FINMECCANICA 2011 CONSOLIDATED FINANCIAL STATEMENTS Disclaimer This Annual Report 2011 has been translated into English solely for the convenience of the international reader. In the event of conflict or inconsistency between the terms used in the Italian version of the report and the English version, the Italian version shall prevail, as the Italian version constitutes the sole official document. WorldReginfo - 56ddd0b8-b832-4725-81a8-8f573327074a CONTENTS Boards and Committees ................................................................................................................................ 5 REPORT ON OPERATIONS AT 31 DECEMBER 2011 ........................................................................... 7 Group results and financial position ......................................................................................................... 7 “Non-GAAP” performance indicators .................................................................................................... 28 Transactions with related parties ............................................................................................................ 31 Finmeccanica and the commercial scenario ........................................................................................... 35 Performance by division ......................................................................................................................... 42 HELICOPTERS ............................................................................................................................ 42 DEFENCE AND SECURITY ELECTRONICS ............................................................................. 45 AERONAUTICS ........................................................................................................................... 52 SPACE ..................................................................................................................................... 56 DEFENCE SYSTEMS ................................................................................................................... 60 ENERGY ..................................................................................................................................... 63 TRANSPORTATION ..................................................................................................................... 67 OTHER ACTIVITIES .................................................................................................................... 71 Reconciliation of net profit and shareholders’ equity of the Group Parent with the consolidated figures at 31 December 2011 ................................................................................................................ 73 Significant events in 2011 and events subsequent to closure of the accounts ........................................ 74 Finmeccanica and risk management ....................................................................................................... 81 Finmeccanica and the environment ........................................................................................................ 87 Finmeccanica and Research and development ....................................................................................... 97 Finmeccanica: Human Resources ......................................................................................................... 120 Finmeccanica: Security Policy Statement (SPS) .................................................................................. 136 Incentive plans (stock-option and stock-grant plans) ........................................................................... 137 Finmeccanica and the financial markets ............................................................................................... 144 Corporate governance report and shareholder structure ....................................................................... 149 Outlook ................................................................................................................................................. 241 2 WorldReginfo - 56ddd0b8-b832-4725-81a8-8f573327074a ACCOUNTING STATEMENTS AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS at 31 December 2011 ..................................................................................................... 246 Separate Income Statement .................................................................................................................. 247 Consolidated Statement of Comprehensive Income ............................................................................. 248 Consolidated Balance Sheet ................................................................................................................. 249 Consolidated Statement of Cash Flows ................................................................................................ 250 Consolidated Statement of Changes in Shareholders’ Equity .............................................................. 251 Notes to the consolidated financial statements at 31 December 2011 .................................................. 252 1. General information .................................................................................................. 252 2. Form, content and applicable accounting standards ................................................ 252 3. Accounting policies adopted ...................................................................................... 253 4. Significant issues and critical estimates by management .......................................... 280 5. Effects of changes in accounting policies adopted .................................................... 282 6. Significant non-recurring events or transactions ...................................................... 283 7. Segment information .................................................................................................. 284 8. Intangible assets ........................................................................................................ 287 9. Property, plant and equipment .................................................................................. 293 10. Investment properties ................................................................................................ 294 11. Equity investments ..................................................................................................... 294 12. Business combinations ............................................................................................... 296 13. Financial transactions with related parties ............................................................... 297 14. Receivables and other non-current assets ................................................................. 302 15. Inventories ................................................................................................................. 303 16. Contract work in progress and advances received .................................................... 303 17. Trade and financial receivables ................................................................................ 304 18. Current financial assets at fair value ........................................................................ 304 19. Income Tax receivables and payables ....................................................................... 304 20. Other current assets .................................................................................................. 305 21. Cash and cash equivalents ........................................................................................ 305 3 WorldReginfo - 56ddd0b8-b832-4725-81a8-8f573327074a 22. Shareholders' equity .................................................................................................. 306 23. Borrowings ................................................................................................................ 308 24. Provisions for risks and charges and contingent liabilities ....................................... 314 25. Employee liabilities ................................................................................................... 324 26. Other current and non-current liabilities .................................................................. 328 27. Trade payables .......................................................................................................... 329 28. Derivatives................................................................................................................. 329 29. Guarantees and other commitments .......................................................................... 331 30. Transactions with related parties .............................................................................. 332 31. Revenue ..................................................................................................................... 334 32. Other operating income (expenses) ........................................................................... 335 33. Raw materials and consumables used and purchase of services ............................... 336 34. Personnel costs .......................................................................................................... 337 35. amortisation, Depreciation and impairment ............................................................. 339 36. Work performed by the group and capitalised .......................................................... 339 37. Finance