 WING NED BV...... Rotterdam (the Netherlands) 100 100

(*) From 1 January 2009 ANSALDO STS USA INC (**) From 1 January 2009 ANSALDO STS INTERNATIONAL CO (***) From 1 January 2009 ANSALDO STS INTERNATIONAL PROJECT CO

F-13 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

List of companies consolidated using the proportionate method % Group ownership % Group Company name Registered office Direct Indirect shareholding THALES ALENIA SPACE SAS ...... Cannes La Bocca (France) 33 33 THALES ALENIA SPACE FRANCE SAS ...... Paris (France) 100 33 THALES ALENIA SPACE ITALIA SPA ...... Rome 100 33 THALES ALENIA SPACE ESPANA SA ...... Madrid (Spain) 100 33 THALES ALENIA SPACE ETCA SA ...... Charleroi (Belgium) 100 33 THALES ALENIA SPACE ANTWERP SA...... Hoboken (Belgium) 100 33 THALES ALENIA SPACE NORTH AMERICA INC . . . . Wilmington (USA) 100 33 FORMALEC SA ...... Paris (France) 100 33 MARILEC SA ...... Paris (France) 100 33 VANELEC SAS ...... Paris (France) 100 33 TELESPAZIO HOLDING SRL ...... Rome 67 67 TELESPAZIO FRANCE SAS ...... Toulouse (France) 100 67 TELESPAZIO DEUTSCHLAND GMBH ...... Gilching, Munich (Germany) 100 67 TELESPAZIO SPA ...... Rome 100 67 E — GEOS SPA ...... Matera 75 49.593 EURIMAGE SPA ...... Rome 51 34.17 TELESPAZIO BRASIL SA ...... Rio de Janeiro (Brazil) 98.534 66.0178 TELESPAZIO NORTH AMERICA INC ...... Dover Delaware (USA) 100 67 TELESPAZIO HUNGARY SAT. TELEC. LTD ...... Budapest (Hungary) 100 67 RARTEL SA ...... Bucarest (Romania) 61.061 40.9109 TELESPAZIO ARGENTINA SA ...... Buenos Aires (Argentina) 100 66.9509 MARS SRL ...... Naples 100 67 FILEAS SA ...... Paris (France) 85 56.95 AURENSIS SL ...... Barcelona (Spain) 100 67 ISAF — INIZIATIVE PER I SISTEMI AVANZATI E FORNITURE SRL ...... Rome 100 67 GAF AG ...... Munich (Germany) 100 67 EUROMAP SATELLITENDATEN-VERTRIEB MBH . . . Neustrelitz (Germany) 100 67 AMSH BV ...... Amsterdam (the Netherlands) 50 50 MBDA SAS...... Paris (France) 50 25 MBDA TREASURE COMPANY LTD ...... Jersey (UK) 100 25 MBDA FRANCE SAS ...... Paris (France) 100 25 MBDA INCORPORATED...... Wilmington, Delaware (USA) 100 25 MBDA ITALIA SPA...... Rome 100 25 MBDA UK LTD...... Stevenage (UK) 100 25 MARCONI UAE LTD ex MARCONI OVERSEAS LTD . . London (UK) 100 25 MATRA ELECTRONIQUE SA ...... Paris (France) 100 25 MBDA SERVICES SA ...... Paris (France) 99.76 24.94 LFK-LENKFLUGKORPERSYSTEME GMBH ...... UnterschleiBheim (Germany) 100 25 BAYERN-CHEMIE GMBH ...... Germany 100 25 TAURUS SYSTEMS GMBH ...... Germany 67 16.75 TDW GMBH ...... Germany 100 25 AVIATION TRAINING INTERNATIONAL LIMITED . . . Dorset (UK) 50 50 CONSORZIO ATR GIE e SPE...... Toulouse (France) 50 50 GLOBAL AERONAUTICA LLC ...... Wilmington, Delaware (USA) 50 44.2045 LMATTS LLC ...... Georgia (USA) 50 44.2045

F-14 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

List of companies consolidated using the equity method % Group ownership % Group Company name Registered office Direct Indirect shareholding ABRUZZO ENGINEERING SCPA ...... L’Aquila 30 30 ABU DHABI SYSTEMS INTEGRATION LLC . . . Abu Dhabi (United Arab Emirates) 43.043 43.043 ADVANCED AIR TRAFFIC SYSTEMS SDN BHD ...... Darul Ehsan (Malaysia) 30 30 ADVANCED LOGISTICS TECHNOLOGY ENGINEERING CENTER SPA ...... Turin 51 16.83 ALENIA HELLAS SA ...... Kolonaki, Athens (Greece) 100 100 ALIFANA DUE SCRL ...... Naples 53.34 21.371 ALIFANA SCRL ...... Naples 65.85 26.38 ANSALDO ARGENTINA SA ...... Buenos Aires (Argentina) 99.9933 99.9933 ANSALDO ELECTRIC DRIVES SPA ...... Genoa 100 100 ANSALDO — E.M.I.T. SCRL ...... Genoa 50 50 ANSALDO ENERGY INC ...... Wilmington, Delaware(USA) 100 100 ANSERV SRL ...... Bucarest (Romania) 100 100 AUTOMATION INTEGRATED SOLUTIONS SPA ...... Pianezza (Turin) 40 40 BELL AGUSTA AEROSPACE COMPANY LLC . . Wilmington, Delaware (USA) 40 40 BRITISH HELICOPTERS LTD ...... Yeovil, Somerset (UK) 100 100 CANOPY TECHNOLOGIES LLC ...... Wilmington, Delaware (USA) 50 50 CARDPRIZE TWO LIMITED ...... Basildon, Essex (UK) 100 100 COMLENIA SENDIRIAN BERHAD ...... Selangor Darul Ehsan (Malaysia) 30 30 CONSORZIO START SPA ...... Rome 40 40 CONTACT SRL ...... Naples 30 30 DIGINT SRL ...... Milano 49 49 DOGMATIX LEASING LIMITED ...... Mauritius Islands 100 50 DRS CONSOLIDATED CONTROLS INC ...... Wilmington, Delaware (USA) 100 100 DRS INTEGRATED DEFENSE SOLUTIONS LLC...... Wilmington, Delaware (USA) 100 100 ECOSEN SA ...... Caracas (Venezuela) 48 19.23 ELETTRONICA SPA ...... Rome 31.333 31.333 ELSACOM BULGARIA AD (IN LIQ.) ...... Sofia (Bulgaria) 90 90 ELSACOM HUNGARIA KFT ...... Budapest (Ungheria) 100 100 ELSACOM SLOVAKIA SRO...... Bratislava (Slovakia) 100 100 ELSACOM-UKRAINE JOINT STOCK COMPANY ...... Kiev (Ukraine) 49 49 ELSAG EASTERN EUROPE SRL (IN LIQ.) . . . . . Bucarest (Romania) 100 100 ENERGEKO GAS ITALIA SRL...... Brindisi 20.99 20.99 EURISS NV ...... Leiden (the Netherlands) 25 8.25 EUROFIGHTER AIRCRAFT MANAGEMENT GMBH ...... Hallbergmoos (Germany) 21 21 EUROFIGHTER JAGDFLUGZEUG GMBH . . . . . Hallbergmoos (Germany) 21 21 EUROFIGHTER INTERNATIONAL LTD ...... London (UK) 21 21 EUROFIGHTER SIMULATION SYSTEMS GMBH ...... Unterhaching (Germany) 24 24 EUROMIDS SAS ...... Paris (France) 25 25 EURO PATROL AIRCRAFT GMBH (IN LIQ.) . . . Munich (Germany) 50 50 EUROPEA MICROFUSIONI AEROSPAZIALI SPA ...... Morra De Sanctis (Avellino) 49 49 EUROPEAN SATELLITE NAVIGATION INDUSTRIES GMBH ...... Ottobrunn (Germany) 18.939 18.94 25.1892 EUROSATELLITE FRANCE SA ...... France 99.76 32.92 EUROSYSNAV SAS ...... Paris (France) 50 50

F-15 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

% Group ownership % Group Company name Registered office Direct Indirect shareholding EUROTECH SPA ...... Amaro (Udine) 11.08 11.08 FATA DTS SPA (IN LIQ.) ...... Pianezza (Turin) 100 100 FATA HUNTER INDIA PVT LTD ...... New Delhi (India) 100 100 FEDER PETROLI GREEN ENERGY SRL ...... Rome 20 20 FINMECCANICA CONSULTING SRL...... Rome 100 100 FINMECCANICA NORTH AMERICA INC . . . . . Dover, Delaware (USA) 100 100 FINMECCANICA UK LTD ...... London (UK) 100 100 GALILEO INDUSTRIES SA ...... Brussels (Belgium) 18.939 18.939 25.189 GROUPEMENT IMMOBILIER AERONAUTIQUE G.I.A. SA ...... Blagnac (France) 20 20 GRUPO AURENSIS SA DE CV...... Bosque de Duraznos (Mexico) 100 67 HR GEST SPA ...... Genoa 30 30 IAMCO SCRL ...... Mestre (Venice) 20 20 ICARUS SCPA...... Turin 49 49 IMMOBILIARE CASCINA SRL ...... Gallarate (Varese) 100 100 IMMOBILIARE FONTEVERDE SRL ...... Rome 60 48 INDRA ESPACIO SA ...... France 49 16.17 INTERNATIONAL LAND SYSTEMS INC ...... Wilmington, Delaware (USA) 28.365 19.005 INTERNATIONAL METRO SERVICE SRL . . . . . Milan 49 19.63 I.M. INTERMETRO SPA...... Rome 33.332 23.343 IVECO FIAT — OTO MELARA SCRL...... Rome 50 50 JIANGXI CHANGE AGUSTA HELICOPTER CO LTD ...... Zone Jiangxi Province (China) 40 40 LIBYAN ITALIAN ADVANCED TECHNOLOGY CO ...... Tripoli (Libya) 25 25 50 MACCHI HUREL DUBOIS SAS ...... Plaisir (France) 50 49.99 MEDESSAT SAS ...... Toulouse (France) 28.801 19.296 METRO 5 SPA...... Milan 31.9 17.156 MUSI NET ENGINEERING SPA ...... Turin 49 49 N2 IMAGING SYSTEMS LLC ...... Wilmington, Delaware (USA) 30 30 NAHUELSAT SA ...... Buenos Aires (Argentina) 33.332 33.33 NGL PRIME SPA ...... Turin 30 30 N.H. INDUSTRIES SARL ...... Aix en Provence (France) 32 32 NICCO COMMUNICATIONS SAS ...... Colombes (France) 50 50 NNS — SOC. DE SERV. POUR REACTEUR RAPIDE SNC ...... Lyon (France) 40 40 NOVACOM SERVICES SA ...... Toulouse (France) 39.73 26.62 ORIZZONTE — SISTEMI NAVALI SPA...... Genoa 49 49 OTE M ...... Moscow (Russian Federation) 100 100 PEGASO SCRL ...... Rome 46.87 18.748 POLARIS SRL ...... Genoa 50 50 ROXEL SAS ...... Le Plessis Robinson (France) 50 12.5 SAN GIORGIO SA (IN LIQ.) ...... Paris (France) 99.969 99.969 SAPHIRE INTERNAT. ATC ENGINEERING CO LTD ...... Beijing (China) 65 65 SATELLITE TERMINAL ACCESS SA (IN LIQ.) ...... France 21.19 6.993 SCUOLA ICT SRL ...... L’Aquila 20 20 SELEX PENSION SCHEME (TRUSTEE) LTD . . . Basildon, Essex (UK) 100 100 SELEX SENSORS AND AIRBORNE SYSTEMS ELECTRO OPTICS (OVERSEAS) LTD...... Basildon, Essex (UK) 100 100 SELEX SENSORS AND AIRBORNE SYSTEMS (PROJECTS) LTD ...... Basildon, Essex (UK) 100 100

F-16 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

% Group ownership % Group Company name Registered office Direct Indirect shareholding SELEX SENSORS AND AIRBORNE SYSTEMS INFRARED LTD...... Basildon, Essex (UK) 100 100 SELEX SISTEMI INTEGRATI DE VENEZUELA SA ...... Caracas (Venezuela) 100 100 SERVICIOS TECNICOS Y SPECIALIZADOS DE INFORM. SA DE CV ...... Bosque de Duraznos (Mexico) 100 67 SEVERNYJ AVTOBUZ Z.A.O...... St. Petersburg (Russia) 35 35 SISTEMI DINAMICI SPA ...... S. Piero a Grado (Pisa) 40 40 SOGELI — SOCIETA’ DI GESTIONE DI LIQ. SPA...... Rome 100 100 SOSTAR GMBH (IN LIQ.) ...... Immerstad (Germany) 28.2 28.2 TELBIOS SPA ...... Milan 32.86 22.0162 TELESPAZIO NETHERLAND BV...... Enschede (the Netherlands) 100 67 THOMASSEN SERVICE AUSTRALIA PTY LTD ...... Canning Vale (Australia) 100 100 TRADE FATA BV ...... Rotterdam (the Netherlands) 100 100 TRIMPROBE SPA (IN LIQ.) ...... Rome 100 100 TURBOENERGY SRL ...... Cento (Ferrara) 25 25 WESTLAND INDUSTRIAL PRODUCTS LTD . . . Yeovil, Somerset (UK) 100 100 WITG L.P. INC ...... Kent, Dover, Delaware (USA) 24 21.2184 WITG L.P. LTD ...... Kent, Dover, Delaware (USA) 20 17.682 WORLD’S WING SA ...... Geneva (Switzerland) 95.364 95.364 XAIT SRL ...... Ariccia (Rome) 100 100 ZAO ARTETRA ...... Moscow (Russian Federation) 51 51

List of companies valued at fair value % Group ownership % Group Company name Registered office Direct Indirect shareholding BCV INVESTMENTS SCA ...... Luxembourg 14.321 14.321 BCV MANAGEMENT SA ...... Luxembourg 14.999 14.999 STMICROELECTRONICS HOLDING NV(*) ...... Rotterdam (the Netherlands) 20 20

(*) Recognized as “assets available for sale”

F-17 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

List of subsidiaries and associates valued at cost % Group ownership % Group Company name Registered office Direct Indirect shareholding 179CENTELEC SAS...... Neuilly Sur Seine (France) 21 21 ALENIA NORTH AMERICA DEFENSE LLC. . . . Wilmington, Delaware (USA) 100 88.409 ANSALDO RAILWAY SYSTEM TECHNICAL SERVICE (BEIJING) LTD ...... Beijing (China) 100 40.0655 ANSALDO STS INFRADEV SOUTH AFRICA (PTY) LTD ...... Johannesburg (ZA) — South Africa 50.7 20.31 ANSALDO STS SOUTHERN AFRICA (PTY) LTD...... Gaborone (Botswana) — Africa 100 40.0655 CCRT SISTEMI SPA (IN FALL.) ...... Milan 30.34 30.34 DATAMAT SUISSE SA (IN LIQ.) ...... Lugano (Switzerland) 100 100 FOSCAN SRL (IN FALL.) ...... Anagni (Frosinone) 20 20 IND. AER. E MECC. R. PIAGGIO SPA (AMM.STR.) ...... Genoa 30.982 30.982 SAITECH SPA (IN FALL.) ...... Passignano sul Trasimeno (Perugia) 40 40 SEL PROC SCRL ...... Rome 100 100 SESM — SOLUZIONI EVOLUTE PER LA SISTEMISTICA E I MODELLI — SCRL . . . . . Naples 100 100 U.V.T. SPA (IN FALL.) ...... San Giorgio Jonico (Taranto) 50.614 50.614 U.V.T. ARGENTINA SA ...... Buenos Aires (Argentina) 60 30.368 For ease of understanding and comparability, below are the main changes in the scope of consolidation during 2008: • the Vega Group, which was purchased in 2007, was fully consolidated since that date on a line-by-line basis; • Global Military Aircraft LLC, previously consolidated proportionally (50%) in the 2007 financial statements, has been consolidated on a line-by-line basis since January 1, 2008; • Aurensis S.L., acquired by Telespazio SpA on April 1, 2008, has been proportionally consolidated (67%) from that date; • ISAF Iniziative per i Sistemi Avanzati Srl, acquired by Telespazio SpA on July 31, 2008, has been proportionally consolidated (67%) beginning from such date; • DRS Technologies group, acquired on October 22, 2008, is consolidated on a line-by-line basis starting from that date.

Subsidiaries and entities controlled jointly The entities over which Finmeccanica exercises a controlling power, either by directly or indirectly holding a majority of shares with voting rights or by exercising a dominant influence through the power to govern the financial and operating policies of the entity and obtain the related benefits regardless of the nature of the shareholding, have been consolidated on a line-by-line basis. Not consolidated on a line-by-line basis are those entities which, because of the dynamics of their operations (e.g. consortia without shares and controlling interests in equity consortia which, by charging costs to their members, do not have their own financial results and the financial statements of which do not, net of intercompany assets and liabilities, have material balances) or their current status (e.g. companies that are no longer operational, have no assets or personnel, or for which the liquidation process appears to be essentially concluded), would be immaterial to the Group’s situation in both quantitative and qualitative terms. These holdings have been consolidated using the equity method. Participating interests in entities (including special-purpose entities) over which control is exercised jointly with other parties are consolidated proportionally (so as to incorporate only the value of the assets,

F-18 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 liabilities, costs and income proportional to the percentage held without, therefore, including the holdings of the other parties). All controlled entities are consolidated at the date on which control was acquired by the Group. The entities are removed from the consolidated financial statements at the date on which the Group relinquishes control. Business combinations are accounted for using the purchase method, whereby the acquirer purchases the equity and recognizes all assets and liabilities, even if merely potential, of the acquired company. The cost of the transaction includes the fair value at the date of purchase of the assets sold, the liabilities assumed, the capital instruments issued, and all other incidental charges. Any difference between the cost of the transaction and the fair value at the date of purchase of the assets and liabilities is allocated to goodwill. In the event the process of allocating the purchase price should result in a negative difference, this difference is recorded as an expense immediately at the purchase date. In the case of purchase of controlling stakes other than 100% stakes, goodwill is recognized only to the extent of the portion attributable to the Group Parent. Amounts resulting from transactions with consolidated entities have been eliminated, particularly where related to receivables and payables outstanding at the end of the period, as well as interest and other income and expenses recorded on the income statements of these enterprises. Also eliminated are the net profits or losses between the consolidated entities along with their related tax adjustments. The consolidated entities all close their financial years on December 31st. The Group consolidated financial statements have been prepared based on the ending balances at December 31st.

Other equity investments Investments in entities over which significant influence is exercised, which generally corresponds to a holding of between 20% (10% if listed) and 50% (equity investments in associates), are accounted for using the equity method. In the case of the equity method, the value of the investment is in line with shareholders’ equity adjusted, when necessary, to reflect the application of IFRS, and includes the recognition of goodwill (net of impairments) calculated at the time of purchase, and to account for the adjustments required by the standards governing the preparation of consolidated financial statements. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Any value losses in excess of book value are recorded in the provision for risks on equity investments. The fair value of equity investments, in the event this method applies, is calculated based on the bid price of the last trading day of the month for which the IFRS report was prepared (in this case December 31), or based on financial valuation techniques for not listed instruments. Investments available for sale, like those acquired with the sole purpose of being disposed within the subsequent twelve months, are classified separately within “assets held for sale”.

3.2 SEGMENT INFORMATION The Group considers the organization by industry to be ‘primary’, as company risks and benefits are influenced significantly by differences in the products and services provided, with the organization by geographic area being ’secondary’, as company risks and benefits are also significantly influenced by operating in different countries or different geographic areas.

3.3 CURRENCY TRANSLATION Identification of the functional currency The balances of the financial statements of each Group entity are presented in the currency of the primary economy in which each enterprise operates (the functional currency). The consolidated financial statements for the Finmeccanica Group have been prepared in Euros, which is the functional currency of the Group Parent.

F-19 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Translation of transactions denominated in a foreign currency Items expressed in a currency other than the functional currency, whether monetary (cash and cash equivalents, receivables or payables due in pre-set or measurable amounts, etc.) or non-monetary (advances to suppliers of goods and services, goodwill, intangible assets, etc.), are initially recognized at the exchange rate prevailing at the date on which the transaction takes place. Subsequently, the monetary items are translated into the functional currency based on the exchange rate at the reporting date, and any differences resulting from this conversion are recognized in the income statement. Non-monetary items continue to be carried at the exchange rate on the date of the transaction, except in situations where there is a persistent unfavorable trend in the exchange rate concerned. If this is the case, exchange differences are recognized in the income statement.

Translation of financial statements expressed in a currency other than the functional currency The rules for translating financial statements expressed in a foreign currency into the functional currency (except where the currency is that of a hyper-inflationary economy — a situation not applicable to the Group) are as follows: • the assets and liabilities presented, including for comparative purposes, are translated at the end-of-period exchange rate; • costs and revenues, charges and income presented, including for comparative purposes, are translated at the average exchange rate for the period in question, or at the exchange rate on the date of the transaction in the event this is significantly different from the average rate; • the ‘translation reserve’ includes both the exchange rate differences generated by the translation of balances at a rate different from that at the close of the period and those that are generated by the translation of opening balances of shareholders’ equity at a rate different from that at the close of the period. Goodwill and adjustments to fair value related to the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the end-of-period exchange rate. With reference to data comparability, the year 2008 has been marked by significant changes in the Euro against the main currencies of interest for the Group. Specifically, the currency exchange rates as of December 31, 2008 and the average exchange rate for the year ended December 31, 2008 show, for the main currencies, these changes from 2007: final exchange rates for the period (Euro/US dollar -5.46% and Euro/ sterling pound + 29.88%); average exchange rates for the period (Euro/US dollar + 7.32% and Euro/sterling pound + 16.36%). Below are the exchange rates adopted for the currencies that are most significant for the Group: As of and for the year ended December 31, 2008 2007 2006 Closing Closing Closing Average exchange exchange rate Average exchange exchange rate Average exchange exchange rate rate for the year for the year rate for the year for the year rate for the year for the year US Dollar .... 1.47076 1.39170 1.37048 1.47210 1.25560 1.31700 Pound Sterling .... 0.79629 0.95250 0.68434 0.73335 0.68173 0.67150

3.4 INTANGIBLE ASSETS Intangible assets are non-monetary items without physical form, but which can be clearly identified and generate future economic benefits for the company. They are carried at purchase and/or production cost, including directly related expenses allocated to them when preparing the asset for operations and net of accumulated amortization (with the exception of intangibles with an indefinite useful life) and any impairments of value. Amortization begins when the asset is available for use and is recognized systematically over its remaining useful life. In the period in which the intangible asset is recognized for the first time, the amortization rate applied takes into account the period of actual use of the asset.

F-20 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Development costs Development costs include costs related to the application of the results of applied research or other knowledge in a plan or a project for the production of materials, devices, processes, systems or services that are new or significantly advanced, prior to the start of commercial production or use, for which the generation of future economic benefits can be demonstrated. These costs are amortized over the period in which the future earnings are expected to be realized by the project itself and in any case over a period no longer than 10 years. If such costs fall within the scope of costs defined by Group standards as ‘non-recurring costs’, they are recognized in a specific item under intangible assets Note 4.1. Research costs, on the other hand, are expensed in the period in which they are incurred.

Industrial patent and intellectual property rights Patents and intellectual property rights are carried at acquisition cost net of amortization and accumulated impairment losses. Amortization begins in the period in which the rights acquired are available for use and is calculated based on the shorter of the period of expected use and that of ownership of the rights.

Concessions, licenses and trademarks This category includes: concessions, i.e. government measures that grant private parties the right to exclusive use of public assets or to manage public services under regulated conditions; licenses that grant the right to use patents or other intangible assets for a determinate or determinable period of time; trademarks that establish the origin of the products of a given company; and licenses for the know-how or software owned by others. The costs, including the direct and indirect costs incurred to obtain such rights, can be capitalized after receiving title to the rights themselves and are amortized systematically over the shorter of the period of expected use and that of ownership of the rights.

Goodwill Goodwill recognized as an intangible asset is associated with business combinations and represents the difference between the cost incurred to acquire a company or division and the Group’s share of the sum of the values assigned, based on current values at the time of the acquisition, to the individual assets and liabilities of the given company or division. As it does not have a definite useful life, goodwill is not amortized but is subject to impairment tests conducted at least once a year, unless market and operational factors identified by the Group indicate that an impairment test is also necessary in the preparation of interim financial statements. In conducting an impairment test, goodwill is allocated to the individual cash-generating units (CGUs), i.e. the smallest financially independent business units through which the Group operates in its various market segments. Goodwill related to the acquisition of consolidated companies is recognized under intangible assets. Goodwill related to unconsolidated associated companies or subsidiaries is included in the value of investments.

3.5 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is measured at purchase or production cost net of accumulated depreciation and any impairment losses. The cost includes all direct costs incurred to prepare the assets for use, as well as any charges for dismantlement and disposal that will be incurred to return the site to its original condition. Charges incurred for routine and/or cyclical maintenance and repairs are expensed in full in the period in which they are incurred. Costs related to the expansion, modernization or improvement of owned or leased structural assets are only capitalized to the extent that such costs meet the requirements for being classified separately as an asset or part of an asset. Any public capital grants related to property, plant and equipment are recognized as a direct deduction from the asset to which they refer. The value of an asset is adjusted by systematic depreciation calculated based on the residual useful life of the asset itself. In the period in which the asset is recognized for the first time, the depreciation rate

F-21 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 applied takes into account the date in which the asset is ready for use. The estimated useful lives adopted by the Group for the various asset classes are as follows: Years Land ...... indefinite useful life Buildings ...... 20-33 Plant and machinery ...... 5-10 Equipment ...... 3-5 Other assets ...... 5-8 The estimated useful life and the residual value are regularly reviewed. Depreciation ends when the asset is sold or reclassified as asset held for sale. In the event the asset to be depreciated is composed of significant distinct elements with useful lives that are different from those of the other constituent parts, each individual part that makes up the asset is depreciated separately, in application of the component approach to depreciation. This item also includes equipment intended for specific programs (tooling), although it is depreciated, as with other non-recurring costs (Note 4.1), on the basis of units manufactured in relation to those expected to be produced. The gains and losses from the sale of assets or groups of assets are calculated by comparing the sales price with the related net book value.

3.6 INVESTMENT PROPERTIES Properties held to earn rentals or for capital appreciation are carried under ‘Investment properties’; they are valued at purchase or construction cost plus any related charges, net of accumulated depreciation and impairment, if any.

3.7 IMPAIRMENT OF INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT Assets with indefinite lives are not depreciated or amortized, but are rather subject to impairment tests at least once a year to ascertain the recoverability of their book value. For assets that are depreciated or amortized, an assessment is made to determine whether there is any indication of a loss in value. If so, the recoverable value of the asset is estimated, with any excess being recognized in the income statement. The recoverable value of an asset is the higher of its fair value less costs to sell and its value in use calculated on the basis of a model of discounted cash flows. The discount rate encompasses the risks particular to the asset which have not been considered in the expected cash flows. Assets which do not generate independent cash flows are tested as cash-generating units. If the reasons for such write-downs should cease to obtain, the asset’s book value is restored within the limits of the book value that would have resulted if no loss was recognized due to previous years’ loss of value. Under no circumstances, however, is the value of goodwill that has been written down restored to its previous level.

3.8 INVENTORIES Inventories are recorded at the lower of cost, calculated with reference to the weighted average cost, and net realizable value. They do not include finance costs and overheads. The net realizable value is the sales price in the course of normal operations net of estimated costs to finish the goods and those needed to make the sale.

3.9 CONTRACT WORK IN PROGRESS Work in progress is recognized on the basis of progress (or percentage of completion), whereby costs, revenues and margins are recognized based on the progress of production. The state of completion is

F-22 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 determined on the basis of the ratio between costs incurred at the measurement date and the total expected costs for the program or based on the productions units delivered. The valuation reflects the best estimate of the schedules prepared at the balance sheet date. The assumptions upon which the estimates are made are periodically updated. Any impact on profit or loss are recognized in the period in which the updates are made. In the event the completion of a contract is expected to result in a loss at the gross margin level, the loss is recognized in its entirety in the period in which it becomes reasonably foreseeable. Contract work in progress is recorded net of any write-downs, as well as pre-payments and advances related to the contract being performed. This analysis is carried out contract by contract: in the event of positive differences (where the value of work in progress is greater than total pre-payments), the difference is recorded as an asset; negative differences, on the other hand, are recorded as a liability under ‘due to customers for contract work’. If it has not been collected at the date of preparation of the annual or interim accounts, the amount recorded among advance payments will have a directly offsetting item in trade receivables. Contracts with payments in a currency other than the functional currency (the Euro for the Group) are measured by converting the portion of payments due, calculated using the percentage-of-completion method, at the exchange rate prevailing at the close of the period in question. However, the Group’s policy for exchange-rate risk calls for all contracts in which cash inflows and outflows are significantly exposed to exchange rate fluctuations to be hedged specifically. In such cases, the recognition methods described in Note 4.3 below are applied.

3.10 RECEIVABLES AND FINANCIAL ASSETS The Group classifies its financial assets into the following categories: • financial assets at fair value through profit or loss; • loans and receivables; • held-to-maturity financial assets; • available-for-sale financial assets. Management classifies assets at the time they are first recognized.

Financial assets at fair value through profit or loss This category includes financial assets acquired for the purpose of short-term trading transactions, as well as derivatives, which are discussed in the next Note. The fair value of these instruments is determined with reference to their end-of-period bid price. For unlisted instruments, the fair value is calculated using commonly adopted valuation techniques. Changes in the fair value of instruments in this category are recognized immediately in the income statement. The classification of assets as current or non-current reflects management expectations regarding their trading. Current assets include those that are planned to be sold within 12 months or those designated as held for trading purposes. Loans and receivables This category includes non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. They are measured at their amortized cost using the effective interest method. Should objective evidence of impairment emerge, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss — is recognized in the income statement. If the reasons for the write-down should cease to obtain, the value of the asset is restored up to the amortized cost value it would have if no impairment had been recognized. Loans and receivables are recorded under current assets except for the portion falling due beyond 12 months, which is carried under non-current assets.

F-23 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Financial assets held to maturity These are non-derivative assets with fixed maturities that the Group has the intention and ability to hold to maturity. Those maturing within 12 months are carried as current assets. Should objective evidence of impairment emerge, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss — is removed from equity and recognized in the income statement. If the reasons for the write-down should cease to obtain in future periods, the value of the asset is restored up to the amortized cost value it would have if no impairment had been recognized. Financial assets available for sale This category encompasses non-derivative financial assets specifically designated as available for sale or are not classified in any of the previous items. They are recognized at fair value, which is calculated with reference to their market price at the reporting date or using financial valuation techniques and models. Changes in value are recognized in a specific equity item (‘Reserve for assets available for sale’). The reserve is taken to the income statement only when the financial asset is effectively sold or, in cases of a loss of value, when it become evident that the impairment in value already recognized in equity is unrecoverable. Classification as current or non-current depends on the intentions of management and the effective marketabil- ity of the security itself. Assets that are expected to be sold within 12 months are carried under current assets. Should objective evidence of impairment emerge, the value of the asset is reduced to the value obtained by discounting the expected cash flows from the asset; reductions in value previously recognized in equity are reversed to profit or loss. If the reasons for the write-down should cease to obtain, the value of the asset is restored, applicable only to debt financial instruments. 3.11 DERIVATIVES Derivatives are still regarded as assets held for trading and stated at fair value through profit and loss unless they are deemed eligible for hedge accounting and effective in offsetting the risk in respect of underlying assets, liabilities or commitments undertaken by the Group. In particular, the Group uses derivatives as part of its hedging strategies to offset the risk of changes in the fair value of assets or liabilities on its balance sheet or the risk associated with contractual commitments (fair value hedges) and the risk of changes in expected cash flows in contractually defined or highly probable operations (cash flow hedges). For details regarding the methodology for recognizing hedges of the exchange rate risk on long-term contracts, see Note 4.3. The effectiveness of hedges is documented and tested both at the start of the operation and periodically thereafter (at least every time an annual or interim report is published) and measured by comparing changes in the fair value of the hedging instrument against changes in the hedged item (‘dollar offset ratio’). For more complex instruments, the measurement involves statistical analysis based on the variation of the risk. Fair value hedges Changes in the value of derivatives that have been designated and qualify as fair value hedges are recognized in profit or loss, similarly to the treatment of changes in the fair value of the hedged assets or liabilities that are attributable to the risk that has been offset with the hedge. Cash flow hedges Changes in the fair value of derivatives that have been designated and qualify as cash flow hedges are recognized — with reference to the ‘effective’ component of the hedge only — in a specific equity reserve (‘cash flow hedge reserve’), which is subsequently recognized in profit or loss when the underlying transaction affects profit or loss. Changes in fair value attributable to the non-effective component are immediately recognized in profit or loss for the period. If the occurrence of the underlying operation ceases to be highly probable, the relevant portion of the cash flow hedge reserve is immediately recognized in the income statement. If the derivative is sold or ceases to function as an effective hedge against the risk for which it was originated, the relevant portion of the “cash flow hedge reserve” is kept recognized until the underlying contract shows its effect.

F-24 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Determining fair value The fair value of instruments quoted on public markets is determined with reference to the bid price for the instrument in question at the reference date. The fair value of unquoted instruments is determined with financial valuation techniques. Specifically, the fair value of interest rate swaps is measured by discounting the expected cash flows, while the fair value of foreign exchange forwards is determined on the basis of the market exchange rate at the reference date and the rate differentials among the currencies involved. 3.12 CASH AND CASH EQUIVALENTS The item includes cash, deposits with banks or other institutions providing current account services, post office accounts and other cash equivalents, as well as investments maturing in less than three months from the date of acquisition. Cash and cash equivalents are recognized at their fair value. 3.13 SHAREHOLDERS’ EQUITY Share capital Share capital consists of the capital subscribed and paid up by the Group Parent. Costs directly associated with the issue of shares are recognized as a decrease in share capital when they are directly attributable to capital operations, net of the deferred tax effect. Treasury shares Treasury stock is recognized as a decrease in Group shareholders’ equity. Gains or losses realized in the acquisition, sale, issue or cancellation of treasury stock are recognized directly in shareholders’ equity. 3.14 PAYABLES AND OTHER LIABILITIES Payables and other liabilities are initially recognized at fair value net of transaction costs. They are subsequently valued at their amortized cost using the effective interest rate method (see Note 3.21). Payables and other liabilities are defined as current liabilities unless the Group has the contractual right to settle its debts at least 12 months after the date of the annual or interim financial statements. 3.15 DEFERRED TAX ASSETS AND LIABILITIES Deferred tax assets and liabilities are calculated based on temporary differences arising between the carrying amounts in the consolidated financial statements of assets and liabilities and their value for tax purposes. Deferred tax assets and liabilities are calculated by applying the tax rate in force at the time the temporary differences will be reversed. Deferred tax assets are recognized to the extent that it is probable the company will post taxable income at least equal to the temporary differences in the financial periods in which such assets will be reversed. 3.16 EMPLOYEE BENEFITS Post-employment benefit plans Group companies use several types of pension and supplementary benefit plans, which can be classified as follows: • Defined contribution plans in which the company pays fixed amounts to a distinct entity (e.g. a fund) but has no legal or constructive obligation to make further payments if the fund does not have sufficient assets to pay the benefits accrued by employees during their period of employment with the company. The company recognizes the contributions to the plan only when employees rendered their services to the company specifically in exchange for these contributions; • Defined benefit plans in which the company undertakes to provide agreed benefits for current and former employees and incur the actuarial and investment risks associated with the plan. The cost of the plan is therefore not determined by the amount of the contributions payable in the financial period but, rather, is redetermined with reference to demographic and statistical assumptions and wage trends. The methodology used is the projected unit credit method. For the recognition of defined benefit plans, the Group adopts the so-called “equity option”

F-25 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

approach. According to this option the Group recognize a liability for the same amount arising from the actuarial estimation, and recognize actuarial gains and losses in the period in which they occur, directly in equity (in the “Reserve for actuarial gains (losses) to equity”). Other long-term benefits and post-employment benefit plans Group companies grant employees with other benefits (such as seniority bonuses after a given period of service with the company) that, in some cases, continue to be provided after retirement (for example, medical care). These receive the same accounting treatment as defined benefit plans, using the projected unit credit method. However for ‘other long-term benefits’ net actuarial gains and losses are both recognized to Profit and Loss immediately and in full as they occur. Benefits payable for the termination of employment and incentive plans Termination benefits are recognized as liabilities and expenses when the enterprise is demonstrably committed to terminating the employment of an employee or group of employees before the normal retirement date or to providing termination benefits as a result of an offer made in order to encourage voluntary redundancy. The benefits payable to employees for the termination of employment do not bring any future economic benefit to the enterprise and are therefore recognized immediately as expenses. Equity compensation benefits The Group uses stock option and stock grant plans as part of its compensation of senior management. In these cases, the theoretical benefit attributable to the recipients is charged to the income statement in the financial periods for which the plan is operative with a contra-item in an equity reserve. The benefit is quantified by measuring at the assignment date the fair value of the assigned instrument using financial valuation techniques that take account of market conditions and, at the date of each annual report, an updated estimate of the number of instruments expected to be distributed. 3.17 PROVISIONS FOR RISKS AND CHARGES Provisions for risks and charges cover certain or probable losses and charges whose timing or amount was uncertain at the reporting date. The provision is recognized only when a current obligation (legal or constructive) exists as a result of past events and it is probable that an outflow of economic resources will be required to settle the obligation. The amount reflects the best current estimate of the cost of fulfilling the obligation. The interest rate used to determine the present value of the liability reflects current market rates and includes the additional effects relating to the specific risk associated with each liability. Risks for which the emergence of a liability is merely a possibility are reported in the section in the notes on commitments and risks and no provision is recognized. 3.18 LEASING Group entities as lessees in a finance lease At the date on which a lease is first recognized, the lessee records a non-current asset and a financial liability at the lower of the fair value of the asset and the present value of the minimum lease payments at the date of the inception of the lease, using the implicit interest rate in the lease or the incremental borrowing rate. Subsequently, an amount equal to the depreciation expense for the asset and the finance charge separated from principal component of the lease payment made in the period is recognized in the income statement. Group entities as lessors in a finance lease At the date on which a lease is first recognized, the value of the leased asset is eliminated from the balance sheet and a receivable equal to the net investment in the lease is recognized. The net investment is the sum of the minimum payments plus the residual unguaranteed value discounted at the interest rate implicit in the lease contract. Subsequently, finance income is recognized in the income statement for the duration of the contract in an amount providing a constant periodic rate of return on the lessor’s net investment. The unsecured residual value is reviewed periodically for possible impairment.

F-26 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Operating leases Receipts and payments in respect of contracts qualifying as operating leases are recognized in the income statement over the duration of the contract on a straight-line basis. 3.19 REVENUE Revenues generated by an operation are recognized at the fair value of the amount received and receivable, inclusive of volume discounts and reductions. Revenues also include changes in work in progress, the accounting policies for which were described in Note 3.9. Revenues generated from the sale of goods are recognized when the enterprise has transferred to the buyer substantially all of the significant risks and rewards of ownership of the goods, which, in many cases, will coincide with the transfer of title or possession to the buyer; and when the value of the revenues can be reliably determined. Revenues from services are recognized on a percentage-of-completion method when they can be reliably estimated. 3.20 GOVERNMENT GRANTS Once formal authorization for their assignment has been issued, grants are recognized on an accruals basis in direct correlation with the costs incurred. Specifically, set-up grants are taken to the income statement in direct relation to the depreciation of the relevant goods or projects, and are recognized as a direct reduction in the value of the depreciation expense. In the balance sheet, grants are recognized as a direct reduction of the related assets, for the amount not yet recognized to income statement. 3.21 FINANCE INCOME AND COSTS Interest is recognized on an accruals basis using the effective interest rate method, i.e. the interest rate that results in the financial equivalence of all inflows and outflows (including any premiums, discounts, commissions etc) that make up a given operation. Finance costs are never capitalized. 3.22 DIVIDENDS Dividends are recognized as soon as shareholders obtain the right to receive payment, which is normally when the shareholders’ meeting approves the distribution of dividends. Dividends distributed to Finmeccanica shareholders are recognized as liabilities for the period in which their distribution is approved by the shareholders’ meeting. 3.23 EMISSION RIGHTS In expectation of specific rules governing emission rights, the Group recognizes only income and expense items and assets and liabilities arising from the sale and/or purchase of emission rights to cover differences, if any, among the shares assigned and the effective emissions produced. 3.24 TRANSACTIONS WITH RELATED PARTIES Transactions with related parties are carried out at arm’s length. 3.25 COSTS Costs are recorded in compliance with the competence principle.

F-27 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

3.26 NEW IFRS’S AND IFRIC INTERPRETATIONS At the date of preparation of this report, the IASB and the International Financial Reporting Interpretations Committee (IFRIC) had published new standards and interpretations that are not compulsory or that have not been endorsed by the European Commission. The Group has considered their effects and reported their potential impact on its balance sheet and income statement, as follows: IFRS — IFRIC interpretation Effects for the Group IAS 39 Amendments Financial instruments Not significant IFRS 8 Operating segments Application of the standard results in a different disclosure in the financial statements. The Group expects to apply these changes from January 1, 2009. IAS 23 Borrowing costs The Group does not currently capitalize borrowing costs. The new standard, which will be applied starting from January 1, 2009, requires the capitalization of borrowing costs for certain categories of assets IAS 1 Presentation of financial statements Application would only result in a different disclosure in the financial statements. The Group expects to apply these changes from January 1, 2009 IFRS 2 Amendment Share-based payments Not significant. The Group expects to apply these changes from January 1, 2009 IAS 27 Consolidated and separate financial statements As of today the Group adopts the Parent company approach, which is no longer envisaged in the Amendment to IAS 27. The Group expects to apply these changes from January 1, 2010. IFRS 3 Business combinations The new version of IFRS 3 envisages the recognition in the income statement of transaction costs; the elimination of the obligation to value each asset and liability of the subsidiary at fair value in subsequent step acquisitions, and the recognition at the acquisition date of liabilities for conditional payments. The Group expects to apply these changes from January 1, 2010. IFRIC 12 Service concession agreements The Group expects to apply these changes after the ratification by the European Union. The Group is evaluating the possible impact arising from the application. IFRIC 13 Customer loyalty programs Not significant IFRIC 14 The limit on a defined benefit asset, minimum The Group expects to apply these changes from funding requirements and their interaction January 1, 2009. IFRIC 15 Agreements for the construction of real estate The Group expects to apply these changes after the ratification by the European Union. The Group is evaluating the possible impact arising from the application IFRIC 16 Hedges on a net investment in a foreign operation The Group expects to apply these changes after the ratification by the European Union. IFRIC 17 Distributions of non-cash assets to owners The Group expects to apply these changes after the ratification by the European Union. IFRIC 18 Transfers of assets from customers The Group expects to apply these changes after the ratification by the European Union.

4 CRITICAL ACCOUNTING ESTIMATES 4.1 NON-RECURRING COSTS The Group separately discloses as intangible assets the costs incurred in designing, prototyping and upgrading to the technical and functional specifications of clearly identified potential clients, if they are financed under Law 808/1985 governing State aids to support the competitiveness of entities operating in the Aeronautics and Defense segments. These costs are shown excluding the benefits collected or to be collected under Law 808/1985 for programs qualified as functional to National Security and similar. The aid under Law 808/1985 is deducted from capitalized costs, and the royalties to be given to the grantor are recognized as the requirements are met (sale of products embedding the technology for which the Law permits aids).

F-28 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

For other programs, non-recurring costs are recognized as ‘non-recurring costs’, and the funds received are recognized as ‘other liabilities’ at their nominal value, making a distinction between the current portion and the non-current portion, based on the date of repayment. In both cases, non-recurring costs are suspended between intangible assets and are amortized on the units-of-production method. These costs are tested for impairment at least once a year until development is complete; after that, as soon as contract prospects change, when expected orders are no longer made or delayed. The impairment test is conducted on assumed sales plans, which in general are made for a period greater than 5 years, in light of the particularly long life of products under development. In the case of programs that benefit from the provisions of Law 808/1985 and that are classified as functional to national security, the portion of non-recurring costs capitalized which have not been assessed yet by the issuer is shown separately, pending the fulfillment of the legal requirements for the recognition of the amount receivable from the Ministry. The amount shown in other non-current assets is calculated based on an estimate made by management that reflects the reasonable probability that funds are received and the effects of time value in the case of deferment over more than one year of the granting of funds.

4.2 FINANCING FOR EEIG ATR AIRCRAFT In order to enhance its competitive position, in certain cases EEIG ATR facilitates access to financing by its customers by providing specific guarantees to third parties (an approach taken by its direct competitors), an activity that in the past it also conducted through special purpose entities. Where, due to the effect of the guarantees provided or the content of other contractual provisions, it is felt that substantially all risks and benefits attaching to aircraft sale contracts have not transferred to customers, the sale is not recognized as such in the accounts. Rather, the entire operation is recognized as a lease, postponing the recognition of profits until such time as the risks no longer obtain by way of recognition under deferred income and carrying the aircraft among the Group’s assets, undergoing normal depreciation. If, however, the operation is structured in a manner in which substantially all risks and benefits are transferred to the customer, it is booked as a loan or a finance lease, with the sale being recognized upon delivery and the financial component being recognized under finance income on an accruals basis. If contracts envisage a buy- back clause or a residual value guarantee, the operation is recognized as a sale only if the present value of the guarantees can be considered immaterial with respect to the overall value of the transaction; otherwise, the aircraft is carried under the Group’s assets and depreciated. All likely risks associated with operations carried out by EEIG ATR are measured on the basis of a prudent valuation conducted by management and are either deducted directly from the carrying value of the asset or are recognized under provisions for risks and charges.

4.3 HEDGING LONG-TERM CONTRACTS AGAINST FOREIGN EXCHANGE RISK In order to hedge exposure to changes in flows of receipts and payments associated with long-term construction contracts denominated in currencies other than the functional currency, the Group enters into specific hedges for the expected individual cash flows in respect of the contracts. The hedges are entered into at the moment the commercial contracts are finalized, except where the award of the contracts is felt to be highly likely as a result of existing framework contracts. Exchange-rate risk is normally hedged with plain vanilla instruments (forward contracts); in some cases, however, in order to protect the Group against the persistent adverse trend in the US dollar, we have entered into more highly structured operations that, while substantively hedging the positions, do not qualify for hedge accounting under IAS 39. In these cases, as in all cases where hedges prove to be ineffective, changes in the fair value of such instruments are taken immediately to the income statement as financial items, while the underlying is valued as if it were exposed to exchange rate variations. The effects of this recognition policy are reported in Note 38. Hedges in the former case are reported as cash flow hedges, considering as ineffective the part relating to the premium or discount in the case of forwards or the time value in the case of options, which is recognized under financial items.

4.4 RECOGNITION OF THE EQUITY INVESTMENT IN STMICROELECTRONICS NV (STM) The equity investment indirectly held in STM was designated as ‘available for sale’. Accordingly, the carrying value is adjusted at each balance-sheet or interim balance-sheet date to market value (bid price),

F-29 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 recognizing the changes in fair value in a specific equity reserve (reserve for assets available for sale), which is reversed to profit or loss only in case of sale or impairment.

4.5 PROVISIONS FOR RISKS AND ESTIMATES OF FINAL COSTS OF LONG-TERM CONTRACTS The Group operates in sectors and with contractual arrangements that are especially complex. They are recognized on a percentage-of-completion basis. Margins recognized in the income statement are a function of both the state of progress on contracts and the margins that are expected to be recognized for the completed contract. Accordingly, correct recognition of work in progress and margins on contracts that have not yet been completed requires management to make a careful estimate of the final costs and expected increases as well as delays, extra costs and penalties that could reduce the expected margin. In order to enhance support for this activity, the Group has adopted contract management and risk analysis tools designed to identify, monitor and quantify the risks associated with such contracts. The amounts posted in the financial statements represent management’s best estimate at the reporting date. In addition, the Group’s operations regard sectors and markets where many disputes are settled only after a considerable period of time, especially in cases where the customer is a government entity, making it necessary for management to estimate the outcome of such disputes. The main potential loss situations classified as “probable” or “possible” (no provision is recognized for the latter) are discussed below.

4.6 LIABILITIES FROM DEFINED BENEFIT PENSION PLANS The Group is sponsor to two United Kingdom defined-benefit pension plans. It has the obligation to ensure a given level of benefits to the plan participants and carries the risk that the plan assets are not adequate to cover the benefits promised. In case these plans are in a deficit position, the trustee responsible for the management requests the Group to fund the plan. The deficit resulting from the most updated actuarial valuations made by independent experts is recognized as a liability: however, these valuations stem from actuarial, demographic, statistical and financial assumptions that are highly volatile and hardly foreseeable. Through the JV MBDA, which is consolidated proportionally at 25%, the Group also participates in defined-benefit pension plans in the United Kingdom where the main employer is BAE Systems Plc. As envisaged by IAS 19, the Group recognizes the deficit amount that is estimated to be related to MBDA, based on information provided by BAE

4.7 IMPAIRMENT OF ASSETS Group assets are tested for impairment at least annually if their lives are indefinite, or more often if there are indications of impairment. Similarly, impairment tests are conducted on all the assets showing signs of impairment, even if the amortization already commenced. Impairment tests are generally conducted using the discounted cash flow method: however, this method is highly sensitive to the assumptions contained in the estimate of future cash flows and interest rates applied. For these valuations, the Group uses plans that have been approved by corporate bodies and financial parameters that are in line with those resulting from the current performance of reference markets.

5 EFFECTS OF CHANGES IN ACCOUNTING POLICIES ADOPTED Effects of the reform of severance pay legislation (The 2007 Finance Law and enabling acts) With regard to the severance pay (“TFR”), that was recognized as a defined benefit plan as of December 31, 2006, Law no. 296 of December 27, 2006 (‘Finance Law 2007’) and subsequent Decrees and Regulations issued in 2007 introduced, as part of the reform of the social security system, significant changes as to where to allocate the severance pay provision. Specifically, starting from January 1, 2007, the employee may choose to put the new accruals to the severance pay provision in supplementary pension schemes of his choice, or to keep them at the Company (for

F-30 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 companies with less than 50 employees), or to transfer them to the INPS (for companies with more than 50 employees). Based on these regulations, and on the generally accepted interpretations, the Group believed that: • For the severance pays accrued as of December 31, 2006, the provision is a defined benefit plan to be measured on actuarial rules but without including future pay increases. The resulting difference was treated as a curtailment in accordance with the provisions of Section 109 of IAS 19. The estimated effects of this curtailment are described in Note 26; • For the severance pays accruing after December 31, 2006, the nature of supplementary pension funds and of funds allocated to the INPS Treasury Fund is that of a defined contribution plan, without including actuarial estimates in the determination of the portion of cost attributable to the period.

6 SIGNIFICANT NON-RECURRING EVENTS OR TRANSACTIONS 2008 Acquisition of DRS and relevant financing transactions On October 22, 2008 Finmeccanica carried out the acquisition of the DRS Group for an overall amount of USD 3,600 million, hedged through derivatives starting from May at an average exchange rate of 1.54 (against an exchange rate on October 28, 2008 of 1.28). Therefore, Group consideration was Euro 2,342 million (plus transaction costs of Euro 43 million), in addition to financial payables, mainly bonds, of DRS of Euro 1,250 million, which mostly provided for put clauses in the case of a change in the shareholder to be exercised between October and January. The transaction was financed as follows: In millions In millions of Euro Notes of Euro Notes Equity value ...... 2,342(*) 12 Sale of STM 260 6 Transaction costs ...... 43 12 Share capital increase 1,226(***) 23 DRS financial payables — Transaction costs net...... 1,250(**) 12 (24) 23 — of which: reimbursed in Residual bridge loan October 2008 ...... 287(**) 1,830(****) 24 — of which: reimbursed in EMTN bond issue January 2009 ...... 934(**) 448(*****) 24 — of which: outstanding in January 2009 ...... 29(**) Enterprise value ...... 3,635 3,740

(*) At the hedge exchange rate (**) At the USD/Euro exchange rate of October 22, 2008 (***) Including transaction costs (****) The original amount of the bridge loan (nominal Euro 3,040 million) was reduced by Euro 1,205 million as a result of the share capital increase. Additional Euro 150 million was used in January 2009 (*****) Euro 750 million, less Euro 297 million of transaction costs intended to refinance the Finmeccanica bonds maturing in December 2008

Sale of STM shares On February 26, 2008, Finmeccanica, Cassa Depositi e Prestiti and FT1CI (a company owned by Areva), as shareholders of STMicroelectronics Holding NV (STH), the Dutch company which owns 27.54% of the share capital of STM, signed an agreement amending the existing shareholders’ agreement concerning the joint Italian-French governance of STH. Under the agreement, the Italian and French parties agreed to rebalance their respective stakes in STM, indirectly held through STH. Specifically, Finmeccanica, as shareholder of STH, agreed to sell to FT1CI the equivalent of 26,034,141 shares of STM at the price of

F-31 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Euro 10 per share, plus an earn-out equal to 40% of any positive price differential of STM stock between the base price of Euro 10 and the average market price calculated over a three-month period starting nine months from the date of signing of the agreement, up to Euro 4 per share, with these effects: In millions of Euro Sale proceeds ...... 260 Capital gain realized...... 56 Tax effect...... (2) The interest indirectly held in STM after the partial sale is equal to 3.7% of the share capital.

Settlement of the Enea dispute On December 12, 2008 the settlement agreement between Finmeccanica SpA and ENEA was signed in relation with the settlement of the dispute initiated in 1995 between ENEA and Finmeccanica concerning the costs borne by it as a result of the settlement under Law 321/1988 of the contract for the construction of the nuclear power plant named PEC, signed in previous years between ENEA and Finmeccanica, with these effects: Balance Sheet Income Statement Cash Flow Statement (In millions of Euro) Receivable recognized in financial statements 2007 ...... 340 Write-back after settlement ...... 31 31 Proceeds ...... (307) 307 Receivable recognized in financial statements 2008 ...... 64 Stamp tax ...... (11) (11) Tax effect ...... (6) Effect on the 2008 result ...... 14 296

Financing under Law 808/1985 In May 2008 the reimbursements, including finance costs, expired in 2007 were paid in line with the provisions made in the Group financial statements. The Commission, through their decision, retained the right to submit to Italy additional requests for information on two helicopter projects (for which the Group feels it has proven full compatibility with Community regulations, as these are national security programs) before a final decision on the matter is taken. The Commission and the Italian Government are currently exchanging information.

2007 • On March 30, 2007 Finmeccanica completed the acquisition of 25% of Selex Sensors and Airborne Systems S.p.A. from BAE Systems with a cash-out of Euro 408 million. Such amount was already included in net debt at the end of 2006. As a result, the transaction had no significant effects on the financial position; • On November 29, 2007 Law Decree no. 159 of October 1, 2007 was transposed into Law no. 222/2007. Article 32 identifies the financial resources necessary to let ENEA (Ente per le Nuove tecnologie e l’Ambiente) pay — also by way of settlement — the amounts due to Finmeccanica for the closing of the dispute started in 1995 between ENEA and Finmeccanica regarding the expenses borne by Finmeccanica following the termination under law 321/1988 of the contract signed by ENEA and Finmeccanica in prior years for the construction of a nuclear plant named PEC. By partial ruling, neither final nor provisionally enforceable, issued in 2003, which reformed the ruling of the court of first instance, the Court of Appeal of Rome had sanctioned

F-32 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Finmeccanica’s right to be paid in respect of all the items deriving from the termination of the contract. ENEA filed an appeal with the Supreme Court against this ruling. In the meantime, at the request of the same Court of Appeal, the parties decided to see whether a settlement was viable or not. In this way, also under Article 32 of Law Decree 159/2007, the Supreme Court accepted the joint request of Finmeccanica and ENEA for a stay of ruling. The parties then confirmed their willingness to settle the matter and started to jointly review the individual items claimed by Finmeccanica. The review identified a range of amounts for a possible settlement, against a total claim of Euro 670 million as of December 31, 2007. Based on these considerations, although there is no formal settlement agreement, the Group determined to write up the amount of the receivable from ENEA (in the financial statements as of and for the year ended December 31, 2006 the net amount recorded was Euro 53 million), and to report an additional amount in order to reach the minimum range identified, in accordance with accounting standards and with a view to prudence and reasonable reliability, even if the reasons for the claim are considered to be fully grounded. The formal closing of the settlement agreement might involve the recognition of additional income. However, this is not recognized yet in the Group financial statements as long as additional elements of certainty are collected. The effects of this on the 2007 financial statements have been as follows: Balance Sheet Income Statement (In millions of Euro) Receivable recognized in the 2006 financial statements ...... 53 — Write-back ...... 287 287 Estimated legal fees and third party share ..... — (39) Receivable recognized in the 2007 financial statements ...... 340 — Tax effect (deferred in the amount of Euro 82 million) ...... (80) Effect on the 2007 result ...... 168

• In December 2007 the Ministry for the Economic Development, the Competition Directorate- General of the European Commission and the Group have decided the methods for determining the repayment plans and the relevant financial expense on programs that are being investigated in connection with the infringement procedure against the Italian Government. The procedure was notified to the Ministry of Foreign Affairs on October 1, 2003 pursuant to Article 11 of the EC Treaty, with respect to the non-bearing loans granted by the Italian Government to Group companies under Law 808/85 for R&D programs, which, according to the Commission, are State aids. The preliminary assessment of the Commission was that these subsidies were not notified to the Commission at the time, even though they were each in excess of the ECU 20 million threshold (1 ECU being equal to 1 Euro) until 1996 and ECU 25 million after that year. On January 22, 2004, the decision to open proceedings was published in the EU Official Journal. With its letter of June 22, 2005 C(2005)1813, received by the Permanent Representa- tion of Italy in the EU on June 24, the European Commission informed the Italian Government of its decision to extend the scope of the current proceedings to additional projects. The decision was later published on the EU Official Journal. Given this situation, even if the formal progress of the procedure has not been completed yet, the Group posted these effects in the financial statements as of and for the year ended December 31, 2007: • the recognition of interests amounting to Euro 105 million on programs for which the additional benefit of not paying interest was considered by the Commission as an

F-33 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

additional State aid to be repaid, even though Law 808/85 did not provide, and still does not provide, for the payment of any interest; • the reclassification of payables under Law 808/85 for a total amount of Euro 389 million (of which Euro 284 million was recognized in prior years as a liability, plus the above said financial expense reported in 2007) under other current financial payables, given the definition of a repayment plan which does not depend any longer by the actual achievement of estimated sales; • the review of costs capitalized in respect of these programs, to take into account that the risk-sharing mechanisms of Law 808/85 no longer applies, which led to the impairment of assets amounting of Euro 125 million. During a meeting held on March 11, 2008 the European Commission decided, under EC Treaty state aid rules, to require Italy to ensure that loans granted under such projects and the related interests are fully reimbursed within two months of the date the decision is notified. The Commission’s investigation will continue for two helicopter projects. The Group believes that the full compatibility of these projects with the EU laws has already been proved, since they are both of extreme importance for national security.

2006 The following events took place in the year 2006: • The finalization of a project for listing Ansaldo STS S.p.A. on the Italian Stock Exchange. After this, the Group sold 60% of the stock held, maintaining a 40% controlling stake; and • The sale, together with the Carlyle investment fund holding the majority of the share capital, of the interest in Avio, and the simultaneous buy-back from the British Cinven investment funds, through Aeromeccanica S.A., of a 15% stake in the Avio group for about Euro 130 million. The effects of these transactions were as follows: IPO Ansaldo STS Sale of Avio (In millions of Euro) Revenue...... 458 302 Gain ...... 417 291 Tax effect ...... (12) (11)

F-34 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

7. SEGMENT INFORMATION Primary basis The Group operates in a variety of industry segments: Helicopters, Defense Electronics and Security, Aeronautics, Space, Defense Systems, Energy, Transportation and Other Activities. The results for each segment at December 31, 2008, as compared with those of the same period of 2007 and 2006, are as follows: Year ended December 31, 2008 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Eliminations Total (In millions of Euro) Revenue ...... 3,035 4,362 2,530 994 1,116 1,333 1,759 425 (517) 15,037 of which from other segments . . 92 755 954 27 171 3 140 80 (517) 1,705 Result before tax and finance income and costs ...... 344 357 246 62 116 122 123 (160) — 1,210 Finance income and costs — net ...... — — — — — — — — — (238) Share of result of associates . . . — — 6 1 1 — — 8 — 16 Tax expense ...... — — — — — — — — — (367) Profit (loss) from discontinued operations ...... — — — — — — — — — — Profit for the period ...... — — — — — — — — — 621 Group share of net result . . . . . — — — — — — — — — 571 Minority share ...... — — — — — — — — — 50 Investments ...... 193 199 298 31 56 65 33 14 — 889

Year ended December 31, 2007 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Eliminations Total (In millions of Euro) Revenue ...... 2,980 3,826 2,306 853 1,130 1,049 1,356 345 (416) 13,429 of which from other segments ...... 51 629 896 34 168 — 86 65 (416) 1,513 Result before tax and finance income and costs ...... 340 382 150 48 116 93 (129) 84 — 1,084 Finance income and costs — net ...... — — — — — — — — — (253) Share of result of associates . . — 3 8 — (2) — — 7 — 16 Tax expense ...... — — — — — — — — — (326) Profit (loss) from discontinued operations ...... — — — — — — — — — Profit for the period ...... — — — — — — — — — 521 Group share of net result . . . . — — — — — — — — — 484 Minority share ...... — — — — — — — — — 37 Investments ...... 127 206 523 53 48 20 25 26 — 1,028

F-35 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Year ended December 31, 2006 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Eliminations Total (In millions of Euro) Revenue ...... 2,727 3,747 1,908 764 1,127 978 1,368 229 (376) 12,472 of which from other segments ...... 30 572 842 6 166 2 18 33 (376) 1,293 Result before tax and finance income and costs ...... 293 314 209 46 92 65 17 (128) — 908 Finance income and costs net...... — — — — — — — — — 370 Share of result of associates . . 1 — (4) — (2) — — — — (5) Tax expense ...... — — — — — — — — — (243) Profit (loss) from discontinued operations ...... — — — — — — — — — (9) Profit for the period ...... — — — — — — — — — 1,021 Group share of net result . . . . — — — — — — — — — 989 Minority share ...... — — — — — — — — — 32 Investments ...... 89 150 554 16 51 15 22 17 — 914 The assets and liabilities attributable to the segments as of December 31, 2008, 2007 and 2006 are as follows: As of December 31, 2008 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Eliminations Total (In millions of Euro) Assets .... 5,428 10,923 5,372 1,268 2,503 1,595 2,035 5,575 (4,777) 29,922 Liabilities . . 3,315 6,554 5,007 756 1,780 1,485 1,783 8,030 (4,918) 23,792 As of December 31, 2007 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Eliminations Total (In millions of Euro) Assets .... 5,394 6,827 5,129 1,049 2,444 1,269 1,866 4,360 (4,290) 24,048 Liabilities . . 3,151 3,985 4,821 555 1,743 1,196 1,650 5,950 (4,435) 18,616 As of December 31, 2006 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Eliminations Total (In millions of Euro) Assets .... 5,143 6,404 4,561 1,092 2,289 1,110 1,838 4,303 (3,447) 23,293 Liabilities . . 3,085 3,754 4,287 633 1,666 1,062 1,734 5,575 (3,796) 18,000

F-36 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Secondary basis Group revenue can also be broken down geographically as follows (based on the customer’s home country): Year ended December 31, 2008 2007 2006 (In millions of Euro) Europe ...... 10,345 10,139 9,241 North America ...... 1,809 1,468 1,408 Other ...... 2,883 1,822 1,823 Total revenue ...... 15,037 13,429 12,472

Assets are geographically distributed as follows: As of December 31, 2008 2007 2006 (In millions of Euro) Europe ...... 24,712 23,511 22,841 North America ...... 5,051 468 351 Other ...... 159 69 101 Total assets ...... 29,922 24,048 23,293

Capital expenditure is distributed as follows (based on the location in which it is made): Year ended December 31, 2008 2007 2006 (In millions of Euro) Europe ...... 815 983 893 North America...... 69 34 18 Other...... 5 11 3 Total capital expenditure ...... 889 1,028 914

F-37 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

8. INTANGIBLE ASSETS Acquired Non- Concession, through Development recurring licenses and business Goodwill costs costs trademarks combinations Other Total (In millions of Euro) January 1, 2006 Cost ...... 3,516 84 — 187 — 374 4,161 Depreciation, amortization and impairment ...... (194) (60) — (74) — (237) (565) Carrying amount...... 3,322 24 — 113 — 137 3,596 Reclassifications(*) ...... (358) 174 596 — 578 — 990 Investments...... — 118 156 21 — 53 348 Amortization...... — (34) (59) (19) (24) (36) (172) Increases for business combinations . . . 156 2 — — 29 — 187 Other changes ...... 358 — — 1 7 2 368 December 31, 2006 ...... 3,478 284 693 116 590 156 5,317 broken down as follows: Cost ...... 3,672 385 826 209 614 421 6,127 Amortization and impairment ...... (194) (101) (133) (93) (24) (265) (810) Carrying amount...... 3,478 284 693 116 590 156 5,317 Investments(**)...... — 148 140 10 — 100 398 Sales ...... (2) — — (2) — (2) (6) Amortization...... — (65) (58) (18) (26) (43) (210) Impairment ...... — (32) (91) — — (21) (144) Increases for business combinations . . . 58 — — 1 8 — 67 Other changes ...... (100) (3) — (14) (33) (6) (156) December 31, 2007 ...... 3,434 332 684 93 539 184 5,266 broken down as follows: Cost ...... 3,606 528 964 168 586 500 6,352 Amortization and impairment ...... (172) (196) (280) (75) (47) (316) (1,086) Carrying amount...... 3,434 332 684 93 539 184 5,266 Investments(***)...... — 212 35 47 — 93 387 Sales ...... — — — — — — — Amortization...... — (71) (59) (26) (34) (46) (236) Impairment ...... (40) (13) (1) — — (1) (55) Increases for business combinations . . . 2,979 — — — 638 11 3,628 Other changes ...... (583) 14 (26) 7 (119) (46) (753) December 31, 2008 ...... 5,790 474 633 121 1,024 195 8,237 broken down as follows: Cost ...... 5,996 742 964 222 1,085 538 9,547 Amortization and impairment ...... (206) (268) (331) (101) (61) (343) (1,310) Carrying amount...... 5,790 474 633 121 1,024 195 8,237

(*) of which capitalization of internal construction costs.... — 118 441 2 — 17 578 (**) of which capitalization of internal construction costs.... — 144 103 — — 11 258 (***) of which capitalization of internal construction costs.... 1 171 (3) (1) — 7 175

F-38 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Goodwill in 2008 grew by Euro 2,356 million as a result of: • business aggregations (Note 12), particularly the acquisition of DRS; • the recognition of impairment in the amount of Euro 40 million in the communications segment of the Defense Electronics and Security division; • translation differences on the goodwill of assets denominated in British pound sterling and U.S. dollars (included in the flow “other changes”). Goodwill in 2007 fell by Euro 44 million compared to 2006. In particular, increases for business combinations (Euro 58 million) relate to: • The acquisition in November of 28.2% of the shares in Vega Group Plc, prior to the launch in December of the Public Offer on the remaining share capital, which led to the recognition of goodwill of Euro 24 million; • The recognition of additional goodwill deriving from the actual exercise of the call option over 25% of the Selex Sensors and Airborne Systems group, previously held by BAE Systems (Euro 22 million); • The acquisition of Bayern Chemie from JV MBDA (Euro 1 million); • The operation to purchase shares held by minority shareholders in Datamat S.p.A. (Euro 7 million) and Ansaldo STS S.p.A. (Euro 4 million). As a result of these increases, the net value of goodwill fell due to the translation differences on the goodwill of assets denominated in British pounds (included in the flow “other changes”). Goodwill in 2006 rose by Euro 156 million compared to 2005, due to: • The recognition of the relevant goodwill deriving from the exercise of the put and call options over 25% of the Selex Sensors and Airborne Systems Group (Euro 326 million); • The operation to purchase shares held by minority shareholders in Datamat S.p.A. (Euro 64 million), Tecnosis S.p.A. (Euro 2 million) and GAF AG (Euro 1 million); • The acquisition by the MBDA joint venture of the remaining 81.25% of the LFK Group (Euro 43 million); • The acquisition of 100% of Thomassen Turbine Systems B.V. (Euro 4 million) and 55% of Energy Service Group Ltd (Euro 1 million) in the Energy segment, and the reclassification of the share of goodwill in this company relating to the share previously held (Euro 2 million); • The establishing of the price adjustment provided for in the articles of incorporation of the joint venture in the Space segment (Euro 41 million); • The completion of the purchase price allocation process for the operations, as described in Note 12, which led to a decrease in goodwill of Euro 360 million and recognition of other intangible assets (Euro 578 million) and deferred tax liabilities (Euro 218 million), as described in Note 40; and • Exchange differences amounting to Euro 31 million, entirely due to assets held in the United Kingdom. The recognized amount of goodwill is allocated to the individual cash-generating units (CGUs) concerned, which generally coincide with the group’s individual legal entities as per Group practice.

F-39 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

A summary of goodwill by segment is as follows: As of December 31, 2008 2007 2006 (In millions of Euro) Helicopters ...... 1,147 1,289 1,314 Defense Electronics and Security...... 3,831 1,338 1,368 Aeronautics ...... 60 60 60 Space ...... 339 328 315 Defense Systems...... 364 370 376 Energy ...... 7 7 7 Transportation...... 42 42 38 Total goodwill ...... 5,790 3,434 3,478

Goodwill is subject to impairment tests to determine any losses in value. This is done by individual CGU by comparing the carrying amount with the greater of the value in use of the CGU and amount recoverable by sale. In particular, the value in use is measured by discounting the cash flows of the five-year plans approved by management and projected beyond the explicit time horizon covered by the plan using growth rates of no greater than those forecast for the market in which the given CGU operates. For the impairment tests conducted in 2008, 2007 and 2006 the growth rate used was 1.5%-2%, 2%, and 2% respectively, and the interest rates applied are between 8.5% — 9.5% as of December 31, 2008 and 9.0% — 9.8% as of December 31, 2007 and 2006. For the year ended December 31, 2008 assuming that the growth rate across all the CGUs falls by 50 basis points, no impairment would be recognized on any CGU other than that to which the aforementioned impairment of Euro 40 million applies. An analogous result would be reached if the interest rate used to discount cash flows across all the CGUs were to rise by 50 basis points. Development costs and non-recurring costs in 2008 increased due to the capitalizations for the period (Euro 212 million and Euro 35 million, respectively), mainly due to Aeronautics (Euro 71 million) and Defense Electronics and Security (Euro 67 million) programs, which have been partly offset by amortization and impairment (Euro 144 million). As regards programs that benefit from the provisions of Law 808 and are classified as functional to national security, the portion of capitalized non-recurring costs whose fairness must be assessed yet by the grantor is separately disclosed within other non-current assets (Note 15). Development costs and non-recurring costs in 2007 increased due to the capitalizations for the period (Euro 148 million and Euro 140 million respectively), mainly due to Aeronautics (Euro 172 million) and Defense Electronics and Security (Euro 77 million) programs, which have been partly offset by the impairment (Euro 144 million, which includes the impairment amounting to Euro 87 million due to the decision taken by the European Commission following the infringement, as reported in Note 6). Development costs and non-recurring costs in 2006 (Euro 977 million for the year ended December 31, 2006) increased due to the reclassification (Euro 174 million and Euro 596 million, respectively) of costs previously classified by the Group among inventories (Note 16). The highest values related to Aeronautics (Euro 526 million) and Helicopters (Euro 164 million) programs and the Defense Electronics and Security segment (Euro 192 million). Concessions, licenses and trademarks as of December 31, 2008 include Euro 94 million (Euro 71 million as of December 31, 2007 and Euro 77 million as of December 31, 2006) for the production and marketing rights for the AW139 helicopter acquired by Bell Helicopter. In 2008, the value of these rights rose by Euro 33 million. The balancing item for this investment is found among other non-current liabilities.

F-40 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Acquired through business combination which includes intangible assets acquired in the course of corporate aggregation operations increased as a result of the fair value allocated to the intangible assets of DRS (Note 12) and includes the following items: As of December 31, 2008 2007 2006 (In millions of Euro) Backlog and commercial positioning ...... 875 359 403 Know-how ...... 88 118 128 Trademarks ...... 45 46 46 Licences ...... 16 16 13 Total...... 1,024 539 590

F-41 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

9. PROPERTY, PLANT AND EQUIPMENT Land and Plant and buildings machinery Equipment Other Total (In millions of Euro) January 1, 2006 Cost ...... 1,410 1,492 851 1,225 4,978 Depreciation and impairment ...... (365) (1,020) (537) (550) (2,472) Carrying amount ...... 1,045 472 314 675 2,506 Investments(*) ...... 56 87 73 350 566 Sales ...... (36) (4) (1) (19) (60) Depreciation ...... (45) (112) (71) (82) (310) Increases for business combinations ...... 5 1 — 5 11 Other changes ...... (6) 9 (1) (55) (53) December 31, 2006 ...... 1,019 453 314 874 2,660 broken down as follows: Cost ...... 1,426 1,549 897 1,466 5,338 Depreciation and impairment ...... (407) (1,096) (583) (592) (2,678) Carrying amount ...... 1,019 453 314 874 2,660 Investments(**) ...... 28 171 343 88 630 Sales ...... (17) (2) (1) (25) (45) Depreciation ...... (44) (110) (72) (67) (293) Impairment ...... — — (25) — (25) Increases for business combinations ...... 3 — — 4 7 Other changes ...... (2) (34) (20) (23) (79) December 31, 2007 ...... 987 478 539 851 2,855 broken down as follows: Cost ...... 1,430 1,619 1,200 1,491 5,740 Depreciation and impairment ...... (443) (1,141) (661) (640) (2,885) Carrying amount ...... 987 478 539 851 2,855 Investments(***) ...... 30 69 130 273 502 Sales ...... (8) (1) (2) (12) (23) Depreciation ...... (46) (117) (79) (62) (304) Impairment ...... — — — — — Increases for business combinations ...... 74 10 66 57 207 Other changes ...... 96 192 (31) (395) (138) December 31, 2008 ...... 1,133 631 623 712 3,099 broken down as follows: Cost ...... 1,603 1,768 1,288 1,388 6,047 Depreciation and impairment ...... (470) (1,137) (665) (676) (2,948) Carrying amount ...... 1,133 631 623 712 3,099

(*) of which work performed by the Group and capitalized ...... — 2 90 16 108 (**) of which work performed by the Group and capitalized ...... — 5 171 26 202 (***) of which work performed by the Group and capitalized...... — 6 81 12 99 Property, plant and equipment includes Euro 40 million as of December 31, 2008 (Euro 28 million as of December 31, 2007 and Euro 31 million as of December 31, 2006) of assets held under contracts that can

F-42 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 be qualified as finance leases, of which Euro 29 million as of December 31, 2008 (Euro 24 million as of December 31, 2007 and Euro 25 million as of December 31, 2006) relates to land and buildings and Euro 11 million as of December 31, 2008 (Euro 4 million as of December 31, 2007 and Euro 6 million as of December 31, 2006) to plant and machinery, equipment and other assets. Other assets include a total of Euro 8 million as of December 31, 2008, Euro 9 million as of December 31, 2007 and Euro 16 million as of December 31, 2006 for helicopters owned by the AgustaWestland group and a total of Euro 148 million as of December 31, 2008, Euro 169 million as of December 31, 2007 and Euro 214 million as of December 31, 2006 for aircraft owned by the EEIG ATR group, as well as for aircraft that did not meet the requirements, in terms of the substantial transfer of the risks of ownership (Note 4.2), to recognize the sale, despite the fact that sales contracts have been concluded with external customers. The item also includes the value of assets under construction totaling Euro 393 million as of December 31, 2008, Euro 529 million as of December 31, 2007 and Euro 507 million as of December 31, 2006. The most significant investments in 2008 amounted to Euro 198 million for Aeronautics (mainly for the start-up of the B787 program), Euro 94 million for Defense Electronics and Security, Euro 79 million for Helicopters, Euro 25 million for Defense Systems, and Euro 29 million for Transportation. Increases from business combinations relate to the consolidation of DRS in the amount of Euro 204 million. The most significant investments in 2007 amounted to Euro 326 million for Aeronautics (mainly for the start-up of the B787 program), Euro 98 million for the Defense Electronics and Security, Euro 109 million for Helicopters and Euro 25 million for Defense Systems. Impairment relates to tooling costs relating to the infringement procedure commenced by the European Commission (Note 6). The most significant investments in 2006 amounted to Euro 346 million for Aeronautics (mainly for the start-up of the B787 program), Euro 79 million for the Defense Electronics and Security segment, Euro 62 million for Helicopters and Euro 24 million for Defense Systems. Purchase commitments of property, plant and equipment are recorded in the amount of Euro 143 million as of December 31, 2008, Euro 135 million as of December 31, 2007 and Euro 122 million as of December 31, 2006.

10. INVESTMENT PROPERTIES Investment properties amounting to Euro 1 million as of December 31, 2008 (Euro 1 million as of December 31, 2007 and Euro 2 million as of December 31, 2006), entirely regarded land and buildings.

11. EQUITY INVESTMENTS As of December 31, 2008 2007 2006 (In millions of Euro) January 1, ...... 148 140 138 Acquisitions/subscriptions and capital increases ...... 41 7 44 Effect of recognition using the equity method ...... 17 19 11 Impairment of other equity investments ...... (4) (1) (5) Dividends received...... (10) (11) (3) Sales ...... — (3) (37) Other changes ...... — (3) (8) December 31, ...... 192 148 140

In 2008, the increases mainly related to the acquisition of a stake in Eurotech SpA (Euro 19 million) in Defense Electronics and Security, in PZ-Swonik SA (Euro 7 million) in the Helicopters segment and in Sin Srl (Euro 5 million) in the Space segment.

F-43 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

In 2007, the increases mainly related to the acquisition of Digint S.r.l. (Euro 2 million) in Other activities segment and of ABS Technology S.p.A. (Euro 3 million) in the Defense Electronics and Security segment. In 2006 the increases specifically included the increase in the share capital of OTO Melara North America Inc. (Euro 4 million) in the Defense Systems segment, the incorporation of Metro C S.p.A. (Euro 21 million) and Metro 5 S.p.A. (Euro 8 million) in the Transportation segment, the formation of the Libyan Italian Advanced Technology Company joint venture (Euro 2 million) in the Helicopters segment, and the increase in share capital of Finmeccanica Inc. (Euro 3 million) in the Other activities segment.

List of unconsolidated equity investments as of December 31, 2008 In Assets Liabilities millions in millions in millions Ownership % of Euro of Euro of Euro Currency SUBSIDIARIES — ASSOCIATES Eurotech SpA ...... 11.08% 19 157 39 Elettronica SpA ...... 31.333% 15 668 618 Orizzonte — Sistemi Navali SpA ...... 49.00% 12 714 689 Metro 5 SpA ...... 31.90% 8 145 120 Europea Microfusioni Aerospaziali SpA ...... 49.00% 7 49 34 Eurosysnav SAS ...... 50.00% 6 1,193 1,182 Icarus ScpA ...... 49.00% 6 24 12 Eurofighter Jagdflugzeug GmbH...... 21.00% 5 1,306 1,251 Finmeccanica North America Inc...... 100.000% 3 5 1 USD Libyan Italian Advanced Technology Company(+) . . . 50.00% 3 3 1 LD Consorzio C.R.I.S...... 81.00% 2 5 3 Musinet Engineering SpA...... 49.00% 2 6 2 Digint Srl ...... 49.00% 2 3 1 Jiangxi Changhe Agusta Helicopters Co. Ltd...... 40.00% 2 56 3 RMB I.M. Intermetro SpA(+) ...... 33.33% 2 1,532 1,522 Novacom Services SA(*) ...... 26.62% 2 7 3 MINORITY INTERESTS Metro C ScpA ...... 14.00% 21 Indra Espacio S.A.(*) ...... 16.17% 8 PZL — Swidnik SA ...... 6.135% 7 SINSrl...... 4.00% 5 Innovazione e Progetti ScpA (in liq.) ...... 15.00% 4 BCV Investments SCA ...... 14.32% 4 Roxel SAS(*) ...... 12.50% 4 Panavia Aircraft GmbH ...... 15.00% 3 Digitalglobe Inc.(*) ...... 1.39% 3 Ferromovil 9000 SL ...... 10.00% 2 Sofresa SA(*) ...... 3.00% 2 Vitrociset SpA ...... 1.46% 2 Equity investments in companies and consortiums with value lower than Euro 2 million ...... 31 Total equity investments (less impairment provisions) ...... 192

(*) Investment with % ownership in Group companies. (+) Reference values: 2007 financial statements

F-44 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

List of unconsolidated equity investments as of December 31, 2007 In Assets Liabilities Ownership millions in millions in millions % of Euro of Euro of Euro Currency Orizzonte — Sistemi Navali S.p.A...... 49.00% 11 421 398 Elettronica S.p.A...... 31.333% 13 622 581 Metro 5 S.p.A...... 31.90% 8 60 35 Icarus S.C.p.A...... 49.00% 5 16 6 Europea Microfusioni Aerospaziali S.p.A...... 49.00% 6 43 30 Eurofighter Jagdflugzeug GmbH ...... 21.00% 5 985 931 Eurosysnav S.A.S ...... 50.00% 4 1,283 1,274 Finmeccanica North America Inc...... 100.00% 3 5 1 USD ABS Technology S.p.A. (.)...... 60.00% 3 — — I.M. Intermetro S.p.A.(+) ...... 33.33% 2 1,487 1,479 Consorzio C.R.I.S...... 81.00% 2 6 4 Jiangxi Changhe Agusta Helicopters Co. Ltd . . . 40.00% 1 105 57 RMB Musinet Engineering S.p.A...... 49.00% 2 6 2 Digint S.r.l...... 49.00% 2 3 1 Libyan Italian Advanced Technology Company ...... 50.00% 2 3 1 LD MINORITY INTERESTS Metro C S.C.p.A...... 14.00% 21 Indra Espacio S.A.(*) ...... 16.17% 7 Vitrociset S.p.A...... 10.00% 6 Innovazione e Progetti S.C.p.A...... 15.00% 4 Panavia Aircraft GmbH...... 15.00% 3 Roxel S.A.S.(*) ...... 12.50% 3 Digitalglobe Inc.(*)...... 1.39% 3 USD Ferromovil 9000 S.L...... 10.00% 2 Sofresa S.A...... 3.00% 2 Equity investments in companies and consortia with value lower than Euro 2 million ...... 28 Total equity investments (less impairment provisions) ...... 148

(*) Investment with % ownership in Group companies (.) Formed on December 20, 2007, the first annual report will be prepared in 2008 (+) Amounts of reference: financial statements 2006

F-45 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Detail of unconsolidated equity investments as of December 31, 2006

In Assets Liabilities Ownership millions in millions in millions % of Euro of Euro of Euro Currency Orizzonte-Sistemi Navali S.p.A...... 49% 10 242 221 Elettronica S.p.A.(*) ...... 31.333% 11 758 730 Metro 5 S.p.A. (..) ...... 31.9% 8 14 8 Icarus S.C.p.A...... 49% 5 23 12 Europea Microfusioni Aerospaziali S.p.A.(*) ...... 49% 5 37 28 Eurofighter Jagdflugzeug GmbH(*) ...... 21% 4 1,338 1,321 Eurosysnav S.A.S(*) ...... 50% 4 311 304 Finmeccanica Inc...... 100% 3 5 1 USD Consorzio Cris(*) ...... 81% 2 11 9 Jiangxi Changhe Agusta Helicopters Co. Ltd ...... 40% 2 n.a. n.a. RMB Musinet Engineering S.p.A.(*) ...... 49% 2 8 4 Libyan Italian Advanced Technology Company (...). . 50% 2 n.av. n.av. MINORITY INTERESTS Metro C S.p.A...... 14% 21 Indra Espacio S.A...... 16.17% 6 Vitrociset S.p.A...... 10% 6 Roxel S.A.S...... 12.5% 5 Innovazione e Progetti S.C.p.A...... 15% 5 Panavia Aircraft GmbH...... 15% 3 Digitalglobe Inc...... 2.078% 3 Ferromovil 9000 S.L...... 10% 2 Sofresa S.A...... 2.995% 2 Cesi-Centro Elettrotecnico Sperimentale G. Motta . . 9.36% 2 Investments in companies and consortia with value lower than Euro 2 million ...... 27 Total equity investments (less impairment provisions) ...... 140

(..) incorporated on June 5, 2006 (...) incorporated on May 18, 2006 (*) financial statements 2005 n.av.: not available n.a.: not applicable

F-46 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

12. BUSINESS COMBINATIONS The following summarizes the overall effects of the business combinations that took place in the financial periods presented: As of December 31, 2008 2007 2006 Goodwill Effect of cash Goodwill Effect of cash Goodwill Effect of cash (In millions of Euro) Acquisition of DRS ...... 2,901 (2,372) — — — — Transactions with minority shareholders...... 73 (75) 33 (424) 67 (116) Other acquisitions ...... 5 (7) 25 (10) 89 (65) Total ...... 2,979 (2,454) 58 (434) 156 (181)

2008 Acquisition of DRS Technologies Inc. On October 22, 2008 Finmeccanica purchased, through its US subsidiary Meccanica Holdings USA Inc, 100% of DRS Technologies Inc. (DRS), a US company listed on the New York Stock Exchange and a leader in the integrated defense electronics products and services industry, for USD 81 per share. The total value of the transaction was USD 5.2 billion, which included the assumption of financial liabilities amounting to USD 1.6 billion (Euro 1,250 million at the exchange rate on the date of completion of the transaction) which, in large part, were repaid under the put options triggered by the change in control, exercised between October 2008 and January 2009. The amount paid to DRS’s shareholders, equivalent to US Euro 3.6 billion, was hedged using derivatives starting from May at an average exchange rate of 1.54 (compared with an exchange rate of 1.28 on October 22, 2008), equal to Euro 2,342 million (to which are added transaction costs of Euro 43 million). Following the acquisition, DRS, which will operate in accordance with agreements with the US Department of Defense designed to regulate the influence and control over DRS by a non-US company, was delisted from the New York Stock Exchange. DRS was consolidated on a line-by-line basis starting from October 22, 2008, contributing the following (translated into Euros) to the Group’s results: In millions of Euro Revenue ...... 551 Earnings before amortization of intangible assets acquired ...... 51 Net profit ...... 16 Cash flow generated by operating activities, net of capital investments ...... 26 If DRS had been consolidated starting from January 1, its contribution to the Group (translated into Euros), net of transactions costs, would have been as follows: In millions of Euro Revenue ...... 2,647 Earnings before amortization of intangible assets acquired ...... 263 Net profit ...... 75 The pro-forma information presented is merely intended as a simulation, obtained by adjusting DRS’s historical data to take into account (excluding the corresponding tax effects): (i) the costs incurred by DRS in the course of the transaction, not considered in the pro forma results presented; and (ii) amortization identified in the course of the acquisition. Finally, if the transaction had occurred on January 1, the above results would not necessarily have been attained and the pro forma figures do not in any way reflect projected figures.

F-47 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The transaction had the following effect on the Group’s balance sheet and cash flow statement: Original Provisional values Fair Value Cash flow (In millions of Euro) Non-current assets ...... 272 1,085 — of which: intangible assets ...... 8 646 — of which: deferred tax assets ...... 35 229 Non-current liabilities ...... (88) (383) — of which: deferred tax liabilities ...... (21) (280) Working capital ...... 467 277 Provisions for risks and charges ...... (72) (109) Other net liabilities...... (146) (129) Cash and cash liabilities ...... 44 44 Borrowings ...... (1,291) (1,294) Minority interests ...... (7) (7) Net assets acquired...... (821) (516) Price paid ...... 2,342 2,342 (2,342) Transaction costs ...... 43 43 — paid ...... 17 (17) — not paid ...... 26 Total costs of the transaction ...... 2,385 Goodwill resulting ...... 2,901 Cash acquired ...... 44 Transaction costs paid by DRS following the acquisition . . (57) Total cash outlays...... (2,372)

The recognition of the intangible assets can be traced largely to the order backlog and relations with customers. The process of identifying the fair value of the assets and liabilities acquired as required by IFRS 3 is still ongoing. Therefore, the residual value currently attributed to goodwill could change once the allocation process is concluded. Other acquisitions in 2008 related to: • the acquisition of the Spanish company Aurensis SL, specializing in technologies for territorial applications and satellite and aerial Earth observation services, by the Telespazio joint venture which is consolidated proportionally (67%); and • the purchase of 100% of the Italian company ISAF, specializing in the geographical technologies information systems sector, by Telespazio. ISAF participates in a consortium of companies that was awarded the contract tendered by Agenzia per le Erogazioni in Agricoltura (AGEA) for the development and management of the national agriculture information system;

F-48 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The effects of these acquisitions on the Group’s balance sheet are as follows: Aurensis ISAF Total Non-current assets ...... — 4 4 Non-current liabilities ...... — — — Working capital ...... 2 3 5 Provisions for risks and charges ...... — — — Other net liabilities ...... (1) (1) (2) Cash and cash equivalents ...... — — — Borrowings ...... — (5) (5) Net assets acquired ...... 1 1 2 Price paid ...... 4 3 7 Transaction costs ...... — — — Total costs of the transaction ...... 4 3 7 Goodwill resulting ...... 3 2 5 Cash acquired ...... — — — Net cash outlays ...... 4 3 7

2007 Acquisition of the Vega Group Plc On November 29, 2007 Finmeccanica announced the launch of a Public Offer on the shares of Vega Group Plc, a company listed on the London Stock Exchange, at a price per share of 280 pence, to be completed in the period December 7, 2007 — December 28, 2007, with an extension to January 16, 2008. On November 30, Finmeccanica performed the acquisition of 28.2% of Vega Plc, with a total outlay of Euro 23 million. As of December 31, 2007 irrevocable bids on the offer launched by Finmeccanica amounted to 85.1% of the share capital of Vega Group Plc: therefore, even though the acquisition was not completed yet, since it is subject to certain conditions which have not been fulfilled yet (a minimum acceptance of 90% of the share capital), due to Finmeccanica’s right to waive these conditions and to the irrevocability of the shareholders acceptance, the company was consolidated on a line-by-line basis, as permitted by IAS 27 (14), from December 31, 2007 (without any impact on the income statement), allocating the remaining 71.8% to minority interests.

F-49 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The transaction led to the recognition of additional goodwill of Euro 24 million (calculated on the amount held as of December 31, 2007), with the following effect on the Group balance sheet: Amounts as of December 31, 2007 (In millions of Euro) Cash and cash equivalents ...... 2 Property, plant and equipment...... 2 Intangible assets ...... 1 Receivables ...... 20 Inventories and contract work in progress ...... 9 Other assets ...... 1 Advances from customer and trade payables ...... (11) Borrowings ...... (22) Other liabilities ...... (6) Net liabilities acquired ...... (4) 28.2% acquired ...... (1) Price paid ...... 23 Transactions costs ...... — Total cost of the acquisition ...... 23 Goodwill resulting from the acquisition...... 24 Cash acquired ...... 2 Net cash outlays ...... 21 On January 16, 2008 the offer was positively completed, with 93.3% acceptance. At the same time, Finmeccanica commenced the squeeze-out process, and the delisting was completed on February 13, 2008.

Exercise of the call option on Selex Sensors & Airborne Systems On April 29, 2005, the final agreement was signed for the “Eurosystems” operation with BAE Systems Plc (BAE) for the overall reorganization of Group activities in the Defense Electronics and Security segment. As a result of this transaction: • Finmeccanica has acquired a 75% interest in a new company Selex Sensors and Airborne Systems SpA (Selex S&AS) (the remaining 25% was owned by BAE Systems), to which it transferred its entire stake in Galileo Avionica SpA. Selex Sensors and Airborne Systems SpA, in turn, acquired the entire capital in the new company BAE Avionics Ltd, which received the BAE businesses specified in the agreement. The agreements also call for a call option in favor of Finmeccanica and a put option exercisable by BAE upon expiration (24 months) on the remaining 25%; • Finmeccanica acquired the BAE businesses in the field of military communications (or “comms”); and • The Italian operations assigned by the Group in 1998 (AMS SpA) to the joint venture with BAE AMS NV once again became wholly owned by the Group, while the United Kingdom component (AMS Ltd Group) is once again under the full control of BAE. The new scope of Selex Sistemi Integrati S.p.A. (formerly AMS S.p.A.) was redefined with the acquisition from BAE of its businesses in the area of Air Traffic Management and Air Traffic Control in Germany, the United Kingdom, and the United States. On March 30, 2007 Finmeccanica exercised the call option on the remaining 25% of the shares in Selex Sensors & Airborne Systems, held by BAE at a price of Euro 408 million (including a later price adjustment determined in December 2007), less the refund of certain costs of BAE incurred in prior years and

F-50 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 recognized in the Group financial statements as of and for the year ended December 31, 2006 as financial receivables (Euro 15 million). The effects of this transaction had already been recognized as financial receivables, due to the translation of the consideration agreed between the parties for the possible exercise of the put and call options rights. Due to this transaction, additional goodwill of Euro 22 million was recognized.

Acquisition of Bayern-Chemie On August 31, 2007, JV MBDA acquired from EADS and Thales 100% of Bayern-Chemie GmbH and Protac S.A., companies operating in the development and manufacturing of missile production systems. In the 4 months, the economic contribution by these companies amounted to negative Euro 1 million.

2006 Thomassen Turbine Systems and Energy Service Group In 2006, Ansaldo Energia S.p.A. acquired 100% of Thomassen Turbine Systems B.V. (TTS) a Dutch company specializing in services for gas turbines, for Euro 12 million, and the remaining 55% of the Swiss firm Energy Service Group A.G. (ESG) which provides on-site plant maintenance and repairs, for Euro 2 million. The fair value attributed to the assets and liabilities acquired is as follows: TTS ESG (In millions of Euro) Cash and cash equivalents ...... 1 1 Property, plant and equipment ...... 2 — Intangible assets ...... 2 — Other non-current assets...... 5 — Receivables ...... 4 2 Inventories and contract work in progress ...... 7 — Payables ...... (11) (1) Provisions for risks ...... (2) — Deferred taxes ...... — — Net assets acquired ...... 8 2 Share acquired...... 100% 55% Share of net assets acquired ...... 8 1 Price paid ...... 12 2 Acquisition costs ...... — — Total cost of the acquisition ...... 12 2 Goodwill resulting from the acquisition ...... 4 1 Cash acquired ...... 1 1 Net cash outlay ...... 11 1

Alcatel adjustment On July 1, 2005, the alliance between Finmeccanica and Alcatel for the management of their respective activities in the Space sector was finalized. The agreements envisaged the creation of two joint ventures: Alcatel Alenia Space SAS — in which Thales holds 67% and Finmeccanica 33% as of December 31, 2007 — operating in the design, development and production of space and satellite systems, and Telespazio Holding S.r.l. — owned by Finmeccanica (67%) and Thales (33%) — operating in the sector of services for satellite solutions. For the transaction Finmeccanica recorded a net financial outlay of Euro 109 million. In September 2006 Finmeccanica paid Euro 47 million to Alcatel as the price adjustment contractually agreed upon formation of the joint ventures in the Space segment.

F-51 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Acquisition of LFK On March 1, 2006 the joint venture MBDA, in which the Group holds an investment of 25% and consolidated using the proportionate method, acquired the remaining 81.25% of the LFK Group, the main manufacturer of missile systems in Germany. The table below reports amounts at the date of acquisition and the fair value attributed to the assets and liabilities acquired at the end of this process (Finmeccanica share) in 2006 and in part in 2007 (when deferred tax assets amounting to Euro 5 million have been recognized). Amounts as of Amounts Amounts before Fair value December 31, 2007 recognized at acquisition adjustment 2007 adjustments acquisition (In millions of Euro) Cash and cash equivalents...... 59 — 59 — 59 Property, plant and equipment ...... 8 1 9 — 9 Intangible assets ...... — 29 29 — 29 Receivables ...... 27 — 27 — 27 Inventories and contract work in progress ...... 30 — 30 — 30 Other assets ...... 1 — 1 — 1 Liabilities for pension plans ...... (26) — (26) — (26) Payables...... (60) (1) (61) — (61) Provisions for risks ...... (37) — (37) — (37) Deferred taxes ...... — (5) (5) 5 — Net assets acquired ...... 2 24 26 5 31 Negative interest of minority interests ...... 1 — 1 — 1 Net assets of the Group ...... 3 24 27 5 32 81.25% acquired...... 2 20 22 5 27 Price paid...... 64 — 64 — 64 Transactions costs...... 1 — 1 — 1 Total cost of the acquisition ...... 65 — 65 — 65 Goodwill resulting from the acquisition ...... 63 (20) 43 (5) 38 Cash acquired...... 59 — 59 — 59 Net cash outlays ...... 6 — 6 — 6

Transactions with minority shareholders In 2008-2006 the Group entered into transactions with minority shareholders. In this regard, it should be noted that IFRS 3 applies solely to transactions that involve the acquisition of control by the acquiring entity over the assets of the acquired company. Therefore, acquisitions of additional shares after control has already been achieved are not specifically governed by the IFRSs. Under the current doctrine, these transactions may be recognized as equity transactions (with the difference between the acquisition cost and the carrying value of the minority stakes acquired being directly attributed to the Group’s shareholders’ equity) or, in accordance with the parent company approach (which treats minority shareholders as third parties), allocating the difference between the acquisition cost and the carrying value of the minority stakes acquired to goodwill. Consistent with its approach to the sale of shares that do not lead to the loss of control, the Group treats such transactions using the parent company approach, which presently complies with the current version of IAS 27, recognizing the difference as goodwill.

F-52 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The details of the transactions are as follows:

2008 • Vega Group. See information provided in 2007 discussion above; • Sirio Panel. In 2008, the Group, which already held 75% of Sirio Panel, purchased a further 18% stake for a price of Euro 12 million. Based on the put and call options on the remaining 7% held by third parties, the Group has recognized the value of these rights among borrowings and consolidates the company without recognizing any minority interests. The total effects of these transactions on the Group’s balance sheet and cash flow statement were as follows: Sirio Vega Group Panel Total (In millions of Euro) Purchase price ...... 61 16 77 Transaction costs ...... 2 — 2 of which deferred payment ...... — (4) (4) Cash outlays for the period ...... 63 12 75 Minority interests acquired ...... (2) 8 6 Goodwill resulting ...... 65 8 73

2007 • Datamat. In 2005, Finmeccanica, as a result of exceeding the 30% statutory threshold provided by Legislative Decree 58/1998, launched a mandatory public offering on the 12,284,840 ordinary Datamat shares for a unit price of Euro 9.65 per share. At the conclusion of the mandatory public offering, the Group acquired, as of January 4, 2006, an additional 9,178,274 shares for a total value of Euro 89 million. The Group later acquired further shares on the open market, thus exceeding the 90% necessary to launch the residual offering, at a price per share set by CONSOB (the Italian Securities Regulator) of Euro 9.911 per share. In the end, the Group’s total stake came to 98.6% for a total additional outlay of Euro 20 million. Following this process, the Datamat S.p.A. shares were withdrawn from the MTAX market effective as from January 9, 2007. In 2007 Finmeccanica exercised the right to purchase the remaining Datamat shares in a squeeze-out operation pursuant to Article 111 of the Finance Act, for a unit price of Euro 10.040 determined by an expert appointed by the President of the Court of Rome. The Group now holds the entire capital of the Datamat shares. Soon after the full ownership of the Datamat shares was reached, the process of merger between the company and Elsag S.p.A. was started and finalized on August 1, 2007. On completion of the merger, the company was named Elsag Datamat S.p.A. • Ansaldo STS. In 2007 Finmeccanica acquired on the open market Ansaldo STS shares in order to keep its ownership percentage, since, as part of the IPO, the company made a commitment to grant, for no further compensation, to subscribers who retained possession of the shares for at least 12 months, one share for every 10 held.

F-53 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The total effects of these transactions on the performance and financial position of the Group at December 31, 2007 were as follows: Datamat Ansaldo STS Total (In millions of Euro) Cash paid ...... 11 5 16 Transactions costs ...... — — — Cash outlays ...... 11 5 16 Minority interests acquired ...... 4 1 5 Goodwill resulting from the acquisition ...... 7 4 11

2006 During 2006, the group was involved in these transactions with minority shareholders: • Tecnosis. At the beginning of 2006, the Group, through Elsag S.p.A. purchased a minority stake (30%) in Tecnosis S.p.A. for Euro 2 million; • GAF. On December 21, 2006, Telespazio S.p.A. (a joint venture in which the Group holds 67% and which is consolidated proportionally) purchased the remaining 24.92% of the German company GAF AG for Euro 3 million.

13. FINANCIAL ASSETS AT FAIR VALUE As of December 31, 2008 2007 2006 Assets at Assets at Assets at fair value fair value fair value Assets through Assets through Assets through available profit or available profit or available profit or for sale loss for sale loss for sale loss (In millions of Euro) Investment in STM ...... 154 — 589 — 840 — Other securities ...... — — — — 17 — Total financial assets at fair value ...... 154 — 589 — 857 —

The item relates to the indirectly-owned interest in STMicroelectronics (STM), amounting to 3.7% of the share capital as of December 31, 2008 and approximately 6.6% as of December 31, 2007 and 2006, classified entirely as “assets available for sale”. Below are changes for the periods in this item: As of December 31, 2008 2007 2006 (In millions of Euro) January 1, ...... 589 840 906 Purchases for the year ...... — — — Sales for the year ...... (260) — — Fair value adjustment as of December 31 ...... (175) (251) (66) December 31,...... 154 589 840

As explained in more detail in Note 6, 26 million shares were sold in 2008 for a total amount received of Euro 260 million, with a resulting transfer of a portion of the “reserve for assets available for sale” (Euro 56 million in net income recognized on the transaction) to the income statement. However, the stock was heavily affected by the negative performance of the financial markets, particularly during the final quarter of the year, remaining persistently below the original carrying value. Therefore, the Group recognized an

F-54 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 impairment of the “reserve for assets available for sale” (Euro 111 million in the 2008 income statement) on shares still held in its portfolio (33.7 million) equal to the entire negative value at December 31. In order to mitigate the risk of stock depreciation, the Group has routinely taken positions in derivatives, classified as assets held for trading, that through the purchase of put spreads and calls, have made it possible to recognize total income of Euro 22 million for the year. The Group’s hedging strategy is analyzed in Note 44.

14. TRANSACTIONS WITH RELATED PARTIES In general, commercial relations with related parties are carried out at arm’s length, as is settlement of the interest-bearing receivables and payables when not governed by specific contractual conditions. Below are the amounts: Non-current Other Current Other financial non-current financial Trade current Receivables as of December 31, 2008 receivables receivables receivables receivables receivables Total (In millions of Euro) Subsidiaries Other companies with unit amount lower than Euro 5 million ...... — — 13 8 1 22 Associates Eurofighter Jagdflugzeug GmbH .... — — — 92 — 92 Iveco Fiat/Oto Melara Scarl...... — — — 65 — 65 Orizzonte — Sistemi Navali SpA .... — — — 36 — 36 NH Industries Sarl ...... — — — 23 — 23 Macchi Hurel Dubois SAS ...... — — — 12 — 12 Metro 5 SpA...... — — — 19 — 19 Abruzzo Engineering Scpa ...... — — — 9 — 9 Other companies with unit amount lower than Euro 5 million ...... 2 — 1 28 1 32 Joint ventures(*) MBDASAS...... — — — 77 — 77 Thales Alenia Space SAS ...... — — 6 29 — 35 EEIG ATR ...... — — — 15 6 21 Aviation Training International Ltd . . 6 — — — — 6 Other companies with unit amount lower than Euro 5 million ...... 5 1 5 5 16 Consortiums(**) Saturno ...... — — — 49 — 49 Trevi — Treno Veloce Italiano ...... — — — 15 — 15 C.I.S. DEG ...... — — — 9 — 9 Elmac ...... — — — 6 — 6 Other consortiums with unit amount lower than Euro 5 million ...... — — 5 21 1 27 Total ...... 13 — 26 518 14 571 % against total for the year ...... 16.5% — 3.8% 11.1% 2.1% n.a.

F-55 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Non-current Other Current Other financial non-current financial Trade current Payables as of December 31, 2008 payables payables payables payables payables Total Guarantees (In millions of Euro) Subsidiaries Other companies with unit amount lower than Euro 5 million ...... — — 1 16 1 18 — Associates Eurofighter Jagdflugzeug Gmbh ...... — — 62 7 — 69 — Iveco Fiat/Oto Melara Scarl . . — — — — 25 25 — Eurosysnav SAS ...... — — 9 — — 9 — Consorzio Start SpA...... — — — 19 — 19 — Orizzonte — Sistemi Navali SpA...... — — — — — — 12 Other companies with unit amount lower than Euro 5 million ...... — — 2 15 4 21 — Joint ventures(*) MBDASAS...... — — 544 10 — 554 161 Thales Alenia Space SAS.... — — 19 8 — 27 3 Superject International SpA . . — — 8 — — 8 — Telespazio SpA ...... — — 7 — — 7 364 Other companies with unit amount lower than Euro 5 million ...... — — — 1 4 5 — Consortiums(**) C.I.S.DEG ...... — — — — — — 1 Other consortiums with unit amount lower than Euro 5 million ...... — — — 8 — 8 — Total ...... — — 652 84 34 770 541 % against total for the year . . — — 28.8% 1.8% 2.2% n.a. n.a.

F-56 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Non- current Other non- Current Other financial current financial Trade current Receivables as of December 31, 2007 receivables receivables receivables receivables receivables Total (In millions of Euro) Subsidiaries Other companies with unit amount lower than Euro 5 million...... — — 9 7 1 17 Associates Eurofighter Jagdflugzeug GmbH ..... — — — 108 — 108 Iveco Fiat/Oto Melara S.c.a.r.l...... — — — 33 — 33 Orizzonte — Sistemi Navali S.p.A. . . . — — — 29 — 29 Abruzzo Engineering S.c.p.a...... — — — 13 — 13 NH Industries S.a.r.l...... — — — 13 — 13 Macchi Hurel Dubois S.A.S...... — — — 11 — 11 Eurosysnav S.A.S...... — — — 8 — 8 Metro 5 S.p.A...... — — — 7 — 7 Other companies with unit amount lower than Euro 5 million...... 2 — — 22 2 26 Joint ventures.(*) MBDA S.A.S...... — — — 87 — 87 Thales Alenia Space S.A.S...... — — — 25 — 25 EEIG ATR...... — — — — 10 10 Aviation Training International Ltd.... 9 — — — — 9 Other companies with unit amount lower than Euro 5 million...... — — 3 3 1 7 Consortiums(**) Saturno ...... — — — 42 — 42 Trevi — Treno Veloce Italiano ...... — — — 14 — 14 C.I.S. DEG ...... — — — 10 — 10 Elmac ...... — — — 6 — 6 Other consortia with unit lower than Euro 5 million ...... — — 8 13 1 22 Total ...... 11 — 20 451 15 497 % against total for the year ...... 18.3% — 3.3% 10.4% 2.5% n.a.

(*) Amounts refer to the portion not eliminated on consolidation (**) Consortia over which the Group exercises considerable influence or which are subject to joint control

F-57 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Non- Other current non- Current Other financial current financial Trade current Payables as of December 31, 2007 payables payables payables payables payables Total Guarantees (In millions of Euro) Subsidiaries Other companies with unit amount lower than Euro 5 million ...... — — — 8 1 9 — Associates Consorzio Start S.p.A...... — — — 16 — 16 — Eurosysnav S.A.S...... — — 13 — — 13 — Iveco Fiat/Oto Melara S.c.a.r.l ..... — — — — 6 6 — Metro 5 S.p.A...... — — — — 6 6 — Orizzonte — Sistemi Navali S.p.A...... — — — — — — 12 Other companies with unit amount lower than Euro 5 million ...... — — 3 21 — 24 — Joint ventures(*) MBDA S.A.S...... — — 494 11 — 505 165 Telespazio S.p.A...... — — 23 1 — 24 102 Thales Alenia Space S.A.S...... — — 24 9 — 33 5 Other companies with unit amount lower than Euro 5 million ...... — — 3 5 — 8 — Consortiums (**) Trevi — Treno Veloce Italiano ..... — — — — 12 12 — Other consortia with unit amount lower than Euro 5 million ...... — — — 11 — 11 — Total ...... — — 560 81 25 666 284 % against total for year ...... — — 32.8% 2.0% 1.7% n.a. n.a.

(*) Amounts refer to the portion not eliminated on consolidation (**) Consortia over which the Group exercises considerable influence or which are subject to joint control

F-58 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Non- Other current non- Current Other financial current financial Trade current Receivables as of December 31, 2006 receivables receivables receivables receivables receivables Total Subsidiaries Other companies with unit amount lower than Euro 5 million ...... — — 8 6 1 15 Associates Eurofighter Jagdflugzeug GmbH...... — — — 79 — 79 Iveco Fiat/Oto Melara S.c.r.l...... — — — 58 — 58 NH Industries S.a.r.l...... — — — 14 — 14 Eurosysnav S.A.S...... — — — 11 — 11 Galileo Vacuum Systems S.p.A...... — — 9 1 — 10 Orizzonte — Sistemi Navali S.p.A. . . . — — — 9 — 9 Macchi Hurel Dubois S.A.S...... — — — 8 — 8 Ansaldo Trasmissione e Distribuzione S.p.A...... 5 — — 1 — 6 Elettronica S.p.A...... — — — 5 — 5 Other companies with unit amount lower than Euro 5 million ...... — — — 24 — 24 Joint ventures(*) EEIG ATR...... — — — — 33 33 MBDA S.A.S...... — — — 45 — 45 Alcatel Alenia Space S.A.S...... — — 2 23 — 25 Aviation Training International Ltd .... 11 — 1 — — 12 Other companies with unit amount lower than Euro 5 million ...... — — — 1 1 2 Consortiums (**) Saturno ...... — — — 35 — 35 Trevi — Treno Veloce Italiano ...... — — — 24 — 24 CMS Italia ...... — — — 14 — 14 C.I.S. DEG ...... — — — 6 — 6 Other companies with unit amount lower than Euro 5 million ...... — — 6 13 — 19 Total ...... 16 — 26 377 35 454 % against total for the year ...... 29.1% — 5.4% 9.8% 6.0% n.a.

(*) Amounts refer to the portion not eliminated on consolidation (**) Consortia over which the Group exercises considerable influence or which are subject to joint control

F-59 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Non- Other current non- Current Other financial current financial current Payables as of December 31, 2006 payables payables payables Trade payables payables Total Guarantees Subsidiaries Alifana Due S.c.r.l...... — — — 5 — 5 — Other companies with unit amount lower than Euro 5 million ...... — — 1 7 2 10 — Associates Eurofighter Jagdflugzeug GmbH ...... — — 78 9 — 87 — Eurosysnav S.A.S...... — — 20 — — 20 — Ansaldo Trasmissione & Distribuzione S.p.A...... — — 10 — 1 11 — Iveco Fiat/Oto Melara S.c.r.l . . — — — — 9 9 — Metro 5 S.p.A...... — — — — 6 6 — Other companies with unit amount lower than Euro 5 million ...... — — 3 9 1 13 — Joint ventures(*) MBDA S.A.S...... — — 358 15 — 373 — Telespazio S.p.A...... — — 28 — — 28 306 Other companies with unit amount lower than Euro 5 million ...... — — — 8 — 8 — Consortiums (**) CMS Italia ...... — — — 14 — 14 — Other companies with unit amount lower than Euro 5 million ...... — — 2 8 — 10 — Total ...... — — 500 75 19 594 — % against total for the year ...... — — 36.2% 2.1% 1.4% n.a. n.a.

(*) Amounts refer to the portion not eliminated for proportional consolidation (**) Consortiums over which the Group exercises considerable influence or which are subject to joint control

F-60 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

15. RECEIVABLES AND OTHER NON-CURRENT ASSETS As of December 31, 2008 2007 2006 (In millions of Euro) Deferred receivables Law 808/85 ...... 135 51 314 Third-party financing ...... 60 39 19 Net asset defined-benefit retirement plans (Note 26) ...... 39 — — Security deposits ...... 21 19 16 Financial receivables from related parties (Note 14) ...... 13 11 16 Receivables for finance leases ...... 6 10 20 Other...... 28 39 57 Non-current receivables ...... 302 169 442 Non-recurring costs awaiting interventions under Law 808/1985 ...... 467 362 — Other accrued income — non-current ...... 10 1 1 Financial accrued income — non-current...... 3 4 6 Other non-current assets ...... — — 2 Other non-current assets ...... 480 367 9 Total receivables and other non-current assets ...... 782 536 451

Receivables for finance lease relate to transactions qualifying as finance lease made by EEIG ATR where the Group is the lessor: in this case, the aircraft being the subject-matter of the lease contract is removed from assets and replaced by a receivable, and the relevant finance income is recognized progressively over the term of the contract at the effective interest rate applicable to the lease contract. The item “deferred receivables Law 808/85” includes the receivables from the Ministry of Economic Development relating to the current value of the interventions pursuant to Law 808/85 in national security and similar projects for which collections were deferred. The portion for which collection is expected within 12 months (Euro 35 million as of December 31, 2008, Euro 39 million as of December 31, 2007 and Euro 38 million as of December 31, 2006) is classified among other current assets (Note 21). Non-recurring costs awaiting interventions under Law 808 include the portion of non-recurring costs paid on programs that benefit from the provisions of Law 808/1985, are classified as being functional to national security, and whose expenses have not been assessed yet by the issuer. After the legal requirements for the recognition of the receivable from the Ministry are fulfilled, the recognized amount is reclassified as a receivable (current or non-current, based on the expected payment schedule). The amount shown is calculated based on an estimate made by management that reflects the reasonable probability that funds are received and the effects of time value in the case of deferment over more than one year of the granting of funds.

16. INVENTORIES As of December 31, 2008 2007 2006 (In millions of Euro) Raw materials, supplies and consumables ...... 1,996 1,678 1,543 Work in progress and semi-finished goods ...... 1,328 806 800 Finished goods and merchandise ...... 229 150 134 Advances to suppliers ...... 812 749 618 Total inventories ...... 4,365 3,383 3,095

Inventories are shown net of write-downs of Euro 530 million as of December 31, 2008 (Euro 427 million as of December 31, 2007 and Euro 418 as of December 31, 2006). Inventories have grown considerably due to the consolidation of DRS (Euro 377 million at the exchange rate on the transaction date).

F-61 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

17. CONTRACT WORK IN PROGRESS AND ADVANCED FROM CUSTOMERS As of December 31, 2008 2007 2006 (In millions of Euro) Work in progress (gross) ...... 7,825 6,426 6,184 Advances from customers ...... (4,151) (3,199) (3,361) Work in progress (net)...... 3,674 3,227 2,823 Advances from customers (gross)...... 16,245 15,457 12,996 Work in progress ...... (8,846) (8,980) (7,467) Advances from customers (net) ...... 7,399 6,477 5,529

Work in progress is recognized as an asset net of the relative advances if, based on an analysis carried out on a contract-by-contract basis, the gross amount of work in progress exceeds advances from customers. It is recognized as a liability if advances from customers exceed the relevant work in progress. This offsetting is performed only with regard to work in progress and not to inventories or other assets. If the advances have not been collected at the reporting date, the corresponding amount is recognized as a receivable from customers.

18. TRADE AND FINANCIAL RECEIVABLES As of December 31, 2008 2007 2006 Trade Financial Trade Financial Trade Financial (In millions of Euro) Receivables ...... 4,317 653 4,037 586 3,659 453 Impairment ...... (180) — (169) — (180) (1) Receivables from related parties (Note 14)...... 518 26 451 20 377 26 Total receivables ...... 4,655 679 4,319 606 3,856 478

The increase in receivables from related parties in 2008 is mainly due to the acquisition of DRS (Euro 413 million at the exchange rate on the transaction date). Trade receivables from related parties refer specifically to the non-eliminated portion of receivables from joints ventures and the lead companies or consortiums of major programs in which the Group participates. The most important of these relate to the Eurofighter (EFA program) totaling Euro 92 million as of December 31, 2008 (Euro 108 million as of December 31, 2007 and Euro 79 million as of December 31, 2006) for contracts for the production of wings and posterior fuselages and for the assembly of aircraft for the Italian Air Force; receivables from the Saturno consortium amounting to Euro 49 million (Euro 42 million as of December 31, 2007 and Euro 35 million as of December 31, 2006) for work on high-speed train lines; receivables from the Iveco Fiat/Oto Melara consortium amounting to Euro 65 million as of December 31, 2008 (Euro 33 million as of December 31, 2007 and Euro 58 million as of December 31, 2006) for production and post-sales assistance on defense and security ground vehicles (production is currently under way on Blindo Puma, Carro PZH2000 and self-propelled vehicles for the Italian Army); receivables from Orizzonte-Sistemi Navali SpA amounting to Euro 36 million as of December 31, 2008 (Euro 29 million as of December 31, 2007 and Euro 9 million as of December 31, 2006) relating to the FREMM program. Financial receivables mainly include receivables from other partners of the joint ventures (Euro 629 million as of December 31, 2008, Euro 552 million as of December 31, 2007 and Euro 429 million as of December 31, 2006) related to the deposit of cash and cash equivalents of the MBDA and the Thales Alenia Space group with the other participants in the joint venture (BAE Systems Plc, EADS NV and Thales SA), acquired on a pro rata basis (25% MBDA and 33% Thales Alenia Space respectively) through the proportional consolidation.

F-62 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The aging of receivables together with an analysis of how the Group manages credit risk is reported under Note 44.

19. CURRENT FINANCIAL ASSETS AT FAIR VALUE As of December 31, 2008 2007 2006 Assets Assets at fair Assets Assets at fair Assets Assets at fair available for value through available for value through available for value through sale profit or loss sale profit or loss sale profit or loss (In millions of Euro) Bonds ...... ———— 9— Other securities ...... 1 — 13 — 12 — Total current financial assets at fair value...... 1 — 13 — 21 —

This item decreased due to the sale of the shares in an Italian fund, resulting from a past investment of liquidity made by the Parent Company. Other securities refer to government securities given to guarantee performance of sale contracts with national government customers and are held until sale upon the expiration of the associated guarantee.

20. INCOME TAX RECEIVABLES AND PAYABLES As of December 31, 2008 2007 2006 Receivables Payables Receivables Payables Receivables Payables (In millions of Euro) Receivables assigned without recourse ...... 106 — 106 — 106 — Parent Company receivables ...... 76 — 122 — 173 — Other income tax receivables/payables ...... 54 201 49 68 92 139 Total income tax ...... 236 201 277 68 371 139

Parent Company receivables relate to IRES. (corporate income tax) receivables of Euro 25 million, Euro 56 million and Euro 151 million as of December 31, 2008, 2007 and 2006 respectively, to interest on tax receivables of Euro 40 million, Euro 59 million and Euro 89 million as of December 31, 2008, 2007 and 2006 and other receivables (IRAP, regional tax on productive activities, and ILOR, local income tax etc) of Euro 11 million, Euro 7 million and Euro 40 million as of December 31, 2008, 2007 and 2006 respectively. Receivables assigned without recourse relates to IRPEG (corporate income tax) receivables maintained as Group assets, even though they have been sold to third parties, because this is not included in the requirements of IAS 39 on de-recognition. A financial payable of the same amount is recognized against these tax receivables (Note 24).

F-63 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

21. OTHER CURRENT ASSETS As of December 31, 2008 2007 2006 (In millions of Euro) Indirect tax receivables...... 204 161 98 Accrued income — current portion ...... 114 82 80 Receivables for contributions ...... 71 69 83 Receivables from employees and social security ...... 37 40 33 Deferred receivables Law 808/85 ...... 35 39 38 Equity investments ...... 1 1 — Other receivables from related parties (Note 14) ...... 14 15 35 Other assets ...... 183 202 213 Total other current assets...... 659 609 580

Deferred receivables Law 808/1985 includes the receivables from the Ministry of Economic Develop- ment relating to the interventions pursuant to Law 808/1985 in national security and similar projects for which collections are expected within 12 months. Portions for which collections are expected beyond 12 months are recognized as accounts receivable and other non-current assets (Note 15). Other assets include, among others, receivables from the Camozzi group in the amount of Euro 3 million as of December 31, 2008 (Euro 14 million as of December 31, 2007 and as of December 31, 2006), sundry advances in the amount of Euro 23 million as of December 31, 2008 (Euro 20 million as of December 31, 2007 and Euro 21 million as of December 31, 2006), receivables from the Ministry of Defense in connection with the settlement of disputes in the amount of Euro 34 million as of December 31, 2008, Euro 37 million as of December 31, 2007 and nil as of December 31, 2006.

22. CASH AND CASH EQUIVALENTS As of December 31, 2008 2007 2006 (In millions of Euro) Cash...... 3 3 5 Bank deposits ...... 2,294 1,604 1,998 Total cash and cash equivalents ...... 2,297 1,607 2,003

The Group does not include overdraft facilities as they are not systematically used as a form of financing.

F-64 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

23. SHAREHOLDERS’ EQUITY Shareholders’ equity as of December 31, 2008 amounted to Euro 6,130 million (Euro 5,432 million as of December 31, 2007 and Euro 5,320 million as of December 31, 2006), a net increase of Euro 698 million from 2007 to 2008 and Euro 112 million from 2006 to 2007.

Share capital Costs Number of incurred ordinary Nominal Treasury net of tax shares value shares effect Total (In millions (In millions (In millions (In millions of Euro) of Euro) of Euro) of Euro) Outstanding shares ...... 422,845,466 1,860 — — 1,860 Treasury shares ...... (258,605) — (2) — (2) December 31, 2005 ...... 422,586,861 1,860 (2) — 1,858 Shares subscribed during the period ..... 1,748,690 8 — — 8 Repurchase of treasury shares, less shares sold ...... (373,096) — (8) — (8) December 31, 2006 ...... 423,962,455 1,868 (10) 1,858 broken down as follows: Outstanding shares ...... 424,594,156 1,868 — — 1,868 Treasury shares ...... (631,701) — (10) — (10) December 31, 2006 ...... 423,962,455 1,868 (10) — 1,858 Shares subscribed during the period ..... 541,104 2 — — 2 Repurchase of treasury shares, less shares sold ...... 287,924 — 4 — 4 December 31, 2007 ...... 424,791,483 1,870 (6) — 1,864 broken down as follows: Outstanding shares ...... 425,135,260 1,870 — — 1,870 Treasury shares ...... (343,777) — (6) — (6) December 31, 2007 ...... 424,791,483 1,870 (6) — 1,864 Capital increase November 2008 ...... 152,921,430 673 — (17) 656 Shares subscribed during the period ..... 93,705 1 — — 1 Repurchase of treasury shares, less shares sold ...... (103,432) — (2) — (2) December 31, 2008 ...... 577,703,186 2,544 (8) (17) 2,519 broken down as follows: Outstanding shares ...... 578,150,395 2,544 — (17) 2,527 Treasury shares ...... (447,209) — (8) — (8) December 31, 2008 ...... 577,703,186 2,544 (8) (17) 2,519

F-65 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The Group Parent’s share capital fully subscribed and paid-up is divided into ordinary shares with a nominal value of Euro 4.40 each. The changes during 2008 relate to the following transactions:

• the subscription of 152,921,430 new shares as part of the share capital increase approved by the Shareholders’ Meeting on August 1, 2008. The transaction had the following overall impact on the Group’s balance sheet and cash flow statement: Statement of Cash Balance Sheet Flows Share capital increase ...... 673 Share premium ...... 550 Proceeds from subscriptions ...... 1,223 Proceeds of sale of unexercised options ...... 3 Total proceeds ...... 1,226 1,226 Transaction costs: ...... (24) - of which: paid ...... (20) (20) Deferred tax assets on transaction cost ...... 7 Net capital increase ...... 1,209 1,206

• the issue of 93,705 new shares for the exercise of as many options under the 2002-2004 stock option plan;

• the repurchase of 1,225,000 (Euro 21 million) own shares, net of 1,121,568 shares (Euro 19 million), corresponding to the options granted to the beneficiaries of the stock grant and stock option plans.

At December 31, 2008 the Ministry for the Economy and Finance held about 30.2043% of the shares. No other shareholder held more than 2% of the shares.

The Group Parent’s share capital in 2007 fully subscribed and paid-up is divided into 425,135,260 ordinary shares with a nominal value of Euro 4.40 each, including 343,777 treasury shares.

During 2007, share capital increased by Euro 6 million due to:

• The issue of 541,104 new shares for the exercise of as many options under the 2002-2004 stock option plan approved by the Board of Directors (Euro 2 million); and • The repurchase of 350,000 (Euro 7 million) own shares, in support of the 2005-2007 stock grant plan; 31,100 options to purchase treasury shares were exercised by non-employees under the stock option plan and 606,824 shares were delivered under the stock grant plan for a total amount of Euro 11 million.

As a result of these transactions, there were 343,777 treasury shares held in the portfolio, of which 166,815 to service the aforementioned stock option plan and 176,962 to service the stock grant plan.

As of December 31, 2007 the Ministry of Finance held 33.725%, Fidelity International Ltd held 2.127% and Capital Research and Management Company held 2.118% of the shares.

The Group Parent’s share capital in 2006 fully subscribed and paid-up is divided into 424,594,156 ordinary shares with a nominal value of Euro 4.40 each, including 631,701 treasury shares.

During 2006 the share capital increased by Euro 8 million resulting from the issue of 1,748,690 new shares from the exercise of subscription rights as resolved by the Board of Directors as part of the stock option plan 2002 - 2004.

F-66 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Moreover, 1,075,901 ordinary shares were purchased on the market, for a total amount of Euro 19 million, in order to support the stock grant plan 2005-2007, and 60,690 options were exercised for the purchase of treasury shares of Finmeccanica from persons not related to Finmeccanica through an employment contract as part of the former stock option plan, and 642,115 shares were awarded under the stock grant plan for a total payment of Euro 11 million.

As a result, treasury shares amounted to 631,701, of which 197,915 were used in the above said stock option plan and 433,786 in the stock grant plan.

As of December 31, 2006, the Ministry of Finance held 33.767% of the shares.

F-67 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Other reserves Reserve for actuarial Reserve for profits/ Retained Reserve for Cash- stock- (losses) earnings and assets flow option and posted to consolidation available for hedge stock-grant shareholders’ Translation Other Minority reserve sale reserve plans equity reserve reserves Total interests (In millions of Euro) January 1, 2006 ...... 2,173 438 (44) 17 (93) 2 2,493 154 Dividends paid ...... (211) — — — — — — (211) (3) Surplus on share capital increases...... 17 — — — — — — 17 4 Total income and costs ...... 994 (66) 102 — 56 33 — 1,119 26 Changes to United Kingdom pension plans...... (53) — — — — — — (53) — Other changes ...... 13 — — — — — — 13 — Stock options/grant plans: - services rendered ...... — — — 18 — — — 18 — - stock grant assigned ...... — — — (15) — — — (15) — Change in scope of consolidation and other minor changes ...... — — — — — — — — (100) December 31, 2006 ...... 2,933 372 58 20 (37) 35 — 3,381 81 Dividends paid ...... (149) — — — — — — (149) (2) Capital increase for stock option plan ...... 5 — — — — — — 5 — Total income and costs ...... 484 (251) 13 — 154 (185) — 215 29 Stock options/grant plans: - services rendered ...... — — — 32 — — — 32 3 - stock grants assigned ...... 1 — — (20) — — — (19) — Effects of curtailment ...... (50) — — — 50 — — — — Change in scope of consolidation and other minor changes ...... — — — — — — — — (8) December 31, 2007 ...... 3,224 121 71 32 167 (150) — 3,465 103 Dividends paid ...... (174) — — — — — — (174) (13) Capital increases ...... 550 — — — — — — 550 10 Sale of unexercised grants . . . . 3 — — — — — — 3 — Capital increases for stock option plan ...... 1 — — — — — — 1 — Total income and costs ...... 571 (121) (54) — (111) (672) — (387) 52 Stock options/grant plans: - services rendered ...... — — — 19 — — — 19 1 - stock grant assigned ...... (3) — — (32) — — — (35) (3) Change in scope of consolidation and other minor changes ...... 11 — 6 — (15) 11 — 13 — December 31, 2008 ...... 4,183 — 23 19 41 (811) — 3,455 156

Reserve for assets available for sale This reserve includes changes in the value of the indirect investment in STMicroelectronics NV (Note 13), which is designated as an asset available for sale, and in the other assets included in this category. Due to the stress in the financial markets which pushed the value of STMicroelectronics NV stock below its

F-68 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 carrying value, the Group recognized an impairment in value of Euro 111 million on the 33.7 million shares remaining in its portfolio (Note 38).

Cash flow hedge reserve This reserve includes the fair value of derivatives used by the Group to hedge its exposure to currency or interest rate risk net of the effect of deferred taxes until the moment in which the underlying position is recognized in the income statement. When this condition is met, the reserve is recognized in the income statement to offset the economic effects of the hedged transaction.

Translation reserve This reserve is used to recognize the exchange rate differences resulting from the translation of the financial statements of consolidated companies. The most significant amounts were the result of the consolidation of the U.K. component of the AgustaWestland group amounting to Euro (165) million in 2008, Euro (33) million in 2007 and Euro 13 million in 2006, Selex Communications amounting to Euro (47) million in 2008, Euro (7) million in 2007 and Euro 6 million in 2006, Selex Sensors and Airborne Systems amounting to Euro (408) million in 2008, Euro (103) million in 2007 and Euro 10 million in 2006 and the DRS Technologies group amounting to Euro (184) million in 2008.

Reserve for stock-option and stock-grant plans This reserve is the equity contra-item of the value of the activities performed by employees and non- employees, remunerated through the assignment of options on the shares of the parent company Finmeccanica SpA stock as part of the previous stock option plan for 2002-2004 or through the free assignment of shares as part of the stock grant plan 2005-2007. With regard to the stock option plan 2002-2004, following achievement of the conditions specified by the plan, a total of 3,993,175 (79,863,500 before combining them) options have been assigned and are currently exercisable by their recipients through December 31, 2009. The strike price was set at Euro 14 per share with a nominal value of the shares to be subscribed of Euro 4.40, with the difference allocated to the share premium reserve. In relation to the capital increase carried out in 2008, the exercise price was adjusted by the Remuneration Committee on October 15, 2008 to Euro 12.28 per share for options not yet exercised at the start date of the capital increase, although the number of options granted remained unchanged. With the increase in the share capital authorized by the Board of Directors within the limits set by the shareholders on May 16, 2003, at December 31, 2007, a total of 3,334,474 ordinary shares had been subscribed, for an increase in capital of Euro 15 million. At December 31, 2008 treasury shares used in the stock option plan amounted to 166,815, following the exercise of 91,790 call options for treasury shares from persons not related to Finmeccanica through an employment contract. Finmeccanica also introduced Long-term Incentive Plans (stock grant plans) targeted at key resources among executives, directors and self-employed workers with top-level roles in Finmeccanica SpA or its subsidiaries. The first plan related to the 2005-2007 three-year period, while the second related to the 2008-2010 three-year period. The 2005-2007 stock grant plan, approved by the Board of Directors on September 29, 2005, had 574 beneficiaries (a number later changed). Under the plan, each of the beneficiaries was entitled to receive Finmeccanica SpA’s ordinary shares for each of the years 2005, 2006 and 2007, on annual assignment and deferred delivery of shares, subject to the achievement of the performance goals defined internally. The shares to be assigned following the assignment and subject to the achievement of the goals were made available through a share capital increase resolved by the Company pursuant to Article 2349 of the Italian Civil Code or through shares already issued and included in the Group portfolio, to be purchased upon prior authorization resolved by the Shareholders’ Meeting on June 1, 2005. In the meeting of July 26, 2007 the Board of Directors of Finmeccanica, following the renewal resolved by the Shareholders’ Meeting dated May 30, 2007 of the authorization to purchase and dispose of treasury shares in the plan, resolved to

F-69 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 acquire — even in more tranches of maximum 4,067,880 Company shares — giving the CEO instructions to acquire such shares at the conditions determined in such resolution. October 1, 2008, delivery of 1,121,568 shares awarded for 2007 was made to the beneficiaries. As indicated by the beneficiaries, the balance of the shares were withheld to cover tax and social security obligations owed by the beneficiaries in relation to said delivery. On May 30, 2007, the Board of Directors of the Company approved the 2008-2010 stock grant plan. The plan, which has 562 beneficiaries, is substantially the same as the plan created for the 2005-2007 period. The plan consists of awarding designated individuals the right to receive ordinary Finmeccanica SpA shares for each of 2008, 2009 and 2010, granted on an annual basis with deferred delivery of the shares, subject to achieving set performance targets. With regard to both plans, the Finmeccanica SpA Shareholders’ Meeting of January 16, 2008 revoked its authorization to purchase and make available the shares mentioned above resulting from the unexercised options, however it guaranteed the availability of the same number of shares to service the Plan, as well as the shares still required for other stock incentive plans, within the scope of resolution on a broader treasury share buy-back and use program. The fair value of the shares of the tranche 2008 to be assigned in 2008 was set at Euro 20.44 per share, on the basis of the market value of the share at the date the plan structure and the key parameters were defined: during the year the valorization of the rights that are estimated to be assigned has increased the reserve by Euro 20 million (Euro 1 million on minority interests); this reserve also includes contributions of Euro 6 million, for a total cost of Euro 26 million for the year (Notes 33 and 34).

Minority interests The most significant changes for 2008 compared to 2007 related the capital increase of Global Military Aircraft System LLC (49%) for Euro 9 million, the payment of dividends and the change in income and costs largely attributable to the Ansaldo STS group (60%) recognized in shareholders’ equity. The following is a breakdown of the tax effects on the gain and loss items recognized in shareholders’ equity. Group Minority interest Amount Amount net Amount Amount net before taxes Tax effect of tax effect before taxes Tax effect of tax effect (In millions of Euro) Available-for-sale financial assets ...... (121) — (121) — — — Actuarial gains (losses) on defined benefit plans ...... (150) 39 (111) (1) — (1) Changes in cash flow hedges ...... (70) 16 (54) 8 (2) 6

24. BORROWINGS As of December 31, 2008 2007 2006 Non- Non- Non- Current current Total Current current Total Current current Total (In millions of Euro) Bonds ...... 966 2,115 3,081 351 1,407 1,758 78 1,670 1,748 Bank borrowings ..... 178 1,880 2,058 133 149 282 81 195 276 Finance leases ...... 14 2 16 5 15 20 5 20 25 Payable for non- recourse factoring. . . 109 — 109 109 — 109 116 — 116 Payables to related parties (Note 14) . . . 652 — 652 560 — 560 500 — 500 Other borrowings ..... 346 98 444 551 104 655 601 94 695 Total borrowings .... 2,265 4,095 6,360 1,709 1,675 3,384 1,381 1,979 3,360

F-70 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Changes in borrowings are: Repayments/ As of Payment of Change As of January 1, Increases coupons in scope of Other December 31, 2006 (*) (*) consolidation changes 2006 (In millions of Euro) Bonds ...... 1,723 85 (60) — — 1,748 Bank borrowings ...... 346 25 (93) — (2) 276 Finance leases ...... 36 — (11) — — 25 Payable for non-recourse factoring ...... 39 — (29) — 106 116 Payables to related parties (Note 14) ..... 372 128 — — — 500 Other borrowings ...... 125 593 (26) (1) 4 695 Total ...... 2,641 831 (219) (1) 108 3,360

(*) Net changes for current liabilities. The items also include changes resulting from the application of the effective interest rate method, which may not correspond with actual cash movements. As of Repayments/ Change As of January 1, Payment of in scope of Other December 31, 2007 Increases(*) coupons(*) consolidation changes 2007 (In millions of Euro) Bonds...... 1,748 88 (78) — — 1,758 Bank borrowings...... 276 42 (25) 32 (43) 282 Finance leases ...... 25 — (5) — — 20 Payable for non-recourse factoring .... 116 — (7) — — 109 Payables to related parties (Note 14) . . . 500 60 — — — 560 Other borrowings ...... 695 — (407) 3 364 655 Total ...... 3,360 190 (522) 35 321 3,384

(*) Net changes for current liabilities. The items also include changes resulting from the application of the effective interest rate method, which may not correspond with actual cash movements. As of Repayments/ Change As of January 1, Payment of in scope of Other December 31, 2008 Increases(*) coupons(*) consolidation changes 2008 (In millions of Euro) Bonds...... 1,758 850 (614) 1,193 (106) 3,081 Bank borrowings...... 282 3,058 (1,225) 106 (163) 2,058 Finance leases ...... 20 1 (5) — — 16 Payable for non-recourse factoring .... 109 — — — — 109 Payables to related parties (Note 14) . . . 560 92 — — — 652 Other borrowings ...... 655 64 (297) 3 19 444 Total ...... 3,384 4,065 (2,141) 1,302 (250) 6,360

(*) Net changes for current liabilities. The items also include changes resulting from the application of the effective interest rate method, which may not correspond with actual cash movements.

F-71 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Bonds As of Payment Effect of As of January 1, New Change of exchange December 31, 2006 borrowings in scope Interest Repayments coupons rate 2006 (In millions of Euro) Exchangeable bonds . . 415 — — 19 — (2) — 432 Bonds — 1997 ...... 6 — — — — — — 6 Bonds — 2002 ...... 292 — — 12 — (5) — 299 Bonds — 2003 ...... 497 — — 29 — (29) — 497 Bonds — 2005 ...... 513 — — 25 — (24) — 514 Total ...... 1,723 — — 85 — (60) — 1,748

As of Payment Effect of As of January 1, New Change of exchange December 31, 2007 borrowings in scope Interest Repayments coupons rate 2007 (In millions of Euro) Exchangeable bonds . . 432 — — 21 — (2) — 451 Bonds — 1997 ...... 6 — — — (6) — — — Bonds — 2002 ...... 299 — — 14 — (17) — 296 Bonds — 2003 ...... 497 — — 29 — (29) — 497 Bonds — 2005 ...... 514 — — 24 — (24) — 514 Total ...... 1,748 — — 88 (6) (72) — 1,758

As of Payment Effect of As of January 1, New Change of exchange December 31, 2008 borrowings in scope Interest Repayments coupons rate 2008 (In millions of Euro) Exchangeable bonds . . . . . 451 — — 21 — (2) — 470 Bonds—1997...... — — — — — — — — Bonds — 2002 ...... 296 — — 14 (297) (13) — — Bonds — 2003 ...... 497 — — 29 (29) — 497 Bonds — 2005 ...... 514 — — 25 (24) — 515 Bonds — 2008 ...... — 745 — 4 — — — 749 DRS — Bonds — 2003 . . . — — 445 6 — (13) (35) 403 DRS — Bonds — 2006 . . . — — 278 4 — — (22) 260 DRS — Bonds — 2006 . . . — — 200 2 — — (15) 187 DRS — Bonds — 2006 . . . — — 270 — (235) (1) (34) — 1,758 745 1,193 105 (532) (82) (106) 3,081

Below is some information on the features of these bonds. • Exchangeable bonds: The bond was issued by Finmeccanica Finance SA during financial year 2003 for a nominal value of Euro 501 million with a nominal yield of 0.375% annually. The bond was measured at an effective interest rate of 4.36%, which is the rate at which it would have been issued had it not had the exchange option. This component, separated from the value of the bond, was measured at fair value and recognized through profit and loss (see Notes 29 and 38 for more information). On June 1, 2005, the Group entered into a transaction to hedge the income volatility caused by the recognition of the embedded option by purchasing an offsetting option sold to investors with the same underlying position and the same basic parameters. The economic effects of this transaction are nil (see Note 38). For the handling of the STM shares linked to the conversion (20,000,000) see Note 13.

F-72 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

• Bonds — 2002: this bond, issued by Finmeccanica Finance SA for a total nominal value of Euro 297 million, was repaid in December 2008. • Bonds — 2003: this bond was issued by Finmeccanica Finance SA and has a total nominal value of Euro 500 million. With an annual coupon of 5.75%, the effective interest rate is 5.93%. • Bonds — 2005: this bond was issued in 2005 by Finmeccanica SpA and has a total nominal value of Euro 500 million. With an annual coupon of 4.875%, the effective interest rate is 4.96%. • Bonds — 2008: this bond was issued in December 2008 by Finmeccanica SpA and has a total nominal value of Euro 750 million. With an annual coupon of 8.125%, the effective interest rate is 8.32%. As a result of the acquisition in 2008, the Group assumed a total of USD 1,495 million in bonds. Over the last two months of the year, the USD 345 million convertible bond was extinguished due to the triggering of the put option held by the bondholders as a result of the change in the controlling shareholder. The financial statements at December 31, 2008 incorporate DRS’s other bond issues for a nominal value of USD 1,150 million, which were almost entirely repaid in January 2009 (except for USD 37 million) upon the triggering of the DRS bondholders’ right to repayment under the change of control clause.

Bank borrowings As of December 31, 2008 this item includes Euro 1,830 million (non-current portion of Euro 1,762 million) as the remaining amount of the bridge loan signed by Finmeccanica relating to the purchase of DRS (Note 6) for Euro 3,015 million (excluding commissions), which has been partially repaid (Euro 1,205 million) from the proceeds of the capital increase. The remaining amount of Euro 1,288 million falls due in June 2009 (extendable to 2010) and of Euro 697 million in June 2011. As part of the purchase of DRS, the Group assumed its bank borrowings (Euro 101 million at the exchange rate on the transaction date), which were almost entirely extinguished under the accelerated repayment clause in the loan agreement triggered by the change in the controlling shareholder. This item also includes borrowings by the joint ventures ATIL Ltd in the helicopters segment (Euro 71 million as of December 31, 2008, Euro 80 million as of December 31, 2007 and Euro 96 million as of December 31, 2006), and EEIG ATR in the Aeronautics segment (Euro 9 million as of December 31, 2008, Euro 15 million as of December 31, 2007 and Euro 14 million as of December 31, 2006), and subsidized loans (Euro 79 million as of December 31, 2008, Euro 81 million as of December 31, 2007 and Euro 58 million as of December 31, 2006).

Finance leases These obligations are related to property, plant and equipment held by the Group under finance lease contracts.

Payable for non-recourse factoring Although some assignments of receivables carried out by the Group in prior years are both legally and substantively assignments without recourse and their terms and conditions do not envisage repurchase or reversion clauses or guarantees that could require reimbursement of the amounts received, these are not eligible for de-recognition. Accordingly, the accounting policy adopted calls for the trade receivable to remain among assets (even though the Group no longer has control over the asset), with the recognition of a corresponding financial liability. On the date the assignee receives payment from the assigned debtor, the receivable and the related financial liability are eliminated from the Group’s assets and liabilities. This item specifically includes Euro 106 million of tax receivables that were derecognized in prior years.

F-73 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Payables to related parties Payables to related parties (Note 14) includes the Euro 570 million as of December 31, 2008 (Euro 541 million as of December 31, 2007 and Euro 386 million as of December 31, 2006) debt of Group companies to the MBDA and Thales Alenia Space joint ventures for the unconsolidated portion, and the debt of Euro 62 million as of December 31, 2008, Euro 1 million as of December 31, 2007 and Euro 79 million as of December 31, 2006 to the company Eurofighter, of which Alenia Aeronautica owns 21%. As regards the latter, under a new treasury agreement its surplus cash and cash equivalents at December 31, 2008 were distributed among the partners.

Other borrowings Other borrowings as of December 31, 2008 fell significantly (Euro 211 million) attributable largely to the payment of Euro 297 million (out of a total of Euro 389 million) to the Ministry of Economic Development (MED) as a result of the decisions made concerning the methods for complying with the scheduled repayment plans and the corresponding finance costs related to programs funded by Law 808/1985 (Note 6). The movement in 2007 is mainly due to: • The increase due to the reclassification under Law 808/85 on civil programs for which, as part of a broader re-definition of the methods for granting and the nature of these subsidies, repayment plans have been defined with the Ministry for Economic Development that do not consider the actual achievement of sales (Euro 389 million, of which Euro 284 million was previously classified as other liabilities, plus Euro 105 million of finance costs expensed to the income statement during 2007); and • The decrease specifically refers to the exercise of the call option for 25% of Selex Sensors and Airborne Systems S.p.A. (Euro 401 million). The Group’s financial liabilities are subject to the following repayment schedules and exposures to interest rate risk: As of December 31, 2008 Bank borrowings Bonds Related parties Other Total Floating Fixed Floating Fixed Floating Fixed Floating Fixed Floating Fixed (In millions of Euro) Within 1 year. . . . 178 — 73 893 652 — 455 14 1,358 907 2 to 5 years . . . . . 1,864 — 738 632 — — 44 2 2,646 634 Beyond 5 years . . 16 — 196 549 — — 54 266 549 TOTAL...... 2,058 — 1,007 2,074 652 — 553 16 4,270 2,090

As of December 31, 2007 Bank borrowings Bonds Related parties Other Total Floating Fixed Floating Fixed Floating Fixed Floating Fixed Floating Fixed (In millions of Euro) Within 1 year. . . . 133 — 167 184 560 — 660 5 1,520 189 2 to 5 years . . . . . 91 — — 662 — — 90 15 181 677 Beyond 5 years . . 58 — 200 545 — — 14 — 272 545 TOTAL...... 282 — 367 1,391 560 — 764 20 1,973 1,411

F-74 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

As of December 31, 2006 Bank borrowings Bonds Related parties Other Total Floating Fixed Floating Fixed Floating Fixed Floating Fixed Floating Fixed (In millions of Euro) Within 1 year. . . . 81 — — 78 500 — 717 5 1,298 83 2 to 5 years . . . . . 107 — 167 758 — — 55 20 329 778 Beyond 5 years . . 88 — 200 545 — — 39 — 327 545 TOTAL...... 276 — 367 1,381 500 — 811 25 1,954 1,406

The table below reports the net financial indebtedness of the Group as of December 31, 2008, 2007 and 2006: As of December 31, Section 2008 2007 2006 (In millions of Euro) Cash...... 22 (3) (3) (5) Bank deposits ...... 22 (2,294) (1,604) (1,998) Securities held for trading ...... 19 (1) (13) (21) Liquidity ...... (2,298) (1,620) (2,024) Current financial receivables ...... 18 (679) (606) (478) Current bank payables ...... 24 178 133 81 Current portion of non-current borrowings ...... 24 980 356 83 Other current borrowings ...... 24 1,107 1,220 1,217 Current financial debt ...... 2,265 1,709 1,381 Net current financial indebtedness/(position) ...... (712) (517) (1,121) Non-current bank payables ...... 24 1,880 149 195 Bonds issued ...... 24 2,115 1,407 1,670 Other non-current payables ...... 24 100 119 114 Non-current financial debt ...... 4,095 1,675 1,979 Net financial indebtedness...... 3,383 1,158 858

F-75 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

25. PROVISIONS FOR RISKS AND CHARGES AND CONTINGENT LIABILITIES Guarantees Product given Restructuring Penalties guarantees Other Total (In millions of Euro) As of January 1, 2006 Current ...... 9 53 50 101 310 523 Non-current ...... 55 24 6 90 248 423 64 77 56 191 558 946 Allocations ...... — 9 14 52 150 225 Uses...... (1) (13) (6) (12) (58) (90) Reversal ...... (11) (22) (16) (29) (93) (171) Other changes ...... (13) (13) 4 29 19 26 As of December 31, 2006 ...... 39 38 52 231 576 936 Broken down as follows: Current ...... — 28 43 132 368 571 Non-current ...... 39 10 9 99 208 365 39 38 52 231 576 936 Allocations ...... 14 27 21 45 159 266 Uses...... (2) (13) (8) (28) (72) (123) Reversal ...... (3) (16) (28) (24) (84) (155) Other changes ...... 4 3 17 (23) (27) (26) As of December 31, 2007 ...... 52 39 54 201 552 898 Broken down as follows: Current ...... 16 23 20 91 395 545 Non-current ...... 36 16 34 110 157 353 52 39 54 201 552 898 Allocations ...... 9 14 41 59 108 231 Uses...... (1) (9) (15) (30) (39) (94) Reversals ...... (6) (4) (1) (36) (50) (97) Other changes ...... 1 (8) — 25 20 38 As of December 31, 2008 ...... 55 32 79 219 591 976 Broken down as follows: Current ...... 23 18 26 117 448 632 Non-current ...... 32 14 53 102 143 344 55 32 79 219 591 976

Other changes include changes in the scope of consolidation (DRS for Euro 118 million at the exchange rate at the transaction date). The provisions for risks and charges include: • The provision for guarantees given in the amount of Euro 55 million as of December 31, 2008 (Euro 52 million as of December 31, 2007 and Euro 39 million as of December 31, 2006) is related to business in the Aeronautics, Transportation and Other activities segments with foreign partners;

F-76 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

• The provision for conversion and restructuring in the amount of Euro 32 million as of December 31, 2008 (Euro 39 million as of December 31, 2007 and Euro 38 million as of December 31, 2006) was established for expected charges resulting from the program to restructure the various segments. The most significant uses for the period involved the Defense Electronics and Security, Helicopters and Space segments. The amounts recorded are related to the Aeronautics, Defense Systems, Energy, Defense Electronics and Security and Transportation segments; • The provision for penalties in the amount of Euro 79 million as of December 31, 2008 (Euro 54 million as of December 31, 2007 and Euro 52 million as of December 31, 2006). The amounts recorded are related to the Aeronautics, Helicopter, Space, Defense Systems and Defense Electronics and Security; • The provision for product guarantees, in the amount of Euro 219 million as of December 31, 2008 (Euro 201 million as of December 31, 2007 and Euro 231 million as of December 31, 2006) includes allocations related to commitments for products sold. The amounts recorded are related to the Helicopter, Energy, Defense Electronics and Security, Defense Systems and Transportation segments; and • The other provisions total Euro 591 million as of December 31, 2008 (Euro 552 million as of December 31, 2007 and Euro 576 million as of December 31, 2006) and include: • The provision for risks on the business of EEIG ATR in the amount of Euro 68 million as of December 31, 2008, 2007 and 2006; • The provision for risks and contractual charges in the amount of Euro 69 million as of December 31, 2008 (Euro 74 million as of December 31, 2007 and Euro 93 million as of December 31, 2006) related, in particular, to business in the Defense Electronics and Security, Defense Systems and Space segments; • The provision for bad debts of Euro 17 million as of December 31, 2008 (Euro 25 million as of December 31, 2007 and Euro 27 million as of December 31, 2006) includes accruals to cover losses exceeding the carrying amounts of unconsolidated investees valued using the equity method; • The provision for taxes in the amount of Euro 64 million as of December 31, 2008 (Euro 49 million as of December 31, 2007 and Euro 43 million as of December 31, 2006); • The provision for disputes with employees and former employees in the amount of Euro 35 million as of December 31, 2008 and Euro 41 million as of December 31, 2007 and 2006 relating, in particular, to the Aeronautics, Defense Electronics and Security, Space and Transportation segments;; • The provision for pending litigation in the amount of Euro 101 million as of December 31, 2008 (Euro 96 million as of December 31, 2007 and Euro 110 million as of December 31, 2006); • The provisions for risk on contract-related losses in the amount of Euro 44 million as of December 31, 2008 (Euro 46 million as of December 31, 2007 and Euro 49 million as of December 31, 2006); and • Other provisions in the amount of Euro 193 million as of December 31, 2008 (Euro 153 million as of December 31, 2007 and Euro 106 million as of December 31, 2006). With regard to the risk provisions, the Group’s operations regard industries and markets where many disputes are settled only after a considerable period of time, especially in cases where the customer is a government entity. Of course, in application of related accounting standards, provisions have been made for any obligations related to probable and quantifiable risks. Likewise, to the best of our knowledge, regarding other

F-77 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 disputes against the Group, no specific allocation has been made since the Group reasonably believes that such disputes may be resolved satisfactorily and without any significant impact on the results. The situations below are mentioned here for the purposes of full disclosure. Of particular note: • the dispute in which Finmeccanica has been asked to cover the contractual commitments assumed upon the sale of the former subsidiary Finmilano SpA to Banca di Roma (now Unicredit Group) originated from the assessment ordered by the Rome Office of Direct Taxes of Finmilano SpA regarding the disallowance of the tax deductibility of the capital loss originating in 1987 on the sale of a non-recourse “deferred” receivable at a price below its nominal value. In essence, the Italian tax authorities felt that this sale was actually a financing transaction and that the loss, in the same manner as a finance cost, should not have been deducted in its entirety in 1987, but should have been recognized over subsequent years as implicit interest in the transaction. After the Court of Cassation (the supreme court of appeal) — in allowing the appeal filed by the tax authorities — had returned the parties to the court of first instance, the latter once again upheld the company’s complaint. This ruling was once again appealed to the Court of Cassation. It should be noted that substantial charges to be paid by Finmeccanica are not currently foreseeable; • the dispute resulting from the notice to settle the registry fee of about Euro 10 million, which was received by Finmeccanica in July 2001 and due on the capital increase approved in 1998. Although the tax liability had already been recognized in the related financial year, the Company felt it was unnecessary to meet the tax demand because it was unjustified both in law and in fact. In addition to being received after statutory deadline, the notice contained a request for a tax related to a tax base that was partially inconsistent with applicable laws. The Tax Commission for the Province of Rome upheld the Company’s dispute in its ruling filed in December 2002. The ruling was appealed by the Company in relation to the failure to order the tax authorities to reimburse costs. In the first half of 2004, the tax authorities in turn filed a cross-appeal of the same ruling, but only with regard to the decision that confirmed the termination of the office’s assessment power in the matter. No objection was raised, however, with regard to the substance of the original ruling establishing the partial lack of justification of the amount requested by the revenue office. In a ruling filed in October 2004, the appeal court rejected the Company’s primary appeal regarding the lack of reimbursement of costs, but at the same time declared that the cross-appeal filed by the tax authorities was inadmissible in that it was filed after the ordinary statutory deadlines. In particular, the Regional Tax Commission in Rome upheld the complaint filed by the Company regarding the fact that the tax authorities had erroneously deemed the suspension of the procedural deadlines defined by Article 16 of Law 289/02 (facilitated settlement of pending disputes) to be applicable, given that the case did not fall within the scope of this law. The sentence of the court of second instance has been appealed to the Court of Cassation by the tax authorities; • the dispute initiated by Telespazio SpA against the Agenzia delle Entrate, Rome District 4 challenging a tax assessment regarding direct income taxation (IIDD) for the year 2000, which contained a demand for a total of about Euro 30 million consisting of additional taxes, penalties and interest. The notice of assessment, served on November 27, 2006, relates to a tax audit completed in 2001 in which the Tax Authority challenged the deductibility of the loss regarding receivables from a foreign company taken by Telespazio SpA within the context of a non- recourse sale carried out following many fruitless attempts to recover these receivables. Specifically, the Tax Authority, deeming the actions undertaken by the Company to forcibly collect the receivables and therefore the evidence of the foreign debtor’s solvency or lack thereof to be insufficient, found that the requirements of certainty and precision under the law were not met to allow the loss to be fully deducted, regardless of the fact that the loss was conclusively realized by Telespazio SpA within the context of the non-recourse sale of the receivables arguing that sale per se guarantees certainty only of the legal loss of the receivable but not the financial loss. The court of first instance upheld the company’s appeal with ruling

F-78 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

filed on September 25, 2008. The deadline for a possible challenge by the tax authorities is currently pending; • the dispute initiated by Telespazio SpA (TSP) against the Agenzia delle Entrate, Rome District 4 challenging a tax assessment regarding direct income taxation (IIDD) and regional business taxation (IRAP) for the year 2001 containing an adjustment of about Euro 9.7 million in taxable income at the time the tax statement was prepared. Considering that the adjustment, for IIDD purposes, results in a reduction by an amount equal to the final tax loss in 2001 and that this loss was fully used by the Company in 2006, the total amount owed to the Tax Authority would be about Euro 7 million plus additional taxes, penalties and interest. The notice of assessment, served on November 27, 2006, relates to a tax audit completed in 2003 in which the Tax Authority challenged Telespazio SpA’s reserving tax treatment until the completion of the Astrolink contract. Specifically, in November 2001, the customer Astrolink at its discretion terminated a long-term contract triggering TSP’s right to compensation under the contract equal to the costs (plus 20% and in any event “be agreed” with the customer) that TSP would incur as a result of the early termination. Since it was not possible in 2001 to determine and agree upon the total amount of these costs (and the corresponding compensation revenues), the Company prudentially allocated Euro 48.5 million in the 2001 financial statements to a provision for risks and charges, as it deemed that amount to not be tax deductible. The auditors, starting, instead, with the assumption that TSP could have calculated the amount of compensation due from the counterparty as early as 2001 since the costs that it would have incurred as a result of the early termination of the contract were determinable, challenged the failure to account for revenues in the amount of Euro 58.2 million and also gave full tax effect to the amount of Euro 48.5 million in the provision for risks and charges which TSP instead treated as fully taxed. As a result, the Tax Authority determined that TSP had Euro 9.7 million more in taxable income in 2001 for direct income taxation and regional business taxation purposes. The court of first instance upheld the company’s appeal with ruling filed on September 25, 2008. The deadline for a possible challenge by the tax authorities is currently pending. Beyond the merits, it should be pointed out that it is currently impossible to estimate the substantive costs to be borne by the Finmeccanica Group considering that the liability, if it should be found to exist, would be neutralized by the guaranteed issued by Telecom Italia within the scope of the contract selling its shares of TSP in November 2002; • the dispute initiated by So.Ge.Pa. SpA against the Agenzia delle Entrate, Rome District 4 challenging a tax assessment regarding direct income taxation (IIDD) for the year 2001, which contained a demand for a total of about Euro 18 million consisting of additional taxes, penalties and interest. The tax claim served on December 27, 2006, traces back to a tax audit completed in 2004 against ALS SpA, a Finmeccanica Group company absorbed by So.Ge.Pa. in 2006, in which the tax inspectors — without including any formal comments — merely notified the tax office responsible for the assessment of possible violations in applying the regulations concerning the tax appraisal of work in progress inventories within the context of the long-term contract for the provision and launching of the Atlantic Bird1 satellite obtained in 2000. Specifically, the warning originates from the fact the company had, over the years, accounted for these inventories based on the percentage completed (calculated using the cost-to-cost method), thereby rendering the settlement and payments received over the medium term upon the achievement of various milestones irrelevant since they are not, under the contract, final settlements and therefore recognizing as revenues (and therefore taxable) the entire amount of the inventories only when ownership of the satellite was transferred in 2002 upon acceptance in orbit of the satellite by the customer as contractually agreed. By contrast, the tax inspectors asked the competent tax office to assess whether, in reality, under the contract, the various milestones could have been treated using the Work Status (WS) process, so as to include in the tax assessment of work in progress inventories the payments received based on the achievement of the WS objectives, regardless of the amounts recognized in the financial statements, on the assumption that the object of the contract could be divided into individual, “autonomous” lots for which each payment represents a final settlement of payments owed. The tax officials,

F-79 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

receiving the auditors’ report and without carrying out any further analysis of the matter although it involves a rather complex contractual relationship, issued the notice of assessment against the Company. The court of first instance upheld the company’s appeal with ruling filed on October 28, 2008. The sentence of the court of second instance has been challenged by the tax authorities and the appellate judge has to set the date of the hearing; • the appeal, together with Enel and other parties, filed with the Regional Administrative Court of Lombardy of the resolution of the Italian Electricity and Gas Authority regarding the method of calculating interest due on amounts to be paid, as compensation, in relation to the termination of the Italian national nuclear energy program. Interest due calculated using a different calculation method is around Euro 13 million. Previous rulings by the Lombardy Regional Administrative Court do not support the resolutions of the Authority. Accordingly, it is reasonable to expect a favorable outcome for Finmeccanica; • with regard to the litigation commenced by Reid in 2001 against Finmeccanica and Alenia Spazio (now So.Ge.Pa. SpA) before the Court of Texas to object against alleged breaches by former Finmeccanica-Space Division of agreements for the project for the implementation of the Gorizont satellite program. The litigation had a favorable outcome, after more than five years, due to the lack of jurisdiction of the relevant Court. On May 11, 2007, Reid served Finmeccanica and Alcatel Alenia Space Italia (now Thales Alenia Space Italia) with a Complaint commencing a new lawsuit before the Court of Chancery of Delaware. In the new lawsuit, Reid demands the same claims for compensation that were demanded in the prior Texas lawsuit, without giving an amount for the damage incurred. On June 29, 2007 Finmeccanica filed a Motion to Dismiss objecting to the time-barring and the statute of limitation on the action and the lack of jurisdiction of the Court of Delaware. These objections were discussed in the hearing of October 29, 2007. On March 27, 2008 the Court denied the plaintiff’s motion, finding the action to be time-barred. This decision has been challenged by the opposing party before the Supreme Court of Delaware, which is expected to render a decision following the hearing held on January 14, 2009; • with regard to work to build Line 6 of the Naples metro, in 1995 the Regional Prosecutor’s Office attached to the State Auditors’ Court brought an action against the directors of Azienda Tranvie Autofilovie Napoli (now Azienda Napoletana Mobilità) and the then Ansaldo Trasporti seeking compensation for damages amounting to Euro 100 million from all the defendants jointly and severally. In the first instance, the State Auditors’ Court rejected the petition due to lack of jurisdiction. The Regional Prosecutor’s Office attached to the State Auditors’ Court challenged the decision, bringing Finmeccanica into the action as successor to Ansaldo Trasporti as a result of the merger in September 2001. The Company objected, arguing that it lacked capacity to be sued since, prior to the merger, the contract was transferred to Ansaldo Trasporti Sistemi Ferroviari, which would be the company to suffer any negative consequences. On March 20, 2007, the Appellate Section of the State Auditors’ Court reversed the decision of the court of first instance and found the existence of accounting jurisdiction, even against the former directors of Ansaldo Trasporti. It referred the action to the court of first instance of the local Section for a decision on the merits. This finding was challenged before the Supreme Court, which affirmed, in its decision of July 18, 2008, that the State Auditor’s Court had jurisdiction. The State Attorney’s Office attached to the State Auditors’ Court reinstated the action before the Jurisdictional Section of the State Auditors’ Court of Campania for the decision on the merits. The hearing on the matter is scheduled for July 22, 2010; • in May 2007 Finmeccanica voluntarily intervened in a suit brought by Calyon SpA against the Agenzia delle Entrate before the Court of Rome seeking payment of a tax receivable of roughly Euro 71 million, plus interest of Euro 34 million, transferred by Finmeccanica in May 2004. The Agenzia delle Entrate challenged on the grounds that Calyon lacked standing since Finmeccanica had, in the past, transferred the same tax receivable to Mediofactoring SpA (the sale was later rescinded due to breach and the receivable was returned to Finmeccanica) and that the action on the receivable was time-barred. Finmeccanica intervened on behalf of Calyon

F-80 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

and to protect its own interests related to any resulting right to restitution of the credit by Calyon. The next hearing is scheduled for October 28, 2009; • In 1999 the Royal Thai Army summoned Finmeccanica before the Court of Bangkok demanding a compensation for damages amounting to USD 37,375,564 plus interest of USD 20 million, for operation defects in the “Spada Aspide” missile system, which was the subject-matter of a supply contract made in 1986 with former Selenia Industrie Elettroniche Associate. The supply contract under dispute was transferred in 1998 to the former Alenia Marconi Systems SpA (now Selex Sistemi Integrati SpA), which undertook any risks connected with the dispute. When filing the appeal, the lack of jurisdiction of the relevant court (due to the arbitration clause of the contract) and the time-barring on the action were challenged. The next hearing to discuss these challenges is scheduled for February 10, 2009; • In November 1997, in relation to a contract commissioned by Prepa, the Puerto Rican Electric Power Authority the company Abengoa awarded to Ansaldo Energia a sub-supplier contract for expansion work on the San Juan, Puerto Rican power plant. In connection with the contract between Abengoa and Prepa, American International Insurance Company of Puerto Rico (“AIIP”), a member of the AIG Group, issued a performance bond and a payment bond, each in the amount of USD 125 million, in favour of Prepa which Ansaldo Energia, as a supplier, counter-guaranteed in relation to the sub-supply. In 2000, Abengoa unilaterally terminated its contract without informing Ansaldo Energia and filed suit against the customer in the Court of Puerto Rico seeking compensation for damages it allegedly suffered. Prepa in turn filed an appeal demanding that Abengoa be sentenced to pay the compensation for damages and filed suit against AIIP to obtain the payment of the bonds issued by it as a security of the proper performance of works. Ansaldo Energia is not a party to the suit. In 2001, Ansaldo Energia initiated arbitration proceedings in Paris seeking a finding that Abengoa breached the contract by terminating its agreement with Prepa without notifying Ansaldo Energia in advance. The arbitration award, issued in March 2003, came out in favour of Ansaldo Energia. In order to avoid any enforcement of the aforementioned counter-guarantee, on May 13, 2005, Ansaldo Energia brought an action against Abengoa, AIG and AIIP before the Court of Milan, requesting that the same be found void, or, in the alternative, that the amount of the guarantee be assessed until USD 36 million and that it be held harmless by Abengoa. In this suit AIIP asked that Ansaldo Energia be held jointly liable to hold harmless AIG in the event it loses the case. The Court’s decision is still pending. In the opinion of its legal team, even if the court does not accept the company’s arguments and if the counter-guarantee is enforceable, the company could, in any case, initiate an action against Abengoa even based on the aforementioned arbitration award; • In December 2007, EADS ATR initiated arbitration proceedings with the International Chamber of Commerce of Lausanne to challenge an alleged breach by Alenia Aeronautica in relation with an agreement signed in May 2001 for the transfer to EEIG ATR (in which EADS ATR and Alenia own a 50% stake) of ATR 42 and ATR 72 aircraft components made by Alenia Aeronautica and EADS ATR. The plaintiff claims that Alenia Aeronautica had withdrawn itself from the contractual obligation of renegotiating the prices established in that contract. These prices were no longer valid since 2003 and the plaintiff demands that the company be sentenced to pay USD 32 million, plus interest as compensation for the damages resulting from that breach. EADS ATR also demands that the arbitration panel determined a new price for the transfer to EEIG ATR of the components made by the parties based on their actual industrial costs. In its appeal, Alenia Aeronautica challenged the plaintiff’s claim and filed counterclaims. On September 29, 2008 EADS ATR served on Alenia Aeronautica a brief increasing the amount of damages from USD 32 million to USD 55 million. The next hearing to gather evidence is scheduled for May 12, 2009.

F-81 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

26. SEVERANCE PAY AND OTHER EMPLOYEE LIABILITIES As of December 31, 2008 2007 2006 (In millions of Euro) Severance obligations ...... 701 736 846 Defined benefit retirement plans ...... 248 152 330 Share of joint venture pension obligation ...... 50 41 75 Other employee plans ...... 28 17 44 Total severance pay and other employee liabilities ...... 1,027 946 1,295

The statutory severance pay obligation is specific to Italy and calls for the payment of the entitlement accumulated by employees until the time they leave the company. This provision is calculated in accordance with Article 2120 of the Italian Civil Code by dividing the fixed components of an employee’s compensation by 13.5. Law no. 296 of December 27, 2006 and subsequent Decrees and Regulations issued in the first months of 2007, as part of the complementary social security reform, altered significantly the functioning of the social security system: the severance pay accrued after the date of the reform can be transferred to complementary funds or in a treasury fund managed by INPS (the Italian Social Security Institution). With the defined-benefit plans, the Group assumes the obligation to ensure a specific retirement benefit level for employees participating in the plan, guaranteeing to make good any negative difference between value of plan assets and the agreed-upon benefit level. Liabilities relating to defined-benefit retirement plans include the share of the total defined-benefit retirement plans managed by BAE Systems Plc allocable to the MBDA joint venture. The valuation of these liabilities entailed the recognition of actuarial losses in the shareholders’ equity accounts in the amount of Euro 31 million, whereas the cost booked to the income statement was Euro 4 million (Note 35). A detail of the defined benefit retirement plans is as follows: As of December 31, 2008 2007 2006 Euro area (in millions) ...... 76 77 30 USD area (in millions) ...... 76 — — GBP area (in millions) ...... 54 75 300 Other...... 3 — — 209 152 330 of which related to: - net liabilities ...... 248 152 330 - net assets (Note 15) ...... (39) — — Total ...... 209 152 330

Below is a breakdown of defined-benefit plans and statistical information regarding the excess (deficit) of the plans: As of December 31, 2008 2007 2006 (In millions of Euro) Present value of obligations...... 1,055 1,038 1,126 Fair value of plan assets ...... (846) (886) (796) Plan excess (deficit) ...... (209) (152) (330) of which related to: - net liabilities ...... (248) (152) (330) - net assets ...... 39 — —

F-82 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The increase in the total deficit is due to the net effect of the increase of Euro 87 million for the DRS acquisition (inclusive of Euro 76 million for the USA area) and Euro 44 million for the AgustaWestland plan (Euro 90 million as of December 31, 2008) and the decrease of Euro 68 million in the Selex Sensors and Airborne Systems Ltd. plan. Changes in defined-benefit plans are reported below: As of December 31, 2006 Present value of Present value of Net liability defined the obligation the asset benefit plans (In millions of Euro) Opening balance ...... 1,025 641 384 Costs of benefits paid...... 78 — 78 Interest expense ...... 50 — 50 Expected return on plan’s assets ...... — 46 (46) Actuarial losses/(gains) through equity ...... (54) 23 (77) Increases from business combinations ...... — — — Contributions paid ...... — 66 (66) Contributions from other plan participants...... 20 20 — Exchange rate differences ...... 21 15 6 Benefits paid ...... (20) (19) (1) Other changes ...... 6 4 2 Closing balance ...... 1,126 796 330 of which related to: — net liabilities ...... 1,126 796 330 — net assets ...... — — — As of December 31, 2007 Present value of Present value of Net liability defined the obligation the asset benefit plans (In millions of Euro) Opening balance ...... 1,126 796 330 Costs of benefits paid...... 52 — 52 Interest expense ...... 77 — 77 Expected return on plan’s assets ...... — 77 (77) Actuarial losses/(gains) through equity ...... (148) 33 (181) Increases from business combinations ...... 7 — 7 Contributions paid ...... — 73 (73) Contributions from other plan participants...... 16 16 — Exchange rate differences ...... (92) (109) 17 Benefits paid ...... (2) — (2) Other changes ...... 2 — 2 Closing balance ...... 1,038 886 152 of which related to: — net liabilities ...... 1,038 886 152 — net assets ...... — — —

F-83 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

As of December 31, 2008 Present Value Net Liabilities of of the Present Value Defined-Benefit Obligation of the Assets Plans (In millions of Euro) Opening balance ...... 1,038 886 152 Costs of benefits paid ...... 56 — 56 Interest expense ...... 56 — 56 Expected return on plan assets ...... — 59 (59) Actuarial losses (gains) through equity ...... (30) (67) 37 Increases from business combinations...... 210 123 87 Contributions paid ...... — 74 (74) Contributions from other plan participants . . . 20 20 — Exchange-rate differences ...... (268) (222) (46) Benefits paid ...... (27) (27) — Other changes ...... — — — Closing balance...... 1,055 846 209 of which related to: - net liabilities ...... 916 668 248 - net assets ...... 139 178 (39) The amount recognized in the income statement for defined benefit plans was calculated as follows: Year ended December 31, 2008 2007 2006 (In millions of Euro) Costs of current service ...... 56 74 78 Past service costs ...... — (22) — Total personnel costs (Note 35)...... 56 52 78 Interest expense ...... 56 77 50 Expected return on plan assets ...... (59) (77) (46) Costs (income) booked as “finance income/costs” ...... (3) — 4 Total cost to income statement ...... 53 52 82

Changes in severance obligations are shown below: As of December 31, 2008 2007 2006 (In millions of Euro) Opening balance ...... 736 846 851 Costs of benefits paid...... 1 10 64 Effects of curtailment ...... — (60) — Interest expense ...... 19 28 25 Actuarial losses (gains) through equity ...... 43 (18) (5) Decreases for sales...... — — (7) Increases from business combinations ...... — 6 — Benefits paid ...... (98) (80) (82) Other changes ...... — 4 — Closing balance ...... 701 736 846

F-84 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The decrease in the costs of current service for 2008 compared to 2007 is essentially due to the accounting effects of the changes in the regulation of severance obligations introduced by the 2007 Budget Law. Until the new regulations went into effect, the severance obligations had been considered a defined- benefit plan, and the related provision was included as part of the costs of current service in relation to the defined-benefit plans. For the effect of the regulatory changes, the severance obligations (for companies with more than 50 employees) accrued after the option date are now considered as a defined-contribution plan: the cost is accordingly reported as related to such plans (Note 35). The severance obligations remaining on the corporate accounting books, accrued up to the date of option for complementary funds or INPS funds, are reported as defined-benefit plans. During 2007, the accounting effects of the changes brought under the Finance Law 2007 to the regulation of the severance pay have been recognized (Note 5). Specifically, the provision accrued as of December 31, 2006 in companies with more than 50 employees was redetermined (which maintains its nature of defined benefit plan), except for future salary increases, as was the subsequent effect of curtailment, which was recognized in the income statement under section 109 of IAS 19 (Euro 60 million of lower expense). Also, the portion of cost attributable to the year was recognized according to the rules for defined contribution plans, without any actuarial valuation. Therefore, starting from the year 2007 the amount set aside to the severance pay is included in costs of defined contribution plans. The severance pay maintained with the Company (equal to the amount accrued until the date for the option between the complementary funds or the INPS funds) changed because of advances and severances paid as well as the discounting effects (expected date of payment drawing near and change in actuarial assumptions): these effects are reflected in the income statement among finance costs and, to the extent of the changes in actuarial gains, as profits and losses directly recognized in equity. The change in the scope of consolidation in 2007 relates to the consolidation of BredaMenarinibus, which was previously recognized as a discontinued operation. The main actuarial assumptions used in the valuation of defined benefit plans and of the portion of severance pay provision that maintained the nature of defined benefit plan are as follows: Severance obligations Defined benefit plans As of December 31, As of December 31, 2008 2007 2006 2008 2007 2006 Discount rate (annual) ...... 2.7%-3.5% 4.15-4.30% 3.40-4.10% 5.1%-7.3% 5.8% 4.50-5.20% Expected return on plan assets .... — — — 6%-8.3% 4.5%- 8.0% 4.50-8.0% Rate of salary increase ...... — — 1.30-4.30% 3%-5% 4.20-4.30% 3.30-4.15% Rate of turnover ...... 1%-5.75% 1.00-5.75% 1.00-5.75% — — — Assets of defined benefit plans include: As of December 31, 2008 2007 2006 (In millions of Euro) Shares ...... 319 348 500 Bonds ...... 163 220 66 Real properties...... 30 62 116 Cash or equivalents ...... 28 6 6 Other...... 306 250 108 Total ...... 846 886 796

F-85 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

27. OTHER CURRENT AND NON-CURRENT LIABILITIES Non-current Current As of December 31, As of December 31, 2008 2007 2006 2008 2007 2006 (In millions of Euro) Payable to Min. of Econ. Dev. Law 808/85...... 276 288 564 23 8 58 Other liabilities Law 808/85...... 158 258 425 — — — Payable to Min. of Econ. Dev. for monopoly rights Law 808/85 ...... 72 56 46 28 17 15 Employee obligations ...... 56 50 54 456 333 337 Deferred income ...... 48 89 138 118 100 100 Social security payable ...... 3 3 6 291 294 201 Indirect tax payables ...... — — — 174 192 183 Other payables to related parties (Note 14)...... — — — 34 25 19 Other payables ...... 118 77 99 450 498 489 Total other current and non-current liabilities...... 731 821 1,332 1,574 1,467 1,402

The payables to the Ministry of Economic Development (MED) relate to the payables for royalties accrued pursuant to Law 808/1985 for “national security” and similar projects, in addition to payables for disbursement received from the Ministry of Economic Development supporting development of non-national security and similar programs eligible for the incentives under Law 808/85. The payables are reimbursed on the basis of a scheduled repayment plan, without the payment of finance costs. Other liabilities Law 808/1985 includes the difference between the subsidies received or to be received pursuant to Law 808/1985, relating to programs qualifying as programs “of European interest”, with regard to the share of the subsidized costs classified among non-recurring costs, as well as the differential between the monopoly rights charged for the programs of national security and the effective payable accrued based on the established reimbursement ratio. The account decreased during 2008 due to the effect of the recognition in the income statement (Euro 113 million) of the portion of the subsidies under Law 808/1985 on programs qualifying as “national security” or similar programs in order to cover the costs charged to the income statement. Other payables include: • the payable to Bell Helicopters of Euro 14 million as of December 31, 2008 included among non-current liabilities (Euro 48 million as of December 31, 2007 and Euro 61 million as of December 31, 2006), arising from the “BAAC reorganization” which involved the acquisition of 100% of the construction and marketing rights for the helicopter AW139, previously owned by Bell Helicopter at 25%; • the payable to EADS NV due by EEIG ATR (50-50 consortium owned by Alenia Aeronautica S.p.A. and EADS NV) in the amount of Euro 6 million as of December 31, 2008 (Euro 10 million as of December 31, 2007 and Euro 33 million as of December 31, 2006); • the payable for customer deposits in the amount of Euro 33 million as of December 31, 2008 (Euro 32 million as of December 31, 2007 and Euro 9 million as of December 31, 2006); • the payable for contractual penalties in the amount of Euro 32 million as of December 31, 2008 (Euro 24 million as of December 31, 2007 and Euro 41 million as of December 31, 2006); • the payable for the repurchase of a G222 aircraft in the amount of Euro 9 million as of December 31, 2008 (Euro 36 million as of December 31, 2007 and 2006);

F-86 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

• commissions due in the amount of Euro 25 million as of December 31, 2008 (Euro 35 million as of December 31, 2007 and Euro 38 million as of December 31, 2006); • royalties due in the amount of Euro 19 million as of December 31, 2008 (Euro 22 million as of December 31, 2007 and Euro 24 million as of December 31, 2006); • payables for insurance in the amount of Euro 22 million (Euro 14 million as of December 31, 2007).

28. TRADE PAYABLES As of December 31, 2008 2007 2006 (In millions of Euro) Trade payables ...... 4,651 3,923 3,486 Trade payables to related parties (Note 14) ...... 84 81 75 Total trade payables ...... 4,735 4,004 3,561

Trade payables increased due to the effect of DRS consolidation (Euro 225 million at the exchange rate at the acquisition date) and the incremental production developed in the final quarter when compared with the previous year.

29. DERIVATIVES The table below provides a detail of the asset and liability positions related to derivative instruments. As of December 31, 2008 2007 2006 Assets Liabilities Assets Liabilities Assets Liabilities (In millions of Euro) Forward forex instruments .... 137 195 115 80 115 69 Embedded derivatives ...... 69 — ———— Interest rate swaps ...... 19 5 3 25 7 21 Options on STM...... 18 — 43 — 13 — Exchangeable bond option .... — — 1 1 11 11 Forex options ...... — 36 — 3 1 — Other equity derivatives ...... — — — — — 3 Total derivatives ...... 243 236 162 109 147 104

The change in the fair value of the forward instruments is caused by the volatility of the USD with respect to the Euro: the exchange rate went from 1.317 as of December 31, 2006 to 1.4721 at December 31, 2007 to 1.3917 at December 31, 2008. The interest rate swaps with a total notional value of Euro 1,400 million as of December 31, 2008 were placed into effect to hedge bonds issued for a total of Euro 3,077 million (inclusive of Euro 826 million in relation to short-term bonds issued by the acquired company DRS, equal to USD 1,150 million, denominated in USD). As indicated in more detail in Note 38, in 2008, a Group company entered into a sale contract that included embedded derivatives with a fair value of Euro 69 million at December 31, 2008. At December 31, 2008, the Group has 33.7 million STMicroelectronics NV (“STM”) securities classified as “assets available for sale”, with a fair value of Euro 154 million at December 31, 2008 (Note 13). In order to hedge the exposure to the risk of fluctuation of the market price of the securities, the Group put derivatives in place to protect most of its portfolio: the hedging transactions are classified as trading activity, with the consequent economic impact resulting from the change in fair value (Note 13). At December 31, 2008, options were outstanding against 25 million STM shares.

F-87 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The table below illustrates the fair value of the various derivatives in the portfolio: As of December 31, 2008 2007 2006 (In millions of Euro) Assets Interest rate swaps Trading 18 2 6 Fair-value hedge — — — Cash-flow hedge 1 1 1 Currency forwards/swaps/options Trading — — 1 Fair-value hedge — — — Cash-flow hedge 206 115 115 Equity instruments (trading) ...... 18 43 13 Embedded derivatives (trading) ...... — 1 11 Liabilities Interest rate swap Trading 1 23 17 Fair-value hedge — — — Cash-flow hedge 4 2 4 Currency forwards/swaps/options Trading 36 3 — Fair-value hedge — — — Cash-flow hedge 195 80 69 Equity instruments (trading) ...... — — 3 Embedded derivatives (trading) ...... — 1 11 The portion of changes that had an earnings impact is illustrated in Note 38. Details on the instruments outstanding are provided in Note 44.

30. GUARANTEES AND OTHER COMMITMENTS Leasing The Group is party to a number of operating leases as both lessor and lessee primarily for the purposes of acquiring the use of plant and equipment. Below are the non-cancellable minimum future payments and collections relating to operating lease contracts: As of December 31, 2008 2007 2006 As a As a As a As a As a As a lessee lessor lessee lessor lessor lessor (In millions of Euro) Within 1 year ...... 143 63 152 68 135 86 2 to 5 years ...... 300 109 247 77 226 165 Beyond 5 years...... 278 88 270 29 70 38 Total ...... 721 260 669 174 431 289

The amounts of the purchase and sale commitments include those relating to the satellite capacity business conducted by the Telespazio joint venture, as well as those relating to EEIG ATR’s airplane leasing and sub-leasing operations. Specifically, the amount of the commitments to purchase satellite capacity came to about Euro 228 million as of December 31, 2008 (Euro 157 million as of December 31, 2007 and Euro 215 million as of December 31, 2006) and is substantially covered by the customer orders backlog. The corresponding sales commitments amounted to Euro 219 million as of December 31, 2008 (Euro 157 million as of December 31, 2007 and Euro 217 million as of December 31, 2006).

F-88 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Guarantees As of December 31, 2008, 2007 and 2006 the Group had the following outstanding guarantees: As of December 31, 2008 2007 2006 (In millions of Euro) Guarantees ...... 16,786 13,900 12,970 Other unsecured guarantees ...... 567 577 583 Unsecured guarantees given ...... 17,353 14,477 13,553

At December 31, 2008, there are no secured guarantees given for the liabilities or obligations of third parties.

31. TRANSACTIONS WITH RELATED PARTIES The income statement transactions with the Group’s related parties in the years ended December 31, 2008, 2007 and 2006 are described below: Year ended December 31, 2008 Other Operating Finance Finance Revenue Income Costs Income Costs (In millions of Euro) Subsidiaries Alifana Due Scrl...... 11 — 11 — — Finmeccanica UK Ltd ...... — — 9 — — Other companies with unit amount Ͻ Euro 5 million ...... 2 — 9 — — Associates Eurofighter Jagdflugzeug GmbH ...... 805 — — — — Iveco Fiat/Oro Melara Scarl ...... 136 — — — — NH Industries Sarl ...... 92 — — — — Orizzonti — Systems Navali SpA ...... 82 — — — — Macchi Hurel Dubois SAS ...... 40 — — — — International Metro Service Srl ...... — — 36 — — Eurofighter Simulation Systems GmbH ...... 30 — — — — Eurosysnav SAS ...... 30 — — — — Abruzzo Engineering Scpa ...... 23 — — — — Euromids SAS ...... 19 — — — — Metro 5 SpA ...... 14 — — — — Consorzio Start SpA ...... — — 21 — — Pegaso Scrl...... — — 10 — — Automation Integrated Solution SpA ...... — — 9 — — Other companies with unit amount Ͻ Euro 5 million ...... 26 1 14 — 4 Joint ventures(*) EEIG ATR ...... 120 — 13 — — MBDASAS...... 92 — — — 21 Thales Alenia Space SAS ...... 46 — — — — Other joint ventures with unit amount Ͻ Euro 5 million . . . 4 — 6 2 1 Consortiums (**) Saturno ...... 104 — — — — C.I.S.DEG ...... 6 — — — — Other consortiums with unit amount Ͻ Euro 5 million ..... 23 — 9 — — Total ...... 1,705 1 147 2 26 % against total for the year ...... 11.3% 0.1% 1.3% 0.2% 2.2%

(*) Amounts refer to the portion not eliminated for proportional consolidation (**) Consortiums over which the Group exercises considerable influence or which are subject to joint control

F-89 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Year ended December 31, 2007 Other operating Finance Finance Revenue income Costs income costs (In millions of Euro) Subsidiaries Finmeccanica UK Ltd ...... — — 8 — — Alifana Due S.c.r.l...... 7 — 7 — — Other companies with unit value less than Euro 5 million . . . 4 — 7 1 — Associates Eurofighter Jagdflugzeug GmbH ...... 772 — 4 — — Iveco Fiat/Oro Melara S.c.a.r.l...... 126 — 2 — 5 Eurosysnav S.A.S...... 50 — — — 1 Orizzonti — Sistemi Navali S.p.A...... 48 — 1 — — NH Industries S.a.r.l...... 48 — — — — Macchi Hurel Dubois S.A.S...... 32 — — — — Euromids S.A.S...... 13 — — — — Eurofighter Simulation Systems GmbH ...... 11 — — — — Metro 5 S.p.A...... 6 — — — — Consorzio Start S.p.A...... 1 — 21 — — Pegaso S.c.r.l...... — — 6 — — Other companies with unit value less than Euro 5 million . . . 17 1 11 1 — Joint ventures (*) EEIG ATR ...... 103 — 6 — — MBDA S.A.S...... 86 — — — 15 Thales Alenia Space S.A.S...... 54 — 10 — — Other joint ventures with unit value less than Euro 5 million ...... 4 — 1 1 1 Consortiums (**) Saturno ...... 87 — 4 — — CMS Italia ...... 15 — 6 — — C.I.S.DEG...... 8 — 5 — — Elmac ...... 7 — — — — Other consortiums with unit amount lower than Euro 5 million ...... 14 1 4 — — Total...... 1,513 2 103 3 22 % against total for the year ...... 11.3% 0.2% 1.1% 0.5% 2.5%

(*) Amounts refer to the portion not eliminated on consolidation. (**) Consortia over which the Group exercises considerable influence or which are subject to joint control.

F-90 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Year ended December 31, 2006 Other operating Finance Finance Revenues income Costs income costs (In millions of Euro) Subsidiaries Alifana Due S.c.r.l...... — — 23 — — Finmeccanica UK Ltd...... — — 6 — — Other companies with unit amount lower than Euro 5 million ...... — — 4 — — Associates Eurofighter Jagdflugzeug GmbH ...... 764 — — — — Iveco Fiat Oto Melara S.c.r.l...... 149 — 3 — 7 Eurosysnav S.A.S...... 51 — — — — N.H. Industries S.a.r.l...... 26 — — — — Macchi Hurel Dubois S.A.S...... 25 1 — — — Euromids S.A.S...... 11 — — — — Orizzonte Sistemi Navali S.p.A...... 14 — 2 — — Eurofighter Simulation Systems GmbH ...... 13 — — — — Nicco Communications S.A.S...... 6 — — — — Elettronica S.p.A...... 6 — 1 — — Pegaso S.c.r.l...... — — 7 — — Other companies with unit amount lower than Euro 5 million ...... 13 5 7 2 — Joint ventures(*) MBDA S.A.S...... 84 — — — 8 EEIG ATR ...... 54 — — — — Alcatel Alenia Space S.A.S...... 23 — 7 — — Other joint ventures with unit amount lower than Euro 5 million ...... 4 — 1 1 1 Consortiums (**) CMS Italia ...... 14 — 36 — — Trevi — Treno Veloce Italiano ...... 21 — 2 — — C.I.S. DEG...... 10 — 16 — — Other consortiums with unit amount lower than Euro 5 million ...... 5 1 3 — — Total ...... 1,293 7 118 3 16 % against total for the year ...... 10.4% 1.4% 1.3% 0.3% 1.9%

(*) Amounts refer to the portion not eliminated on consolidation. (**) Consortia over which the Group exercises considerable influence or which are subject to joint control.

F-91 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

32. REVENUE Year ended December 31, 2008 2007 2006 (In millions of Euro) Revenue from sales ...... 9,392 9,152 7,879 Revenue from services...... 2,660 2,191 2,364 12,052 11,343 10,243 Change in contract work in progress ...... 1,280 573 936 Revenue from related parties ...... 1,705 1,513 1,293 Total revenue ...... 15,037 13,429 12,472

The trends in revenue by business segment and geographic area are described in Note 7.

33. OTHER OPERATING INCOME/(EXPENSES) Year ended December 31, 2008 2007 2006 Income Expenses Income Expenses Income Expenses (In millions of Euro) Exchange rate difference on operating items.... 308 (308) 216 (207) 121 (98) Reversal of deferred income under Law 808/85...... 113 — 169 — — — Reversals of/Accruals to provisions for risks . . . 85 (200) 128 (198) 138 (162) Grants for research and development costs ..... 42 — 29 — 32 — Write-up of receivables from ENEA ...... 31 (11) 287 — — — Insurance reimbursements ...... 22 — 12 — 12 — Other operating grants ...... 18 — 17 — 11 — Reversal of impairment of receivables ...... 5 — 19 — 13 — Reorganization costs ...... 3 (11) 15 (21) 12 (17) Gains/Losses on sales of assets ...... 3 (3) 30 (5) 34 — Other operating income (costs) from related parties ...... 1 (2) 2 (2) 7 (1) Indirect taxes ...... — (56) — (46) — (47) Other operating income/(costs) ...... 71 (95) 109 (85) 114 (109) Total other operating income/(expenses) ..... 702 (686) 1,033 (564) 494 (434)

Write up of receivables from ENEA is described in Note 6. The reversals of provisions for risks for the year ended December 31, 2008 of Euro 85 million (Euro 128 million in 2007 and Euro 138 million in 2006) regarded: the provision for product guarantees in the amount of Euro 36 million (Euro 24 million in 2007 and Euro 29 million in 2006), the provision for guarantees granted in the amount of Euro 6 million (Euro 3 million in 2007 and Euro 11 million in 2006), and the provision for penalties in the amount of Euro 2 million (Euro 28 million in 2007 and Euro 16 million in 2006). The accruals of provisions for risks of Euro 200 million (Euro 198 million in 2007 and Euro 162 million in 2006) regarded: the provision for disputes with third parties in the amount of Euro 7 million (Euro 5 million in 2007 and Euro 10 million in 2006), the provision for product guarantees in the amount of Euro 59 million (Euro 45 million in 2007 and Euro 52 million in 2006), the provision for guarantees given in the amount of Euro 9 million (Euro 14 million in 2007 and nil in 2006), the provision for penalties in the amount of Euro 41 million (Euro 21 million in 2007 and Euro 14 million in 2006), and the provision for contractual risks and charges in the amount of Euro 9 million (Euro 10 million in 2007 and Euro 3 million in 2006).

F-92 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Other operating income and costs include, amongst other things, interest income and expense on commercial transactions and contractual penalties. The reorganization costs also include the reversal and accrual of provisions for restructuring risks.

34. RAW MATERIALS AND CONSUMABLES USED AND PURCHASE OF SERVICES Year ended December 31, 2008 2007 2006 (In millions of Euro) Purchase of materials from third parties ...... 5,746 5,725 4,998 Change in inventories ...... (427) (169) (210) Costs for purchases from related parties (Note 31) ...... 24 10 6 Total raw materials and consumables used ...... 5,343 5,566 4,794 Services rendered by third parties ...... 4,525 3,470 3,274 Costs of rents and operating leases ...... 138 118 113 Costs of acquiring satellite capacity ...... 70 68 70 Royalties ...... 48 45 40 Rental fees ...... 19 24 21 Software fees ...... 13 14 11 Costs of airplane leases ...... 9 10 12 Cost of PSP relating to non-employees (Note 23)...... 1 3 2 Costs for services from related parties (Note 31) ...... 121 91 111 Total purchase of services ...... 4,944 3,843 3,654

The costs for purchases as a percentage of revenue amounted to 38% in 2006, 41% in 2007 and 36% in 2008, whereas the costs for services amounted to 29% in 2006 and 2007 and 33% in 2008. These changes are partly due to the different means for booking certain types of purchases, which as of 2008 have been reported as costs for purchases and no longer as costs for services received. Royalties mostly relate to royalties due under Law 808/1985 for programs qualified as national security and similar programs (Note 27). The costs for the acquisition of satellite capacity refer to satellite capacity trading business conducted by the Telespazio joint venture and are more than offset by revenues from sales; this activity carried out primarily on the basis of back-to-back contracts in terms of their expiry date and penalties in the event of breach of contract. The costs of leasing airplanes relate to leasing and sub-leasing transactions entered into by EEIG ATR. The amount for the purchase commitments undertaken to that regard through Telespazio and EEIG ATR are described in Note 30.

F-93 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

35. PERSONNEL COSTS Year ended December 31, 2008 2007 2006 (In millions of Euro) Wages and salaries ...... 2,866 2,653 2,456 Social security contributions ...... 725 679 637 Costs related to defined contribution plans (Note 26) ...... 122 107 35 Costs related to other defined benefit plans (Note 26) ...... 60 52 78 Net reorganization costs ...... 33 52 5 Cost of PSP (Note 23) ...... 25 40 20 Cost of LTIP...... 5 7 6 Employee disputes ...... (3) 1 10 Costs of severance pay, less curtailment effect (Note 26) ...... 1 (50) 64 Other costs ...... 94 58 50 Total personnel costs ...... 3,928 3,599 3,361

The 2008 overall personnel cost remained substantially in line with the prior-year level as a percentage of revenue, amounted to 26.9% in 2006, 26.8% in 2007 and 26.1% in 2008. The slight decrease in 2008 compared to 2007 is partially attributable to wages and salaries, whereas social security contributions remained unchanged as a percentage of revenue. The average workforce in 2008 numbered 62,791, as compared with 58,700 in 2007 and 56,653 in 2006. The net increase of 4,091 in 2008 is especially significant in the case of personnel abroad as a result of changes in the area of consolidation (in particular, Vega Group, and in the final part of the year, DRS Group) and the positive turnover in certain sectors (Energy, Helicopters, Space and Aeronautics), including through the use of new contractual forms. The total workforce inclusive of all personnel of the acquired DRS (10,798 employees) went from 58,059 as of December 31, 2006 to 60,748 as of December 31, 2007 to 73,398 as of December 31, 2008. The average workforce for the year ended December 31, 2007 was 58,700, as compared with 56,653 for the year ended December 31, 2006. The net increase of 2,047 in 2007 is due to the positive turnover in certain sectors, also through the use of new contractual forms, such as Aeronautics - following the development of new programs — Helicopters, Space and Energy, and to the change in the scope of consolidation. Total personnel costs were Euro 3,928 million, Euro 3,599 million and Euro 3,361 million for the years ended December 31, 2008, 2007 and 2006 respectively. The increase in 2008 is the result of the factors outlined above as well as contract renewals and medium-/long-term incentive programs for management that were inaugurated in recent years. The increase in 2007 is due to the reasons above, to the long-term incentive policies for managers started in prior years, and to significant reorganization costs. The decrease reported in the costs of PSP is attributable to a different percentage of assignment for the final tranche of the 2005-2007 Plan (equal to 50%) compared with the percentage for the first tranche of the 2008-2010 Plan (equal to 25%) as well as different reference values for the security (Note 23). Personnel costs also include reorganization costs amounting to Euro 33 million, Euro 52 million and Euro 5 million for the year ended December 31, 2008, 2007 and 2006, respectively, that specifically relate to Defense Electronics and Security, Aeronautics, Defense Systems, Transportation and Space. They mainly include costs incurred and accruals in relation to the ongoing reorganization of various companies of the Group.

F-94 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

36. AMORTIZATION, DEPRECIATION AND IMPAIRMENT Year ended December 31, 2008 2007 2006 (In millions of Euro) Depreciation and amortization: • property, plant and equipment...... 304 293 310 • intangible assets ...... 236 210 172 540 503 482 Impairment • intangible assets ...... 55 144 — • operating receivables ...... 27 37 23 • property, plant and equipment...... — 25 — 82 206 23 Total amortization, depreciation and impairment...... 622 709 505

In 2008 the impairment charges with regard to intangible assets refer to goodwill (Euro 40 million) and non-recurring charges and development costs. Impairment amounted to Euro 206 million for the year ended December 31, 2007 of which Euro 112 million, refers to the programs discussed in the infringement procedure of the European Commission (Note 6) (of the Euro 122 million, Euro 87 million relates to non-recurring expenses and Euro 25 million related to tooling costs recognized as property, plant and equipment see Notes 8 and 9).

37. WORK PERFORMED BY THE GROUP AND CAPITALIZED Year ended December 31, 2008 2007 2006 (In millions of Euro) Personnel costs ...... 300 359 312 Materials ...... 92 161 121 Other costs ...... 321 329 281 Total work performed by the group and capitalized ...... 713 849 714

F-95 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

38. FINANCE INCOME AND COSTS Year ended December 31, 2008 2007 2006 Income Costs Net Income Costs Net Income Costs Net (In millions of Euro) Exchange rate differences ...... 642 (630) 12 275 (272) 3 322 (340) (18) Fair value adjustments through profit or loss . . 156 (60) 96 82 (44) 38 47 (54) (7) Interest income/expense(*) ...... 99 (261) (162) 99 (182) (83) 75 (269) (194) Capital gain on sale of STM ...... 56 — 56 — — — — — — Impairment on STM ...... — (111) (111) — — — — — — Premiums paid/received on forwards ...... 16 (14) 2 16 (34) (18) 5 (27) (22) Discounting of receivables, payables and provisions ...... 9 (9) — 9 (8) 1 3 (2) 1 Dividends ...... 8 — 8 24 — 24 8 — 8 Value adjustments to equity investments ..... 5 (6) (1) 2 (51) (49) 3 (22) (19) Gains on investments and securities ...... 3 — 3 1 — 1 7 — 7 Finance income and costs from related parties...... 2 (26) (24) 3 (22) (19) 3 (16) (13) Commission income/expense (including commissions on non-recourse items) ...... — (39) (39) 1 (35) (34) — (31) (31) Income from Ansaldo STS IPO ...... — — — — — — 416 — 416 Gain from the sale of AvioGroup SpA ...... — — — — — — 291 — 291 Interest cost on defined benefit plans (net of expected returns on plan assets) ...... — (16) (16) — (28) (28) — (29) (29) Other finance income and costs ...... 21 (83) (62) 112 (201) (89) 14 (34) (20) Total finance income and costs ...... 1,017 (1,255) (238) 624 (877) (253) 1,194 (824) 370

(*) of which finance costs arising from the application of the effective interest rate on bonds for Euro 43 million for the year ended December 31, 2008 (Euro 16 million for the year ended December 31, 2007 and Euro 25 million for the year ended December 31, 2006). With reference to the effects of the STM investment, during 2008 , the Group reported a capital gain of Euro 56 million on the sale of 26 million STM shares, impairment of Euro 111 million on the 34 million shares remaining in the portfolio, earnings arising from options on STM in the amount of Euro 22 million (including Euro 7 million from valuation of the instruments in the portfolio and Euro 15 million from the sale of part of the options held), and dividend in the amount of Euro 6 million. The 2007 figure was significantly influenced by the recognition of finance costs to be paid on the programs provided by Law 808/1985 under review by the EU (Euro 105 million). Following are the significant components of the account in 2008: • net interest costs of Euro 162 million, inclusive of premiums collected/paid on the hedging of interest-rate risk (interest-rate swaps) for a net charge of Euro 7 million. The net account balance is significantly worse than in the prior year mainly due to the growing level of average indebtedness in 2008. In particular, the 2008 figure includes Euro 105 million of interest on bonds and Euro 35 million of interest on bridge loan financing secured in June 2008 as part of the DRS acquisition;

F-96 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

• net income of Euro 96 million arising from the application of fair value to the income statement, as detailed below: Net income from measurement of fair value through profit or loss is as follows: Year ended December 31, 2008 2007 2006 Income Expense Net Income Expense Net Income Expense Net (In millions of Euro) Embedded derivatives...... 83 — 83 — — — — — — Interest rate swaps (Note 29) ...... 41 (3) 38 6 (15) (9) 3 (7) (4) Ineffective component of hedging on swap . . 19 (13) 6 13 (14) (1) 10 (21) (11) Options on STM (Note 29)...... 7 — 7 44 — 44 9 — 9 Foreign-currency swaps and options ...... 5 (43) (38) 6 (5) 1 2 — 2 Option embedded in exchangeable bond (Note 24) ...... 1 (1) — 10 (10) — 23 (23) — Other equity derivatives ...... — — — 3 — 3 — (3) (3) Total ...... 156 (60) 96 82 (44) 38 47 (54) (7)

• Foreign currency swaps and options includes the effects of trading derivative instruments or instruments which, although they meet the objective of limiting the fluctuations of the underlying position within a specific range, do not meet the conditions of IAS 39, either because of the nature of instruments themselves or the inability to mathematically demonstrate their effectiveness; • Income from interest rate swaps in 2008 reflects the significant reduction of interest rates worldwide (6-month EURIBOR went from 4.71% at December 31, 2007 to 2.97% at December 31, 2008); the Group was able to benefit from the reduction on the portion of bond issues transformed into variable-rate instruments via the use of derivatives (Note 29). • Income on the options on STM is correlated to the decrease in price of the hedged instruments. At December 31, 2008, options were in effect on a total of 25 million STM shares. In addition, the Group has an offsetting call option on STM shares with the same underlying position and the same parameters of reference as the option embedded in the exchangeable bonds issued in 2002; as a result of this transaction, the Group is essentially in a neutral position with regard to further variations in the fair value of the call option sold (income of Euro 1 million in 2008 on the call option sold and expense of Euro 1 million in 2008 on the call option acquired). • The embedded derivatives are related to commercial contracts denominated in currencies other than the currencies of the contractually involved parties and that generally used in the markets of reference. This component is separated from the commercial contract and valued at fair value through the income statement. • Other net costs of Euro 62 million, inclusive of Euro 15 million of income, arising from the closing out of options of STM. Value adjustments to equity investments for the year ended December 31, 2007 mainly include the write-down of Consorzio Trevi, held by AnsaldoBreda (Euro 12 million), of Galileo Vacuum System S.p.A., held by Fata Group (Euro 16 million), and of Ansaldo Trasmissione & Distribuzione S.p.A., held by So.Ge.Pa. (Euro 13 million). For the year ended December 31, 2006, Value adjustments to equity investments primarily includes the write-down of Ansaldo Trasmissione e Distribuzione amounting to Euro 12 million and of Nahuelsat for Euro 8 million. In 2006 the Group recognized two capital gains arising from the initial public offering of the Ansaldo STS group (Euro 416 million) and the sale of Avio Group S.p.A. (Euro 291 million) (Note 6).

F-97 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Interest cost includes the cost of interest deriving from the expected date of maturity of the defined benefit liability drawing near, less the expected results on the financial assets of the plan. Other finance income and costs: • for the year ended December 31, 2008 relate to Euro 15 million of income arising from the closing out of options on STM; • for the year ended December 31, 2007 relate to Euro 105 million of finance costs on programs being reviewed by the European Commission as part of the breach procedure against the Italian Government (Note 6), and to the recognition of income of Euro 103 million and expense of Euro 80 million from the closing of options on STM; • for the year ended December 31, 2006 includes income generated by the closing of hedging operations for Euro 8 million, charges related to the purchase of the call option on Avio for Euro 7 million, the effect of the purchase price adjustment connected with the joint venture with Alcatel for Euro 6 million, and charges on contracts for the sale of the receivables completed during the previous year that do not fall under the scope of IAS 39 for Euro 10 million. Finally, it was noted during 2008, the Group assigned receivables without recourse in the amount of about Euro 1,006 million (about Euro 1,081 million for the year ended December 31, 2007 and Euro 1,000 million for the year ended December 31, 2006).

39. SHARE OF PROFIT/(LOSS) OF EQUITY ACCOUNTED INVESTMENTS Year ended December 31, 2008 2007 2006 (In millions of Euro) Recognition of Eurofighter J. GmbH ...... 6 8 — Recognition of Elettronica S.p.A...... 5 4 — Net recognition of other investees ...... 5 4 (5) Total share of profit/(loss) of equity accounted investments .... 16 16 (5)

40. INCOME TAXES Income tax expense can be broken down as follows: Year ended December 31, 2008 2007 2006 (In millions of Euro) Corporate income tax (IRES) ...... 231 253 232 Regional tax on productive activities (IRAP) ...... 129 124 126 Provisions for tax disputes...... 11 14 14 Deferred tax — net ...... (65) 82 (63) Tax related to previous periods ...... (17) (28) (4) Benefit under consolidated tax mechanism ...... (72) (216) (151) Substitute taxes ...... 30 — — Other income taxes ...... 120 97 89 Total income taxes...... 367 326 243

Income from adopting the consolidated taxation mechanism for IRES purposes (a tax introduced by Legislative Decree 344/2003) from January 1, 2004 was considered in the calculation of income taxes. According to this mechanism, there is only one taxable income for all the Group companies included in the scope of consolidation. This option makes it possible to offset the tax results (taxable income and losses in the consolidation period) of the participating companies. As a result, the income statement includes the benefit resulting from

F-98 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 the losses for the period up to the limit of the taxable income included in the consolidated tax base. This income was then allocated to all the consolidated companies reporting a fiscal loss. As to the parent company, current taxes (IRAP) of Euro 10 million have been included in the consolidated income statement for the year ended December 31, 2008. As for the parent company current taxes have not been included in the consolidated income statement for the year ended December 31, 2007 and 2006, because no taxable income was recognized in the financial statements as of and for the year ended December 31, 2007 and 2006, and deferred taxes were recognized in the amount of Euro 44 million for the year ended December 31, 2007 and nil for the year ended December 31, 2006. Following is an analysis of the difference between the theoretical tax rate and the effective tax rate for 2008, 2007 and 2006: 2008 2007 2006 (In millions of Euro) Profit (loss) before taxation ...... 988 847 1,272 Percentage impact of Italian and foreign taxes Corporate income tax (IRES) (net of tax receipts) ...... 16.06 4.34 6.37 IRAP ...... 13.02 14.70 9.91 Other income taxes ...... 12.13 11.47 7 Substitute taxes...... 3.09 — — Taxes related to previous periods ...... (1.70) (3.27) (0.31) Provisions for tax disputes...... 1.10 1.68 1.10 Deferred tax — net ...... (6.57) 9.62 (4.95) Effective rate...... 37.13 38.54 19.12 Increase (decrease) Percentage impact of the permanent difference on the effective rate ...... 1.96 — 19.62 Theoretical rate...... 39.09 38.54 38.74

The permanent differences that generated a variance between the effective rate and the theoretical rate are the result of the capital gain on the investment sold under the participation exemption.

F-99 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Deferred taxes and their related receivables and payables as of and for the year December 31, 2008 were the result of the following temporary differences: Income Statement Balance Sheet Assets Liabilities Net Assets Liabilities Net (In millions of Euro) Deferred taxes on tax losses ...... 3 51 (48) 119 — 119 Goodwill ...... 12 2 10 — 22 (22) Intangible assets acquired through a business combination . . . 11 — 11 — 359 (359) Other differences on non-current assets ...... 65 14 51 39 54 (15) Financial assets and liabilities ...... — 44 (44) 92 12 80 Severance and retirement benefits ...... 1 8 (7) — 19 (19) Writeback of receivables from ENEA (Note 6) ...... 93 — 93 — — — Provision for risks and impairment ...... 34 25 9 261 — 261 Stock option/stock grant ...... 1 5 (4) 14 — 14 Grants ...... 3 3 — — 9 (9) Other ...... 61 67 (6) 168 105 63 Offsetting...... — — — (91) (91) — Deferred taxes recognized through income statement .... 284 219 65 602 489 113 On cash-flow hedge derivatives...... — — — 33 30 3 On actuarial gains and losses ...... — — — 13 34 (21) Deferred taxes recognized through shareholders’ equity . . — — — 46 64 (18) Total ...... 284 219 65 648 553 95

Deferred taxes and their related receivables and payables as of and for the year ended December 31, 2007 were the result of the following temporary differences: Income Statement Balance Sheet Assets Liabilities Net Assets Liabilities Net (In millions of Euro) Deferred taxes on tax losses ...... 42 39 3 109 — 109 Intangible assets acquired through a business combination . . . 39 — 39 — 168 (168) Other differences on non-current assets ...... 35 35 — 28 61 (33) Provision for risks and impairment ...... 27 27 — 119 6 113 Severance and retirement benefits ...... 4 28 (24) 108 18 90 Stock option/stock grant ...... 4 3 1 6 — 6 Grants ...... 3 3 — — 9 (9) Goodwill ...... 1 2 (1) — 20 (20) Write-back of receivables from ENEA (Note 6)...... — 82 (82) — 82 (82) Offsetting...... — — — (92) (92) — Other ...... 69 87 (18) 161 90 71 Deferred taxes recognized through profit and loss ...... 224 306 (82) 439 362 77 On cash-flow hedge derivatives...... — — — 11 29 (18) On actuarial gains and losses ...... — — — — 51 (51) Deferred taxes recognized through shareholders’ equity . . — — — 11 80 (69) Total ...... 224 306 (82) 450 442 8

F-100 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Deferred taxes and their related receivables and payables as of and for the year ended December 31, 2006 were the result of the following temporary differences: Income Statement Balance Sheet Assets Liabilities Net Assets Liabilities Net (In millions of Euro) Deferred taxes on tax losses ...... 40 — 40 160 — 160 Provision for risks and impairment ...... 15 15 — 76 22 54 Grants ...... 4 — 4 — 10 (10) Other differences on assets ...... 1 11 (10) 79 52 27 Severance and retirement benefits ...... 1 3 (2) 108 16 92 Stock option/stock grant ...... 1 3 (2) 3 3 — Intangible assets acquired through a business combination . . . — 9 (9) — 224 (224) Other ...... 42 — 42 18 10 8 Deferred taxes recognized through profit and loss ...... 104 41 63 444 337 107 On cash-flow hedge derivatives...... — — — 26 3 23 On actuarial gains and losses ...... — — — 22 2 20 Deferred taxes recognized through shareholders’ equity .. — — — 48 5 43 Total ...... 104 41 63 492 342 150

41. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE Group operations were classified as discontinued operations as they are about to be sold. As such, the balance sheet includes the assets and liabilities attributed to this business segment, net of impairment charges to realign the carrying value with the fair value (sales value less transaction costs). Similarly, the results of the operations identified as discontinued have been shown separately on the income statements. At December 31, 2006 non-current assets held for sale and liabilities directly related to assets held for sale included, among others, Group assets and liabilities attributable to the manufacturing of trucking systems through the subsidiary BredaMenarinibus S.p.A.. Similarly, costs and revenues have been shown separately as Profit/(loss) connected with discontinued operations. These costs and revenues were carried as discontinued operations as they were about to be sold. Following the failure to finalize a purchase offer from third parties, which did not happen until 2007 the implementation of this plan was not considered probable, as required by IFRS 5, if there are no advanced negotiations. Therefore, the assets of BredaMenarinibus have been reclassified as continuing operations. Year ended December 31, 2008 2007 2006 (In millions of Euro) Revenue ...... — — 88 Costs ...... — — (96) Net financial (expense)/income ...... — — (1) (Write-down)/Net write-backs ...... — — — Tax expense ...... — — — Net profit ...... — — (9)

F-101 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

With regard to balance sheet items: As of December 31, 2008 2007 2006 (In millions of Euro) Assets Intangible assets ...... — — 1 Property, plant and equipment ...... — — 10 Current assets ...... — — 11 Inventories ...... — — 26 Trade receivables ...... — — 67 Other current assets...... — — 1 Cash and cash equivalents ...... — — 5 Non-current assets...... — — 99 Total ...... — — 110

As of December 31, 2008 2007 2006 (In millions of Euro) Liabilities Severance pay and other employee provisions ...... — — 5 Provisions for non-current risks and charges...... — — 28 Current liabilities ...... — — 33 Advances from customers ...... — — — Trade payables ...... — — 36 Current financial payables ...... — — 11 Tax payables ...... — — 1 Other current liabilities ...... — — 2 Non-current liabilities ...... — — 50 Total ...... — — 83

42. EARNINGS PER SHARE Earnings per share (EPS) are calculated as follows: • for basic EPS, by dividing net profit attributable to holders of ordinary shares by the average number of ordinary shares for the period less treasury shares; and • for diluted EPS, by dividing net profit by the average number of ordinary shares and the average number of ordinary shares potentially deriving from the exercise of all the option rights for stock option plans less treasury shares.

F-102 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Year ended December 31, Basic EPS 2008 2007 2006 Average number of shares for the period (in thousands).... 441,354 424,336 423,323 Net earnings (not including minority interests) (in millions of Euro) ...... 571 484 989 Earnings of continuing operations (not including minority interests) (in millions of Euro) ...... 571 484 998 Basic EPS ...... 1.294 1.140 2.333 Basic EPS from continuing operations ...... 1.294 1.140 2.353

Year ended December 31, Diluted EPS 2008 2007 2006 Average number of shares for the period (in thousands).... 441,499 425,191 425,094 Adjusted earnings (not including minority interests) (in millions of Euro) ...... 571 484 989 Adjusted earnings of continuing operations (not including minority interests) (in millions of Euro) ...... 571 484 998 Diluted EPS...... 1.293 1.138 2.323 Diluted EPS from continuing operations ...... 1.293 1.138 2.344

In 2008, the weighted average shares takes into account the issuance of 152,921,430 ordinary shares consequent to the parent company’s capital increase.

43. CASH FLOW FROM OPERATING ACTIVITIES Year ended December 31, 2008 2007 2006 (In millions of Euro) Net profit ...... 621 521 1,021 Depreciation, amortization and impairment ...... 622 709 505 Effect of the measurement of equity investments on the equity method ...... (16) (16) 5 Income taxes ...... 367 326 243 Costs of pension and stock grant plans ...... 87 152 197 Net capital gains from the sale of non-current assets ...... — (25) (34) Writeback of ENEA receivable ...... 31 — — Gains from Avio and Ansaldo STS and STM ...... — — (707) Net finance costs (net of the gains from Avio and Ansaldo STS andSTM)...... 238 253 337 Other non-monetary items ...... 18 (209) 33 Cash flow from operating assets and liabilities ...... 1,968 1,711 1,600

Costs of pension and stock grant plans include the portion of costs relating to defined-benefit and defined-contribution pension plans that is recognized as a personnel cost (the portion of costs relating to interest is carried among net finance costs). They also include the cash outlays relating to the stock grant plan.

F-103 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The changes in working capital, net of the effects of the acquisition and sale of consolidated companies and exchange gains/losses, are as follows: Year ended December 31, 2008 2007 2006 (In millions of Euro) Inventories ...... (797) (443) (288) Contract work in progress and advances received ...... 531 706 828 Trade receivables and payables ...... 97 55 (193) Changes in working capital ...... (169) 318 347

The changes in other operating assets and liabilities, net of the effects of the acquisition and sale of consolidated companies and exchange gains/losses, are as follows: Year ended December 31, 2008 2007 2006 (In millions of Euro) Changes in provisions for risks and other operating items ...... (148) 3 (54) Payment of pension and stock grant plans ...... (201) (276) (203) Changes in other operating activities ...... (349) (273) (257)

44. FINANCIAL RISK MANAGEMENT The Group is exposed to financial risks associated with its operations, specifically related to these types of risks: • market risks, related to the Group exposure on interest-bearing financial instruments (interest- rate risks), operations in currency areas other than the reporting currency area (exchange-rate risk) and the changes in the prices of listed securities (STMicroelectronics NV); • liquidity risks, relating to the availability of financial resources and access to the credit market; • credit risks, resulting from normal commercial transactions or financing activities. The Group specifically monitors each of these financial risks, with the objective of promptly minimizing them, also through hedging derivatives. The sections below provide an analysis, conducted through sensitivity analysis, of the potential impact on the final results deriving from assumed fluctuations in reference parameters. As required by IFRS 7, these analyses are based on simplified scenarios applied to the final results of the reference periods and, by their own nature, they cannot be considered as indicators of the actual effects of future changes in reference parameters with different financial statements and market conditions, and cannot reflect the inter-relations and the complexity of reference markets.

Interest rate risk The Finmeccanica Group is exposed to changes in interest rates on its floating-rate debt instruments, most of which are tied to EURIBOR. The management of interest rate risk is consistent with the long-standing practice of reducing the risk of fluctuations in interest rates while seeking to minimize related finance costs. At December 31, 2008, the Group has bonds outstanding for the total nominal amount of Euro 3,077 million (including roughly Euro 826 million circa related to the Euro counter-value of fixed-rate bonds issued by the newly acquired company, DRS, equal to Euro 1,150 million). Almost all of the DRS bond were repaid in January 2009; accordingly, against bonds outstanding for a total nominal value of Euro 2,251 million, interest- rate swaps for a total notional value of Euro 1,400 million executed by Group with financial counterparties of prime standing entailed as of December 31, 2008 a mix of interest-rate risk on financings equal to the nominal value of Euro 1,251 million (fixed rate) and the nominal value of Euro 1,000 million (floating rate).

F-104 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The detail of the impact of the main instruments and their earnings effects is shown below: Fair Value as Fair Value of as of NotionalJanuary Changes December 31, 2008 2007 Underlying 1, 2008 Income Costs CFH Reserve 2008 (In millions of Euro) IRS fixed/floating/fixed ...... 400 500 Bond 2003(a) (10) 14 — — 4 IRS fixed/floating and options ..... 250 250 Bond 2005(b) (7) 23 (3) — 13 IRS floating /fixed ...... — 280 Bond 2002(c) 1 — — (1) — IRS fixed/floating ...... 750 — Bond 2008(e) — — — — — — — Bond 2003(f) — — — — — Other...... — — —(d) (6) 4 — (1) (3) Total notional ...... 1,400 1,030 (22) 41 (3) (2) 14

Fair Value as Fair Value of as of NotionalJanuary Changes December 31, 2007 2006 Underlying 1, 2007 Income Costs CFH Reserve 2007 (In millions of Euro) IRS fixed/floating/fixed...... 500 500 Bond 2003(a) (11) 1 — — (10) IRS fixed/floating and options...... 250 200 Bond 2005(b) 5 3 (15) — (7) IRS floating/fixed ...... 280 130 Bond 2002(c) 1 — — — 1 IRS fixed/floating ...... — — Bond 2008(e) — — — — — — — Bond 2003(f) — — — — — Other ...... — — —(d) (9) 2 — 1 (6) Total notional ...... 1,030 830 (14) 6 (15) 1 (22)

(a) The transaction was carried out to benefit from low short-term interest rates without, however, exposing the Group to the risk of any subsequent increases. As such, the exposure was converted to a floating rate through December 19, 2005 and back to fixed (5.80% average) after that date. (b) The transaction was carried out during 2005 in order to earn short-term benefits from low interest rates. The instruments purchased also include a number of interest rate options that enable the Group to protect portion of the debt portfolio exposed to floating rates and to switch to floating for additional portions of the debt. (c) The transaction makes it possible to limit exposure to future changes in the reference interest rate (6-month EURIBOR) and has been recognized as a cash-flow hedge. (d) The item includes a floating/fixed swap out by JV ATIL, which operates in the helicopter sector, and other minor items. (e) The transaction was placed into effect at the time of the issue of the bond loan of Euro 750 million, in December 2008, with the objective providing for a floating rate for the bonds and in view of the conversion (which occurred in January 2009) into USD, needed for the prepayment of the issues of the subsidiary, DRS, against which was pending the right to reimbursement on the part of the bondholders in light of the clause on the change of control. (f) The exchangeable bond was negotiated at a fixed rate and is not backed by any interest rate swap.

F-105 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The table below shows the effects of the sensitivity analysis deriving from the shift in the interest rate curves: December 31, 2008 December 31, 2007 December 31, 2006 Effect of Shift of Interest Effect of Shift of Interest Effect of Shift of Interest — Rate Curves — Rate Curves — Rate Curves Increase by Decrease by Increase by Decrease by Increase by Decrease by 50 bps 50 bps 50 bps 50 bps 50 bps 50 bps (In millions of Euro) Net result...... (15) 21 3 (3) 4 (4) Shareholders’ equity(*) ...... (15) 20 3 (3) 4 (4)

(*): Defined as sum of earnings and cash-flow hedge reserve

Exchange rate risk Transaction risk Due to its commercial operations, the Group is exposed to the risk of fluctuations in the currencies in which its orders are denominated (specifically USD and, to a lesser extent, GBP), due to the fact that costs are concentrated in the Euro and the GBP areas. Exchange-rate risk management is governed by the directive in force within the Group. The goal of the directive is to create uniformity in management criteria based on industrial — not speculative - strategies so as to contain risks within specific limits by carefully and constantly assessing all foreign currency positions. The methodology adopted calls for the systematic hedging of commercial cash flows resulting from the assumption of contractual commitments that are certain or highly probable as either buyer or seller, thereby ensuring current exchange rates at the date of acquisition of multi-year contracts and neutralizing the effects of exchange rate fluctuations. As a result, contracts for purchases or sales denominated in a currency different from the functional currency are hedged using forward contracts of amounts, maturities, and key parameters that are similar to the underlying position. Therefore, at the moment of receiving payment from a customer (or making payment to a vendor), which takes place at the current exchange rate on that day, the related hedging transactions are extinguished in order to substantially offset the effects of the difference between the current exchange rate and the rate of the hedging instrument. The effectiveness of the hedge is tested at least at each interim or year-end reporting date using mathematical and statistical methods. In the event that, due to its nature or following such tests, a derivative instrument held should be found to no longer be an effective hedge, the fair value of the instrument is immediately recognized through profit and loss. In the event the designation of the instrument as a hedge should continue to be supported by the tests of actual and future effectiveness, the cash-flow hedge accounting method of recognition is adopted (see Note 4.3). These transactions are mainly carried out with banks by Finmeccanica’s Group Finance Department and then matched with the companies of the Group, which incur the relevant costs. At December 31, 2008, Finmeccanica had outstanding foreign exchange transactions in the interest of other Group companies totaling Euro 5,604 million (notional amount) (an increase of about 49% over the year-earlier period), broken down as follows: Group Finance Department and then matched with the companies of the Group, which incur the relevant costs. As of December 31, 2007 and 2006 Finmeccanica had outstanding foreign exchange transactions with highly rated financial counterparties in the interest of other Group companies, totaling Euro 3,740 million and Euro 2,928 million (notional amount).

F-106 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Fair Fair Value Value as as of of NotionalJanuary Changes December Sales Purchases Total 1, 2008 Revenue Costs Reserve CFH 31, 2008 (In millions of Euro) Swap and forward transactions ..... 3,532 1,707 5,239 35 24 (23) (94) (58) Options...... 365 — 365 (3) — (33) — (36) Total notional ...... 3,897 1,707 5,604 32 24 (56) (94) (94)

Fair Fair Value Value as as of of NotionalJanuary Changes December Sales Purchases Total 1, 2007 Revenue Costs Reserve CFH 31, 2007 (In millions of Euro) Swap and forward transactions ..... 1,890 1,427 3,317 46 19 (15) (15) 35 Options...... 423 — 423 1 — (4) — (3) Total notional ...... 2,313 1,427 3,740 47 19 (19) (15) 32

Fair Fair Value Value as as of of NotionalJanuary Changes December Sales Purchases Total 1, 2006 Revenue Costs Reserve CFH 31, 2006 (In millions of Euro) Swap and forward transactions ..... 1,986 786 2,772 (44) 10 (21) 101 46 Options...... 75 81 156 (1) 2 — — 1 Total notional ...... 2,061 867 2,928 (45) 12 (21) 101 47

The table below shows the expected collections and payments of the hedged flows in the hedged currency according to due dates: As of December 31, 2008 As of December 31, 2007 Receipts Payments Receipts Payments Notional Notional Notional Notional Cash-Flow Hedge USD GBP USD GBP USD GBP USD GBP (In millions of Euro) Within 1 year ...... 2,500 9 831 636 1,665 11 833 542 2 to 3 years ...... 1,187 — 167 1 375 — 238 90 4 to 9 years ...... 50 — 5 — 21 — 33 29 More than 9 years ...... — — — — — — — — Total ...... 3,737 9 1,003 637 2,061 11 1,104 661 Transactions other than cash-flow hedges . . 370 1 74 5 47 — 48 — Total transactions ...... 4,107 10 1,077 642 2,108 11 1,152 661

The table below shows the effects of the sensitivity analysis carried out on the change in the exchange rates of the Euro against the British pound and the US dollar, assuming a +/- 5% change of the Euro/USD exchange rate and the Euro/GBP exchange rate compared with rates of reference for the year ended December 31, 2008 (1.3917 and 0.925, respectively) and for the year ended December 31, 2007 (1.4731 and 0.7333, respectively). Year ended December 31, 2008 Effect of the change in Effect of the change in EUR/GBP exchange rate EUR/USD exchange rate 5% Increase 5% Decrease 5% Increase 5% Decrease (In millions of Euro) Net result ...... 6 (6) 9 (26) Shareholders’ equity(*) ...... 12 (13) 60 (83)

(*): Sum of result and cash flow hedge reserve

F-107 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Year ended December 31, 2007 Effect of the change in Effect of the change in EUR/GBP exchange Rate EUR/USD exchange Rate 5% Increase 5% Decrease 5% Increase 5% Decrease (In millions of Euro) Net result ...... 17 (17) 2 13 Shareholders’ equity(*) ...... 17 (17) 30 (22)

(*): Sum of result and cash flow hedge reserve Year ended December 31, 2006 Effect of the change in Effect of the change in EUR/GBP exchange Rate EUR/USD exchange Rate 5% Increase 5% Decrease 5% Increase 5% Decrease (In millions of Euro) Net result ...... 9 (11) 3 (4) Shareholders’ equity(*) ...... 9 (11) 26 (28)

(*): Sum of result and cash flow hedge reserve

Translation risk The Group is also exposed to the translation risk, i.e. the risk that assets and liabilities in consolidated companies whose reporting currency is not the Euro (mainly GBP and, to a lesser extent, USD) can have different values in Euros depending on the performance of exchange rates, which affects the equity reserve named translation reserve (Note 23). The Group is constantly monitoring this risk, and at December 31, 2008 there were no hedging transactions against it using derivatives. Finally, with reference to intercompany receivable and payable accounts denominated primarily in GBP and USD, it is noted that hedging transactions are in effect so as to sterilize the potential income- statement effects arising from such intercompany positions. The cash balance generated by such hedging contributes to the Group’s net debt.

Other risks on financial instruments Options on STM As of December 31, 2008, the Group has 33.7 million STMicroelectronics NV (“STM”) securities (Note 13), and is this exposed to the risk of a fluctuation of the market price of the security. During the final quarter of 2008, the security’s price was mostly impacted by the financial crisis: accordingly, the carrying value was impaired, and a loss of value was reported in the amount of Euro 111 million (see Note 38). In order to mitigate this risk, the Group has regularly put into place derivatives transactions to hedge most of the portfolio; such transactions are booked as trading activity. The strategy employed through the purchase of put spread structures and the sale of calls allows Finmeccanica to limit the negative effects of a partial decline in the price of the STM security, though continuing to make it possible to benefit to a certain extent from any increase in the price of the security. The Group is therefore still exposed to the potential loss of income in the event such limits are exceeded.

F-108 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Movements in these transactions in the last three years were as follows: Fair Value as Premiums Paid Fair Value as of January 1, Fair Value for New Delta Fair of December 2008 Transactions Closed Transactions Value 31, 2008 (In millions of Euro, unless otherwise stated) Options on STM ...... 43 (39) 7 7 18 — realized capital gains ...... 15 — total receipts...... 54 Underlying position (millions of STM shares) ...... 40 (30) 15 — 25

Fair Value Premiums Paid for Fair value as Fair value as of Transactions Premiums Paid for New of December January 1, 2007 Closed New Transactions Transactions 31, 2007 (In millions of Euro, unless otherwise stated) Options on STM ...... 13 (18) 4 44 43 — gains realized ...... 26 — Total receipts ...... 44 Underlying position (millions of shares) ...... 45 (30) 25 — 40

Fair value Premiums Fair value as Fair value as of Transactions Premiums paid for paid for new of December January 1, 2006 Closed new transactions transactions 31, 2006 (In millions of Euro, unless otherwise stated) Options on STM ...... 1 (1) 4 9 13 —gains realized ...... 8 — Total receipts ...... 9 Underlying position (millions of shares)...... 30 (15) 30 — 45

Exchangeable bond options The STM security represents, for 20 million shares, the underlying security of the exchangeable bond loan with a maturity of August 2010. This embedded option is accounted for separately from the bond loan and is valued at fair value through the income statement. However, in 2005 Finmeccanica acquired a virtually identical option to hedge the option sold to bondholders thereby neutralizing the economic effects of the former (because both the option purchased and the option sold as a part of the bond are valued at fair value through profit and loss) while at the same time freeing up the STM shares that were originally used for servicing the conversion. Were the STM market value to have appreciated (depreciated) by 10% compared with the value at December 31, 2008, earnings would have been higher (lower) by Euro 15 million (15), with an increase (decrease) of Euro 15 million (15) in shareholders’ equity.

Liquidity risk The Group is exposed to the liquidity risk, i.e. the risk that it cannot manage efficiently the ordinary commercial and investment performance and that it cannot repay its payables at maturity. As part of the effort to mitigate such risk, Finmeccanica has adopted a financial planning system aimed at insuring the orderly procurement of the resources needed to cover financial requirements. Such planning involves a series of instruments: the setting of solidity and flexibility targets for the capital structure so that the Group’s credit rating by the rating agencies is at an investment grade level; quantification of confirmed bank facilities for sources of cash in the short and medium term; quantification of unsecured credit facilities; funding activity in the equity and bond markets in order to ensure orderly refinancing of maturing loans / bonds; centralization of

F-109 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 the treasury through cash-pooling with companies wholly owned by the Group and the resulting easier maintenance of adequate liquidity levels; planning and management of operational financial flows; employment of techniques to convert receivables with longer collection times into cash; and projects to evaluate the sale of non-strategic assets. In July 2008, the EMTN bond-issue program was extended for another period of 12 months. Finmeccanica is co-issuer in the program with the Luxembourg subsidiary Finmeccanica Finance S.a., and serves as a guarantor in case of issue by the subsidiary. The total amount of the program is Euro 2,500 million, with bonds of roughly Euro 2,000 million issued to date (Euro 1,750 million at December 31, 2008). It is also noted that the Group will be required to reimburse bonds in the amount of Euro 501 million by 2010. Also, the tranches of the bridge loan still outstanding will need to be refinanced in the next few years according to the following schedule: • tranche B for the residual Euro 1,288 million (inclusive of the Euro 1,139 million outstanding at December 31, 2008, and the Euro 149 million disbursed in January 2009) by June 2009, renewable through the month of June 2010; • tranche C for Euro 697 million by June 2011.

Credit risk The Group is exposed to credit risk, which is defined as the probability of an insolvency with respect to a credit position with commercial and financial counterparties (for both financing and investing activities), and industrial counterparties (for guarantees given on payables or third-party commitments) (Note 30). With regard to commercial counterparties, the most significant programs are made with public-sector contractors or contractors belonging to public institutions, mainly in the Euro Area, the United Kingdom and USA. The risks associated with the counterparty, for contracts with countries for which there are no usual commercial relations, are analyzed and valued at the time of the offer in order to highlight solvency risks, if any, and the possible forms of hedging. Customers being public companies represent a guarantee for solvency, but, on the other hand, means that collection times are longer (in some countries they are significantly longer) than in other businesses, creating significant outstanding credit positions and the subsequent need for transactions to convert the receivables into cash. The table below summarizes trade receivables at December 31, 2008, 2007 and 2006, with most of the balance claimed, as indicated, from public-sector contractors or contractors belonging to public institutions: As of December 31, 2008 2007 2006 (In billions of Euro) Portion due ...... 1.8 1.4 1.5 — including: for more than 12 months...... 0.4 0.4 0.5 Portion not yet due ...... 2.9 2.9 2.0 Total ...... 4.7 4.3 3.5

A part of the portion due is offset by a liability, in relation to payable items or provisions for risks on net excesses. Receivables from financing activities, amounting to Euro 758 million, for the year ended Decem- ber 31, 2008, Euro 666 million, for the year ended December 31, 2007 and Euro 533 million, for the year ended December 31, 2006, of which Euro 79 million, Euro 60 million and Euro 55 million, respectively, was classified as “non-current” and consequently excluded from the net financial position. The receivables mainly refer to the cash and cash equivalents of the MBDA joint venture and Thales Alenia Space (TAS) on deposit

F-110 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006 with the other partners (BAE and EADS in the first case; Thales in the second case), booked as “Other non- current financial receivables” and financing to other related parties, as shown in the table below: As of December 31, 2008 2007 2006 incl. incl. incl. incl. incl. incl. Total MBDA TAS Total MBDA TAS Total MBDA TAS (In millions of Euro) Financial receivables from related parties. . 13 — — 11 — — 16 — — Other financial receivables ...... 65 — 1 49 — 1 39 — 1 Non-current financial receivables ...... 78 — 1 60 — 1 55 — 1 Financial receivables from related parties. . 26 — — 20 — — 26 — — Impairment ...... — — — — — — (1) — — Other financial receivables ...... 653 546 82 586 491 61 453 358 70 Current financial receivables ...... 679 546 82 606 491 61 478 358 70 Total financial receivables ...... 757 546 83 666 491 62 533 358 71

Both trade and financial receivables are impaired individually if they are significant. For receivables that are not impaired individually, impairment provisions are accrued on an aggregate basis, using historical series and statistical data.

Classification of financial assets and liabilities The table below gives a breakdown of Group assets by type of recognition. Derivatives are analyzed separately in Note 24. Liabilities are all valued on the amortized cost method. As of December 31, 2008 Fair value through Loans and Held to Available Income Statement Receivables Maturity for Sale Total (In millions of Euro) Non-current assets Financial assets at fair value ...... — — — 154 154 Non-current receivables from related parties . . . — 13 — — 13 Receivables ...... — 730 — — 730 Current assets Trade receivables ...... — 4,655 — — 4,655 Financial assets at fair value ...... — — — 1 1 Financial receivables ...... — 679 — — 679 Other assets ...... — 340 — — 340

As of December 31, 2007 Fair value through Loans and Held to Available Income Statement Receivables Maturity for Sale Total (In millions of Euro) Non-current assets Financial assets at fair value ...... — — — 589 589 Receivables ...... — 473 — — 473 Current assets Trade receivables ...... — 4,319 — — 4,319 Financial assets at fair value ...... — — — 13 13 Financial receivables ...... — 606 — — 606 Other assets ...... — 667 — — 667

F-111 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

As of December 31, 2006 Fair value through Loans and Held to Available Profit and Loss Receivables Maturity for Sale Total (In millions of Euro) Non-current assets Financial assets at fair value ...... — — — 857 857 Receivables ...... — 442 — — 442 Other assets ...... — 9 — — 9 Current assets Trade receivables ...... — 3,856 — — 3,856 Financial assets at fair value ...... — — — 21 21 Financial receivables ...... — 478 — — 478 Other assets ...... — 364 — — 364

45. REMUNERATION TO KEY MANAGEMENT PERSONNEL Remuneration paid to persons who have power and responsibility over the planning, management and control of the Company, including executive and non-executive Directors, is as follows: Year ended December 31, 2008 2007 2006 (In millions of Euro) Compensation ...... 80 81 72 Post-employment benefits ...... 1 1 3 Other long-term benefits ...... 1 — — Severance indemnity...... 3 1 4 Stock grant ...... 7 4 6 Total ...... 92 87 85

Remuneration paid to directors and managers with strategic responsibility came to Euro 89 million in 2008, Euro 84 million in 2007 and Euro 83 million in 2006. Remuneration to the statutory auditors came to Euro 3 million, Euro 3 million and Euro 2 million respectively for 2008, 2007 and 2006. These figures include fees and other compensation, pensions and other benefits, including the portion borne by the Company, owed as a result of holding the position of director or statutory auditor of the parent company and of the other companies included in the scope of consolidation that represented a cost for the Group. The detail of compensation paid to the directors, statutory auditors, the general manager and the managers with strategic responsibility of the parent company is reported in the following table:

F-112 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Compensation paid to members of administrative and control bodies, to general managers and managers with strategic responsibilities Year ended December 31, 2008

Emoluments by Person Description of Position position in the Bonuses and Term of office reporting Non-cash other Other Name Position Office term expiring Company benefits incentives remunerations (Euros in thousands) Guarguaglini Pier Chairman/Chief Francesco ...... Executive Officer 1.1/31.12.2008 year 2010 85 9 3,966(1) 1,500 Alberti Piergiorgio . . . . Director 1.1/31.12.2008 year 2010 92 50 Andreatta Filippo . . . . . Director 1.1/5.6.2008 year 2007 23 Boltho von Hohebach Andrea ...... Director 6.6/31.12.2008 year 2010 36 Bonferroni Franco . . . . Director 1.1/31.12.2008 year 2010 87 Castellaneta Giovanni . . Director 1.1/5.6.08-26.6/31.12.08 year 2010 55 De Tilla Maurizio . . . . . Director 1.1/31.12.2008 year 2010 102 Galli Dario ...... Director 6.6/31.12.2008 year 2010 36 Greco Richard ...... Director 6.6/31.12.2008 year 2010 36 Lombardi Cerri Gian Luigi ...... Director 1.1/5.6.2008 year 2007 31 Parlato Francesco . . . . . Director 1.1/31.12.2008 year 2010 67(2) Petri Roberto ...... Director 1.1/5.6.2008 year 2007 23 Squillace Nicola...... Director 6.6/31.12.2008 year 2010 45 Varaldo Riccardo . . . . . Director 1.1/31.12.2008 year 2010 74 Venturoni Guido...... Director 1.1/31.12.2008 year 2010 74 Vigevano Paolo ...... Director 1.1/5.6.2008 year 2007 23 Gaspari Luigi ...... Chairman of the Board of Statutory Auditors 1.1/31.12.2008 year 2008 78 36 Cumin Giorgio...... Regular Member 1.1/31.12.2007 year 2008 52 36 Forchielli Francesco . . . Regular Member 1.1/31.12.2008 year 2008 59 15 Montaldo Silvano . . . . . Regular Member 1.1/31.12.2008 year 2008 52 Tamborrino Antonio . . . Regular Member 1.1/31.12.2008 year 2008 71 57 Zappa Giorgio ...... General Manager 1.1/31.12.2008 152 1,158(1) 1,066(3) Managers with strategic responsibilities 1.1/31.12.2008 193 1,282(1) 1,518(4)

(1) — Variable remunerations, to be paid, are shown at their estimated value recorded in the company’s financial statements. (2) — Of which Euro 61 thousand paid to the Ministry of Economy and Finance. (3) — Of which Euro 55 thousand for emoluments by position in Group companies, paid to Finmeccanica SpA. (4) — Of which Euro 60 thousand for emoluments by position in Group companies, paid to Finmeccanica SpA.

F-113 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Compensation paid to members of administrative and control bodies, to general managers and managers with strategic responsibilities Year ended December 31, 2007

Emoluments by Person Description of Position position in the Bonuses and Term of office reporting Non-cash other Other Name Position Office term expiring Company benefits incentives remunerations (Euros in thousands) Guarguaglini Pier Chairman/Chief Francesco ...... Executive Officer 1.1/31.12.2007 year 2007 77 9 2,653(1) 1,500 Alberti Piergiorgio . . . . Director 1.1/31.12.2007 year 2007 87 76 Andreatta Filippo . . . . . Director 27.3/31.12.2007 year 2007 45 Bonferroni Franco . . . . Director 1.1/31.12.2007 year 2007 80 Castellaneta Giovanni . . Director 1.1/31.12.2007 year 2007 60 De Tilla Maurizio . . . . Director 1.1/31.12.2007 year 2007 100 Lombardi Cerri Gian Luigi ...... Director 1.1/31.12.2007 year 2007 74 Parlato Francesco . . . . . Director 12.9/31.12.2007 year 2007 21(2) Petri Roberto ...... Director 1.1/31.12.2007 year 2007 60 Scannapieco Dario . . . . Director 1.1/30.9.2007 year 2007 48(3) Varaldo Riccardo . . . . . Director 1.1/31.12.2007 year 2007 69 Venturoni Guido . . . . . Director 1.1/31.12.2007 year 2007 79 Vigevano Paolo ...... Director 1.1/31.12.2007 year 2007 60 Gaspari Luigi ...... Chairman of the Board of Statutory Auditors 1.1/31.12.2007 year 2008 78 36 Cumin Giorgio ...... Regular Member 1.1/31.12.2007 year 2008 68(*) 51 Forchielli Francesco . . . Regular Member 1.1/31.12.2007 year 2008 57(*) 15 Montaldo Silvano. . . . . Regular Member 1.1/31.12.2007 year 2008 52 Tamborrino Antonio . . . Regular Member 1.1/31.12.2007 year 2008 70(*) 57 Zappa Giorgio ...... General Manager 1.1/31.12.2007 137 1,680(1) 1,076(4) Managers with strategic responsibilities 1.1/31.12.2007 212 2,779(1) 1,697(5)

(1) — Variable remunerations, to be paid, are shown at their estimated value recorded in the company’s financial statements. (2) — Of which Euro 17 thousand paid to the Ministry of Economy and Finance. (3) — Of which Euro 17 thousand paid to the Ministry of Economy and Finance. (4) — Of which Euro 55 thousand for emoluments by position in Group companies, paid to Finmeccanica S.p.A. (5) — Of which Euro 49 thousand for emoluments by position in Group companies, paid to Finmeccanica S.p.A. (*) — Including refund of expenses

F-114 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

Compensation paid to members of administrative and control bodies, to general managers and managers with strategic responsibilities Year ended December 31, 2006

Emoluments by Person Description of Position position in the Bonuses and Term of office reporting Non-cash other Other Name Position Office term expiring Company benefits incentives remunerations (Euros in thousands) Guarguaglini Pier Chairman/Chief Francesco...... Executive Officer 1.1/31.12.2006 year 2007 77 9 1,922(1) 1,500 Alberti Piergiorgio . . . Director 1.1/31.12.2006 year 2007 70 34 Bonferroni Franco . . . . Director 1.1/31.12.2006 year 2007 64 Castellaneta Giovanni ...... Director 1.1/31.12.2006 year 2007 66 De Tilla Maurizio . . . . Director 1.1/31.12.2006 year 2007 96 Lombardi Cerri Gian Luigi...... Director 1.1/31.12.2006 year 2007 72 Monti Ernesto ...... Director 1.1/31.12.2006 year 2007 88 Petri Roberto ...... Director 1.1/31.12.2006 year 2007 66 Scannapieco Dario . . . Director 1.1/31.12.2006 year 2007 79(2) Varaldo Riccardo . . . . Director 1.1/31.12.2006 year 2007 69 Venturoni Guido . . . . . Director 1.1/31.12.2006 year 2007 66 Vigevano Paolo . . . . . Director 1.1/31.12.2006 year 2007 66 Piacenza Domenico . . . Chairman of the Board of Statutory Auditors 1.1/23.05.2006 31 Gaspari Luigi ...... Regular Member 1.1/23.05.2006 year 2008 21 Gaspari Luigi ...... Chairman of the Board of Statutory Auditors 24.5/31.12.2006 year 2008 47 36 Cumin Giorgio ...... Regular Member 1.1/31.12.2006 year 2008 52 52 Forchielli Francesco . . Regular Member 1.1/31.12.2006 year 2008 57 8 Montaldo Silvano . . . . Regular Member 24.5/31.12.2006 year 2008 31 1 Tamborrino Antonio . . Regular Member 1.1/31.12.2006 year 2008 59 42 Zappa Giorgio ...... General Manager 1.1/31.12.2006 115 1,207(1) 954(3) Managers with strategic responsibility 1.1/31.12.2006 200 2,300(1) 1,439(4)

(1) — Variable remunerations, to be paid, are shown at their estimated value recorded in the company’s financial statements. (2) — Of which Euro 57 thousand paid to the Ministry of Finance. (3) — Of which Euro 28 thousand for emoluments by position in the Group company, paid by Finmeccanica S.p.A. (4) — Of which Euro 111 thousand for emoluments by position in the Group company, paid by Finmeccanica S.p.A.

F-115 FINMECCANICA S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of and for the years ended December 31, 2008, 2007 and 2006

The parent, Finmeccanica S.p.A., in order to create an incentive and retention system for Group employees and consultants, implemented incentive plans providing for the granting of Finmeccanica shares, subject to the attainment of specific objectives. At December 31, 2008, there were commitments to Finmeccanica employees and consultants to grant 4,759,483 ordinary Finmeccanica shares with a par value of Euro 20.44. As of December 31, 2007 there were commitments to grant 3,436,523 ordinary Finmeccanica shares at a par value of Euro 15.90 without compensation to Finmeccanica employees and. The changes in the stock grant plans are as follows: As of December 31, 2008 2007 2006 (Number of shares) Rights existing as of January 1, ...... — — — New rights assigned ...... 2,042,384 1,055,710 888,456 Rights exercised during the year ...... 2,042,384 1,055,710 888,456 Rights lapsed during the year ...... — — — Rights existing at period-end ...... — — —

F-116 FINMECCANICA S.p.A. UNAUDITED INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT For the six months ended June 30, 2009 and 2008

For the six months ended June 30, of which of which with related with related Section 2009 parties 2008 parties (In millions of Euro, except per share information) Revenue ...... 8,523 640 6,433 630 Purchases and personnel costs ...... 9 (7,621) (58) (5,820) (31) Amortization, depreciation and impairment ...... 10 (320) — (220) — Other operating income (expenses) ...... 11 (23) — (18) 1 Operating income ...... 559 375 Finance income (costs) ...... 12 (168) — — (12) Share of profit (loss) of equity accounted investments...... 12 — 10 — Profit before taxes and the effect of discontinued operations ...... 403 385 Income taxes ...... 13 (161) — (88) — Profit (Loss) from discontinued operations...... — — — — Net profit ...... 242 297 — equity holders of the Group ...... 218 — 278 — — minority interests ...... 24 — 19 — Earnings per Share ...... 29 Basic ...... 0.378 n.a. 0.623 n.a. Diluted...... 0.377 n.a. 0.622 n.a. Earnings per share net of discontinued operations .. 29 Basic ...... 0.378 n.a. 0.623 n.a. Diluted...... 0.377 n.a. 0.622 n.a.

(The accompanying notes are an integral part of this unaudited interim condensed consolidated financial information)

F-117 FINMECCANICA S.p.A. UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET As of June 30, 2009 and December 31, 2008

of which As of of which As of June with related December 31, with related Section 30, 2009 parties 2008 parties (In millions of Euro) Non-current assets Intangible assets ...... 14 8,516 — 8,237 — Property, plant and equipment ...... 15 3,185 — 3,099 — Financial assets at fair value ...... 17 180 — 154 — Deferred taxes ...... 662 — 648 — Other assets ...... 18 1,085 12 975 13 13,628 13,113 Current assets Inventories...... 4,876 — 4,365 — Trade receivables, including net work in progress ...... 19 8,729 445 8,329 518 Financial receivables...... 758 38 679 26 Derivatives...... 20 302 — 243 — Other assets ...... 21 988 60 896 14 Cash and cash equivalents ...... 718 — 2,297 — 16,371 16,809 Non-current assets held for sale ...... — — — — Total assets ...... 29,999 29,922 Shareholders’ equity Share capital ...... 22 2,508 — 2,519 — Other reserves ...... 3,643 — 3,455 — Capital and reserves attributable to equity holders of the Company ...... 6,151 5,974 Minority interests in equity ...... 168 — 156 — Total shareholders’ equity ...... 6,319 6,130 Non-current liabilities Borrowings ...... 25 3,743 — 4,095 — Employee liabilities ...... 23 1,032 — 1,027 — Provisions for risks and charges ...... 24 386 — 344 — Deferred taxes ...... 527 — 553 — Other liabilities ...... 27 699 — 731 — 6,387 6,750 Current liabilities Trade payables, including advances from customers, net ...... 26 12,239 78 12,134 84 Borrowings ...... 25 2,349 703 2,265 652 Income tax payables ...... 338 — 201 — Provisions for risks and charges ...... 24 571 — 632 — Derivatives...... 20 95 — 236 — Other liabilities ...... 27 1,701 30 1,574 34 17,293 17,042 Liabilities directly correlated with assets held for sale...... — — — — Total liabilities...... 23,680 23,792 Total liabilities and shareholders’ equity ...... 29,999 29,922

(The accompanying notes are an integral part of this unaudited interim condensed consolidated financial information)

F-118 FINMECCANICA S.p.A. UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended June 30, 2009 and 2008

For the six months ended June 30, of which of which with with related related Section 2009 parties 2008 parties (In millions of Euro) Cash flow from operating activities: Gross cash flow from operating activities ...... 28 1,019 — 635 — Changes in working capital ...... 28 (1,024) 70 (1,135) (50) Changes in other operating assets and liabilities and provisions for risks and charges ...... (109) (39) (183) (19) Finance costs paid ...... (97) — (40) (12) Income taxes paid ...... (35) — (67) — Net cash used in operating activities ...... (246) (790) Cash flow from investing activities: Acquisitions of subsidiaries, net of cash acquired ...... (11) — (78) — Sale of STM shares ...... — — 260 — Purchase of property, plant and equipment and intangible assets ...... (475) — (541) — Proceeds from sale of property, plant and equipment and intangible assets ...... 6 — 6 — Subscription of SCAC and other equity investments ...... (149) — — — Other investing activities ...... (5) — (25) (10) Net cash used in investing activities ...... (634) (378) Cash flow from financing activities: Share capital increase ...... 22 — — 1 — Dividends paid to Company’s shareholders...... (237) — (174) — Dividends paid to minority interests ...... (17) — (13) — Repayment of DRS’s convertible bonds ...... (868) — — — Issue of bonds ...... 696 — — — Net change in other borrowings ...... (275) (20) 70 (34) Net cash used in financing activities ...... (701) (116) Net increase (decrease) in cash and cash equivalents ...... (1,581) (1,284) Exchange gains/losses ...... 2 (9) Cash and cash equivalents as of January 1 ...... 2,297 1,607 Cash and cash equivalents as of June 30...... 718 314

(The accompanying notes are an integral part of this unaudited interim consolidated financial information)

F-119 FINMECCANICA S.p.A. UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY For the six months ended June 30, 2009 and 2008

Reserve for actuarial profits Retained Reserve for Reserve for (losses) Total earnings and assets Cash-flow stock-option posted to other Share consolidation available hedge and stock- shareholders’ Translation Group Minority capital reserve for sale reserve grant plans equity reserve reserves interests (In millions of Euro) January 1, 2008 ...... 1,864 3,224 121 71 32 167 (150) 5,329 103

Dividends paid ...... — (174) — — — — — (174) (13) Capital increases ...... — 1 — — — — — 1 — Repurchase of treasury shares, less shares sold ...... (4) — — — — — — (4) — Total income and costs . . — 278 (162) (16) — (76) (161) (137) 15 Stock options/grant plans: ...... — — — — — — — — — — services rendered . . . . — — — — 10 — — 10 1 Other changes...... — 3 8 — — — (8) 3 —

June 30, 2008 ...... 1,860 3,332 (33) 55 42 91 (319) 5,028 106

January 1, 2009 ...... 2,519 4,183 — 23 19 41 (811) 5,974 156

Dividends paid ...... — (237) — — — — — (237) (17) Capital increases ...... — — — — — — — — 4 Repurchase of treasury shares, less shares sold ...... (9) — — — — — — (9) — Total income and costs . . — 218 26 56 — (39) 148 409 25 Stock options/grant plans: ...... — — — — — — — — — — services rendered . . . . — — — — 15 — — 15 1 Other changes...... (2) (4) — — — — 5 (1) (1)

June 30, 2009 ...... 2,508 4160 26 79 34 2 (658) 6,151 168

(The accompanying notes are an integral part of this unaudited interim consolidated financial information)

F-120 FINMECCANICA S.p.A. UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSES For the six months ended June 30, 2009 and 2008

For the six months ended June 30, 2009 2008 (In millions of Euro) Profit (loss) for the period ...... 242 297 Reserves of income (expense) recognized in equity — Financial assets available for sale: ...... 26 (162) — sale of shares ...... — (56) — fair value adjustment ...... 26 (106) — Actuarial gains (losses) on defined-benefit plans: ...... (59) (105) — plan measurement ...... (68) (105) — exchange gains/losses ...... 9 — — Changes in cash-flow hedges: ...... 72 (24) — fair value adjustment ...... 86 (24) — transferred to the income statement ...... (13) — — exchange gains/losses ...... (1) — — Translation differences ...... 151 (162) Tax on expense (income) recognized in equity ...... 2 34 — fair value adjustment/measurement ...... 5 34 — exchange gains/losses ...... (3) — Income (expense) recognized in equity ...... 192 (419) Total income and expense for the period ...... 434 (122) Attributable to: — equity holders of the Company ...... 409 (137) — minority interests ...... 25 15

(The accompanying notes are an integral part of this unaudited interim consolidated financial information)

F-121 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

1. GENERAL INFORMATION Finmeccanica S.p.A. (hereinafter “Finmeccanica”) is a company limited by shares based in Rome (Italy), at Piazza Monte Grappa 4, and is listed on the Milan stock market (S&P/MIB). Finmeccanica, the holding company responsible for guiding and controlling industrial and strategic operations, coordinates its subsidiaries (hereinafter the “Finmeccanica Group” or, simply, the “Group” or the “Company”), which are especially concentrated in the fields of Helicopters, Defense Electronics and Security, Aeronautics, Space, Defense Systems, Energy and Transportation. The Finmeccanica Group is a major Italian high technology organization.

2. FORM, CONTENT AND APPLICABLE ACCOUNTING STANDARDS The unaudited interim condensed consolidated financial information of the Finmeccanica Group as of and for the six months ended June 30, 2009 (hereinafter “Unaudited Interim Condensed Consolidated Financial Information”) was prepared pursuant to Article 154-ter, of Legislative Decree 58/98 (Consolidated Law on Financial Intermediation), as subsequently changed and amended. The Unaudited Interim Condensed Consolidated Financial Information was prepared in accordance with IAS 34 “Interim financial reporting”, issued by the International Accounting Standard Board (IASB). In accordance with IAS 34, these notes are presented in a condensed form and do not include all the information required to be disclosed in the annual consolidated financial statements, because they relate only to those items whose amount, breakdown or changes are key to the understanding of the financial condition of the Group. Therefore, this report must be read in conjunction with the Group’s consolidated financial statements as of and for the year ended December 31, 2008. Likewise, the balance sheet and the income statement are presented in a condensed form as compared with the annual consolidated financial statements. The reconciliation of the items which are condensed to the annual financial statements is provided in the relevant notes to the Unaudited Interim Condensed Consolidated Financial Information. The accounting principles and basis of accounting that have been used in the preparation of the Unaudited Interim Condensed Consolidated Financial Information are the same that were used in the preparation of the consolidated financial statements as of and for the year ended December 31, 2008 and the unaudited interim condensed consolidated financial information as of and for the six months ended June 30, 2008, except for the application of the revised version of IAS 1 “Presentation of financial statements” and IAS 23 “Borrowing costs” and of IFRS 8 “Operating segments” as indicated below (Section 4) starting from this Unaudited Interim Condensed Consolidated Financial Information. All figures are shown in millions of Euros unless otherwise indicated. The Unaudited Interim Condensed Consolidated Financial Information as of and for the six months ended June 30, 2009, which was prepared in accordance with IAS 34 “Interim Financial Reporting” issued by IASB.

3. TREATMENT OF INCOME TAXES APPLIED IN THE PREPARATION OF INTERIM REPORTS AND SEASONALITY OF OPERATIONS Treatment of income taxes In the Unaudited Interim Condensed Consolidated Financial Information, income taxes are estimated by applying the expected effective annual tax rate to the interim pre-tax result.

Cash flows relating to operations The businesses in which the Group is primarily active are characterized by a high concentration of cash flows from customers in the closing months of the year. This pattern affects both the interim cash flow statements and the volatility of the debt situation of the Group over each interim period, which shows a marked improvement in the final months of the calendar year.

F-122 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

4. EFFECT OF CHANGES IN ACCOUNTING POLICIES ADOPTED The changes made to IAS 1 and the introduction of IFRS 8 have only had an impact on how information is disclosed. Specifically, the revised version of IAS 1 requires that the statement of changes in shareholders’ equity only shows changes resulting from transactions with shareholders. The Group decided to present information of transactions with non-shareholders in two separate statements, called the “Income Statement” and the “Statement of Recognized Income and Expense”. In addition to indicating how information on operating segments is to be presented, IFRS 8 requires that the operating segments used be consistent with those adopted by management in making operating decisions. The changes made to IAS 23, in particular, eliminate the option of recognizing borrowing costs stemming from the acquisition, construction or production of certain assets that require a significant period of time before being ready to use or sell (qualifying assets) in the income statement. The Group has elected to apply the new policies prospectively, starting from January 1, 2009, without recognizing any significant effects during the period. Other changes in the accounting policies and interpretations, applicable starting from January 1, 2009, have not had any impact on the Unaudited Interim Condensed Consolidated Financial Information.

5. SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS In June 2009, the Group received the remaining Euro 64 million relating to the receivable (originally set at Euro 371 million) arising from the settlement of the dispute with ENEA. On December 12, 2008, a settlement agreement — accompanied by the payment of an initial installment of Euro 307 million — was signed by Finmeccanica SpA and Ente per le Nuove tecnologie e l’Ambiente (ENEA) in relation to the settlement of the dispute initiated in 1995 between the parties concerning the costs borne by Finmeccanica as a result of the settlement under Law 321/1988 of the contract for the construction of the nuclear power plant named PEC, signed in previous years between ENEA and Finmeccanica. Further to the information provided in the 2008 financial statements concerning financing under Law 808/1985, it should be reported that amounts due as of December 31, 2008 were repaid in January 2009, in line with the allocation made in the Group’s financial statements. These payments are in addition to the installment repaid in May 2008 (relating to amounts due for 2007, including finance costs). In addition, the European Commission, through the decision issued in March 2008 concerning the individual aid granted by Italy for research and development projects, retained the right to submit to Italy additional requests for information on two helicopter projects (for which the Group feels it has proven full compatibility with Community regulations, as these are national security programs) before a final decision on the matter is taken. The Commission and the Italian Government are currently exchanging information. ************

F-123 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

With regard to June 30, 2008, it should be noted that: On February 26, 2008, Finmeccanica, Cassa Depositi e Prestiti and FT1CI (a company owned by Areva), as shareholders of STMicroelectronics Holding NV (STH), the Dutch company which owns 27.54% of the share capital of STM, signed an agreement amending the existing shareholders’ agreement concerning the joint Italian-French governance of STH. Under the agreement, the Italian and French parties agreed to rebalance their respective stakes in STM, indirectly held through STH. Specifically, Finmeccanica, as shareholder of STH, agreed to sell to FT1CI the equivalent of 26,034,141 shares of STM at the price of Euro 10 per share, plus an earn-out equal to 40% of any positive price differential of STM stock between the base price of Euro 10 and the average market price calculated over a three-month period starting nine months from the date of signing of the agreement, up to Euro 4 per share, with these effects: In millions of Euro Sale proceeds ...... 260 Capital gain realized...... 56 Tax effect...... (2) The interest indirectly held in STM after the partial sale was equal to 3.7% of the share capital. Concerning financing under Law 808/1985, on March 11, 2008, the European Commission issued a decision on the individual aids granted by Italy for R&D projects in the aeronautics segment under Law 808/95, Article 3 a. Pending the decision, the Group had recognized (in the 2007 financial statements) impairment of assets for Euro 125 million and finance costs of Euro 105 million. The decision declared that these aids are compatible with the common market, under Article 87 of the Treaty, provided that the Italian authorities obtain the repayment, plus relevant finance costs, within two months of notification of the Community decision.

6. SCOPE OF CONSOLIDATION List of companies consolidated on a line-by-line basis % Group ownership % Group Name Registered office Direct Indirect shareholding

3083683 NOVA SCOTIA LIMITED ...... Halifax, New Scotland (Canada) 100 100 ABS TECHNOLOGY SPA ...... Florence 60 60 AEROMECCANICA SA ...... Luxembourg 99.967 100 AGUSTA AEROSPACE CORP. USA ...... Wilmington Delaware (USA) 100 100 AGUSTAAEROSPACESERVICESA.ASSA..... Grace Hollogne (Belgium) 100 100 AGUSTAHOLDINGBV...... Amsterdam (the Netherlands) 100 100 AGUSTASPA...... Cascina Costa (Varese) 100 100 AGUSTAUSINC...... Wilmington, Delaware (USA) 100 100 AGUSTAWESTLAND AUSTRALIA PTY LTD .... Melbourne (Australia) 100 100 AGUSTAWESTLAND DO BRASIL LTDA ...... SaoPaulo (Brazil) 100 100 AGUSTAWESTLAND HOLDINGS LTD ...... Yeovil, Somerset (U.K.) 100 100 AGUSTAWESTLAND INC...... NexCastle,Wilmington, Delaware (USA) 100 100 AGUSTAWESTLAND INTERNATIONAL LTD .... Yeovil, Somerset (U.K.) 100 100 AGUSTAWESTLAND MALAYSIA SDN BHD .... Kuala Lumpur (Malaysia) 100 100 AGUSTAWESTLAND NORTH AMERICA INC .... Wilmington, Delaware (USA) 100 100 AGUSTAWESTLAND NV ...... Amsterdam (the Netherlands) 100 100 AGUSTAWESTLAND PORTUGAL SA ...... Lisbona (Portugal) 100 100 AGUSTAWESTLAND PROPERTIES LTD ...... Yeovil, Somerset (U.K.) 100 100 AGUSTAWESTLAND BELL LLC ...... Wilmington, Delaware (USA) 51 51 ALENIA AERMACCHI SPA ...... Venegono Superiore (Varese) 99.998 99.998 ALENIA AERONAUTICA SPA...... Pomigliano (Naples) 100 100 ALENIAAERONAVALISPA...... Tessera (Venice) 100 100

F-124 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

List of companies consolidated on a line-by-line basis (continued) % Group ownership % Group Name Registered office Direct Indirect shareholding ALENIA COMPOSITE SPA ...... Grottaglie (Taranto) 97 97 ALENIAIMPROVEMENTSPA...... Pomigliano D’Arco (Naples) 98 98 ALENIANORTHAMERICAINC...... NexCastle,Wilmington, Delaware (USA) 88.409 88.409 ALENIASIASPA...... Turin 100 100 AMTECSPA...... Piancastagnaio (Siena) 100 100 ANSALDOENERGIASPA...... Genoa 100 100 ANSALDO ESG AG ex ENERGY SERVICE GROUPAG...... Wurenlingen (Switzerland) 100 100 ANSALDO FUEL CELLS SPA ...... Genoa 94.37 94.37 ANSALDONUCLEARESPA...... Genoa 100 100 ANSALDOSIGNALNV(INLIQ.)...... Amsterdam (the Netherlands) 100 40.0655 ANSALDOSTSAUSTRALIAPTYLTD...... Birsbane (Australia) 100 40.0655 ANSALDO STS BEIJING LTD ...... Beijing (China) 80 32.0524 ANSALDOSTSCANADAINC...... Burlington, Ontario (Canada) 100 40.0655 ANSALDO STS DEUTSCHLAND GMBH ...... Berlin (Germany) 100 40.0655 ANSALDOSTSESPANASAU...... Madrid (Spain) 100 40.0655 ANSALDOSTSFINLANDOY...... Helsinki (Finland) 100 40.0655 ANSALDO STS FRANCE SA ...... LesUlis(France) 100 40.0655 ANSALDO STS HONG KONG LTD ...... Kowloon Bay (China) 100 40.0655 ANSALDOSTSIRELANDLTD...... COKERRY(Ireland) 100 40.0655 ANSALDOSTSMALAYSIASDNBHD...... Kuala Lumpur (Malaysia) 100 40.0655 ANSALDOSTSSWEDENAB...... Solna (Sweden) 100 40.0655 ANSALDO STS TRASP. SYST. INDIA PRIV. LTD exUNIONSWIT.&SIGN.PRIV.LTD...... Bangalore (India) 100 40.0655 ANSALDOSTSUKLTD...... Barbican (U.K.) 100 40.0655 ANSALDOSTSSPA...... Genoa 40.0655 40.0655 ANSALDOSTSUSAINC...... Wilmington, Delaware (USA) 100 40.0655 ANSALDOSTSUSAINTERNATIONALCO..... Wilmington, Delaware (USA) 100 40.0655 ANSALDO STS USA INTERNATIONAL PROJECT CO...... Wilmington, Delaware (USA) 100 40.0655 ANSALDO THOMASSEN BV ex THOMASSEN TURBINE SYSTEMS BV ...... Rheden (the Netherlands) 100 100 ANSALDO THOMASSEN GULF LLC ex THOMASSEN SERVICE GULF LLC ...... AbuDhabi, United Arab Emirates 48.667 100 ANSALDOBREDAESPANASLU...... Madrid (Spain) 100 100 ANSALDOBREDASPA...... Naples 100 100 ANSALDOBREDAINC...... Pittsburg, California (USA) 100 100 ASIAPOWERPROJECTSPRIVATELTD...... Bangalore (India) 100 100 AUTOMATISMES CONTROLES ET ETUDES ELECTRONIQUES ACELEC SA ...... LesUlis(France) 99.999 40.0651 BREDAMENARINIBUSSPA...... Bologna 100 100 DAVIES INDUSTRIAL COMMUNICATIONS LTD . . . Chelmsford, Essex (U.K.) 100 100 DRS C3 & AVIATION COMPANY ...... Wilmington, Delaware (USA) 100 100 DRS C3 SYSTEMS INC ...... Plantation, Florida (USA) 100 100 DRS CODEM SYSTEMS INC ...... Wilmington, Delaware (USA) 100 100 DRS DATA & IMAGING SYSTEMS INC ...... Wilmington, Delaware (USA) 100 100 DRS HOMELAND SECURITY SOLUTIONS INC . . Wilmington, Delaware (USA) 100 100 DRS INTELLIGENCE & AVIONIC SOLUTIONS INC...... Cleveland, Ohio (USA) 100 100 DRSINTERNATIONALINC...... Wilmington, Delaware (USA) 100 100 DRS MOBILE ENVIRONMENTAL SYSTEMS CO. . . Cleveland, Ohio (USA) 100 100

F-125 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

List of companies consolidated on a line-by-line basis (continued) % Group ownership % Group Company name Registered office Direct Indirect shareholding DRS POWER & CONTROL TECHNOLOGIES INC ...... Wilmington, Delaware (USA) 100 100 DRS POWER TECHNOLOGY INC ...... Wilmington, Delaware (USA) 100 100 DRS RSTA INC. ex DRS SENSORS & TARGETING SYSTEMS INC...... Wilmington, Delaware (USA) 100 100 DRS SENSORS & TARGETING SYSTEMS INC ...... Wilmington, Delaware (USA) 100 100 DRSSIGNALSOLUTIONSINC...... Wilmington, Delaware (USA) 100 100 DRS SONAR SYSTEMS LLC ...... Wilmington, Delaware (USA) 51 51 DRS SURVEILLANCE SUPPORT SYSTEMS INC ...... Wilmington, Delaware (USA) 100 100 DRS SUSTAINMENT SYSTEMS INC ...... Wilmington, Delaware (USA) 100 100 DRS SYSTEMS MANAGEMENT LLC ...... Wilmington, Delaware (USA) 100 100 DRS SYSTEMS INC...... Wilmington, Delaware (USA) 100 100 DRS TACTICAL SYSTEMS GLOBAL SERVICES INC . . . Plantation, Florida (USA) 100 100 DRS TACTICAL SYSTEMS INC ...... Plantation, Florida (USA) 100 100 DRS TECHNICAL SERVICES GMBH & CO KG ...... Baden, Wurttemberg (Germany) 100 100 DRS TECHNICAL SERVICES INC ...... Baltimore, Maryland (USA) 100 100 DRS TECHNOLOGIES CANADA INC ...... Wilmington, Delaware (USA) 100 100 DRS TECHNOLOGIES CANADA LTD ...... Kanata, Ontario (Canada) 100 100 DRS TECHNOLOGIES UK LIMITED ...... Farnham, Surrey (UK) 100 100 DRS TECHNOLOGIES VERWALTUNGS GMBH ...... Baden, Wurttemberg (Germany) 100 100 DRS TECHNOLOGIES INC...... Wilmington, Delaware (USA) 100 100 DRS TEST & ENERGY MANAGEMENT LLC ...... Wilmington, Delaware (USA) 100 100 DRS UNMANNED TECHNOLOGIES INC ...... Wilmington, Delaware (USA) 100 100 ED CONTACT SRL ...... Rome 100 100 ELECTRON ITALIA SRL ...... Rome 80 80 ELSACOM NV ...... Amsterdam (the Netherlands) 100 100 ELSACOM SPA ...... Rome 100 100 ELSAG DATAMAT SPA ...... Genoa 100 100 ELSAG NORTH AMERICA LLC ex REMINGTON ELSAG LAW ENFORCEMENT SYST...... Madison, North Carolina (USA) 100 100 ENGINEERED COIL COMPANY ...... Clayton, Missouri (USA) 100 100 ENGINEERED ELECTRIC COMPANY ...... Clayton, Missouri (USA) 100 100 ENGINEERED SUPPORT SYSTEMS INC ...... Clayton, Missouri (USA) 100 100 E-SECURITY SRL ...... Montesilvano (Pescara) 79.688 79.688 ESSI RESOURCES LLC ...... Louisville, Kentucky (USA) 100 100 FATAENGINEERINGSPA...... Pianezza (Turin) 100 100 FATAGROUPSPA(INLIQ.)...... Pianezza (Turin) 100 100 FATAHUNTERINC...... Riverside, California (USA) 100 100 FATA LOGISTIC SYSTEMS SPA ...... Pianezza (Turin) 100 100 FATASPA...... Pianezza (Turin) 100 100 FINMECCANICA FINANCE SA...... Luxembourg (Luxembourg) 73.6395 26.3575 99.997 FINMECCANICA GROUP REAL ESTATE SPA ...... Rome 100 100 FINMECCANICA GROUP SERVICES SPA ...... Rome 100 100 GALILEO AVIONICA SPA ...... CampiBisenzio (Florence) 100 100 GLOBAL MILITARY AIRCRAFT SYSTEMS LLC ...... Wilmington, Delaware (USA) 51 45.0886 ITALDATAINGEGNERIADELL’IDEASPA...... Rome 51 51 LARIMARTSPA...... Roma 60 60 LAUREL TECHNOLOGIES PARTNERSHIP ...... Wilmington, Delaware (USA) 80 80 MECCANICA HOLDINGS USA INC ...... Wilmington, Delaware (USA) 100 100 MECFINT (JERSEY) SA ...... Luxembourg (Luxembourg) 99.999 99.996 MSSC COMPANY ...... Philadelphia, Pennsylvania (USA) 51 51

F-126 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

List of companies consolidated on a line-by-line basis (continued) % Group ownership % Group Company name Registered office Direct Indirect shareholding NETSERVICESRL...... Bologna 70 70 NIGHT VISION SYSTEMS LLC ...... Wilmington, Delaware (USA) 100 100 OTE MOBILE TECHNOLOGIES LIMITED ...... Chelmsford, Essex (U.K.) 100 100 OTO MELARA IBERICA SA ...... Loriguilla, Valencia (Spain) 100 100 OTOMELARANORTHAMERICAINC...... Dover,Delaware (USA) 100 100 OTOMELARASPA...... LaSpezia 100 100 PCA ELECTRONIC TEST LTD ...... Grantham, Lincolnshire (UK) 100 100 PIVOTALPOWERINC...... Halifax, New Scotland (Canada) 100 100 QUADRICSLTD...... Bristol (U.K.) 100 100 SEICOS SPA ...... Rome 100 100 SELENIAMARINECOLTD(INLIQ.)...... Chelmsford, Essex (U.K.) 100 100 SELENIA MOBILE SPA ...... Chieti Scalo (Chieti) 100 100 SELEX COMMUNICATIONS DO BRASIL LTDA ...... RiodeJaneiro (Brazil) 100 100 SELEX COMMUNICATIONS GMBH ...... Backnang (Germany) 100 100 SELEX COMMUNICATIONS HOLDINGS LTD ...... Chelmsford (U.K.) 100 100 SELEX COMMUNICATIONS INC ...... SanFrancisco, California (USA) 100 100 SELEX COMMUNICATIONS INTERNATIONAL LTD . . . . Chelmsford, Essex (U.K.) 100 100 SELEX COMMUNICATIONS LTD ...... Chelmsford, Essex (U.K.) 100 100 SELEX COMMUNICATIONS ROMANIA SRL ...... Bucarest (Romania) 99.976 99.976 SELEX COMMUNICATIONS SPA ...... Genoa 100 100 SELEX COMMUNICATIONS SECURE SYSTEMS LTD . . . Chelmsford, Essex (U.K.) 100 100 SELEX KOMUNIKASYON AS ...... Golbasi (Turkey) 99.999 99.999 SELEX SENSORS AND AIRBORNE SYSTEMS SPA (IN LIQ.)...... CampiBisenzio (Florence) 100 100 SELEX SENSORS AND AIRBORNE SYSTEMS LTD . . . . Essex (U.K.) 100 100 SELEX SENSORS AND AIRBORNE SYSTEMS (US) INC...... Wilmington, Delaware (USA) 100 100 SELEXSERVICEMANAGEMENTSPA...... Rome 100 100 SELEX SISTEMI INTEGRATI GMBH ...... Neuss (Germany) 100 100 SELEX SISTEMI INTEGRATI INC ...... Delaware (USA) 100 100 SELEX SYSTEMS INTEGRATION LTD ex SELEX SISTEMI INTEGRATI LTD ...... Portsmouth, Hampshire (U.K.) 100 100 SELEX SISTEMI INTEGRATI SPA ...... Rome 100 100 S.C. ELETTRA COMMUNICATIONS SA...... Ploiesti (Romania) 50.5 50.4997 SIRIOPANELSPA...... Montevarchi (Arezzo) 93 93 SISTEMI E TELEMATICA SPA ...... Genoa 92.793 92.793 SO.GE.PA.SOC.GEN.DIPARTECIPAZIONISPA...... Genoa 100 100 SPACESOFTWAREITALIASPA...... Taranto 100 100 T — S HOLDING CORPORATION ...... Dallas, Texas (USA) 100 100 TECH-SYM CORPORATION ...... Reno, Nevada (USA) 100 100 UNION SWITCH & SIGNAL INC ex TRANSCONTROL CORPORATION ...... Wilmington, Delaware (USA) 100 40.0655 UNIVERSAL POWER SYSTEMS INC...... Wilmington, Delaware (USA) 100 100 VEDECON GMBH ex ANITE TRAVEL SYSTEMS GMBH...... Cologne (Germany) 100 100 VEGA CONSULTING & TECHNOLOGY SL ...... Madrid (Spain) 100 100 VEGA CONSULTING SERVICES LTD ex VEGA GROUP PLC...... Hertfordshire (UK) 100 100 VEGA DEUTSCHLAND GMBH & CO KG ex ANITE DEUTSCHLAND GMBH & CO KG...... Cologne (Germany) 100 100

F-127 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

List of companies consolidated on a line-by-line basis (continued) % Group ownership % Group Company name Registered office Direct Indirect shareholding VEGA DEUTSCHLAND HOLDING GMBH ex ANITE DEUTSCHLAND MANAG. GMBH ...... Cologne (Germany) 100 100 VEGA DEUTSCHLAND MANAGEMENT GMBH ex ANITE DEUTSCHL. HOLD. GMBH ...... Cologne (Germany) 100 100 VEGASERVICESLTDexCREWGROUPLTD...... Hertfordshire (UK) 100 100 VEGA SPACE LTD ex VEGA SPACE SYSTEMS ENGINEERING LTD ...... Hertfordshire (UK) 100 100 VEGA TECHNOLOGIES SAS ...... Ramonville Saint Agne (France) 100 100 WESTLAND HELICOPTERS INC ...... Wilmington, Delaware (USA) 100 100 WESTLAND HELICOPTERS LTD ...... Yeovil, Somerset(U.K.) 100 100 WESTLAND INDUSTRIES LTD ...... Yeovil, Somerset (U.K.) 100 100 WESTLAND SUPPORT SERVICES LTD ...... Yeovil, Somerset (U.K.) 100 100 WESTLAND TRANSMISSIONS LTD ...... Yeovil, Somerset (U.K.) 100 100 WHITEHEAD ALENIA SIST. SUBACQUEI SPA ...... Livorno 100 100 WINGNEDBV...... Rotterdam (the Netherlands) 100 100 WORLD’S WING SA ...... Geneva(Switzerland) 94.94 94.94

F-128 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

List of companies consolidated using the proportionate method (continued) % Group ownership % Group Company name Registered office Direct Indirect shareholding MBDA TREASURE COMPANY LTD ...... Jersey (U.K.) 100 25 MBDA FRANCE SAS ...... Paris (France) 100 25 MBDA INCORPORATED ...... Wilmington, Delaware (USA) 100 25 MBDAITALIASPA...... Rome 100 25 MBDAUKLTD...... Stevenage (U.K.) 100 25 MARCONI UAE LTD ex MARCONI OVERSEAS LTD ...... London (U.K.) 100 25 MATRA ELECTRONIQUE SA ...... Paris (France) 100 25 MBDASERVICESSA...... Paris (France) 99.68 24.92 LFK-LENKFLUGKORPERSYSTEME GMBH ...... UnterschleiBheim(Germany) 100 25 BAYERN-CHEMIE GMBH ...... Germany 100 25 TAURUS SYSTEMS GMBH ...... Germany 67 16.75 TDW GMBH ...... Germany 100 25 AVIATION TRAINING INTERNATIONAL LIMITED ...... Dorset (U.K.) 50 50 CONSORZIO ATR GIE e SPE ...... Toulouse (France) 50 50 SUPERJETINTERNATIONALSPA...... Tessera (Venice) 51 51 GLOBALAERONAUTICALLC...... Wilmington, Delaware (USA) 50 44.2045

List of companies consolidated using the equity method % Group ownership % Group Company name Registered office Direct Indirect shareholding 179CENTELEC SAS ...... Neuilly Sur Seine (France) 21 21 ABRUZZOENGINEERINGSCPA...... L’Aquila 30 30 ABU DHABI SYSTEMS INTEGRATION LLC ...... AbuDhabi(UnitedArabEmirates) 43.043 43.043 ADVANCED AIR TRAFFIC SYSTEMS SDN BHD ...... Darul Ehsan (Malaysia) 30 30 ADVANCED LOGISTICS TECHNOLOGY ENGINEERING CENTERSPA...... Turin 51 16.83 ALENIA HELLAS SA ...... Kolonaki, Athens (Greece) 100 100 ALENIANORTHAMERICA-CANADACO...... Halifax, New Scotland (Canada) 100 88.409 ALIFANADUESCRL...... Naples 53.34 21.371 ALIFANASCRL...... Naples 65.85 26.38 ANSALDOARGENTINASA...... Buenos Aires (Argentina) 99.9933 99.9933 ANSALDO ELECTRIC DRIVES SPA ...... Genoa 100 100 ANSALDO — E.M.I.T. SCRL ...... Genoa 50 50 ANSALDOENERGYINC...... Wilmington, Delaware (USA) 100 100 ANSERVSRL...... Bucharest (Romania) 100 100 AUTOMATIONINTEGRATEDSOLUTIONSSPA...... Pianezza (Turin) 40 40 BELL AGUSTA AEROSPACE COMPANY LLC ...... Wilmington, Delaware (USA) 40 40 BRITISH HELICOPTERS LTD ...... Yeovil, Somerset (U.K.) 100 100 CANOPY TECHNOLOGIES LLC ...... Wilmington, Delaware (USA) 50 50 CARDPRIZE TWO LIMITED ...... Basildon, Essex (U.K.) 100 100 COMLENIA SENDIRIAN BERHAD ...... Selangor Darul Ehsan (Malaysia) 30 30 CONSORZIO START SPA ...... Rome 40 40 CONTACT SRL ...... Naples 30 30 COREAT S.C. A R.L...... Rieti 30 30 DIGINTSRL...... Milan 49 49 DOGMATIX LEASING LIMITED ...... Mauritius Islands 100 50 DRS CONSOLIDATED CONTROLS INC ...... Wilmington, Delaware (USA) 100 100

F-129 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

List of companies consolidated using the equity method (continued) % Group ownership % Group Company name Registered office Direct Indirect shareholding DRS DEFENSE SOLUTIONS LLC ex DRS INTEGRATED DEFENSE SOLUTIONS LLC...... Wilmington, Delaware (USA) 100 100 ECOSENSA...... Caracas (Venezuela) 48 19.23 ELETTRONICA SPA ...... Rome 31.333 31.333 ELSACOM BULGARIA AD (IN LIQ.) ...... Sofia (Bulgaria) 90 90 ELSACOM HUNGARIA KFT ...... Budapest (Ungheria) 100 100 ELSACOM SLOVAKIA SRO...... Bratislava (Slovakia) 100 100 ELSACOM-UKRAINE JOINT STOCK COMPANY ...... Kiev(Ukraine) 49 49 EURISSNV...... Leiden (the Netherlands) 25 8.25 EUROFIGHTER AIRCRAFT MANAGEMENT GMBH . . . . Hallbergmoos (Germany) 21 21 EUROFIGHTER JAGDFLUGZEUG GMBH ...... Hallbergmoos (Germany) 21 21 EUROFIGHTERINTERNATIONALLTD...... London (U.K.) 21 21 EUROFIGHTER SIMULATION SYSTEMS GMBH ...... Unterhaching (Germany) 24 24 EUROMIDSSAS...... Paris (France) 25 25 EURO PATROL AIRCRAFT GMBH (IN LIQ.) ...... Munich (Germany) 50 50 EUROPEAMICROFUSIONIAEROSPAZIALISPA...... Morra De Sanctis (Av) 49 49 EUROSATELLITE FRANCE SA ...... France 100 33 EUROSYSNAVSAS...... Paris (France) 50 50 EUROTECHSPA...... Amaro(Uine) 11.08 11.08 FATADTSSPA(INLIQ.)...... Pianezza (Turin) 100 100 FATAHUNTERINDIAPVTLTD...... NewDelhi (India) 100 100 FEDERPETROLIGREENENERGYSRL...... Rome 20 20 FINMECCANICA CONSULTING SRL ...... Rome 100 100 FINMECCANICA NORTH AMERICA INC ...... Dover,Delaware (USA) 100 100 FINMECCANICA UK LTD ...... London (U.K.) 100 100 GROUPEMENT IMMOBILIER AERONAUTIQUE G.I.A. SA...... Blagnac (France) 20 20 GRUPOAURENSISSADECV...... Bosque de Duraznos (Mexico) 100 67 HRGESTSPA...... Genoa 30 30 IAMCO SCRL ...... Mestre (Venice) 20 20 ICARUSSCPA...... Turin 49 49 IMMOBILIARE CASCINA SRL ...... Gallarate (Varese) 100 100 IMMOBILIARE FONTEVERDE SRL ...... Rome 60 48 INDRA ESPACIO SA...... France 49 16.17 INTERNATIONAL LAND SYSTEMS INC...... Wilmington, Delaware (USA) 28.365 19.005 INTERNATIONALMETROSERVICESRL...... Milan 49 19.63 I.M.INTERMETROSPA...... Rome 33.332 23.343 IVECO — OTO MELARA SCRL ex IVECO FIAT — OTO MELARASCRL...... Rome 50 50 JIANGXI CHANGE AGUSTA HELICOPTER CO LTD . . . . Zone Jiangxi Province (China) 40 40 JOINT STOCK COMPANY SUKHOI CIVIL AIRCRAFT . . . Moscow (Russian Federation) 25.0001 23.735 LIBYAN ITALIAN ADVANCED TECHNOLOGY CO . . . . . Tripoli (Libya) 25 25 50 LMATTSLLC...... Georgia (USA) 50 44.2045 MACCHI HUREL DUBOIS SAS ...... Plaisir (France) 50 49.99 MEDESSAT SAS ...... Toulouse (France) 28.801 19.296 METRO5SPA...... Milan 31.9 17.156 MUSINETENGINEERINGSPA...... Turin 49 49 N2 IMAGING SYSTEMS LLC ...... Wilmington, Delaware (USA) 30 30 NAHUELSAT SA (IN LIQ.) ...... Buenos Aires (Argentina) 33.332 33.33 NGLPRIMESPA...... Turin 30 30

F-130 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

List of companies consolidated using the equity method (continued) % Group ownership % Group Company name Registered office Direct Indirect shareholding N.H.INDUSTRIESSARL...... AixenProvence (France) 32 32 NICCO COMMUNICATIONS SAS...... Colombes (France) 50 50 NNS — SOC. DE SERV. POUR REACTEUR RAPIDE SNC...... Lyon(France) 40 40 NOVACOMSERVICESSA...... Toulouse (France) 39.73 26.62 ORIZZONTE — SISTEMI NAVALI SPA ...... Genoa 49 49 PEGASOSCRL...... Rome 46.87 18.778 POLARISSRL...... Genoa 49 49 ROXELSAS...... LePlessis Robinson (France) 50 12.5 SANGIORGIOSA(INLIQ.)...... Paris (France) 99.969 99.969 SAPHIRE INTERNAT. ATC ENGINEERING CO LTD . . . . . Beijing (China) 65 65 SATELLITE TERMINAL ACCESS SA (IN LIQ.) ...... France 21.19 6.993 SCUOLA ICT SRL ...... L’Aquila 20 20 SELEX PENSION SCHEME (TRUSTEE) LTD ...... Basildon, Essex (U.K.) 100 100 SELEX SENSORS AND AIRBORNE SYSTEMS ELECTRO OPTICS(OVERSEAS)LTD...... Basildon, Essex (U.K.) 100 100 SELEX SENSORS AND AIRBORNE SYSTEMS (PROJECTS) LTD ...... Basildon, Essex (U.K.) 100 100 SELEX SENSORS AND AIRBORNE SYSTEMS INFRAREDLTD...... Basildon, Essex (U.K.) 100 100 SELEX SISTEMI INTEGRATI DE VENEZUELA SA . . . . . Caracas (Venezuela) 100 100 SERVICIOS TECNICOS Y SPECIALIZADOS DE INFORM. SADECV...... Bosque de Duraznos (Mexico) 100 67 SEVERNYJ AVTOBUZ Z.A.O...... St.Petersburg (Russia) 35 35 SISTEMI DINAMICI SPA...... S.Piero a Grado (Pisa) 40 40 SOGELI — SOCIETA’ DI GESTIONE DI LIQ. SPA ...... Rome 100 100 SOSTAR GMBH (IN LIQ.) ...... Immerstad (Germany) 28.2 28.2 TELBIOS SPA ...... Milan 34.47 23.0949 TELESPAZIO NETHERLAND BV ...... Enschede (the Netherlands) 100 67 THOMASSEN SERVICE AUSTRALIA PTY LTD ...... Canning Vale (Australia) 100 100 TRADEFATABV...... Rotterdam (the Netherlands) 100 100 TRIMPROBE SPA (IN LIQ.) ...... Rome 100 100 TURBOENERGY SRL ...... Cento (Ferrara) 25 25 WESTLAND INDUSTRIAL PRODUCTS LTD ...... Yeovil, Somerset (U.K.) 100 100 WITGL.P.INC...... Kent, Dover, Delaware (USA) 24 21.2184 WITGL.P.LTD...... Kent, Dover, Delaware (USA) 20 17.682 XAITSRL...... Ariccia (Rome) 100 100 ZAO ARTETRA ...... Moscow (Russian Federation) 51 51

List of Companies valued at fair value % Group ownership % Group Company name Registered office Direct Indirect shareholding BCV INVESTMENTS SCA ...... Luxembourg 14.32 14.32 BCVMANAGEMENTSA...... Luxembourg 15 15 STMICROELECTRONICS HOLDING NV(*) ...... Rotterdam (the Netherlands) 20 20

(*) Recognised as “assets available for sale”

F-131 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

List of subsidiaries and associates valued at cost % Group ownership % Group Company name Registered office Direct Indirect shareholding ALENIA NORTH AMERICA DEFENSE LLC ...... Wilmington, Delaware (USA) 100 88.409 ANSALDO RAILWAY SYSTEM TECHNICAL SERVICE (BEIJING) LTD ...... Beijing (China) 100 40.0655 ANSALDO STS INFRADEV SOUTH AFRICA (PTY) LTD...... Johannesburg (ZA) - South Africa 50.7 20.31 ANSALDO STS SOUTHERN AFRICA (PTY) LTD ...... Gaborone (Botswana) - Africa 100 40.0655 BALFOUR BEATTY ANSALDO SYSTEMS JV SDN BHD...... Ampang (Malaysia) 40 16.0262 CCRT SISTEMI SPA (IN FALL.) ...... Milan 30.34 30.34 DATAMAT SUISSE SA (IN LIQ.)...... Lugano (Switzerland) 100 100 EUROPEAN SATELLITE NAVIGATION INDUSTRIES GMBH...... Ottobrunn (Germany) 18.939 18.94 25.1892 FOSCAN SRL (IN FALL.) ...... Anagni (Frosinone) 20 20 GALILEO INDUSTRIES SA ...... Bruxelles (Belgium) 18.939 18.939 25.189 IND. AER. E MECC. R. PIAGGIO SPA (AMM.STR.) .... Genoa 30.982 30.982 ORANGEES SRL ...... Rome 70 70 SAITECH SPA (IN FALL.) ...... Passignano sul Trasimeno (Perugia) 40 40 SELEX SISTEMI INTEGRATI DO BRASIL LTDA ...... RioDeJaneiro (Brazil) 99.9998 99.9998 SELPROCSCRL...... Rome 100 100 SESM — SOLUZIONI EVOLUTE PER LA SISTEMISTICA E I MODELLI — SCRL ...... Naples 100 100 TECHSANASRL...... Cosenza 100 70 U.V.T. SPA (IN FALL.) ...... SanGiorgio Jonico (Taranto) 50.614 50.614 U.V.T.ARGENTINASA...... Buenos Aires (Argentina) 60 30.368 For ease of understanding and comparability, below are the main changes in the scope of consolidation since June 2008: • ISAF Iniziative per i Sistemi Avanzati Srl, acquired by Telespazio SpA on July 31, 2008, has been consolidated on a proportionate basis (67%) from that date; • DRS Technologies group, acquired on October 22, 2008, has been consolidated on a line-by-line basis starting from that date; • Avion de Trasport Regional Ireland Ltd, valued through June 2008 using the equity method, was deconsolidated following liquidation; • Ansaldo Segnalamento Ferroviario SpA and Ansaldo Trasporti Sistemi Ferroviari SpA were merged with Ansaldo STS SpA on January 1, 2009; • Ote Mosca, valued through the 2008 financial statements using the equity method, was deconsolidated upon sale to third parties; • Energeko Gas Italia Srl, valued through the 2008 financial statements using the equity method, was deconsolidated upon sale to third parties; • World’s Wing SA, previously valued using the equity method, has been consolidated on a line-by-line basis starting from January 1, 2009; • LMATTS LLC, previously valued on a proportionate basis, has been consolidated using the equity method starting from January 1, 2009; • Alenia North America-Canada Co, previously valued on a line-by-line basis, has been consolidated using the equity method starting from January 1, 2009;

F-132 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

• Coreat Scrl, formed on January 29, 2009, has been valued using the equity method starting from that date; • Joint Stock Company Sukhoi Civil Aircraft, acquired by World’s Wing SA on April 29, 2009, has been valued using the equity method; • MARS Srl was merged with Telespazio SpA on May 5, 2009; • Elsag Eastern Europe Srl (in liquidation), valued through March 2009 using the equity method, has been deconsolidated following its removal from the Business Register; • Ansaldo Ricerche SpA was merged with Ansaldo Energia SpA on June 22, 2009.

7. SIGNIFICANT CHANGES IN THE EXCHANGE RATES APPLIED Again with reference to data comparability, the first six months of 2009 was again marked by changes in the Euro against the main currencies of interest for the Group. Specifically, the currency exchange rates as of June 30, 2009 and the average exchange rates for the six months ended June 30, 2009 for the main currencies, changed as follows from 2008: final exchange rates for the period (euro/US dollar +1.56% and euro/sterling pound – 10.54%); average exchange rates for the period (euro/US dollar +12.98% and euro/sterling pound + 15.30%). Below are the exchange rates adopted for the currencies that are most significant for the Group: As of and for the six As of and for the six months As of December 31, months ended June 30, 2009 2008 ended June 30, 2008 Average Closing Closing Average Closing exchange exchange exchange exchange exchange rate for the rate for rate for rate for the rate for the period the period the year period period US dollar...... 1.33217 1.4134 1.39170 1.53088 1.57640 Pound sterling ...... 0.89391 0.8521 0.95250 0.77527 0.79225

8. SEGMENT INFORMATION In accordance with the compliance model followed, Management has adopted operating segments that correspond to the business segments in which the Group operates: Helicopters, Defense Electronics and Security, Aeronautics, Space, Defense Systems, Energy, Transportation and Other Activities. The Group assesses the performance of its operating segments and the allocation of the financial resources based on Revenues and Adjusted EBITA. The results for each segment for the six months ended June 30, 2009, as compared with those of the same period of the previous year, are as follows: Six months ended June 30, 2009 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Eliminations Total (In millions of Euro) Revenues ...... 1,646 3,075 1,208 435 514 820 895 198 (268) 8,523 of which from other segments ...... 16 319 353 13 83 — 61 63 (268) 640 Adjusted EBITA ...... 162 274 60 13 42 76 55 (77) — 605 Investments ...... 60 108 227 17 22 26 13 5 — 478

F-133 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

As of June 30, 2009 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Eliminations Total (In millions of Euro) Assets ...... 5,985 10,901 5,423 1,290 2,528 1,601 2,339 5,548 (5,616) 29,999 Liabilities ...... 3,859 6,520 4,980 768 1,829 1,525 2,159 7,796 (5,756) 23,680 Six months ended June 30, 2008 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Eliminations Total (In millions of Euro) Revenues ...... 1,469 1,628 1,062 451 513 512 836 150 (188) 6,433 of which from other segments ...... 44 281 324 10 72 — 57 30 (188) 630 Adjusted EBITA ...... 158 98 70 15 42 37 47 (67) — 400 Investments ...... 57 88 268 16 25 21 16 4 — 495

As of December 31, 2008 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Eliminations Total (In millions of Euro) Assets ...... 5,428 10,923 5,372 1,268 2,503 1,595 2,134 5,530 (4,831) 29,922 Liabilities ...... 3,315 6,554 5,007 756 1,780 1,485 1,881 7,986 (4,972) 23,792 The reconciliation between Adjusted EBITA and the result before taxes, finance income and costs and the effects of equity investments measured using the equity method (“EBIT”) for the six months ended June 30, 2009 and 2008 is as follows: Six months ended June 30, 2009 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Total (In millions of Euro) Adjusted EBITA...... 162 274 60 13 42 76 55 (77) 605 Impairment ...... — — — — — — — — — Amortization of intangible assets acquired through a business combination ...... (4) (34) — — (1) — — — (39) Restructuring costs ...... — (2) (1) (1) (1) — (2) — (7) EBIT ...... 158 238 59 12 40 76 53 (77) 559

Six months ended June 30, 2008 Defense Electronics Defense Other Helicopters and Security Aeronautics Space Systems Energy Transportation activities Total (In millions of Euro) Adjusted EBITA...... 158 98 70 15 42 37 47 (67) 400 Impairment ...... — — — — — — — — — Amortization of intangible assets acquired through a business combination ...... (4) (6) — — (1) — — — (11) Restructuring costs ...... — (8) — — (5) — (1) — (14) EBIT ...... 154 84 70 15 36 37 46 (67) 375

F-134 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

9. PURCHASES AND PERSONNEL COSTS The break down of this item is as follows: Six months ended June 30, 2009 2008 (In millions of Euro) Cost of purchases ...... 3,091 2,363 Cost of services...... 2,667 2,019 Costs attributable to related parties (Section 30) ...... 58 31 Personnel costs ...... 2,359 1,911 Wages, salaries and contributions...... 2,176 1,778 Costs related to stock grant plans...... 18 13 Costs related to defined-benefit plans ...... 25 28 Costs related to defined-contribution plans ...... 70 55 Restructuring costs ...... 5 9 Other personnel costs ...... 65 28 Changes in inventories of work in progress, semi-finished and finished goods...... (226) (155) Capitalized costs for internal production ...... (328) (349) Total purchases and personnel costs ...... 7,621 5,820

As to personnel, the average workforce number rose from 60,641 for the six months ended June 30, 2008 to 72,600 for the same period in 2009. The net increase is especially significant in the case of personnel abroad, mainly as a result of the acquisition of DRS at the end of 2008. The total workforce for the six months ended June 30, 2009 came to 73,517, compared with 73,398 for the year ended December 31, 2008, for a slight increase due, on the one hand, to the net decline in personnel in the Aeronautics, Transportation, Defense Systems segments and in the foreign component of the Defense Electronics and Security segment and, on the other hand, to a net increase in personnel in the Energy, Space and Helicopters segments. The change in personnel costs amounting to Euro 2,176 million for the six months ended June 30, 2009, compared with Euro 1,778 million for the same period in 2008, reflects the increase in the average workforce. Moreover, the increase in costs related to defined-contribution plans is largely attributable to the purchase of the DRS group. Restructuring costs include the costs of reorganizing companies for the most part in the Defense Electronics and Security and Transportation segments. Costs for services includes, among other things, the costs for the acquisition of satellite capacity for the Telespazio joint venture, which was more than offset by revenues from sales (Euro 32 million compared with Euro 38 million for the six months ended June 30, 2009 and 2008, respectively), the costs of leasing airplanes for GIE ATR (Euro 5 million compared with Euro 4 million for the six months ended June 30, 2009 and 2008, respectively) and the costs of rents, operating leases and rental fees (Euro 104 million compared with Euro 81 million for the six months ended June 30, 2009 and 2008, respectively).

F-135 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

10. AMORTIZATION, DEPRECIATION AND IMPAIRMENT Six months ended June 30, 2009 2008 (In millions of Euro) Amortization and depreciation: • Amortization (Section 14) ...... 132 74 Development costs ...... 36 12 Non-recurring costs ...... 16 17 Acquired as part of business combination ...... 39 11 Other...... 41 34 • Depreciation ...... 173 142 Impairment: • Property, plant and equipment ...... 3 — • Intangible assets ...... 1 — • Operating receivables...... 11 4 Total amortization, depreciation and impairment ...... 320 220

The increase in the amortization of “Intangible assets acquired as part of business combination” compared with the six months ended June 30, 2008 is essentially due to the amortization quota related to DRS intangible assets (Euro 29 million), which was absent for the six months ended June 30, 2008.

11. OTHER OPERATING INCOME (EXPENSES) Six months ended June 30, 2009 2008 Income Expense Net Income Expense Net (In millions of Euro) Grants for research and development costs ...... 23 — 23 19 — 19 Exchange rate difference on operating items ...... 108 (116) (8) 117 (125) (8) Indirect taxes ...... — (23) (23) — (20) (20) Gains/losses on sales of assets ...... 1 — 1 — — — Insurance reimbursements ...... 22 — 22 14 — 14 Reversal of impairment of receivables ...... 6 — 6 3 — 3 Gains/losses on operating receivables ...... — — — — (5) (5) Restructuring costs ...... — (2) (2) — (5) (5) Reversals of/Accruals to provisions for risks ...... 32 (61) (29) 47 (44) 3 Other operating income (expenses) ...... 46 (59) (13) 16 (36) (20) Other operating income (expenses) attributable to related parties ...... — — — 1 — 1 Total ...... 238 (261) (23) 217 (235) (18)

The most significant changes in “Reversals of/Accruals to provisions for risks” compared with the six months ended June 30, 2008 relate to the provision for product guarantees, the provision for risks and contractual charges and other provisions.

F-136 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

12. FINANCE INCOME (COSTS) The components of finance income and costs are as follows: Six months ended June 30, 2009 2008 Income Costs Net Income Costs Net (In millions of Euro) Gain from sale of STM ...... — — — 56 — 56 Dividends ...... 5 — 5 2 — 2 Income from equity investments and securities ...... 4 — 4 1 — 1 Discounting of receivables, liabilities and provisions ...... 4 (11) (7) 2 (5) (3) Interest income/expense ...... 28 (213) (185) 47 (101) (54) Commission income/expense (including commissions on non-recourse items) ...... 1 (28) (27) — (12) (12) Fair value adjustments through profit or loss...... 138 (53) 85 72 (23) 49 Premiums paid/received on forwards ...... 9 (6) 3 8 (7) 1 Exchange rate differences...... 430 (456) (26) 244 (244) — Value adjustments to equity investments ...... — (1) (1) 2 (9) (7) Interest cost on defined benefit plans (less expected returns on plan assets) ...... — (18) (18) — (11) (11) Income (costs) attributable to related parties (Section 30) . . . 6 (6) — 1 (13) (12) Other finance income and costs ...... 3 (4) (1) 13 (23) (10) 628 (796) (168) 448 (448) —

For the six months ended June 30, 2009, the Group reported a significant increase in finance costs compared with the same period in 2008, mainly due to the costs relating to bonds and the Senior Term Loan Facility. The figure for the six months ended June 30, 2008 was strongly affected by the gain on the sale of roughly 26 million share of STM (Euro 56 million). A breakdown of the item reveals: • net interest costs of Euro 185 million, including Euro 88 million of interest on bonds (Euro 43 million for the six months ended June 30, 2008), mainly relating to recent issues placed on the market. The figure also includes premiums collected/paid on the hedging of interest rate risk (interest rate swaps) for a net charge of Euro 38 million (Euro 8 million for the six months ended June 30, 2008), that will be recovered in the second half of the year as recognition of the accrued component included in the fair value;

F-137 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

• net income of Euro 85 million arising from the application of the fair value method, as detailed below: Six months ended June 30, 2009 2008 Income Costs Net Income Costs Net (In millions of Euro) Foreign-currency swaps ...... 40 (11) 29 4 (4) — Foreign-currency options...... 25 — 25 — (4) (4) Interest rate swaps ...... 55 (22) 33 17 (9) 8 Options on STM...... — (3) (3) 16 — 16 Ineffective component of hedging swap ...... 18 (7) 11 33 (4) 29 Embedded derivatives ...... — (10) (10) — — — Option embedded in the exchangeable bond ...... — — — 1 (1) — Other equity derivatives ...... — — — 1 (1) — 138 (53) 85 72 (23) 49

• net income on foreign-currency swaps relates to the hedging of intercompany or third- party payables and receivables expressed in currencies other than the euro which qualify as trading transactions for accounting purposes; • income from foreign-currency options relates to options traded to hedge underlying positions in currencies other than the euro which, although they meet the objective of limiting the fluctuations of the underlying position within a specific range, do not meet the conditions of IAS 39, either because of the nature of the instruments themselves or the inability to mathematically demonstrate their effectiveness; • net income from interest rate swaps results mainly from the conversion of a portion of the bond issues at a floating rate in order to take advantage of the current favorable spread between long-term fixed rates and short-term floating rates; • costs on the options on STM are correlated to the light appreciation in the hedged instruments; and • costs on embedded derivatives are related to commercial contracts denominated in currencies other than the currencies of the contractually involved parties and those generally used in the markets of reference. This component is separated from the commercial contract and valued at fair value through the income statement. • net exchange losses amounting to Euro 26 million relate to the effects recognized and the realignment of intercompany and third-party payables and receivables expressed in currencies other than the Euro, which were largely offset by net income on foreign-currency swaps, incorporated in the results valued at fair value through the income statement.

F-138 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

13. INCOME TAXES Income taxes came to Euro 161 million (Euro 88 million for the six months ended June 30, 2008), which consisted of the following: Six months ended June 30, 2009 2008 (In millions of Euro) Corporate income tax (IRES)...... 135 87 Regional tax on productive activities (IRAP) ...... 56 50 Benefit under consolidated tax mechanism ...... (42) (72) Other income taxes ...... 37 70 Tax related to previous periods ...... 4 (12) Provisions for tax disputes ...... 4 1 Deferred tax liabilities (assets)- net ...... (33) (36) 161 88

The increase in the item was mainly due to the rise in IRES in absolute terms resulting from the growth in the tax base and the decrease in the consolidated tax mechanism caused by fewer losses generated during the period and by the exhaustion of available tax losses carried forward. The changes in the other taxes tended to offset one another, thereby have a neutral impact on the total amount. The theoretical tax rate rose from 31.49% for the six months ended June 30, 2008 to 40.04% for the same period in 2009 (the same and the effective tax rate).

14. INTANGIBLE ASSETS Intangible assets consist of the follows: As of As of June 30, December 31, 2009 2008 (In millions of Euro) Goodwill ...... 5,910 5,790 Development costs ...... 578 474 Non-recurring costs ...... 678 633 Concessions, licenses and trademarks...... 125 121 Acquired as part of business combination...... 1,005 1,024 Other ...... 220 195 Total intangible assets ...... 8,516 8,237

In particular, the most significant changes related to: • a net increase in goodwill (Euro 120 million), mainly due to translation differences on the goodwill of assets denominated in US dollars and British pound sterling;

F-139 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

• amortization of Euro 132 million (Euro 74 million for the six months ended June 30, 2008) (Section 10); and • total investments of Euro 225 million, broken down as follows: Six months ended June 30, 2009 2008 (In millions of Euro) Development costs ...... 103 85 Non-recurring costs ...... 61 135 Concessions, licenses and trademarks...... 13 5 Other ...... 48 28 Total intangible assets ...... 225 253

Purchase commitments for intangible assets are recorded in the amount of Euro 19 million as of June 30, 2009 (Euro 12 million as of December 31, 2008).

15. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment break down as follows: As of As of June 30, December 31, 2009 2008 (In millions of Euro) Land and buildings ...... 1,154 1,133 Plant and machinery ...... 633 631 Equipment ...... 635 623 Other ...... 763 712 Total property, plant and equipment...... 3,185 3,099

In particular, the most significant changes related to: • depreciation for Euro 173 million for the six months ended June 30, 2009 (Euro 142 million for the six months ended June 30, 2008) (Section 10); and • total investments for Euro 253 million, broken down as follows: Six months ended June 30, 2009 2008 (In millions of Euro) Land and buildings ...... 21 4 Plant and machinery ...... 28 23 Equipment ...... 38 67 Other ...... 166 148 Total property, plant and equipment...... 253 242

Property, plant and equipment includes Euro 38 million as of June 30, 2009 (Euro 40 million as of December 31, 2008) of assets held under contracts that can be qualified as finance leases. “Other assets” includes Euro 8 million as of June 30, 2009 (Euro 8 million as of December 31, 2008) for helicopters owned by the AgustaWestland group and Euro 155 million as of June 30, 2009 (Euro 148 million as of December 31, 2008) for aircraft owned by the GIE ATR group, as well as for aircraft that did not meet the requirements, in

F-140 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008 terms of the substantial transfer of the risks of ownership, for recognition of the sale, despite the fact that sales contracts have been concluded with external customers. Purchase commitments for property, plant and equipment are recorded in the amount of Euro 101 million as of June 30, 2009 (Euro 143 million as of December 31, 2008).

16. BUSINESS COMBINATIONS No business combinations were carried out during the period. On October 22, 2008, the acquisition of DRS Technologies Inc. was completed. Its contribution to the Group during the period was as follows: (In millions of Euro) Revenues ...... 1,466 Adjusted EBITA ...... 176 Net profit ...... 62 Cash-flow generated by operating activities, net of investments in non-current assets...... 15 The overall effects of this transaction and those carried out in the six months ended June 30, 2008 are as follows: Six months ended June 30, 2009 2008 Goodwill Effect of cash Goodwill Effect of cash (In millions of Euro) Acquisition of DRS...... — 11 — — Other acquisitions ...... — — 3 4 Transactions with minority shareholders. . — — 73 74 Total ...... — 11 76 78

The following transactions were carried out in the six months ended June 30, 2008: • Acquisition of the Spanish company Aurensis SL, which specializes in technologies for territorial applications and satellite, aerial and Earth observation services; and • Acquisitions of shares of minority shareholders, relating to the purchase of the remaining 71.8% of the Vega Group following the completion of the squeeze-out process, for a total outlay, including transaction costs, of Euro 62 million in 2008, and 18% of Sirio Panel SpA, of which the Group already controlled 75%, for Euro 12 million. Moreover, based on the put and call options on the remaining 7% held by third parties, the Group has recognized the value of these rights among borrowings and consolidates the company without recognizing any minority interests. These transactions produced goodwill of Euro 65 million and Euro 8 million, respectively.

F-141 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

17. FINANCIAL ASSETS AT FAIR VALUE The item, classified entirely as “assets available for sale”, relates to the indirectly-owned interest in STMicroelectronics (STM), amounting to 3.7% of the share capital. Below are the changes for the periods being compared: As of June 30, 2009 2008 (In millions of Euro) January 1...... 154 589 Purchases for the period ...... — — Sales for the period ...... — (260) Fair value adjustment ...... 26 (175) Period end ...... 180 154

The increase in the fair value adjustment was offset by a specific equity reserve named “reserve for assets available for sale”. As of June 30, 2009 this reserve amounted to Euro 26 million (nil as of December 31, 2008). The strategy for hedging the STM instrument is designed to limit the negative effects of a partial depreciation of the security. The Group, on the contrary, is exposed in the event the coverage limits are exceeded.

18. OTHER NON-CURRENT ASSETS As of As of June 30, December 31, 2009 2009 (In millions of Euro) Third-party financing...... 73 60 Security deposits ...... 27 21 Receivables for finance leases ...... 4 6 Deferred receivables Law 808/85 ...... 203 135 Net asset defined-benefit retirement plans (Section 23) ...... — 39 Financial receivables from related parties (Section 30) ...... 12 13 Other ...... 33 28 Non-current receivables...... 352 302 Real estate investments ...... 1 1 Equity investments ...... 343 192 Non-recurring costs awaiting interventions under Law 808/1985 .... 384 467 Other non-current assets ...... 5 13 Non-current assets ...... 733 673 Total other non-current assets ...... 1,085 975

Receivables for finance leases relate to transactions qualifying as finance leases made by GIE ATR where the Group is the lessor: in this case, the aircraft being the subject-matter of the lease contract is removed from assets and replaced by a receivable, and the relevant finance income is recognized progressively over the term of the contract at the effective interest rate applicable to the lease contract. The item deferred receivables Law 808/85 includes the receivables from the Ministry of Economic Development relating to the current value of the interventions pursuant to Law 808/85 in national security and similar projects for which collections were deferred. The portion for which collection is expected within 12 months (Euro 43 million as of June 30, 2009 compared with Euro 35 million as of December 31, 2008) is

F-142 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008 classified among other current assets (Section 21). Non-recurring costs awaiting interventions under Law 808/1985 include the portion of non-recurring costs paid on programs that benefit from the provisions of Law 808/1985, are classified as being functional to national security, and whose expenses have not been assessed yet by the issuer. After the legal requirements for the recognition of the receivable from the Ministry are fulfilled, the recognized amount is reclassified as a receivable (current or non-current, based on the expected payment plan). The amount shown is calculated based on an estimate made by management that reflects the reasonable probability that funds are received and the effects of time value in the case of deferment over more than one year of the granting of funds. Equity investments rose mainly as a result of the subscription of 25% plus one share of the Russian Joint Stock Company Sukhoi Civil Aircraft (Euro 142 million).

19. TRADE RECEIVABLES, INCLUDING NET WORK IN PROGRESS As of As of June 30, December 31, 2009 2009 (In millions of Euro) Receivables...... 4,237 4,317 Impairment ...... (184) (180) Receivables from related parties (Section 30) ...... 445 518 4,498 4,655 Work in progress (gross) ...... 9,021 7,825 Advances from customers ...... (4,790) (4,151) Work in progress (net)...... 4,231 3,674 Total trade receivables and net work in progress ...... 8,729 8,329

Trade receivables from related parties refer specifically to the non-eliminated portion of receivables from joints ventures and the lead companies or consortiums of major programs in which the Group participates. The most important of these relate to the Eurofighter (EFA program) totaling Euro 93 million as of June 30, 2009 (Euro 92 million as of December 31, 2008) for contracts for the production of wings and posterior fuselages and for the assembly of aircraft for the Italian Air Force; receivables from the Saturno consortium amounting to Euro 13 million as of June 30, 2009 (Euro 49 million as of December 31, 2008) for work on high-speed train lines; receivables from the Iveco — Oto Melara consortium amounting to Euro 45 million as of June 30, 2009 (Euro 65 million as of December 31, 2008) for production and post-sales assistance on defense and security ground vehicles (production is currently under way on Blindo Puma, Carro PZH2000 and self-propelled vehicles for the Italian Army); receivables from Orizzonte-Sistemi Navali SpA amounting to Euro 43 million as of June 30, 2009 (Euro 36 million December 31, 2008) relating to the FREMM program.

20. DERIVATIVES The table below provides a breakdown of the equity items related to derivative instruments: As of As of June 30, 2009 December 31, 2009 Assets Liabilities Assets Liabilities (In millions of Euro) Forward forex instruments ...... 162 65 137 195 Foreign-currency options ...... — 11 — 36 Interest rate swaps ...... 66 19 19 5 Options on STM ...... 15 — 18 — Embedded derivatives ...... 59 — 69 — 302 95 243 236

F-143 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

The change in the fair value of the forward forex instruments is mainly the result of the increase in volumes hedged during the period at exchange rates more favorable than the closing exchange rate as of June 30. The interest rate swaps with a total notional value of Euro 1,869 million were placed into effect to partially hedge bonds issued. The change in the fair value was mainly affected by the increase in notional values converted at a floating rate (from Euro 930 million as of June 30, 2008 to Euro 1,869 million as of June 30, 2009), owing to the current favorable spreads between long-term fixed rates and short-term floating rates, as well as the trend in long-term fixed rates compared with those in effect at the date the aforementioned transactions were carried out (Section 12). The figure for embedded derivatives relates to commercial contracts denominated in currencies other than the currencies of the contractually involved parties and that generally used in the markets of reference. This component is separated from the commercial contract and valued at fair value through the income statement. As of June 30, 2009, the Group has 33.7 million STMicroelectronics NV (“STM”) securities classified as “assets available for sale”, with a fair value of Euro 180 million (Section 17). In order to hedge the exposure to the risk of fluctuation of the market price of the securities, derivatives were put in place to protect the 20 million shares of STM. The hedging transactions are classified as trading activity, with the consequent economic impact resulting from the change in fair value (Section 12).

21. OTHER CURRENT ASSETS As of As of June 30, December 31, 2009 2009 (In millions of Euro) Tax receivables ...... 218 236 Assets available for sale ...... 1 1 Other current assets: ...... 769 659 Accrued income — current portion ...... 113 114 Receivables for contributions ...... 62 71 Receivables from employees and social security ...... 39 37 Indirect tax receivables ...... 278 204 Deferred receivables Law 808/85 ...... 43 35 Equity investments ...... 1 1 Other receivables from related parties (Section 30)..... 60 14 Other assets ...... 173 183 Total other current assets ...... 988 896

Tax receivables include, inter alia, IRPEG receivables (corporate income tax) (Euro 106 million) assigned to third parties, maintained as Group assets, even though they had been sold in previous years, because they do not meet the requirements of IAS 39 on derecognition. Specifically, in April 2009, Finmeccanica signed an agreement with the transferee containing a repurchase obligation in the event the tax receivables are not collected by March 31, 2013. Therefore, a financial payable of the same amount is recognized against these tax receivables (Section 25). The item deferred receivables Law 808/1985 includes the receivables from the Ministry of Economic Development relating to the interventions pursuant to Law 808/1985 in national security and similar projects for which collections are expected within 12 months. Portions for which collections are expected beyond 12 months are recognized as accounts receivable and other non-current assets (Section 18). As of June 30, 2009, other assets include, among other things, receivables from the Ministry of Defense for the settlement of disputes for Euro 5 million (Euro 34 million as of December 31, 2008), sundry

F-144 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008 advances in the amount of Euro 24 million (Euro 23 million as of December 31, 2008), receivables for disputes in the amount of Euro 6 million (Euro 6 million as of December 31, 2008), and receivables from the Camozzi group in the amount of Euro 2 million (Euro 3 million as of December 31, 2008).

22. SHARE CAPITAL Number of ordinary Costs incurred shares Par value Treasury shares net of tax effect Total (In millions of Euro) Outstanding shares ...... 578,150,395 2,544 — (17) 2,527 Treasury shares ...... (447,209) — (8) — (8) December 31, 2008 ...... 577,703,186 2,544 (8) (17) 2,519 Repurchase of treasury shares, less shares sold ...... (948,000) — (9) — (9) Share capital increase in November 2008...... — — — (2) (2) June 30, 2009...... 576,755,186 2,544 (17) (19) 2,508 broken down as follows: Outstanding shares ...... 578,150,395 2,544 — (19) 2,525 Treasury shares ...... (1,395,209) — (17) — (17) 576,755,186 2,544 (17) (19) 2,508

The Group Parent’s share capital fully subscribed and paid-up is divided into ordinary shares with a par value of Euro 4.40 each. As of June 30, 2009, the Ministry for the Economy and Finance held about 30.2043% of the shares. Capital Research and Management Co. held more than 2.8042% of the shares and The Income Fund of America Inc. held about 2.0633% of the shares. The statement of changes of other reserves and minority interests is provided in the accounting statements section. The following is a breakdown of the tax effects on the gain and loss items recognized in shareholders’ equity: Group Minority interests Amount Amount net Amount Amount net before taxes Tax effect of tax effect before taxes Tax effect of tax effect (In millions of Euro) Available-for-sale financial assets ...... 26 — 26 — — — Actuarial gains (losses) on defined-benefit plans...... (60) 21 (39) 1 — 1 Changes in cash flow hedges . . . 75 (19) 56 (3) — (3) Exchange gains/losses...... 148 — 148 3 — 3 Total ...... 189 2 191 1 — 1

F-145 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

23. EMPLOYEE LIABILITIES As of As of June 30, December 31, 2009 2009 (In millions of Euro) Severance obligations ...... 646 701 Defined-benefit retirement plans ...... 310 248 Share of MBDA joint-venture pension obligation ...... 53 50 Other employee funds ...... 23 28 1,032 1,027

Below is a breakdown of defined-benefit plans and statistical information regarding the excess (deficit) of the plans:

As of June 30, As of December 31, 2009 2008 2007 2006 2005 (In millions of Euro) Present value of obligations ...... 1,240 1,055 1,038 1,126 1,025 Fair value of plan assets...... (930) (846) (886) (796) (641) Plan excess (deficit) ...... (310) (209) (152) (330) (384) of which related to: — net liabilities ...... (310) (248) (152) (330) (384) — net assets ...... — 39 — — — The total net deficit mainly relates to plans for which the Group is a sponsor in the United Kingdom (Euro 152 million) and, following the acquisition of DRS, in the USA (Euro 75 million). The amount recognized in the income statement for defined-benefit plans was calculated as follows: Six months ended June 30, 2009 2008 (In millions of Euro) Costs of current services ...... 25 28 Total “personnel costs” ...... 25 28 Interest expense ...... 53 41 Expected return on plan assets ...... (35) (30) Costs recognized as “finance costs” ...... 18 11 43 39

F-146 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

24. PROVISIONS FOR RISKS AND CHARGES As of June 30, 2009 As of December 31, 2008 Non-current Current Non-current Current (In millions of Euro) Guarantees given ...... 32 19 32 23 Restructuring ...... 13 18 14 18 Penalties...... 61 21 53 26 Product guarantees ...... 106 128 102 117 Other ...... 174 385 143 448 386 571 344 632

Other provisions for risks and charges came to a total of Euro 559 million as of June 30, 2009 (Euro 591 million as of December 31, 2008) and specifically include: • the provision for risks on the business of GIE ATR in the amount of Euro 68 million (unchanged from December 31, 2008); • the provision for risks and contractual charges in the amount of Euro 56 million (Euro 69 million as of December 31, 2008) related, in particular, to business in the Defense Electronics and Security, Space, Defense Systems and Other Activities segments; • the provision for risks on equity investments of Euro 15 million (Euro 17 million as of December 31, 2008) includes accruals to cover losses exceeding the carrying amounts of unconsolidated equity investments; the provision fell mostly due to the elimination of Elsag Eastern Europe Srl (in liq.) from the Register of Enterprises (Euro 1 million); • the provision for taxes in the amount of Euro 56 million (Euro 64 million as of December 31, 2008); • the provision for disputes with employees and former employees in the amount of Euro 32 million (Euro 35 million as of December 31, 2008); • the provision for pending litigation in the amount of Euro 82 million (Euro 101 million as of December 31, 2008); • the provisions for risk on contract-related costs in the amount of Euro 68 million (Euro 44 million as of December 31, 2008); • other provisions in the amount of Euro 182 million (Euro 193 million as of December 31, 2008). With regard to the risk provisions, the Group’s operations regard industries and markets where many disputes are settled only after a considerable period of time, especially in cases where the customer is a government entity. In application of related accounting standards, provisions have been made for any obligations related to probable and quantifiable risks. Likewise, to the best of our knowledge, regarding other disputes against the Group, no specific allocation has been made since the Group reasonably believes that such disputes may be resolved satisfactorily and without any significant impact on the results. The following is a description of the situations, mentioned here for the purposes of full disclosure, that have undergone change since the preparation of the consolidated financial statements as of and for the year ended December 31, 2008 (which we suggest you refer to for more information): • with regard to the litigation commenced by Reid in 2001 against Finmeccanica and Alenia Spazio (now So.Ge.Pa. SpA) before the Court of Texas to object to alleged breaches by the former Finmeccanica-Space Division of agreements for the project for implementing the Gorizont satellite program. The litigation had a favorable outcome, after more than five years,

F-147 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

due to the lack of jurisdiction of the relevant Court. On May 11, 2007, Reid served Finmeccanica and Alcatel Alenia Space Italia (now Thales Alenia Space Italia) with a Complaint commencing a new lawsuit before the Court of Chancery of Delaware. In the new lawsuit, Reid presented the same claims for compensation that were demanded in the prior Texas lawsuit, without specifying an amount for the damage incurred. On June 29, 2007 Finmeccanica filed a Motion to Dismiss objecting to the time-barring of and the statute of limitations on the action and the lack of jurisdiction of the Court of Delaware. These objections were discussed in the hearing of October 29, 2007. On March, 27 2008 the Court denied the plaintiff’s motion, finding the action to be time-barred. This decision was challenged by the opposing party before the Supreme Court of Delaware, which issued a decision on April 9, 2009, granting the motion and remanding the case to the Court of Chancery for a decision on the other objection raised by Finmeccanica concerning the lack of jurisdiction of the Court of Delaware, relating to which the discovery phase has begun and is expected to be completed by December 2009; • in 1999 the Royal Thai Army sued Finmeccanica before the Court of Bangkok demanding compensation for damages amounting to USD 37,375,564 plus interest of USD 20 million, for operation defects in the “Spada Aspide” missile system, which was the subject-matter of a supply contract made in 1986 with the former Selenia Industrie Elettroniche Associate. The supply contract under dispute was transferred in 1998 to the former Alenia Marconi Systems SpA (now Selex Sistemi Integrati SpA), which undertook any risks connected with the dispute. Finmeccanica objected on the grounds of the lack of jurisdiction of the relevant court (due to the arbitration clause of the contract) and the time-barring of the action. On March 10, 2009, the Court, granted the objection and found that it lacked jurisdiction; • the dispute initiated by Telespazio SpA against the Agenzia delle Entrate, Rome District 4 challenging a tax assessment regarding direct income taxation (IIDD) for the year 2000, which contained a demand for a total of about Euro 30 million consisting of additional taxes, penalties and interest. The notice of assessment, served on November 27, 2006, relates to a tax audit completed in 2001 in which the Tax Authority challenged the deductibility of the loss regarding receivables from a foreign company taken by Telespazio SpA within the context of a non- recourse sale carried out following many fruitless attempts to recover these receivables. Specifically, the Tax Authority, deeming the actions undertaken by the Company to forcibly collect the receivables and therefore the evidence of the foreign debtor’s solvency or lack thereof to be insufficient, found that the requirements of certainty and precision under the law were not met to allow the loss to be fully deducted, regardless of the fact that the loss was conclusively realized by Telespazio SpA within the context of the non-recourse sale of the receivables arguing that sale per se guarantees certainty only of the legal loss of the receivable but not the financial loss. The court of first instance upheld the company’s appeal with ruling filed on September 25, 2008. The ruling was appealed by the Tax Authority. The appellate court has yet to schedule a hearing date; • in January 2009, Pont Ventoux Scrl initiated an arbitration with the joint venture formed by Ansaldo Energia, as representative (31%), Alstom Power Italia SpA (17%) and Voith Siemens Hydro Power Generation SpA (52%) concerning a contract worth Euro 15 million to supply two electric generators as part of the project to build a hydroelectric plant in Val di Susa (Italy). The plaintiff is seeking payment for alleged damages, both direct and consequential, and harm to its image, totaling about Euro 90 million. It asserts that the serious fault renders the clause that limits the liability of the joint venture to the contract amount inapplicable. Ansaldo Energia maintains that it supplied the products required and that it carried out its responsibilities as representative with the greatest diligence. Therefore, it argues that it is not liable for the delays and breaches in performing the contract claimed by Pont Ventoux;

F-148 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

• in December 2007, EADS ATR initiated arbitration proceedings with the International Chamber of Commerce of Lausanne to challenge an alleged breach by Alenia Aeronautica in relation with an agreement signed in May 2001 for the transfer to GIE ATR (in which EADS ATR and Alenia own a 50% stake) of ATR 42 and ATR 72 aircraft components made by Alenia Aeronautica and EADS ATR. The plaintiff claims that Alenia Aeronautica had withdrawn itself from the contractual obligation of renegotiating the prices established in that contract, not valid since 2003. The plaintiff asks that the company be ordered to pay USD 32 million, plus interest, as compensation for the damages resulting from that breach. EADS ATR also asks that the Arbitration Panel determine a new price for the sale of the components made by the parties to GIE ATR based on actual industrial costs. In its appeal, Alenia Aeronautica challenged the plaintiff’s claim and filed counterclaims. On September 29, 2008 EADS ATR served Alenia Aeronautica a brief in which it increased the amount of damages sought from USD 32 million to USD 55 million. The evidence-gathering phase was completed at the hearing held on May 12, 2009 and the Arbitration Panel is expected to issue the partial arbitration award on the finding of liability.

25. BORROWINGS As of As of June 30, December 31, 2009 2009 (In millions of Euro) Bonds ...... 3,037 3,081 Bank borrowings ...... 1,825 2,058 Finance leases ...... 14 16 Payables for factoring of receivables sold ...... 109 109 Payables to related parties (Section 30) ...... 703 652 Other borrowings ...... 404 444 Total borrowings ...... 6,092 6,360 of which: Current ...... 2,349 2,265 Non-current ...... 3,743 4,095 The decrease in bonds is due to the reimbursement of almost all the remaining DRS bond issues (Euro 850 million as of December 31, 2008) triggered by the change of control clause, net of the new bonds recorded in February 2009 and April 2009 for a nominal amount of Euro 250 million and GBP 400 million, respectively (approximately Euro 471 million). The decrease in other borrowings (Euro 40 million) includes, among the other things, the second reimbursement payment of Euro 80 million (total initial debt of Euro 389 million) made in January 2009 by the relevant Group companies to the Ministry for Economic Development (MED) as a result of the decisions made concerning the methods for complying with the scheduled repayment plans and the corresponding finance costs related to programs funded by Law 808/1985. The first reimbursement payment of Euro 297 million was made in May 2008. The decrease in bank borrowings relates to the partial reimbursement of the Senior Term Loan Facility. Payables to related parties (Section 30) includes, in particular, Euro 596 million as of June 30, 2009 (Euro 570 million as of December 31, 2008) due by Group companies to the joint ventures MBDA and Thales Alenia Space, for the unconsolidated portion, and payables of Euro 96 million as of June 30, 2009 (Euro 62 million as of December 31, 2008) from Eurofighter, held by Alenia Aeronautica (21%), which, due to the new cash pooling agreement made by the shareholders, distributed the cash surplus as of June 30, 2009.

F-149 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

Below is the financial information required under CONSOB communication no. DEM/6064293 of July 28, 2006: As of As of June 30, December 31, 2009 2009 (In millions of Euro) Cash ...... (718) (2,297) Securities held for trading...... (1) (1) LIQUIDITY ...... (719) (2,298) CURRENT FINANCIAL RECEIVABLES ...... (758) (679) Current bank payables ...... 1,041 178 Current portion of non-current borrowings ...... 194 980 Other current borrowings ...... 1,114 1,107 CURRENT NET DEBT ...... 2,349 2,265 CURRENT NET FINANCIAL DEBT (CASH) ...... 872 (712) Non-current bank payables ...... 784 1,880 Bonds issued ...... 2,856 2,115 Other non-current payables ...... 103 100 NON-CURRENT NET FINANCIAL DEBT...... 3,743 4,095 NET FINANCIAL DEBT ...... 4,615 3,383

26. TRADE PAYABLES, INCLUDING ADVANCES FROM CUSTOMERS, NET As of As of June 30, December 31, 2009 2009 (In millions of Euro) Trade payables ...... 4,607 4,651 Trade payables to related parties (Section 30) ...... 78 84 4,685 4,735 Advances from customers (gross) ...... 16,329 16,245 Work in progress ...... (8,775) (8,846) Advances from customers (net) ...... 7,554 7,399 Total trade payables ...... 12,239 12,134

F-150 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

27. OTHER LIABILITIES Non-current Current As of As of As of As of June 30, December 31, June 30, December 31, 2009 2008 2009 2008 (In millions of Euro) Employee obligations ...... 59 56 540 456 Deferred income ...... 33 48 96 118 Social security payable ...... 5 3 279 291 Payable to Min. of Econ. Dev. Law 808/1985 ...... 254 276 49 23 Payable to Min. of Econ. Dev. for monopoly rights Law 808/1985 ...... 73 72 33 28 Other liabilities Law 808/1985 ...... 163 158 — — Indirect tax payables ...... — — 157 174 Other payables to related parties (Section 30) ...... — — 30 34 Other payables ...... 112 118 517 450 699 731 1,701 1,574

The payables to the Ministry of Economic Development (MED) relate to the payables for royalties accrued pursuant to Law 808/1985 for “national security” and similar projects, in addition to payables for disbursement received from the Ministry of Economic Development supporting development of non-national security and similar programs eligible for the incentives under Law 808/85. The payables are reimbursed on the basis of a scheduled repayment plan, without the payment of finance costs. Other liabilities Law 808/1985 includes the difference between the subsidies received or to be received pursuant to Law 808/1985, relating to programs qualifying as programs “of European interest”, with regard to the share of the subsidized costs classified among non-recurring costs, as well as the differential between the monopoly rights charged for the programs of national security and the effective payable accrued based on the established reimbursement ratio. Other payables include: • the payable to Bell Helicopters in the amount of Euro 77 million as of June 30, 2009, which is classified within non-current liabilities (Euro 89 million as of December 31, 2008), of which Euro 61 million (Euro 75 million as of December 31, 2008) is related to the “BAAC reorganization” which involved the acquisition of 100% of the construction and marketing rights for the helicopter AW139, previously owned by Bell Helicopter; • the payable to EADS NV due from GIE ATR (50/50 consortium owned by Alenia Aeronautica SpA and EADS NV) in the amount of Euro 52 million as of June 30, 2009 (Euro 6 million as of December 31, 2008); • the payable for customer deposits in the amount of Euro 27 million as of June 30, 2009 (Euro 33 million as of December 31, 2008); • the payable for contractual penalties in the amount of Euro 22 million as of June 30, 2009 (Euro 32 million as of December 31, 2008); • the payable for the repurchase of a G222 aircraft in the amount of Euro 8 million as of June 30, 2009 (Euro 9 million as of December 31, 2008); • commissions due in the amount of Euro 18 million as of June 30, 2009 (Euro 25 million as of December 31, 2008); • royalties due in the amount of Euro 26 million as of June 30, 2009 (Euro 19 million as of December 31, 2008); and

F-151 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

• payables for insurance in the amount of Euro 16 million as of June 30, 2009 (Euro 22 million as of December 31, 2008).

28. CASH FLOW FROM OPERATING ACTIVITIES Six months ended June 30, Cash flow from operating activities 2009 2008 (In millions of Euro) Net result ...... 242 297 Depreciation, amortization and impairment ...... 320 220 Effect of valuation of equity investments using the equity method ..... (12) (10) Income taxes ...... 161 88 Costs of pension and stock grant plans ...... 44 41 Net finance costs (income) ...... 168 — Other non-monetary items...... 96 (1) 1,019 635

Costs of pension and stock grant plans include the portion of costs relating to defined-benefit pension plans that is recognized as a personnel cost (the portion of costs relating to interest is carried among net finance costs). They also include the cash outlays relating to the stock grant plan classified among “cost of services”. The changes in working capital, net of the effects of the acquisition and sale of consolidated companies and exchange gains/losses, are as follows: As of As of June 30, December 31, 2009 2008 (In millions of Euro) Inventories ...... (530) (622) Contract work in progress and advances received ...... (605) (371) Trade receivables and payables ...... 111 (142) Changes in working capital ...... (1,024) (1,135)

F-152 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

29. EARNINGS PER SHARE Earnings per share (EPS) are calculated as follows: • for basic EPS, by dividing net profit attributable to holders of ordinary shares by the average number of ordinary shares for the period less treasury shares; • for diluted EPS, by dividing net profit by the average number of ordinary shares and the average number of ordinary shares potentially deriving from the exercise of all the option rights for stock option plans less treasury shares. Six months ended June 30, Basic EPS 2009 2008 (In millions of Euro) Average number of shares for the period (in thousands)(*)...... 577,362 446,498 Net result (not including minority interests) (Euro) ...... 218 278 Result of continuing operations (not including minority interests) (Euro) ...... 218 278 Basic EPS ...... 0.378 0.623 Basic EPS from continuing operations...... 0.378 0.623

Six months ended June 30, Diluted EPS 2009 2008 (In millions of Euro) Average number of shares for the period (in thousands)(*)...... 578,020 447,217 Adjusted result (not including minority interests) (Euro) ...... 218 278 Adjusted result of continuing operations (not including minority interests) (Euro) ...... 218 278 Diluted EPS ...... 0.377 0.622 Diluted EPS from continuing operations ...... 0.377 0.622

(*) The values as of June 30, 2008 have been adjusted due to the issue of new shares in consequence of Fin- meccanica capital increase occurred in November 2008.

F-153 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

30. TRANSACTIONS WITH RELATED PARTIES In general, commercial relations with related parties are carried out at arm’s length, as is settlement of the interest-bearing receivables and payables when not governed by specific contractual conditions. The following table summarizes the impact on the balance sheet and income statement. The impact of transactions with related parties on cash flows is reported directly in the statement of cash flows. Non-current Other Current Other financial Non-current financial Trade current RECEIVABLES as of June 30, 2009 receivables receivables receivables receivables receivables Total (In millions of Euro) Subsidiaries Other companies with unit amount lower than Euro 5 ...... — — 13 6 1 20 Associates Eurofighter Jagdflugzeug GmbH .... — — — 93 — 93 Iveco — Oto Melara Scarl...... — — — 45 — 45 Orizzonte — Sistemi Navali SpA . . . — — — 43 — 43 NH Industries Sarl ...... — — — 21 — 21 Metro 5 SpA ...... — — — 12 — 12 Abruzzo Engineering Scpa ...... — — — 13 — 13 Eurofighter Simulation Sistem GmbH ...... — — — 9 — 9 Other companies with unit amount lower than Euro 5 ...... 1 — 1 28 1 31 Joint ventures(*) MBDASAS...... — — — 73 — 73 Thales Alenia Space SAS ...... — — — 28 — 28 GIEATR...... — — 8 9 52 69 Aviation Training International Ltd . . 6 — — — — 6 Other companies with unit amount lower than Euro 5 ...... 5 — 11 6 4 26 Consortiums(**) Saturno ...... — — — 13 — 13 Trevi — Treno Veloce Italiano ..... — — — 14 — 14 C.I.S. DEG...... — — — 8 — 8 Other consortiums with unit amount lower than Euro 5 ...... — — 5 24 2 31 Total ...... 12 — 38 445 60 555 % against total for the year ...... 13.5 — 5.0 5.1 7.8 n.a.

F-154 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

Other Other Non-current non-current Current Trade current PAYABLES as of June 30, 2009 borrowings payables borrowings payables payables Total Guarantees (In millions of Euro) Subsidiaries Other companies with unit amount lower than Euro 5 ...... — — 1 13 1 15 — Associates Eurofighter Jagdflugzeug Gmbh . . . — — 96 — — 96 — Iveco — Oto Melara Scarl ...... — — — — 24 24 — Eurosysnav SAS ...... — — 7 — — 7 — Consorzio Start SpA ...... — — — 20 — 20 — Orizzonte-Sistemi Navali SpA .... — — — — — — 12 Other companies with unit amount lower than Euro 5 ...... — — 3 14 1 18 — Joint ventures(*) MBDASAS...... — — 562 10 — 572 138 Thales Alenia Space SAS ...... — — 34 10 — 44 4 Telespazio SpA ...... — — — — — — 161 Other companies with unit amount lower than Euro 5 ...... — — — 6 4 10 — Consortiums(**) Other consortiums with unit amount lower than Euro 5 ..... — — — 5 — 5 — Total...... — — 703 78 30 811 315 % against total for the year...... — — 29.9 0.6 1.8 n.a. n.a.

(*) Amounts refer to the portion not eliminated for proportionate consolidation (**) Consortiums over which the Group exercises considerable influence or which are subject to joint control

F-155 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

Non-current Other Current Other financial non-current financial Trade current RECEIVABLES as of December 31, 2008 receivables receivables receivables receivables receivables Total (In millions of Euro) Subsidiaries Other companies with unit amount lower than Euro 5 ...... — — 13 8 1 22 Associates Eurofighter Jagdflugzeug GmbH ...... — — — 92 — 92 Iveco — Oto Melara Scarl ...... — — — 65 — 65 Orizzonte — Sistemi Navali SpA ...... — — — 36 — 36 NH Industries Sarl ...... — — — 23 — 23 Macchi Hurel Dubois SAS ...... — — — 12 — 12 Metro 5 SpA ...... — — — 19 — 19 Abruzzo Engineering Scpa ...... — — — 9 — 9 Other companies with unit amount lower than Euro 5 ...... 2 — 1 28 1 32 Joint ventures(*) MBDASAS...... — — — 77 — 77 Thales Alenia Space SAS ...... — — 6 29 — 35 GIEATR...... — — — 15 6 21 Aviation Training International Ltd...... 6 — — — — 6 Other companies with unit amount lower than Euro 5 ...... 5 — 1 5 5 16 Consortiums(**) Saturno ...... — — — 49 — 49 Trevi — Treno Veloce Italiano ...... — — — 15 — 15 C.I.S. DEG ...... — — — 9 — 9 Elmac ...... — — — 6 — 6 Other consortiums with unit amount lower than Euro 5 ...... — — 5 21 1 27 Total ...... 13 — 26 518 14 571 % against total for the year ...... 16.5 — 3.8 11.1 2.1 n.a.

F-156 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

Other Other Non-current non-current Current Trade current PAYABLES as of December 31, 2008 borrowings payables borrowings payables payables Total Guarantees (In millions of Euro) Subsidiaries Other companies with unit amount lower than Euro 5 ...... — — 1 16 1 18 — Associates Eurofighter Jagdflugzeug Gmbh . . . — — 62 7 — 69 — Iveco — Oto Melara Scarl ...... — — — — 25 25 — Eurosysnav SAS ...... — — 9 — — 9 — Consorzio Start SpA ...... — — — 19 — 19 — Orizzonte — Sistemi Navali SpA . . — — — — — — 12 Other companies with unit amount lower than Euro 5 ...... — — 2 15 4 21 — Joint ventures(*) MBDASAS...... — — 544 10 — 554 161 Thales Alenia Space SAS ...... — — 19 8 — 27 3 Superject International SpA ...... — — 8 — — 8 — Telespazio SpA ...... — — 7 — — 7 364 Other companies with unit amount lower than Euro 5 ...... — — — 1 4 5 — Consortiums(**) C.I.S.DEG ...... — — — — — — 1 Other consortiums with unit amount lower than Euro 5 ..... — — — 8 — 8 — Total...... — — 652 84 34 770 541 % against total for the year...... — — 28.8 1.8 2.2 n.a. n.a.

(*) Amounts refer to the portion not eliminated for proportionate consolidation (**) Consortiums over which the Group exercises considerable influence or which are subject to joint control

F-157 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

Six months ended June 30, 2009 Other operating Finance Finance Revenue income Costs income costs (In millions of Euro) Subsidiaries Alifana Due Scrl ...... 7 — 7 — — Other companies with unit amount lower than Euro 5 ...... 2 — 6 — — Associates Eurofighter Jagdflugzeug GmbH ...... 285 — — — — Iveco — Oto Melara Scarl ...... 67 — — — — Orizzonti — Sistemi Navali SpA ...... 29 — — — — NH Industries Sarl ...... 21 — 17 — — International Metro Service Srl ...... — — — — — Eurofighter Simulation System GmbH ...... 13 — — — — Macchi Hurel Dubois SAS...... 11 — — — — Consorzio Start SpA ...... — — 10 — — Eurosysnav SAS ...... 8 — — — — Euromids SAS...... 7 — — — — Metro 5 S.p.A...... 7 — — — — Other companies with unit amount lower than Euro 5 ...... 12 — 8 6 1 Joint ventures(*) GIEATR...... 57 — — — — MBDASAS...... 45 — — — 5 Thales Alenia Space SAS ...... 15 — — — — Other companies with unit amount lower than Euro 5 ...... 2 — 8 — — Consortiums(**) Saturno ...... 41 — — — — Other consortiums with unit amount lower than Euro 5..... 11 — 2 — — Total...... 640 — 58 6 6 % against total for the period ...... 7.5 — 1.1 0.9 0.7

(*) Amounts refer to the portion not eliminated for consolidation (**) Consortiums over which the Group exercises considerable influence or which are subject to joint control

F-158 FINMECCANICA S.p.A. NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION — (Continued) As of June 30, 2009 and for the six months ended June 30, 2009 and 2008

Six months ended June 30, 2008 Other operating Finance Finance Revenue income Costs income costs Subsidiaries Other companies with unit amount lower than Euro 5 ...... 2 — 10 — — Associates Eurofighter Jagdflugzeug GmbH ...... 258 — — — Iveco — Oto Melara Scarl ...... 58 — 1 — 2 NH Industries Sarl ...... 44 — — — — Orizzonti — Sistemi Navali SpA ...... 30 — — — — Macchi Hurel Dubois SAS...... 14 — — — — Euromids SAS...... 12 — — — — Abruzzo Engineering Scpa ...... 12 — — — — Eurofighter Simulation Systems GmbH ...... 9 — — — — Eurosysnav SAS ...... 8 — — — — Other companies with unit amount lower than Euro 5 ...... 13 1 10 — — Joint ventures(*) GIEATR...... 54 — 4 — — MBDASAS...... 40 — — — 10 Thales Alenia Space SAS ...... 17 — 2 1 Other companies with unit amount lower than Euro 5 ...... 2 — — 1 — Consortiums(**) Saturno ...... 49 — 2 — — Other consortiums with unit amount lower than Euro 5..... 8 — 2 — — Total...... 630 1 31 1 13 % against total for the period ...... 10.9 0.5 0.8 0.2 3.0

(*) Amounts refer to the portion not eliminated for consolidation (**) Consortiums over which the Group exercises considerable influence or which are subject to joint control

F-159 INDEX TO THE FINANCIAL STATEMENTS AND FINANCIAL INFORMATION OF MECCANICA HOLDINGS USA, INC

Independent Auditors’ Report ...... M-2 Meccanica Holdings USA, Inc. Consolidated Financial Statements for the Period from 14 October 2008 (Date of Inception) to 31 December 2008 ...... M-4

M-1 PricewaterhouseCoopers SpA

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of Meccanica Holdings USA Inc 1 We have audited the accompanying consolidated financial statements of Meccanica Holdings USA Inc (the “Company”) and its subsidiaries (together “Meccanica Holdings Group”) which comprise the consolidated balance sheet as of December 31, 2008 and the consolidated statement of income, the consolidated statement of recognized income and expense, the consolidated statement of changes in shareholders’ equity, the consolidated statement of cash flow for the period from 14 October 2008 (the inception) to 31 December 2008 and related explanatory notes (the “Consolidated Financial State- ments”). Directors of the Company are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The Consolidated Financial Statements are prepared solely for the purpose of including them in the Listing Prospectus prepared by the Company’s directors, for the filing on the official list of the Luxembourg Stock Exchange, in order to register the $500,000,000 6.25% Guaranteed Notes due 2040 issued by Meccanica Holdings USA Inc. and guaranteed by Finmeccanica — Società per azioni. 2 We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Sede legale e amminlstrative: Milano 20149 Via Monte Rosa 91 Tel. 0277851 Fax 027785240 Cap. Soc. 3.754.400,00 Euro i.v., C.F. e P.IVA e Reg. Imp. Milano 12979880155 Iscritta al n. 43 dell’Albo Consob — Altri Uifici: Bari 70124 Via Don Luigl Guanella 17 Tel. 0805640211 — Bologna Zola Predosa 40069 Via Tevere 18 Tel. 0516186211 — Brescia 25123 Via Borgo Pietro Wuhrer 23 Tel. 0303697501 — Firenze 50121 Viale Gramsoi 15 Tel. 0552482811 — Genova 16121 Piazza Dante 7 Tel. 01029041 — Napoli 80121 Piazza dei Martiri 58 Tel. 08136181 — Padova 35138 Via Vicenza 4 Tel. 049873481 — Palermo 90141 Via Marchese Ugo 60 Tel. 091349737 — Parma 43100 Viale Tanara 20/A Tel. 0521242848 — Roma 00154 Largo Fochettl 29 Tel. 06570251 — Torino 10129 Corso Montevecchio 37 Tel. 011556771 — Trento 38122 Via Grazloli 73 Tel. 0461237004 — Treviso 31100 Viale Felissent 90 Tel. 0422696911 — Trieste 34125 Via Cesare Battisti 18 Tel. 0403480781 — Udine 33100 Via Poscolle 43 Tel. 043225789 — Verona 37122 Corso Porta Nuova 125 Tel. 0458002561.

M-2 3 In our opinion, the accompanying Consolidated Financial Statements give a true and fair view of the financial position of the Meccanica Holdings Group as of December 31, 2008, and of its financial performance and its cash flows for the period from 14 October 2008 (the inception) to 31 December 2008 in accordance with International Financial Reporting Standards as adopted by European Union.

Rome, 21 December 2009 PricewaterhouseCoopers SpA

Gabriele Maria Matrone (Partner)

M-3 MECCANICA HOLDINGS USA, Inc. CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD FROM 14 OCTOBER 2008 (DATE OF INCEPTION) TO 31 DECEMBER 2008

M-4 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS For the period from 14 October 2008 (date of inception) to 31 December 2008

CONTENTS

MANAGEMENT BOARD’S REPORT...... M-6 General information ...... M-6 Main highlights for 2008 ...... M-6 Outlook for 2009 ...... M-6 Subsequent events ...... M-8 CONSOLIDATED FINANCIAL STATEMENTS ...... M-9 Income statement for the period from 14 October 2008 (inception) to 31 December 2008 ...... M-9 Balance Sheet as of 31 December 2008 ...... M-10 Statement of recognised income and expense for the period from 14 October 2008 (inception) to 31 December 2008 ...... M-11 Statement of changes in Shareholder’s equity as of 31 December 2008 ...... M-12 Statement of cash flows for the period from 14 October 2008 (inception) to 31 December 2008 .... M-13 Notes to the financial statements ...... M-14 1. General information ...... M-14 2. Basis of preparation and accounting standards used ...... M-15 3. Accounting policies ...... M-15 4. Scope of consolidation ...... M-21 5. Business combination ...... M-22 6. Intangible assets ...... M-23 7. Tangible assets ...... M-23 8. Trade receivables and payables ...... M-24 9. Inventories ...... M-24 10. Contract work in progress and advances from customers ...... M-24 11. Share capital ...... M-24 12. Borrowings...... M-24 13. Defined benefit obligations ...... M-25 14. Provisions for risks and charges ...... M-26 15. Other current liabilities...... M-32 16. Revenues ...... M-32 17. Raw materials and consumables and purchase of services ...... M-32 18. Personnel costs...... M-32 19. Amortisation and depreciation...... M-33 20. Finance costs ...... M-33 21. Income taxes ...... M-33 22. Gross cash flow from operating activities ...... M-34 23. Changes in working capital...... M-34 24. Changes in other operating items ...... M-34 25. Commitments and Contingent Liabilities ...... M-35 26. Remuneration of the Directors ...... M-35 27. Financial risks ...... M-35 28. Transactions with related parties ...... M-36 OTHER INFORMATION ...... M-36 Profit appropriation ...... M-36 Audit report ...... M-36

M-5 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

MANAGEMENT BOARD’S REPORT Management of Meccanica Holdings USA, Inc. (“the Company” or “MHUSA”) hereby presents its consolidated financial statements as of 31 December 2008 and for the period from 14 October 2008 (incpetion) to 31 December 2008. The Company was established on 14 October 2008; therefore, the income statement represents activities from 14 October 2008 (inception) to 31 December 2008. The consolidated financial statements were prepared soley for the purpose of including them in the Listing Prospectus prepared by Meccanica Holdings USA Inc.’s Directors for the registration on the official list of the Luxembourg Stock Exchange for the $500 million 6.25% Guaranteed Notes due 2040 issued by Meccanica Holdings USA Inc. and guaranteed by Finmeccanica — Società per azioni.

GENERAL INFORMATION The Company derives all of its operating income and cash flows from its wholly-owned subsidiary, DRS Technologies, Inc. (“DRS”), a corporation organised and existing under the laws of Delaware, which was acquired by MHUSA on 22 October 2008. The Company’s only asset is its investment in DRS as of 31 December 2008. The accompanying financial statements consist of the consolidated financial statements of the Company. MHUSA has elected to adopt IFRS for its consolidated financial statements. All amounts are expressed in United States dollars.

MAIN HIGHLIGHTS FOR 2008 As stated above, the Company was incorporated on 14 October 2008. On the same day the Company issued one thousand (1000) shares of Common Stock to Finmeccanica — Società per azioni (“Finmeccanica”), based in Italy, in exchange for a cash contribution in the amounting of $3.6 billion and a contribution of shares held in Dragon Merger Sub, Inc., which was later merged into DRS through a triangular reverse merger. As a consequence of the above, the Company is a fully owned subsidiary of Finmeccanica. For the period from 14 October 2008 (inception) to 31 December 2008 the Company had revenues of $811 million and operating margins of $59 million. Revenues and operating margins were driven by strong performances on several programs and lines of business, including strong demand for and shipments of ground vehicle electro-optical programs, thermal weapons sights, driver vision enhancement components for ground vehicles and combat display workstations. Finance costs for the period from 14 October 2008 (inception) to 31 December 2008 were $21 million. Finance costs were primarily driven from interest on the debt outstanding which include $350 million 5 aggregate principal amount of 6 ⁄8% senior notes due 2016, $250 million aggregate principal amount of 5 7 7 ⁄8% senior subordinated notes due 2018 and $550 million aggregate principal amount of 6 ⁄8% senior subordinated notes due 2013 (collectively the “Notes”) and an intercompany loan with Finmeccanica. DRS was required to offer to purchase all the Notes pursuant to DRS’ obligations under the indentures governing the Notes. DRS offered 101% of the aggregate principal amount plus accrued and unpaid interest on the repurchased Notes. After the offers expired in January 2009, $30 million of the Notes remained outstanding. Income taxes and the effective tax rate for the period from 14 October 2008 (inception) to 31 December 2008 were $15 million and 38.5%, respectively.

OUTLOOK FOR 2009 During the year 2009 the Company has been involved in the issuance of bonds which will be mainly used to support the Finmeccanica group refinancing. In this respect the Company’s Board of Directors was authorised to offer and issue in one or more series, at times to be determined, of U.S. Bonds with certain characteristics in the aggregate principal amount of up to $1.6 billion to be unconditionally guaranteed by Finmeccanica as to payment of principal and interest. However, as of 31 December 2008 no U.S. Bonds were issued. An aggregate amount of $800 million was issued on 15 July 2009: $500 million due 2019 and $300 million due 2039. The notes due 2019 bear interest at a rate of 6.25% per year and the notes due 2039 bear interest at a rate of 7.375%. MHUSA will pay interest on these notes on 15 January and 15 July of each year. The notes are listed and traded on the Luxembourg Stock Exchange. The net proceeds, together with the

M-6 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008 amount drawn-down ($13 million) under a facility agreement entered into between MHUSA and Finmeccanica on 15 July 2009 (amounting to $20 million), were entirely used to finance DRS. An aggregate amount of $500 million was issued on 27 October 2009 due 2040. The notes bear interest at a rate of 6.25% per year. The net proceeds were entirely used to finance DRS. In July 2009 the Company, along with its subsidiary DRS and its parent company Finmeccanica, entered into a Special Security Agreement (“SSA”) and in a Proxy Agreement (“PA”) with the United States Department of Defence (“DoD”). The SSA is an agreement limiting the right of non-U.S. shareholders to access classified information that protects the secrecy of such information through certain governance mechanisms. Under the SSA, the directors are appointed by the Company, but a majority of the directors must have had no prior relationship with DRS or Finmeccanica Group and be approved by the DoD (the outside directors) and at least one officer must serve as an executive director. However, under the SSA, the Company maintains full control of DRS’ management and the ability to direct its policies subject at all times to the full compliance of policies and practices to ensure the safeguarding of classified and controlled unclassified information. The PA is an agreement which prevents the sharing of classified information with non-U.S. shareholders or affiliates, by the appointment of a proxy board comprised solely of American citizens with U.S. security clearances (“Proxy Holders”), approved by Defense Security Services (“DSS”). Certain DRS sensitive assets were placed into a subsidiary of DRS, DRS Defense Solutions, LLC (“DRS DS”). Under the PA, DRS appointed three Proxy Holders of DRS DS who are responsible for the oversight of DRS’ security arrangements, including the separation of the relevant DRS assets from Finmeccanica Group. Those Proxy Holders have the obligation to act prudently to protect the legitimate economic interests of DRS in DRS DS and DRS DS shall comply with the policies and requirements arising as a result of being a Finmeccanica subsidiary. The proxy holders have authority to manage DRS DS’ affairs independently of the DRS Board of Directors, with the exception of certain extraordinary actions. Assets which account for approximately 30% of DRS revenues are managed under this arrangement. Both the PA and SSA establish procedures regarding meetings, visits and communications between DRS DS, DRS, Finmeccanica and the Company. The U.S. Defence industry faces several macro environment challenges in 2009: new administration with an aggressive social agenda, two war fronts with waning public support, an economic recession that is exacerbated by, and arguably feeding a global economic crisis, and federal deficits that are growing as a result of the aforementioned wars and economic recession. While these challenges may not materially affect defence spending in 2009 and 2010, they are likely to impact spending in 2011 and beyond. For this reason, it is important for defence companies today to position and manage their business for an upcoming period of flat to declining defence budgets. In 2007 and 2008, DRS experienced strong demand for ground vehicle electro-optical/infrared (“EO/IR”) signing systems, EO/IR soldier systems and ruggedised computing products, among other things, as a result of troop “surge” in Iraq and the development of the new Mine Resistant Ambush Protected (“MRAP”) platform. This increased demand helped raise funded backlog to $3.3 billion as of 31 December 2008. We expect this high level of backlog will allow us to sustain 2009 revenue at levels similar to 2008 results. Changes in program funding are the largest challenges we anticipate over the next several years. It is expected that increasing federal deficits and a wind-down in the Iraq War will reduce both the baseline budget and supplemental spending. Within the baseline budget, we also expect pressure on the accounts from which our contracts receive funding: procurement and research, development, test and evaluation (“RDT&E”). The pressure will come as lawmakers attempt to restrain defence spending growth, despite increasing costs for military salaries, housing, healthcare and national security commitments in south west Asia. This will result in a funding shift primarily away from procurement to military personnel and other. Cuts to large, future-generation programs, such as Future Combat Systems (“FCS”) and the F-22, appear inevitable within the procurement account. Fortunately, DRS maintains a large footprint on the current force, which will maintain funding, and has limited exposure to large program cuts. To address this shift in funding priorities, we will look to exploit our leading and/or improving positions in growing markets such as homeland security, aviation maintenance, repair and overhaul (“MRO”),

M-7 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008 airborne Intelligence Surveillance Reconnaissance (“ISR”), and tactical communications and network solutions. Because of our customer focus, highly diversified business, and position as a merchant defence electronics vendor, DRS remains well positioned to compete in this dynamic environment. Moreover, as we begin a new era as a Finmeccanica company, we believe these attributes will be complemented by synergies with other Finmeccanica companies that will better position DRS to meet new global security challenges.

SUBSEQUENT EVENTS In January 2009 DRS repaid $1.12 billion of its $1.15 billion in notes outstanding with proceeds from a term loan with Finmeccanica. See Note 12 for further information. We are not aware of any other significant subsequent events which may have an impact on these consolidated financial statements.

M-8 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

CONSOLIDATED FINANCIAL STATEMENTS INCOME STATEMENT For the period from 14 October 2008(inception) to 31 December 2008 Note 2008 In millions of U.S. Dollars Revenue...... 16 811 Raw materials and consumables ...... 17 364 Purchase of services ...... 17 149 Personnel costs...... 18 167 Amortisation and depreciation ...... 19 24 Other operating costs ...... 9 Changes in inventories of work in progress, semi-finished and finished goods ...... (39) Operating margin ...... 59 Finance income ...... 1 Finance costs ...... 20 21 Result before taxes ...... 39 Income taxes ...... 21 (15) Result for the period from 14 October 2008 to 31 December 2008 ...... 24 Attributable to: — equity holders of the Company ...... 24 — minority interests ...... —

M-9 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

BALANCE SHEET As as of 31 December 2008

Note 2008 In millions of U.S. Dollars (After appropriation of results) Intangible assets ...... 6 5,082 Tangible assets ...... 7 274 Deferred taxes ...... 21 292 Other assets...... 13 Non current assets ...... 5,661 Trade receivables...... 8 499 Inventories ...... 9 454 Contract work in progress ...... 10 95 Income tax receivables ...... 11 Financial receivables from related parties ...... 28 1 Other assets...... 32 Cash and cash equivalents ...... 72 Current assets...... 1,164 Total assets ...... 6,825 Share capital ...... 11 — Share premium ...... 3,600 Other reserves ...... (19) Retained earnings ...... 23 Minority interests ...... 10 Shareholders’ equity ...... 3,614 Borrowings — long term ...... 12 7 Defined benefit obligations ...... 13 113 Provisions for risks and charges ...... 14 11 Deferred taxes ...... 21 361 Other liabilities ...... 15 Non current liabilities ...... 507 Advances from customers ...... 10 409 Trade payables ...... 8 307 Borrowings — short term ...... 12 1,712 Income tax payables ...... 2 Provisions for risks and charges ...... 14 100 Other liabilities ...... 15 174 Current liabilities ...... 2,704 Total liabilities ...... 6,825

M-10 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

STATEMENT OF RECOGNISED INCOME AND EXPENSE For the period from 14 October 2008 (inception) to 31 December 2008

Note 2008 In millions of U.S. Dollars Actuarial losses on defined-benefit plans ...... 13 (30) Tax on actuarial losses ...... 11 Net expenses recognised directly in equity ...... (19) Result for the period from 14 October to 31 December 2008 ...... 24 Total recognised income for the period from 14 October to 31 December 2008 ...... 5

M-11 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY As of 31 December 2008

Share Retained Minority Other premium earnings interests reserves Total In millions of U.S. Dollars Balance as of 14 October 2008 (inception) ...... — — — — — Total recognised income for the year ...... — 24 — (19) 5 Acquisition of DRS...... — — 10 10 Cash contribution from shareholder ...... 3,600 — — — 3,600 Other ...... — (1) — — (1) Balance as of 31 December 2008 ...... 3,600 23 10 (19) 3,614

M-12 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

STATEMENT OF CASH FLOWS For the period from 14 October 2008 (inception) to 31 December 2008

Note 2008 In millions of U.S. Dollars Gross cash flow from operating activities ...... 22 91 Changes in working capital ...... 23 4 Changes in other operating items ...... 24 (27) Financial costs paid ...... (4) Income taxes paid ...... 2 Cash flow generated from operating activities ...... 66 Purchases of tangible assets ...... (23) Purchases of intangible assets...... (5) Acquisition of subsidiaries, net of cash acquired ...... 5 (3,628) Cash flow used in investing activities ...... (3,656) Share capital increase...... 3,600 Repayments of bonds ...... (345) Net change in other borrowings ...... 407 Cash flow generated from financing activities ...... 3,662 Cash and cash equivalents at the beginning of the period ...... — Net increase in cash and cash equivalents ...... 72 Cash and cash equivalents at the end of the period ...... 72

M-13 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION MHUSA was incorporated on 14 October 2008 and has its legal seat in Wilmington, County of New Castle, Delaware (USA). The Company’s headquarters and principal place of business is located at 1625 I Street, NW, 12th Floor, Washington, District of Columbia 20006, USA. The Company holds 100% of the shares of DRS, a corporation organised and existing under the laws of Delaware, operating in the Defence Electronics business. The financial statements of the Company are included in the consolidated financial statements of its 100% shareholder Finmeccanica — Società per azioni. The consolidated financial statements is prepared only for the inclusion in the Listing Prospectus prepared by Meccanica Holdings USA Inc. Directors for the filing on the official list of the Luxembourg Stock Exchange of $500 million 6.25% Guaranteed Notes due 2040 issued by Meccanica Holdings USA Inc. and guaranteed by Finmeccanica — Società per azioni. All amounts are presented in millions of U.S. Dollars, unless stated otherwise. These consolidated financial statements were audited by PricewaterhouseCoopers.

1.1 PRINCIPAL ACTIVITY Following the completion of the above mentioned transaction, MHUSA current principal activity is acting as the holding company of the 100% investment in DRS. MHUSA also intends to support Finmeccanica Group refinancing and acts as a financial vehicle for the Finmeccanica group in the U.S. market. DRS is a supplier of defense electronic products, systems and military support services. DRS provides high-technology products and services to all branches of the U.S. military, major aerospace and defense prime contractors, government intelligence agencies, international military forces and industrial markets. DRS focuses on several key areas of importance for the U.S. Department of Defense (“DoD”), such as intelligence, surveillance, reconnaissance, power management, advanced communications and network systems. DRS is a provider of thermal imaging devices, combat display workstations, electronic sensor systems, power systems, battlefield digitisation systems, air combat training systems, mission recorders, deployable flight incident recorders, environmental and telecommunication systems, aircraft loaders and military trailers and shelters. DRS also provides support services, including security and asset protection system services, telecommunication and information technology services, training and logistics support services for all branches of the U.S. armed forces, certain foreign militaries, homeland security forces and selected government and intelligence agencies.

1.2 SHAREHOLDERS Finmeccanica S.p.A., Italy : 100%

1.3 REGISTERED ADDRESS Corporation Service Company 2711 Centerville Road Suite 400 Wilmington, County of New Castle Delaware 19808 USA

M-14 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) 2. BASIS OF PREPARATION AND ACCOUNTING STANDARDS USED The financial statements as of 31 December 2008 were prepared in accordance with International Financing Reporting Standards as endorsed by the European Union (“EU”), supplemented by the relevant interpretations (Standing Interpretations Committee — SIC and International Financial Reporting Interpreta- tions Committee — IFRIC) issued by the International Accounting Standard Board (“IASB”).

2.1 COMPARATIVE FIGURES As the Company was established on 14 October 2008, no comparative prior period figures are presented.

2.2 USE OF ESTIMATION The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The most significant of these estimates and assumptions relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, pension and post-retirement benefit obligations, income taxes, including deferred tax assets, litigation reserves and environmental obligations and the recoverability, useful lives and valuations of recorded amounts of long- lived assets, identifiable intangible assets and goodwill. Actual results may differ from these estimates.

2.3 BASIS OF MEASUREMENT Assets and liabilities are stated at historical cost.

3. ACCOUNTING POLICIES 3.1 IDENTIFICATION OF THE FUNCTIONAL CURRENCY This report is presented in U.S. Dollars, which is the functional currency of MHUSA and DRS.

3.2 SEGMENT INFORMATION The Company does not disclose any segment information due to the fact that operating results are reviewed by the Company’s decision maker based on the performances of DRS as a whole. Therefore, key decisions about resources to be allocated and the assessment of performances are exclusively based on the performances of the DRS Group. Consequently, discrete financial information at the Company level relating to different business segments which may be identified at DRS level are not available. Revenues are almost entirely realised within the United States of America.

3.3 INTANGIBLE ASSETS Intangible assets represent assets acquired as part of MHUSA’s acquisition of DRS. The acquisition included customer and program/contract-related and technology-based intangibles. The values assigned to the acquired identifiable intangible assets are determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and revenues, all of which are discounted to present value. The Company assesses the recoverability of the carrying value of its acquired intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. If there are any indicators of impairment present, the Company would then evaluate the recoverability of the potentially impaired long-lived assets and acquired identifiable intangible assets based upon the expectations of undiscounted net cash flows from such assets. If the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset or asset group, a loss would be recognised for the difference between the fair value and the carrying amount of the assets.

M-15 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) Assets to be disposed of, including those of discontinued operations, are reported at the lower of the carrying amount or fair value, less the costs to sell.

3.3.1 Goodwill Goodwill recognised as an intangible asset is associated with business combinations and represents the difference between the cost incurred to acquire a business and the Company’s share of the sum of the values assigned, based on current values at the time of the acquisition, to the individual assets and liabilities of the given business. As it does not have a definite useful life, goodwill is not amortised but is subject to impairment tests conducted at least once a year, unless market and operational factors identified by the Company indicate that an impairment test is also necessary in the preparation of interim financial statements. In conducting an impairment test, goodwill is allocated to the individual cash-generating units (CGUs), i.e. the smallest financially independent business units through which the Company operates in its various market segments.

3.4 TANGIBLE ASSETS Property, plant and equipment is measured at purchase or production cost net of accumulated depreciation and any impairment losses. The cost includes all direct costs incurred to prepare the assets for use, as well as any charges for dismantlement and disposal that will be incurred to return the site to its original condition. Charges incurred for routine and/or cyclical maintenance and repairs are expensed in full in the period in which they are incurred. Costs related to the expansion, modernisation or improvement of owned or leased structural assets are only capitalised to the extent that such costs meet the requirements for being classified separately as an asset or part of an asset. The value of an asset is adjusted by systematic depreciation calculated based on the residual useful life of the asset itself. In the period in which the asset is recognised for the first time, the depreciation rate applied takes into account the period of actual use of the asset. The estimated useful lives adopted by the Company for the various asset classes are as follows: Years Land ...... Indefinite useful life Buildings and building improvements ...... 15-40 Plant and machinery...... 3-10 Equipment ...... 3-10 In the event the asset to be depreciated is composed of distinct elements with useful lives that are significantly different from those of the other constituent parts, each individual part that makes up the asset is depreciated separately, in application of the component approach to depreciation. The gains and losses from the sale of assets or groups of assets are calculated by comparing the sales price with the related net book value.

3.5 DEFERRED TAXES Deferred tax assets and liabilities are calculated based on temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax assets and liabilities are calculated by applying the tax rate in force at the time the temporary differences will be reversed. Deferred tax assets are recognised to the extent that it is probable the Company will post taxable income at least equal to the temporary differences in the financial periods in which such assets will be reversed.

3.6 INVENTORIES Inventories other than inventoried contract costs are recorded at the lower of cost and net realisable value. The Company uses the weighted average cost method. The net realisable value is the sales price in the

M-16 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) course of normal operations, net of estimated costs to finish the goods and those needed to make the sale. Any write-downs are eliminated in future periods if the reason for the write-down should cease to exit. The Company classifies inventories as follows: • Raw materials • Work in progress and semi-finished goods • Finished goods • Advances to suppliers Work in progress is recognised at production cost using the weighted average cost, excluding financial charges and general overhead costs.

3.7 CONTRACT WORK IN PROGRESS Contract work in progress is recognised on the basis of progress (or percentage of completion), whereby costs, revenues and margins are recognised based on the progress of completion. The state of completion is determined either on the basis of the ratio between costs incurred at the measurement date and the total expected costs for the program or as units are delivered. The valuation reflects the best estimates of total expected contractual revenues and total expected contractual costs as of the reporting date. The assumptions upon which the valuations are made are periodically updated. Any impact on profit or loss are recognised in the period in which the updates are made. In the event the completion of a contract is expected to result in a loss at the gross margin level, the loss is recognised in its entirety in the period in which it becomes reasonably foreseeable. Contract work in progress is recorded net of any write-downs, as well as pre-payments and advances related to the contract being performed. This analysis is carried out contract by contract: in the event of positive differences (where the value of work in progress is greater than total pre-payments), the difference is recorded as an asset; negative differences, on the other hand, are recorded as a liability under ‘due to customers for contract work’. If it has not been collected at the date of preparation of the annual accounts, the amount recorded among advance payments will have a contra-item in trade receivables. The Company values its acquired contract work in progress in connection with business acquisitions on the date of acquisition at contract value less the Company’s estimated costs to complete the contract and a reasonable profit allowance on the Company’s completion effort commensurate with the profit margin the Company earns on similar contracts.

3.8 TRADE RECEIVABLES Trade receivables are recognised at fair value, given their short-term nature, less a provision for impairment. A provision for impairment of trade receivables is established when there is evidence that the Company will not be able to collect all amounts due. The amount of the provision is the difference between the asset’s carrying value and the present value of estimated future cash flows discounted at the original effective interest rate.

3.9 CASH AND CASH EQUIVALENTS Cash and cash equivalents includes cash on hand, deposits with banks or other short-term, highly liquid investments with original maturities of three months or less. Cash and cash equivalents are recognised at their fair value.

3.10 IMPAIRMENT The carrying amounts of the Company’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the asset’s recoverable amount is

M-17 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the income statement. The recoverable amount is the greater of the fair value less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The impairment test is based on expected future cash-flow discounted as of the balance-sheet date. Therefore, they are highly sensitive to the assumptions contained in the estimate of future cash-flows and interest rates applied. No impairment losses have been recognised in profit and loss during the period.

3.11 SHARE CAPITAL Share capital consists of the capital subscribed through 31 December 2008.

3.12 EMPLOYEE BENEFITS The Company uses several types of pension and supplementary benefit plans, which are classified as Defined benefit plans. Under this category, the Company undertakes to provide agreed benefits for current and former employees and incur the actuarial and investment risks associated with the plan. The cost of the plan is therefore not determined by the amount of the contributions payable in the financial period but, rather, is determined with reference to demographic and statistical assumptions and wage trends. The methodology used is the projected unit credit method. The Company uses the ‘equity’ approach in recognising actuarial effects relating to defined benefit plans: actuarial gains and losses are recognised in the period in which they occur, directly in equity. Service costs, past service costs and curtailment costs (if applicable) are recognised in “personnel costs”. On the other hands, interest costs, net of expected return of plan assets, are recognised in “financial charges”.

3.13 TRADE PAYABLES AND OTHER LIABILITIES Payables and other liabilities are recognised at fair value net of transaction costs given their short term nature. They are subsequently valued at their amortised cost using the effective interest rate method. Payables and other liabilities are defined as current liabilities unless the Company has the contractual right to settle its debts at least 12 months after the reporting date.

3.14 BORROWINGS Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit and loss account over the period of the borrowings using the effective interest method.

3.15 PROVISIONS FOR RISKS AND CHARGES Provisions for risks and charges cover certain or probable losses and charges whose timing or amount was uncertain at the reporting date. The provision is recognised only when a current obligation (legal or constructive) exists as a result of past events and it is probable that an outflow of economic resources will be required to settle the obligation. The amount reflects the best current estimate of the cost of fulfilling the obligation. The interest rate used to determine the present value of the liability reflects current market rates and includes the additional effects relating to the specific risk associated with each liability.

M-18 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) Risks for which the emergence of a liability is merely a possibility are disclosed in the section in the notes on commitments and risks and no provision is recognised.

3.16 REVENUES Revenues are recognised at the fair value of the amount received and receivable, inclusive of volume discounts and reductions. Revenues also include changes in work in process, the accounting policies for which were described in Section 3.7 above. Revenues generated from the sale of goods are recognised when the enterprise has transferred to the buyer substantially all of the significant risks and rewards of ownership of the goods, which, in many cases, will coincide with the transfer of title or possession to the buyer; and when the value of the revenues can be reliably determined. Revenues from services are recognised on a percentage-of-completion method when they can be reliably estimated.

3.17 FINANCIAL INCOME AND EXPENSE Interest is recognised on an accrual basis using the effective interest rate method, i.e. the interest rate that results in the financial equivalence of all inflows and outflows (including any premiums, discounts, commissions etc) that make up a given operation. Financial expense is never capitalised.

3.18 STATEMENT OF CASH FLOWS The statement of cash flows has been prepared according to the indirect method. Transactions not resulting in cash flows are not recorded in the statement of cash flows.

M-19 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) 3.19 NEW STANDARDS AND INTERPRETATIONS NOT YET APPROVED The following new standards, amendments to standards and interpretations were not effective for the period from 14 October 2008 (inception) to 31 December 2008, and have not been applied in preparing these consolidated financial statements: IFRS - IFRIC interpretation Effects for the Company

IAS 32/39 Amendments Financial instruments Not applicable to the Company. There will be no impact on 2009 financial statement. IAS 23 Borrowing costs The standard removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised IAS 23 will be effective for the 2009 financial statement and its adoption is not expected to have a material impact. IAS 1 Presentation of financial statements Application would only result in a different disclosure in the financial statements. The Company expects to apply these changes from 1 January 2009. IFRS 2 Amendment Share-based payments The amendment defines the accounting policy for vesting conditions. The amendment will become mandatory for the 2009 financial statements and is not expected to have an impact. IAS 27 Consolidated and separate financial statements Not applicable to the Company. There will be no impact on 2009 financial statement. IFRS 3 Business combinations The new version of IFRS 3 envisages the recognition in the income statement of transaction costs; the elimination of the obligation to value each asset and liability of the subsidiary at fair value in subsequent step acquisitions, and the recognition at the acquisition date of liabilities for conditional payments. The standard will become mandatory for the 2009 financial statements and is not expected to have a material impact. IFRIC 12 Service concession agreements Not applicable to the Company. There will be no impact on 2009 financial statement. IFRIC 13 Customer loyalty programs Not applicable to the Company. There will be no impact on 2009 financial statement. IFRIC 14 The limit on a defined benefit asset, minimum Not applicable to the Company. There will be no funding requirements and their interaction impact on 2009 financial statement. IFRIC 15 Agreements for the construction of real estate Not applicable to the Company. There will be no impact on 2009 financial statement. IFRIC 16 Hedges on a net investment in a foreign operation Not applicable to the Company. There will be no impact on 2009 financial statement. IFRIC 17 Distributions of non-cash assets to owners Not applicable to the Company. There will be no impact on 2009 financial statement. IFRIC 18 Transfers of assets from customers Not applicable to the Company. There will be no impact on 2009 financial statement.

M-20 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) 4. SCOPE OF CONSOLIDATION The consolidated financial statements include the statements as of 31 December 2008 and for the period from 14 October 2008 (inception) to 31 December 2008 of the companies/entities included in the scope of consolidation (“consolidated entities”), which have been prepared in accordance with the IFRS. Below is a list of the consolidated entities and the respective ownership by the Company:

List of companies consolidated on a line-by-line basis %of Company name Registered Office Ownership DRS Surveillance Support Systems, Inc...... Delaware 100% DRS Technologies UK Limited ...... United Kingdom 100% DRS Systems Management, LLC...... Delaware 100% Laurel Technologies Partnership ...... Delaware 80% DRS Power & Control Technologies, Inc...... Delaware 100% DRS Power Technology, Inc...... Delaware 100% DRS Tactical Systems, Inc...... Florida 100% DRS Intelligence & Avionic Solutions, Inc...... Ohio 100% DRS Sensors & Targeting Systems, Inc...... Delaware 100% DRS Unmanned Technologies, Inc...... Delaware 100% DRS Data & Imaging Systems, Inc...... Delaware 100% DRS Technologies Canada, Inc...... Delaware 100% DRS Technologies Canada Ltd...... Ontario 100% DRS C3 Systems, Inc...... Florida 100% DRS Sonar Systems, LLC ...... Delaware 51% MSSC Company...... Pennsylvania 51% Tech-Sym Corporation ...... Nevada 100% DRS Test & Energy Management, LLC ...... Delaware 100% DRS Signal Solutions, Inc...... Delaware 100% T-S Holding Corporation ...... Texas 100% DRS International, Inc...... Delaware 100% DRS Systems, Inc...... Delaware 100% Night Vision Systems, LLC ...... Delaware 100% DRS Tactical Systems, Global Services, Inc...... Florida 100% DRS Homeland Security Solutions, Inc...... Delaware 100% DRS Codem Systems, Inc...... Delaware 100% Engineered Support Systems, Inc...... Missouri 100% ESSI Resources, LLC ...... Kentucky 100% Engineered Coil Company...... Missouri 100% Engineered Electric Company ...... Missouri 100% DRS Sustainment Systems, Inc...... Delaware 100% Universal Power Systems, Inc...... Delaware 100% DRS Technical Services, Inc...... Maryland 100% DRS Mobile Environmental Systems Co...... Ohio 100% 3083683 Nova Scotia Limited ...... NovaScotia 100% Pivotal Power, Inc...... NovaScotia 100% PCA Electric Test Ltd...... United Kingdom 100% DRS Consolidated Controls, Inc...... Delaware 100% DRS Integrated Defense Solutions, LLC...... Delaware 100% DRS Technologies Verwaltungs GmbH ...... Germany 100% DRS Technical Services GmbH & Co. KG ...... Germany 100%

M-21 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) List of companies consolidated using the equity method %of Company name Registered Office Ownership Canopy Technologies, LLC ...... Delaware 50% N2 Imaging Systems, LLC...... Delaware 30%

5. BUSINESS COMBINATION On 22 October 2008, the Company purchased 100% of DRS, a U.S. company listed on the New York Stock Exchange and a provider of integrated defence electronics products and services, for $81 per share of common stock. The total value of the transaction was $5.2 billion, which included the assumption of financial liabilities amounting to $1.6 billion, mainly related to bonds and credit facilities which included put and call obligations, exercisable in the event of a change of control. Subsequent to the date of acquisition, the majority of DRS borrowings have been repaid. See Note 12 for further information on DRS borrowings. Following the acquisition, DRS was delisted from the New York Stock Exchange. DRS was consolidated on a line-by-line basis starting from 22 October 2008. The acquired business contributed revenues of $811 million and net profit of $24 million for the period from 22 October 2008 to 31 December 2008. If the acquisition had occurred on 14 October 2008 group revenues and profit would not have been materially different than the results for the period from 14 October 2008 to 31 December 2008 as DRS was part of the consolidated group for all but eight days during the period. The transaction had the following effect on the Company’s balance sheet and statement of cash flow: Fair Value Cash Flow In million of U.S. Dollars Non-current assets ...... 1,394 — of which: intangible assets ...... 831 — of which: deferred tax assets ...... 294 Non-current liabilities ...... (492) — of which: deferred tax liabilities ...... (360) Working capital ...... 355 Provisions for risks and charges ...... (140) Other net liabilities...... (165) Cash and cash liabilities ...... 57 Borrowings ...... (1,662) Minority interests ...... (9) Net assets acquired...... (662)

Consideration paid ...... 3,600 (3,600)

Goodwill ...... 4,262 Cash acquired ...... 57 Transaction costs paid by DRS following the acquisition ...... (85) Total cash outlays...... (3,628)

Fair value of acquired intangible assets mainly relates to order backlog and customer relationships.

M-22 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) 6. INTANGIBLE ASSETS Goodwill Other Total Opening amount ...... — — — Acquisition of DRS (see Note 5) ...... 4,262 831 5,093 Additions ...... — 5 5 Amortisation ...... — (16) (16) 31 December 2008 broken down as follows: ...... 4,262 820 5,082 Cost ...... 4,262 836 5,098 Depreciation...... — (16) (16) Carrying amount ...... 4,262 820 5,082

Other intangible assets mainly refer to existing backlog and customer contractual relationships attributable to the DRS business, recognised as part of the purchase price allocation process (see Note 5). Goodwill is allocated to the DRS business, identified as a single cash-generating unit, and it is tested for impairment annually. The recoverable amount of CGU is determined based on value-in-use calculations. These calculations use before-tax cash flow projections based on financial budgets approved by management covering a five-year period. Cash flow beyond the five-year period are extrapolated using the estimated growth rate, which does not exceed the long term average growth rate applicable to the business in which the CGU operates. Management determined budgeted performances based on past results and its expectations of business development. Cash flows are discounted based on pre-tax group weighted average cost of capital, which is eventually adjusted to reflect specific risks relating to the CGU.

7. TANGIBLE ASSETS Land and Plant and Buildings Machinery Equipment Other Total Opening amount ...... — — — — — Acquisition of DRS (see Note 5) ...... 110 76 33 40 259 Additions ...... 2 1 4 16 23 Depreciation ...... (2) (1) (3) (2) (8) 31 December 2008 broken down as follows: ...... 110 76 34 54 274 Cost ...... 112 77 37 56 282 Depreciation and impairment ...... 2 1 3 2 8 Carrying amount...... 110 76 34 54 274

Lease rentals amounting to $2 million and $5 million relating to the lease of machinery and property, respectively, are included in the income statements (see Note 17). Other than a $2 million mortgage note payable that is secured by a lien on DRS’ facility in Palm Bay, Florida, there are no bank borrowings secured on land or buildings.

M-23 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) 8. TRADE RECEIVABLES AND PAYABLES Receivables Payables Third parties ...... 496 307 Related parties (see Note 28) ...... 3 — Total...... 499 307

9. INVENTORIES 31 December 2008 Raw materials ...... 32 Work in progress and semi-finished goods ...... 352 Finished goods ...... 14 Advances to suppliers ...... 56 Total...... 454

Inventoried contract costs (i.e., work in process and semi-finished goods) represent incurred costs on contracts in process that have not yet been recognised as costs and expenses because the related revenues, which are primarily recorded using the units-of-delivery percentage-of-completion method, have not been recognised.

10. CONTRACT WORK IN PROGRESS AND ADVANCES FROM CUSTOMERS 31 December 2008 Work in progress (gross) ...... 136 Advances from customers ...... (41) Work in progress (net) ...... 95 Advances from customers (gross) ...... 409 Work in progress...... — Advances from customers (net) ...... 409

Revenue is calculated in accordance with the revenue recognition policy described in note 3.16 and all revenues are derived from the principal activities of the business.

11. SHARE CAPITAL Share capital is made up of one thousand issued Common Stocks, which are fully owned by Finmeccanica — Società per Azioni.

12. BORROWINGS 31 December 2008 Current Non-current Total Bonds ...... 1,184 — 1,184 Bank borrowings ...... 3 6 9 Other borrowings ...... — 1 1 Payables to related parties (see Note 28)...... 525 — 525 Total borrowings ...... 1,712 7 1,719

5 Bonds includes $350 million aggregate principal amount of 6 ⁄8% senior notes due 2016, $250 million 5 aggregate principal amount of 7 ⁄8% senior subordinated notes due 2018 and $550 million aggregate principal 7 amount of 6 ⁄8% senior subordinated notes, due 2013 (collectively the “Notes”). On 21 November 2008, DRS

M-24 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) commenced an offer to purchase all the Notes pursuant to a change of control notice and offer to purchase dated 21 November 2008. DRS offered 101% of the aggregate principal amount plus accrued and unpaid interest on the repurchased Notes. The offers were made pursuant to DRS’ obligations under the indentures governing the Notes to purchase any and all of its Notes following a “Change of Control” as defined in the indentures. A “Change of Control” occurred on 22 October 2008, with Finmeccanica’s acquisition of DRS. The expiration date for each of the offers expired 15 January 2009, except for the offer relating to the 5 6 ⁄8% Senior Notes due 2016, which expired on 14 January 2009. Of the $1.15 billion in notes offered $30 million remained after the offers expired. The redemption of the Notes was funded with a $1.2 billion intercompany term loan with Finmeccanica. The total loan agreement is for $1.9 billion, $700 million is a revolving credit facility and $1.2 billion is a term loan. DRS drew down $1.15 billion on the term loan facility to repay the Notes. The term loan is a five year agreement with a maturity of 20 January 2014. The interest rate is 8.75% and the interest payment dates are 20 January and 20 July. Bonds also included $345 million aggregate principal amount of 2.0% convertible senior notes due 2026 (“Convertible Notes”). With Finmeccanica’s acquisition of DRS a change of control provision was triggered (as defined in the indenture governing the Convertible Notes) and DRS was required to repay the Convertible Notes. As of the 31 December 2008 no Convertible Notes were outstanding. Bank borrowings largely include a five-year senior secured term loan (“Canadian loan”) for approximately $10 million (C$12 million) with $5 million remaining at 31 December 2008 maturing on 1 April 2011 payable in Canadian dollars, a mortgage on DRS’ Palm Bay, Florida facility of $2 million (Palm Bay Mortgage), and $1 million for certain notes payable to the former owners of DRS Mobile Environmental Systems Co. Transactions with related parties are carried out on an arm’s length basis. The amount refers to a working capital facility entered into between Finmeccanica SpA and DRS following the acquisition to repay bank facilities which included change-of-control provisions.

13. DEFINED BENEFIT OBLIGATIONS The detail of the defined-benefit retirement plans is as follows: 31 December 2008 USD area ...... 106 GBP area ...... 4 Other ...... 3 Total ...... 113

DRS maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility for participation in the plans vary, and benefits generally are based on the participant’s compensation and years of service, as defined in the respective plan. The funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Internal Revenue Code and regulations hereunder. Plan assets are invested primarily in U.S. government and U.S. government-sponsored entity instruments, stocks, bonds and real estate. DRS also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for DRS’ pension plans. DRS’ contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees’ Beneficiary Association (“VEBA”) trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Internal Revenue Code and regulations hereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. DRS also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited and benefits generally are based on the participant’s compensation and/or years of service.

M-25 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) Below is a breakdown of defined-benefit plans: 31 December 2008 Present value of obligations ...... (269) Fair value of plan assets ...... 156 Plan excess (deficit) ...... (113)

Changes in defined-benefit plans are reported below: 31 December 2008 Present Value of Present Value of Net Liabilities of the Obligation the Assets Defined Benefit Plans Opening balance ...... — — — Acquisition of DRS...... 242 160 82 Costs of benefits ...... 2 — 2 Actuarial losses (gains) through equity ...... 27 (2) 29 Contributions paid...... — (1) 1 Exchange-rate differences ...... (2) (1) (1) Closing balance ...... 269 156 113

The main actuarial assumptions used in the valuation of defined-benefit plans are as follows: 31 December 2008 Discount rate (annual) ...... 5.53% - 7.32% Expected return of plan assets ...... 7.00% - 8.35% Rate of salary increase ...... 3.00% - 5.00% Rate of turnover ...... 9.70% Assets of defined-benefit plans include: 31 December 2008 Shares ...... 81 Real properties ...... 10 Bonds ...... 45 Cash or equivalent ...... 7 Other ...... 13 Total ...... 156

14. PROVISIONS FOR RISKS AND CHARGES 31 December 2008 Non-current Current Total Provisions for tax ...... 11 — 11 Litigations...... — 23 23 Product guarantees ...... — 47 47 Provisions for contractual risks ...... — 30 30 Total provisions for risks and charges ...... 11 100 111

Provisions for tax Provisions for tax represents amounts that the Company’s management believes could be challenged by various taxing authorities under examination. In the normal course of the Company’s business the

M-26 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) Company’s tax returns are examined by Federal, State, Local and Foreign tax authorities and such examina- tions could result in challenges to tax positions taken on previously filed tax returns. Accordingly, the Company has provided for its estimation of what could be disallowed under examination. There were no changes to the provision for tax during the period from 22 October 2008 to 31 December 2008.

Litigations Various legal actions, claims, assessments and other contingencies, including, without limitation, the items described below, are pending against DRS and certain of DRS’ subsidiaries. These matters are subject to many uncertainties, and it is possible that some of these matters ultimately could be decided, resolved or settled adversely. Although the precise amount of liability that may result from these matters is not ascertainable, DRS believes that any amounts exceeding DRS’ recorded accruals should not materially affect DRS’ financial condition or liquidity. It is possible, however, that the ultimate resolution of those matters could result in a material adverse effect on DRS’ results of operations and/or cash flows from operating activities for a particular reporting period. Some environmental laws, such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (also known as CERCLA or the Superfund law) and similar state statutes, can impose liability upon former owners or operators for the entire cost of investigating and remediating contaminated sites regardless of the lawfulness of the original activities that led to the contamination. In July 2000, prior to its acquisition by Integrated Defense Technologies, Tech-Sym Corporation, a subsidiary of DRS, received a Section 104(e) Request for Information from the National Park Service (“NPS”), pursuant to CERCLA, regarding a site known as the Orphan Mine site in the Grand Canyon National Park, Arizona. The Orphan Mine, which was operated by an alleged predecessor to Tech Sym between 1956 and 1967, is the subject of an NPS investigation regarding the presence of residual radioactive materials and contamination. Following Tech-Sym’s response to the Request for Information, the NPS directed Tech Sym and another alleged former owner/operator to perform an Engineering Evaluation and Cost Analysis (“EE/CA”) of the site. Tech Sym made a good faith offer to conduct the EE/CA, but the NPS rejected this offer and opted to perform the EE/CA itself. In December 2009 the NPS issued an announcement that it had updated the administrative record to include a draft EE/CA report based on its investigation of the upper mine area, human health and ecological risk assessments, and other decision-documents relating to NPS’s plans to design and implement a removal action. The NPS has indicated that it plans to open a formal public comment period regarding the EE/CA following publication. DRS has been advised that the NPS’ analysis is expected to be completed in 2011. Following completion of the EE/CA, the NPS may direct one or more of the potentially responsible parties to perform any remediation that may be required by CERCLA. DRS believes that it has legitimate defenses to Tech-Sym’s potential liability and that there are other potentially responsible parties for the environmental conditions at the site, including the U.S. government as owner, operator and arranger at the site. The potential liability associated with this matter can change substantially, due to such factors as additional information on the nature or extent of contamination, methods of remediation that might be recommended or required, changes in the apportionment of costs among the responsible parties and other actions by governmental agencies or private parties. In March 2009, DRS received a Section 104(e) Request for Information from the Environmental Protection Agency (“EPA”), pursuant to CERCLA, regarding the Iron King Mine-Humboldt Smelter Superfund Site in Yavapai County, Arizona. According to the EPA, contaminants of concern associated with the site include lead and arsenic. DRS in the process of determining whether Tech Sym could be deemed an owner or operator of the site. In connection with DRS’ acquisition of Engineered Support Systems, Inc. (“ESSI”) in January 2006, DRS has been made aware of certain legal actions, claims, assessments and other contingencies, including those described below. In December 2004, ESSI was notified by the Enforcement Division of the SEC of the issuance of a formal order directing a private investigation and was notified that the SEC had issued subpoenas to various

M-27 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) individuals associated with ESSI to produce certain documents. The SEC staff also requested that ESSI produce certain documents in connection with the investigation. The subpoenas related to trading in ESSI stock around ESSI’s earnings releases in 2003 and to the adequacy of certain disclosures made by ESSI regarding related-party transactions in 2002 and 2003 involving insurance policies placed by ESSI through an insurance brokerage firm in which an ESSI director was a principal at the time of the transactions. In February 2007, the SEC filed a civil injunctive action in the United States District Court for the Eastern District of Missouri, Eastern Division, against Ronald W. Davis, a former director, officer and consultant of ESSI, alleging that he had violated the federal securities laws by “tipping” his financial advisor and close friend by sharing material, nonpublic information regarding ESSI’s financial condition shortly before certain 2003 earnings announcements. In February 2009, the Court entered a consent judgment against Mr. Davis, under which he did not admit liability, but agreed to a judgment prohibiting him from engaging in any future violations of the securities laws. In addition, Mr. Davis agreed to pay a civil penalty of $107,062 and agreed that he would not seek reimbursement or indemnification of the amounts paid as civil penalties from any source and would refrain from taking any action denying the allegations in the complaint. In March 2009, DRS was served with a complaint Mr. Davis had filed against DRS and ESSI in the Circuit Court of St. Louis County, Missouri seeking to recover reimbursement of expenses (including attorneys fees) incurred by him in connection with the foregoing proceedings. In May 2009, DRS and ESSI filed an answer, along with a counterclaim against Mr. Davis for damages for breach of contract and unjust enrichment in connection with Mr. Davis’ receipt while at ESSI of improperly backdated stock options. DRS is unable to predict at this time with any degree of certainty what the outcome will be or the range of potential loss. In September 2005, the SEC staff advised ESSI’s counsel that it had issued a subpoena directed to ESSI and expanded its investigation to include ESSI’s disclosure of a November 2004 stop work order relating to ESSI’s Deployable Power Generation and Distribution Systems (“DPGDS”) program for the U.S. Air Force and relating to trading in ESSI stock by certain individuals associated with ESSI. In connection with the foregoing SEC investigation, ESSI and certain of its directors and officers have provided information and/or testimony to the SEC. ESSI has received no additional subpoenas or requests for information from the SEC on these subject matters since May 2006. In January 2006, ESSI was informed that the Office of the U.S. Attorney for the Eastern District of Missouri was initiating an investigation into ESSI’s disclosure of the DPGDS stop-work order and into trading in ESSI stock by ESSI insiders, which preceded such disclosure. The U.S. Attorney’s office advised ESSI that although it considered ESSI to be a subject of its investigation, ESSI was not a target. In connection with this investigation, the U.S. Attorney’s office issued ESSI a subpoena requesting specified information, which ESSI has furnished. ESSI has received no additional subpoenas or requests for information from the U.S. Attorney’s office on these subject matters since May 2006. In May 2006, DRS was advised that the Enforcement Division of the SEC and the U.S. Attorney’s office each had expanded its investigation to include possible “backdating” of the timing of option grants at ESSI prior to the time ESSI was acquired by DRS. As a part of its investigation, the SEC issued subpoenas to certain former officers and employees of ESSI to provide testimony and produce certain documents. The U.S. Attorney’s office advised ESSI that although it considered ESSI to be a subject of its investigation, ESSI was not a target. Because the events being investigated occurred prior to the time of DRS’ acquisition of ESSI, the U.S. Attorney’s office further advised DRS that it considered DRS to be a witness, not a subject or target of its investigation. In February 2007, the SEC filed civil injunctive actions in the United States District Court for the Eastern District of Missouri, Eastern Division, alleging that ESSI’s former Chief Financial Officer and former Controller had each participated in a backdating scheme. Also in February 2007, the SEC reported that ESSI’s former Controller had settled its action against him by consenting to disgorgement, financial penalties, an officer and director bar and a permanent suspension from practicing before the SEC as an accountant. In July 2007, the SEC filed civil injunctive actions in the United States District Court for the Eastern District of Missouri, Eastern Division, alleging that ESSI’s former Chairman of the Board and Chief Executive Officer

M-28 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) and his son (who was also a member of ESSI’s Board of Directors and Compensation Committee) each participated in a backdating scheme. ESSI’s former Chief Financial Officer represented in an October 2008 court filing that he had agreed to pay a civil penalty to the SEC of $400,000. In December 2008, the Court denied ESSI’s former Chairman of the Board and Chief Executive Officer’s motion to dismiss certain of the backdating allegations as time-barred, but did grant his motion for partial summary judgment on the SEC’s claim under Section 304 of the Sarbanes-Oxley Act of 2002. The Court denied his son’s motion to dismiss, finding that the SEC has pled its fraud and scienter allegations against him with sufficient particularity. In March 2009, DRS was served with a document subpoena by defense counsel in the SEC case. DRS has been advised that ESSI’s former Chairman of the Board and Chief Executive Officer and the SEC have reached a tentative settlement agreement subject to the approval of the Commission, the terms of which have not yet been made public. The SEC’s case against his son remains pending and is set for trial in February 2010. In March 2007, ESSI’s former Controller pleaded guilty to a one-count information brought by the office of the United States Attorney for the Eastern District of Missouri, charging him with making false statements to the government. In connection with his plea, this former ESSI executive admitted that a number of documents filed by ESSI with the SEC contained the materially false statement that the option price of shares subject to the ESSI stock option plan was the closing price of the stock on the date the options were awarded. This former ESSI executive was sentenced to two years probation and a fine of $30,000. In March 2007, ESSI’s former Chief Financial Officer was indicted by the grand jury of the United States District Court for the Eastern District of Missouri relating to the backdating of the timing of stock options at ESSI prior to the time ESSI was acquired by DRS. In July 2007, ESSI’s former Chairman of the Board and Chief Executive Officer and his son (who was also a member of ESSI’s Board of Directors and Compensation Committee) were each indicted on similar charges. The July 2007 superseding indictment charged these former ESSI officers and directors with twelve counts of fraud based on allegations that they backdated stock options on at least eight occasions between 1996 and 2002. In July 2008, ESSI’s former Chairman of the Board and Chief Executive Officer and former Chief Financial Officer each pleaded guilty to falsifying (or causing the falsification of) the records of a publicly traded company. In connection with their respective pleas, ESSI’s former Chairman of the Board and Chief Executive Officer admitted that he knowingly and intentionally signed falsely dated stock option award letters and ESSI’s former Chief Financial Officer admitted that he caused such falsely dated award letters to be issued to stock option recipients. In October 2008, ESSI’s former Chairman of the Board and Chief Executive Officer was sentenced to probation for a term of three years and ordered to serve forty hours of community service and pay approximately $7.9 million in restitution. Later that month, ESSI’s former Chief Financial Officer was sentenced to fifteen months in prison and two years of supervised release thereafter. He was also ordered to pay approximately $1.8 million in restitution and a penalty of approximately $4 million. In June 2009, the foregoing restitution amounts were paid to DRS. The remaining charges against these former executives and the indictment issued against ESSI’s former Chairman of the Board and Chief Executive Officer’s son (who was also a member of ESSI’s Board of Directors and Compensation Committee) were dismissed as part of an agreement with the government which required payment of $92,000 in restitution to DRS. DRS is committed to full cooperation with regard to the foregoing investigations and proceedings. In September 2006, the Internal Revenue Service commenced an audit of ESSI’s Federal tax returns for the tax periods ended October 31, 2004, October 31, 2005 and January 31, 2006. Thereafter, the Internal Revenue Service agreed, subject to Congressional approval, to close these audits based on ESSI’s agreement to accept certain proposed adjustments (primarily involving the reversal of certain compensation deductions taken during these tax years) and a corresponding assessment of approximately $11.3 million (exclusive of interest) which was previously accrued. In September 2007, DRS received written confirmation from the Congressional Joint Committee on Taxation that it took no exception to the proposed adjustments.

M-29 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) In August 2007, a shareholder derivative complaint was filed in the United States District Court for the Eastern District of Missouri against ESSI’s former Chairman of the Board and Chief Executive Officer, his son (who was also a member of ESSI’s Board of Directors and Compensation Committee), ESSI’s former Chief Financial Officer and ESSI’s former Controller relating to the alleged backdating of stock options prior to ESSI’s acquisition by DRS. The complaint also contains claims against DRS as a nominal defendant and against each of the then current members of DRS’ Board of Directors with respect to the alleged backdating of ESSI stock options and the ESSI acquisition. In March 2009, the Plaintiff agreed to dismiss the action with prejudice. Thereafter, the court denied Plaintiff’s motion for requested attorneys’ fees and expenses. In November 2008, a Shareholder Class Action Petition was filed by the plaintiff in the foregoing action in the Circuit Court for the City of St. Louis, State of Missouri against certain officers and directors of ESSI, along with its external auditor, PricewaterhouseCoopers and the Chairman and Chief Executive Officer of DRS. The action alleges breaches of fiduciary duty and other violations of Missouri law in connection with the preparation and dissemination of ESSI’s S-4 Registration Statement and the Prospectus incorporated therein filed in connection with ESSI’s acquisition by DRS. In June 2009, PricewaterhouseCoopers filed a Notice of Removal and removed the action to the United States District Court for the Eastern District of Missouri. DRS believes the claims made against its Chairman and Chief Executive Officer are wholly without merit and is advancing any defense costs in connection therewith in accordance with DRS’ policy and corporate governance documents. Certain former officers and directors of ESSI have demanded that DRS and/or its affiliates indemnify them in connection with the foregoing investigations and/or litigation. In May 2008, DRS was notified that the NYSE Regulation Inc.’s Market Trading Analysis Department (the “NYSE”) and the SEC had each commenced independent inquiries regarding trading in DRS securities prior to the public announcement that Finmeccanica S.p.A and DRS had entered into a definitive merger agreement pursuant to which Finmeccanica had agreed to acquire DRS for $81 per share subject to the terms thereof. In each case, DRS was asked to provide certain documents and information. The SEC subsequently filed the following two Federal injunctive actions in the Southern District of New York: (i) SEC v. One or More Unknown Purchasers and (ii) SEC v. De Colli. The Commission asked DRS to voluntarily provide information in connection with these actions, and DRS responded to such requests. In October 2008, the District Court in SEC v. De Colli entered a judgment by default against Cristan De Colli. The SEC and/or the NYSE may request DRS to provide additional documents or information in connection with these matters. The duration and outcome of these matters cannot be predicted at this time. In May 2008, a plaintiff filed a putative class action lawsuit against DRS and the then current members of its board of directors in New Jersey state court, challenging the transactions contemplated by the merger agreement and alleging breaches of fiduciary duty. As amended, the complaint asserts a claim for breach of fiduciary duties against the director defendants and a claim for aiding and abetting breach of fiduciary duties against DRS and its then general counsel. The plaintiff alleges, among other things, that the proposed transaction arises out of a flawed process and that DRS’ preliminary proxy statement, filed with the SEC in June 2008, contained misleading disclosures and/or omitted certain material information. In July 2008, the defendants moved to dismiss the amended complaint for failure to state a claim. In September 2008, the plaintiff filed a motion to enjoin the stockholder vote. Later that month, the Court denied both motions. In November 2008, the defendants moved to disqualify plaintiff’s counsel. In February 2009, this motion was denied and the stay on discovery that had been in place pending a decision was lifted. In August 2009, the defendants filed a renewed motion to dismiss the amended complaint in its entirety, which the parties briefed. Oral arguments were held in October 2009. After supplemental letter submissions regarding certain matters raised at oral arguments, the Court scheduled further argument on defendants” motion to dismiss for January 2010. DRS is advancing any related defense costs of its officers and directors in accordance with DRS’ policy and corporate governance documents. In January 2008, DRS received an inquiry from the Australian Competition and Consumer Commis- sion (“ACCC”) related to one of Defense Solutions’ subsidiaries, DRS Training & Control Systems, Inc., now

M-30 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) known as DRS C3 Systems, Inc. (“DRS TCS”). The ACCC requested documents and information regarding allegations of possible anticompetitive activity in violation of the Australian Trade Practices Act of 1974 (the “Trade Practices Act”). In April 2008, DRS provided the documents and information requested by the ACCC. In June 2009, the ACCC filed an action against DRS TCS in the Federal Court of Australia alleging violations of the Trade Practices Act. The proceedings are ongoing. In October 2008, DRS TCS, a Defense Solutions subsidiary, received a subpoena for documents issued by the Department of Defense Office of Inspector General. The subpoena calls for documents and categories of documents relating to materials that DRS TCS, and its predecessor companies, manufactured under contract for General Dynamics Armament & Technical Products Division, and its predecessors. DRS TCS believes that the subpoena is part of an investigation being conducted by the United States Attorney’s Office for the District of Vermont. DRS TCS is responding to the subpoena and cooperating with the government’s investigation. In August 2009, DRS Technical Services, Inc., a Defense Solutions subsidiary, DRS TSI was served with a subpoena from the Department of Defense Inspector General’s office seeking documents relating to work performed under the U.S. Army Communications-Electronics Command Rapid Response contract (No. AAB07-03-D-B013). DRS TSI is responding to the subpoena and cooperating with the government in its response. There were no changes to the Litigations provision during the period 22 October 2008 to 31 December 2008.

Product guarantees Product guarantees costs generally are accrued when the covered products are delivered to the customer. Product warranty expense is recognised based on the terms of the product warranty and the related estimated costs, considering historical claims expense. Accrued warranty costs are reduced as these costs are incurred and as the warranty period expires, and otherwise may be modified as specific product performance issues are identified and resolved. A roll forward of the balance follows: 31 December 2008 Opening balance ...... — Acquisition ...... 48 Additional provision ...... — Utilisation/repayment ...... (1) Total product guarantees...... 47

Provisions for contractual risks Provision for contractual risks includes unrecoverable costs on a loss contract that are expected to be incurred in future periods. A roll forward of the balance follows: 31 December 2008 Opening balance ...... — Acquisition ...... 24 Additional provision ...... 6 Utilisation/repayment ...... — Total provision for contractual risks ...... 30

M-31 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) 15. OTHER CURRENT LIABILITIES 31 December 2008 Employee obligations ...... 125 Other payables ...... 49 Total current and non-current liabilities ...... 174

Employee obligations include accrued payroll costs, bonuses and employee fringe.

16. REVENUES 31 December 2008 Revenue from sales ...... 609 Revenue from services ...... 178 Change in contract work in progress ...... 20 Revenue from related parties (see Note 28) ...... 4 Total revenue...... 811

Revenue is calculated in accordance with the revenue recognition policy as described in Note 3.16 and is derived from the principal activity of the business.

17. RAW MATERIALS AND CONSUMABLES AND PURCHASE OF SERVICES 31 December 2008 Purchase of materials from third parties ...... 138 Purchases of semi-finished and finished goods ...... 232 Change in inventories ...... (8) Costs for purchases from related parties (see Note 28)...... 2 Total raw materials and consumables ...... 364 Services rendered by third parties ...... 141 Costs of rents and operating leases ...... 7 Rental fees ...... 1 Total purchase of services ...... 149

18. PERSONNEL COSTS 31 December 2008 Wages,salaries and other costs ...... 155 Social security contributions ...... 7 Other incentives ...... 1 Costs related to other defined-benefit plans ...... 2 Costs related to other defined-contribution plans ...... 2 Total personnel costs ...... 167

M-32 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) 19. AMORTISATION AND DEPRECIATION 31 December 2008 Depreciation and amortisation: Intangible assets ...... 16 Property, plant and equipment ...... 8 Total amortisation, depreciation and impairment ...... 24

20. FINANCE COSTS 31 December 2008 Interest charges ...... 17 Finance costs — related parties (see Note 28)...... 4 Total finance income and costs ...... 21

Interest charges mainly relates to interest accrued on bonds for the period from 22 October 2008 to 31 December 2008. Finance costs-related parties refer to interest on the working-capital facility entered into between Finmeccanica SpA and DRS (see Note 12).

21. INCOME TAXES 31 December 2008 Other income taxes ...... 1 Deferred tax-net ...... 14 Total income taxes ...... 15

The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows: 31 December 2008 Expected United States Federal Income Tax Rate ...... 35.0% State Income Tax Rates, Net of Federal Benefit ...... 2.7% Non-deductible Expenses...... 0.8% Total ...... 38.5%

31 December 2008 Deferred tax assets ...... 292 Deferred tax liabilities ...... (361) Net deferred tax asset ...... (69) Of which in equity: Employee benefit liabilities ...... 11 Total ...... 11

M-33 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) The movement in deferred tax assets and liabilities during the two months ended 31 December 2008, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows: Employee Fiscal Deferred tax assets Benefits Losses Other Total As of 22 October 2008 ...... 29 46 219 294 Transfers to profit and loss...... (1) (4) (8) (13) Transfers to Equity ...... 11 11 As of 31 December 2008 ...... 39 42 211 292

Intangible Deferred tax liabilities Assets Other Total As of 22 October 2008 ...... (288) (72) (360) Transfers to profit and loss ...... 5 (6) (1) As of 31 December 2008 ...... (283) (78) (361)

22. GROSS CASH FLOW FROM OPERATING ACTIVITIES 31 December 2008 Net profit ...... 24 Depreciation, amortisation and impairment...... 24 Income tax ...... 15 Reversal/Accruals of provisions for risks ...... 6 Costs related to defined benefit plans...... 2 Other ...... 20 Gross cash flow from operating activities ...... 91

23. CHANGES IN WORKING CAPITAL 31 December 2008 Inventories and contract work in progress ...... (29) advances received ...... 1 Trade receivables ...... 14 Trade payables ...... 18 Changes in working capital ...... 4

24. CHANGES IN OTHER OPERATING ITEMS 31 December 2008 Provisions for risk and charges ...... (1) Other operating assets and liabilities ...... (25) Other defined benefit plan payments ...... (1) Changes in other operating items ...... (27)

M-34 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) 25. COMMITMENTS AND CONTINGENT LIABILITIES Operating lease commitments The minimum payments which the Company is committed to make under non cancellable operating leases are as follows. Operating leases 31 December 2008 Within one year ...... 14 More than one year and less than five years ...... 37 More than five years ...... 6 Total ...... 57

26. REMUNERATION OF THE DIRECTORS No remuneration was paid in 2008 to the Company’s Directors. DRS Directors’ remuneration for the period from 22 October 2008 to 31 December 2008, including salaries, bonus and long term incentive was $2 million.

27. FINANCIAL RISKS The Group activities expose it to a variety of financial risks: cash-flow interest rate risk, credit risk and liquidity risk. Risk management activities carried out by Group treasury seek to minimise potential adverse effects on the Group’s financial performance. The group operates in the United States and its costs are mainly denominated in U.S. dollars. Furthermore, borrowings are entirely denominated in U.S. dollars. Therefore, the Group is not exposed to foreign exchange risks.

Interest rate risk The Group’s interest rate risk arises from borrowings from related parties, for an amount of $525 millions outstanding as of 31 December 2008 and from borrowings with banks amounting to $9 million. Borrowings from Finmeccanica S.p.A., the ultimate parent company, are at variable rate. As of 31 December 2008, if interest rates had been 100 basis points higher/lower with all variables held constant, pre-tax profit for the period from 14 October 2008 (inception) to 31 December 2008 would have been $1 million lower/higher.

Credit risk Due to the nature of customers (the group sells a significant portion of its production to agencies of the U.S. Government) the group is subject to low risk with respect to sales to customers. However, significant items which are due are monitored at a group level to assess bad debt provisions.

Liquidity risk During 2009, the group has completed the re-financing of pre-acquisition DRS’ debt (see the Outlook for 2009 Section). Following the July and November issuances, group’s debt duration has been increased to

M-35 MECCANICA HOLDINGS USA, INC. CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the period from 14 October 2008 (date of inception) to 31 December 2008

NOTES TO THE FINANCIAL STATEMENTS — (Continued) 22 years on average. Short term requirements are met through intercompany loans from related parties. The financial assets and obligations as of 31 December 2008 are as follows: 31 December 2008 Current financial receivables ...... 1 Cash and cash equivalents ...... 72 Borrowings — long term ...... (7) Borrowings — short term ...... (1,712) (1,646)

28. TRANSACTIONS WITH RELATED PARTIES Transactions with related parties were as follows: Finmeccanica S.p.A. : current borrowings 525 interest charge 4 current financial receivables 1 Selex Sensors and Airborne Systems Ltd : trade receivables 2 revenues 3 Agusta Westland International Ltd : trade receivables 1 revenues 1 Telespazio North America Inc. : purchases 2

Wilmington, 18 December 2009 /s/ S. Bemporad (President)

OTHER INFORMATION PROFIT APPROPRIATION No dividends were distributed based on 2008 net result.

AUDIT REPORT The audit report is set out herein.

M-36 PRINCIPAL OFFICE OF FINMECCANICA

Finmeccanica — Società per azioni Piazza Monte Grappa 4 00195 Rome Italy

PRINCIPAL OFFICE OF MECCANICA HOLDINGS

Meccanica Holdings USA, Inc. 1625 I Street, NW 12th Floor Washington, D.C. 20006 United States of America

LEGAL ADVISORS TO FINMECCANICA As to United States law As to Italian law Sullivan & Cromwell LLP Chiomenti Studio Legale 1 New Fetter Lane Via XXIV Maggio, 43 London, EC4A 1AN 00187 Rome United Kingdom Italy

AUDITORS OF FINMECCANICA AND MECCANICA HOLDINGS

PricewaterhouseCoopers S.p.A. Largo Angelo Fochetti 29 00154 Rome Italy O U08018