As filed with the Securities and Exchange Commission on September 22, 2015
Registration No.  333-205804
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Amendment No. 2 to
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
New Business Netherlands N.V.
(Exact Name of Registrant as Specified in Its Charter)
 
The Netherlands
3711
Not Applicable
(State or Other Jurisdiction of
Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(IRS Employer
Identification Number)
 
Via Abetone Inferiore n. 4
I-41053 Maranello (MO)
Italy
Tel. No.: +39 0536 949111
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
 
Ferrari North America, Inc.
250 Sylvan Avenue
Englewood Cliffs, NJ 07632
Tel. No.: (201) 816-2600
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
 
Copies to:
Scott D. Miller
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004
Tel No.: (212) 558-4000
Giorgio Fossati
Fiat Chrysler Automobiles N.V.
25 St. James’s Street
London SW1A 1HG
United Kingdom
Carlo Daneo
Ferrari S.p.A.
Via Abetone Inferiore n. 4
I- 41053 Maranello (MO)
Italy
William V. Fogg
Johnny G. Skumpija
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Tel No.: (212) 474-1000
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨   
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨  
 
CALCULATION OF REGISTRATION FEE
 
 
 
Title of each class of securities
to be registered
Proposed maximum
aggregate offering
price (1)
Amount of
registration fee
Common shares, nominal value €0.01
$100,000,000

$11,620 (2)

Special voting shares, nominal value €0.01
 
(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act.
(2)
All $11,620 was previously paid in connection with this offering.
 
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.



The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO AMENDMENT AND COMPLETION, DATED SEPTEMBER 22, 2015.
Common Shares
This is an initial public offering of common shares of New Business Netherlands N.V., to be renamed Ferrari N.V. (“Ferrari”) shortly prior to completion of the offering. Fiat Chrysler Automobiles N.V. (“FCA”) is selling ______ common shares of Ferrari, equal to        percent of the Ferrari share capital. We are not selling common shares and we will not receive any of the proceeds from the sale of common shares by FCA. Prior to this offering, there has been no public market for our common shares. The estimated offering price is between $          and $ ______ per common share.
This offering is intended to be part of a series of transactions to separate Ferrari from FCA. Following completion of this offering, FCA expects to transfer its remaining approximately 80 percent interest in us to FCA shareholders. For a description of the separation, see “The Restructuring and Separation Transactions.” Although we currently expect the separation to be completed in early 2016, we cannot assure you that the separation will be carried out as described in this prospectus, completed within the expected timeline or completed at all.
We will apply for listing of our common shares on the New York Stock Exchange under the symbol                  .
We have a loyalty voting program. Investors who purchase common shares in the offering may elect to participate in our loyalty voting program by registering their common shares in our loyalty share register and holding them for three years. The loyalty voting program effectively awards two votes for each qualifying common share by means of the issue of special voting shares. See “The Ferrari Shares, Articles of Association and Terms and Conditions of the Special Voting Shares” for additional information including terms and conditions relating to our loyalty voting program. We expect that FCA and Piero Ferrari, our minority shareholder, will participate in our loyalty voting program and, upon completion of this offering, will effectively hold two votes for each of their common shares. FCA shareholders that participate in FCA’s loyalty voting program will be entitled to participate on the same basis in our loyalty voting program effective upon the separation.
Investing in our common shares involves risk. See Risk Factors beginning on page 12.
 
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
 
 
Per Share
Total (1)
Initial public offering price
$
$
Underwriting discount and commissions
$
$
Proceeds, before expenses, to the selling shareholder
$
$
(1)    Assuming the underwriters do not exercise their option to purchase additional shares.
The selling shareholder has granted the underwriters the option to purchase up to an additional ______ common shares at the initial public offering price less an underwriting discount of $ ______ per share for a period of 30 days after the date of this prospectus to cover over allotments, if any.
UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Allen & Company LLC, Banco Santander, S.A., BNP Paribas Securities Corp., J.P. Morgan Securities LLC and Mediobanca - Banca di Credito Finanziario S.p.A. are acting as Joint Bookrunners and UBS Securities LLC is acting as Global Coordinator for the offering. The underwriters expect to deliver the common shares against payment in New York, New York on ______ , 2015.
Joint Bookrunners
UBS Investment Bank                                      BofA Merrill Lynch
Allen & Company LLC Banco Santander BNP PARIBAS J.P. Morgan Mediobanca
 
Prospectus dated                  , 2015.












WHERE YOU CAN FIND MORE INFORMATION
Ferrari has filed a registration statement on Form F-1 to register with the Securities and Exchange Commission (“SEC”) the Ferrari common shares to be sold in the offering. This prospectus is a part of that registration statement on Form F-1. As permitted by the rules and regulations of the SEC, this prospectus does not contain all the information included in the registration statement. You should refer to the registration statement on Form F-1 (File No. 333-205804 ), for information omitted from this prospectus.
You may read and copy any document we file with or furnish to the SEC free of charge at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain documents we file with or furnish to the SEC on the SEC website at www.sec.gov . The address of the SEC’s website is provided solely for the information of prospective investors and is not intended to be an active link. Please visit the website or call the SEC at 1 (800) 732-0330 for further information about its public reference room.
 
This prospectus and any free-writing prospectus that we prepare or authorize contain information that you should consider when making your investment decision on whether to purchase Ferrari common shares in the offering. No one has been authorized to provide you with information that is different from that contained in this prospectus. You should not assume that the information contained in this prospectus is accurate as of any date other than the date of this prospectus.
This prospectus is made available by Ferrari in connection with the offering pursuant to the U.S. Securities Act of 1933. This prospectus does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell, any securities in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.
This prospectus does not constitute an offer of securities to the public in the Netherlands within the meaning of article 5:1 of the Dutch Financial Supervision Act ( Wet op het financieel toezicht ). This prospectus does not constitute an offer of securities to the public in the Republic of Italy within the meaning of article 1, paragraph 1, letter (t) of the Italian Unified Financial Act (Legislative Decree no. 58 of February 24, 1998, as amended). This prospectus is not a prospectus or an offer document within the meaning of the Prospectus Directive (2003/71/EC), as amended.
Until ______ , 2015 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
 

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TABLE OF CONTENTS
 
 
Page
 



CERTAIN DEFINED TERMS
In this prospectus, unless otherwise specified, the terms “we,” “our,” “us,” the “Group,” the “Company” and “Ferrari” refer to Ferrari N.V., together with its subsidiaries, or to Ferrari N.V., individually or together with its subsidiaries, as the context may require. References to “Ferrari N.V,” refer solely to New Business Netherlands N.V., which, shortly prior to completion of the offering, will be renamed “Ferrari N.V,” References to “FCA” or “FCA Group” refer to Fiat Chrysler Automobiles N.V., together with its subsidiaries, following completion of the merger of Fiat S.p.A. with and into the FCA on October 12, 2014, or to Fiat S.p.A. together with its subsidiaries, prior to the merger of Fiat S.p.A. with and into the FCA, as the context may require. References to “Fiat” refer solely to Fiat S.p.A., the predecessor of FCA.
See “Note on Presentation” below for additional information regarding the financial presentation.

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NOTE ON PRESENTATION
This prospectus includes the consolidated financial statements of New Business Netherlands N.V., to be renamed Ferrari N.V., for the years ended December 31, 2014, 2013 and 2012 prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). We refer to these consolidated financial statements collectively as the “Annual Consolidated Financial Statements.”
This prospectus also includes the unaudited interim condensed consolidated financial statements of New Business Netherlands N.V. for the three and six months ended June 30, 2015 prepared in accordance with IAS 34 Interim Financial Reporting. We refer to these interim condensed consolidated financial statements as the “Interim Condensed Consolidated Financial Statements.”
Basis of Preparation of the Annual Consolidated Financial Statements and the Interim Condensed Consolidated Financial Statements
As explained in Note 1 to the Annual Consolidated Financial Statements, Note 1 to the Interim Condensed Consolidated Financial Statements and in “The Restructuring and Separation Transactions” in this prospectus, on October 29, 2014, FCA announced its intention to separate Ferrari S.p.A. from FCA. The separation is expected to occur through a series of transactions including (i) an intra-group restructuring which will result in our acquisition of the assets and business of Ferrari North Europe Limited and the transfer by FCA of its 90 percent shareholding in Ferrari S.p.A. to us, (ii) the transfer of Piero Ferrari’s 10 percent shareholding in Ferrari S.p.A. to us, (iii) this initial public offering of our common shares described in this prospectus, and (iv) the distribution, following this initial public offering, of FCA’s remaining interest in us to its shareholders. The transactions referred to in (i) and (ii) are defined in the Annual Consolidated Financial Statements and the Interim Condensed Consolidated Financial Statements as the “Restructuring” and were completed on ______ .
The Restructuring comprises: (i) a capital reorganization of the group under the Company and (ii) the issuance of the FCA Note (as defined under "Unaudited Pro Forma Condensed Consolidated Financial Information") which is expected to be subsequently refinanced. In preparing the Annual Consolidated Financial Statements and the Interim Condensed Consolidated Financial Statements, the Company has retrospectively applied FCA's basis of accounting for the Restructuring based on the following:
(i)
The capital reorganization:

The Company was formed by FCA solely to effect the Separation and will be controlled by FCA until completion of the Separation. Therefore, the capital reorganization does not meet the definition of a business combination in the context of IFRS 3 - “Business Combinations” but rather a combination of entities under common control and as such is excluded from the scope of IFRS 3. IFRS has no applicable guidance in accounting for such transactions. IAS 8 - “Accounting Policies, Changes in Accounting Estimates and Errors” states that in the absence of an IFRS which specifically applies to a transaction, the Company may consider the most recent pronouncements of other standard-setting bodies that use a similar conceptual framework to develop accounting standards or other accounting literature and accepted industry practices, to the extent that these do not conflict with the requirements in IFRS for dealing with similar and related issues or the definitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses in the IFRS Conceptual Framework for Financial Reporting (the “Framework”). Accordingly, the Company has considered the guidance in ASC 805-50-30-5 on common control transactions, which indicates that the receiving entity (the Company) is able to reflect the transferred assets and liabilities in its own accounting records at the carrying amount in the accounting records of the transferring entity (FCA). As a result, the Annual Consolidated Financial Statements and the Interim Condensed Consolidated Financial Statements include FCA’s recorded goodwill relating to Ferrari S.p.A. in the amount of €780,542 thousand.

The retrospective accounting for the capital reorganization is consistent with the principles underlying paragraph 64 of IAS 33 - “Earnings per Share” which requires calculation of basic and diluted earnings per share for all periods presented to be adjusted retrospectively if changes occur to the capital structure after the reporting period but before the financial statements are authorized for issue. SAB Topic 4C also requires that such changes be given retroactive effect in the balance sheet where they occur after the reporting period but before the financial statements are authorized for issue. The capital reorganization has been accounted for as though it had occurred effective January 1, 2012 in the Annual Consolidated Financial Statements and

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as though it had occurred effective January 1, 2014 in the Interim Condensed Consolidated Financial Statements. In particular:
The issuance of shares in the Company to FCA has been reflected as an increase in share capital and share premium in the amounts of € and € , respectively, with an offset to retained earnings of € .
The issuance of shares in the Company to Piero Ferrari has been reflected as an increase in share capital and share premium in the amounts of € and € , respectively, with an offset to retained earnings of € .
The historical number of ordinary shares, nominal value per share, basic and diluted earnings per ordinary share amounts and other per share disclosures retrospectively reflect the capital structure of the Company post Restructuring for all periods presented, with the required disclosures presented in Notes 12 and 20 to the Annual Consolidated Financial Statements and Notes 12 and 19 to the Interim Condensed Consolidated Financial Statements.

(ii)
The issuance of the FCA Note:

The FCA Note and subsequent refinancing have not been reflected in the Annual Consolidated Financial Statements and the Interim Condensed Consolidated Financial Statements. The acquisition of the Ferrari North Europe Limited assets and business and the FNE Note (as defined under "Unaudited Pro Forma Condensed Consolidated Financial Information") eliminate on consolidation.

The Group’s financial information is presented in Euro. In some instances, information is presented in U.S. Dollars. All references in the prospectus to “Euro” and “€” refer to the currency introduced at the start of the third stage of European Economic and Monetary Union pursuant to the Treaty on the Functioning of the European Union, as amended, and all references to “U.S. Dollars,” “U.S.$” and “$” refer to the currency of the United States of America (the “United States”).
The language of the prospectus is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law.
Certain totals in the tables included in this prospectus may not add due to rounding.

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TRADEMARKS AND TRADE NAMES
This prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
MARKET AND INDUSTRY INFORMATION
In this prospectus, we include and refer to industry and market data, including market share, ranking and other data, derived from or based upon a variety of official, non-official and internal sources, such as internal surveys and management estimates, market research, publicly available information and industry publications, such as, among others, FOM-Formula One Management (Formula 1); U.S. Maker Data Club (United States); ANFAVEA- Associação Nacional dos Fabricantes de Veículos Automotores (Brazil); OSZ- Österreichisches-Sprachen-Kompetenz-Zentrum (Austria); FEBIAC- Fédération Belge de l’industrie de l’automobile et du cycle (Belgium); AAA Data (France); KBA- Kraftfahrt-Bundesamt (Germany); SMMT-Society of Motor Manufacturers and Traders (United Kingdom); UNRAE- Unione Nazionale Rappresentanti Autoveicoli Esteri (Italy); RDC Datacentrum B.V . (Netherlands); TRAFICO- Revista Tráfico y Seguridad Vial (Spain); BranschData (Sweden); ASTRA (Switzerland); China Automobile Industry Association (China); Hong Kong Motor Trader Association (Hong Kong); Ministry of Transportation and Communications (Taiwan); VFACTS Series produced by the Federal Chamber of Automotive Industries (Australia and New Zealand); JAIA-Japan Automobile Importers Association (Japan); GAIKINDO-Association of Indonesia Automotive Industries (Indonesia); Singapore Land Transport Authority and Singapore Motor Trader Associations (Singapore); KAIDA-Korea Automobile Importers & Distributors Association (South Korea); Thailand Department of Land Transportation (Thailand).
Market share, ranking and other data contained in this prospectus may also be based on our good faith estimates, our own knowledge and experience and such other sources as may be available. Market share data may change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data-gathering process, different methods used by different sources to collect, assemble, analyze or compute market data, including different definitions of car segments and descriptions and other limitations and uncertainties inherent in any statistical survey of market shares or size. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. Although we believe that this information is reliable, we have not independently verified the data from third-party sources. In addition we normally estimate our market share for luxury performance cars based on registration data. In a limited number of markets where registration data are not available, we calculate our market share based on estimates relating to sales to final clients. Such data may differ from data relating to shipments to our dealers and distributors. While we believe our internal estimates with respect to our industry are reliable, our internal company surveys and management estimates have not been verified by an independent expert, and we cannot guarantee that a third party using different methods to assemble, analyze or compute market data would obtain or generate the same result. The market share data presented in this prospectus represents the best estimates available from the sources indicated as of the date hereof but, in particular as they relate to market share and our future expectations, involve risks and uncertainties and are subject to change based on various factors, including those discussed under the caption “Risk Factors.”

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CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
Statements contained in this prospectus, particularly those regarding our possible or assumed future performance, competitive strengths, costs, dividends, reserves and growth, industry growth and other trends and projections and estimated company earnings are “forward-looking statements” that contain risks and uncertainties. In some cases, words such as “may,” “will,” “expect,” “could,” “should,” “intend,” “estimate,” “anticipate,” “believe,” “outlook,” “continue,” “remain,” “on track,” “design,” “target,” “objective,” “goal,” “plan” and similar expressions are used to identify forward-looking statements. These forward-looking statements reflect the respective current views of Ferrari with respect to future events and involve significant risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. These factors include, without limitation:
our ability to preserve and enhance the value of the Ferrari brand;
the success of our Formula 1 racing team and the expenses we incur for our Formula 1 activities;
our ability to keep up with advances in high performance car technology and to make appealing designs for our new models;
our ability to preserve our relationship with the automobile collector and enthusiast community;
our low volume strategy;
the ability of Maserati, our engine customer, to sell its planned volume of cars;
changes in client preferences and automotive trends;
changes in the general economic environment and changes in demand for luxury goods, including high performance luxury cars, which is highly volatile;
the impact of increasingly stringent fuel economy, emission and safety standards, including the cost of compliance, and any required changes to our products;
our ability to successfully carry out our growth strategy and, particularly, our ability to grow our presence in emerging market countries;
competition in the luxury performance automobile industry;
reliance upon a number of key members of executive management and employees, and the ability of our current management team to operate and manage effectively;
the performance of our dealer network on which we depend for sales and services;
increases in costs, disruptions of supply or shortages of components and raw materials;
disruptions at our manufacturing facilities in Maranello and Modena;
our ability to provide or arrange for adequate access to financing for our dealers and clients, and associated risks;
the performance of our licensees for Ferrari-branded products;
our ability to protect our intellectual property rights and to avoid infringing on the intellectual property rights of others;
product recalls, liability claims and product warranties;
our continued compliance with customs regulations of various jurisdictions;

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labor relations and collective bargaining agreements;
exchange rate fluctuations, interest rate changes, credit risk and other market risks;
changes in tax, tariff or fiscal policies and regulatory, political and labor conditions in the jurisdictions in which we operate;
our ability to ensure that our employees, agents and representatives comply with applicable law and regulations;
the adequacy of our insurance coverage to protect us against potential losses;
potential conflicts of interest due to director and officer overlaps with our largest shareholders;
our ability to maintain the functional and efficient operation of our information technology systems; and
other factors discussed elsewhere in this prospectus.
Actual results could differ materially from those expressed or implied in such forward-looking statements. We do not undertake an obligation to update or revise publicly any forward-looking statements. Additional factors which could cause actual results and developments to differ from those expressed or implied by the forward-looking statements are included in the section “Risk Factors” of this prospectus. These factors may not be exhaustive and should be read in conjunction with the other cautionary statements included in this prospectus. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.

viii



SUMMARY
This summary highlights selected information from this prospectus and might not contain all of the information that is important to you. You should read carefully the entire prospectus to fully understand the transactions, and before deciding to invest in our common shares.
Ferrari
Ferrari is among the world’s leading luxury brands focused on the design, engineering, production and sale of the world’s most recognizable luxury performance sports cars. Our brand symbolizes luxury, exclusivity, innovation, state-of-the-art sporting performance and Italian design and engineering heritage. Our name and history and the image enjoyed by our cars are closely associated with our Formula 1 racing team, Scuderia Ferrari, the most successful team in Formula 1 history. From the inaugural year of Formula 1 in 1950 through the present, Scuderia Ferrari has won 224 Grand Prix races, 16 Constructor World titles and 15 Drivers’ World titles, including most recently the Constructor World title in 2008. We believe our history of excellence, technological innovation and defining style transcends the automotive industry, and is the foundation of the Ferrari brand and image. We design, engineer and produce our cars in Maranello, Italy, and sell them in over 60 markets worldwide through a network of 182 authorized dealers operating 204 points of sale.
We believe our cars are the epitome of performance, luxury and styling. We currently sell nine models, including seven sports cars (458 Italia, 488 GTB, 458 Spider, 488 Spider, F12berlinetta and our special series 458 Speciale and 458 Speciale A) and two GT cars (California T and FF). In March 2015, we launched the 488 GTB, which is replacing the 458 Italia and, in September 2015, we launched the 488 Spider, our latest sports car, which is replacing the 458 Spider. We expect to gradually replace our 458 models with successor 488 models during 2015 and the next several years. We also produce a limited edition supercar, LaFerrari, and very limited editions series ( Fuoriserie ) and one-off cars.
In 2014, we shipped 7,255 cars, and recorded net revenues of €2,762 million, net profit of €265 million, adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) of €693 million and earnings before interest and taxes (EBIT) of €389 million. For additional information regarding Adjusted EBITDA, which is a non-GAAP measure, including a reconciliation of Adjusted EBITDA to net profit, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA.”
We pursue a low volume production strategy in order to maintain a reputation of exclusivity and scarcity among purchasers of our cars and deliberately monitor and maintain our production volumes and delivery wait-times to promote this reputation. We divide our regional markets into EMEA (consisting of Europe, the Middle East, India and Africa), Americas, Greater China and Rest of APAC (consisting of the Asia-Pacific region, excluding Greater China), representing respectively 45 percent, 34 percent, nine percent and 12 percent of units shipped in 2014. In recent years we have allocated a higher proportion of shipments to the Middle East and Greater China and, to a lesser extent, the Americas and a lower proportion to Europe, reflecting changes in relative demand as part of our strategy to manage waiting lists and maintain product exclusivity.
We license the Ferrari brand to a select number of producers and retailers of luxury and lifestyle goods, and we sell Ferrari-branded merchandise through a network of 20 franchised and 12 owned Ferrari stores and on our website. As one of the world’s most recognized premium luxury brands, we believe we are well positioned to selectively expand the presence of the Ferrari brand in attractive and growing lifestyle categories consistent with our image, including sportswear, watches, accessories, consumer electronics and theme parks which we believe enhance the brand experience of our loyal following of clients and Ferrari enthusiasts.
We focus our marketing and promotion efforts in the investments we make in our racing activities, in particular Scuderia Ferrari’s participation in the Formula 1 World Championship, which is one of the most watched annual sports series in the world, with approximately 425 million television viewers annually. Although our most recent Formula 1 world title was seven years ago, we are enhancing our focus on Formula 1 activities with the goal of improving recent racing results and restoring our historical position as the premier racing team in Formula 1. We believe that these activities support the strength and awareness of our brand among motor enthusiasts, clients and the general public.
We will continue focusing our efforts on protecting and enhancing the value of our brand to preserve our strong financial profile and participate in the premium luxury market growth. We intend to selectively pursue controlled and profitable growth in existing and emerging markets while expanding the Ferrari brand to carefully selected lifestyle categories.

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Our Competitive Strengths
We believe that the following key competitive strengths have been the primary drivers of our success in the past and will be the pillars of our growth strategy going forward.
An iconic brand with superior, enduring power, benefiting from a loyal customer base. Our brand is one of the most iconic and recognizable in the world. We believe the Ferrari brand and our prancing horse logo symbolize luxury, exclusivity, innovation, state-of-the-art sporting performance and Italian design and engineering heritage. The Ferrari brand has also been ranked as one of the world’s most powerful brands by independent surveys, including in 2014 and 2015 surveys published by Brand Finance, based on a range of factors, including customer loyalty, name recognition and overall reputation. Our name and image have been burnished over decades of unparalleled success in automotive racing, particularly through our Formula 1 racing team, Scuderia Ferrari, and the performance and styling of our luxury performance cars. We believe the power of our brand and the passion we inspire in clients and the broader community of enthusiasts is preserved and enhanced by our rigorous production and distribution model, which promotes hard-to-satisfy demand and thus scarcity value in our cars. We promote this passion for our brand by fostering a community of enthusiasts and we reward loyal clients through various initiatives, such as driving events and client activities in Maranello and at motor shows and, more particularly, through providing our most loyal and active clients with preferential access to our newest and highest value cars. As a result, in 2014 approximately 60 percent of our new cars were sold to Ferrari owners and 34 percent of our clients own more than one Ferrari car. As a testament to the enduring power of our brand, vintage Ferraris are among the most sought after cars in the collector market, with nine Ferraris ranking in the top 10 most valuable cars ever sold in public auctions. We also generate revenues from our brand through licensing partnerships, Ferrari retail stores and a theme park, Ferrari World. We believe our success in these activities demonstrates the value of Ferrari as a true global absolute luxury brand.
Global access to growing wealth creation. We target our products to the upper end of the luxury performance car segment and buyers of our cars tend to belong to the wealthiest segment of the population. The size and spending capacity of our target client base has grown significantly in recent years and we expect macroeconomic trends that promote an expanding market for our products to continue, particularly in emerging markets, which have seen significant growth in personal wealth and disposable incomes. In many of our key markets, such as the United States, where we sell over 30 percent of our cars, spending by our target clients has proven to be relatively insulated from short term economic downturns. This provides a resilient source of demand at the upper end of the luxury industry, particularly for our cars, which we have captured through the frequent renewal of our product offering. Our low volume strategy and our tight control over the allocation of our cars allow us to adjust the geographical distribution of our unit sales over time to respond to economic developments in our markets and to benefit from patterns of wealth creation and demand for luxury products in different regions.
Exceptional pricing power and value resilience. The allure of our brand and our controlled production and distribution model promote premium prices for the new cars we sell as well as Ferraris sold in the resale market, which reinforces stability in our new car pricing. We have focused relentlessly on extending the quality, performance and craftsmanship of our cars further into the upper end of the market, through special limited editions selling at prices exceeding €1 million per car, as well as bespoke, one-off cars and extensive personalization of our cars, which on average add 15 percent to selling prices. These limited edition and bespoke vehicles enhance our reputation for exclusivity which in turn supports premium pricing on our standard Sports and GT models. We are confident that this approach, rather than seeking to increase volumes by competing with lower priced luxury or premium cars, will lead to stronger long term financial performance. We believe our strategy, coupled with the spending power of our clients and our ability to offer highly personalized “tailor-made” products, has provided us with enduring premium pricing for our cars. We believe our cars benefit from strong value resilience over time, with high residual value in the resale markets which in turn lowers the total cost of ownership for our clients and promotes repeat purchases.
Racing heritage. We benefit from our racing heritage and foundation and success in Formula 1 World Championships. Our research and development initiatives and the know-how developed through designing, engineering and producing circuit racing cars has allowed us to streamline our new car design and development schedule, to implement a range of cutting-edge innovations to deliver best-in-market performance in our Sports and GT cars and to design, engineer and sell our special series, limited edition and one-off cars, all of which attract significant price premiums. In addition to the research and development support from our racing activities, our prominent role in Formula 1 racing provides us with an incomparable platform from which to promote our brand and technological prowess. In light of this, we do not need to use mainstream product advertising, which we believe would conflict with the image of exclusivity that our clients and enthusiasts expect and, as a result, would be detrimental to our brand. In 2014, Formula 1 races attracted approximately 425 million television viewers around the world, making it one of the world’s most watched sport series in the year. We believe the success and prominence of Scuderia Ferrari, the most successful team in Formula 1 history, gives us a strong marketing advantage in the luxury performance car market.

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Leading edge engineering capabilities. We believe that our cars are the epitome of performance, luxury and styling. Our cars integrate industry-leading technological and engineering capabilities which benefit from the know-how gained through our racing activities. Our constant engineering improvements, for example, have resulted in significantly more powerful engines over time. The V8 engine mounted in the 430 model in 2005 had 490hp, while the V8 turbo engine mounted in the 488 GTB and 488 Spider models in 2015 has 670 hp. Innovations transferred from our racing team to our street cars include innovative electronic control systems, carbon fiber parts and KERS (Kinetic Energy Recovery System) technology. While we continue to focus intently on the higher end of the luxury performance car market, we have rounded out our range of products in recent years to cater to different client preferences, ranging from pure performance to cars characterized by more refined and luxurious interiors to improve comfort and drivability. Our cars’ distinctive designs, when taken together with their performance and luxury status, provide Ferrari with a unique character, which, in turn, contributes to increased brand strength.
Flexible and efficient development and production process. Our focus on the upper end of the luxury performance car market, the dedication and skill of our engineers and developers and the clarity and focus of our product marketing objectives, allow us to design and develop new models exceptionally quickly. Our racing heritage, which is characterized by an annual design, develop and build schedule, as well as our engineering and design focus has enabled us typically to bring to market new models in approximately 40 months, depending on the modifications (approximately 33 months for modified or “M” models), measured from the beginning of the development project to the start of production. The flexibility of our development process is such that we are able to continue to modify and adjust a new model’s specifications throughout the development phase and near to the scheduled launch of the model. The speed and flexibility of our development process reduces development costs for new models and allows our newest models to be fully responsive to changes in technology and market demand. This also allows us to renew our model line-up on a more frequent and regular schedule; we typically seek to launch at least one new model every year. Our models have an average lifecycle of four or five years (depending on market dynamics) followed by a significantly modified and enhanced version after the fourth or fifth year of production. This predictable lifecycle supports both new car sales and the value of models both in the primary and resale markets. We believe this lifecycle also ensures that our products remain more responsive to the expectations of our clients than those of other luxury performance car manufacturers. Furthermore, we recently renovated our production facilities, which positions us to accommodate meaningful increases in production with limited additional investments. This gives us the flexibility to prudently increase sales of our cars to meet growing demand while retaining the exclusivity and scarcity of our cars.
Strong and resilient financial performance and profile. Our brand, clients and product positioning provide us with an exceptional track record of financial performance that has withstood market challenges throughout economic cycles. In the year ended December 31, 2014, we recorded net revenues of €2,762 million , net profit of €265 million , Adjusted EBITDA of €693 million and Adjusted EBITDA margin of 25.1 percent, EBIT of €389 million and EBIT margin of 14.1 percent and we shipped 7,255 cars. We have recorded shipment growth of 34 percent in the last 10 years and, during the financial crisis, suffered only a single year of modest (less than 5 percent) decline in shipments in spite of the luxury status of our cars and the discretionary nature of their purchase. From 2005 to 2014 we achieved a compound annual growth rate in net revenues of seven percent and our 2014 Adjusted EBITDA margin of 25.1 percent represented an increase of 6.9 percentage points over 2005. We believe this exceptional financial performance positions us as not just a leading luxury automaker, but as one of the world’s leading absolute luxury brands. For additional information regarding Adjusted EBITDA, which is a non-GAAP measure, including a reconciliation of Adjusted EBITDA to net profit, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA.”
Superior Talent. We benefit from the experience and expertise of a strong team of managers, technical employees and racing talent, combining industry knowledge, technological expertise, sporting success and financial savvy. We believe our brand and technological heritage has enabled us to attract the best technical talent from a wide range of fields. We recently hired a leading Formula 1 manager and a new driver to allow us to capitalize on our strong technical position and return to a higher level of racing success, while our employees, particularly at our facilities in and around Maranello, Italy, include a large number of highly skilled engineers, designers, technicians and artisans. Our management team also benefits from the leadership of our CEO, Amedeo Felisa, who brings over 40 years of automotive technical experience and skill to his leadership role, and our chairman, Sergio Marchionne, who engineered the operating and financial turnaround of Fiat and Chrysler and the global expansion of our parent company, FCA, into the seventh largest automaker in the world (based on 2014 vehicle sales). We believe our small but skilled team gives our brand the leading talent in the industry and the ability to carry out our business plan objectives.

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Our Strategies
We intend to maintain and extend our leading position in the luxury performance sports car market and to continue to protect and enhance the value and exclusivity of the Ferrari brand and its association with the lifestyle we believe it represents. Within these parameters, we aim to achieve profitable growth by pursuing the following strategies.
Controlled growth in developed and emerging markets. While we will continue to pursue a low volume production strategy and maintain our reputation for exclusivity, we intend to respond to growing demand, both in emerging markets as well as in response to demographic changes and the growth in the size and spending capacity of our target clients. We believe we can grow in a controlled manner while preserving the exclusivity of our brand by continuing to focus on distinct market segments and maintaining a strong pipeline of new car launches. We will also continue to explore controlled growth in emerging markets to capitalize on the substantial wealth creation and the growing affluent populations in those markets, while maintaining our historic control over the relative allocation of cars among regions in order to maintain proper balance of our supply to support both demand for our cars and our brand reputation over the long term.
Regular new model introductions and enhancements. We intend to continue our effective strategy of regularly launching new cars with enhanced technological innovations and design improvements, capitalizing on the speed and flexibility of our design, engineering and production processes. We also intend to alternate our new model launches among our distinct product segments in order to preserve the exclusivity and enduring value of each new car launch, while ensuring that our clients have continuing access to the latest technology and design. We will also continue periodically to design and launch limited edition supercars and very limited series and one-off cars, which command significantly higher prices, in order to satisfy the demands of our most affluent and loyal clients and to inspire our clients who purchase our Sports and GT cars to purchase our newer and enhanced models. Notwithstanding the regular introduction of new products, we intend to continue the practice of managing waiting lists in our various geographic markets to respond appropriately to relative levels of demand by balancing the need to enhance exclusivity while minimizing any concerns for client satisfaction. We expect that increasing technological content of our cars combined with clients’ appetite for our distinctive designs will continue to support pricing at the upper end of the luxury performance market in each of our car segments.
Pursue Excellence in Formula 1 Racing. We intend to continue to pursue success in Formula 1 racing through Scuderia Ferrari, the most successful team in Formula 1 history. We believe that competitive success in Formula 1 racing both promotes our brand and excites passion in our employees, clients and other Ferrari enthusiasts and we will devote the resources we believe are required to maintain that success. In addition to the know-how we develop in designing, engineering and producing Formula 1 racing cars that we apply to our Sports and GT cars, we continue to believe that the success of our business, the image of our brand and the allegiance of our clients is enhanced by our racing success, which will, among other things, position us to extend the Ferrari brand into other luxury and lifestyle segments. More generally, we believe that our Formula 1 racing team allows us to promote and market our brand and technology to a global audience more effectively than traditional advertising activities, which enhances the aura of exclusivity around our brand.
Controlled growth in adjacent luxury and lifestyle categories. We intend to maintain the Ferrari brand’s reputation for exclusivity and selectively extend the brand through initiatives that are compatible with our brand image and the loyal following we enjoy among our clients and other Ferrari enthusiasts. We expect over time to expand the Ferrari brand into a range of other luxury goods and in adjacent lifestyle categories through third party licensing and partnerships, but intend to do so only in a manner that preserves the strength and exclusivity of our brand. We also intend to expand our retail activities with balanced growth through new openings of direct point of sales in order to increase our presence in the United States and in Europe as well as improving our franchising activities in selected locations. We will also promote the Ferrari brand through carefully selected theme park locations that we believe will attract consumers including current clients as well as those who aspire to become our clients. We believe these strategies will allow us to extend the reach of our brand to additional consumers, which we believe will further enhance our position as a premier luxury lifestyle brand.
Corporate Structure and Proposed Separation
This offering is intended to be part of a series of transactions (the “Separation”) to separate Ferrari from FCA, after which FCA would no longer hold any ownership interest in Ferrari. Shortly prior to the pricing of this offering, we carried out a restructuring of Ferrari, after which FCA owns 90 percent of our common shares and voting power and Piero Ferrari holds the remaining 10 percent .

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In connection with the restructuring, FCA transferred to us all of the share capital that it previously held in Ferrari S.p.A. (representing 90 percent of the share capital in Ferrari S.p.A.), and in exchange we issued to FCA a note in the principal amount of € (the “FCA Note”). FCA then contributed cash of € to us in consideration of the issue by us to FCA of of our common shares. A portion of the cash contribution we received from FCA was used to repay a portion of the FCA Note, following which the principal amount outstanding on the FCA Note is € . We expect to refinance the outstanding amount of the FCA Note through third party debt, either before or after the completion of the Separation, depending on market conditions and other factors.
Immediately following the offering, it is expected that FCA will own approximately 81 percent of our common shares ( 80 percent if the underwriters’ option to purchase additional shares is exercised in full), Piero Ferrari will own 10 percent of our common shares (whether or not the underwriters’ option to purchase additional shares is exercised) and public shareholders will own nine percent of our common shares ( 10 percent if the underwriters’ option to purchase additional shares is exercised in full).
Following completion of the offering, FCA intends to transfer its remaining approximately 80 percent interest in Ferrari to FCA shareholders by way of demergers under Dutch law.
The Separation is currently expected to be completed in early 2016. However, completion of the Separation is subject to various conditions, risks and uncertainties and we cannot assure you that it will be completed in the manner described in this prospectus or at all.
Upon completion of the Separation, Ferrari N.V. would be the holding company of the Ferrari group through its 100 percent shareholding in Ferrari S.p.A. and FCA would no longer have an ownership interest in Ferrari N.V. Pursuant to the Separation, each holder of FCA common shares will receive one common share in FE New (our successor company, which will be renamed “Ferrari N.V.” following the completion of the Separation) for every ten common shares held in FCA immediately prior to completion of the Separation, and each FCA shareholder participating in FCA’s loyalty voting program will receive one special voting share in FE New for every ten special voting shares in FCA held prior to completion of the Separation. We expect that FCA and Piero Ferrari will participate in our loyalty voting program. Therefore, following the offering, we expect FCA will hold approximately 84.2 percent of the voting power in us and Piero Ferrari will hold approximately 10.5 percent of such voting power. See “Principal Shareholders and Related Party Transactions.” Following the Separation, the common shares of Ferrari N.V. are expected to be held as follows:
Exor S.p.A. (“Exor”) (FCA’s largest shareholder): approximately percent ( 24 percent if the underwriters’ option to purchase additional common shares in this offering is exercised in full);
Piero Ferrari: 10 percent (whether or not the underwriters’ option is exercised); and
Public shareholders: approximately percent ( 66 percent if the underwriters’ option is exercised).
However, voting power in Ferrari will also depend on the number of special voting shares outstanding after the Separation. We expect that Piero Ferrari and any FCA shareholders participating in FCA’s loyalty voting program at the time of completion of the Separation, including Exor, will receive special voting shares in connection with the Separation. If participation in the FCA loyalty voting program and our loyalty voting program remain unchanged through completion of the Separation, we expect that, after the Separation, Exor would hold approximately 33.4 percent of the voting power in us, Piero Ferrari would hold approximately 15.3 percent of the voting power in us and public shareholders would hold approximately 51.3 percent of the voting power in us. See “The Ferrari Shares, Articles of Association and Terms and Conditions of the Special Voting Shares.”
We believe that the Separation will enable us to pursue our business strategies with greater operational and financial independence while preserving the unique character of our business and organization. ‎ Although, as a separate public company we will lose the operational and financial support inherent in being part of a larger organization, we believe that as a standalone company with an iconic brand name, we will be better positioned to promote and extend the value of our brand, maintain our heritage, attract and reward technical and management talent and further enhance Ferrari’s position among the world’s premier luxury lifestyle companies. We also expect that the Separation and our capital and organizational structure will offer a flexible and beneficial environment that will enable us to access directly sources of equity and debt capital to finance our business on favorable terms, as well as the opportunity to reward our most loyal shareholders with our loyalty voting program. Our listing on the New York Stock Exchange, which will require us to invest in systems and resources to operate as a separate public

5



company in compliance with regulatory and listing requirements, is also expected to increase our investment appeal, particularly in the United States which has historically been one of our largest ‎and most important markets. 
In connection with the Separation, we may apply for admission to listing and trading of our common shares on the Mercato Telematico Azionario, or MTA, organized and managed by Borsa Italiana S.p.A. Any listing on the MTA would occur at or after the completion of the Separation.
For more information regarding the Separation, see “The Restructuring and Separation Transactions.”
Corporate Information
Ferrari was incorporated as a public limited liability company ( naamloze vennootschap ) under the laws of the Netherlands on May 24, 2013 under the name New Business Netherlands N.V. Shortly prior to the completion of the offering, this name will be changed to Ferrari N.V.
Ferrari’s place of effective management is in Italy and, therefore, its fiscal residency is in Italy (see “Tax Consequences—Material Italian Income Tax Consequences”).
Risk Factors
Investing in our common shares involves risks. See “Risk Factors” beginning on page 12.

6



The Offering
Common shares offered by the selling shareholder
         common shares
Common shares subject to underwriters’
option to purchase additional common shares
         common shares
Common shares outstanding
         common shares
Selling Shareholder
Fiat Chrysler Automobiles N.V. Following this offering, the selling shareholder will hold approximately 81 percent of our common shares (approximately 80 percent if the underwriters’ option to purchase additional common shares is exercised in full).
Use of proceeds
We will not receive any proceeds from the sale of common shares in this offering, including any proceeds that the selling shareholder may receive from the exercise by the underwriters of their option to purchase additional common shares from the selling shareholder. See “Use of Proceeds.”
Risk Factors
See “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common shares.
Lock-up
We, FCA, Piero Ferrari and certain of our directors and officers have agreed that, subject to certain exceptions, we and they will not, without the prior written consent of UBS Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, offer, pledge, sell, contract to sell or otherwise transfer or dispose of, all or a portion of the economic consequences of ownership of, any of our common shares or any securities convertible into or exercisable or exchangeable for our common shares for a period of 90 days after the date of this prospectus. For more information, see “Underwriting.” However, this lock-up does not restrict the consummation of, or any activities by us or FCA in furtherance of, any of the transactions relating to the separation of Ferrari from FCA described under “The Restructuring and Separation Transactions.”
Dividend policy
Our dividend policy will be determined by our Board of Directors as constituted following completion of this offering and the Separation. Payment of dividends on our common shares in the future will depend on general business conditions, our financial condition, earnings and liquidity, and other factors. Under our articles of association and Dutch law, dividends may be declared on our common shares only if the amount of equity exceeds the paid up and called up capital plus the reserves that have to be maintained pursuant to the law or our articles of association. Further, even if we are permitted under our articles of association and Dutch law to pay cash dividends on our common shares, we may not have sufficient cash to pay dividends in cash on our common shares.
Expected New York Stock Exchange (“NYSE”) symbol
“FRRI”

7



Summary Historical and Pro Forma Financial Data
The following tables set forth selected historical consolidated financial data and pro forma consolidated financial data of Ferrari. The historical consolidated financial data has been derived from the unaudited Interim Condensed Consolidated Financial Statements and the audited Annual Consolidated Financial Statements, both of which are included elsewhere in this prospectus. The pro forma consolidated financial data has been derived from the Unaudited Pro Forma Condensed Consolidated Financial Information included elsewhere in this prospectus.
The accompanying Annual Consolidated Financial Statements have been prepared in accordance with IFRS. The accompanying Interim Condensed Consolidated Financial Statements have been prepared in accordance with the requirements of IFRS and in particular in accordance with IAS 34 – Interim Financial Reporting. The accounting principles applied in the Interim Condensed Consolidated Financial Statements are consistent with those used for the preparation of the Annual Consolidated Financial Statements, except as otherwise stated in “New standards and amendments effective from January 1, 2015” in the Notes to the Interim Condensed Consolidated Financial Statements.
As explained in “Note on Presentation,” with the exception of the FCA Note and subsequent refinancing (as defined herein), the Restructuring has been retrospectively reflected in the Annual Consolidated Financial Statements as though it had occurred effective January 1, 2012, and reflected in the Interim Condensed Consolidated Financial Statements as though it had occurred effective January 1, 2014. See “Note on Presentation.”
The pro forma consolidated financial data has been prepared by applying unaudited pro forma adjustments to (i) our historical interim consolidated statement of financial position and our historical interim consolidated income statement at and for the six months ended June 30, 2015 included in the Interim Condensed Consolidated Financial Statements and (ii) our historical consolidated income statement for the year ended December 31, 2014 included in the Annual Consolidated Financial Statements, adjusted to give effect to the transactions described under “Unaudited Pro Forma Condensed Consolidated Financial Information” included in this prospectus. The pro forma consolidated financial data does not purport to represent what our actual results of operations would have been if such transactions had actually occurred on the dates assumed, nor is it necessarily indicative of future consolidated results of operations or financial condition. The pro forma consolidated financial data is presented for information purposes only.

The following information should be read in conjunction with “Note on Presentation,” “Selected Historical Consolidated Financial And Other Data,” “Risk Factors,” “Unaudited Pro Forma Condensed Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Interim Condensed Consolidated Financial Statements and the Annual Consolidated Financial Statements included elsewhere in this prospectus. Historical results for any period are not necessarily indicative of results for any future period.

8



Consolidated Income Statement Data
 
For the three months ended June 30,
 
For the six months ended June 30,
 
2015
 
2014
 
2015
 
2015
 
2014
 

 

 
Pro Forma
 

 

 
(€ million, except for per share data)
Net revenues
766

 
729

 
1,387

 
1,387

 
1,349

EBIT
122

 
105

 
218

 
218

 
185

Profit before taxes
114

 
106

 
191

 
212

 
187

Net profit
76

 
74

 
126

 
141

 
128

Attributable to:

 

 

 

 

     Owners of the parent
75

 
73

 
125

 
140

 
126

     Non-controlling interest
1

 
1

 
1

 
1

 
2

Basic and diluted earnings per ordinary share (in Euro) (1)

 

 

 

 

________________________
(1) See Note 12 to the Interim Condensed Consolidated Financial Statements for the calculation of Basic and Diluted earnings per ordinary share.

Non-GAAP Consolidated Income Statement Measure

 
For the three months ended June 30,
 
For the six months ended June 30,
 
2015
 
2014
 
2015
 
2015
 
2014
 
 
 
 
 
Pro Forma
 
 
 
 
 
(€ million)
Adjusted EBITDA
194

 
177

 
354

 
354

 
325


Adjusted EBITDA is a non-GAAP measure. The following table provides a reconciliation of Adjusted EBITDA to net profit, the most directly comparable measure presented in accordance with IFRS. For additional information regarding Adjusted EBITDA, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA.”

 
For the three months ended June 30,
 
For the six months ended June 30,
 
2015
 
2014
 
2015
 
2015
 
2014
 
 
 
 
 
Pro Forma
 
 
 
 
 
(€ million)
Net profit
76

 
74

 
126

 
141

 
128

Income tax expense
38

 
32

 
65

 
71

 
59

Net financial expenses/(income)
8

 
(1
)
 
27

 
6

 
(2
)
Amortization and depreciation
70

 
72

 
130

 
130

 
140

EBITDA
192

 
177

 
348

 
348

 
325

Expense related to the resignation of the former Chairman

 

 

 

 

Expenses incurred in relation to the IPO
2

 

 
6

 
6

 

Adjusted EBITDA
194

 
177

 
354

 
354

 
325


9




Consolidated Statement of Financial Position Data

At June 30,
 
At December 31,

2015
 
2015
 
2014
 
2013

Pro Forma
 

 

 


(€ million)
Cash and cash equivalents
258

 
258

 
134

 
114

Deposits in FCA Group cash management pools (1)

 
1,098

 
942

 
684

Total assets
3,901

 
5,001

 
4,641

 
3,895

Debt
1,967

 
567

 
510

 
317

Total equity
99

 
2,599

 
2,478

 
2,316

Equity attributable to owners of the parent
87

 
2,587

 
2,470

 
2,290

Non-controlling interests
12

 
12

 
8

 
26

_________________________
(1)    Deposits in FCA Group cash management pools relate to our participation in a group-wide cash management system at FCA, where the operating cash management, main funding operations and liquidity investment of the Group are centrally coordinated by dedicated treasury companies with the objective of ensuring effective and efficient management of our funds. Following the Separation, these arrangements will be terminated and we will manage our liquidity and treasury function on a standalone basis.

Consolidated Income Statement Data

For the years ended December 31,

2014
 
2014
 
2013
 
2012

Pro Forma
 

 

 


(€ million, except for per share data)
Net revenues
2,762

 
2,762

 
2,335

 
2,225

EBIT
389
 
389

 
364

 
335

Profit before taxes
357
 
398

 
366

 
334

Net profit
235
 
265

 
246

 
233

Attributable to:

 

 

 

     Owners of the parent
231
 
261

 
241

 
225

     Non-controlling interest
4
 
4

 
5

 
8

Basic and diluted earnings per ordinary share (in Euro) (1)

 

 

 

_____________________________

(1)    See Note 12 to the Annual Consolidated Financial Statements for the calculation of Basic and Diluted earnings per ordinary share.








10



Non-GAAP Consolidated Income Statement Measure

 
For the years ended December 31,
 
2014
 
2014
 
2013
 
2012
 
Pro Forma
 
 
 
 
 
 
 
(€ million)
Adjusted EBITDA
693

 
693

 
634

 
573


Adjusted EBITDA is a non-GAAP measure. The following table provides a reconciliation of Adjusted EBITDA to net profit, the most directly comparable measure presented in accordance with IFRS. For additional information regarding Adjusted EBITDA, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA.”

 
For the years ended December 31,
 
2014
 
2014
 
2013
 
2012
 
Pro Forma
 
 
 
 
 
 
 
(€ million)
Net profit
235

 
265

 
246

 
233

Income tax expense
122

 
133

 
120

 
101

Net financial expenses/(income)
32

 
(9
)
 
(2
)
 
1

Amortization and depreciation
289

 
289

 
270

 
238

EBITDA
678

 
678

 
634

 
573

Expense related to the resignation of the former Chairman
15

 
15

 

 

Expenses incurred in relation to the IPO

 

 

 

Adjusted EBITDA
693

 
693

 
634

 
573



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RISK FACTORS
Investing in our common shares involves risks. You should carefully consider the following risks, as well as all other information included in this prospectus including our consolidated financial statements and the related notes, before investing in our common shares. Our business as well as our results of operations or financial condition could be materially adversely affected by any of these risks, as well as other risks and uncertainties not currently known to us or not currently deemed to be material. In this case, the price of our common stock could decline, and you may lose some or all of your investment.
Risks Related to Our Business, Strategy and Operations
We may not succeed in preserving and enhancing the value of the Ferrari brand, which we depend upon to drive demand and revenues.
Our financial performance is influenced by the perception and recognition of the Ferrari brand, which, in turn, depends on many factors such as the design, performance, quality and image of our cars, the appeal of our dealerships and stores, the success of our promotional activities including public relations and marketing, as well as our general profile, including our brand’s image of exclusivity. The value of our brand and our ability to achieve premium pricing for Ferrari-branded products may decline if we are unable to maintain the value and image of the Ferrari brand, including, in particular, its aura of exclusivity. Maintaining the value of our brand will depend significantly on our ability to continue to produce luxury performance cars of the highest quality. The market for luxury goods generally and for luxury automobiles in particular is intensely competitive, and we may not be successful in maintaining and strengthening the appeal of our brand. Client preferences, particularly among luxury goods, can vary over time, sometimes rapidly. We are therefore exposed to changing perceptions of our brand image, particularly as we seek to attract new generations of clients. Any failure to preserve and enhance the value of our brand may materially and adversely affect our ability to sell our cars, to maintain premium pricing, and to extend the value of our brand into other activities profitably or at all.
We selectively license the Ferrari brand to third parties that produce and sell Ferrari-branded luxury goods and therefore we rely on our licensing partners to preserve and enhance the value of our brand. If our licensees or the manufacturers of these products do not maintain the standards of quality and exclusivity that we believe are consistent with the Ferrari brand, or if such licensees or manufacturers otherwise misuse the Ferrari brand, our reputation and the integrity and value of our brand may be damaged and our business, operating results and financial condition may be materially and adversely affected.
Our brand image depends in part on the success of our Formula 1 racing team.
The prestige, identity, and appeal of the Ferrari brand depend on the continued success of the Scuderia Ferrari racing team in the Formula 1 World Championship. The racing team is a key component of our marketing strategy and may be perceived by our clients as a demonstration of the technological capabilities of our Sports and GT cars which also supports the appeal of other Ferrari-branded luxury goods. The success of our Formula 1 racing team has declined over the past several years as our most recent driver's championship and constructors' championship were in 2007 and 2008, respectively. As a result, we are enhancing our focus on Formula 1 activities with the goal of improving racing results and restoring our historical position as the premier racing team in Formula 1. If we are unable to attract and retain the necessary talent to succeed in international competitions or devote the capital necessary to fund successful racing activities, the value of the Ferrari brand and the appeal of our cars and other luxury goods may suffer. Even if we are able to attract such talent and adequately fund our racing activities, there is no assurance that this will lead to competitive success for our racing team.
The success of our racing team depends in particular on our ability to attract and retain top drivers and racing management and engineering talent. Our primary Formula 1 drivers, team managers and other key employees of Scuderia Ferrari are critical to the success of our racing team and if we were to lose their services, this could have a material adverse effect on the success of our racing team and correspondingly the Ferrari brand. If we are unable to find adequate replacements or to attract, retain and incentivize drivers and team managers, other key employees or new qualified personnel, the success of our racing team may suffer. As the success of our racing team forms a large part of our brand identity, a sustained period without racing success could detract from the Ferrari brand and, as a result, potential clients’ enthusiasm for the Ferrari brand and their perception of our cars, which could have an adverse effect on our business, results of operations and financial condition.

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If we are unable to keep up with advances in high performance car technology, our competitive position may suffer.
Performance cars are characterized by leading-edge technology which is constantly evolving. In particular, advances in racing technology often lead to improved technology in road cars. Although we invest heavily in research and development, we may be unable to maintain our leading position in high performance car technology and, as a result, our competitive position may suffer. As technologies change, we plan to upgrade or adapt our cars and introduce new models in order to continue to provide cars with the latest technology. However, our cars may not compete effectively with our competitors’ cars if we are not able to develop, source and integrate the latest technology into our cars.
Developing and applying new automotive technologies is costly, and may become even more costly in the future as available technology advances and competition in the industry increases. If our research and development efforts do not lead to improvements in car performance relative to the competition, or if we are required to spend more to achieve comparable results, sales of our cars or our profitability may suffer.
If our car designs do not appeal to clients, our brand and competitive position may suffer.
Design and styling are an integral component of our models and our brand. Our cars have historically been characterized by distinctive designs combining the aerodynamics of a sports car with powerful, elegant lines. We believe our clients purchase our cars for their appearance as well as their performance. However, we will need to renew over time the style of our cars to differentiate the new models we produce from older models, and to reflect the broader evolution of aesthetics in our markets. We devote great efforts to the design of our cars and most of our current models are designed by Ferrari Design Centre, our in-house design team. If the design of our future models fails to meet the evolving tastes and preferences of our clients and prospective clients, or the appreciation of the wider public, our brand may suffer and our sales may be adversely affected.
The value of our brand depends in part on the automobile collector and enthusiast community.
An important factor in the connection of clients to the Ferrari brand is our strong relationship with the active global community of automotive collectors and enthusiasts, particularly collectors and enthusiasts of Ferrari automobiles. This is influenced by our close ties to the automotive collectors’ community and our support of related events (such as car shows and driving events), at our headquarters in Maranello and through our dealers, the Ferrari museum and affiliations with regional Ferrari clubs. The support of this community also depends upon the perception of our cars as collectibles, which we also support through our Ferrari Classiche services, and the active resale market for our automobiles which encourages interest over the long term.
If there is a change in collector appetite or damage to the Ferrari brand, our ties to and the support we receive from this community may be diminished. Such a loss of enthusiasm for our cars from the automotive collectors’ community could harm the perception of the Ferrari brand and adversely impact our sales and profitability.
Demand for luxury goods, including luxury performance cars, is volatile, which may adversely affect our operating results.
Volatility of demand for luxury goods, in particular luxury performance cars, may adversely affect our business, operating results and financial condition. The markets in which we sell our cars have been subject to volatility in demand in recent periods. Demand for luxury automobiles depends to a large extent on general, economic, political and social conditions in a given market as well as the introduction of new vehicles and technologies. As a luxury performance car manufacturer and low volume producer, we compete with larger automobile manufacturers many of which have greater financial resources in order to withstand changes in the market and disruptions in demand. Demand for our cars may also be affected by factors directly impacting automobile prices or the cost of purchasing and operating automobiles, such as the availability and cost of financing, prices of raw materials and parts and components, fuel costs and governmental regulations, including tariffs, import regulation and other taxes, including taxes on luxury goods, resulting in limitations to the use of high performance sports cars or luxury goods more generally. Volatility in demand may lead to lower car unit sales, which may result in further downward price pressure and adversely affect our business, operating results and financial condition. These effects may have a more pronounced impact on us given our low volume strategy and relatively smaller scale as compared to large global mass-market automobile manufacturers.

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Our low volume strategy may limit potential profits.
A key to the appeal of the Ferrari brand and our marketing strategy is the aura of exclusivity and the sense of luxury which our brand conveys. A central facet to this exclusivity is the limited number of models and cars we produce and our strategy of maintaining our car waiting lists to reach the optimal combination of exclusivity and client service. Our low volume strategy is also an important factor in the prices that our clients are willing to pay for our cars. Regulation also affects our potential for volume growth because we are eligible for certain exemptions from fuel economy and emissions requirements provided we sell less than 10,000 road cars worldwide per year. See “—New laws, regulations, or policies of governmental organizations regarding increased fuel economy requirements, reduced greenhouse gas or pollutant emissions, or vehicle safety, or changes in existing laws, may have a significant effect on our costs of operation and/or how we do business.”
While important to our current marketing strategy, our focus on maintaining low volumes and exclusivity limits our potential sales growth and profitability. As a public company following this offering, we may from time to time face pressure to demonstrate growth including by increasing the volume of cars we sell. Notwithstanding any such pressure, we intend to continue to pursue a low volume strategy in order to maintain our reputation for exclusivity, while growing volume in a controlled way to respond to growth in emerging markets and demographic changes.
Conversely, if we were to change our strategy and increase production of our cars more aggressively, we may be unable to maintain the exclusivity of the Ferrari brand. If we are unable to balance brand exclusivity with increased production, we may erode the desirability and ultimately the consumer demand for our cars. As a result, if we are unable to increase car production meaningfully or introduce new car models without eroding the image of exclusivity in our brand we may be unable to significantly increase our revenues.
Our revenues from Formula 1 activities may decline and our related expenses may grow.
Revenues from our Formula 1 activities depend principally on the income from our sponsorship agreements and on our share of Formula 1 revenues from broadcasting and other sources. See “Business—Formula 1 Activities.” If we are unable to renew our existing sponsorship agreements or if we enter into new or renewed sponsorship agreements with less favorable terms, our revenues would decline. In addition, our share of Formula 1 results may decline if either our team’s performance worsens compared to other competing teams, or if the overall Formula 1 business suffers. Furthermore, in order to compete effectively on track we have been investing significant resources in research and development and to competitively compensate the best available drivers and other racing team members. These expenses also vary based on changes in Formula 1 regulations that require modification to our racing engines and cars. These expenses are expected to continue, and may grow further, including as a result of any changes in Formula 1 regulations, which would negatively affect our results of operations.
The small number of car models we produce and sell may result in greater volatility in our financial results.
We currently depend on the sales of six range models, two special series and one limited edition supercar to generate our revenues. While we anticipate expanding our car offerings, we expect that a limited number of models will continue to account for a large portion of our revenues at any given time in the foreseeable future. Therefore, our future operating results depend upon the continued market acceptance of each model in our line-up. There can be no assurance that our cars will continue to be successful in the market. On average it takes about 40 months (approximately 33 months for M models) from the beginning of the development phase to start of production for a new model and the car development process is capital intensive. As a result, we would likely be unable to replace the revenue lost from one of our main car models if it does not achieve market acceptance. Furthermore, volatility in our revenues and profits is also affected by our “special series” and limited edition cars that we launch from time to time and are typically priced higher than our range models. There can be no assurance that we will be successful in developing, producing and marketing additional new cars that will sustain sales growth in the future.
Engine production revenues are dependent on Maserati’s ability to sell its cars.
We produce V8 and V6 engines for Maserati. In particular, we have a multi-year arrangement with Maserati to provide V6 engines in an initial production run of up to 160,000 engines in aggregate through 2020, which is expected to increase to up to 275,000 engines in aggregate through 2023 to cater to Maserati’s planned expanded model range and sales volumes. While Maserati is required to compensate us for certain costs we may incur, such as penalties from our suppliers, in the event that the sales of Maserati cars decline, or do not increase at the expected rate, such an event would adversely affect our revenues from the sale of engines.

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Our business is subject to changes in client preferences and automotive trends.
Our continued success depends in part on our ability to originate and define product and automotive trends, as well as to anticipate and respond promptly to changing consumer demands and automotive trends in the design, styling, technology, production, merchandising and pricing of our products. Our products must appeal to a client base whose preferences cannot be predicted with certainty and are subject to rapid change. Evaluating and responding to client preferences has become even more complex in recent years, due to our expansion in new geographical markets. If we misjudge the market for our products, we and our dealers may be faced with excess inventories for some cars and missed opportunities with others. In addition, there can be no assurance that we will be able to produce, distribute and market new products efficiently or that any product category that we may expand or introduce will achieve sales levels sufficient to generate profits. Any of these outcomes could have a material adverse effect on our business, results of operations and financial condition.
Global economic conditions may adversely affect us.
Our sales volumes and revenues may be affected by overall general economic conditions. Deteriorating general economic conditions may affect disposable incomes and reduce consumer wealth impacting client demand, particularly for luxury goods which may negatively impact our profitability and put downward pressure on our prices and volumes. Furthermore, during recessionary periods, social acceptability of luxury purchases may decrease and higher taxes may be more likely to be imposed on certain luxury goods including our cars, which may affect our sales. Adverse economic conditions may also affect the financial health and performance of our dealers in a manner that will affect sales of our cars or their ability to meet their commitments to us.
Many factors affect the level of consumer spending in the luxury performance car industry, including the state of the economy as a whole, stock market performance, interest and exchange rates, inflation, political uncertainty, the availability of consumer credit, tax rates, unemployment levels and other matters that influence consumer confidence. In general, although our sales have historically been comparatively resilient in periods of economic turmoil, sales of luxury goods tend to decline during recessionary periods when the level of disposable income tends to be lower or when consumer confidence is low.
We distribute our products internationally and we may be affected by downturns in general economic conditions or uncertainties regarding future economic prospects that may impact the countries in which we sell a significant portion of our products. In particular, the majority of our current sales are in the EU and in the United States; if we are unable to expand in emerging markets, a downturn in mature economies such as the EU and the United States may negatively affect our financial performance. In the EU, in particular, despite measures taken by several governments and monetary authorities to provide financial assistance to certain Eurozone countries and to avoid default on sovereign debt obligations, concerns persist regarding the debt burden of several countries. These concerns, along with the significant fiscal adjustments carried out in several countries, intended to manage actual or perceived sovereign credit risk, have led to further pressure on economic growth and may lead to new periods of recession.
A significant decline in the EU or the global economy or in the specific economies of our markets, or in consumers’ confidence could have a material adverse effect on our business.
New laws, regulations, or policies of governmental organizations regarding increased fuel economy requirements, reduced greenhouse gas or pollutant emissions, or vehicle safety, or changes in existing laws, may have a significant effect on our costs of operation and/or how we do business.
We are subject throughout the world to comprehensive and constantly evolving laws, regulations and policies. We expect the extent of the legal and regulatory requirements affecting our business and our costs of compliance to continue to increase significantly in the future. In Europe and the United States, for example, significant governmental regulation is driven by environmental, fuel economy, vehicle safety and noise emission concerns. Evolving regulatory requirements could significantly affect our product development plans and may limit the number and types of cars we sell and where we sell them, which may affect our revenue. Governmental regulations may increase the costs we incur to design, develop and produce our cars and may affect our product portfolio. Regulation may also result in a change in the character or performance characteristics of our cars which may render them less appealing to our clients. We anticipate that the number and extent of these regulations, and their effect on our cost structure and product line-up, will increase significantly in the future.
Current European legislation limits fleet average greenhouse gas emissions for new passenger cars, and new targets have been set in 2014 with more stringent emission targets applicable to the 2017-2021 period. Due to our small volume

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manufacturer (“SVM”) status we benefit from a derogation from the existing emissions requirement and we are instead required to meet by 2016 alternative targets for our fleet of EU-registered vehicles. By the end of 2015, we will submit our proposed CO 2 emissions target for the 2017-2021 period to the EU Commission for approval.
In the United States, the U.S. Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration (“NHTSA”) have set the federal standards for passenger cars and light trucks to meet certain combined average fuel economy (“CAFE”) levels and more stringent standards have been prescribed for model years 2017 through 2025. As a SVM that is able to demonstrate our operational independence from FCA, we expect to benefit from a derogation from currently applicable standards. We have also petitioned the EPA for alternative standards for the 2017-2019 period, which are aligned to our technical and economic capabilities, and we expect to receive feedback on this proposal by the end of 2015. Following the Separation, we intend to petition NHTSA for recognition as an independent manufacturer of less than 10,000 vehicles globally, in order to be eligible for alternate CAFE standards, as permitted under the CAFE program. If our petition qualifying for alternate CAFE standards is successful, NHTSA will determine the appropriate level of CAFE applicable to us for future model years.
In addition, we are subject to legislation relating to the emission of other air pollutants such as, among others, the “Tier 3” Motor Vehicle Emission and Fuel Standards issued by the EPA, and the Zero Emission Vehicle regulation in California, which are subject to similar derogations for SVMs, as well as vehicle safety legislation. NHTSA also recently published guidelines for driver distraction, and the associated compliance costs may be substantial.
Other governments around the world, such as those in Canada, South Korea, China and certain Middle Eastern countries are also creating new policies to address these issues which could be even more stringent than the U.S. or European requirements. As in the United States and Europe, these government policies if applied to us could significantly affect our product development plans. In China, for example, Stage III fuel consumption regulations target a national average fuel consumption of 6.9L/100km by 2015 and Stage IV targets a national average fuel consumption of 5.0L/100km by 2021. In response to severe air quality issues in Beijing and other major Chinese cities, the Chinese government also intends to adopt more stringent emissions standards for Mainland China beginning in 2016. It is unclear whether the new standards, if adopted, will include exceptions for SVMs similar to those currently in place in the United States and in the EU.
We could lose our status as a SVM in the EU and/or the United States if we do not continue to meet all of the necessary eligibility criteria under applicable regulations as they evolve. In order to meet these criteria we may need to modify our growth plans or other operations. Furthermore, even if we continue to benefit from derogations as a SVM, we will be subject to alternative standards that the regulators deem appropriate for our technical and economic capabilities and such alternative standards may be significantly more stringent than those currently applicable to us.
Under these existing regulations, as well as new or stricter rules or policies, we could be subject to sizable civil penalties or have to restrict or modify product offerings drastically to remain in compliance. We may have to incur substantial capital expenditures and research and development expenditures to upgrade products and manufacturing facilities, which would have an impact on our cost of production and results of operation.
Our growth strategy exposes us to risks.
Our growth strategy includes a controlled expansion of our sales and operations, including the launching of new car models and expanding sales and dealer operations in targeted growth regions internationally. In particular, our growth strategy requires us to expand operations in regions that we have identified as having relatively high growth potential. We may encounter difficulties, including more significant competition in entering and establishing ourselves in these markets.
Our growth depends on the continued success of our existing cars, as well as the successful design and introduction of new cars. Our ability to create new cars and to sustain existing car models is affected by whether we can successfully anticipate and respond to consumer preferences and car trends. The failure to develop and launch successful new cars could hinder the growth of our business. Also, any delay in the development or launch of a new product could result in others bringing new products and technology to market first, which could compromise our competitive position.
Our growth strategy may expose us to new business risks that we may not have the expertise, capability or the systems to manage. This strategy will also place significant demands on us by requiring us to continuously evolve and improve our operational, financial and internal controls. Continued expansion also increases the challenges involved in maintaining high levels of quality, management and client satisfaction, recruiting, training and retaining sufficient skilled management, technical

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and marketing personnel. See “Business—Our Strategies.” If we are unable to manage these risks or meet these demands, our growth prospects and our business, results of operation and financial condition could be adversely affected.
We currently plan to open additional dealerships and Ferrari stores in various international markets. We do not yet have significant experience directly operating in many of these markets, and in many of them we face established competitors. Many of these countries have different operational characteristics, including but not limited to employment and labor, transportation, logistics, real estate, environmental regulations and local reporting or legal requirements.
Consumer demand and behavior, as well as tastes and purchasing trends may differ in these markets, and as a result, sales of our products may not be successful, or the margins on those sales may not be in line with those we currently anticipate. Furthermore, such markets will have upfront short-term investment costs that may not be accompanied by sufficient revenues to achieve typical or expected operational and financial performance and therefore may be dilutive to us in the short-term. In many of these countries, there is significant competition to attract and retain experienced and talented employees.
Consequently, if our international expansion plans are unsuccessful, our business, results of operation and financial condition could be materially adversely affected.
We face competition in the luxury performance car industry.
We face competition in all product categories and markets in which we operate. We compete with other international luxury performance car manufacturers which own and operate well-known brands of high-quality cars, some of which form part of larger automotive groups and may have greater financial resources and bargaining power with suppliers than we do, particularly in light of our policy to maintain low volumes in order to preserve and enhance the exclusivity of our cars. We believe that we compete primarily on the basis of our brand image, the performance and design of our cars and our reputation for quality. If we are unable to compete successfully, our business, results of operations and financial condition could be adversely affected.
Developments in emerging markets may adversely affect our business.
We operate in a number of emerging markets, both directly and through our dealers and we have experienced increasing demand in China and the Middle East.
Our strategy contemplates expanding our sales in the Middle East and Asia regions, recognizing the increasing personal wealth in these markets. While demand in these markets has increased in recent years due to sustained economic growth and growth in personal income and wealth, we are unable to foresee the extent to which economic growth in these emerging markets will be sustained. For example, recent events in Asia including market turmoil and currency devaluations, and potential slowdowns in the rate of growth there and in other emerging markets could limit the opportunity for us to increase unit sales and revenues in those regions in the near term.
Our exposure to emerging countries is likely to increase, as we pursue expanded sales in such countries. Economic and political developments in emerging markets, including economic crises or political instability, have had and could have in the future material adverse effects on our results of operations and financial condition. Further, in certain markets in which we or our dealers operate, required government approvals may limit our ability to act quickly in making decisions on our operations in those markets. Other government actions may also impact the market for luxury goods in these markets, such as tax changes or the active discouragement of luxury purchases.
Maintaining and strengthening our position in these emerging markets is a key component of our global growth strategy. However, initiatives from several global luxury automotive manufacturers have increased competitive pressures for luxury cars in several emerging markets. As these markets continue to grow, we anticipate that additional competitors, both international and domestic, will seek to enter these markets and that existing market participants will try to aggressively protect or increase their market share. Increased competition may result in pricing pressures, reduced margins and our inability to gain or hold market share, which could have a material adverse effect on our results of operations and financial condition.
Our success depends largely on the ability of our current management team to operate and manage effectively.
Our success depends on the ability of our senior executives and other members of management to effectively manage our business as a whole and individual areas of the business. Our management team particularly benefits from the leadership of our CEO, Amedeo Felisa, who brings over 40 years of automotive technical experience and skill to his leadership role and our

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chairman, Sergio Marchionne, who engineered the operating and financial turnaround of Fiat and Chrysler and the global expansion of our parent company, FCA, into the seventh largest automaker in the world (based on 2014 vehicle sales worldwide). Our employees, particularly in our production facilities in and around Maranello, Italy include several highly skilled engineers, technicians and artisans. If we were to lose the services of any of these senior executives or key employees, this could have a material adverse effect on our business, operating results and financial condition. We have developed succession plans that we believe are appropriate in the circumstances, although it is difficult to predict with any certainty that we will replace these individuals with persons of equivalent experience and capabilities. If we are unable to find adequate replacements or to attract, retain and incentivize senior executives, other key employees or new qualified personnel, our business, results of operations and financial condition may suffer.
We rely on our dealer network to provide sales and services.
We do not own our Ferrari dealers and virtually all of our sales are made through our network of dealerships located throughout the world. If our dealers are unable to provide sales or service quality that our clients expect or do not otherwise adequately project the Ferrari image and its aura of luxury and exclusivity, the Ferrari brand may be negatively affected. We depend on the quality of our dealership network and our business, operating results and financial condition could be adversely affected if our dealers suffer financial difficulties or otherwise are unable to perform to our expectations.
Our growth strategy also depends on our ability to attract a sufficient number of quality new dealers to sell our products in new areas. We may face competition from other luxury performance car manufacturers in attracting quality new dealers, based on, among other things, dealer margin, incentives and the performance of other dealers in the region. If we are unable to attract a sufficient number of new Ferrari dealers in targeted growth areas, our prospects could be materially adversely affected.
We depend on our suppliers, many of which are single source suppliers; and if these suppliers fail to deliver necessary raw materials, systems, components and parts of appropriate quality in a timely manner our operations may be disrupted.
Our business depends on a significant number of suppliers, which provide the raw materials, components, parts and systems we require to manufacture cars and parts and to operate our business. We use a variety of raw materials in our business including aluminum, and precious metals such as palladium and rhodium. We source materials from a limited number of suppliers. We cannot guarantee that we will be able to maintain access to these raw materials, and in some cases this access may be affected by factors outside of our control and the control of our suppliers. In addition, prices for these raw materials fluctuate and while we seek to manage this exposure, we may not be successful in mitigating these risks.
As with raw materials, we are also at risk for supply disruption and shortages in parts and components we purchase for use in our cars. We source a variety of key components from third parties, including transmissions, brakes, driving-safety systems, navigation systems, mechanical, electrical and electronic parts, plastic components as well as castings and tires, which makes us dependent upon the suppliers of such components. While we obtain components from multiple sources whenever possible, similar to other small volume car manufacturers, most of the key components we use in our cars are purchased by us from single source suppliers. We generally do not qualify alternative sources for most of the single-sourced components we use in our cars and we do not maintain long-term agreements with a number of our suppliers. Furthermore, we have limited ability to monitor the financial stability of our suppliers.
While we believe that we may be able to establish alternate supply relationships and can obtain or engineer replacement components for our single-sourced components, we may be unable to do so in the short term, or at all, at prices or costs that we believe are reasonable. Qualifying alternate suppliers or developing our own replacements for certain highly customized components of our cars may be time consuming, costly and may force us to make costly modifications to the designs of our cars.
In the past, we have replaced certain suppliers because they have failed to provide components that met our quality control standards. The loss of any single or limited source supplier or the disruption in the supply of components from these suppliers could lead to delays in car deliveries to our clients, which could adversely affect our relationships with our clients and also materially and adversely affect our operating results and financial condition. Supply of raw materials, parts and components may also be disrupted or interrupted by natural disasters, as was the case in 2012 following the earthquake in the Emilia Romagna region of Italy.
Changes in our supply chain have in the past resulted and may in the future result in increased costs and delays in car production. We have also experienced cost increases from certain suppliers in order to meet our quality targets and development

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timelines and because of design changes that we have made. We may experience similar cost increases in the future. Additionally, we are negotiating with existing suppliers for cost reductions, seeking new and less expensive suppliers for certain parts, and attempting to redesign certain parts to make them less expensive to produce. If we are unsuccessful in our efforts to control and reduce supplier costs while maintaining a stable source of high quality supplies, our operating results will suffer. Additionally, cost reduction efforts may disrupt our normal production processes, thereby harming the quality or volume of our production.
Furthermore, if our suppliers fail to provide components in a timely manner or at the level of quality necessary to manufacture our cars, our clients may face longer waiting periods which could result in negative publicity, harm our reputation and relationship with clients and have a material adverse effect on our business, operating results and financial condition.
We depend on our manufacturing facilities in Maranello and Modena.
We assemble all of the cars that we sell and manufacture all of the engines we use in our cars and sell to Maserati at our production facility in Maranello, Italy, where we also have our corporate headquarters. We manufacture all of our car chassis in a nearby facility in Modena, Italy. Our Maranello or Modena plants could become unavailable either permanently or temporarily for a number of reasons, including contamination, power shortage or labor unrest. Alternatively, changes in law and regulation, including export, tax and employment laws and regulations, or economic conditions, including wage inflation, could make it uneconomic for us to continue manufacturing our cars in Italy. In the event that we were unable to continue production at either of these facilities or it became uneconomic for us to continue to do so, we would need to seek alternative manufacturing arrangements which would take time and reduce our ability to produce sufficient cars to meet demand. Moving manufacturing to other locations may also affect the perception of our brand and car quality among our clients. Such a transfer would materially reduce our revenues and could require significant investment, which as a result could have a material adverse effect on our business, results of operations and financial condition.
Maranello and Modena are located in the Emilia-Romagna region of Italy which has the potential for seismic activity. For instance, in 2012 a major earthquake struck the region, causing production at our facilities to be temporarily suspended for a day. If major disasters such as earthquakes, fires, floods, hurricanes, wars, terrorist attacks, pandemics or other events occur, our headquarters and production facilities may be seriously damaged, or we may have to stop or delay production and shipment of our cars. As such damages from disasters or unpredictable events could have a material adverse impact on our business, results from operations and financial condition.
Car sales depend in part on the availability of affordable financing.
In certain regions, financing for new car sales has been available at relatively low interest rates for several years due to, among other things, expansive government monetary policies. To the extent that interest rates rise generally, market rates for new car financing are expected to rise as well, which may make our cars less affordable to clients or cause consumers to purchase less expensive cars, adversely affecting our results of operations and financial condition. Additionally, if consumer interest rates increase substantially or if financial service providers tighten lending standards or restrict their lending to certain classes of credit, our clients may not desire to or be able to obtain financing to purchase our cars.
We may not be able to provide adequate access to financing for our dealers and clients.
Our dealers enter into wholesale financing arrangements to purchase cars from us to hold in inventory or to use in showrooms and facilitate retail sales, and retail clients use a variety of finance and lease programs to acquire cars.
In most markets, we rely on controlled finance companies and commercial relationships with third parties, including third party financial institutions, to provide financing to our dealers and retail clients. Finance companies are subject to various risks that could negatively affect their ability to provide financing services at competitive rates, including:
the performance of loans and leases in their portfolio, which could be materially affected by delinquencies or defaults;
higher than expected car return rates and the residual value performance of cars they lease; and
fluctuations in interest rates and currency exchange rates.

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Any financial services provider, including our controlled finance companies, will face other demands on its capital, as well as liquidity issues relating to other investments or to developments in the credit markets. Furthermore, they may be subject to regulatory changes that may increase their costs, which may impair their ability to provide competitive financing products to our dealers and retail clients. To the extent that a financial services provider is unable or unwilling to provide sufficient financing at competitive rates to our dealers and retail clients, such dealers and retail clients may not have sufficient access to financing to purchase or lease our cars. As a result, our car sales and market share may suffer, which would adversely affect our results of operations and financial condition.
We rely on our licensing and franchising partners to preserve the value of our licenses and the failure to maintain such partners could harm our business.
We currently have multi-year agreements with licensing partners for various Ferrari-branded products in the sports, lifestyle and luxury retail segments. We also have multi-year agreements with franchising partners for our Ferrari stores and theme park. In the future, we may enter into additional licensing or franchising arrangements. Many of the risks associated with our own products also apply to our licensed products and franchised stores. In addition, there are unique problems that our licensing or franchising partners may experience, including risks associated with each licensing partner’s ability to obtain capital, manage its labor relations, maintain relationships with its suppliers, manage its credit and bankruptcy risks, and maintain client relationships. While we maintain significant control over the products produced for us by our licensing partners and the franchisees running our Ferrari stores and theme park, any of the foregoing risks, or the inability of any of our licensing or franchising partners to execute on the expected design and quality of the licensed products, Ferrari stores and theme park, or otherwise exercise operational and financial control over its business, may result in loss of revenue and competitive harm to our operations in the product categories where we have entered into such licensing or franchising arrangements. While we select our licensing and franchising partners with care, any negative publicity surrounding such partners could have a negative effect on licensed products, the Ferrari stores and theme parks or the Ferrari brand. Further, while we believe that we could replace our existing licensing or franchising partners if required, our inability to do so for any period of time could materially adversely affect our revenues and harm our business.
We depend on the strength of our trademarks and other intellectual property rights
We believe that our trademarks and other intellectual property rights are fundamental to our success and market position. Therefore, our business depends on our ability to protect and promote our trademarks and other intellectual property rights. Accordingly, we devote substantial efforts to the establishment and protection of our trademarks and other intellectual property rights such as registered designs and patents on a worldwide basis. We believe that our trademarks and other intellectual property rights are adequately supported by applications for registrations, existing registrations and other legal protections in our principal markets. However, we cannot exclude the possibility that our intellectual property rights may be challenged by others, or that we may be unable to register our trademarks or otherwise adequately protect them in some jurisdictions. If a third party were to register our trademarks, or similar trademarks, in a country where we have not successfully registered such trademarks, it could create a barrier to our commencing trade under those marks in that country.
Third parties may claim that we infringe their intellectual property rights.
We believe that we hold all the rights required for our business operations (including intellectual property rights and third-party licenses). However, we are exposed to potential claims from third parties alleging that we infringe their intellectual property rights, since many competitors and suppliers also submit patent applications for their inventions and secure patent protection or other intellectual property rights. If we are unsuccessful defending against any such claim, we may be required to pay damages or comply with injunctions which may disrupt our operations. We may also as a result be forced to enter into royalty or licensing agreements on unfavorable terms or to redesign products to comply with third parties’ intellectual property rights.
If our cars do not perform as expected our ability to develop, market and sell our cars could be harmed.
Our cars may contain defects in design and manufacture that may cause them not to perform as expected or that may require repair. There can be no assurance that we will be able to detect and fix any defects in the cars prior to their sale to consumers. Our cars may not perform in line with our clients’ evolving expectations or in a manner that equals or exceeds the performance characteristics of other cars currently available. For example, our newer cars may not have the durability or longevity of current cars, and may not be as easy to repair as other cars currently on the market. Any product defects or any other failure of our performance cars to perform as expected could harm our reputation and result in adverse publicity, lost revenue, delivery

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delays, product recalls, product liability claims, harm to our brand and reputation, and significant warranty and other expenses, and could have a material adverse impact on our business, operating results and financial condition.
Car recalls may be costly and may harm our reputation.
We have in the past and we may from time to time in the future be required to recall our products to address performance, compliance or safety-related issues. We may incur costs for these recalls, including replacement parts and labor to remove and replace the defective parts. For example, in July, 2015, we commenced a safety recall of some of our model year 2015 cars after learning that certain driver’s side airbags manufactured by Takata Corporation and installed in those cars were defective. The defect in the pre-assembled airbags supplied by Takata related to insufficient gluing of the airbag cover, and a possible incorrect installation of the airbag cushion. While the cost of the recall to remedy this safety defect is not material to us, any product recalls can harm our reputation with clients, particularly if consumers call into question the safety, reliability or performance of our cars. Any such recalls could harm our reputation and result in adverse publicity, lost revenue, delivery delays, product liability claims and other expenses, and could have a material adverse impact on our business, operating results and financial condition.
We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
We may become subject to product liability claims, which could harm our business, operating results and financial condition. The automobile industry experiences significant product liability claims and we have inherent risk of exposure to claims in the event our cars do not perform as expected or malfunction resulting in personal injury or death. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about our cars and business, adversely affecting our reputation and inhibiting or preventing commercialization of future cars which could have a material adverse effect on our brand, business, operating results and financial condition. While we seek to insure against product liability risks, insurance may be insufficient to protect against any monetary claims we may face and will not mitigate any reputational harm. Any lawsuit seeking significant monetary damages may have a material adverse effect on our reputation, business and financial condition. We may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if we face liability for our products and are forced to make a claim under such a policy.
We are exposed to risks in connection with product warranties as well as the provision of services.
A number of our contractual and legal requirements oblige us to provide extensive warranties to our clients, dealers and national distributors. There is a risk that, relative to the guarantees and warranties granted, the calculated product prices and the provisions for our guarantee and warranty risks have been set or will in the future be set too low. There is also a risk that we will be required to extend the guarantee or warranty originally granted in certain markets for legal reasons, or provide services as a courtesy or for reasons of reputation where we are not legally obliged to do so, and for which we will generally not be able to recover from suppliers or insurers.
If we were to lose our Authorized Economic Operator certificate, we may be required to modify our current business practices and to incur increased costs, as well as experience shipment delays.
Because we ship and sell our cars in numerous countries, the customs regulations of various jurisdictions are important to our business and operations. To expedite customs procedure, we applied for, and currently hold, the European Union’s Authorized Economic Operator (AEO) certificate. The AEO certificate is granted to operators that meet certain requirements regarding supply chain security and the safety and compliance with law of the operator’s customs controls and procedures. Operators are audited periodically for continued compliance with the requirements. The AEO certificate allows us to benefit from special expedited customs treatment, which significantly facilitates the shipment of our cars in the various markets where we operate. However, if we were to lose the AEO status, including for failure to meet one of the certification’s requirements, we would be required to change our business practices and to adopt standard customs procedures for the shipment of our cars. This could result in increased costs and shipment delays, which, in turn, could negatively affect our results of operations.
Labor laws and collective bargaining agreements with our labor unions could impact our ability to operate efficiently.
All of our production employees are represented by trade unions, are covered by collective bargaining agreements and/or are protected by applicable labor relations regulations that may restrict our ability to modify operations and reduce costs quickly in response to changes in market conditions. These regulations and the provisions in our collective bargaining agreements

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may impede our ability to restructure our business successfully to compete more efficiently and effectively, especially with those automakers whose employees are not represented by trade unions or are subject to less stringent regulations, which could have a material adverse effect on our results of operations and financial condition.
We are subject to risks associated with exchange rate fluctuations, interest rate changes, credit risk and other market risks.
We operate in numerous markets worldwide and are exposed to market risks stemming from fluctuations in currency and interest rates. The exposure to currency risk is mainly linked to the differences in geographic distribution of our sourcing and manufacturing activities from those in our commercial activities, as a result of which our cash flows from sales are denominated in currencies different from those connected to purchases or production activities. For example, we incur a large portion of our capital and operating expenses in Euros while we receive the majority of our revenues in currencies other than Euro. In addition, foreign exchange movements might also negatively affect the relative purchasing power of our clients which could also have an adverse effect on our results of operations.
We seek to manage risks associated with fluctuations in currency through financial hedging instruments. Although we seek to manage our foreign currency risk in order to minimize any negative effects caused by rate fluctuations, including through hedging activities, there can be no assurance that we will be able to do so successfully, and our business, results of operations and financial condition could nevertheless be adversely affected by fluctuations in market rates, particularly if these conditions persist.
Our financial services activities are also subject to the risk of insolvency of dealers and retail clients, as well as unfavorable economic conditions in markets where these activities are carried out. Despite our efforts to mitigate such risks through the credit approval policies applied to dealers and retail clients, there can be no assurances that we will be able to successfully mitigate such risks, particularly with respect to a general change in economic conditions.
Changes in tax, tariff or fiscal policies could adversely affect demand for our products.

Imposition of any additional taxes and levies designed to limit the use of automobiles could adversely affect the demand for our vehicles and our results of operations. Changes in corporate and other taxation policies as well as changes in export and other incentives given by various governments or import or tariff policies could also adversely affect our results of operations. While we are managing our product development and production operations on a global basis to reduce costs and lead times, unique national or regional standards can result in additional costs for product development, testing, and manufacturing. Governments often require the implementation of new requirements during the middle of a product cycle, which can be substantially more expensive than accommodating these requirements during the design of a new product. The imposition of any additional taxes and levies or change in government policy designed to limit the use of high performance sports cars or automobiles more generally could also adversely affect the demand for our cars. The occurrence of the above may have a material adverse effect on our business, results of operations and financial condition.
We face risks associated with our international operations, including unfavorable regulatory, political, tax and labor conditions and establishing ourselves in new markets, all of which could harm our business.
We currently have international operations and subsidiaries in various countries and jurisdictions in Europe, North America and Asia that are subject to the legal, political, regulatory, tax and social requirements and economic conditions in these jurisdictions. Additionally, as part of our growth strategy, we will continue to expand our sales, maintenance, and repair services internationally. However, such expansion requires us to make significant expenditures, including the establishment of local operating entities, hiring of local employees and establishing facilities in advance of generating any revenue. We are subject to a number of risks associated with international business activities that may increase our costs, impact our ability to sell our cars and require significant management attention. These risks include:
conforming our cars to various international regulatory and safety requirements where our cars are sold, or homologation;
difficulty in establishing, staffing and managing foreign operations;
difficulties attracting clients in new jurisdictions;

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foreign government taxes, regulations and permit requirements, including foreign taxes that we may not be able to offset against taxes imposed upon us in Italy;
fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities we undertake;
our ability to enforce our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as do the United States, Japan and European countries, which increases the risk of unauthorized, and uncompensated, use of our technology;
European Union and foreign government trade restrictions, customs regulations, tariffs and price or exchange controls;
foreign labor laws, regulations and restrictions;
preferences of foreign nations for domestically produced cars;
changes in diplomatic and trade relationships;
political instability, natural disasters, war or events of terrorism; and
the strength of international economies.
If we fail to successfully address these risks, many of which we cannot control, our business, operating results and financial condition could be materially harmed.
Improper conduct of employees, agents, or other representatives could adversely affect our reputation and our business, operating results, and financial condition.

Our compliance controls, policies, and procedures may not in every instance protect us from acts committed by our employees, agents, contractors, or collaborators that would violate the laws or regulations of the jurisdictions in which we operate, including employment, foreign corrupt practices, environmental, competition, and other laws and regulations. Such improper actions could subject us to civil or criminal investigations, and monetary and injunctive penalties. In particular, our business activities may be subject to anti-corruption laws, regulations or rules of other countries in which we operate. If we fail to comply with any of these regulations, it could adversely impact our operating results and our financial condition. In addition, actual or alleged violations could damage our reputation and our ability to conduct business. Furthermore, detecting, investigating, and resolving any actual or alleged violation is expensive and can consume significant time and attention of our executive management.

Our insurance coverage may not be adequate to protect us against all potential losses to which we may be subject, which could have a material adverse effect on our business.
We maintain insurance coverage that we believe is adequate to cover normal risks associated with the operation of our business. However, there can be no assurance that any claim under our insurance policies will be honored fully or timely, our insurance coverage will be sufficient in any respect or our insurance premiums will not increase substantially. Accordingly, to the extent that we suffer loss or damage that is not covered by insurance or which exceeds our insurance coverage, or have to pay higher insurance premiums, our financial condition may be affected.
The requirements of being a U.S. public company may strain our resources and divert management’s attention.
As a public company, we will be required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations adopted by the SEC and the Public Corporation Accounting Oversight Board. Further, compliance with various regulatory reporting requires significant commitments of time from our management and our directors, which reduces the time available for the performance of their other responsibilities. If we are unable to comply with the rules and regulations or are otherwise unable to obtain necessary certifications to financial statements or other disclosures,

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this may materially adversely affect our reputation, lead to additional regulatory enforcement actions, and could adversely affect the value of our common shares.
Failure to establish and maintain effective internal controls in accordance with Section 404 of Sarbanes-Oxley could have a material adverse effect on our business and common share price.
As a public company, we will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of Sarbanes-Oxley (“Section 404”), which will require management assessments and certifications of the effectiveness of our internal control over financial reporting, beginning with our annual report for the year ending December 31, 2016. During the course of our testing, we may identify deficiencies that we may not be able to remedy in time to meet our deadline for compliance with Section 404. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. In addition, under Section 404(b) of Sarbanes-Oxley, our independent registered public accounting firm will be required to report on the effectiveness of our internal control over financial reporting but may not be able or willing to issue an unqualified report. If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of remediation actions and testing or their effect on our operations.
If we are unable to conclude that we have effective internal control over financial reporting, our independent auditors are unable to provide us with an unqualified report as required by Section 404, or we are required to restate our financial statements, we may fail to meet our public reporting obligations and investors could lose confidence in our reported financial information, or the listing of our common shares on the NYSE could be suspended or terminated, any of which could have a negative effect on the trading price of our common shares.
A disruption in our information technology could compromise confidential and sensitive information.
We depend on our information technology and data processing systems to operate our business, and a significant malfunction or disruption in the operation of our systems, or a security breach that compromises the confidential and sensitive information stored in those systems, could disrupt our business and adversely impact our ability to compete. Our ability to keep our business operating effectively depends on the functional and efficient operation of our information, data processing and telecommunications systems, including our car design, manufacturing, inventory tracking and billing and payment systems. We rely on these systems to enable a number of business processes and help us make a variety of day-to-day business decisions as well as to track transactions, billings, payments and inventory. Such systems are susceptible to malfunctions and interruptions due to equipment damage, power outages, and a range of other hardware, software and network problems. Those systems are also susceptible to cybercrime, or threats of intentional disruption, which are increasing in terms of sophistication and frequency. For any of these reasons, we may experience systems malfunctions or interruptions. Although our systems are diversified, including multiple server locations and a range of software applications for different regions and functions, and we are currently undergoing an effort to assess and ameliorate risks to our systems, a significant or large scale malfunction or interruption of any one of our computer or data processing systems could adversely affect our ability to manage and keep our operations running efficiently, and damage our reputation if we are unable to track transactions and deliver products to our dealers and clients. A malfunction that results in a wider or sustained disruption to our business could have a material adverse effect on our business, results of operations and financial condition. In addition to supporting our operations, we use our systems to collect and store confidential and sensitive data, including information about our business, our clients and our employees. As our technology continues to evolve, we anticipate that we will collect and store even more data in the future, and that our systems will increasingly use remote communication features that are sensitive to both willful and unintentional security breaches. Much of our value is derived from our confidential business information, including car design, proprietary technology and trade secrets, and to the extent the confidentiality of such information is compromised, we may lose our competitive advantage and our car sales may suffer. We also collect, retain and use certain personal information, including data we gather from clients for product development and marketing purposes, and data we obtain from employees. In the event of a breach in security that allows third parties access to this personal information, we are subject to a variety of ever-changing laws on a global basis that require us to provide notification to the data owners, and that subject us to lawsuits, fines and other means of regulatory enforcement. Our reputation could suffer in the event of such a data breach, which could cause consumers to purchase their cars from our competitors. Ultimately, any significant compromise in the integrity of our data security could have a material adverse effect on our business.

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Risks Related to this Offering, the Separation and the Investment in our Common Shares
There is no existing trading market for our common shares, and there can be no assurance that a liquid trading market will develop or be sustained which may cause our common stock to trade at a discount from its initial offering price and make it difficult to sell the shares you purchase.
Prior to this offering, there has been no market for our common shares and we cannot predict the extent to which investor interest in us will lead to the development of an active trading market on the NYSE, or otherwise, or how liquid that market might become. If an active trading market does not develop, you may have difficulty selling your common shares at an attractive price, or at all. The initial public offering price for our common shares will be determined by negotiations between the selling stockholder and the representatives of the underwriters, following consultation and discussion with us, and may not be indicative of prices that will prevail in the open market following this offering. See “Underwriting.” Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price you paid in this offering and you may suffer a loss on your investment.
Following the completion of this offering, there will be a limited public float of our common stock, which may cause the price of our common shares to be volatile.
The limited number of common shares being sold by the selling shareholder will be the only shares in the public market following the completion of this offering. As such, there will be a limited “public float” of our common shares in the hands of a relatively small number of holders. Due to our relatively small public float and the limited trading volume of our common shares, purchases and sales of relatively small amounts of our common shares may have a disproportionate effect on the market price of our common shares. This volatility could prevent a shareholder seeking to sell our common shares from being able to sell the shares at or above the price at which the shares were purchased.
The market price and trading volume of our common shares may be volatile, which could result in rapid and substantial losses for our shareholders.
Even if an active trading market develops, the market price of our common shares may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume of our common shares may fluctuate and cause significant price variations to occur. If the market price of our common shares declines significantly, you may be unable to sell your common shares at or above your purchase price, if at all. The market price of our common shares may fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of our common shares, or result in fluctuations in the price or trading volume of our common shares, include:
variations in our operating results, or failure to meet the market’s earnings expectations;
publication of research reports about us or the automotive industry, or the failure of securities analysts to cover our common shares after this offering;
departures of any members of our management team or additions or departures of other key personnel;
adverse market reaction to any indebtedness we may incur or securities we may issue in the future;
actions by shareholders;
changes in market valuations of similar companies;
changes or proposed changes in laws or regulations, or differing interpretations thereof, affecting our business, or enforcement of these laws and regulations, or announcements relating to these matters;
adverse publicity about the automotive industry generally, or particularly scandals relating to the industry, specifically;
litigation and governmental investigations; and
general market and economic conditions.

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The loyalty voting program may affect the liquidity of our common shares and reduce our common share price .
The implementation of our loyalty voting program could reduce the trading liquidity and adversely affect the trading prices of our common shares. The loyalty voting program was intended to reward our shareholders for maintaining long-term share ownership by granting initial shareholders and persons holding our common shares continuously for at least three years the option to elect to receive special voting shares. Special voting shares cannot be traded and, if common shares participating in the loyalty voting program are sold they must be deregistered from the loyalty register and any corresponding special voting shares transferred to us for no consideration ( om niet ). This loyalty voting program is designed to encourage a stable shareholder base and, conversely, it may deter trading by shareholders that may be interested in participating in our loyalty voting program. Therefore, the loyalty voting program may reduce liquidity in our common shares and adversely affect their trading price.
Our separation from FCA may be delayed or may not take place in the manner currently anticipated or at all.
This offering is intended to be part of a series of transactions designed to fully separate Ferrari from FCA, following which FCA would no longer hold any ownership interest in us. Several steps of the Separation will occur following this offering and may be subject to conditions, including necessary corporate and regulatory approvals and they are also subject to market conditions and other uncertainties, including creditor opposition periods. Therefore, the Separation may not be completed in the manner and within the time expected, or at all. If our Separation from FCA is not completed, the benefits we currently expect from the Separation, such as our strategic independence from FCA, would not arise. In that event, FCA will continue to exercise control over all matters requiring shareholder approval, such as adoption of the annual financial statements, declarations of annual dividends, the election and removal of the members of our the Board, capital increases and amendments to our articles of association. See “The Restructuring and Separation Transactions.”
The Separation or future sales of our common shares in the public market or the perception that future sales may occur, could lower our share price.
The market price of our common shares could decline as a result of the distribution of a significant number of common shares in the Separation or because of sales of a large number of common shares available for sale after completion of this offering, or the perception that such sales could occur. We may, in the future, issue stock options or other stock grants to retain and motivate our directors and employees. These issuances of our securities could dilute the voting and economic interests of our existing stockholders. These sales, or the possibility that these sales may occur, also may make it more difficult for us to raise additional capital by selling equity securities in the future, at a time and price that we deem appropriate. We will agree with the underwriters not to issue, sell, or otherwise dispose of or hedge any shares of our common stock, subject to certain exceptions, for the 90-day period following the date of this prospectus, without the prior consent of UBS Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated. Our officers, directors, FCA and Piero Ferrari, will enter into similar lock-up agreements with the underwriters. UBS Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, may, at any time, release us and/or any of our officers, directors and/or stockholders from this lock-up agreement and allow us and them to sell shares of our common stock within this 90-day period. See “Underwriting.”
We cannot predict the timing or size of any future issuances of our common shares or the effect, if any, that future issuances and sales of our common shares may have on the market price of our common shares. Sales or distributions of substantial amounts of our common shares, or the perception that such sales could occur, may cause the market price of our common shares to decline. See “Shares Eligible for Future Sale.”
The interests of FCA, our controlling shareholder, or its shareholders, may differ from the interests of other shareholders.
Upon completion of the offering, FCA, which is partially held by Exor S.p.A., will continue to own approximately 80 percent of our common shares and a higher voting power given that FCA will participate in the loyalty voting program. As a result, prior to the completion of the Separation, FCA will have a controlling influence in matters submitted to a vote of our shareholders, including matters such as adoption of the annual financial statements, declarations of annual dividends, the election and removal of the members of our Board, capital increases and amendments to our articles of association. Following the Separation, we expect that Exor will hold approximately 24 percent of our common shares and over 30 percent of our voting power due to its holding of FCA common shares and mandatory convertible securities and its intention to participate in our loyalty voting program. Both prior to completion of the Separation (by virtue of its ownership and voting interest in FCA) and following the completion of the Separation (by virtue of its ownership and voting interest in us), Exor will have a significant influence over these matters. The interests of these large shareholders may in certain cases differ from those of other shareholders.

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We may have potential conflicts of interest with FCA and Exor.
Questions relating to conflicts of interest may arise between us and FCA, currently our largest shareholder, in a number of areas relating to common shareholdings and management, as well as our past and ongoing relationships. We expect that even after the Separation overlaps will remain among the directors and officers of us and FCA. For example, Mr. Sergio Marchionne, our Chairman, is the Chief Executive Officer of FCA and Mr. Marchionne and certain of our other directors and officers may also be directors or officers of FCA or Exor, the largest shareholder of FCA. These individuals will owe duties both to us and to the other companies that they serve as officers and/or directors. This may raise conflicts as, for example, these individuals review opportunities that may be appropriate or suitable for both us and such other companies, or we pursue business transactions in which both we and such other companies have an interest, such as our arrangement to supply engines for Maserati cars. In addition, Exor, which we expect will be our largest shareholder following the Separation, is also expected to remain FCA’s largest shareholder. Following the Separation, Exor is expected to hold approximately 24 percent of our common shares and approximately 36 percent of the voting power in us, while it holds approximately 29 percent of the common shares and 44 percent of the voting power in FCA. These ownership interests could create actual, perceived or potential conflicts of interest when these parties or our common directors and officers are faced with decisions that could have different implications for us and FCA or Exor, as applicable.
Our loyalty voting program may make it more difficult for shareholders to acquire a controlling interest in Ferrari, change our management or strategy or otherwise exercise influence over us, which may affect the market price of our common shares.
The provisions of our articles of association which establish the loyalty voting program may make it more difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change of control were considered favorably by shareholders holding a majority of our common shares. As a result of the loyalty voting program, a relatively large proportion of the voting power of Ferrari could be concentrated in a relatively small number of shareholders who would have significant influence over us. Prior to completion of the Separation, FCA will have approximately 80 percent of the common shares and a higher voting power in us due to its participation in the loyalty voting program. After giving effect to the Separation, Exor is expected to have a voting interest in Ferrari of over 30 percent due to its holding of FCA common shares and mandatory convertible securities and its intention to participate in the loyalty voting program. Both before and after the Separation, Piero Ferrari is expected to hold 10 percent of our common shares and, after the Separation, to have approximately 14.9 percent of the voting power in our shares. As a result, Exor and Piero Ferrari may exercise significant influence on matters involving our shareholders. Exor and Piero Ferrari and other shareholders participating in the loyalty voting program may have the power effectively to prevent or delay change of control or other transactions that may otherwise benefit our shareholders. The loyalty voting program may also prevent or discourage shareholder initiatives aimed at changing Ferrari’s management or strategy or otherwise exerting influence over Ferrari. The loyalty voting program may also prevent or discourage shareholders’ initiatives aimed at changes in our management. See “The Ferrari Shares, Articles of Association and Terms and Conditions of the Special Voting Shares.”
The interests of Piero Ferrari, our minority shareholder, may differ from the interests of other shareholders.
Upon completion of the offering, Piero Ferrari, the Vice Chairman of Ferrari S.p.A., will continue to own 10 percent of our common shares and will hold a higher voting power given that Piero Ferrari will participate in our loyalty voting program. As a result, he will have influence in matters submitted to a vote of our shareholders, including matters such as adoption of the annual financial statements, declarations of annual dividends, the election and removal of the members of our the Board, capital increases and amendments to our articles of association. The interests of Piero Ferrari may in certain cases differ from those of other minority shareholders. In addition, the sale of substantial amounts of our common shares in the public market (following the expiration of the lock-up period) by Piero Ferrari or the perception that such a sale could occur could adversely affect the prevailing market price of the common shares.
Concentration of ownership among FCA and Piero Ferrari may prevent new investors from influencing significant corporate decisions until completion of the Separation, at which time Exor will have significant influence over us.
Prior to this offering, our majority shareholder, FCA, and Piero Ferrari, together own 100 percent of our outstanding common shares. In particular, Piero Ferrari owns and is expected to continue to own 10 percent of our outstanding common shares. Following this offering, FCA will retain approximately 80 percent of our common shares and, as a result, these shareholders will be able to control all matters requiring shareholder approval, including matters such as adoption of the annual financial statements, declarations of annual dividends, the election and removal of the members of our the Board, capital increases and

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amendments to our articles of association. This control could have the effect of delaying or preventing a change of control of our company or changes in management and will make the approval of certain transactions difficult or impossible without the support of these shareholders until completion of the Separation. In addition, Exor holds approximately 30 percent of the common shares in FCA and due to its participation in FCA’s loyalty voting program holds over 40 percent of the voting power in FCA and is therefore able indirectly to influence our corporate decisions. Following completion of the Separation, Exor is expected to hold approximately 24 percent of our common shares, and over 30 percent of our voting power and Exor will continue to be able to influence our corporate decisions.
We are a Dutch public company with limited liability, and our shareholders may have rights different to those of shareholders of companies organized in the United States.
The rights of our shareholders may be different from the rights of shareholders governed by the laws of U.S. jurisdictions. We are a Dutch public company with limited liability ( naamloze vennootschap ). Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in the Netherlands. The rights of shareholders and the responsibilities of members of our board of directors may be different from the rights of shareholders and the responsibilities of members of our board of directors in companies governed by the laws of other jurisdictions including the United States. In the performance of its duties, our board of directors is required by Dutch law to consider our interests and the interests of our shareholders, our employees and other stakeholders, in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder.
We expect to maintain our status as a “foreign private issuer” under the rules and regulations of the SEC and, thus, are exempt from a number of rules under the Exchange Act of 1934 and are permitted to file less information with the SEC than a company incorporated in the United States.
As a “foreign private issuer,” we are exempt from rules under the Exchange Act of 1934, as amended (“the Exchange Act”) that impose certain disclosure and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our common shares. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act, nor are we required to comply with Regulation FD, which restricts the selective disclosure of material information. Accordingly, there may be less publicly available information concerning us than there is for U.S. public companies.
Our dividend policy will be established in the future by our Board of Directors, and our ability to pay dividends on our common shares may be limited.
Our dividend policy will be determined by our Board of Directors as constituted following completion of this offering and the Separation. Our payment of dividends on our common shares in the future will depend on business conditions, our financial condition, earnings and liquidity, and other factors.
In addition, under our articles of association and Dutch law, dividends may be declared on our common shares only if the amount of equity exceeds the paid up and called up capital plus the reserves that have to be maintained pursuant to Dutch law or the articles of association. Further, even if we are permitted under our articles of association and Dutch law to pay cash dividends on our common shares, we may not have sufficient cash to pay dividends in cash on our common shares.
It may be difficult to enforce U.S. judgments against us.
We are organized under the laws of the Netherlands, and a substantial portion of our assets are outside of the United States. Most of our directors and senior management and our independent auditors are resident outside the United States, and all or a substantial portion of their respective assets may be located outside the United States. As a result, it may be difficult for U.S. investors to effect service of process within the United States upon these persons. It may also be difficult for U.S. investors to enforce within the United States judgments against us predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. In addition, there is uncertainty as to whether the courts outside the United States would recognize or enforce judgments of U.S. courts obtained against us or our directors and officers predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Therefore, it may be difficult to enforce U.S. judgments against us, our directors and officers and our independent auditors.

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Because we are a recently formed company with a limited separate operating history we need to create separate administrative and governance functions.
Because we are a recently formed company we have not been required to maintain many of the administrative functions attendant to a listed company of our size. These include public company financial reporting, internal control and audit, compliance, legal and governance functions. It may take some time for us to employ the persons necessary to staff these administrative functions internally, requiring us to engage external consultants or staff, which may be more expensive. Further, this is a significant increase in the amount of employees we have historically employed for administrative matters, constituting a significant new expense. As a result of this increase in administrative requirements, there may be an adverse effect on our business, operating results and financial condition.
Following the Separation, FCA creditors may seek to hold us liable for certain FCA obligations.
One step of our expected Separation from FCA will include a demerger from FCA of our common shares held by it. In connection with a demerger under Dutch law, the demerged company may continue to be liable for certain obligations of the demerging company that exist at the time of the demerger, but only to the extent that the demerging company fails to satisfy such liabilities. Based on other actions taken as part of the Separation, we do not believe we will retain any liability for obligations of FCA existing at the time of the Separation. Nevertheless, in the event that FCA fails to satisfy obligations to its creditors existing at the time of the demerger, it is possible that those creditors may seek to recover from us, claiming that we remain liable to satisfy such obligations. While we believe we would prevail against any such claim, litigation is inherently costly and uncertain and could have an adverse effect. See “The Restructuring and Separation Transactions.”
Risks Related to Taxation
The Separation is generally intended to qualify as a tax-free transaction for our shareholders from a U.S. federal income tax perspective, but no assurance can be given that our shareholders will receive such tax-free treatment.
The Separation is intended to qualify as a generally tax-free transaction for U.S. federal income tax purposes for holders of common shares sold pursuant to this offering. No statutory, judicial or administrative authority directly discusses how a transaction such as the Separation (including the First Demerger, the Second Demerger and the Merger) should be treated for U.S. federal income tax purposes. In particular, the application of U.S. federal income tax laws to such transactions governed by non-U.S. corporate law is unclear. Accordingly, no assurance can be given that the intended tax treatment will be achieved, or that shareholders (and/or persons that receive the benefit of our common shares) will not incur substantial U.S. federal income tax liabilities in connection with the Separation and related transactions (including that a holder of Ferrari common shares could be required to recognize gain up to the excess of the fair market value of such shares over such holder's adjusted basis in such shares as gain for U.S. federal income tax purposes). In addition, no assurance can be given that any ruling (or similar guidance) from any taxing authority would be sought (or, if sought, granted). For a further description of the expected terms of the Separation, see “The Restructuring and Separation Transactions” below. For a further discussion of the expected U.S. federal income tax consequences of the Separation, see “Tax Consequences—Material U.S. Federal Income Tax Consequences—Tax Consequences of the Separation” below.
The Separation is generally intended to qualify as a tax-free, neutral transaction from an Italian income tax perspective, but no assurance can be given that such tax-free treatment will be achieved.
The Separation is intended to qualify as a tax-free, neutral transaction from an Italian income tax perspective. However, no statutory, judicial or administrative authority directly discusses how a transaction such as the Separation (including the First Demerger, the Second Demerger and the Merger) should be treated for Italian income tax purposes. FCA has therefore applied for an advance tax ruling with the Italian tax authorities (“Tax Ruling”) to seek confirmation that the two Dutch law demergers described in the section “The Restructuring and Separation Transactions” will qualify as tax-free to FCA and its shareholders for Italian income tax purposes. The Tax Ruling has not been issued yet, and no assurance can therefore be given that the intended tax treatment will be achieved. Should the outcome of the Tax Ruling be negative, the Separation (and in particular, the two Dutch law demergers) could be recast as a distribution in kind to FCA’s shareholders, but this should not affect those who were our shareholders (other than FCA) before the two Dutch law demergers. For a further discussion of the expected Italian tax consequences of the Separation, see “Tax Consequences —Material Italian Income Tax Consequences—Tax Consequences of the Separation” below.

29



As a result of the demergers and the merger in connection with the Separation, we might be jointly and severally liable with FCA for certain tax liabilities arisen in the hands of FCA.
Even if the demergers and the merger to be carried out in connection with the Separation were respected as tax-free, neutral transactions from an Italian income tax perspective, under Italian tax law we may still be held jointly and severally liable, as a result of the combined application of the rules governing the allocation of tax liabilities in case of demergers and mergers, with FCA for taxes, penalties, interest and any other tax liability arising in the actions of FCA because of violations of its tax obligations related to tax years prior to the two demergers described in the section “The Restructuring and Separation Transactions.”
There may be potential “Passive Foreign Investment Company” tax considerations for U.S. holders.
Our common shares would be stock of a “passive foreign investment company,” or a PFIC, for U.S. federal income tax purposes with respect to a U.S. holder (as defined in “Tax Consequences—Material U.S. Federal Income Tax Consequences” below) if for any taxable year in which such U.S. holder held our common shares, after the application of applicable “look-through rules” (i) 75 percent or more of our gross income for the taxable year consists of “passive income” (including dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business, as defined in applicable Treasury Regulations), or (ii) at least 50 percent of our assets for the taxable year (averaged over the year and determined based upon value) produce or are held for the production of “passive income.” U.S. persons who own shares of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the dividends they receive from the PFIC, and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.
While we believe that our common shares are not stock of a PFIC for U.S. federal income tax purposes, this conclusion is based on a factual determination made annually and thus is subject to change. Moreover, our common shares may become stock of a PFIC in future taxable years if there were to be changes in our assets, income or operations. See “Tax Consequences—Material U.S. Federal Income Tax Consequences—Tax Consequences of Owning Ferrari Stock—U.S. Holders—PFIC Considerations” for a further discussion.
Tax consequences of the loyalty voting program are uncertain.
No statutory, judicial or administrative authority directly discusses how the receipt, ownership, or disposition of special voting shares should be treated for Italian or U.S. tax purposes and as a result, the tax consequences in those jurisdictions are uncertain.
The fair market value of the special voting shares, which may be relevant to the tax consequences, is a factual determination and is not governed by any guidance that directly addresses such a situation. Because, among other things, our special voting shares are not transferable (other than, in very limited circumstances, together with the associated common shares) and a shareholder will receive amounts in respect of the special voting shares only if we are liquidated, we believe and intend to take the position that the fair market value of each special voting share is minimal. However, the relevant tax authorities could assert that the value of the special voting shares as determined by us is incorrect.
The tax treatment of the loyalty voting program is unclear and shareholders are urged to consult their tax advisors in respect of the consequences of acquiring, owning and disposing of special voting shares. See “Tax Consequences” for a further discussion.

30



USE OF PROCEEDS
We will not receive any proceeds from the sale of common shares in this offering, including any proceeds that the selling shareholder may receive from the exercise by the underwriters of their option to purchase additional common shares from the selling shareholder. The selling shareholder will receive all of the net proceeds from the sale of our common shares offered under this prospectus as well as all proceeds from any sale of common shares if the underwriters exercise their option to purchase additional common shares.
We and the selling shareholder will share in the offering expenses incurred in connection with this offering and any exercise by the underwriters of their option to purchase additional common shares, except that the underwriting discounts and commissions will be borne by the selling shareholder.

31



CAPITALIZATION
The following table sets forth (1) our historical capitalization at June 30, 2015 and (2) our pro forma capitalization at June 30, 2015, which gives effect to (a) the FCA Note of €2.5 billion, which was recognized as a result of the Restructuring, (b) the settlement of the FCA Note, which is assumed to be repaid using proceeds from the issuance of new third party financing and (c) the settlement of deposits in FCA's cash management pools, debt with FCA and receivables from financing activities with FCA on completion of the Separation. For an explanation of the effects of the pro forma adjustments and defined terms, see “Unaudited Pro Forma Condensed Consolidated Financial Information.” We will not receive any proceeds from the sale of common shares in the offering.
You should read this table together with our Interim Condensed Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

 
At June 30, 2015
 
Historical
Pro Forma
 
(€ thousand)
Debt with FCA
428,039


Debt with third parties
138,639

1,966,943

Total Debt
566,678

1,966,943

Equity attributable to owners of the parent
2,586,838

86,838

Equity attributable to non-controlling interest
12,158

12,158

Total Equity
2,598,996

98,996

Total Capitalization (1)
3,165,674

2,065,939

______________________________
(1)    Total capitalization is defined as total debt and total equity.


32



SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following tables set forth selected historical consolidated financial and other data of Ferrari and have been derived from the unaudited Interim Condensed Consolidated Financial Statements, the audited Annual Consolidated Financial Statements, both of which are included elsewhere in this prospectus, and unaudited financial information for 2010 and 2011. This financial information has been prepared in accordance with IFRS.
As explained in “Note on Presentation,” with the exception of the FCA Note and subsequent refinancing (as defined herein), the Restructuring has been retrospectively reflected in the Annual Consolidated Financial Statements as though it had occurred effective January 1, 2012, and reflected in the Interim Condensed Consolidated Financial Statements as though it had occurred effective January 1, 2014. See “Note on Presentation.”
The following information should be read in conjunction with “Note on Presentation,” “Risk Factors,” “Unaudited Pro Forma Condensed Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Interim Condensed Consolidated Financial Statements and the Annual Consolidated Financial Statements included elsewhere in this prospectus. Historical results for any period are not necessarily indicative of results for any future period.
Consolidated Income Statement Data
 
For the three months ended June 30,
 
For the six months ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(€ million, except for per share data)
Net revenues
766

 
729

 
1,387

 
1,349

EBIT
122

 
105

 
218

 
185

Profit before taxes
114

 
106

 
212

 
187

Net profit
76

 
74

 
141

 
128

Attributable to:

 

 

 

     Owners of the parent
75

 
73

 
140

 
126

     Non-controlling interest
1

 
1

 
1

 
2

Basic and diluted earnings per ordinary share (in Euro) (1)

 

 

 

Dividends paid per share (in Euro)

 

 

 

_____________________________
(1)    See Note 12 to the Interim Condensed Consolidated Financial Statements for the calculation of Basic and Diluted earnings per ordinary share.


33



Consolidated Statement of Financial Position Data
 
At June 30,
 
At December 31,
 
2015
 
2014
 
(€ million)
Cash and cash equivalents
258

 
134

Deposits in FCA Group cash management pools (1)
1,098

 
942

Total assets
5,001

 
4,641

Debt
567

 
510

Total equity
2,599

 
2,478

Equity attributable to owners of the parent
2,587

 
2,470

Non-controlling interests
12

 
8

Share capital (2)

 

Ordinary shares issued (in thousands of shares) (2)

 


_____________________________
(1)    Deposits in FCA Group cash management pools relate to our participation in a group-wide cash management system at FCA, where the operating cash management, main funding operations and liquidity investment of the Group are centrally coordinated by dedicated treasury companies with the objective of ensuring effective and efficient management of our funds. Following the Separation, these arrangements will be terminated and we will manage our liquidity and treasury function on a standalone basis.
(2)    See Note 19 to the Interim Condensed Consolidated Financial Statements for the calculation of Share capital and Ordinary shares issued.
Other Statistical Information

For the three months ended June 30,
 
For the six months ended June 30,

2015
 
2014
 
2015
 
2014
Shipments
2,059

 
1,936

 
3,694

 
3,668

Average number of employees for the period
2,942

 
2,833

 
2,922

 
2,825


Consolidated Income Statement Data
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
2011
 
2010
 
(€ million, except per share data)
Net revenues
2,762

 
2,335

 
2,225

 
2,067

 
1,831

EBIT
389

 
364

 
335

 
298

 
295

Profit before taxes
398

 
366

 
334

 
301

 
294

Net profit
265

 
246

 
233

 
196

 
202

Attributable to:
 
 
 
 
 
 
 
 
 
Owners of the parent
261

 
241

 
225

 
188

 
195

Non-controlling interest
4

 
5

 
8

 
8

 
7

Basic and diluted earnings per ordinary share (in Euro) (1)


 


 


 
n.a.

 
n.a.

Dividends paid per share (in Euro)

 

 

 
n.a.

 
n.a.

_____________________________
(1)    See Note 12 to the Annual Consolidated Financial Statements for the calculation of Basic and Diluted earnings per ordinary share.

34




Consolidated Statement of Financial Position Data
 
At December 31,
 
2014
 
2013
 
2012
 
2011
 
2010
 
(€ million, except shares issued)
Cash and cash equivalents
134

 
114

 
100

 
94

 
61

Deposits in FCA Group cash management pools (1)
942

 
684

 
457

 
529

 
513

Total assets
4,641

 
3,895

 
3,465

 
3,369

 
3,051

Debt
510

 
317

 
261

 
522

 
354

Total equity
2,478

 
2,316

 
2,041

 
1,769

 
1,792

Equity attributable to owners of the parent
2,470

 
2,290

 
2,019

 
1,748

 
1,777

Non-controlling interests
8

 
26

 
22

 
21

 
15

Share capital (2)


 


 


 
n.a.

 
n.a.

Ordinary shares issued (in thousands of shares) (2)


 


 


 
n.a.

 
n.a.

_____________________________
(1)    Deposits in FCA Group cash management pools relate to our participation in a group-wide cash management system at FCA, where the operating cash management, main funding operations and liquidity investment of the Group are centrally coordinated by dedicated treasury companies with the objective of ensuring effective and efficient management of our funds. Following the Separation, these arrangements will be terminated and we will manage our liquidity and treasury function on a standalone basis.
(2)    See Note 20 to the Annual Consolidated Financial Statements for the calculation of Share capital and Ordinary shares issued.

Other Statistical Information
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
2011
 
2010
Shipments (in units)
7,255

 
7,000

 
7,405

 
7,195

 
6,573

Average number of employees for the period
2,843

 
2,774

 
2,708

 
2,709

 
2,779



35



UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information (the “Unaudited Pro Forma Condensed Consolidated Financial Information”) at and for the six months ended June 30, 2015 and for the year ended December 31, 2014 has been prepared by applying unaudited pro forma adjustments to (i) the historical interim consolidated statement of financial position and the historical interim consolidated income statement of the Company at and for the six months ended June 30, 2015 included in the Interim Condensed Consolidated Financial Statements and (ii) the historical consolidated income statement of the Company for the year ended December 31, 2014 included in the Annual Consolidated Financial Statements. The Interim Condensed Consolidated Financial Statements and the Annual Consolidated Financial Statements are included elsewhere in this prospectus.
On October 29, 2014, FCA announced its intention to separate Ferrari S.p.A. from FCA through the Separation. The Separation is expected to occur through a series of transactions including (i) an intra-group restructuring which will result in our acquisition of the assets and business of Ferrari North Europe Limited and the transfer by FCA of its 90 percent shareholding in Ferrari S.p.A. to us, (ii) the transfer of Piero Ferrari’s 10 percent shareholding in Ferrari S.p.A. to us, in exchange for Piero Ferrari receiving an equivalent amount of our common shares, (iii) this initial public offering of our common shares, and (iv) the distribution, following the initial public offering, of FCA’s remaining interest in us to its shareholders.
The transactions described above in (i) and (ii) (which are referred to collectively as the “Restructuring”) were completed on through the following steps:
We acquired from Ferrari North Europe Limited (a 100 percent owned subsidiary of Ferrari S.p.A.) its assets and business of providing sales, after-sales and support services for the Ferrari brand and in exchange we issued to Ferrari North Europe Limited a note in the principal amount of € million (the “FNE Note”).

FCA transferred to us all of the issued and outstanding share capital that it previously held in Ferrari S.p.A. (representing 90 percent of the share capital in Ferrari S.p.A.), and in exchange we issued to FCA a note in the principal amount of €    billion (the “FCA Note”).

FCA contributed cash of € billion to us in consideration of the issue to FCA of ____ of our common shares. These common shares were issued at nominal value of € ____ with a share premium of € ____ . The cash proceeds received from FCA were used to settle a portion of the FCA Note, following which the principal outstanding on the FCA Note is €2.5 billion, which, following the application of the net proceeds from the intercompany settlement described below, is expected to be refinanced through third party debt, as further discussed below. We also used € million of the cash proceeds received as a result of issuing shares to FCA to fully repay the FNE Note. As discussed below, the repayment of the FNE Note has no impact on the Unaudited Pro Forma Condensed Consolidated Financial Information.

Piero Ferrari transferred his 10 percent interest in Ferrari S.p.A. to us and in exchange we issued to Piero Ferrari ____ of our common shares. Following a subsequent transaction with FCA, Piero Ferrari will own 10.0 percent of our share capital. We did not receive any cash consideration as part of this transaction.

With the exception of the FCA Note and the subsequent refinancing, the Restructuring has been retrospectively reflected in the Interim Condensed Consolidated Financial Statements and the Annual Consolidated Financial Statements (see Note 1 to the Annual Consolidated Financial Statements and Interim Condensed Consolidated Financial Statements for further details).
The Unaudited Pro Forma Condensed Consolidated Financial Information give effect to the following transactions (together the “Transactions”):
The recognition, as a result of the Restructuring, of the residual principal amount under the FCA Note of €2.5 billion;
The settlement of deposits in FCA's cash management pools, debt with FCA and receivables from financing activities with FCA on completion of the Separation, resulting in net cash proceeds to us of approximately €672 million, which will be used to partially repay the FCA Note.

36




The settlement of the outstanding principal amount of the FCA Note, which is assumed to be repaid using the proceeds from the issuance of new third party financing. Solely for the purposes of the preparation of the Unaudited Pro Forma Condensed Consolidated Financial Information, the net proceeds from the new third party financing are estimated to be approximately €1,828 million, based on the estimated principal amount of the new third party financing of €1,850 million, net of the estimated associated transaction costs of approximately €22 million. The estimated interest rate on the financing has been assumed to be approximately 2 percent.
The acquisition of the Ferrari North Europe Limited assets and business and the FNE Note have no impact on the Unaudited Pro Forma Condensed Consolidated Financial Information as Ferrari North Europe Limited was one of our existing subsidiaries, therefore these intercompany transactions were eliminated in the Interim Condensed Consolidated Financial Statements and the Annual Consolidated Financial Statements.
The unaudited pro forma condensed consolidated income statements include pro forma adjustments which are factually supportable and recurring in nature. The unaudited pro forma condensed consolidated statement of financial position includes pro forma adjustments for items that have a continuing impact and for non-recurring items that are factually supportable and directly attributable to the Transactions. The unaudited pro forma condensed consolidated income statements have been prepared as though the Transactions occurred on January 1, 2014. The unaudited pro forma condensed consolidated statement of financial position has been prepared as though the Transactions occurred on June 30, 2015. The Unaudited Pro Forma Condensed Consolidated Financial Information does not purport to represent what our actual results of operations would have been if the Transactions had actually occurred on the dates assumed, nor is it necessarily indicative of future consolidated results of operations or financial condition. The Unaudited Pro Forma Condensed Consolidated Financial Information is presented for informational purposes only.
We expect to experience changes in our ongoing cost structure when we become an independent, publicly-traded company. In particular, FCA currently provides many corporate functions on our behalf, including but not limited to, finance, legal, treasury, internal audit, investor relations, information technology and human resource activities. Our historical consolidated financial statements include expenses directly incurred by the FCA Group for the procurement of services on our behalf of €5,556 thousand for the six months ended June 30, 2015 ( €10,486 thousand , for the year ended December 31, 2014) and corporate costs re-charged to the Group by FCA of €1,401 thousand for the six months ended June 30, 2015 ( €2,952 thousand for the year ended December 31, 2014). These costs may not be representative of the future costs we will incur as an independent public company.
We currently estimate that the incremental costs we will incur during our transition to being a stand-alone public company will not be material. We have not adjusted the Unaudited Pro Forma Condensed Consolidated Financial Information for these costs because either (i) they are not expected to have an ongoing impact on our operating results or (ii) they would need to be estimated based on subjective judgments and assumptions, and therefore would not be factually supportable. The transition-related costs include, but are not limited to:
incremental finance, legal, treasury, internal audit, investor relations, information technology, human resource and Board of Directors costs relating to operating as a stand-alone public company;
recruiting and relocation costs associated with recruiting key corporate senior management personnel new to our company; and
costs to separate corporate information systems.
During the six months ended June 30, 2015, we earned interest income of €710 thousand (€2,333 thousand for the year ended December 31, 2014) on the deposits in FCA’s cash management pools and incurred financial expenses of €2,879 thousand (€6,141 thousand for the year ended December 31, 2014) on financial liabilities with FCA. These financial assets and liabilities will be settled in cash on completion of the Separation. As a result of such settlement we expect to receive cash of approximately €672 million from FCA, which will be used to partially repay the FCA Note. We have not made any adjustment to the pro forma income statement for such interest income and finance expense.
The Unaudited Pro Forma Condensed Consolidated Financial Information are subject to the assumptions and adjustments described in the accompanying notes. Management believes that these assumptions and adjustments are reasonable under these circumstances and given the information available at this time. However, these adjustments are subject to change

37



as we and FCA finalize the terms of the Separation and the related agreements and the costs of operating as a stand-alone company are determined. The Unaudited Pro Forma Condensed Consolidated Financial Information does not reflect all of the costs of operating as a stand-alone company, including incremental finance, legal, treasury, internal audit, investor relations, information technology, human resource and other similar expenses associated with operating as a stand-alone company.
The Unaudited Pro Forma Condensed Consolidated Financial Information should be read in conjunction with the information contained in “Selected Historical Consolidated Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Interim Condensed Consolidated Financial Statements and the Annual Consolidated Financial Statements appearing elsewhere in this prospectus. All unaudited pro forma adjustments and their underlying assumptions are described more fully in the footnotes to our Unaudited Pro Forma Condensed Consolidated Financial Information.

38




Unaudited Pro Forma Condensed Consolidated Statement of Financial Position
at June 30, 2015

 
 
 
 
Unaudited Pro Forma Adjustments
 
 
 
 
Historical
 
FCA Note
 
Intercompany Settlement
 
Settlement of FCA Note
 
Pro Forma at June 30, 2015
 
 
(€ thousand)
 
 
 
 
(A)
 
(B)
 
(C)
 
 
Assets
 
 
 
 
 
 
 
 
 
 
Goodwill
 
787,178

 

 

 

 
787,178

Intangible assets
 
282,683

 

 

 

 
282,683

Property, plant and equipment
 
588,697

 

 

 

 
588,697

Investments and other financial assets
 
48,351

 

 

 

 
48,351

Deferred tax assets
 
148,707

 

 

 

 
148,707

Total non-current assets
 
1,855,616

 

 

 

 
1,855,616

Inventories
 
352,425

 

 

 

 
352,425

Trade receivables
 
154,290

 

 

 

 
154,290

Receivables from financing activities
 
1,182,544

 

 
(1,340
)
 

 
1,181,204

Current tax receivables
 
10,159

 

 

 

 
10,159

Other current assets
 
83,047

 

 

 

 
83,047

Current financial assets
 
6,523

 

 

 

 
6,523

Deposits in FCA’s cash management pools
 
1,098,395

 

 
(1,098,395
)
 

 

Cash and cash equivalents
 
257,527

 

 
671,696

 
(671,696
)
 
257,527

Total current assets
 
3,144,910

 

 
(428,039
)
 
(671,696
)
 
2,045,175

Total assets
 
5,000,526

 

 
(428,039
)
 
(671,696
)
 
3,900,791

 
 
 
 
 
 
 
 
 
 
 
Equity and liabilities
 
 
 
 
 
 
 
 
 
 
Equity attributable to owners of the parent
 
2,586,838

 
(2,500,000
)
 

 

 
86,838

Non-controlling interest
 
12,158

 

 

 

 
12,158

Total equity
 
2,598,996

 
(2,500,000
)
 

 

 
98,996

 
 
 
 
 
 
 
 
 
 
 
Employee benefits
 
77,500

 

 

 

 
77,500

Provisions
 
139,493

 

 

 

 
139,493

Deferred tax liabilities
 
22,713

 

 

 

 
22,713

Debt with FCA
 
428,039

 
2,500,000

 
(428,039
)
 
(2,500,000
)
 

Debt with third parties
 
138,639

 

 

 
1,828,304

 
1,966,943

Other liabilities
 
669,701

 

 

 

 
669,701

Other financial liabilities
 
165,833

 

 

 

 
165,833

Trade payables
 
577,939

 

 

 

 
577,939

Current tax payables
 
181,673

 

 

 

 
181,673

Total equity and liabilities
 
5,000,526

 

 
(428,039
)
 
(671,696
)
 
3,900,791

______________________________
(A)
This adjustment reflects the residual principal amount under the FCA Note obligation of € 2.5 billion incurred in connection with the Restructuring.
(B)
This adjustment reflects the anticipated settlement of deposits in FCA's cash management pools, debt with FCA and receivables from financing activities with FCA which will be settled in cash on completion of the Separation. Trade intercompany receivables and payables will be settled in the normal course of business. The net cash of €671.7 million will be used to partially settle the residual principal amount under the FCA Note.
(C)
This adjustment reflects the anticipated settlement of the €2.5 billion FCA Note which is assumed to be repaid using the proceeds from the intercompany settlement and, for the remainder, from the issuance of new third party financing. Solely for the purposes of the preparation of the Unaudited Pro Forma Condensed Consolidated Financial Information, the net proceeds from the new third party financing are estimated to be approximately €1,828 million, based on the estimated principal amount of the new third party financing of €1,850 million, net of the estimated associated transaction costs of approximately €22 million. The estimated interest rate on the financing has been assumed to be approximately 2 percent.

39



Unaudited Pro Forma Condensed Consolidated Income Statement
for the six months ended June 30, 2015

 
 
 
 
Unaudited Pro Forma Adjustments
 
 
 
 
Historical
 
Settlement of FCA Note
 
Unaudited Pro Forma
 
 
(€ thousand)
 
 
 
 
(D)
 
 
Net revenues
 
1,386,737

 

 
1,386,737

Cost of sales
 
721,738

 

 
721,738

Selling, general and administrative costs
 
152,100

 

 
152,100

Research and development costs
 
291,106

 

 
291,106

Other expenses, net
 
3,788

 

 
3,788

EBIT
 
218,005

 

 
218,005

Net financial (expenses)/income
 
(5,962
)
 
(20,650
)
 
(26,612
)
Profit before taxes
 
212,043

 
(20,650
)
 
191,393

Income tax expense
 
71,064

 
(5,679
)
 
65,385

Net profit
 
140,979

 
(14,971
)
 
126,008

Net profit attributable to:
 

 


 


Owners of the parent
 
139,634

 
(14,971
)
 
124,663

Non-controlling interests
 
1,345

 

 
1,345

Basic and diluted earnings per share (in €) (E)
 


 


 


______________________________
(D)
This adjustment reflects:
the additional finance expense which we expect to incur on the issuance of approximately €1,850 million of new third party financing in connection with the settlement of the FCA Note. As previously explained, solely for the purposes of the preparation of the Unaudited Condensed Consolidated Pro Forma Financial Information, we have estimated the interest rate on the borrowings to be approximately 2 percent and the associated estimated transaction costs to be €22 million. The transaction costs are assumed to be amortized over 5 years. Interest expense may be higher or lower depending on the actual interest rate of the borrowings that we enter into. A 10 basis points change to the annual interest rate would change interest expense by approximately €1.9 million on an annual basis.
the tax effect on such adjustment has been calculated using the statutory tax rate of 27.5 percent that would be applicable to the entity incurring the debt.
(E)
Our historical and pro forma earnings per share and pro forma weighted average shares outstanding are based on our post transaction capital structure, as a result of which we will have ______ common shares outstanding.


40



Unaudited Pro Forma Condensed Consolidated Income Statement
for the year ended December 31, 2014

 
 
 
 
Unaudited Pro Forma Adjustments
 
 
 
 
Historical
 
Settlement of FCA Note
 
Unaudited Pro Forma
 
 
(€ thousand)
 
 
 
 
(D)
 
 
Net revenues
 
2,762,360

 

 
2,762,360

Cost of sales
 
1,505,889

 

 
1,505,889

Selling, general and administrative costs
 
300,090

 

 
300,090

Research and development costs
 
540,833

 

 
540,833

Other expenses, net
 
26,080

 

 
26,080

EBIT
 
389,468

 

 
389,468

Net financial (expenses)/income
 
8,765

 
(41,300
)
 
(32,535
)
Profit before taxes
 
398,233

 
(41,300
)
 
356,933

Income tax expense
 
133,218

 
(11,358
)
 
121,860

Net profit
 
265,015

 
(29,942
)
 
235,073

Net profit attributable to:
 

 

 

Owners of the parent
 
261,371

 
(29,942
)
 
231,429

Non-controlling interests
 
3,644

 

 
3,644

Basic and diluted earnings per share (in €) (E)
 


 


 



______________________________
(D)
This adjustment reflects:
the additional finance expense which we expect to incur on the issuance of approximately €1,850 million of new third party financing in connection with the settlement of the FCA Note. As previously explained, solely for the purposes of the preparation of the Unaudited Condensed Consolidated Pro Forma Financial Information, we have estimated the interest rate on the borrowings to be approximately 2 percent and the associated estimated transaction costs to be €22 million. The transaction costs are assumed to be amortized over 5 years. Interest expense may be higher or lower depending on the actual interest rate of the borrowings that we enter into. A 10 basis points change to the annual interest rate would change interest expense by approximately €1.9 million on an annual basis.
the tax effect on such adjustment has been calculated using the statutory tax rate of 27.5 percent that would be applicable to the entity incurring the debt.
(E)
Our historical and pro forma earnings per share and pro forma weighted average shares outstanding are based on our post transaction capital structure, as a result of which we will have ______ common shares outstanding.
    

41



MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read together with the information included under “Business,” “Selected Historical Consolidated Financial and Other Data,” the Annual Consolidated Financial Statements, the Interim Condensed Consolidated Financial Statements and the Unaudited Pro Forma Condensed Consolidated Financial Information included elsewhere in this prospectus. This discussion includes forward-looking statements, and involves numerous risks and uncertainties, including, but not limited to, those described under “Cautionary Statements Concerning Forward—Looking Statements” and “Risk Factors.” Actual results may differ materially from those contained in any forward looking statements. Unless otherwise indicated or the context otherwise requires, references to “we,” “our,” “us,” “the Group” and the “Company” in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refer to Ferrari.
Overview
Ferrari is among the world’s leading luxury brands focused on the design, engineering, production and sale of the world’s most recognizable luxury performance sports cars. Our brand symbolizes luxury, exclusivity, innovation, state-of-the-art sporting performance and Italian design and engineering heritage. Our name and history and the image enjoyed by our cars are closely associated with our Formula 1 racing team, Scuderia Ferrari, the most successful team in Formula 1 history. From the inaugural year of Formula 1 in 1950 through the present, Scuderia Ferrari has won 224 Grand Prix races, 16 Constructor World titles and 15 Drivers’ World titles, including most recently the Constructor World title in 2008. We believe our history of excellence, technological innovation and defining style transcends the automotive industry, and is the foundation of the Ferrari brand and image. We design, engineer and produce our cars in Maranello, Italy, and sell them in over 60 markets worldwide through a network of 182 authorized dealers operating 204 points of sale.
We believe our cars are the epitome of performance, luxury and styling. We currently sell nine models, including seven sports cars (458 Italia, 488 GTB, 458 Spider, 488 Spider, F12berlinetta and our special series 458 Speciale and 458 Speciale A) and two GT cars (California T and FF). In March 2015, we launched the 488 GTB, which is replacing the 458 Italia and, in September 2015, we launched the 488 Spider, our latest sports car, which is replacing the 458 Spider. We expect to gradually replace our 458 models with successor 488 models during 2015 and the next several years. We also produce a limited edition supercar, LaFerrari, and very limited editions series ( Fuoriserie ) and one-off cars.
In 2014, we shipped 7,255 cars, and recorded net revenues of €2,762 million, net profit of €265 million, adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) of €693 million and earnings before interest and taxes (EBIT) of €389 million. For additional information regarding Adjusted EBITDA, which is a non-GAAP measure, including a reconciliation of Adjusted EBITDA to net profit, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Non-GAAP Financial Measures-EBITDA and Adjusted EBITDA.”
We pursue a low volume production strategy in order to maintain a reputation of exclusivity and scarcity among purchasers of our cars and deliberately monitor and maintain our production volumes and delivery wait-times to promote this reputation. We divide our regional markets into EMEA, Americas, Greater China and Rest of APAC, representing respectively 45 percent, 34 percent, nine percent and 12 percent of units shipped in 2014. In recent years we have allocated a higher proportion of shipments to the Middle East and Greater China and, to a lesser extent, the Americas and a lower proportion to Europe, reflecting changes in relative demand as part of our strategy to manage waiting lists and maintain product exclusivity.
We license the Ferrari brand to a select number of producers and retailers of luxury and lifestyle goods, and we sell Ferrari-branded merchandise through a network of 20 franchised and 12 owned Ferrari stores and on our website. As one of the world’s most recognized premium luxury brands, we believe we are well positioned to selectively expand the presence of the Ferrari brand in attractive and growing lifestyle categories consistent with our image, including sportswear, watches, accessories, consumer electronics and theme parks which we believe enhance the brand experience of our loyal following of clients and Ferrari enthusiasts.
We focus our marketing and promotion efforts in the investments we make in our racing activities, in particular Scuderia Ferrari’s participation in the Formula 1 World Championship, which is one of the most watched annual sports series in the world, with approximately 425 million television viewers annually. Although our most recent Formula 1 world title was seven years ago, we are enhancing our focus on Formula 1 activities with the goal of improving recent racing results and restoring our

42



historical position as the premier racing team in Formula 1. We believe that these activities support the strength and awareness of our brand among motor enthusiasts, clients and the general public.
We will continue focusing our efforts on protecting and enhancing the value of our brand to preserve our strong financial profile and participate in the premium luxury market growth. We intend to selectively pursue controlled and profitable growth in existing and emerging markets while expanding the Ferrari brand to carefully selected lifestyle categories.
Key Factors Affecting Results
Shipments . Our results of operations depend on the achievement of shipment targets established in our budgets and business plans. One of the performance indicators we monitor is shipment volumes, which represent the number of cars we ship to third parties in a given period and which drive net revenues. We recognize revenues from car shipments once it is probable that the economic benefits associated with a transaction will flow to the Group and the revenue can be reliably measured. Revenue is recognized when the risks and rewards of ownership are transferred to our dealers, the sales price is agreed or determinable and collectability is reasonably assured; this generally corresponds to the date on which the cars are released to the carrier responsible for transporting them to dealers.
In general, our shipments do not vary based on changes in demand. Rather, we tend to ship based on volume targets established under our low volume strategy. As part of this strategy, we seek to manage waiting lists in the various markets in which we operate to respond appropriately to relative levels of demand while being sensitive to local client expectations in those markets. In certain markets, we believe that waiting lists have promoted our products’ sense of exclusivity; accordingly we monitor and manage such waiting lists to maintain such exclusivity while ensuring that we do not jeopardize client satisfaction.
Prior to 2013, our production volumes were determined by plant capacity and as a result of increases in productivity, shipments increased each year from 2010 to 2012. In the year ended December 31, 2012, we shipped 7,405 units, representing a record year. In May 2013, we announced our decision to limit the number of cars sold, to approximately 7,000 per year in order to maintain a reputation of exclusivity among purchasers of our cars. Our strategic business plan reflects a continuation of the low volume strategy, while responding to growing demand in emerging markets and from demographic changes as the size and spending capacity of our target clients grows, gradually increasing shipments to approximately 9,000 units per year by 2019.

43



The following table sets forth our shipments by geographic location:
(Number of cars and % of total cars)
 
For the six months ended June 30,
 
For the years ended December 31,
 
 
2015
 
%
 
2014
 
%
 
2014
 
%
 
2013
 
%
 
2012
 
%
EMEA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UK
 
456

 
12.3
%
 
408

 
11.1
%
 
705

 
9.7
%
 
686

 
9.8
%
 
686

 
9.3
%
Germany
 
214

 
5.8
%
 
353

 
9.6
%
 
616

 
8.5
%
 
659

 
9.4
%
 
755

 
10.2
%
Switzerland
 
155

 
4.2
%
 
181

 
4.9
%
 
332

 
4.6
%
 
350

 
5.0
%
 
366

 
4.9
%
Italy
 
139

 
3.8
%
 
132

 
3.6
%
 
243

 
3.3
%
 
206

 
2.9
%
 
318

 
4.3
%
France
 
129

 
3.5
%
 
138

 
3.8
%
 
253

 
3.5
%
 
273

 
3.9
%
 
330

 
4.5
%
Middle East (1)
 
185

 
5.0
%
 
232

 
6.3
%
 
521

 
7.2
%
 
472

 
6.7
%
 
423

 
5.7
%
Rest of EMEA (2)
 
320

 
8.7
%
 
349

 
9.5
%
 
604

 
8.3
%
 
663

 
9.5
%
 
825

 
11.1
%
Total EMEA
 
1,598

 
43.3
%
 
1,793

 
48.8
%
 
3,274

 
45.1
%
 
3,309

 
47.3
%
 
3,703

 
50.0
%
Americas (3)
 
1,287

 
34.8
%
 
1,199

 
32.7
%
 
2,462

 
33.9
%
 
2,382

 
34.0
%
 
2,208

 
29.8
%
Greater China (4)
 
261

 
7.1
%
 
289

 
7.9
%
 
675

 
9.3
%
 
572

 
8.2
%
 
789

 
10.7
%
Rest of APAC (5)
 
548

 
14.8
%
 
387

 
10.6
%
 
844

 
11.7
%
 
737

 
10.5
%
 
705

 
9.5
%
Total
 
3,694

 
100.0
%
 
3,668

 
100.0
%
 
7,255

 
100.0
%
 
7,000

 
100.0
%
 
7,405

 
100.0
%
______________________________
(1) Middle East includes the United Arab Emirates, Saudi Arabia, Bahrain, Lebanon, Qatar, Oman and Kuwait.
(2) Rest of EMEA includes Africa and the other European markets not separately identified.
(3) Americas includes the Unites States of America, Canada, Mexico, the Caribbean and Central and South America.
(4) Greater China includes China, Hong Kong and Taiwan.
(5) Rest of APAC mainly includes Japan, Australia, Singapore, Indonesia and South Korea.
We target our products to the upper end of the luxury car segment and buyers of our cars tend to belong to the wealthiest segment of the population. As the size and spending capacity of our target client base has grown significantly in recent years, our addressable market and the sense of exclusivity fostered by our low volume strategy have been further enhanced. In response, we have expanded our distribution capabilities and sought to rebalance the geographic distribution of shipments from several traditional markets, particularly in Europe, to growing markets in Asia, particularly China and the Middle East. For example, in 1993, 90 percent of our cars were sold in Italy, Germany and the United States; those markets now represent less than half of our unit shipments. Furthermore, the profitability of our cars may vary from market to market. Given that our shipment strategy is flexible, we are able to adjust shipment allocations across markets to respond to changes in our key markets.
Research, Development and Product Lifecycle . The design and development process for a new model currently takes approximately 40 months (approximately 33 months for modified, or “M” versions of existing models, depending on the modifications), measured from the beginning of the development project to the start of production. The first stage of the product development phase is the research phase. In this phase, we research the specifications of new models that we believe will appeal to our clients and will be commercially viable. Costs we incur for developments for car project production and related components, engines and systems are recognized as an asset if, and only if, both of the following conditions under IAS 38 - Intangible Assets are met: that development costs can be measured reliably and that the technical feasibility of the product, volumes and pricing support the view that the development expenditure will generate future economic benefits. Capitalized development costs include all direct and indirect costs that may be directly attributed to the development process. Capitalized development costs are amortized on a straight-line basis from the start of production over the estimated lifecycle of the model and the useful life of the components (generally between four and eight years). All other research and development costs are expensed as incurred.
We also incur research and development expenses in connection with Formula 1 racing activities, including initiatives to maximize the performance, efficiency and safety of our racing cars. While we develop these technologies for initial use in our Formula 1 racing car, we seek to transfer these components and technologies, where appropriate, for use in our new models. Technological developments and changes in the regulations of the Formula 1 World Championship lead us to design, develop and construct a new racing car each year. Such costs are expensed in the income statement as incurred and classified as research and development costs. Research and development costs for Formula 1 activities can vary from year to year, often significantly, and may be difficult to predict because they are subject, among other things, to changes in race regulations and the need to respond to our car’s performance relative to other racing teams.

44



For the six months ended June 30, 2015, we capitalized development costs of €75 million and recognized amortization of capitalized development costs of €56 million (compared to €67 million and €62 million for the six months ended June 30, 2014). For the year ended December 31, 2014, we capitalized development costs of €145 million, and recognized amortization of capitalized development costs of €125 million (compared to €93 million and €120 million, respectively, for the year ended December 31, 2013, and €84 million and €98 million, respectively, for the year ended December 31, 2012).
For the six months ended June 30, 2015, we expensed research and development costs of €235 million (€214 million for the six months ended June 30, 2014). For the year ended December 31, 2014, we expensed research and development costs of €415 million (€359 million for 2013 and €333 million for 2012).
Our results of operations are dependent on the comparative success of our product offering from period to period. Our models typically have a lifecycle of four to five years. After the fourth or fifth year, a significantly modified version is released. While the modified version may be based on the same platform as its predecessor, the increased technological content of the car, new design and other novel features lead us to consider the model as a new car. A portion of our research and development efforts are related to the development of the various components used in our models, and in particular, electronic and mechanical components. Of the total research and development costs for the six months ended June 30, 2015, which were not eligible for capitalization, and as such were expensed, €10 million related to research on components (€9 million for the six months ended June 30, 2014). Of the 2014 total research and development costs, which were not eligible for capitalization, and as such were expensed, €20 million related to the research on components (€20 million for 2013 and €16 million for 2012). For the six months ended June 30, 2015, we capitalized development costs relating to components of €4 million (€4 million for the six months ended June 30, 2014). In 2014, we capitalized development costs relating to components of €15 million (nil for 2013 and 2012). Our new and modified models generally include new technology content, part of which is related to the output from the component research and development efforts. Our continued focus on component development has the objective of reducing the costs to develop new and modified models.
Demand for our cars tends to be highest in the first year or two from a car’s launch, while in the latter two years demand is generally lower as our clients tend to focus on more recently introduced cars. We believe that our relatively short and predictable lifecycle supports both new car sales and the value of existing models both in the primary and resale markets. We also believe that this lifecycle ensures that our products remain responsive to the expectations of our clients. With the exception of the years in which we renew our product range, our research and development expenditure (excluding Formula 1 research and development) does not normally fluctuate significantly from period to period. As a result of our strategy to update our product range, we expect research and development expenditure to peak in 2015 and in any future years in which we have significant renewals of the product range.
Car Profitability . The relative profitability of the cars we sell tends to vary depending on a number of factors including engine size, exclusivity of the offering, content of the car and the geographic market in which it is sold. Our products equipped with V12 engines have historically commanded a higher price, and have therefore been more profitable than those equipped with the V8 engine. At June 30, 2015 our V12 product offering included the LaFerrari, the F12berlinetta and the FF, our current V8 product offering includes the 458 Italia, the 458 Spider, the 458 Speciale and the 458 Speciale Aperta (also referred to as 458 Speciale A) (both of which we refer to as the 458 VS), 488 GTB and the California T. Our total shipments (excluding LaFerrari shipments) represented by V12 models increased from 20.6 percent in 2012 to 26.0 percent in 2013, driven by an increase in shipments of the F12berlinetta, then decreased to 24.3 percent in 2014, primarily driven by an increase in V8 model shipments. Our total shipments (excluding shipments of LaFerrari and the FXX K, a special racing car that may only be used on track, deliveries of which started in the second quarter of 2015) represented by V12 models decreased from 29.2 percent for the six months ended June 30, 2014 to 19.2 percent in for the six months ended June 30, 2015, mainly driven by a decrease in shipments of the F12berlinetta. Our recent trend towards a relatively higher proportion of shipments of V8 model sales as compared to V12 models is expected to continue over the next few years based on our current and expected product offerings and anticipated growth plans, and is consistent with industry trends toward cars with smaller displacement and more fuel efficient engines, even among high performance cars.
The exclusivity of a particular product offering is also a relevant factor in its profitability. For example, in November 2013, we launched the LaFerrari, our latest limited edition supercar, which was planned for a total production run of only 499 units. In light of the exclusivity of the offering, along with the “supercar” advanced technological and design content, LaFerrari has a sales price in excess of €1 million, which is much higher than other models in the Ferrari product range. Therefore, our 2014 and 2015 net revenues have benefited significantly from shipments of LaFerrari. We expect to complete the production run of the LaFerrari in early 2016. In general, more exclusive offerings generate higher net revenues and provide better margins than those generated on shipments of range models (which include Sports and GT models, V8 and V12 models and represent

45



the core of our product offering) and special series cars. Similarly, our limited edition cars which we launch from time to time are typically sold at a significantly higher price point than our range models and therefore they benefit our results in the periods in which they are sold.
We seek to increase over time the average price point of our range models and special series by continually improving performance, technology and other features, and by leveraging the scarcity value resulting from our low volume strategy. Furthermore, the content of the cars we sell can be customized through our interior and exterior personalization program, which can be further enhanced through bespoke specifications. Incremental revenues from personalization are a particularly favorable factor of our pricing and product mix, due to the fact that we generate a margin on each additional option selected by the client.
Maserati Engine Volumes . In 2011, we began producing a new family of V6 engines for Maserati for use in their cars. The net revenues associated with sales of these engines correspond directly to Maserati production volumes. In order to meet our obligations under our agreement with Maserati, we constructed a new production line dedicated to the Maserati V6 engine, which was funded by Maserati.
Net revenues generated from the Maserati engine shipments decreased from €121 million for the six months ended June 30, 2014, to €98 million for the six months ended June 30, 2015, primarily driven by a 20.9 percent decrease in the number of engines shipped. This reduction followed an extended period in which net revenues from Maserati engines increased significantly. Net revenues generated from the Maserati engine shipments increased from €50 million for 2012, to €163 million for 2013 and €251 million for 2014, primarily driven by a 242.4 percent and 70.4 percent increase in the number of engines shipped from 2012 to 2013 and from 2013 to 2014, respectively. The Separation has no impact on our contract with Maserati.
Cost of Sales . Cost of sales comprises expenses incurred in the manufacturing and distribution of cars and parts, including engines rented to other Formula 1 racing teams. Costs of materials, components and labor are the most significant elements of our cost of sales. The remaining costs principally include depreciation, amortization, insurance and transportation costs. Cost of sales also includes warranty, maintenance and product-related costs, which are estimated and recorded at the time of shipment of the car. Expenses that are directly attributable to our financial services companies, including the interest expenses related to their financing as a whole and provisions for risks and write-downs of assets, are also reported in cost of sales.
We purchase a variety of components (including mechanical, steel, aluminum, electrical and electronic, plastic components as well as casting and tires), raw materials (the most significant of which is aluminum) and supplies, and we incur costs of utilities, logistics and other services from numerous suppliers in the manufacture of our cars. Fluctuations in cost of sales are primarily related to the number of cars we produce and sell along with shifts in car mix, as newer models generally have more technologically advanced components and enhancements and therefore higher costs per unit. Supercars and limited edition cars (fuoriserie) also tend to have higher costs per unit but these higher costs tend to be more than offset by higher sales prices. Cost of sales are also affected, to a lesser extent, by fluctuations of certain raw material prices, although, we typically seek to manage these costs and minimize their volatility through the use of fixed price long-term purchase contracts.
In recent years, management has made efforts to achieve technical and commercial efficiencies. In particular, commercial efficiencies have been achieved through negotiating discounts where appropriate and entering into long-term contracts with suppliers, who commit upfront to passing on to us a portion of the efficiencies they achieve in performing our supply contract. Furthermore, efforts are made to award new business to existing suppliers, in order to negotiate favorable pricing. Technical efficiencies include efforts made to produce components using innovative, less expensive materials without compromising the components’ performance. In order to achieve these technical efficiencies, we perform in-house research and development activities and we invite our suppliers to present us with solutions that they have developed.
As cost of sales also includes the depreciation of plant and equipment, cost of sales are affected by product launches, which trigger the commencement of depreciation of plant and equipment acquired specifically for the production of a certain model.
Effects of Foreign Currency Exchange Rates . We are affected by fluctuations in foreign currency exchange rates (i) through translation of foreign currency financial statements into Euro in consolidation, which we refer to as the translation impact, and (ii) through transactions by entities in the Group in currencies other than their own functional currencies, which we refer to as the transaction impact.
Translation impacts arise in preparation of the consolidated financial statements; in particular, we present our consolidated financial statements in Euro, while the functional currency of each of our subsidiaries depends on the primary

46



economic environment of that entity. In preparing the consolidated financial statements, we translate assets and liabilities measured in the functional currency of the subsidiaries into Euro using the foreign currency exchange rate prevailing at the balance sheet date, while we translate income and expenses using the average foreign currency exchange rates for the period covered. Accordingly, fluctuations in the foreign currency exchange rate of the functional currencies of our entities against the Euro impacts our results of operations.
Transaction impacts arise when our entities conduct transactions in currencies other than their own functional currency. We are therefore exposed to foreign currency risks in connection with scheduled payments and receipts in multiple currencies.
Our costs are primarily denominated in Euro, while our net revenues may be denominated in Euro, U.S. Dollars, Japanese Yen, Chinese Yuan or other currencies. In general, for the unhedged portion of our net revenues, an appreciation of the U.S. Dollar against the Euro would positively impact our net revenues and results of operations.
As part of the FCA Group, we have applied the FCA Group policy, which contemplates the use of derivative financial instruments to hedge foreign currency exchange rate risk. In particular, we have used derivative financial instruments as cash flow hedges for the purpose of fixing the foreign currency exchange rate at which a predetermined proportion of forecasted transactions denominated in foreign currencies will be accounted for. Accordingly, our results of operations have not been fully exposed to fluctuations in foreign currency exchange rates.
Regulation . We ship our cars throughout the world and are therefore subject to a variety of laws and regulations. These laws regulate our cars, including their emissions, fuel consumption and safety, and our manufacturing facilities. As we are currently a small volume manufacturer, in certain jurisdictions we benefit from certain regulatory exemptions, including less stringent emissions caps. Developing, engineering and producing cars which meet the regulatory requirements, and can therefore be sold in the relevant markets, requires a significant expenditure of resources.
Critical Accounting Estimates
The Annual Consolidated Financial Statements and the Interim Condensed Consolidated Financial Statements are prepared in accordance with IFRS which require the use of estimates, judgments and assumptions that affect the carrying amount of assets and liabilities, the disclosure of contingent assets and liabilities and the amounts of income and expenses recognized. The estimates and associated assumptions are based on elements that are known when the financial statements are prepared, on historical experience and on any other factors that are considered to be relevant.
The estimates and underlying assumptions are reviewed periodically and continuously by the Group. If the items subject to estimates do not perform as assumed, then the actual results could differ from the estimates, which would require adjustment accordingly. The effects of any changes in estimate are recognized in the consolidated income statement in the period in which the adjustment is made, or prospectively in future periods.
The items requiring estimates for which there is a risk that a material difference may arise in respect of the carrying amounts of assets and liabilities in the future are discussed below.
Allowance for doubtful accounts
The allowances for doubtful accounts reflect management’s estimate of losses inherent in the dealer and end-client credit portfolio. The allowances for doubtful accounts are based on management’s estimation of the losses to be incurred, which derives from past experience with similar receivables, current and historical past due amounts, write-offs and collections, and careful monitoring of portfolio credit quality.
At December 31, 2014, the Group had gross receivables from financing activities of €1,238 million (€873 million at December 31, 2013) and allowances for doubtful accounts of €14 million at December 31, 2014 or 1.1 percent of the gross balance (€10 million at December 31, 2013, or 1.2 percent of the gross balance). Provisions for doubtful accounts charged to the consolidated income statement as cost of sales were €7 million for the year ended December 31, 2014 (€4 million for the year ended December 31, 2013 and €8 million for year ended December 31, 2012).
At December 31, 2014, the Group had gross trade receivables of €198 million (€236 million at December 31, 2013) and allowances for doubtful accounts of €15 million, or 7.4 percent of the gross trade receivables balance (€30 million at December 31, 2013, or 12.8 percent of the gross trade receivables balance). Provisions for doubtful accounts charged to the consolidated

47



income statement as selling, general and administrative costs were €6 million for the year ended December 31, 2014 (€11 million for the year ended December 31, 2013 and €10 million for year ended December 31, 2012).
Should economic conditions worsen resulting in an increase in default risk, or if other circumstances arise, the estimates of the recoverability of amounts due to the Group could be overstated and additional allowances could be required, which could have an adverse impact on the Group’s results.
Recoverability of non-current assets with definite useful lives
Non-current assets with definite useful lives include property, plant and equipment and intangible assets. Intangible assets with definite useful lives mainly consist of capitalized development costs.
The Group periodically reviews the carrying amount of non-current assets with definite useful lives when events and circumstances indicate that an asset may be impaired. Impairment tests are performed by comparing the carrying amount and the recoverable amount of the cash-generating unit (“CGU”). The recoverable amount is the higher of the CGU’s fair value less costs of disposal and its value in use. In assessing the 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 CGU.
For the period covered by the Annual Consolidated Financial Statements and the Interim Condensed Consolidated Financial Statements, the Group has not recognized any impairment charges for non-current assets with definite useful lives.
Recoverability of goodwill
In accordance with IAS 36 - Impairment of Assets, goodwill is not amortized and is tested for impairment annually or more frequently if facts or circumstances indicate that the asset may be impaired.
As the Group is composed of one operating segment, goodwill is tested at the Group level which represents the lowest level within the Group at which goodwill is monitored for internal management purposes in accordance with IAS 36. The impairment test is performed by comparing the carrying amount (which mainly comprises property, plant and equipment, goodwill and capitalized development costs) and the recoverable amount of the CGU. The recoverable amount of the CGU is the higher of its fair value less costs of disposal and its value in use.
Development costs
Development costs are capitalized if the conditions under IAS 38 - Intangible Assets have been met. The starting point for capitalization is based upon the technological and commercial feasibility of the project, which is usually when a product development project has reached a defined milestone according to the Group’s established product development model. Feasibility is based on management’s judgment which is formed on the basis of estimated future cash flows. Capitalization ceases and amortization of capitalized development costs begins on start of production of the relevant project.
The amortization of development costs requires management to estimate the lifecycle of the related model. Any changes in such assumptions would impact the amortization charge recorded and the carrying amount of capitalized development costs. The periodic amortization charge is derived after determining the expected lifecycle of the related model and, if applicable, any expected residual value at the end of its life. Increasing an asset’s expected lifecycle or its residual value would result in a reduced amortization charge in the consolidated income statement.

The useful lives and residual values of the Group’s models are determined by management at the time of capitalization and reviewed annually for appropriateness. The lives are based on historical experience with similar assets as well as anticipation of future events which may impact their life, such as changes in technology. Historically, changes in useful lives and residual values have not resulted in material changes to the Group’s amortization charge.

For the year ended December 31, 2014, the Group capitalized development costs of €145 million (€93 million for the year ended December 31, 2013).
Product warranties and liabilities
The Group establishes reserves for product warranties at the time the sale is recognized. The Group issues various types of product warranties under which the performance of products delivered is generally guaranteed for a certain period or term,

48



which is generally defined by the legislation in the country where the car is sold. The reserve for product warranties includes the expected costs of warranty obligations imposed by law or contract, as well as the expected costs for policy coverage. The estimated future costs of these actions are principally based on assumptions regarding the lifetime warranty costs of each car line and each model year of that car line, as well as historical claims experience for the Group’s cars. In addition, the number and magnitude of additional service actions expected to be approved, and policies related to additional service actions, are taken into consideration. Due to the uncertainty and potential volatility of these estimated factors, changes in the assumptions used could materially affect the results of operations.
The Group periodically initiates voluntary service actions to address various client satisfaction, safety and emissions issues related to cars sold. Included in the reserve is the estimated cost of these services and recall actions. The estimated future costs of these actions are based primarily on historical claims experience for the Group’s cars. Estimates of the future costs of these actions are inevitably imprecise due to several uncertainties, including the number of cars affected by a service or recall action. It is reasonably possible that the ultimate cost of these service and recall actions may require the Group to make expenditures in excess of (or less than) established reserves over an extended period of time. The estimate of warranty and additional service obligations is periodically reviewed during the year.
In addition, the Group makes provisions for estimated product liability costs arising from property damage and personal injuries including wrongful death, and potential exemplary or punitive damages alleged to be the result of product defects. By nature, these costs can be infrequent, difficult to predict and have the potential to vary significantly in amount. Costs associated with these provisions are recorded in the consolidated income statement and any subsequent adjustments are recorded in the period in which the adjustment is determined.
Other contingent liabilities
The Group makes provisions in connection with pending or threatened disputes or legal proceedings when it is considered probable that there will be an outflow of funds and when the amount can be reasonably estimated. If an outflow of funds becomes possible but the amount cannot be estimated, the matter is disclosed in the notes to the Annual Consolidated Financial Statements and the Interim Condensed Consolidated Financial Statements. The Group is the subject of legal and tax proceedings covering a wide range of matters in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the outflow of funds that could result from such disputes with any certainty. Moreover, the cases and claims against the Group often derive from complex legal issues which are subject to a differing degree of uncertainty, including the facts and circumstances of each particular case and the manner in which applicable law is likely to be interpreted and applied to such fact and circumstances, and the jurisdiction and the different laws involved. The Group monitors the status of pending legal proceedings and consults with experts on legal and tax matters on a regular basis. It is therefore possible that the provisions for the Group’s legal proceedings and litigation may vary as the result of future developments in pending matters.
Litigation
Various legal proceedings, claims and governmental investigations are pending against the Group on a wide range of topics, including car safety; emissions and fuel economy, early warning reporting; dealer, supplier and other contractual relationships; intellectual property rights and product warranty matters. Some of these proceedings allege defects in specific component parts or systems (including airbags, seat belts, brakes, transmissions, engines and fuel systems) in various car models or allege general design defects relating to car handling and stability, sudden unintended movement or crashworthiness. These proceedings seek recovery for damage to property, personal injuries or wrongful death and in some cases could include a claim for exemplary or punitive damages. Adverse decisions in one or more of these proceedings could require the Group to pay substantial damages, or undertake service actions, recall campaigns or other costly actions.
Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. An accrual is established in connection with pending or threatened litigation if a loss is probable and a reliable estimate can be made. Since these accruals represent estimates, it is reasonably possible that the resolution of some of these matters could require the Group to make payments in excess of the amounts accrued. It is also reasonably possible that the resolution of some of the matters for which accruals could not be made may require the Group to make payments in an amount or range of amounts that could not be reasonably estimated.
The term “reasonably possible” is used herein to mean that the chance of a future transaction or event occurring is more than remote but less than probable. Although the final resolution of any such matters could have a material effect on the Group’s operating results for the particular reporting period in which an adjustment of the estimated reserve is recorded, it is believed that any resulting adjustment would not materially affect the consolidated financial position.

49



Non-GAAP Financial Measures
We monitor and evaluate our operating and financial performance using several non-GAAP financial measures including: EBITDA, Adjusted EBITDA, Adjusted EBIT, Net Cash/(Net Debt) and Free Cash Flow, as well as a number of financial metrics measured on a constant currency basis. We believe that these non-GAAP financial measures provide useful and relevant information regarding our performance and our ability to assess our financial performance and financial position. They also provide us with comparable measures that facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions. While similar measures are widely used in the industry in which we operate, the financial measures we use may not be comparable to other similarly titled measures used by other companies nor are they intended to be substitutes for measures of financial performance or financial position as prepared in accordance with IFRS.
EBITDA and Adjusted EBITDA
EBITDA is defined as net profit before income tax expense, net financial expenses/(income) and depreciation and amortization. Adjusted EBITDA is defined as EBITDA as adjusted for income and costs, which are significant in nature, but expected to occur infrequently. The following table sets forth the calculation of EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2015 and 2014 and for the years ended December 31, 2014, 2013 and 2012, and provides a reconciliation of these non-GAAP measures to net profit. EBITDA is presented by management to aid investors in their analysis of the performance of the Group and to assist investors in the comparison of the Group’s performance with that of other companies. Adjusted EBITDA is presented to demonstrate how the underlying business has performed prior to the impact of the adjusted items which may obscure underlying performance and impair comparability of results between periods.
 
 
For the three months ended June 30,
 
For the six months ended June 30,
 
For the years ended December 31,
 
 
2015
 
2014
 
2015
 
2014
 
2014
 
2013
 
2012
 
 
(€ million)
Net profit
 
76

 
74

 
141

 
128

 
265

 
246

 
233

Income tax expense
 
38

 
32

 
71

 
59

 
133

 
120

 
101

Net financial expenses/(income)
 
8

 
(1
)
 
6

 
(2
)
 
(9
)
 
(2
)
 
1

Amortization and depreciation
 
70

 
72

 
130

 
140

 
289

 
270

 
238

EBITDA
 
192

 
177

 
348

 
325

 
678

 
634

 
573

Expense related to the resignation of the former Chairman
 

 

 

 

 
15

 

 

Expenses incurred in relation to the IPO
 
2

 

 
6

 

 

 

 

Adjusted EBITDA
 
194

 
177

 
354

 
325

 
693

 
634

 
573


50



Adjusted EBIT
Adjusted EBIT represents EBIT as adjusted for income and costs, which are significant in nature, but expected to occur infrequently. We present such information in order to present how the underlying business has performed prior to the impact of such items, which may obscure underlying performance and impair comparability of results between the periods. The following table sets forth the calculation of Adjusted EBIT for the three and six months ended June 30, 2015 and 2014 and for the years ended December 31, 2014, 2013 and 2012.
 
 
For the three months ended June 30,
 
For the six months ended June 30,
 
For the years ended December 31,
 
 
2015
 
2014
 
2015
 
2014
 
2014
 
2013
 
2012
 
 
(€ million)
EBIT
 
122

 
105

 
218

 
185

 
389

 
364

 
335

Expense related to the resignation of the former Chairman
 

 

 

 

 
15

 

 

Expenses incurred in relation to the IPO
 
2

 

 
6

 

 

 

 

Adjusted EBIT
 
124

 
105

 
224

 
185

 
404

 
364

 
335

Net Cash/(Net Debt)
Net Cash /(Net Debt) is the primary measure used by management to analyze our financial leverage and capital structure, and is one of the key indicators used to measure our financial position. The following table sets forth a reconciliation of Net Cash/(Net Debt) at June 30, 2015, December 31, 2014 and 2013, using information derived from our consolidated statement of financial position and on a pro forma basis at June 30, 2015, using information derived from our unaudited pro forma condensed consolidated statement of financial position, each included elsewhere in this prospectus.
 
 
At June 30,
 
At December 31,
 
 
2015
 
2015
 
2014
 
2013
 
 
(Pro Forma)
 
(Historical)
 
(Historical)
 
(Historical)
 
 
(€ million)
Cash and cash equivalents
 
258

 
258

 
134

 
114

Deposits in FCA Group cash management pools
 

 
1,098

 
942

 
684

Financial liabilities with FCA Group
 

 
(428
)
 
(379
)
 
(242
)
Financial liabilities with third parties
 
(1,967
)
 
(139
)
 
(131
)
 
(76
)
Total Net Cash/(Net Debt)
 
(1,709
)
 
789

 
566

 
480

Free Cash Flow
Free Cash Flow is one of management’s primary key performance indicators to measure the Group’s performance and is defined as net cash generated from operations less cash flows used in investing activities. The following table sets forth our Free Cash Flow for the six months ended June 30, 2015 and 2014 and for the years ended December 31, 2014, 2013 and 2012 using information derived from our consolidated statement of cash flows:
 
 
For the six months ended June 30,
 
For the years ended December 31,
 
 
2015
 
2014
 
2014
 
2013
 
2012
 
 
(€ million)
Cash flows from operating activities
 
416

 
262

 
426

 
454

 
463

Cash flows used in investing activities
 
(152
)
 
(128
)
 
(290
)
 
(267
)
 
(258
)
Free Cash Flow
 
264

 
134

 
136

 
187

 
205


51



Constant Currency Information
The “Results of Operations” discussion below includes information about our net revenues on a constant currency basis. We use this information to assess how the underlying business has performed independent of fluctuations in foreign currency exchange rates. We calculate constant currency by applying the prior-period average foreign currency exchange rates to current period financial data expressed in local currency in which the relevant financial statements are denominated, in order to eliminate the impact of foreign currency exchange rate fluctuations (see Note 2 “Significant Accounting Policies” to the Annual Consolidated Financial Statements and Note 5 “Other Information” to the Interim Condensed Consolidated Financial Statements, both included in this prospectus, for information on the foreign currency exchange rates applied). Although we do not believe that these measures are a substitute for GAAP measures, we do believe that such results excluding the impact of currency fluctuations year-on-year provide additional useful information to investors regarding the operating performance on a local currency basis. For example, if a U.S. entity with U.S. Dollar functional currency recorded net revenues of U.S. $100 million for 2013 and 2012, we would have reported €75 million in net revenues for 2013 (using the 2013 average exchange rate of 1.3279) or a €3 million decrease over the €78 million reported for 2012 (using the 2012 average exchange rate of 1.2848). The constant currency presentation would translate the 2013 net revenues using the 2012 foreign currency exchange rates, and therefore indicate that the underlying net revenues on a constant currency basis were unchanged year-on-year. Similarly, if a U.S. entity with a U.S. Dollar functional currency recorded net revenues of $100 million for the six months ended June 30, 2015 and 2014, we would have reported €90 million in net revenues (using the six months ended June 30, 2015 average exchange rate of 1.1155) or a €17 million increase over the €73 million reported for the six months ended June 30, 2014 (using the six months ended June 30, 2014 average exchange rate of 1.3705). The constant currency presentation would translate the six months ended June 30, 2015 net revenues using the six months ended June 30, 2014 foreign currency exchange rates, and therefore indicate that the underlying net revenues on a constant currency basis were unchanged period-on-period.

Results of Operations
Three months ended June 30, 2015 compared to three months ended June 30, 2014
The following is a discussion of the results of operations for the three months ended June 30, 2015 compared to the three months ended June 30, 2014. The discussion of certain line items (cost of sales, selling, general and administrative costs and research and development costs) includes a presentation of such line items as a percentage of net revenues for the respective periods presented, to facilitate period-to-period comparisons.
 
 
For the three months ended June 30,
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
 
(€ million, except percentages)
Net revenues
 
766

 
100.0
 %
 
729

 
100.0
%
Cost of sales
 
416

 
54.3
 %
 
408

 
56.0
%
Selling, general and administrative costs
 
87

 
11.4
 %
 
77

 
10.6
%
Research and development costs
 
137

 
17.9
 %
 
132

 
18.1
%
Other expenses, net
 
4

 
0.5
 %
 
7

 
1.0
%
EBIT
 
122

 
15.9
 %
 
105

 
14.4
%
Net financial (expenses)/income
 
(8
)
 
(1.0
)%
 
1

 
0.1
%
Profit before taxes
 
114

 
14.9
 %
 
106

 
14.5
%
Income tax expense
 
38

 
5.0
 %
 
32

 
4.4
%
Net profit
 
76

 
9.9
 %
 
74

 
10.2
%

52



Net revenues
 
 
For the three months ended June 30,
 
Increase/(decrease)
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
2015 vs. 2014
 
 
(€ million, except percentages)
Cars and spare parts (1)
 
579

 
75.6
%
 
526

 
72.2
%
 
53

 
10.1
 %
Engines (2)
 
57

 
7.4
%
 
75

 
10.3
%
 
(18
)
 
(24.0
)%
Sponsorship, commercial and brand (3)
 
103

 
13.4
%
 
105

 
14.4
%
 
(2
)
 
(1.9
)%
Other (4)
 
27

 
3.6
%
 
23

 
3.1
%
 
4

 
17.4
 %
Total net revenues
 
766

 
100.0
%
 
729

 
100.0
%
 
37

 
5.1
 %
______________________________
(1)
Includes the net revenues generated from shipments of our cars, including any personalization revenue generated on these cars and sales of spare parts.
(2)
Includes the net revenues generated from the sale of engines to Maserati for use in their cars, and the revenues generated from the rental of engines to other Formula 1 racing teams.
(3)
Includes the net revenues earned by our Formula 1 racing team through sponsorship agreements and our share of the Formula 1 World Championship commercial revenues and net revenues generated through the Ferrari brand, including merchandising, licensing and royalty income.
(4)
Primarily includes interest income generated by the Ferrari Financial Services group and net revenues from the management of the Mugello racetrack.
Net revenues for the three months ended June 30, 2015 were €766 million, an increase of €37 million, or 5.1 percent (a decrease of 3.0 percent on a constant currency basis), from €729 million for the three months ended June 30, 2014.
Cars and spare parts
Net revenues generated from cars and spare parts were €579 million for the three months ended June 30, 2015, an increase of €53 million, or 10.1 percent, from €526 million for the three months ended June 30, 2014. The increase was attributable to a €48 million increase in net revenues from supercars and limited edition cars, driven by higher shipments of LaFerrari and the FXX K in the three months ended June 30, 2015 as compared to the three months ended June 30, 2014, and a €5 million increase in net revenues from range and special series cars and spare parts.
The €48 million increase in net revenues from supercars and limited edition cars, which was driven by increased shipments of the LaFerrari and the FXX K, was composed of (i) a €56 million increase in Americas net revenues and (ii) a €5 million increase in Rest of APAC net revenues, which was partially offset by (iii) a €12 million decrease in EMEA net revenues and (iv) a €1 million decrease in Greater China net revenues.
The €5 million increase in net revenues from range and special series cars and spare parts was driven by a 5.7 percent increase in shipments, which was partially offset by an unfavorable shift in mix. In particular, the proportion of V12 models shipped decreased from 26.3 percent for the three months ended June 30, 2014, to 19.4 percent for the three months ended June 30, 2015, and was primarily driven by a 25.2 percent decrease in shipments of the F12berlinetta, in part attributable to the fact that the model has been on the market since 2012, and clients tend to focus on more recently introduced cars. Shipments of V8 models increased by 15.5 percent, primarily as a result of achieving full production of the California T partially offset by decreases in shipments of the 458 Italia and 458 Spider, which are being phased out during 2015.
The €5 million increase in net revenues from range and special series cars and spare parts was composed of (i) a €47 million increase in Americas net revenues, and (ii) a €36 million increase in Rest of APAC net revenues, which were partially offset by (iii) a €59 million decrease in EMEA net revenues, and (iv) a €19 million decrease in Greater China net revenues.
The €47 million increase in Americas net revenues was primarily attributable to (i) an 11.9 percent increase in shipments, driven primarily by increases in shipments of the California T and 458 Italia, partially offset by decreases in shipments of the 458 Spider, and (ii) favorable foreign exchange impact, which was driven by the weakening of the Euro against the U.S. Dollar.

53



The €36 million increase in Rest of APAC net revenues was attributable to an increase of €32 million in Japan net revenues and an increase of €7 million in Australia net revenues, which were partially offset by a decrease of €3 million in other APAC net revenues. The €32 million increase in Japan net revenues was driven by a 210.9 percent increase in shipments, primarily driven by the 458 VS and California T. The €7 million increase in Australia net revenues was driven by a 63.9 percent increase in shipments while the decrease of €3 million in other APAC net revenues was driven by a 23.1 percent decrease in shipments.
The €59 million decrease in EMEA net revenues was primarily attributable to decreases in volumes, driven by decreases in shipments of the 458 Italia and 458 Spider, which are being phased out during 2015. In particular shipments decreased by 36.8 percent in the Middle East, 35.0 percent in Germany and 9.5 percent in Switzerland.
The €19 million decrease in Greater China net revenues was attributable to a decrease of €19 million in mainland China net revenues driven by (i) unfavorable volume impact of €18 million due to decreases in shipments of the 458 Italia and 458 Spider, which were only partially offset by an increase in shipments of the California T, (ii) unfavorable mix impact of €4 million and (iii) a €5 million decrease in net revenues generated by our personalization program. Such decreases were partially offset by a favorable foreign exchange impact of €8 million.
Engines
Net revenues generated from engines were €57 million for the three months ended June 30, 2015, a decrease of €18 million, or 24.0 percent, from €75 million for the three months ended June 30, 2014. The €18 million decrease was attributable to a €15 million decrease in net revenues generated from the sale of engines to Maserati, primarily driven by a 26.9 percent decrease in the volume of engines shipped to Maserati, and an €3 million decrease in net revenues generated from the rental of power units to other Formula 1 teams.
Sponsorship, commercial and brand
Net revenues generated from sponsorship, commercial agreements and brand management activities were substantially unchanged, amounting to €103 million for the three months ended June 30, 2015, as compared to €105 million for the three months ended June 30, 2014.
Other
Other net revenues were €27 million for the three months ended June 30, 2015, an increase of €4 million, or 17.4 percent, from €23 million for the three months ended June 30, 2014.
Cost of sales
 
 
For the three months ended June 30,
 
Increase/(decrease)
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
2015 vs. 2014
 
 
(€ million, except percentages)
Cost of sales
 
416

 
54.3
%
 
408

 
56.0
%
 
8

 
2.0
%
Cost of sales for the three months ended June 30, 2015, was €416 million, an increase of €8 million, or 2.0 percent, from €408 million for the three months ended June 30, 2014. As a percentage of net revenues, cost of sales was 54.3 percent in the three months ended June 30, 2015, compared to 56.0 percent for the three months ended June 30, 2014.
The increase in cost of sales was attributable to the combination of (i) increased costs of €16 million, driven by an increase in volumes and the personalization program, (ii) unfavorable foreign currency impact of €6 million, and (iii) increased costs of €1 million due to changes in product mix, partially offset by (iv) decreased costs of €14 million, mainly related to lower Maserati engine sales volumes and (v) a decrease in depreciation and amortization of €1 million.
The €16 million increase in cost of sales due to volumes and the personalization program was attributable to a 5.7 percent increase in shipments of range and special series cars. In particular, the increase in shipments was driven by the California

54



T and 458 VS. The €6 million unfavorable foreign currency translation impact was mainly attributable to the weakening of the Euro against the U.S. Dollar. The €1 million increase in cost of sales driven by product mix was mainly due to an increase in LaFerrari and FXX K shipments, which was only partially offset by an increase in the proportion of V8 models shipped, which in general have a lower cost of sales per unit. The €14 million decrease in cost of sales related to the sale of engines to Maserati was driven by the 26.9 percent decrease in Maserati engine volumes for the three months ended June 30, 2015 compared to the three months ended June 30, 2014.
The decrease in cost of sales as a percentage of net revenues was driven by a decrease in Maserati engine shipments as Maserati engines generate lower margins than we earn from the sale of cars.
Selling, general and administrative costs
 
 
For the three months ended June 30,
 
Increase/(decrease)
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
2015 vs. 2014
 
 
(€ million, except percentages)
Selling, general and administrative costs
 
87

 
11.4
%
 
77

 
10.6
%
 
10

 
13.0
%
Selling, general and administrative costs for the three months ended June 30, 2015 were €87 million, an increase of €10 million, or 13.0 percent, from €77 million for the three months ended June 30, 2014. As a percentage of net revenues, selling, general and administrative costs were 11.4 percent in the three months ended June 30, 2015, compared to 10.6 percent for the three months ended June 30, 2014.
The increase in selling, general and administrative costs was attributable to (i) an increase in the allowance for doubtful accounts of €3 million, primarily related to a commercial partner of the Formula 1 activities, (ii) consultancy costs incurred in relation to the initial public offering amounting to €2 million, (iii) an increase in selling costs of €2 million driven by new Ferrari store openings and the launch of the 488 GTB, (iv) an unfavorable foreign currency exchange impact of €2 million and (v) an increase in personnel costs of €1 million.
Research and development costs
 
 
For the three months ended June 30,
 
Increase/(decrease)
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
2015 vs. 2014
 
 
(€ million, except percentages)
Amortization of capitalized development costs
 
31

 
4.1
%
 
32

 
4.4
%
 
(1
)
 
(3.1
)%
Research and development costs expensed during the period
 
106

 
13.8
%
 
100

 
13.7
%
 
6

 
6.0
 %
Research and development costs
 
137

 
17.9
%
 
132

 
18.1
%
 
5

 
3.8
 %
Research and development costs for the three months ended June 30, 2015 were €137 million, an increase of €5 million, or 3.8 percent, from €132 million for the three months ended June 30, 2014. As a percentage of net revenues, research and development costs were 17.9 percent for the three months ended June 30, 2015, compared to 18.1 percent for the three months ended June 30, 2014.
The increase in research and development costs expensed during the period of €6 million was primarily driven by the Formula 1 activities and in particular reflected the Group’s efforts related to power unit projects, partially offset by a decrease of €1 million in the amortization of capitalized development costs mainly related to GT models nearing the end of their planned lifecycle.
Other expenses, net

55



 
 
For the three months ended June 30,
 
Increase/(decrease)
 
 
2015
 
2014
 
2015 vs. 2014
 
 
(€ million, except percentages)
Other expenses, net
 
4

 
7

 
(3
)
 
(42.9
)%
For the three months ended June 30, 2015, other expenses, net included other expenses of €10 million, mainly composed of €3 million related to provisions and €7 million related to miscellaneous expenses, partially offset by other income of €6 million, including €2 million related to rental income and €4 million related to miscellaneous income.
For the three months ended June 30, 2014, other expenses, net included other expenses of €17 million, mainly composed of €5 million related to provisions and €12 million related to miscellaneous expenses, partially offset by other income of €10 million, including €2 million related to rental income and €8 million related to miscellaneous income.
EBIT
 
 
For the three months ended June 30,
 
Increase/(decrease)
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
2015 vs. 2014
 
 
(€ million, except percentages)
EBIT
 
122

 
15.9
%
 
105

 
14.4
%
 
17

 
16.2
%
EBIT for the three months ended June 30, 2015 was €122 million, an increase of €17 million, or 16.2 percent, from €105 million for the three months ended June 30, 2014.
The increase in EBIT was due to (i) favorable volume impact of €9 million, (ii) favorable mix impact of €5 million, (iii) favorable foreign currency exchange impact of €14 million, and (iv) decreases in costs related to supporting activities and financial services of €4 million, which were partially offset by (v) an increase in selling, general and administrative costs of €10 million and (vi) an increase in research and development costs of €5 million.
The positive volume impact of €9 million was driven by a 5.7 percent increase in shipments of range and special series cars, primarily driven by the 458 VS and California T, as well as positive impact from the personalization program. The positive mix impact of €5 million was primarily driven by an increase in shipments of the LaFerrari and the FXX K, partially offset by an increase in the proportion of total shipments represented by V8 models. The positive foreign currency exchange impact was primarily driven by the strengthening of the U.S. Dollar and Pound Sterling against the Euro, partially offset by the weakening of the Japanese Yen.
As a percentage of net revenues, EBIT increased from 14.4 percent for the three months ended June 30, 2014 to 15.9 percent for the three months ended June 30, 2015, mainly due to cost of sales, which as a percentage of net revenues was 54.3 percent in the three months ended June 30, 2015, compared to 56.0 percent in the three months ended June 30, 2014.
Net financial (expenses)/income
 
 
For the three months ended June 30,
 
Increase/(decrease)
 
 
2015
 
2014
 
2015 vs. 2014
 
 
(€ million, except percentages)
Net financial (expenses)/income
 
(8
)
 
1

 
n.m.
 
n.m.
Net financial expenses for the three months ended June 30, 2015 was €8 million compared to net financial income of €1 million for the three months ended June 30, 2014.

56



The variation in net financial (expenses)/income was driven by an increase in financial expenses mainly related to foreign exchange losses.
Income tax expense
 
 
For the three months ended June 30,
 
Increase/(decrease)
 
 
2015
 
2014
 
2015 vs. 2014
 
 
(€ million, except percentages)
Income tax expense
 
38

 
32

 
6

 
18.8
%
Income tax expense for the three months ended June 30, 2015 was €38 million, an increase of €6 million, or 18.8 percent, from €32 million for the three months ended June 30, 2014. The increase in income tax expense was primarily due to an increase in profit before taxes from €106 million for the three months ended June 30, 2014 to €114 million for the three months ended June 30, 2015. The effective tax rate net of Italian Regional Income Tax (“IRAP”) was 28.3 percent for the three months ended June 30, 2015, compared to 24.2 percent for the three months ended June 30, 2014.

57



Six months ended June 30, 2015 compared to six months ended June 30, 2014
The following is a discussion of the results of operations for the six months ended June 30, 2015 compared to the six months ended June 30, 2014. The discussion of certain line items (cost of sales, selling, general and administrative costs and research and development costs) includes a presentation of such line items as a percentage of net revenues for the respective periods presented, to facilitate period-to-period comparisons.
 
 
For the six months ended June 30,
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
 
(€ million, except percentages)
Net revenues
 
1,387

 
100.0
 %
 
1,349

 
100.0
%
Cost of sales
 
722

 
52.1
 %
 
738

 
54.7
%
Selling, general and administrative costs
 
152

 
11.0
 %
 
143

 
10.6
%
Research and development costs
 
291

 
21.0
 %
 
276

 
20.5
%
Other expenses, net
 
4

 
0.3
 %
 
7

 
0.5
%
EBIT
 
218

 
15.7
 %
 
185

 
13.7
%
Net financial (expenses)/income
 
(6
)
 
(0.4
)%
 
2

 
0.1
%
Profit before taxes
 
212

 
15.3
 %
 
187

 
13.9
%
Income tax expense
 
71

 
5.1
 %
 
59

 
4.4
%
Net profit
 
141

 
10.2
 %
 
128

 
9.5
%
Net revenues
 
 
For the six months ended June 30,
 
Increase/(decrease)
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
2015 vs. 2014
 
 
(€ million, except percentages)
Cars and spare parts (1)
 
1,008

 
72.7
%
 
950

 
70.4
%
 
58

 
6.1
 %
Engines (2)
 
121

 
8.7
%
 
152

 
11.3
%
 
(31
)
 
(20.4
)%
Sponsorship, commercial and brand (3)
 
212

 
15.3
%
 
206

 
15.3
%
 
6

 
2.9
 %
Other (4)
 
46

 
3.3
%
 
41

 
3.0
%
 
5

 
12.2
 %
Total net revenues
 
1,387

 
100.0
%
 
1,349

 
100.0
%
 
38

 
2.8
 %
(1)
Includes the net revenues generated from shipments of our cars, including any personalization revenue generated on these cars and sales of spare parts.
(2)
Includes the net revenues generated from the sale of engines to Maserati for use in their cars and the revenues generated from the rental of engines to other Formula 1 racing teams.
(3)
Includes the net revenues earned by our Formula 1 racing team through sponsorship agreements and our share of the Formula 1 World Championship commercial revenues and net revenues generated through the Ferrari brand, including merchandising, licensing and royalty income.
(4)
Primarily includes interest income generated by the Ferrari Financial Services group and net revenues from the management of the Mugello racetrack.

Net revenues for the six months ended June 30, 2015 were €1,387 million, an increase of €38 million, or 2.8 percent (a decrease of 4.3 percent on a constant currency basis), from €1,349 million for the six months ended June 30, 2014.

58



Cars and spare parts
Net revenues generated from cars and spare parts were €1,008 million for the six months ended June 30, 2015, an increase of €58 million, or 6.1 percent, from €950 million for the six months ended June 30, 2014. The increase was attributable to a €95 million increase in net revenues from supercars and limited edition cars, driven by higher shipments of the LaFerrari and the FXX K for the six months ended June 30, 2015, as compared to the six months ended June 30, 2014, which was partially offset by a €37 million decrease in net revenues from range and special series cars and spare parts, driven by the combination of lower shipments and an unfavorable shift in mix towards relatively more V8 models and fewer V12 models.
The €95 million increase in net revenues from supercars and limited edition cars was composed of (i) a €92 million increase in Americas net revenues and (ii) a €16 million increase in Rest of APAC net revenues, which were partially offset by (iii) a €12 million decrease in EMEA net revenues and (iv) a €1 million decrease in Greater China net revenues.
The €37 million decrease in net revenues from range and special series cars was primarily driven by an unfavorable shift in mix. In particular, the proportion of V12 models shipped decreased from 29.2 percent for the six months ended June 30, 2014 to 19.2 percent for the six months ended June 30, 2015, and was primarily driven by a 38.7 percent decrease in shipments of the F12berlinetta, in part attributable to the fact that the model has been on the market since 2012, and clients tend to focus on more recently introduced cars. Shipments of V8 models increased by 13.0 percent, principally as a result of achieving full production of the California T, partially offset by decreases in shipments of the 458 Italia and 458 Spider, which are being phased out during 2015.
The €37 million decrease in net revenues from range and special series cars and spare parts was composed of (i) a €104 million decrease in EMEA net revenues and (ii) an €18 million decrease in Greater China net revenues, which were partially offset by (iii) a €52 million increase in Americas net revenues and (iv) a €33 million increase in Rest of APAC net revenues.
The €104 million decrease in EMEA net revenues was primarily attributable to decreases in volumes, driven by decreases in shipments of the 458 Italia and 458 Spider, which are being phased out during 2015. In particular, shipments decreased by 38.6 percent in Germany, 17.4 percent in the Middle East, 13.7 percent in Switzerland and 4.6 percent in France.
The €18 million decrease in Greater China net revenues was primarily attributable to a decrease of €26 million in mainland China net revenues, driven by (i) unfavorable volume impact of €23 million as a result of a 29.3 percent decrease in shipments, (ii) unfavorable mix impact of €8 million and (iii) a €7 million decrease in net revenues from our personalization program and the sale of spare parts. Such decreases were partially offset by favorable foreign exchange impact of €12 million.
The €52 million increase in Americas net revenues was primarily attributable to favorable foreign exchange fluctuations, which was driven by the weakening of the Euro against the U.S. Dollar. This increase was partially offset by unfavorable mix impact and a decrease in net revenues from our personalization program and the sale of spare parts.
The €33 million increase in Rest of APAC net revenues was attributable to an increase of €27 million in Japan net revenues and an increase of €12 million in Australia net revenues, which were partially offset by a decrease of €6 million in other APAC net revenues, and in particular related to Indonesia and Singapore. The €27 million increase in Japan net revenues was driven by a favorable volume impact of €22 million due to a 59.4 percent increase in shipments that was mainly driven by the 458 VS and California T, and a €5 million increase in net revenues generated by our personalization program. The €12 million increase in Australia net revenues was driven by a 91.2 percent increase in shipments while the decrease of €6 million in other APAC net revenues was driven by a 19.2 percent decrease in shipments.
Engines
Net revenues generated from engines were €121 million for the six months ended June 30, 2015, a decrease of €31 million, or 20.4 percent, from €152 million for the six months ended June 30, 2014. The €31 million decrease was attributable to a €23 million decrease in net revenues generated from the sale of engines to Maserati, primarily driven by a 20.9 percent decrease in the volume of engines shipped to Maserati, and an €8 million decrease in net revenues generated from the rental of power units to other Formula 1 teams.

59



Sponsorship, commercial and brand
Net revenues generated from sponsorship, commercial agreements and brand management activities were €212 million for the six months ended June 30, 2015, an increase of €6 million, or 2.9 percent, from €206 million for the six months ended June 30, 2014. The increase was driven by sponsorship and commercial net revenues, primarily due to increased commercial revenues from our participation in the Formula 1 World Championship, which benefitted from the impact of the weakening of the Euro against the U.S. Dollar.
Other
Other net revenues were €46 million for the six months ended June 30, 2015, an increase of €5 million, or 12.2 percent, from €41 million for the three months ended June 30, 2014.
Cost of sales
 
 
For the six months ended June 30,
 
Increase/(decrease)
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
2015 vs. 2014
 
 
(€ million, except percentages)
Cost of sales
 
722

 
52.1
%
 
738

 
54.7
%
 
(16
)
 
(2.2
)%
Cost of sales for the six months ended June 30, 2015 was €722 million, a decrease of €16 million, or 2.2 percent, from €738 million for the six months ended June 30, 2014. As a percentage of net revenues, cost of sales was 52.1 percent for the six months ended June 30, 2015, compared to 54.7 percent for the six months ended June 30, 2014.
The decrease in cost of sales was attributable to the combination of (i) decreased costs of €22 million related to lower Maserati engine sales volumes, (ii) a decrease in depreciation and amortization of €4 million, (iii) technical and commercial savings achieved of €3 million and (iv) a decrease in the costs of sales of supporting activities of €4 million, partially offset by (v) increased costs of €11 million due to changes in product mix and (vi) unfavorable foreign currency impact of €6 million.
The €22 million decrease in cost of sales related to the sale of engines to Maserati was driven by a 20.9 percent decrease in Maserati engine volumes for the six months ended June 30, 2015, as compared to the six months ended June 30, 2014. The €11 million increase in cost of sales driven by product mix was mainly due to an increase in LaFerrari and FXX K shipments for the six months ended June 30, 2015, as compared to the six months ended June 30, 2014, which was only partially offset by an increase in the proportion of V8 models shipped, which in general have a lower cost of sales per unit.
The decrease in cost of sales as a percentage of net revenues was driven by a decrease in Maserati shipments as Maserati engines generate lower margins than the sale of cars.








60



Selling, general and administrative costs
 
 
For the six months ended June 30,
 
Increase/(decrease)
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
2015 vs. 2014
 
 
(€ million, except percentages)
Selling, general and administrative costs
 
152

 
11.0
%
 
143

 
10.6
%
 
9

 
6.3
%
Selling, general and administrative costs for the six months ended June 30, 2015 were €152 million, an increase of €9 million, or 6.3 percent, from €143 million for the six months ended June 30, 2014. As a percentage of net revenues, selling, general and administrative costs were 11.0 percent for the six months ended June 30, 2015, compared to 10.6 percent for the six months ended June 30, 2014.
The increase in selling, general and administrative costs was attributable to (i) consultancy costs incurred in relation to the initial public offering amounting to €6 million, (ii) an increase in the allowance for doubtful accounts of €6 million, primarily related to a commercial partner of the Formula 1 activities and (iii) an unfavorable foreign currency exchange rate impact of €4 million, which were partially offset by (iv) a decrease of €7 million in legal provisions recognized. In particular, during the six months ended June 30, 2014, we recognized a legal provision in relation to ongoing litigation with a former commercial partner charged with operating certain Ferrari stores in Italy.
Research and development costs
 
 
For the six months ended June 30,
 
Increase/(decrease)
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
2015 vs. 2014
 
 
(€ million, except percentages)
Amortization of capitalized development costs
 
56

 
4.0
%
 
62

 
4.6
%
 
(6
)
 
(9.7
)%
Research and development costs expensed during the period
 
235

 
16.9
%
 
214

 
15.9
%
 
21

 
9.8
 %
Research and development costs
 
291

 
21.0
%
 
276

 
20.5
%
 
15

 
5.4
 %
Research and development costs for the six months ended June 30, 2015 were €291million, an increase of €15 million, or 5.4 percent, from €276 million for the six months ended June 30, 2014. As a percentage of net revenues, research and development costs were 21.0 percent for the six months ended June 30, 2015, compared to 20.5 percent for the six months ended June 30, 2014.
The increase in research and development costs expensed during the period of €21 million was primarily driven by the Formula 1 activities, and in particular reflecting the Group’s efforts related to power unit projects, partially offset by a decrease in the amortization of capitalized development costs of €6 million, primarily due to the completion of amortization of capitalized development costs relating to the 458 Italia and 458 Spider, as these models reach the end of their planned lifecycle.

61



Other expenses, net
 
 
For the six months ended June 30,
Increase/(decrease)
 
 
2015
 
2014
 
2015 vs. 2014
 
 
(€ million, except percentages)
Other expenses, net
 
4

 
7

 
(3
)
 
(42.9
)%
For the six months ended June 30, 2015, other expenses, net included other expenses of €10 million, mainly composed of €3 million related to provisions and €7 million related to miscellaneous expenses, partially offset by other income of €6 million, including €2 million related to rental income and €4 million related to miscellaneous income.
For the six months ended June 30, 2014, other expenses, net included other expenses of €17 million, mainly composed of €5 million related to provisions and €12 million related to miscellaneous expenses, partially offset by other income of €10 million, including €2 million related to rental income and €8 million related to miscellaneous income.
EBIT
 
 
For the six months ended June 30,
 
Increase/(decrease)
 
 
2015
 
Percentage of net revenues
 
2014
 
Percentage of net revenues
 
2015 vs. 2014
 
 
(€ million, except percentages)
EBIT
 
218

 
15.7
%
 
185

 
13.7
%
 
33

 
17.8
%
EBIT for the six months ended June 30, 2015 was €218 million, an increase of €33 million, or 17.8 percent, from €185 million for the six months ended June 30, 2014.
The increase in EBIT was due to (i) favorable volume impact of €4 million, (ii) favorable mix impact of €6 million, (iii) favorable foreign currency exchange impact of €25 million and (iv) decreases in costs related to supporting activities and financial services of €22 million, which were partially offset by (v) an increase in selling, general and administrative costs of €9 million and (vi) an increase in research and development costs of €15 million.
The positive volume impact of €4 million was driven by the personalization program. The positive mix impact of €6 million was primarily driven by increases in shipments of the LaFerrari and the FXX K, partially offset by an increase in the proportion of total shipments represented by V8 models. The positive foreign currency exchange impact was primarily driven by the strengthening of the U.S. Dollar and Pound Sterling against the Euro, partially offset by the weakening of the Japanese Yen.
As a percentage of net revenues, EBIT increased from 13.7 percent for the six months ended June 30, 2014 to 15.7 percent for the six months ended June 30, 2015, mainly due to the previously mentioned favorable foreign currency exchange impact and cost of sales, which as a percentage of net revenues was 52.1 percent for the six months ended June 30, 2015, compared to 54.7 percent for the six months ended June 30, 2014.

62



Net financial (expenses)/income
 
 
For the six months ended June 30,
 
Increase/(decrease)
 
 
2015
 
2014
 
2015 vs. 2014
 
 
(€ million, except percentages)
Net financial (expenses)/income
 
(6
)
 
2

 
n.m.
 
n.m.
Net financial expenses for the six months ended June 30, 2015 was €6 million compared to net financial income of €2 million for the six months ended June 30, 2014.
The variation in net financial (expenses)/income was driven by an increase in financial expenses mainly related to foreign exchange losses.
Income tax expense
 
 
For the six months ended June 30,
 
Increase/(decrease)
 
 
2015
 
2014
 
2015 vs. 2014
 
 
(€ million, except percentages)
Income tax expense
 
71

 
59

 
12

 
20.3
%
Income tax expense for the six months ended June 30, 2015 was €71 million, an increase of €12 million, or 20.3 percent, from €59 million for the six months ended June 30, 2014. The increase in income tax expense was primarily due to an increase in profit before taxes from €187 million for the six months ended June 30, 2014 to €212 million for the six months ended June 30, 2015. The effective tax rate net of IRAP was 28.3 percent for the six months ended June 30, 2015, compared to 26.0 percent for the six months ended June 30, 2014.


63



Consolidated Results of Operations – 2014 compared to 2013 and 2013 compared to 2012
The following is a discussion of the results of operations for the year ended December 31, 2014 as compared to the year ended December 31, 2013, and for the year ended December 31, 2013 as compared to the year ended December 31, 2012. The discussion of certain line items (cost of sales, selling, general and administrative costs and research and development costs) includes a presentation of such line items as a percentage of net revenues for the respective periods presented, to facilitate year-on-year comparisons.
 
For the years ended December 31,
 
2014
 
Percentage of net revenues
 
2013
 
Percentage of net revenues
 
2012
 
Percentage of net revenues
 
(€ million, except percentages)
Net revenues
2,762

 
100.0
%
 
2,335

 
100.0
 %
 
2,225

 
100.0
 %
Cost of sales
1,506

 
54.5
%
 
1,235

 
52.9
 %
 
1,199

 
53.9
 %
Selling, general and administrative costs
300

 
10.9
%
 
260

 
11.1
 %
 
243

 
10.9
 %
Research and development costs
541

 
19.6
%
 
479

 
20.5
 %
 
431

 
19.4
 %
Other expenses/(income), net
26

 
0.9
%
 
(3
)
 
(0.1
)%
 
17

 
0.8
 %
EBIT
389

 
14.1
%
 
364

 
15.6
 %
 
335

 
15.1
 %
Net financial income/(expenses)
9

 
0.3
%
 
2

 
0.1
 %
 
(1
)
 
 %
Profit before taxes
398

 
14.4
%
 
366

 
15.7
 %
 
334

 
15.0
 %
Income tax expense
133

 
4.8
%
 
120

 
5.1
 %
 
101

 
4.5
 %
Net profit
265

 
9.6
%
 
246

 
10.5
 %
 
233

 
10.5
 %
Net Revenues
The following table sets forth an analysis of our net revenues for the periods indicated:
 
For the years ended December 31,
 
Increase/(decrease)
 
2014
 
Percentage of net revenues
 
2013
 
Percentage of net revenues
 
2012
 
Percentage of net revenues
 
2014 vs. 2013
 
2013 vs. 2012
 
(€ million, except percentages)
Cars and spare parts (1)
1,944

 
70.4
%
 
1,655

 
70.9
%
 
1,695

 
76.2
%
 
289

 
17.5
%
 
(40
)
 
(2.4
)%
Engines (2)
311

 
11.3
%
 
188

 
8.1
%
 
77

 
3.5
%
 
123

 
65.4
%
 
111

 
144.2
 %
Sponsorship, commercial and brand (3)
417

 
15.1
%
 
412

 
17.6
%
 
385

 
17.3
%
 
5

 
1.2
%
 
27

 
7.0
 %
Other (4)
90

 
3.3
%
 
80

 
3.4
%
 
68

 
3.1
%
 
10

 
12.5
%
 
12

 
17.6
 %
Total net revenues
2,762

 
100.0
%
 
2,335

 
100.0
%
 
2,225

 
100.0
%
 
427

 
18.3
%
 
110

 
4.9
 %
______________________________
(1)
Includes the net revenues generated from shipments of our cars, including any personalization revenue generated on these cars and sales of spare parts.
(2)
Includes the net revenues generated from the sale of engines to Maserati for use in their cars, and the revenues generated from the rental of engines to other Formula 1 racing teams.
(3)
Includes the net revenues earned by our Formula 1 racing team through sponsorship agreements and our share of the Formula 1 World Championship commercial revenues and net revenues generated through the Ferrari brand, including merchandising, licensing and royalty income.
(4)
Primarily includes interest income generated by the Ferrari Financial Services group and net revenues from the management of the racetrack.
2014 compared to 2013
Net revenues for 2014 were €2,762 million , an increase of €427 million , or 18.3 percent (18.9 percent on a constant currency basis), from €2,335 million for 2013.

64



The increase in net revenues was attributable to the combination of (i) a €289 million increase in net revenues generated from the cars and spare parts, (ii) a €123 million increase in net revenues generated from engines, (iii) a €10 million increase in other net revenues and (iv) a €5 million increase in sponsorship, commercial and brand net revenues.
Cars and spare parts
Net revenues generated from cars and spare parts were €1,944 million for 2014, an increase of €289 million , or 17.5 percent , from €1,655 million for 2013. The increase was attributable to a €255 million increase in net revenues from supercars and limited edition cars, primarily attributable to shipments of LaFerrari, and a €34 million increase in net revenues from range and special series cars and spare parts.
Shipments of LaFerrari commenced in November 2013, accordingly, our net revenues in 2014 benefited from a full year of shipments. Shipments of LaFerrari impacted net revenues positively, as these cars are generally sold at a higher price point (in excess of €1 million per unit) than other cars in our product offering, reflecting the advanced technological and design content as well as the exclusive nature of the offering.
Of the €255 million increase in net revenues generated from supercars and limited edition cars, €147 million was attributable to EMEA shipments, €56 million was attributable to Americas shipments, €36 million was attributable to China shipments and €16 million was attributable to Rest of APAC shipments.
The €34 million increase in net revenues from range and special series cars and spare parts was primarily driven by an increase in net revenues generated by the sale of spare parts and our personalization program, which were partially offset by unfavorable change in mix. In particular, our mix was impacted by an increase in the proportion of V8 models shipped from 74.0 percent of total shipments for 2013, to 75.7 percent for 2014, primarily driven by increased shipments of the 458 VS and California T. Shipments of range and special series cars were substantially unchanged.
The €34 million increase in net revenues from range and special series cars and spare parts was composed of (i) a €34 million increase in Americas net revenues, (ii) a €24 million increase in Greater China net revenues and (iii) a €17 million increase in Rest of APAC net revenues, which were partially offset by (iv) a €41 million decrease in EMEA net revenues.
The €34 million increase in Americas net revenues was attributable to (i) an increase of €19 million mainly driven by our personalization program and the sale of spare parts, (ii) positive mix impact of €10 million and (iii) positive volume impact of €5 million. The positive mix impact was attributable to an increase in the proportion of total shipments represented by V12 models, from 16.2 percent in 2013 to 20.9 percent in 2014, primarily driven by, the F12berlinetta, which also supported the positive volume impact of €5 million.
The €24 million increase in Greater China net revenues was mainly attributable to a €29 million increase in mainland China net revenues, driven by (i) positive volume impact of €48 million, which was partially offset by (ii) a decrease in net revenues generated by our personalization program and the sale of spare parts of €12 million, and (iii) unfavorable mix impact of €7 million. In particular, the 32.9 percent increase in volumes, which benefited net revenues by €48 million, was primarily supported by the California T and the 458 VS, shipments of which commenced in mainland China in late 2013 and 2014, respectively. Increases in shipments of these V8 models resulted in the unfavorable mix impact of €7 million, as the proportion of total shipments represented by V8 models increased from 70.8 percent in 2013 to 76.3 percent in 2014.
The €17 million increase in Rest of APAC net revenues was mainly driven by increases in Japan and Australia net revenues, both of which were primarily driven by an increase in shipments. In particular, Japan net revenues were impacted positively by an 18.4 percent increase in shipments, largely due to the 458 VS. The increase in Australia net revenues was supported by an increase in shipments, driven by our new Australian dealer which commenced operations in the fourth quarter of 2013.
The €41 million decrease in EMEA net revenues was primarily attributable to a decrease in shipments. In particular, Germany net revenues decreased by €17 million driven by an 11.6 percent decrease in shipments, Switzerland net revenues decreased by €9 million driven by a 12.6 percent decrease in shipments and Rest of EMEA net revenues decreased by €21 million driven by a 12.4 percent decrease in shipments. Such decreases were partially offset by increases in UK net revenues, mainly attributable to favorable foreign currency fluctuations and Middle East net revenues, which was supported by an increase in shipments.

65



Engines
Net revenues generated from engines were €311 million for 2014, an increase of €123 million , or 65.4 percent , from €188 million for 2013. The €123 million increase was mainly attributable to an increase in the volume of engines sold to Maserati, and to a lesser extent, driven by an increase in net revenues generated by the rental of engines to other Formula 1 racing teams. In particular, the significant increase in volumes of Maserati engines was due to the start of production of new generation V6 engines in the fourth quarter of 2013. Accordingly, net revenues in 2014 benefited from a full year of production. The increase in net revenues generated from the rental of engines to other Formula 1 racing teams was driven by higher pricing. During 2013, we rented V8 engines to other Formula 1 racing teams. During 2014, the World Championship regulations introduced the use of the V6 turbo engines including energy recovery systems. Furthermore, during 2014, we not only rented the engine but also the gearbox (which are collectively referred to as the “power unit”) to other Formula 1 racing teams. Accordingly the increased pricing reflected the increased technology of the engines and the additional hardware rented as compared to 2013.
Sponsorship, commercial and brand
Net revenues generated from sponsorship, commercial agreements and brand management activities were €417 million for 2014, an increase of €5 million , or 1.2 percent , from €412 million for 2013. The €5 million increase in sponsorship, commercial and brand net revenues was mainly driven by new sponsorship contracts entered into by our Formula 1 racing team during 2014.
Other
Other net revenues were € 90 million for 2014, an increase of €10 million , or 12.5 percent , from €80 million for 2013. The €10 million increase in other net revenues was primarily driven by an increase in interest income generated by our financial services activities due to increased volumes.
2013 compared to 2012
Net revenues for 2013 were €2,335 million , an increase of €110 million , or 4.9 percent (7.1 percent on a constant currency basis), from €2,225 million for 2012.
The increase in net revenues was driven by (i) an increase of €111 million in net revenues generated from engines, (ii) an increase of €27 million in sponsorship, commercial and brand net revenues, and (iii) an increase of €12 million in other net revenues, which were partially offset by (iv) a decrease of €40 million in net revenues generated by cars and spare parts reflecting our decision announced in May 2013 to limit the number of cars we ship to preserve the exclusivity of our brand.
Cars and spare parts
Net revenues generated from cars and spare parts were €1,655 million for 2013, a decrease of €40 million , or 2.4 percent , from €1,695 million for 2012. The decrease was attributable to a €50 million decrease in the net revenues generated from range and special series cars and spare parts, which was partially offset by a €10 million increase in the net revenues from supercars and limited edition cars, and primarily attributable to the start of shipments of LaFerrari.
The €50 million decrease in net revenues from range and special series cars and spare parts, was primarily attributable to fewer shipments, which was partially offset by improved mix. In particular, our decision announced in May 2013 to limit the number of cars we sell to preserve the exclusivity of our brand resulted in a 5.5 percent decrease in shipments, which was only partially offset by improved mix. The improved mix was driven by the increased proportion of total shipments represented by V12 models which increased from 20.8 percent for 2012 to 26.0 percent for 2013, driven largely by shipments of the F12berlinetta.
The €50 million decrease in net revenues from range and special series cars and spare parts was composed of (i) a €70 million decrease in Greater China net revenues and (ii) a €1 million decrease in EMEA net revenues which were partially offset by (iii) a €20 million increase in Americas net revenues, and (iv) a €1 million increase in Rest of APAC net revenues.
The €70 million decrease in Greater China net revenues was primarily attributable to a €57 million decrease in mainland China net revenues, and to a lesser extent, decreases in Taiwan and Hong Kong net revenues, both of which were primarily attributable to a decrease in volumes. In particular, shipments to mainland China decreased by 27.2 percent, attributable to a management decision to reduce shipments to this market in anticipation of decrease in demand resulting from a potential luxury tax, which ultimately was not introduced, and in keeping with our low volume strategy.

66



The decrease in EMEA net revenues was primarily driven by management’s decision to limit shipments, and to a lesser extent, the effect of challenging economic conditions in Europe, which were partially offset by improved mix.
The €20 million increase in Americas net revenue was primarily attributable to (i) an increase in volume of €27 million and (ii) an increase of €9 million mainly driven by our personalization program and the sale of spare parts, which were partially offset by (iii) unfavorable foreign currency impact of €16 million driven by the impact of the weakening of the U.S. Dollar against the Euro during 2013. The increase in Americas volumes was in particular driven by shipments of the 458 Spider and the F12berlinetta launched in the third quarter of 2012, which more than offset declines in shipments of the 458 Italia and FF, which were nearing the end of their production and sales cycle. The year-on-year growth of Americas volumes was capped at 7.9 percent, despite strong demand, in keeping with the Group’s strategy to limit production in order to maintain brand exclusivity.
Engines
Net revenues generated from engines were €188 million for 2013, an increase of €111 million , from €77 million for 2012. The €111 million increase in net revenues generated from engines was mainly driven by an increase in the volume of engines shipped to Maserati. In particular, this growth was due to the start of production of the new engines in the fourth quarter of 2013, as a result of which the number of units shipped in 2013 increased by 242.4 percent, from those shipped in 2012.
Sponsorship, commercial and brand
Net revenues generated from sponsorship and commercial agreements and brand management activities were €412 million for 2013, an increase of €27 million , or 7.0 percent , from €385 million for 2012. The €27 million increase in sponsorship, commercial and brand net revenues was mainly attributable to the renegotiation of the terms of the agreement that governs the management of the Formula 1 World Championship, and in particular, resulting from an adjustment to the allocation of broadcast net revenues among the competing teams.
Other
Other net revenues were €80 million for 2013, an increase of €12 million , or 17.6 percent , from €68 million for 2012. The €12 million increase in other net revenues was largely driven by an increase in net revenues generated by the Formula 1 activities, including those generated through the sale of prior year model racing cars.
Cost of sales
 
For the years ended December 31,
 
Increase/(decrease)
 
2014
 
Percentage of net revenues
 
2013
 
Percentage of net revenues
 
2012
 
Percentage of net revenues
 
2014 vs. 2013
 
2013 vs. 2012
 
(€ million, except percentages)
Cost of sales
1,506

 
54.5
%
 
1,235

 
52.9
%
 
1,199

 
53.9
%
 
271

 
21.9
%
 
36

 
3.0
%
2014 compared to 2013
Cost of sales for 2014 was €1,506 million , an increase of €271 million , or 21.9 percent , from €1,235 million for 2013. As a percentage of net revenues, cost of sales was 54.5 percent in 2014 compared to 52.9 percent in 2013.
The increase in cost of sales was due to the combination of (i) increased costs of €156 million related to mix, (ii) increased costs of €83 million primarily related to Maserati engine volumes, (iii) increases in other cost of sales of €33 million, (iv) increases in depreciation and amortization of €14 million and (v) increased costs of €7 million driven by an increase in car shipments and the personalization program, the effects of which were partially offset by (vi) a decrease of €19 million driven by technical and commercial savings achieved and (vii) a decrease due to favorable currency translation impact of €3 million.
The increase in cost related to mix was attributable to the launch and production of the LaFerrari, which has a higher cost per unit than other cars in the Ferrari portfolio, while the increased costs related to the sale of engines to Maserati, was driven by higher volumes. The €33 million increase in other cost of sales was mainly driven by an increase in cost of sales related to Formula 1 activities, and in particular related to the increased technology of the engines and the additional hardware rented

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to other Formula 1 teams. The €14 million increases in depreciation and amortization was mainly related to the investments associated with recent product launches including the LaFerrari, California T and the 458 VS. The decrease in cost of sales of €19 million driven by technical and commercial savings achieved was principally attributable to direct cost savings achieved as a result of management efforts in negotiations with suppliers as described in “—Key Factors Affecting Results—Cost of Sales.”
The increase in cost of sales as a percentage of net revenues was attributable to the increase in Maserati engine volumes and an increase in cost of sales related to our Formula 1 activities. The sale of engines to Maserati generates lower profit margins than the sale of cars. The increase in costs related to our Formula 1 activities was mainly driven by the rental of engine units to other Formula 1 racing teams, due to the increased technological content of the engine units rented.
2013 compared to 2012
Cost of sales for 2013 was €1,235 million , an increase of €36 million , or 3.0 percent , from €1,199 million for 2012. As a percentage of net revenues, cost of sales was 52.9 percent in 2013 compared to 53.9 percent in 2012.
The increase in cost of sales was primarily attributable to the combination of (i) increased costs of €46 million, mainly attributable to Maserati engine sales, (ii) increases in other cost of sales of €23 million, (iii) increased costs of €17 million attributable to mix, and (iv) an increase in depreciation and amortization of €10 million, partially offset by (v) decreased costs of €40 million due to lower volumes, (vi) technical and commercial savings achieved of €16 million and (vii) favorable foreign currency impact of €4 million.
The increase in costs related to the sale of engines to Maserati was driven by higher volumes attributable to the launching of new Maserati cars. The increase in other cost of sales was mainly driven by an increase in cost of sales related to Formula 1 activities. The increase in cost related to mix, and the increase in depreciation and amortization were both mainly driven by the start of production of the LaFerrari and F12berlinetta in 2013, both of which have a higher average cost per unit than the rest of the Ferrari portfolio. The €40 million decrease in costs of sales due to a decrease in volumes was attributable to a 5.5 percent decrease in cars produced, following the strategic decision announced in May 2013 to limit production volumes in order to maintain brand exclusivity. Technical and commercial savings achieved were due to direct cost savings resulting from management efforts in negotiations with suppliers as described in “—Key Factors Affecting Results—Cost of Sales.”
The decrease in cost of sales as a percentage of net revenues was due to the combination of mix impact, and a decrease in costs of sales related to Formula 1 activities. In particular, our mix was impacted by an increase in the proportion of V12 models shipped, which in general have a higher cost of sale per unit, but generate better margins. The decrease in cost of sales related to Formula 1 activities was largely driven by a change in the Formula 1 World Championship regulations, which introduced the V6 engine for 2014, meaning that 2013 would be the last season in which the V8 engine would be used. As a result, we adjusted our purchases of direct materials accordingly, resulting in a decrease in cost of sales, which was only partially offset by an increase in the cost of direct materials related to the V6 hybrid engine.
Selling, general and administrative costs
 
For the years ended December 31,
 
Increase/(decrease)
 
2014
 
Percentage of net revenues
 
2013
 
Percentage of net revenues
 
2012
 
Percentage of net revenues
 
2014 vs. 2013
 
2013 vs. 2012
 
(€ million, except percentages)
Selling, general and administrative costs
300

 
10.9
%
 
260

 
11.1
%
 
243

 
10.9
%
 
40

 
15.4
%
 
17

 
7.0
%
2014 compared to 2013
Selling, general and administrative costs for 2014 were €300 million , an increase of €40 million , or 15.4 percent , from €260 million for 2013. As a percentage of net revenues, selling, general and administrative costs were 10.9 percent in 2014 compared to 11.1 percent for 2013.
In particular, the increase in selling, general and administrative costs was attributable to the combined effect of (i) €15 million related to the compensation costs associated with the resignation of our former Chairman, (ii) €8 million related to an

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increase in marketing and event expenses, primarily driven by a series of special events in celebration of our 60 years in the United States, (iii) €6 million related to an increase in personnel costs and (iv) €11 million related to an increase in legal provisions resulting from ongoing disputes with a former commercial partner previously responsible for operating certain Ferrari stores in Italy. In particular, the increase in personnel costs was in part driven by a 2.5 percent increase in average headcount from 2,774 for 2013, to 2,843 for 2014, due to an increase in our Italian workforce, to support the growth of the Group’s operations, and, to a lesser extent, attributable to increases in personnel expenses incurred by Ferrari Financial Services AG.

2013 compared to 2012
Selling, general and administrative costs for 2013 were €260 million , an increase of €17 million , or 7.0 percent , from €243 million for 2012. As a percentage of net revenues, selling, general and administrative costs amounted to 11.1 percent in 2013 compared to 10.9 percent in 2012.
The increase in selling, general and administrative costs was primarily attributable to (i) an increase in general costs of €8 million, (ii) €4 million related to an increase in legal provisions resulting from ongoing disputes with a former commercial partner previously responsible for operating certain Ferrari stores in Italy, (iii) an increase in the provision for doubtful receivables of €3 million, and (iv) an increase in expenses incurred in launching new cars of €2 million, mainly driven by the LaFerrari, launched at the Geneva motor show in March 2013. The increase in general costs was in part attributable to an increase in professional fees incurred by Ferrari Financial Services AG, and the effect of foreign currency fluctuations.

Research and development costs
 
For the years ended December 31,
 
Increase/(decrease)
 
2014
 
Percentage of net revenues
 
2013
 
Percentage of net revenues
 
2012
 
Percentage of net revenues
 
2014 vs. 2013
 
2013 vs. 2012
 
(€ million, except percentages)
Amortization of capitalized development costs
126

 
4.6
%
 
120

 
5.1
%
 
98

 
4.4
%
 
6

 
5.0
%
 
22

 
22.4
%
Research and development costs expensed during the year
415

 
15.0
%
 
359

 
15.4
%
 
333

 
15.0
%
 
56

 
15.6
%
 
26

 
7.8
%
Research and development costs
541

 
19.6
%
 
479

 
20.5
%
 
431

 
19.4
%
 
62

 
12.9
%
 
48

 
11.1
%
2014 compared to 2013
Research and development costs for 2014 were €541 million , an increase of €62 million , or 12.9 percent , from €479 million for 2013. As a percentage of net revenues, research and development costs was 19.6 percent in 2014 compared to 20.5 percent in 2013.
The increase in research and development costs was attributable to an increase in investment in research and development expensed during the year of €56 million and an increase of €6 million in amortization of capitalized development costs.
The total €56 million increase in research and development costs expensed during the year was driven by the Group’s efforts related to the continued development of the Formula 1 car, which included initiatives to maximize the performance, efficiency and safety of the car.
The increase in amortization of capitalized development costs was largely attributable to new product launches. In particular, in April 2014, we started production of the California T and in July 2013, the 458 Spider, triggering the commencement of amortization of the development costs capitalized in relation to these models.
2013 compared to 2012
Research and development costs for 2013 were €479 million , an increase of €48 million , or 11.1 percent , from €431 million for 2012. As a percentage of net revenues, research and development costs were 20.5 percent in 2013 compared to 19.4 percent in 2012.

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The increase in research and development costs was attributable to an increase in investment in research and development expensed during the year of €26 million and an increase of €22 million in amortization of capitalized development costs.
The increase in research and development costs expensed during the year was driven by the Group’s efforts related to the development of the Formula 1 car and to a lesser extent related to the research of innovative technologies. The increase in costs related to the development of the Formula 1 car was primarily driven by development of the new V6 turbo engines with energy recovery systems, for use in the 2014 World Championship, resulting in an increase in the purchase of materials, and to a lesser extent an increase in costs related to our use of a third party wind tunnel while our equipment was being upgraded.
The increase in amortization of capitalized development costs was largely attributable to new product launches. In particular, in October 2012, we started production of the LaFerrari, triggering the commencement of the amortization of the capitalized development costs related to that car. Accordingly, our results contain only three month of amortization expense for 2012 compared to a full year in 2013. In addition, in July 2013, we started production of the 458 Spider, triggering amortization of the related capitalized development costs. These increases were partially offset by the completion of amortization related to the California in 2012.
Other expenses/(income), net
 
For the years ended December 31,
 
Increase/(decrease)
 
2014
 
2013
 
2012
 
2014 vs. 2013
 
2013 vs. 2012
 
(€ million, except percentages)
Other expenses/(income), net
26

 
(3
)
 
17

 
29

 
n.m.
 
(20
)
 
(117.6
)%
2014 compared to 2013
Other expenses/(income), net for 2014 amounted to net other expenses of €26 million, compared to net other income of €3 million for 2013.
For 2014, other expenses/(income), net included other expenses of €39 million, mainly composed of €21 million related to provisions, €6 million related to indirect taxes, and €12 million in miscellaneous expenses, partially offset by other income of €13 million, including €4 million related to the release of provisions previously recorded in other expenses, €3 million related to rental income and €6 million related to miscellaneous income.
The provisions recognized within other expenses include €13 million related to legal proceedings and disputes and €8 million attributable to other risks, primarily related to disputes with suppliers, employees and other parties. The most significant accruals to the provision for legal proceedings and disputes recognized in 2014 related to litigation with a former distributor.
For 2013, other expenses/(income), net included other expenses of €15 million, mainly composed of €3 million related to provisions, €5 million related to indirect taxes and €7 million in miscellaneous expenses, which was more than offset by other income of €18 million, primarily attributable to €6 million related to the release of provisions for legal proceedings and disputes and other risks provisions, €3 million related to rental income and €9 million related to miscellaneous income.
2013 compared to 2012
Other expenses/(income), net for 2013 amounted to net other income of €3 million, compared to net other expenses of €17 million for 2012.
For 2012, other expenses/(income), net included other expenses of €29 million, mainly composed of €15 million related to provisions, €5 million related to indirect taxes and €9 million in miscellaneous expenses, which was partially offset by other income of €12 million, primarily attributable to €2 million related to the release of provisions for legal proceedings and disputes and other risks provisions, €3 million related to rental income and €7 million related to miscellaneous income.
The accruals to provisions recognized within other expenses include €14 million related to legal proceedings and disputes and €1 million attributable to other risks primarily related to disputes with suppliers, employees and other parties.

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EBIT
 
For the years ended December 31,
 
Increase/(decrease)
 
2014
 
Percentage of net revenues
 
2013
 
Percentage of net revenues
 
2012
 
Percentage of net revenues
 
2014 vs. 2013
 
2013 vs. 2012
 
(€ million, except percentages)
EBIT
389

 
14.1
%
 
364

 
15.6
%
 
335

 
15.1
%
 
25

 
6.9
%
 
29

 
8.7
%
2014 compared to 2013
EBIT for 2014 was €389 million , an increase of €25 million , or 6.9 percent , from €364 million for 2013.
The increase in EBIT was mainly due to (i) favorable mix impact of €85 million, (ii) cost savings of €19 million primarily driven by technical and commercial efficiencies, (iii) decreases in costs related to supporting activities of €14 million, (iv) favorable volume impact of €9 million, which were partially offset by (v) an increase in research and development costs of €62 million, and (vi) an increase in selling, general and administrative costs of €40 million.
In particular, the favorable mix impact was primarily driven by the LaFerrari for which we only had two months of shipments in 2013, compared to a full year for 2014. The increase in shipments of LaFerrari more than offset the unfavorable impact of the increase in the proportion of V8 shipments, from 74.0 percent of total shipments for 2013, to 75.7 percent for 2014.
As a percentage of net revenues, EBIT decreased to 14.1 percent in 2014, from 15.6 percent in 2013, mainly due the increase in cost of sales, which as a percentage of net revenues were 54.5 percent in 2014, compared to 52.9 percent in 2013.
2013 compared to 2012
EBIT for 2013 was €364 million , an increase of €29 million , or 8.7 percent , from €335 million for 2012.
The increase in EBIT was due to (i) €75 million primarily related to engines and Formula 1 activities, (ii) positive mix impact of €33 million and (iii) cost savings of €16 million primarily driven by technical and commercial efficiencies, which were partially offset by (iv) an increase in research and development costs of €48 million, (v) unfavorable volume impact of €30 million, and (vi) an increase in selling, general and administrative costs of €17 million.
The €75 million increase in EBIT attributable to engines and Formula 1 activities was mainly driven by an increase in commercial and sponsorship revenues from F1 activities, and also to an increase in contribution from the sale of engines to Maserati, driven by an increase in volumes. The positive mix impact of €33 million was driven by the increased proportion of total shipments represented by V12 models which increased from 20.8 percent for 2012 to 26.0 percent for 2013, driven largely by shipments of the F12berlinetta. The unfavorable volume impact of €30 million was driven by the 5.5 percent decrease in shipments attributable to management’s decision announced in May 2013 to limit production in order to maintain brand exclusivity.
As a percentage of net revenues, EBIT increased from 15.1 percent in 2012 to 15.6 percent in 2013 due to the combination of a decrease in cost of sales, which as a percentage of net revenues decreased from 53.9 percent in 2012 to 52.9 percent in 2013, partially offset by an increase in research and development costs, which as a percentage of revenues increased from 19.4 percent for 2012 to 20.5 percent in 2013.
Net financial income/(expenses)
 
For the years ended December 31,
 
Increase/(decrease)
 
2014
 
2013
 
2012
 
2014 vs. 2013
 
2013 vs. 2012
 
(€ million, except percentages)
Net financial income/(expenses)
9

 
2

 
(1
)
 
7

 
n.m.
 
3

 
n.m.

71



2014 compared to 2013
Net financial income for 2014 was €9 million , an increase of €7 million from €2 million for 2013.
The increase in net financial income was mainly due to a €5 million increase in financial income and a €2 million decrease in financial expenses. In particular, the €5 million increase in financial income was driven by a €4 million increase in other interest income and financial income and a €1 million increase in interest income from banks deposits, attributable to the increase in our average cash balances.
2013 compared to 2012
Net financial income was €2 million for 2013, compared to net financial expenses of €1 million in 2012.
The €3 million increase in net financial income was primarily attributable to a decrease in financial expenses recognized, mainly related to a decrease in financial expenses incurred on derivative financial instruments.
Income tax expense
 
For the years ended December 31,
 
Increase/(decrease)
 
2014
 
2013
 
2012
 
2014 vs. 2013
 
2013 vs. 2012
 
(€ million, except percentages)
Income tax expense
133

 
120

 
101

 
13

 
10.8
%
 
19

 
18.8
%
2014 compared to 2013
Income tax expense for 2014 was €133 million , an increase of €13 million , or 10.8 percent , from €120 million for 2013. The increase in income tax expense was attributable to the combined effect of an 8.7 percent increase in profit before taxes from €366 million for 2013, to €398 million for 2014, and an increase in the effective tax rate net of IRAP from 28.1 percent for 2013 to 28.6 percent for 2014, primarily due to the geographical distribution of income before tax and the difference in local tax rates.
2013 compared to 2012
Income tax expense for 2013 was €120 million , an increase of €19 million , or 18.8 percent , from €101 million for 2012. The increase in income tax expense was attributable to the combined effect of a 9.6 percent increase in profit before taxes, from €334 million for 2012, to €366 million for 2013, and an increase in effective tax rate net of IRAP, from 25.6 percent in 2012 to 28.1 percent in 2013. In particular, for the year ended December 31, 2012, we accounted for previously unrecognized deferred tax assets of €8 million, which resulted in a substantial decrease of the effective tax rate. Excluding the impact of the previously unrecognized deferred tax assets, the effective tax rate would have been substantially unchanged, amounting to 28.0 percent for the year ended December 31, 2012 as compared to 28.1 percent for the year ended December 31, 2013.
Liquidity and Capital Resources
Liquidity Overview
We require liquidity in order to meet our obligations and fund our business. Short-term liquidity is required to purchase raw materials, parts and components for car production, and to fund selling, administrative, research and development, and other expenses. In addition to our general working capital and operational needs, we expect to use cash for capital expenditures to support our existing and future products. We make capital investments mainly in Italy, for initiatives to introduce new products, enhance manufacturing efficiency, improve capacity, and for maintenance and environmental compliance. Our capital expenditures in 2015 are expected to be between €350 million to €400 million, mainly relating to property, plant and equipment and capitalized research and development, which we plan to fund primarily with cash generated from our operating activities. In connection with the Restructuring, we will enter into the FCA Note, which we expect to subsequently refinance using third party financing (see “Unaudited Pro Forma Condensed Consolidated Financial Information”). We believe that our cash generation together with our current liquidity will be sufficient to meet our obligations, including those resulting from the Restructuring, and fund our business and capital expenditures.

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Historically cash generated from operating activities has been sufficient to support the liquidity requirements of the business. Our Net Cash position increased from €480 million at December 31, 2013 to €566 million at December 31, 2014 mainly due to positive Free Cash Flow (cash provided from operating activities less cash used in investment activities) of €136 million for the year ended December 31, 2014 ( €187 million and €205 million for the years ended December 31, 2013 and 2012, respectively). Our Net Cash position increased from €566 million at December 31, 2014, to €789 million at June 30, 2015, primarily driven by positive Free Cash Flow of €264 million for the six months ended June 30, 2015.
Our business and results of operations depend on our ability to achieve certain minimum car shipment volumes. We have significant fixed costs and, therefore, changes in our car shipment volumes can have a significant effect on profitability and liquidity. We have historically managed our liquidity through participating in cash management and funding services provided by the treasury functions of the FCA Group. Therefore, our liquidity is essentially represented by deposits in FCA cash management pools.
Our debt is mainly with the FCA Group and to a lesser extent with third parties and primarily relates to the financing of the financial services portfolios with the dealer network and clients. At June 30, 2015, we had total debt of €567 million ( €510 million at December 31, 2014, and €318 million at December 31, 2013), of which €139 million (€131 million at December 31, 2014, and €76 million at December 31, 2013) was with third parties and the remainder with the FCA Group.
Our debt position is expected to change significantly as a result of the Restructuring transactions and, in particular, the issue of the FCA Note which is expected to have a principal amount outstanding of €2.5 billion immediately following the Restructuring.
As a result of the Separation, deposits in FCA's cash management pools, debt with FCA (excluding the FCA Note) and receivables from financing activities with FCA will be settled. We also intend to refinance the FCA Note using third party financing. On a pro forma basis at June 30, 2015, our Net Debt would be equal to €1,709 million. See “Unaudited Pro Forma Condensed Consolidated Financial Information” and “The Restructuring and Separation Transactions”.
Post Restructuring we will be funded by a combination of capital markets transactions and bank facilities.
Cyclical Nature of Our Cash Flows
Our working capital is subject to month to month fluctuations due to, among others, production volumes, activity of our financial services portfolio, timing of tax payments and capital expenditures. In particular, our inventory levels increase in the periods leading up to launches of new models, during the phase out of prior models and at the end of the second quarter when our inventory levels are higher to support the summer plant shutdown. The expansion of our financial services portfolio, particularly in the United States, has increased our working capital requirements. The payment of taxes affects our working capital as a substantial portion of our taxes are paid in the fourth quarter of the year and a smaller portion in the third quarter of the year. In the future, following the Separation, as a stand alone company, the timing of our tax payments may change. Finally, our capital expenditure requirements are, among others, influenced by the timing of the launch of new models and, in particular, our development costs peak in periods when we develop a significant number of new models to renew or refresh our product range.
We tend to generally receive payment for cars (other than those for which we provide dealer financing) between 30 and 40 days after the car is shipped while we tend to pay most suppliers between 90 and 105 days after we receive the raw materials or components. We maintain sufficient inventory of raw materials and components to ensure continuity of our production lines but delivery of most raw materials and components takes place monthly or more frequently in order to minimize inventories. Manufacture of one of our cars typically takes between 30 and 42 days, depending on the level of automation of the relevant production line, and the car is generally shipped to our dealers three to six days following the completion of production, although to ensure prompt deliveries in certain regions we may warehouse cars in local markets for longer periods of time. As a result, we tend to receive payment for cars shipped before we are required to make payment for the raw material and components used in manufacturing the cars.

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Cash Flows
The following table summarizes the cash flows from/(used in) operating, investing and financing activities for each of the six months ended June 30, 2015 and 2014. For a complete discussion of our cash flows, see our Interim Condensed Consolidated Financial Statements included elsewhere in this prospectus.
 
 
For the six months ended June 30,
 
 
2015
 
2014
 
 
(€ million)
Cash flows from operating activities
 
416

 
262

Cash flows used in investing activities
 
(152
)
 
(128
)
Cash flows used in financing activities
 
(150
)
 
(131
)
Translation exchange differences
 
9

 
1

Total change in cash and cash equivalents
 
123

 
4

Operating Activities — Six Months Ended June 30, 2015
For the six months ended June 30, 2015, our cash flows from operating activities were €416 million, primarily the result of:
(i)
profit before taxes of €212 million adjusted to add back €130 million for depreciation and amortization expense, €23 million in provisions recognized, and €31 million related to other non-cash expenses and income, relating primarily to fluctuations in the fair value of derivatives not accounted for as hedging derivatives and allowances for doubtful accounts and inventory write-downs;
(ii)
€100 million related to cash generated by the decrease in receivables from financing activities, primarily driven by the full reimbursement of the financing of inventory related to the establishment of the Maserati standalone business in China which at December 31, 2014 was equal to €147 million, partially offset by the increase in the financial services portfolio;
(iii)
€49 million relating to cash absorbed by the net change in other operating assets and liabilities, primarily attributable to an increase in other current assets and a decrease in other liabilities, driven by VAT, deferred income and foreign currency exchange translation;
(iv)
income taxes paid of €24 million; and
(v)
€7 million related to cash absorbed from the net change in inventories, trade payables and trade receivables, primarily driven by (a) an increase in inventories of €52 million, primarily to support a smooth phase out of the 458 Italia and the 458 Spider in 2015 and to a lesser extent due to an increase in semi-finished goods primarily related to future LaFerrari shipments, partially offset by (b) an increase in trade payables of €28 million and (c) a decrease in trade receivables of €17 million.
Operating Activities — Six Months Ended June 30, 2014
For the six months ended June 30, 2014, our cash flows from operating activities were €262 million, primarily the result of:
(i)
profit before taxes of €187 million adjusted to add back €140 million for depreciation and amortization expense, €34 million in provisions recognized, and €5 million related to other non-cash expenses and income;
(ii)
€36 million related to cash generated from the net change in inventories, trade payables and trade receivables, primarily driven by (a) an increase in trade payables of €80 million, partially offset by (b) an increase in inventories of €41 million, mainly related to inventories of the LaFerrari to be shipped in future periods, and (c) an increase in trade receivables of €3 million;
(iii)
€7 million relating to cash generated by the net change in other operating assets and liabilities;

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(iv)
€139 million relating to cash absorbed by an increase in receivables from financing activities, mainly driven by an increase in business volumes of Ferrari Financial Services Inc; and
(v)
income taxes paid of €8 million.
Investing Activities — Six Months Ended June 30, 2015
For the six months ended June 30, 2015, our net cash used in investing activities was €152 million, primarily due to €78 million of additions to intangible assets, mainly related to externally acquired and internally generated development costs, and €73 million of additions to property, plant and equipment, related primarily to the new 488 GTB launched in 2015. For a detailed analysis of additions to property, plant and equipment and intangible assets see “—Capital Expenditures”.
Investing Activities — Six Months Ended June 30, 2014
For the six months ended June 30, 2014, our net cash used in investing activities was €128 million, primarily due to €70 million of additions to intangible assets, mainly related to externally acquired and internally generated development costs, and €57 million of additions to property, plant and equipment, related primarily to engine assembly lines and plant and machinery for the LaFerrari and the California T models. For a detailed analysis of additions to property, plant and equipment and intangible assets see “—Capital Expenditures”.
Financing Activities — Six Months Ended June 30, 2015
For the six months ended June 30, 2015, net cash used in financing activities was €150 million, primarily the result of:
(i)
€147 million related to the increase in deposits in FCA’s cash management pools;
(ii)
€18 million related to dividends paid to non-controlling interest in our Chinese distributor, Ferrari International Cars Trading (Shanghai) Co. Ltd; and
(iii)
€11 million related to net repayments of bank borrowings.
Partially offset by:
(i)
€17 million related to net proceeds from the change in financial liabilities with FCA; and
(ii)
€9 million related to net proceeds from other debt.
Financing Activities — Six Months Ended June 30, 2014
For the six months ended June 30, 2014, net cash used in financing activities was €131 million, primarily the result of:
(i)
€214 million related to the increase in deposits in FCA’s cash management pools; and
(ii)
€16 million related to net change in other debt.
Partially offset by:
(i)
€95 million related to the net change in financial liabilities with FCA; and

75



(ii) €4 million related to net proceeds from bank borrowings.
The following table summarizes the cash flows from/(used in) operating, investing and financing activities for each of the years ended December 31, 2014, 2013 and 2012. For a complete discussion of our cash flows, see our Annual Consolidated Financial Statements included elsewhere in this prospectus.
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ million)
Cash flows from operating activities
426

 
454

 
463

Cash flows used in investing activities
(290
)
 
(267
)
 
(258
)
Cash flows used in financing activities
(122
)
 
(163
)
 
(194
)
Translation exchange differences
6

 
(10
)
 
(5
)
Total change in cash and cash equivalents
20

 
14

 
6

Operating Activities — Year Ended December 31, 2014
For the year ended December 31, 2014, our cash flows from operating activities were €426 million , primarily the result of:
(i)
profit before taxes of €398 million adjusted to add back €289 million for depreciation and amortization expense, €66 million in provisions recognized, and €53 million related to other non-cash expenses and income, relating primarily to the accruals to the allowances for doubtful accounts related to trading and financing activities. In particular, the €66 million accruals to provision was composed of (a) increases in the warranty provision of €27 million due to an increase in cars delivered, and to a lesser extent a reassessment of the estimated cost assumptions used to determine the provision, (b) increases in the provision for legal proceedings and disputes of €24 million, and (c) provisions to cover other risks and charges for €15 million;
(ii)
€15 million relating to cash generated by other operating cash flows, primarily attributable to the net change in other operating assets and liabilities;
(iii)
€52 million related to cash absorbed from the net change in inventories, trade payables and trade receivables, primarily driven by (a) an increase in inventories of €66 million, due to increased finished cars at December 31, 2014 as compared to December 31, 2013, and mainly related to inventories of the LaFerrari to be shipped during 2015, partially offset by (b) a €13 million increase in trade payables and (c) a €1 million decrease in trade receivables, driven by management efforts to improve collection rates;
(iv)
€202 million related to cash absorbed by an increase in receivables from financing activities, mainly driven by an increase in business volumes of Ferrari Financial Services Inc., and in particular due to an increase in the contracts relating to the sale of vintage cars, and to a lesser extent, an increase in the number of contracts relating to new cars; and
(v)
income tax paid of €141 million.
Operating Activities — Year Ended December 31, 2013
For the year ended December 31, 2013, our cash flows from operating activities were €454 million , primarily the result of:
(i)
profit before taxes of €366 million adjusted to add back €270 million for depreciation and amortization expense, €24 million in provisions recognized and other non-cash items of €32 million. In particular, the €24 million increase in provisions was mainly composed of (a) increases to the warranty provision of €14 million, and (b) increases to the provision for legal proceedings and disputes of €6 million;
(ii)
€44 million related to cash generated by other operating cash flows, primarily attributable to cash generated by the change in other operating assets and liabilities;

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(iii)
€87 million related to cash absorbed from the net change in inventories, trade payables and trade receivables, primarily driven by (a) a €81 million increase in trade receivables mainly driven by the increase in volumes of Maserati engine sales and (b) a €20 million increase in inventories, which were partially offset by (c) a €14 million increase in trade payables;
(iv)
€56 million related to cash absorbed by an increase in receivables from financing activities, largely due to increased business volumes of financial services operations in the United States; and
(v)
income tax paid of €139 million.
Operating Activities — Year Ended December 31, 2012
For the year ended December 31, 2012, our cash flows from operating activities were €463 million , primarily the result of:
(i)
profit before taxes of €335 million adjusted to add back €238 million for depreciation and amortization expense, €42 million in provisions recognized and €37 million related to other non-cash expense and income, mainly related to the allowances for doubtful accounts related to trading and financing activities. In particular, the €42 million accruals to provision was mainly composed of (a) increases to the warranty provision of €27 million due primarily to an increase numbers of cars shipped and (b) increases to the provision for legal proceedings and disputes of €11 million;
(ii)
€78 million cash generated from other operating cash flows, primarily attributable to cash generated by the changes in other operating assets and liabilities;
(iii)
€15 million cash generated from the changes in inventories, trade payables and trade receivables, primarily driven by (a) a €25 million increase in trade payables and (b) a €9 million decrease in trade receivables, which were partially offset by (c) a €19 million increase in inventories;
(iv)
€148 million related to cash absorbed by an increase in receivables from financing activities, primarily driven by an increase in the number of financing contracts entered into by Ferrari Financial Services Inc. during the period; and
(iv)
income tax paid of €134 million.
Investing Activities — Year Ended December 31, 2014
For the year ended December 31, 2014, our net cash used in investing activities was €290 million , primarily the result of:
(i)
€330 million of capital expenditures, including €169 million related to additions to property, plant and equipment and €161 million relating to additions to intangible assets. For a detailed analysis of additions to property, plant and equipment and intangible assets see “—Capital Expenditures”;
(ii)
€39 million related to cash acquired on transactions with the non-controlling interests in Ferrari International Cars Trading (Shanghai) Co. L.t.d.; and
(iii)
€1 million proceeds from the sale of property, plant and equipment and intangible assets and the net change in investments and other financial assets.
Investing Activities — Year Ended December 31, 2013
For the year ended December 31, 2013, our net cash used in investing activities was €267 million , primarily the result of:
(i)
€271 million of capital expenditures, including €162 million related to additions to property, plant and equipment and €109 million relating to additions to intangible assets. For a detailed analysis of additions to property, plant and equipment and intangible assets see “—Capital Expenditures”; and

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(ii)
€4 million proceeds from the sale of property, plant and equipment and intangible assets and the net change in investments and other financial assets.
Investing Activities — Year Ended December 31, 2012
For the year ended December 31, 2012, our net cash used in investing activities was €258 million , primarily the result of:
(i)
€258 million of capital expenditures, including €161 million related to additions to property, plant and equipment and €97 million relating to additions to intangible assets. For a detailed analysis of additions to property, plant and equipment and intangible assets see “—Capital Expenditures”;
(ii)
€2 million related to the increase in investments and other financial assets; and
(iii)
€2 million proceeds from the sale of property, plant and equipment and intangible assets.
Financing Activities — Year Ended December 31, 2014
For the year ended December 31, 2014, net cash used in financing activities was €122 million , primarily the result of:
(i)
€247 million related to the increase in deposits in FCA’s cash management pools;
(ii)
€30 million related to net repayments of bank borrowings and other debt; and
(iii)
€15 million related to dividends paid to non-controlling interest in our Chinese distributor, Ferrari International Cars Trading (Shanghai) Co. L.t.d.
These cash outflows were partially offset by:
(i)
€89 million related to net proceeds from the change in financial liabilities with FCA; and
(ii)
€81 million related to proceeds from third party financial liabilities, driven largely by an increase in borrowings from banks.
Financing Activities — Year Ended December 31, 2013
For the year ended December 31, 2013, net cash used in financing activities was €163 million , primarily the result of:
(i)
€227 million related to the increase in deposits in FCA’s cash management pools, and
(ii)
€10 million of cash used for the repayment of bank borrowings.
These cash outflows were partially offset by:
(i)
€51 million related to net proceeds from the net change in financial liabilities with FCA;
(ii)
€15 million related to proceeds from bank borrowings, driven largely by an increase in borrowings from banks, and in particular due to financing obtained by Ferrari Financial Services Japan KK to fund its financing portfolio; and
(iii)
€8 million in net proceeds of other debt.
Financing Activities — Year Ended December 31, 2012
For the year ended December 31, 2012, net cash used in financing activities was €194 million , primarily the result of:
(i)
€293 million related to net repayments of financial liabilities with FCA; and
(ii)
€7 million related to dividends paid to non-controlling interest in Ferrari International Cars Trading (Shanghai) Co. L.t.d.

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These cash outflows were partially offset by:
(i)
€73 million related to a decrease in the deposits in FCA Group cash management pools;
(ii)
€23 million net proceeds from other debt; and
(iii)
€10 million related to proceeds from bank borrowings.
Capital Expenditures
Capital expenditures are defined as cash outflows that result in additions to property, plant and equipment and intangible assets. Capital expenditures for the six months ended June 30, 2015 were €151 million (€127 million for the six months ended June 30, 2014) and €330 million for the year ended December 31, 2014 ( €271 million and €258 million for the years ended December 31, 2013 and 2012, respectively).
The following table sets a forth a breakdown of capital expenditures by category for each of the six months ended June 30, 2015 and 2014, and for each of the years ended December 31, 2014, 2013 and 2012:
 
 
For the six months ended June 30,
 
For the years ended December 31,
 
 
2015
 
2014
 
2014
 
2013
 
2012
 
 
(€ million)
Intangible assets
 
 
 
 
 
 
 
 
 
 
Externally acquired and internally generated development costs
 
75

 
67

 
145

 
93

 
84

Patents, concessions and licenses
 
2

 

 
13

 
13

 
8

Other intangible assets
 
1

 
3

 
3

 
3

 
5

Total intangible assets
 
78

 
70

 
161

 
109

 
97

Property, plant and equipment
 
 
 
 
 
 
 
 
 
 
Land
 

 

 

 

 
2

Industrial buildings
 
10

 
1

 
4

 
10

 
10

Plant, machinery and equipment
 
39

 
40

 
77

 
129

 
89

Other assets
 
7

 
1

 
12

 
12

 
8

Advances and assets under construction
 
17

 
15

 
76

 
11

 
52

Total property, plant and equipment
 
73

 
57

 
169

 
162

 
161

Total capital expenditures
 
151

 
127

 
330

 
271

 
258

Intangible assets
Our total capital expenditures in intangible assets for the six months ended June 30, 2015 were €78 million (€70 million for the six months ended June 30, 2014), and €161 million for the year ended December 31, 2014 ( €109 million and €97 million for the years ended December 31, 2013 and 2012, respectively), the most significant component of which relates to externally acquired and internally generated development costs. In particular, we make such investments to support the development of our current and future product offering. The capitalized development costs primarily include materials costs and personnel expenses relating to engineering, design and development focused on content enhancement of existing cars and new models. We constantly invest in product development to ensure we can quickly and efficiently respond to market demand and/or technological breakthroughs and in order to maintain our position at the top of the performance and luxury sports car market.
For the six months ended June 30, 2015, we invested €75 million in externally acquired and internally generated development costs, of which €25 million related to development of the 488 GTB, a new model which was presented in early 2015, €41 million related to development of models to be launched in future years, €5 million related to investments to develop other existing models in our product line and €4 million related to components.
For the six months ended June 30, 2014, we invested €67 million in externally acquired and internally generated development costs, of which €31 million related to the development of the 488 GTB, €9 million related to development of the

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California T, €6 million related to the LaFerrari and €13 million related to development of models to be launched in future years, €4 million related to investments to develop other existing models in our product line and €4 million related to components.
For the year ended December 31, 2014, we invested €145 million in externally acquired and internally generated development costs, of which €60 million related to the development of the 488 GTB, €60 million related to investments to develop existing models, including the FF, the California T and the LaFerrari and €15 million related to components . Furthermore, during the year ended December 31, 2014, we invested an additional €10 million related to the development phase for a new car not yet scheduled to launch.
For the year ended December 31, 2013, we invested €93 million in externally acquired and internally generated development costs of which €24 million related to the development the LaFerrari, €51 million related to investments to develop existing models in our product line up and in particular, the California T and the 458 VS. Furthermore, we invested €18 million in the development of the new 488 GTB street car.
For the year ended December 31, 2012, we invested €84 million in externally acquired and internally generated development costs of which €32 million related to LaFerrari, €28 million related to the California T and €15 million related to the F12berlinetta.
Investment in other intangible assets mainly relates to costs recognized for the registration of trademarks, patents, concessions and licenses.
Property, plant and equipment
Our total capital expenditure in property, plant and equipment for the six months ended June 30, 2015 was €73 million (€57 million for the six months ended June 30, 2014) and €169 million for the year ended December 31, 2014 ( €162 million and €161 million for the years ended December 31, 2013 and 2012, respectively).
Our most significant investments generally relate to plant, machinery and equipment, which amounted to €39 million for the six months ended June 30, 2015 (€40 million for the six months ended June 30, 2014) and €77 million for the year ended December 31, 2014 ( €129 million and €89 million for the years ended December 31, 2013 and 2012, respectively) and to a lesser extent advances and assets under construction, which amounted to €17 million for the six months ended June 30, 2015 (€15 million for the six months ended June 30, 2014) and €76 million for the year ended December 31, 2014 ( €11 million and €52 million for the years ended December 31, 2013 and 2012, respectively). In particular, our most significant investments include engine assembly lines and plant and machinery used for engine testing to ensure engines deliver the expected performance prior to installation in the car, referred to as the test bench.
For the six months ended June 30, 2015, investments in plant and machinery of €39 million were composed of €15 million related to the 488 GTB, €4 million related to engine assembly lines, €2 million of plant related to our personalization program, €2 million related to the California T, €1 million related to LaFerrari, €1 million related to test bench equipment and machinery and the residual amount of capital expenditure in plant, machinery and equipment was largely related to the purchase of industrial tools needed for production of cars.
For the six months ended June 30, 2014, investments in plant and machinery of €40 million were composed of €9 million related to the California T, €6 million related to the LaFerrari, €6 million related to engine assembly lines, €2 million related to the 488 GTB, €2 million related to the personalization program and €1 million related to test bench equipment and machinery. The residual amount of capital expenditure in plant, machinery and equipment was largely related to the purchase of industrial tools needed for production of cars.
For the year ended December 31, 2014, investments in plant, machinery and equipment of €77 million , were composed of €44 million related to the investments in engine assembly lines, €10 million to test bench equipment and machinery and €3 million related to upgrade works performed on the wind tunnel. The residual amount of capital expenditure in plant, machinery and equipment was largely related to the purchase of industrial tools needed for production of cars.
For the year ended December 31, 2013, investments in plant, machinery and equipment of €129 million , were composed of €91 million related to the construction of new assembly line for the V12 hybrid engine for use in the LaFerrari which entered into production in 2013, €9 million for test bench equipment and machinery and €4 million related to upgrade and improvement works performed on our wind tunnel. The residual amount of capital expenditure in plant, machinery and equipment was largely related to the purchase of industrial tools needed for production of cars.

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For the year ended December 31, 2012, investments in plant, machinery and equipment of €89 million , were composed of €47 million related to investments in engine assembly lines, €12 million for equipment and machinery, and €5 million related to wind tunnel upgrade and improvement. The residual amount of capital expenditure in plant, machinery and equipment was largely related to the purchase of industrial tools needed for production of cars. For the year ended December 31, 2012, capital expenditures related to engine assembly lines include investments made in the V6 engine assembly line, the products of which are sold to Maserati.
Advances and assets under construction for the six months ended June 30, 2015 amounted to €17 million (€15 million for the six months ended June 30, 2014) and €76 million for the year ended December 31, 2014 ( €11 million and €52 million for the years ended December 31, 2013 and 2012, respectively).
In particular for the six months ended June 30, 2015, and for the six months ended June 30, 2014, advances and assets under construction primarily related to investments in car production lines. For the year ended December 31, 2014, advances and assets under construction included €26 million related to the construction of the new building to house our Formula 1 racing team activities (€10 million for the year ended December 2013), €37 million related to the production line of the 488 GTB, which was launched in 2015, and €13 million in the construction of a new assembly line of V6 engines to be used in the Formula 1 World Championship.
Net Cash/(Net Debt)
Net Cash/(Net Debt) is the primary measure used by management to analyze our financial leverage and capital structure, and is one of the key indicators used to measure our financial position. The following table sets forth a reconciliation of Net Cash/(Net Debt) at June 30, 2015, December 31, 2014 and 2013, using information derived from the consolidated statement of financial position and on a pro forma basis at June 30, 2015 using information derived from our unaudited pro forma condensed consolidated statement of financial position, each included elsewhere in this prospectus.
 
 
At June 30,
 
At December 31,
 
 
2015
 
2015
 
2014
 
2013
 
 
(Pro Forma)
 
(Historical)
 
(Historical)
 
(Historical)
 
 
(€ million)
Cash and cash equivalents
 
258

 
258

 
134

 
114

Deposits in FCA Group cash management pools
 

 
1,098

 
942

 
684

Total liquidity
 
258

 
1,356

 
1,076

 
798

Financial liabilities with FCA Group
 

 
(428
)
 
(379
)
 
(242
)
Financial liabilities with third parties
 
(1,967
)
 
(139
)
 
(131
)
 
(76
)
Total Net Cash/(Net Debt)
 
(1,709
)
 
789

 
566

 
480

Cash and cash equivalents
Cash and cash equivalents of €258 million at June 30, 2015 ( €134 million at December 31, 2014 and €114 million at December 31, 2013) consist primarily of bank current accounts. Our cash and cash equivalents are denominated in various currencies and available to certain subsidiaries which operate in areas other than the United States and Europe. Cash held in such countries may be subject to transfer restrictions depending on the jurisdictions in which these subsidiaries operate. In particular, cash held in China is subject to certain repatriation restrictions (and may only be repatriated as dividends). Based on our review, we do not believe such transfer restrictions have an adverse impact on our ability to meet our liquidity requirements at the dates represented above. During the six months ended June 30, 2015, Maserati fully settled the receivable, which at December 31, 2014 amounted to €147 million, deriving from the financing of inventory related to the establishment of the Maserati standalone business in China, resulting in an increase in cash and cash equivalents denominated in Chinese Yuan.

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The following table sets forth an analysis of the currencies in which our cash and cash equivalents were denominated at the dates presented:
 
 
At June 30,
 
At December 31,
 
 
2015
 
2014
 
2013
 
 
(€ million)
Chinese Yuan
 
179

 
74

 
66

Japanese Yen
 
53

 
27

 
30

Euro
 
12

 
10

 
12

U.S. Dollar
 
3

 
14

 

Other currencies
 
11

 
9

 
6

Total
 
258

 
134

 
114

Deposits in FCA Group cash management pools
Deposits in FCA Group cash management pools relate to our participation in a group-wide cash management system at FCA, where the operating cash management, main funding operations and liquidity investment of the Group are centrally coordinated by dedicated treasury companies with the objective of ensuring effective and efficient management of our funds. We access funds deposited in these accounts on a daily basis and have the contractual right to withdraw our funds on demand and terminate the cash management arrangements depending on FCA's ability to pay at the relevant time. The carrying value of deposits in FCA Group cash management pools approximates fair value based on the short maturity of these investments. Of the total €1,098 million of deposits in FCA Group cash management pools at June 30, 2015 ( €942 million at December 31, 2014 and €684 million at December 31, 2013), €1,022 million was denominated in Euro and €76 million in U.S. Dollars (at December 31, 2014 and 2013, €844 million and €647 million was in denominated in Euro and €98 million and €37 million in U.S. Dollars, respectively). These arrangements will be terminated upon the Separation.
Total liquidity (defined as cash and cash equivalents plus deposits in FCA Group cash management pools) at June 30, 2015 was €1,356 million, of which 76.3 percent was denominated in Euro, 13.2 percent in Chinese Yuan, 5.8 percent in U.S. Dollars and 4.7 percent in other currencies. Total liquidity at December 31, 2014 was €1,076 million , of which 79.4 percent was denominated in Euro, 10.5 percent in U.S. Dollars, 6.9 percent in Chinese Yuan, and 3.2 percent in other currencies. Total liquidity at December 31, 2013 was €798 million , of which 82.6 percent was denominated in Euro, 8.3 percent in Chinese Yuan, 4.6 percent in U.S. Dollars and 4.5 percent in other currencies.
Financial liabilities with FCA Group
Financial liabilities with FCA Group at June 30, 2015 were €428 million ( €379 million and €242 million at December 31, 2014 and 2013, respectively) and primarily relate to a credit line held with Fiat Chrysler Finance North America, the purpose of which is to finance the activities of our financial services portfolio in the Americas. The facility is denominated in U.S. Dollars and bore interest of LIBOR plus a spread of 100 bps to May 31, 2015 and LIBOR plus a spread of 220 bps from June 1, 2015.
Financial liabilities with third parties
Financial liabilities with third parties at June 30, 2015 were €139 million ( €131 million and €76 million at December 31, 2014 and 2013, respectively). Financial liabilities with third parties relates to a number of arrangements mainly used to support the financial services operations. In particular, of the total financial liabilities with third parties at June 30, 2015, (i) €67 million related to a Ferrari Financial Services Inc.(€62 million and nil at December 31, 2014 and 2013, respectively), (ii) €29 million related to Ferrari Financial Services Japan KK (€34 million and €12 million at December 31, 2014 and 2013, respectively), (iii) €22 million related to Ferrari Financial Services S.p.A. (€15 million and €42 million at December 31, 2014 and 2013, respectively), (iv) €19 million related to Ferrari S.p.A. (€19 million and €16 million at December 31, 2014 and 2013, respectively) and (v) €2 million and €6 million at June 30, 2015 and December 31, 2013 related to other entities.
The financial liabilities with third parties of Ferrari Financial Services Inc. relate to a U.S. Dollar denominated credit facility, which bears interest at a variable rate of LIBOR plus a spread. This facility was renewed in July 2015 and increased to $150 million, from $75 million, and is payable in January 2016.

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The financial liabilities with third parties of Ferrari Financial Services Japan KK, relate to medium-term loans provided by various local banks, denominated in Japanese Yen with maturity dates up to November 2016.
Other borrowings have been provided by various other banks, and are primarily denominated in the functional currency of the entity receiving the financing.
Funding of the Financial Services Portfolio
At June 30, 2015, approximately 95 percent (approximately 99 percent at December 31, 2014 and 98 percent at December 31, 2013) of our financial services portfolio was funded through third party and intercompany debt.
Free Cash Flow
Free Cash Flow is one of management’s primary key indicators to measure the Group’s performance and is defined as net cash generated from operations less cash flows used in investing activities. The following table sets forth our Free Cash Flow for the six months ended June 30, 2015 and 2014, and for the years ended December 31, 2014, 2013 and 2012, using information derived from our consolidated statement of cash flows:
 
 
For the six months ended June 30,
 
For the years ended December 31,
 
 
2015
 
2014
 
2014
 
2013
 
2012
 
 
(€ million)
Cash flows from operating activities
 
416

 
262

 
426

 
454

 
463

Cash flows used in investing activities
 
(152
)
 
(128
)
 
(290
)
 
(267
)
 
(258
)
Free Cash Flow
 
264

 
134

 
136

 
187

 
205

Free Cash Flow for the six months ended June 30, 2015 was €264 million, an increase of €130 million from Free Cash Flow of €134 million for the six months ended June 30, 2014. The increase in our Free Cash Flow was attributable to an increase in cash generated from operations, which was partially offset by an increase in cash used in investing activities. The cash generated from operations benefited from an increase in EBITDA and the impact of the decrease in receivables from financing activities, driven by the full reimbursement of the financing of inventory related to the establishment of the Maserati standalone business in China.
Free Cash Flow for 2014 was €136 million , a decrease from €187 million for 2013 and €205 million for 2012. The decrease in Free Cash Flow was attributable to an increase in cash used in investing activities and in particular by investments in intangible assets, mainly due to investments in development costs for new models and enhancements to existing models.
Off Balance Sheet Arrangements
We have entered into various off-balance sheet arrangements with unconsolidated third parties in the ordinary course of business. For additional information see Note 28 “Commitments” to our Annual Consolidated Financial Statements included elsewhere in this prospectus.


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Contractual Obligations
The following table summarizes payments due under our significant contractual commitments at December 31, 2014:
 
 
Payments due by period
 
 
1 year
 
1 to 3 years
 
3 to 5 years
 
After
 5 years
 
Total
 
 
(€ million)
Long-term debt (1)
 
3

 
13

 
5

 
1

 
22

Operating lease obligations (2)
 
9

 
13

 
3

 

 
25

Unconditional minimum purchase obligations   (3)
 
56

 
41

 
7

 
6

 
110

Purchase obligations   (4)
 
52

 

 

 

 
52

Total contractual obligations
 
120

 
67

 
15

 
7

 
209

______________________________
(1)
Amounts presented relate to the principal amounts of long-term debt and exclude the related interest expense that will be paid when due. Contractual obligations for interest payments are based on contractual terms and current interest rates on our long-term debt obligations and amount to €323 thousand due within one year, €490 thousand due from one to three years, €296 thousand due from three to five years and €416 thousand due after five years. For additional information see Note 23 “Debt” to our Annual Consolidated Financial Statements included elsewhere in this prospectus. The table above does not include short-term debt obligations or the credit line with FCA. Our long-term debt is expected to change significantly as a result of the Restructuring transactions and, in particular, the issue of the FCA Note which is expected to have a principal amount outstanding of €2.5 billion following the Restructuring. We intend to refinance the FCA Note using third party financing. See “Unaudited Pro Forma Condensed Consolidated Financial Information”.
(2)
Operating lease obligations mainly relate to leases for commercial properties and certain assets used in our business.
(3)
Unconditional minimum purchase obligations relate to our unconditional purchase obligations to purchase a fixed or minimum quantity of goods and/or services from suppliers with fixed and determinable price provisions. From time to time, in the ordinary course of our business, we enter into various arrangements with key suppliers in order to establish strategic and technological advantages. In particular, such agreements primarily relate to the purchase of research and development services and to a lesser extent, tooling obligations.
(4)
Purchase obligations represent obligations to purchase property, plant and equipment of €52 million due within one year.
The long-term debt obligations reflected in the table above can be reconciled to the amount in the statement of financial position at December 31, 2014 as follows:
 
Amount
 
(€ million)
Debt (as per Note 23)
510

Short-term debt obligations
(488
)
Long-term debt
22

Pension, post-employment benefits and other provisions for employees
We provide post-employment benefits for certain of our active employees and retirees. We classify these benefits on the basis of the type of benefit provided and in particular as defined contribution plans, defined benefit obligations and other provisions for employees. At December 31, 2014 the liability for such obligations amounted to €77 million (€65 million at December 31, 2013). See Note 21 to the Annual Consolidated Financial Statements.     
Qualitative and Quantitative Information on Financial Risks
Due to the nature of our business, we are exposed to a variety of market risks, including foreign currency exchange rate risk and to a lesser extent, interest rate risk.
Our exposure to foreign currency exchange rate risk arises from the geographic distribution of our shipments, as we generally sell our models in the currencies of the various markets in which we operate, while our industrial activities are all based in Italy, and primarily denominated in Euro.

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Our exposure to interest rate risk arises from the need to fund certain activities and the necessity to deploy surplus funds. Changes in market interest rates may have the effect of either increasing or decreasing our net profit/(loss), thereby indirectly affecting the costs and returns of financing and investing transactions.
These risks could significantly affect our financial position and results of operations, and for this reason these risks are identified and monitored, in order to detect potential negative effects in advance and take the necessary actions to mitigate them, primarily through our operating and financing activities and if required, through the use of derivative financial instruments.
As part of the FCA Group, we have applied the FCA Group policy, which foresees the use of derivative financial instruments to hedge foreign currency exchange rate risk. In particular, we have used derivative financial instruments as cash flow hedges for the purpose of fixing the foreign currency exchange rate at which a predetermined proportion of forecasted transactions denominated in foreign currencies will be accounted for.
As a result of applying the FCA Group policies with respect to foreign currency exchange exposure, our results of operations have not been fully exposed to fluctuations in foreign currency exchange rates.
The following section provides qualitative and quantitative disclosures on the effect that these risks may have. The quantitative data reported in the following section does not have any predictive value, in particular the sensitivity analysis on finance market risks does not reflect the complexity of the market or the reaction which may result from any changes that are assumed to take place.
Quantitative information on foreign currency exchange rate risk
We are exposed to risk resulting from changes in foreign currency exchange rates, which can affect our earnings and equity. In particular:
Where a Group company incurs costs in a currency different from that of its revenues, any change in foreign currency exchange rates can affect the operating results of that company. In 2014, the total trade flows exposed to foreign currency exchange rate risk amounted to the equivalent of 44 percent of our turnover (45 percent in 2013).
The main foreign currency exchange rate to which we are exposed is the Euro/U.S. Dollar for sales in U.S. Dollar in the United States, Canada and Mexico, and other markets where the U.S. Dollar is the reference currency. In 2014, the value of commercial activity exposed to changes in the Euro/U.S. Dollar exchange rate accounted for about 63 percent (63 percent in 2013) of the total currency risk from commercial activity. Other significant exposures included the foreign currency exchange rate between the Euro and the following currencies: Swiss Franc, Pound Sterling, Australian Dollar, Japanese Yen, Chinese Yuan and Hong Kong Dollar. None of these exposures, taken individually, exceeded 10 percent of our total foreign currency exchange rate exposure for commercial activity in 2014, with the exception of the Pound Sterling, which represented approximately 12 percent (13 percent in 2013). It is our policy to use derivative financial instruments to hedge a certain percentage of the exposure, on average between 50 percent and 90 percent. Until 2014, some exposures were covered over a 24-month rolling period, and since 2015 such timeframe has been reduced to 12 months for all currencies. For firm commitments, the policy is to fully hedge the exposure.
Several subsidiaries are located in countries that are outside the Eurozone, in particular the United States, the United Kingdom, Switzerland, China, Hong Kong, Japan, Australia and Singapore. As our reporting currency is the Euro, the income statements of those subsidiaries are converted into Euro using the average foreign currency exchange rate for the period and, even if revenues and margins are unchanged in local currency, changes in foreign currency exchange rates can impact the amount of revenues, costs and profit as restated in Euro.
The amount of assets and liabilities of consolidated companies that report in a currency other than the Euro may vary from period to period as a result of changes in foreign currency exchange rates. The effects of these changes are recognized directly in equity as a component of other comprehensive income/(loss) under gains/(losses) from currency translation differences.
There have been no substantial changes in 2014 in the nature or structure of exposure to foreign currency exchange rate risk or in our hedging policies.

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The potential decrease in fair value of derivative financial instruments held by us at December 31, 2014 to hedge against foreign currency exchange rate risk (currency swaps/forwards), which would arise in the case of a hypothetical, immediate and adverse change of 10 percent in the exchange rates of the major foreign currencies with the Euro, would be approximately €178 million (€147 million at December 31, 2013). Receivables, payables and future trade flows for which hedges have been put in place were not included in the analysis. It is reasonable to assume that changes in foreign currency exchange rates will produce the opposite effect, of an equal or greater amount, on the underlying transactions that have been hedged.
Quantitative information on interest rate risk
Our exposure to interest rate risk, though less significant, arises from the need to fund industrial and financial operating activities and the necessity to deploy surplus funds. Changes in market interest rates may have the effect of either increasing or decreasing our net profit/(loss), thereby indirectly affecting the costs and returns of financing and investing transactions.
These financial market risks could significantly affect our financial position and results of operations, and for this reason these risks are identified and monitored, in order to detect potential negative effects in advance and take the necessary actions to mitigate them, primarily through our operating and financing activities and if required, through the use of derivative financial instruments. The Company did not enter into any interest rate derivatives in the periods covered by the Consolidated Financial Statements.
Our most significant floating rate financial assets are our deposits in FCA Group cash management pools, cash and cash equivalents and certain receivables from financing activities (mainly financial receivables from FCA Group companies, factoring receivables, dealer financing and some client financing receivables) while our debt generally bears floating rates of interest. At December 31, 2014, a 10 basis point decrease in interest rates on such floating rate financial assets and debt, with all other variables held constant, would have resulted in a decrease in profit before taxes of €598 thousand on an annual basis (€481 thousand at December 31, 2013). The analysis is based on the assumption that floating rate financial assets and debt which expires during the projected 12 month period will be renewed or reinvested in similar instruments, bearing the hypothetical short-term interest rates.

Information on credit risk
Receivables from financing activities amounting to €1,224,446 thousand at December 31, 2014 (€862,764 thousand at December 31, 2013) are shown net of the allowance for doubtful accounts amounting to €14,201 thousand (€10,865 thousand at December 31, 2013). After considering the allowance for doubtful accounts, €12,032 thousand of receivables were overdue (€14,707 thousand at December 31, 2013). Therefore, overdue receivables represent a minor portion of our receivables from financing activities.
In addition, of the total receivables from financing activities, €1,059,592 thousand (€799,872 thousand at December 31, 2013) relate to the financial services portfolio and such receivables are generally secured on the titles of cars or with other guarantees.
New Standards, Amendments and Interpretations under IFRS

For a summary of the new standards, amendments and interpretations under IFRS which have been issued by the IASB that will have mandatory application in 2015 or subsequent years, see Note 2 to the Annual Consolidated Financial Statements.

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EXCHANGE RATES
The table below shows the high, low, average and period end noon buying rates in The City of New York for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York for U.S.$ per €1.00. The average is computed using the noon buying rate on the last business day of each month during the period indicated.
Period
 
Low
 
High
 
Average
 
Period End
Year ended December 31, 2010
 
1.1959
 
1.4536
 
1.3262
 
1.3269
Year ended December 31, 2011
 
1.2926
 
1.4875
 
1.3931
 
1.2973
Year ended December 31, 2012
 
1.2062
 
1.3463
 
1.2859
 
1.3186
Year ended December 31, 2013
 
1.2774
 
1.3816
 
1.3281
 
1.3779
Year ended December 31, 2014
 
1.2101
 
1.3927
 
1.3210
 
1.2101
Year ended December 31, 2015 (through September 18, 2015)
 
1.0524
 
1.2015
 
1.1095
 
1.1358
The table below shows the high and low noon buying rates for Euro for each month during the six months prior to the date of this prospectus.
Period
 
Low
 
High
March 2015
 
1.0524
 
1.1212
April 2015
 
1.0582
 
1.1174
May 2015
 
1.0876
 
1.1428
June 2015
 
1.0913
 
1.1404
July 2015
 
1.0848
 
1.1150
August 2015
 
1.0868
 
1.1580
September 2015 (through September 18, 2015)
 
1.1104
 
1.1358
On September 18, 2015, the noon buying rate for U.S. Dollars was €1.00 = U.S.$1.1358.


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BUSINESS
Overview
Ferrari is among the world’s leading luxury brands focused on the design, engineering, production and sale of the world’s most recognizable luxury performance sports cars. Our brand symbolizes luxury, exclusivity, innovation, state-of-the-art sporting performance and Italian design and engineering heritage. Our name and history and the image enjoyed by our cars are closely associated with our Formula 1 racing team, Scuderia Ferrari, the most successful team in Formula 1 history. From the inaugural year of Formula 1 in 1950 through the present, Scuderia Ferrari has won 224 Grand Prix races, 16 Constructor World titles and 15 Drivers’ World titles, including most recently the Constructor World title in 2008. We believe our history of excellence, technological innovation and defining style transcends the automotive industry, and is the foundation of the Ferrari brand and image. We design, engineer and produce our cars in Maranello, Italy, and sell them in over 60 markets worldwide through a network of 182 authorized dealers operating 204 points of sale.
We believe our cars are the epitome of performance, luxury and styling. We currently sell nine models, including seven sports cars (458 Italia, 488 GTB, 458 Spider, 488 Spider, F12berlinetta and our special series 458 Speciale and 458 Speciale A) and two GT cars (California T and FF). In March 2015, we launched the 488 GTB, which is replacing the 458 Italia and, in September 2015, we launched the 488 Spider, our latest sports car, which is replacing the 458 Spider. We expect to gradually replace our 458 models with successor 488 models during 2015 and the next several years. We also produce a limited edition supercar, LaFerrari, and very limited editions series ( Fuoriserie ) and one-off cars.
In 2014, we shipped 7,255 cars, and recorded net revenues of €2,762 million, net profit of €265 million, adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) of €693 million and earnings before interest and taxes (EBIT) of €389 million. For additional information regarding Adjusted EBITDA, which is a non-GAAP measure, including a reconciliation of Adjusted EBITDA to net profit, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA.”
We pursue a low volume production strategy in order to maintain a reputation of exclusivity and scarcity among purchasers of our cars and deliberately monitor and maintain our production volumes and delivery wait-times to promote this reputation. We divide our regional markets into EMEA, Americas, Greater China and Rest of APAC, representing respectively 45 percent, 34 percent, nine percent and 12 percent of units shipped in 2014. In recent years we have allocated a higher proportion of shipments to the Middle East and Greater China and, to a lesser extent, the Americas and a lower proportion to Europe, reflecting changes in relative demand as part of our strategy to manage waiting lists and maintain product exclusivity.
We license the Ferrari brand to a select number of producers and retailers of luxury and lifestyle goods, and we sell Ferrari-branded merchandise through a network of 20 franchised and 12 owned Ferrari stores and on our website. As one of the world’s most recognized premium luxury brands, we believe we are well positioned to selectively expand the presence of the Ferrari brand in attractive and growing lifestyle categories consistent with our image, including sportswear, watches, accessories, consumer electronics and theme parks which we believe enhance the brand experience of our loyal following of clients and Ferrari enthusiasts.
We focus our marketing and promotion efforts in the investments we make in our racing activities, in particular Scuderia Ferrari’s participation in the Formula 1 World Championship, which is one of the most watched annual sports series in the world, with approximately 425 million television viewers annually. Although our most recent Formula 1 world title was seven years ago, we are enhancing our focus on Formula 1 activities with the goal of improving recent racing results and restoring our historical position as the premier racing team in Formula 1. We believe that these activities support the strength and awareness of our brand among motor enthusiasts, clients and the general public.
We will continue focusing our efforts on protecting and enhancing the value of our brand to preserve our strong financial profile and participate in the premium luxury market growth. We intend to selectively pursue controlled and profitable growth in existing and emerging markets while expanding the Ferrari brand to carefully selected lifestyle categories.
Our History
Our company is named after our founder Enzo Ferrari. An Alfa Romeo driver since 1924, Enzo Ferrari founded his own racing team, Scuderia Ferrari, in Modena in 1929, initially to race Alfa Romeo cars. Though appointed head of Alfa Romeo’s



racing team in 1938, he left the position in 1939 to set up his own company, initially called Auto Avio Costruzioni. In late 1943, Enzo Ferrari moved his headquarters from Modena to Maranello, which remains our headquarters to this day.
In 1947, we produced our first racing car, the 125 S. The 125 S’s powerful 12 cylinder engine would go on to become synonymous with the Ferrari brand. In 1948, the first road car, the Ferrari 166 Inter, was produced. Styling quickly became an integral part of the Ferrari brand.
In 1950, we began our participation in the Formula 1 world championship, racing in the world’s second Grand Prix in Monaco, which makes Scuderia Ferrari the longest running Formula 1 team. We won our first Constructor World Title in 1952. Our success on the world’s tracks and roads extends beyond Formula 1, including victories in some of the most important car races such the 24 Hours of Le Mans, the world’s oldest endurance automobile race, and the 24 Hours of Daytona.
In 1951, we started collaborating with Carrozzeria Scaglietti, founded by Sergio Scaglietti in nearby Modena, for the production and assembly of our cars’ chassis. In 1977, we acquired Carrozzeria Scaglietti, where the bodyworks and chassis of all of our cars are still assembled today. Carrozzeria Scaglietti is our only production facility located outside Maranello.
Between 1950 and 1960, our car shipments more than tripled and in the late 1960s, we partnered with the Fiat group, which acquired a 50 percent stake in Ferrari in 1969.
Also in the late 1960s, to benefit from the widening audience of Formula 1, we began entering into sponsorship agreements and displaying the logos of our sponsors on the spoilers and chassis of our single-seaters. In 1968, we were first sponsored by Shell, and in 1973, we were first sponsored by Philip Morris International. Shell and Philip Morris International remain two of our principal sponsors today.
In the 1970s we began producing cars with our first rear-mounted V8 engines, such as the 308 GTB in 1975, which enjoyed great commercial success. Overall, shipments continued to increase in the 1970s, driven by the success of two-seater sports cars such as the 308 GTB and GTS. In the 1980s we experienced further shipment growth, due in part to the success of the Testarossa. During this period we increased our design and production of special series and limited edition supercars, including the 1984 Ferrari 288 GTO and 1987 Ferrari F40, our first supercars.
After the death of our founder Enzo Ferrari in 1988, the Fiat group increased its interest in Ferrari to 90 percent, with the remaining 10 percent being held by Enzo Ferrari’s son, Piero Ferrari.
In 1997, we acquired ownership of Maserati from Fiat and built a new Maserati dedicated engine factory in Maranello. After the Fiat group re-acquired full ownership of Maserati in 2005, we continued to develop and manufacture engines for Maserati, including the most recent F160 3.0-litre V6 Turbo engines.
In 1995, we launched our second supercar, the F50. From 2002 to 2004, we also produced the Enzo supercar, our fastest car at the time, which was introduced and named in honor of Enzo Ferrari. The Enzo is the predecessor of our most recent limited production supercar, LaFerrari.
The 2000s were a decade of expansion for Ferrari in terms of geographic reach, volumes, and range of products offered. We have significantly expanded our presence in new markets, such as the Middle East, China, Japan and the rest of the Far East and consolidated our position in traditional markets such as the United States, the United Kingdom and Germany, which resulted in a much higher degree of geographical diversification. While in 1993, 58 percent of cars were shipped to Italy, Germany and the United States, those markets now represent 45 percent of our shipments. Over the same period, we have expanded our product range, and in particular we sought to cater to the needs of clients who wish to experience a higher level of comfort and drivability, while maintaining the superior performance characteristics of a Ferrari. Finally, in 2002, we began our branding activities with the launch of Ferrari branded products sold in our network of Ferrari stores (see “—Brand Activities”). During this decade we won six Constructor and Drivers’ World Titles. In 2008, we completed our product range with the launch of a V8 GT car, the California.
At present, 90 percent of our share capital is held by FCA, and 10 percent by Piero Ferrari. This offering is part of a plan to separate Ferrari from FCA. (See “The Restructuring and Separation Transactions”).



Our Competitive Strengths
We believe that the following key competitive strengths have been the primary drivers of our success in the past and will be the pillars of our growth strategy going forward.
An iconic brand with superior, enduring power, benefiting from a loyal customer base. Our brand is one of the most iconic and recognizable in the world. We believe the Ferrari brand and our prancing horse logo symbolize luxury, exclusivity, innovation, state-of-the-art sporting performance and Italian design and engineering heritage. The Ferrari brand has also been ranked as one of the world’s most powerful brands by independent surveys, including in 2014 and 2015 surveys published by Brand Finance, based on a range of factors, including customer loyalty, name recognition and overall reputation. Our name and image have been burnished over decades of unparalleled success in automotive racing, particularly through our Formula 1 racing team, Scuderia Ferrari, and the performance and styling of our luxury performance cars. We believe the power of our brand and the passion we inspire in clients and the broader community of enthusiasts is preserved and enhanced by our rigorous production and distribution model, which promotes hard-to-satisfy demand and thus scarcity value in our cars. We promote this passion for our brand by fostering a community of enthusiasts and we reward loyal clients through various initiatives, such as driving events and client activities in Maranello and at motor shows and, more particularly, through providing our most loyal and active clients with preferential access to our newest and highest value cars. As a result, in 2014 approximately 60 percent of our new cars were sold to Ferrari owners and 34 percent of our clients own more than one Ferrari car. As a testament to the enduring power of our brand, vintage Ferraris are among the most sought after cars in the collector market, with nine Ferraris ranking in the top 10 most valuable cars ever sold in public auctions. We also generate revenues from our brand through licensing partnerships, Ferrari retail stores and a theme park, Ferrari World. We believe our success in these activities demonstrates the value of Ferrari as a true global absolute luxury brand.
Global access to growing wealth creation. We target our products to the upper end of the luxury performance car segment and buyers of our cars tend to belong to the wealthiest segment of the population. The size and spending capacity of our target client base has grown significantly in recent years and we expect macroeconomic trends that promote an expanding market for our products to continue, particularly in emerging markets, which have seen significant growth in personal wealth and disposable incomes. In many of our key markets, such as the United States, where we sell over 30 percent of our cars, spending by our target clients has proven to be relatively insulated from short term economic downturns. This provides a resilient source of demand at the upper end of the luxury industry, particularly for our cars, which we have captured through the frequent renewal of our product offering. Our low volume strategy and our tight control over the allocation of our cars allow us to adjust the geographical distribution of our unit sales over time to respond to economic developments in our markets and to benefit from patterns of wealth creation and demand for luxury products in different regions.
Exceptional pricing power and value resilience. The allure of our brand and our controlled production and distribution model promote premium prices for the new cars we sell as well as Ferraris sold in the resale market, which reinforces stability in our new car pricing. We have focused relentlessly on extending the quality, performance and craftsmanship of our cars further into the upper end of the market, through special limited editions selling at prices exceeding €1 million per car, as well as bespoke, one-off cars and extensive personalization of our cars, which on average add 15 percent to selling prices. These limited edition and bespoke vehicles enhance our reputation for exclusivity which in turn supports premium pricing on our standard Sports and GT models. We are confident that this approach, rather than seeking to increase volumes by competing with lower priced luxury or premium cars, will lead to stronger long term financial performance. We believe our strategy, coupled with the spending power of our clients and our ability to offer highly personalized “tailor-made” products, has provided us with enduring premium pricing for our cars. We believe our cars benefit from strong value resilience over time, with high residual value in the resale markets which in turn lowers the total cost of ownership for our clients and promotes repeat purchases.
Racing heritage. We benefit from our racing heritage and foundation and success in Formula 1 World Championships. Our research and development initiatives and the know-how developed through designing, engineering and producing circuit racing cars has allowed us to streamline our new car design and development schedule, to implement a range of cutting-edge innovations to deliver best-in-market performance in our Sports and GT cars and to design, engineer and sell our special series, limited edition and one-off cars, all of which attract significant price premiums. In addition to the research and development support from our racing activities, our prominent role in Formula 1 racing provides us with an incomparable platform from which to promote our brand and technological prowess. In light of this, we do not need to use mainstream product advertising, which we believe would conflict with the image of exclusivity that our clients and enthusiasts expect and, as a result, would be detrimental to our brand. In 2014, Formula 1 races attracted approximately 425 million television viewers around the world, making it one of the world’s most watched sport series in the year. We believe the success and prominence of Scuderia Ferrari, the most successful team in Formula 1 history, gives us a strong marketing advantage in the luxury performance car market.

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Leading edge engineering capabilities. We believe that our cars are the epitome of performance, luxury and styling. Our cars integrate industry-leading technological and engineering capabilities which benefit from the know-how gained through our racing activities. Our constant engineering improvements, for example, have resulted in significantly more powerful engines over time. The V8 engine mounted in the 430 model in 2005 had 490hp, while the V8 turbo engine mounted in the 488 GTB and 488 Spider models in 2015 has 670 hp. Innovations transferred from our racing team to our street cars include innovative electronic control systems, carbon fiber parts and KERS (Kinetic Energy Recovery System) technology. While we continue to focus intently on the higher end of the luxury performance car market, we have rounded out our range of products in recent years to cater to different client preferences, ranging from pure performance to cars characterized by more refined and luxurious interiors to improve comfort and drivability. Our cars’ distinctive designs, when taken together with their performance and luxury status, provide Ferrari with a unique character, which, in turn, contributes to increased brand strength.
Flexible and efficient development and production process. Our focus on the upper end of the luxury performance car market, the dedication and skill of our engineers and developers and the clarity and focus of our product marketing objectives, allow us to design and develop new models exceptionally quickly. Our racing heritage, which is characterized by an annual design, develop and build schedule, as well as our engineering and design focus has enabled us typically to bring to market new models in approximately 40 months, depending on the modifications (approximately 33 months for modified or “M” models), measured from the beginning of the development project to the start of production. The flexibility of our development process is such that we are able to continue to modify and adjust a new model’s specifications throughout the development phase and near to the scheduled launch of the model. The speed and flexibility of our development process reduces development costs for new models and allows our newest models to be fully responsive to changes in technology and market demand. This also allows us to renew our model line-up on a more frequent and regular schedule; we typically seek to launch at least one new model every year. Our models have an average lifecycle of four or five years (depending on market dynamics) followed by a significantly modified and enhanced version after the fourth or fifth year of production. This predictable lifecycle supports both new car sales and the value of models both in the primary and resale markets. We believe this lifecycle also ensures that our products remain more responsive to the expectations of our clients than those of other luxury performance car manufacturers. Furthermore, we recently renovated our production facilities, which positions us to accommodate meaningful increases in production with limited additional investments. This gives us the flexibility to prudently increase sales of our cars to meet growing demand while retaining the exclusivity and scarcity of our cars.
Strong and resilient financial performance and profile. Our brand, clients and product positioning provide us with an exceptional track record of financial performance that has withstood market challenges throughout economic cycles. In the year ended December 31, 2014, we recorded net revenues of €2,762 million , net profit of €265 million , Adjusted EBITDA of €693 million and Adjusted EBITDA margin of 25.1 percent, EBIT of €389 million and EBIT margin of 14.1 percent and we shipped 7,255 cars. We have recorded shipment growth of 34 percent in the last 10 years and, during the financial crisis, suffered only a single year of modest (less than 5 percent) decline in shipments in spite of the luxury status of our cars and the discretionary nature of their purchase. From 2005 to 2014 we achieved a compound annual growth rate in net revenues of seven percent and our 2014 Adjusted EBITDA margin of 25.1 percent represented an increase of 6.9 percentage points over 2005. We believe this exceptional financial performance positions us as not just a leading luxury automaker, but as one of the world’s leading absolute luxury brands. For additional information regarding Adjusted EBITDA, which is a non-GAAP measure, including a reconciliation of Adjusted EBITDA to net profit, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA.”
Superior Talent. We benefit from the experience and expertise of a strong team of managers, technical employees and racing talent, combining industry knowledge, technological expertise, sporting success and financial savvy. We believe our brand and technological heritage has enabled us to attract the best technical talent from a wide range of fields. We recently hired a leading Formula 1 manager and a new driver to allow us to capitalize on our strong technical position and return to a higher level of racing success, while our employees, particularly at our facilities in and around Maranello, Italy, include a large number of highly skilled engineers, designers, technicians and artisans. Our management team also benefits from the leadership of our CEO, Amedeo Felisa, who brings over 40 years of automotive technical experience and skill to his leadership role, and our chairman, Sergio Marchionne, who engineered the operating and financial turnaround of Fiat and Chrysler and the global expansion of our parent company, FCA, into the seventh largest automaker in the world (based on 2014 vehicle sales). We believe our small but skilled team gives our brand the leading talent in the industry and the ability to carry out our business plan objectives.

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Our Strategies
We intend to maintain and extend our leading position in the luxury performance sports car market and to continue to protect and enhance the value and exclusivity of the Ferrari brand and its association with the lifestyle we believe it represents. Within these parameters, we aim to achieve profitable growth by pursuing the following strategies.
Controlled growth in developed and emerging markets. While we will continue to pursue a low volume production strategy and maintain our reputation for exclusivity, we intend to respond to growing demand, both in emerging markets as well as in response to demographic changes and the growth in the size and spending capacity of our target clients. We believe we can grow in a controlled manner while preserving the exclusivity of our brand by continuing to focus on distinct market segments and maintaining a strong pipeline of new car launches. We will also continue to explore controlled growth in emerging markets to capitalize on the substantial wealth creation and the growing affluent populations in those markets, while maintaining our historic control over the relative allocation of cars among regions in order to maintain proper balance of our supply to support both demand for our cars and our brand reputation over the long term.
Regular new model introductions and enhancements. We intend to continue our effective strategy of regularly launching new cars with enhanced technological innovations and design improvements, capitalizing on the speed and flexibility of our design, engineering and production processes. We also intend to alternate our new model launches among our distinct product segments in order to preserve the exclusivity and enduring value of each new car launch, while ensuring that our clients have continuing access to the latest technology and design. We will also continue periodically to design and launch limited edition supercars and very limited series and one-off cars, which command significantly higher prices, in order to satisfy the demands of our most affluent and loyal clients and to inspire our clients who purchase our Sports and GT cars to purchase our newer and enhanced models. Notwithstanding the regular introduction of new products, we intend to continue the practice of managing waiting lists in our various geographic markets to respond appropriately to relative levels of demand by balancing the need to enhance exclusivity while minimizing any concerns for client satisfaction. We expect that increasing technological content of our cars combined with clients’ appetite for our distinctive designs will continue to support pricing at the upper end of the luxury performance market in each of our car segments.
Pursue Excellence in Formula 1 Racing. We intend to continue to pursue success in Formula 1 racing through Scuderia Ferrari, the most successful team in Formula 1 history. We believe that competitive success in Formula 1 racing both promotes our brand and excites passion in our employees, clients and other Ferrari enthusiasts and we will devote the resources we believe are required to maintain that success. In addition to the know-how we develop in designing, engineering and producing Formula 1 racing cars that we apply to our Sports and GT cars, we continue to believe that the success of our business, the image of our brand and the allegiance of our clients is enhanced by our racing success, which will, among other things, position us to extend the Ferrari brand into other luxury and lifestyle segments. More generally, we believe that our Formula 1 racing team allows us to promote and market our brand and technology to a global audience more effectively than traditional advertising activities, which enhances the aura of exclusivity around our brand.
Controlled growth in adjacent luxury and lifestyle categories. We intend to maintain the Ferrari brand’s reputation for exclusivity and selectively extend the brand through initiatives that are compatible with our brand image and the loyal following we enjoy among our clients and other Ferrari enthusiasts. We expect over time to expand the Ferrari brand into a range of other luxury goods and in adjacent lifestyle categories through third party licensing and partnerships, but intend to do so only in a manner that preserves the strength and exclusivity of our brand. We also intend to expand our retail activities with balanced growth through new openings of direct point of sales in order to increase our presence in the United States and in Europe as well as improving our franchising activities in selected locations. We will also promote the Ferrari brand through carefully selected theme park locations that we believe will attract consumers including current clients as well as those who aspire to become our clients. We believe these strategies will allow us to extend the reach of our brand to additional consumers, which we believe will further enhance our position as a premier luxury lifestyle brand.
Industry Overview
Luxury performance cars share several characteristics with other luxury goods such as quality, aesthetics, rarity, exclusivity and a high degree of non-functional associations all of which leads to significantly higher pricing as compared to mass market goods within the same category. While affected by global macroeconomic conditions, the luxury goods market is also impacted by several more specific factors, such as, in recent years, the significant economic growth and wealth creation in certain emerging economies and rising levels of affluence and demand from the emerging middle and upper classes in Asia and

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a general trend towards urbanization. Particularly following the 2008-2009 downturn, this has led the global luxury goods market to return to perform better than global GDP, as shown in the chart below.
Sources: Bain & Company, 2015 for Global Personal Luxury Goods Market and World Bank Data, 1995-2014 for Global GDP.
Within the luxury goods market, we define our target market for luxury performance cars as two-door cars powered by engines producing more than 500 hp and selling at a retail price in excess of Euro 150,000 (including VAT). The luxury performance car market historically has followed relatively closely growth patterns in the broader luxury market. The luxury performance car market is generally affected by global macroeconomic conditions and, although we and certain other manufacturers have proven relatively resilient, general downturns can have a disproportionate impact on sales of luxury goods in light of the discretionary nature of consumer spending in this market. Furthermore, because of the emotional nature of the purchasing decision, economic confidence and factors such as expectations regarding future income streams as well as the social acceptability of luxury goods may impact sales.
Following the sharp recession of 2008-2009, the luxury performance car market has been resilient to further economic downturns and stagnation in the broader economy, also a result of the increase of new product launches, although the luxury performance car market has not yet returned to the pre-recession levels. A sustained period of wealth creation in several Asian countries and, to a lesser extent, in the Americas, has led to an expanding population of potential consumers of luxury goods. Developing consumer preferences in the Asian markets, where the newly affluent are increasingly embracing western brands of luxury products, have also led to higher demand for cars in our segment, which are all produced by established European manufacturers.
Additionally, the growing appetite of younger affluent purchasers for luxury performance cars has led to new entrants, which in turn has resulted in higher sales overall in the market.
Unlike in other segments of the broader luxury market, however, in the luxury performance car market, a significant portion of demand is driven by new product launches. The market share of individual producers fluctuates over time reflecting the timing of product launches. New launches tend to drive sales volumes even in difficult market environments because the novelty, exclusivity and excitement a new product is capable of creating and capturing its own demand from clients.

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Data for the Luxury Performance Car Industry include all two door GT and sports cars with power above 500hp, and retail price above Euro 150,000 (including VAT) sold by Aston Martin, Audi, Bentley, Ferrari, Lamborghini, McLaren, Mercedes Benz, Porsche and Rolls-Royce.
Ferrari data based on the 22 top countries (excluding Middle East countries) for Ferrari annual registrations and sales (which accounted for approximately 80% of the total Ferrari shipments in 2014).
Data for the Luxury Performance Car Industry based on units registered (in USA, Brazil, Japan, Hong Kong, Taiwan, Australia, United Kingdom, Germany, France, Switzerland, Italy, Spain, Sweden, Netherlands, Belgium and Austria) or sold (in South Korea, Thailand, China, New Zealand, Singapore and Indonesia) in each period. Source: USA: US Maker Data Club, Brazil - ANFAVEA; Austria - OSZ; Belgium - FEBIAC; France - AAA; Germany - KBA; UK - SMMT; Italy - UNRAE; Netherlands- RDC; Spain- TRAFICO; Sweden - BranschData; Switzerland-ASTRA; China - China Automobile Industry Association - DataClub; Hong Kong - Hong Kong Motor Trader Association; Taiwan - Ministry of Transportation and Communications; Australia - VFACTS-S; Japan - JAIA; Indonesia - GAIKINDO; New Zealand - VFACTS; Singapore - LTA, MTA (Land Transport Authority, Motor Trader Associations); South Korea - KAIDA; Thailand -Department of Land Transportation.

The luxury performance car market has not yet returned to pre-recession levels. However, as shown in the chart above, our sales in recent years have proven less volatile than our competitors’. We believe this is due to our strategy of maintaining low volumes compared to demand, as well as the higher number of models in our range and our more frequent product launches compared to our competitors.
In 2014, our market share in the luxury performance car market was 22.9 percent (27.0 percent in 2013), with a 25.0 percent (30.3 percent in 2013) market share in the sports car segment and 18.8 percent (20.7 percent in 2013) market share in the GT segment. The chart below set forth our market shares in all geographical markets in which we operate.

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Data for the Luxury Performance Car Industry include all two door GT and sports cars with power above 500hp, and retail price above Euro 150,000 (including VAT) sold by Aston Martin, Audi, Bentley, Ferrari, Lamborghini, McLaren, Mercedes Benz, Porsche and Rolls-Royce.
Ferrari data based on the 22 top countries (excluding Middle East countries) for Ferrari annual registrations and sales (which accounted for approximately 80% of the total Ferrari shipments in 2014).
Data for the Luxury Performance Car Industry based on units registered (in USA, Brazil, Japan, Hong Kong, Taiwan, Australia, United Kingdom, Germany, France, Switzerland, Italy, Spain, Sweden, Netherlands, Belgium and Austria) or sold (in South Korea, Thailand, China, New Zealand, Singapore and Indonesia) in each period. Source: USA: US Maker Data Club, Brazil - ANFAVEA; Austria - OSZ; Belgium - FEBIAC; France - AAA; Germany - KBA; UK - SMMT; Italy - UNRAE; Netherlands- RDC; Spain- TRAFICO; Sweden - BranschData; Switzerland-ASTRA; China - China Automobile Industry Association - DataClub; Hong Kong - Hong Kong Motor Trader Association; Taiwan - Ministry of Transportation and Communications; Australia - VFACTS-S; Japan - JAIA; Indonesia - GAIKINDO; New Zealand - VFACTS; Singapore - LTA, MTA (Land Transport Authority, Motor Trader Associations); South Korea - KAIDA; Thailand -Department of Land Transportation.

While we monitor our market share as an indicator of our brand appeal, we do not regard market share in the luxury performance market as particularly relevant as compared to other segments of the automotive industry. We are not focused on market share as a performance metric. Instead, we deliberately manage our supply relative to demand, to defend and promote our brand exclusivity and premium pricing. In recent years, we have produced a substantially constant number of cars per year in furtherance of that strategy, and, therefore, our market share has decreased as a result of the increase in overall market volumes. (See “—Our Strategies”).
Competition
Competition in the luxury performance car market is concentrated in a fairly small number of producers, including both large automotive companies as well as small producers exclusively focused on luxury cars, like us. The luxury performance car market includes a sports car segment and a GT segment.
In the sports car segment our products, are the 488 GTB, 488 Spider, 458 Italia, 458 Spider, 458 Speciale, 458 Speciale Aperta and F12berlinetta and our principal competitors are Lamborghini (Huracán and Aventador), McLaren (650S), Porsche (911 Turbo and Turbo S), Mercedes (SL 63/65 AMG), Aston Martin (Vanquish and V12 Vantage/ S) and Audi (R8 V10). In the GT segment our products are the California T and FF models and our principal competitors are Rolls-Royce (Wraith), Bentley (Cont. GT/GTC, V12 and V8 (Speed and S version), GT3-R), Aston Martin (DB9) and Mercedes (CL 63/65 AMG, S Coupé 63/65 AMG).
In recent years, the market has shifted somewhat with an increased focus on the GT segment and the lower priced range of the sports car market, with larger automotive groups expanding their offering of premium cars to enter the luxury performance car market.
Competition in the luxury performance car market is driven by the strength of the brand, and the appeal of the products in terms of performance, styling, novelty and innovation as well as on the manufacturers’ ability to renew its product offerings

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regularly in order to continue to stimulate customer demand. Larger automotive groups with a product offering in the luxury performance car market typically have larger financial resources compared to the small luxury car producers and therefore may have more flexibility in planning for product launches and capital spending over time.
Competition among similarly positioned luxury performance cars is also driven by price and total cost of ownership. We believe that the resilience of the value of our cars after a period of ownership is an important competitive factor because it decreases the total cost of ownership for our clients and promotes repeat purchases.
Sports and GT Cars
Our current product range consists of nine models, including seven range models and two special series, equipped with either eight or twelve cylinder engines and divided into two classes: Sports cars and GT cars. We target end clients seeking high performance cars with distinctive design and state of the art technology. Within these parameters, we offer different models to meet our clients’ varying needs and to differentiate our line-up from that of other manufacturers’, ranging from the exceptional performance of our Sports cars to the luxury and drivability of our GT cars. Our diversified product offering includes different architectures (such as front-engine and mid-rear engine), engine sizes (V8 and V12), body styles (such as coupes and spiders), and seating (2 seaters and 2+2 seaters).
Our sports cars are characterized by compact bodies, a design guided by performance and aerodynamics, and often benefit from technologies initially developed for our Formula 1 single-seaters. They favor performance over comfort, seeking to provide a driver with an immediate response and superior handling, leveraging state of the art vehicle dynamics components and controls. In our sports car class, we offer five range models: four of which are equipped with mid-rear V8 engines, namely the 458 Italia (with 570hp), the 488 GTB (with 670 hp) which, starting from the second half of 2015, is replacing the 458 Italia, the 458 Spider (with 570hp) and the 488 Spider (with 670 hp) which, starting from the fourth quarter of 2015, is replacing the 458 Spider; and one equipped with a front V12 engine with 740hp, the F12berlinetta, the most powerful range model we have ever built. Our GT cars, while maintaining the performance expected of a Ferrari, are characterized by more refined interiors with a higher focus on comfort and quality of life on-board. In our GT class, we offer one model equipped with our V8 engine with 560 hp, the California T, and one model equipped with our V12 engine with 660hp, the FF, our first all-wheel drive four seat car. We also from time to time design, engineer and produce special series cars which are based on our range models but introduce novel product concepts. These cars are characterized by significant hardware and software mechanical modifications designed to enhance performance and drivability. Our special series cars are particularly targeted to collectors and, from a commercial and product development standpoint, they facilitate the transition from existing to new range models. Our current special series models are the Ferrari 458 Speciale and the 458 Speciale Aperta (a limited edition special series coupe based on the 458 Speciale).
In addition to our range models and special series described above, we also continue the longstanding Ferrari tradition of limited edition supercars, very limited series ( fuoriserie ) and one-off cars. Our limited edition supercars, which we typically launch in seven to 10 year intervals, are the highest expression of Ferrari performance and are often the forerunners of technological innovations for the future range models, with innovative features and futuristic design. We launched our latest supercar, LaFerrari, in 2013 with a limited production run of 499 models. Our fuoriserie cars can be based on range or special series mechanical components, but are characterized by important exterior body modifications resulting in an innovative product by concept or design. These exclusive cars are linked to specific events or celebrations, such as the Sergio (named after longtime designer of Ferrari cars, Sergio Pininfarina) and the F60 America (celebrating our 60th anniversary of sales in the United States). Our one-off cars are designed to meet the varying needs of our most loyal and discerning clients. They reflect the exact design and specifications required by the clients, and are produced as a single, unique vehicle. (See “—Limited Edition Supercars, Fuoriserie and One-Offs”).

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The table below sets forth our unit shipments for the six months ended June 30, 2015 and 2014 and for the years ended December 31, 2014, 2013 and 2012, by geographic market:
(Number of cars and % of total cars)
 
For the six months ended June 30,
 
For the years ended December 31,
 
 
2015
 
%
 
2014
 
%
 
2014
 
%
 
2013
 
%
 
2012
 
%
EMEA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UK
 
456

 
12.3
%
 
408

 
11.1
%
 
705

 
9.7
%
 
686

 
9.8
%
 
686

 
9.3
%
Germany
 
214

 
5.8
%
 
353

 
9.6
%
 
616

 
8.5
%
 
659

 
9.4
%
 
755

 
10.2
%
Switzerland
 
155

 
4.2
%
 
181

 
4.9
%
 
332

 
4.6
%
 
350

 
5.0
%
 
366

 
4.9
%
Italy
 
139

 
3.8
%
 
132

 
3.6
%
 
243

 
3.3
%
 
206

 
2.9
%
 
318

 
4.3
%
France
 
129

 
3.5
%
 
138

 
3.8
%
 
253

 
3.5
%
 
273

 
3.9
%
 
330

 
4.5
%
Middle East (1)
 
185

 
5.0
%
 
232

 
6.3
%
 
521

 
7.2
%
 
472

 
6.7
%
 
423

 
5.7
%
Rest of EMEA (2)
 
320

 
8.7
%
 
349

 
9.5
%
 
604

 
8.3
%
 
663

 
9.5
%
 
825

 
11.1
%
Total EMEA
 
1,598

 
43.3
%
 
1,793

 
48.8
%
 
3,274

 
45.1
%
 
3,309

 
47.3
%
 
3,703

 
50.0
%
Americas (3)
 
1,287

 
34.8
%
 
1,199

 
32.7
%
 
2,462

 
33.9
%
 
2,382

 
34.0
%
 
2,208

 
29.8
%
Greater China (4)
 
261

 
7.1
%
 
289

 
7.9
%
 
675

 
9.3
%
 
572

 
8.2
%
 
789

 
10.7
%
Rest of APAC (5)
 
548

 
14.8
%
 
387

 
10.6
%
 
844

 
11.7
%
 
737

 
10.5
%
 
705

 
9.5
%
Total
 
3,694

 
100.0
%
 
3,668

 
100.0
%
 
7,255

 
100.0
%
 
7,000

 
100.0
%
 
7,405

 
100.0
%
______________________________
(1)
Middle East includes the United Arab Emirates, Saudi Arabia, Bahrain, Lebanon, Qatar, Oman and Kuwait.
(2)
Rest of EMEA includes Africa and the other European markets not separately identified.
(3)
Americas includes the Unites States of America, Canada, Mexico, the Caribbean and Central and South America.
(4)
Greater China includes China, Hong Kong and Taiwan.
(5)
Rest of APAC mainly includes Japan, Australia, Singapore, Indonesia and South Korea.

The table below sets forth our unit shipments for the six months ended June 30, 2015 and 2014 and for the years ended December 31, 2014, 2013 and 2012, with a breakdown of Sports and GT cars:
(Number of cars)
 
For the six months ended June 30,
 
For the years ended December 31,
 
 
2015
 
2014
 
2014
 
2013
 
2012
Sports
 
 
 
 
 
 
 
 
 
 
V8 (1)
 
1,581

 
2,077

 
3,651

 
3,944

 
4,274

V12 (2)
 
645

 
900

 
1,565

 
1,401

 
481

Total Sports
 
2,226

 
2,977

 
5,216

 
5,345

 
4,755

GT
 
 
 
 
 
 
 
 
 
 
V8
 
1,280

 
454

 
1,645

 
1,219

 
1,589

V12
 
188

 
237

 
394

 
436

 
1,061

Total GT
 
1,468

 
691

 
2,039

 
1,655

 
2,650

TOTAL
 
3,694

 
3,668

 
7,255

 
7,000

 
7,405

______________________________
(1)
Includes 458 Speciale and 458 Speciale A for 2014 and 458 Speciale for 2013 and for 2012.
(2)
Includes LaFerrari starting from the fourth quarter of 2013.

We are also actively engaged in after sales activities driven, among other things, by the objective of preserving and extending the market value of the cars we sell. We believe our cars’ performance in terms of value preservation after a period of ownership significantly exceeds that of any other brand in the luxury car segment. High residual value is important to the primary market because clients, when purchasing our cars, take into account the expected resale value of the car in assessing the overall cost of ownership. Furthermore, a higher residual value potentially lowers the cost for the owner to switch to a new model thereby supporting client loyalty and promoting repeat purchases.

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Range Models and Special Series
Our products include the range models and special series described below. Our range models currently include five Sports cars, 458 Italia, 488 GTB, 458 Spider, 488 Spider and F12berlinetta, and two GT cars, California T and FF. In March 2015, we launched the 488 GTB, which is replacing the 458 Italia and, in September 2015, we launched the 488 Spider, our latest sports car, which is replacing the 458 Spider. We have started shipping our first 488 GTB in the second half of 2015 and we expect to gradually replace our 458 models with successor 488 models in the next several years. We expect to begin shipping of our first 488 Spider models in November 2015.
We also offer special series cars based on our range models. These cars are characterized by significant hardware and software modifications (engine, aerodynamics, and dynamics among others), designed to enhance performance and drivability when compared to current range models. Our current special series models are 458 Speciale and 458 Speciale A.
All of our range and special series models feature highly customizable interior and exterior options such as forged rims, luxury leathers, seat style, panoramic roof, dashboard and steering wheel inserts (see “—Personalization Program and Tailor Made Program”).
458 Italia
The 458 Italia is a two-seater sports car with a 570 hp mid-rear mounted V8 engine, launched in 2009. Its longitudinally-mounted engine is influenced by Ferrari’s Formula 1 racing technology, and has been engineered to reach 9,000 rpm, a first on an eight cylinder road car. The 458 Italia is designed as a pure sports car, for drivers seeking spirited performance on and off the track. The cabin features a reinterpretation of Ferrari’s traditional sports car interior themes, with clean and simple yet innovative components. The redesigned and intuitive ergonomics have resulted in a completely driver-oriented layout. Among other international awards, the 458 Italia claimed the International Engine of the Year Award in both the Best Performance Engine and Above 4.0 litre categories for both 2011 and 2012. We discontinued production of the 458 Italia, which is being replaced by the 488 GTB, in May 2015.

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488 GTB
The 488 GTB is a two seater berlinetta with a 670 hp mid-rear mounted V8 engine and is replacing the 458 Italia. It was launched in March 2015, 40 years after we unveiled our first ever mid-rear-engined V8 model (the 308 GTB). Its large signature air intake scallop evokes the original 308 GTB and is divided into two sections by a splitter. Designed for track-level performance, the 488 GTB can also provide enjoyment to non-professional drivers for everyday use. Accelerating from 0-200 km/h in only 8.3 seconds, its new 3902 cc V8 turbo engine is at top of the class for power output, torque and response times. In the cabin, the seamless integration of the new satellite control clusters, angled air vents and instrument panel heightens the sense that the cockpit is completely tailored around the driver, leading to an extremely sporty yet comfortable ambiance.

458 Spider
Launched in 2011, the 458 Spider is a two seat coupe with a 570 hp mid-rear mounted V8 engine and is the world’s first mid-rear-engine car with a retractable hard top. If offers the full experience of sports car driving, especially on mixed and challenging surfaces, but aims to cater to those who do not need to constantly push their car to the limit on the track. Unlike the 458 Italia, the engine air intakes have been moved to the rear spoiler, close to the gearbox, clutch and oil radiators. Like the 458 Italia and the 458 Speciale (see below), the Spider draws inspiration from Formula 1 single-seaters, and has been made 12 percent more aerodynamic than its convertible predecessors, such as the F430. Among its other awards, it was named 2012’s “Best of the Best” convertible by the Robb Report (a prominent luxury periodical). We currently expect to stop producing the 458 Spider by the end of July 2015.

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488 Spider
            
Our latest sports car, the 488 Spider, launched in September 2015, is a two seat coupe with a 670 hp mid-rear mounted V8 engine and is replacing the 458 Spider. Its retractable hard top, which saves approximately 25 kg on a soft top, unfolds and retracts in 14 seconds and can also be raised or lowered while the car is moving. Designed around the retractable hard top concept, the 488 Spider combines the prowess of the 488 GTB coupe's mid-rear V8 with innovations in aerodynamics, including a new Ferrari-patented blown spoiler, which allows air to enter an intake at the base of the rear screen and exit via the bumper and reduces drag. The 488 Spider accelerates from 0 to 100 km/h in 3.0 seconds and from 0 to 200 km/h in 8.7 seconds and offers exceptional dynamic behavior, with close to no turbo lag and response time of just 0.8 seconds. Production of the 488 Spider started in September 2015 and shipments are expected to begin in November 2015.
458 Speciale
The 458 Speciale was launched in 2013 and features a 605 hp V8 engine. It is aimed at clients willing to trade some on board comfort for a more track focused car. With a Ferrari-patented special active aerodynamics designed by the Ferrari Design Centre and Pininfarina, it is currently our most aerodynamic road car. Building on the integration of Formula 1 technology, on-track handling is enhanced by Ferrari’s Side Slip Angle Control (SSC) system, which employs an algorithm to analyze the car’s side slip, compare it to the car’s projected trajectory and work with the electronic differential to instantly change the torque distribution between the rear wheels. The Speciale is available as a two seat coupe. We currently expect to stop producing the 458 Speciale by October 2015.


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458 Speciale A
The 458 Speciale A (equipped with a 605 hp V8 engine) debuted at the 2014 Paris Auto Show and features the most powerful naturally aspirated V8 engine ever produced for a Ferrari spider. It is the latest variant of the 458 models, and celebrates the remarkable success of this line. It adopts the innovative retractable hard top that has become a signature of Ferrari spiders and features significantly improved combustion, mechanical and volumetric efficiency. The 458 Speciale A was rated Top Gear’s 2014 Convertible of the Year, and has collected an array of other international motoring awards and track victories. The 499 models produced come as a two seat coupe. We currently expect to stop producing the 458 Speciale A by November 2015.

F12berlinetta
Launched in 2012, the F12berlinetta is equipped with a 740 hp V12 engine. It is the most powerful high performance Ferrari sports car ever built. Built around evolved transaxle architecture with cutting-edge components and control systems, it sets a new standard in aerodynamics and handling. Though conceived as a performance automobile, the F12berlinetta is capable of both high speed and long-distance driving. In 2013 it won the International Engine of the Year Award in both the Best Performance category and Best Engine above 4.0 liters category.


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California T
The California T, which followed the great success of our 2008 California model, is equipped with a 560 hp V8 turbo engine. Launched in 2014, it is the only GT car in the segment to combine a retractable hard top, rear seats and a ski passage to the spacious trunk. Its new turbocharged V8 engine comes with a variable boost management system. This makes it the only turbo engine in the world with close to no turbo lag. It also features a revised rear and interior design and a 15 percent reduction in fuel consumption compared to its predecessor.
FF
Launched in 2011, the FF, our first four-wheel drive model, is equipped with a 660 hp V12 engine. Among its main innovations, the FF features the patented lightweight 4RM system, which transmits torque to all four wheels, thus allowing a 50 percent saving in weight compared to a traditional four-wheel drive system and a lower center of gravity to be maintained. Part of our GT class, the FF features an elegant two door, four seat sporting layout, and the best cabin and luggage space and occupant comfort in its class.
Personalization Program and Tailor Made Program
All of our models feature highly customizable interior and exterior options, which together comprise our personalization catalogue. Some of these options include custom shop wheels, alternate brake caliper colors, parking cameras, magneride dual mode suspension, sport exhaust systems, different panoramic roof options, various door configurations, steering wheel inserts and state of the art custom high fidelity sound systems.

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With our “Special Equipment” program, we offer clients additional customization choices for their car. Our specialists are able to guide clients in creating a very customized car through a wide catalog of special items such as different types of rare leathers, custom stitching, special paints, special carbon fiber, and personalized luggage sets designed to match the car’s interior.
The “Atelier” and “Tailor Made” programs provide two additional levels of personalization in accordance with the expectations of our clients. Both programs benefit from the Maranello factory environment that inspires clients’ special requests. In particular, in the “Tailor Made” program a dedicated Ferrari designer assists clients in selecting and applying virtually any specific design element chosen by the client. Our clients benefit from a large choice of finishes and accessories in an array of different materials (ranging from cashmere to denim), treatments and hues. To assist our clients’ choice we also offer three collections inspired by Ferrari’s own tradition: Scuderia (taking its lead from our sporting history), Classica (bringing a modern twist to the styling cues of our signature GT models) and Inedita (showcasing more experimental and innovation-led personalization).
Limited Edition Supercars, Fuoriserie and One-Offs
In line with our tradition of supercars starting with the 288GTO in 1984 through to the Enzo, which we launched in 2002, we also produce limited edition supercars. These are the highest expression of Ferrari performance at the time and are often the forerunners of technological innovations for future range models, with innovative features and futuristic design. Furthermore, in connection with certain events or celebrations, we also launch very limited edition cars (our fuoriserie ). These models can be offered globally, or may be limited to specific local markets. Based on an exotic product concept not available on the standard Ferrari model range, these cars feature completely unique design and specifications compared to our other models.
LaFerrari
Launched in 2013, LaFerrari is the latest in our line of supercars. Planned for a total production run of just 499 cars, LaFerrari is our first car with hybrid technology. Alongside its powerful rear-wheel drive layout V12 engine (which generates 800 hp), the hybrid system comprises two electric motors and a special battery consisting of cells developed by the Scuderia Ferrari where the F138 KERS technology was pioneered. Because the battery generates an additional 163 hp, LaFerrari has a combined total of 963 hp. LaFerrari’s HY-KERS system is designed to achieve seamless integration and rapid communication between the V12 and electric motor, thus blending extreme performance with maximum efficiency. Thanks to the hybrid technology, LaFerrari generates almost 50 percent more horsepower than the Enzo, its predecessor, and 220 hp more than the F12, our most powerful car to date.


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F60 America
The F60 America, a V12 open air roadster, celebrates our 60 years in the United States and is available to U.S. clients only. It combines two of our American clients’ great passions - the modified V12 engine and open-top driving. The exterior is finished in North American Racing Team livery, with special 60th anniversary prancing horse badges adorning the wheel arches. Inside, the F60America features bespoke cabin trim, with the driver’s side finished in red and the passenger side in black - a nod to our historic competition cars. We have pre-sold ten F60s, with scheduled production and delivery between 2015 and 2016.




Sergio
The Sergio is a 605 hp V8 2-seater barchetta named after Sergio Pininfarina. The car celebrates the spirit and core values of the historic company on the 60th anniversary of its collaboration with Ferrari. The Sergio’s performance and dynamics are designed for excellence even when pushed to the limits. Based on the 458 Spider, it retains the latter’s technological content as well as all of the functional aspects of its cockpit. It is powered by the latest 605 hp model of Ferrari’s naturally aspirated 4,497 cubic centimeter V8 engine, which has won multiple categories of the International Engine of the Year award from Engine

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Technology International magazine in three of the last four years. This power unit also guarantees a 0 to 100 km/h acceleration in just three seconds. We produced six Sergio cars, all of which have been sold and will be dispatched to our clients by the end of 2015.
One-Offs
Finally, in order to meet the varying needs of our most loyal and discerning clients, we also from time to time produce one-off models. While based on the chassis and equipped with engines of one of the current range models for registration purposes, these cars reflect the exact exterior and interior design and specifications required by the clients, and are produced as a single, unique car.
Non-Registered Racing Cars
Based on our Sports and GT cars, we also develop and manufacture special racing cars. These cars are not registered for use on the road and may only be used on track. Clients and private teams purchase these cars for the purpose of participating in our non-competitive and competitive client events, such as Corse Clienti (see “—Client Relations”), or competing in other GT racing competitions, such as the GT2, GT3 and Grand-Am.
In 2014, we produced a total of thirty-seven 458 Challenge cars, which are reserved for owners competing in our mono-brand Ferrari Challenge championship. In 2014, we also produced a total of sixteen 458 GT cars aimed at drivers participating in Grand Tourism competitions worldwide.
Since 2005, we have also operated our XX Program, a non-competitive “owner-test drivers” program organized at some of the best known race tracks in Europe, Asia and North America. Through the XX Program, we test advanced solutions and technological innovations by providing a select group of clients the opportunity to drive cars enhanced with superior power and performance characteristics. As part of this program, we have developed the FXX K, based on LaFerrari, shipments of which started in the second quarter of 2015.

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Sales and After-Sales
Our commercial team, which includes 177 employees at December 31, 2014, is organized in four geographic areas covering our principal regional end markets: (i) EMEA, which is also responsible for South Africa and India, (ii) Americas, (iii) Greater China (which includes The People’s Republic of China, Taiwan and Hong Kong), and (iv) Rest of APAC (which includes the rest of Asia and Oceania).
Dealer network
We sell our cars exclusively through a network of authorized dealers (with the exception of one-offs which we sell directly to end clients). In our larger markets we act as importer either through wholly owned subsidiaries or, in China, through a subsidiary partly owned by a local partner, and we sell the cars to dealers for resale to end clients. In smaller markets we generally sell the cars to a single importer. At June 30, 2015, our network comprised 182 dealers operating 204 points of sale.
We do not own dealerships and our strategy does not generally contemplate owning dealerships.
We believe that our careful and strict selection of the dealers that sell our cars is a key factor for promoting the integrity and success of our brand. Our selection criteria are based on the candidates’ reputation, financial solidity and track record. We are also mindful to select dealers who are able to provide an in-store experience and to market and promote our cars in a manner intended to preserve the Ferrari brand integrity and to ensure the highest level of client satisfaction.
While dealers may hold multiple franchises, we enjoy a high degree of prominence and level of representation at each point of sale, where most of the client interface and retail experience is exclusive to Ferrari. Our network and business development team works directly with individual dealers to ensure various standards are met. All dealers must conform to our rigorous design, layout and corporate identity guidelines ensuring uniformity of the image and client interface. Through the Ferrari Academy we provide training to dealers for sales, after sales and technical activities to ensure our dealer network delivers a consistent level of market leading standards across diverse cultural environments. We train and monitor dealers intensively and we collect and observe data relating to their profitability and financial health in order to prevent or mitigate any adverse experience for clients arising from a dealer ceasing to do business or experiencing financial difficulties. Our representatives visit dealerships regularly to measure compliance with our operating standards. We have the right to terminate dealer relationships in a variety of circumstances including failure to meet performance or financial standards, or failure to comply with our guidelines.
We provide a suggested retail price or a maximum retail price for all of our cars, but each dealer is free to negotiate different prices with clients and to provide financing. Although many of our clients in certain markets purchase our cars from dealers without financing, we provide direct or indirect finance and leasing services to retail clients and to dealers. (See “—Financial Services”).
The total number of our dealers has been relatively stable in recent years and the number of dealers as well as their geographical distribution tends to reflect closely the development or expected development of sales volumes to end clients in our various markets over time. Dealer turnover is relatively low, reflecting the strength of the franchise and our selection processes, but is sufficient to guarantee an orderly renewal over time and to stimulate the network’s health and performance.
The chart below sets forth the geographic distribution of our 204 points of sale at June 30, 2015:

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Our sales are diversified across our dealer network, with the largest dealer representing approximately 2.5 percent of sales, and our 10 largest dealers representing less than 17 percent of sales.
As part of our supply and demand management, we determine allocations based on various metrics including expected developments in the relevant market, the number of cars sold historically by the various dealers, current order book of dealers and the average waiting time of the end client in the relevant market. We have recently introduced an enhanced order reporting system which allows us to collect and monitor information regarding end client orders and assists us in production planning, production allocation and dealer management.
Parts
We supply parts for current and older models of Ferrari to our authorized dealer network.     In addition to substitution of spare parts during the life of the car, sales are driven by clients’ demand for parts to customize their cars and maximize performance, particularly after a change in ownership and to compete in the Ferrari Challenge and other client races. We also supply parts to Ferrari models currently out of production, with stocks dating back to 1995. The stock of parts for even older models is currently owned and managed by a third party which in some cases also manufactures out-of-stock parts based on our design. The sale of parts is a profitable component of our product mix and it is expected to benefit from the increase in the number of Ferrari cars in circulation.
After Sales
Dealers provide after sale services to clients, either at facilities adjacent to showrooms, or in stand-alone service points across 239 facilities worldwide. After sales activities are very important for our business to ensure the client’s continued enjoyment of the car and the experience. Therefore, we enforce a strict quality control on our dealers’ services activities and we provide continued training and support to the dealers’ service personnel. This includes our team of “flying doctors,” Ferrari engineers who regularly travel to service centers to address difficult technical issues for our clients.

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We also sell certain cars together with a scheduled program of recommended maintenance services in order to ensure that these cars are maintained to the highest standards to meet our strict requirements for performance and safety.
While we do not have any direct involvement in pre-owned car sales, we seek to support a healthy secondary market in order to promote the value of our brand, benefit our clients and facilitate sales of new cars. Our dealers provide an inspection service for clients seeking to sell their car which involves detailed checks on the car and a certification on which the client can rely, covering, among other things, the authenticity of the car, the conformity to original technical specifications, and the state of repair. Furthermore, we offer owners of classic Ferrari cars maintenance and restoration services.
Client Relations
Our clients are the backbone of our business together with our brand and our technology. We do not promote our brand or our cars through general advertising. Our main brand marketing and promotional activities have two principal targets.
Firstly, we target the general public. Our most significant effort in this respect is centered on our racing activities and the resonance of Scuderia Ferrari (see “—Formula 1 Activities”). We also engage in other brand-promotional activities, including participation in motor shows and other public events.
Secondly, we target existing and prospective clients, seeking to promote clients’ knowledge of our products, and their enjoyment of our cars both on road and on track, and to foster long term relationships with our clients, which is key to our success. In 2014, approximately 60 percent of our new cars were sold to Ferrari owners.
By purchasing our cars, clients become part of a select community sharing a primary association with the Ferrari image and we foster this sense of fellowship with a number of initiatives. We strive to maximize the experience of our clients throughout their period of interaction with Ferrari - from first contact, through purchasing decision process, to waiting-time management and ownership.
Client events
We organize a number of client events at Maranello and elsewhere.
Our factory in Maranello is the core of our client engagement strategy and a symbolic hub attracting clients and prospects worldwide. Upon invitation, clients and prospects can visit the factory, witness some of its workings and experience several Ferrari core values such as heritage, exclusivity and customization. At the factory, clients have the opportunity to configure their cars through our personalization and bespoke program (see “—Personalization”).
Clients are also invited to celebrations and other events that we organize in various markets. Some recent examples include the celebration of Ferrari North America’s 60 th Anniversary in Beverly Hills, Los Angeles, where over 1,000 Ferraris paraded on the streets, and the celebrations of the Year of the Horse in China.
Every new model launch is carefully staged and selected clients and prospects have preferential access to the new car. The new model presentation begins with the release of images providing a preliminary, often partial view of its design. Clients are then invited to a preview or world premiere. A public model presentation generally follows at motor shows where clients are provided access to the Ferrari stand. Further country and regional events follow before delivery of the first cars to dealers.
Driving events
Driving events serve the dual objective of allowing clients to experience at their best the emotion of driving a Ferrari car, and to foster client loyalty and repeat purchases by creating superior car-usage occasions. Track and sporty driving activities are mainly targeted to clients with a preference for sports models.
In addition to several track day activities, organized by local sales departments and dealers to allow clients to use their cars on ad-hoc rented tracks, Ferrari has a central department responsible for professionally organizing races and racing courses, Corse Clienti. The Corse Clienti activities take place on some of the world’s most famous race tracks, and include both competitive races, such as the Ferrari Challenge Championships, and non-competitive events, such as with XX and F1 Programme . The XX and F1 Programme is a highly selective initiative dedicated to a restricted group of clients who own non-homologated GT race cars and F1 cars previously used in the Formula 1 Championship. Ferrari Challenge and XX/Formula 1 events are sometimes

108



accompanied by so-called Ferrari Racing Days . These events are open to non-competing clients and prospects and a wider audience, and they offer the opportunity for important client gatherings.
In addition to on-track racing, we organize various on-the-road driving events, including both proprietary formats ( Ferrari Cavalcade ) or with a branded presence within an established driving event. For example, in the Ferrari Tribute to Mille Miglia and the Ferrari Tribute to Targa Florio modern Ferrari cars participate in their own regularity rally taking place shortly before the start of the classic Mille Miglia and Targa Florio races.
We see nurturing our clients’ passion for driving as a key asset for our future commercial success, particularly in markets where racing traditions are less pronounced. We offer on-track driving courses to our clients, catering to different levels of skill and experience and teaching essential driving skills for high performance cars. In our newer markets, such as China, we also offer complimentary driving courses on track to any new car buyer.
Ferrari Classiche
Through our “Ferrari Classiche” service, we offer specialized maintenance and restoration services to owners of Ferraris older than 20 years. We use either original components and spare parts or replicas based on the original specifications and our restoration service offers our clients the opportunity to reinstate any classic Ferrari to its pristine, original conditions. Each year Ferrari Classiche carries out maintenance works on approximately 40 cars and performs approximately 10 full restorations.
Ferrari Classiche also issues certificates of authenticity to Ferrari models older than 20 years and to all Ferrari racing cars, including Formula 1 single-seaters of any age, to attest the authenticity of the cars and of their components. Each certified car undergoes a thorough technical inspection, at the Ferrari Classiche workshop in Maranello or at certain of our authorized dealers worldwide, to verify that the car’s chassis, engine, gearbox, transmission, suspension, brakes, wheels, bodywork and interior are original, or otherwise comply with, the car’s original specifications. If the inspection is successful, our committee of experts, chaired by Piero Ferrari, the Vice Chairman of Ferrari S.p.A., grants the certification. In recent years Ferrari Classiche has on average granted approximately 400 certificates of authenticity per year.
Formula 1 Activities
Our participation in the Formula 1 world championship with Scuderia Ferrari is the core element of our marketing effort and an important source of technological innovation for the engineering, development and production of our Sports and GT cars. The Formula 1 world championship is the highest class for single-seat auto races, attracting the best drivers, engineers and designers. Importantly, with over 425 million television viewers in 2014 (Source: Formula One Management (FOM)), it is the most watched annual sport series in the world.
Formula 1 cars rely on advanced  technology, powerful engines and cutting edge aerodynamics, making them the most advanced racing vehicles in motorsports. Single seater Formula 1 racing cars can reach speeds of up to 360 km/h (220 mph). While Europe is the sport’s traditional base, Formula 1’s reach has expanded significantly and an increasing number of Grand Prix are held in non-European countries, such as China, Bahrain, United Arab Emirates, Singapore, Australia, Brazil, Canada, Japan and the United States. This provides participants in the world championship exceptional visibility on the world stage, as also evidenced by the growing volume of dedicated media to the events, including websites, blogs, magazines and other publications.
Our Scuderia Ferrari has participated in the Formula 1 world championship since its beginning in 1950, and won our first Grand Prix in 1951. Since our debut, we have participated continuously in the world championship and we are the oldest and most successful team in the history of Formula 1, with 224 Grand Prix won. On August 23, 2015, at the Spa-Francorchamps circuit in Belgium, we competed in our 900th Grand Prix race. In the 64 years of our racing history, we have won 15 drivers championships and 16 constructors championships, more than any other team. Many of the best known drivers in the sport’s history have raced in Scuderia Ferrari’s distinctive red single-seaters including Alberto Ascari, Juan-Manuel Fangio, Niki Lauda, Gilles Villeneuve, Alain Prost and Michael Schumacher. Our main drivers for the 2015 Formula 1 world championship are Sebastian Vettel, currently in his first season with Scuderia Ferrari and winner of four of the most recent five drivers’ championship titles, and Kimi Raikkonen, who won our most recent drivers’ championship in 2007. The two drivers have won a combined 62 Grand Prix races.
Our Formula 1 racing performance has been less successful over the past several years as our most recent driver's championship and constructors' championship were in 2007 and 2008, respectively. To address this, we have recently enhanced

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our focus on Formula 1 activities with the goal of improving racing results and restoring our historical position as the premier racing team in Formula 1. In addition to increasing our research and development activity to improve car performance, these efforts have included adding to the racing team Sebastian Vettel, one of the most successful drivers in recent years, and Maurizio Arrivabene as team principal.
Participation in the world championship is regulated by bilateral Team Agreements entered into between Formula One World Championship Limited (FOWC), the Formula 1’s commercial rights holder, and each competing Formula 1 racing team (including Ferrari) and by regulations issued by the Federation Internationale de l’Automobile (FIA), the motor sport’s governing body. The Team Agreements cover the 2013-2020 racing seasons and govern the terms by which the racing teams take their share of commercial profits. The FIA regulations, regulate how the cars are manufactured and the teams compete in races and include technical regulations governing aspects ranging from tyres, weight, to ignition, fueling and throttle requirements, and sporting regulations covering scoring and racing procedures. In return for their participation in Formula 1 races the teams receive a share of the annual profits earned from Formula 1 related commercial activities managed by FOWC, including in particular television broadcasting royalties and other sources, such as racetrack owners’ fees. Approximately 60 percent of earnings before interest, tax, depreciation and amortization from commercial activities and broadcasting rights are distributed to the teams, largely based on the relative ranking of each team in the championship. We use our share of these distributions to defray part of the costs associated with Scuderia Ferrari, including the costs of designing and producing a set of single-seaters each year and the costs associated with managing a racing team including earnings of drivers, who generally are among the most highly paid athletes in the world.
Improvements in technology and, sometimes, changes in regulation, require the design and production of a new racing car every year. Therefore, we begin designing our single-seaters each year in April in anticipation of the start of the racing season the following March. While the chassis we build each year are designed to be used throughout the racing season, the majority of other components mounted on our cars are adjusted from race to race depending on the characteristics of the circuits.
To maximize the performance, efficiency and safety of our single-seaters, while complying with the strict technical rules and restrictions set out by the FIA, our research and development team plays a key role in the development of our engines and cars. We often transfer technologies initially developed for racing to our road cars. Examples include traction control systems, gear shifting steering wheels, and the use and development of carbon fiber, which makes cars lighter and faster. Our road cars (especially our sports car models) have benefited from the know-how acquired in the wind tunnel by our racing car development teams, enjoying greater stability as they reach high speeds on and off the track. Our research and development team focused on combining minimal lap times with maximum efficiency, leading to advances in kinetic energy recovery system, or KERS, technology. KERS recovers a moving vehicle’s kinetic energy while braking, storing it in a reservoir. Building on our racing team’s expertise, we developed a hybrid KERS system, for our LaFerrari road car.
The high brand visibility we achieve through success in the world championship has historically enabled us to benefit from significant sponsorships. Philip Morris International has been Scuderia Ferrari’s official sponsor for over forty years and, together with Shell (our official sponsor since 1996) and Banco Santander (our official sponsor since 2008) remain our principal official sponsors. Other official sponsors include TNT (Energy Drink), Alfa Romeo, UPS, Kaspersky lab, Weichai, Hublot and Claro. Our official suppliers include, among others, Pirelli, Puma, Oakley and IVECO. Visibility and placement of a sponsor’s logo reflects the level of sponsorship fees. Historically, our sponsors have sought advertising opportunities on the chassis of our cars, on clothes worn by our team members and drivers, and in the right to mention Ferrari in their marketing materials.
We utilize the platform provided by Formula 1 for a number of associated marketing initiatives, such as the hosting of clients and other key partners in the Scuderia Ferrari paddock to watch Grand Prix races, and our Formula 1 drivers participation in various promotional activities for our road cars. We often sell older single-seaters to clients for use in amateur racing.
More generally, Formula 1 Racing allows us to promote and market our brand and technology to a global audience without resorting to traditional advertising activities, therefore preserving the aura of exclusivity around our brand and limiting the marketing costs that we, as a company operating in the luxury space, would otherwise incur.
The Mugello Circuit
We acquired the international Mugello circuit in Scarperia, near Florence, in 1988. We have renovated its buildings, 5.2 km race track and other testing and racing facilities, making Mugello, we believe, one of the world’s finest circuits of its type, with FIA Grade 1 and FIM Grade A certifications, the highest level of homologation for a track- race.

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We perform promotional activities in order to rent the Mugello circuit to event organizers who regularly host leading car and motorbike races at the circuit, including the MotoGP World Championship since 1992. Many Formula 1 constructors have also used our Mugello circuit for their development tests.
In 2011, the Mugello circuit won its fifth “Best Grand Prix” award, the highest honor given by the motor sport world for MotoGP organizers. The Mugello circuit is the only track race to have received this award five times.
Brand Activities
Ferrari is one of the world’s leading luxury brands. We engage in brand development and protection activities through licensing contracts with selected partners, retail activities through a chain of franchised or directly managed Ferrari stores, licensed theme park and the development of a line of products sold exclusively in our Ferrari stores and on our website www.store.ferrari.com .
Licensing and Theme Park
We enter into license agreements with a number of licensees for the design, development and production of Ferrari branded products.
We carefully select our licensees through a rigorous process and we contractually seek to ensure that our brand and intellectual property are protected and that the products which will eventually bear our brand are of adequate quality, appearance and market positioning.
The table below sets forth our current licensing mix.
Category
 
Principal Licensees
Accessories
 
o Oakley (sunglasses)
o Tod’s (shoes and leather goods)
Consumer electronics
 
Various
Sportswear
 
Puma
Theme Parks
 
o Ferrari World, Abu Dhabi
o Ferrariland, Port Aventura
Toys
 
o Bburago (play-set)
o Lego (Lego toys)
Video games
 
o Electronic Arts
o Microsoft
o Sony Polyphony
o Ubisoft
Watches
 
o Hublot (co-branded high-luxury watches)
o Movado (Scuderia Ferrari Watches)
Other (including models collectors, kid apparels and accessories, stationary and credit cards)
 
Various
A significant portion of our revenues from licensing activities consists of royalties we receive in connection with Ferrari World, our theme park in Abu Dhabi (12 percent of royalties generated by licensing activities). Ferrari World opened on Yas Island - on the North East side of Abu Dhabi’s mainland in 2010 and it is currently the only operating Ferrari theme park. Ferrari World’s iconic sleek red roof is directly inspired by the classic double curve side profile of the Ferrari GT body, spanning 200,000 square meters and carrying the largest Ferrari logo ever created. Ferrari World Abu Dhabi offers an all-around Ferrari experience to children and adults alike. The attractions include futuristic 4D rides such as the child-friendly Speed of Magic and the world’s fastest roller-coaster which reaches speeds of 240 km/h and simulates the breathtaking adrenaline rush of a Ferrari single-seater. In the G-Force experience, visitors are launched 62 meters upwards and over the roof of the Park before being pulled back to earth.
In 2014 we reached an agreement with PortAventura Entertainment S.A.U. to open Ferrari’s first European theme park at the PortAventura resort near Barcelona in Spain. PortAventura Entertainment S.A.U. has announced a planned investment of

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€100 million and the park is expected to open in 2016. In the long-term we aim to open one theme park in each of the main geographic areas where we operate, including North America and Asia.
Retail and E-Commerce
Through our network of Ferrari stores (franchised or directly managed), we offer a wide range of Ferrari branded products, including a line of products exclusively sold in our Ferrari stores and on our website. All Ferrari branded product we sell in our stores and on our website are either manufactured by our licensees, or directly sourced from our selected network of suppliers.
At June 30, 2015, there were a total of 32 retail Ferrari stores, including those in Milan, St. Petersburg, Singapore, Macau, New York, Las Vegas, Honolulu and Miami (United States), Johannesburg (South Africa), Dubai and Abu Dhabi (UAE), including 20 franchised stores and 12 stores owned and operated by us.
We require all franchisees to operate Ferrari stores according to our standards. Stores are designed, decorated, furnished and stocked according to our directions and specifications.
We use multiple criteria to select our franchisees, including know-how, financial condition, sales network and market access. Generally, we require that applicants meet certain minimum working capital requirements and have the requisite business facilities and resources. We typically enter into a standard franchising agreement with our franchisees. Pursuant to this agreement, the franchisee is authorized to sell our products exclusively at a suggested retail price. In exchange, we provide them with our products, the benefit of our marketing platform and association with our corporate identity.
In recent years, our website has proved to be an increasingly valuable sales channel. With over 400,000 registered users in over 90 countries and translations in seven languages, in 2014 it recorded revenues of approximately €6.2 million.
Design, Development and Manufacturing
Design
The design of our cars is an essential and distinctive component of our products and our brand. Our designers, modelers and engineers work together to create car bodies that incorporate the most innovative aerodynamic solutions in the sleek and powerful lines typical of our cars. The interiors of our cars seek to balance functionality, aesthetics and comfort. Our cockpits are designed to maximize the driving experience, more sporty or more comfortable, depending on the model through an ergonomic layout of all main controls clustered on the steering wheel, and our cars’ interiors boast elegant and sophisticated trims and

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details. A guiding principle of our design is that each new model represent a clear departure from prior models and introduce new and distinctive aesthetic elements.
For the design of our cars we have relied historically on our highly successful collaboration with the Italian car design firm Pininfarina. During over 60 years of collaboration with Pininfarina, our cars have been granted several renowned design awards, including: 458 Italia (Best in Show assigned by Autoweek magazine, 2009, Car of the Year and Supercar of the Year assigned by BBC Top Gear Magazine, 2009 and “Chi È” Cars of the Year 2010), California (Best Buy and Recommended Awards 2009 assigned by Chinese magazine Auto World Magazine and Oriental Award for Best Design, 2009), Enzo (“Best in Show” 2002 - Paris Motor Show 2002).
In 2010 we established the Ferrari Design Centre, our in-house design department, in order to improve our control over the design process and ensure long-term continuity of the Ferrari style. All concepts and works from Ferrari Design Centre are marked with our logo “Ferrari Design” (see “—Intellectual Property”). Ferrari Design Centre handles all aspects of automotive styling for the Ferrari road cars product range, including the styling of all external bodywork and components, series production models for the GT and Sports car models, special editions, limited editions, one-off models and concept cars. Ferrari Design also includes a colour & trim team which handles the choice of materials and finishes for both exterior and interior trim and, in addition, is responsible for the Tailor Made program in conjunction with the product marketing department. Ferrari Design is also regularly involved with the styling and conceptual definition of Ferrari branded products produced by our licensees (see “—Brand Activities”).
The department is organized as an integrated automotive design studio, employing a total workforce of approximately 70 people (both full-time workers and external contractors) including designers, 3D surfacing operators, physical modelers and graphic artists. It operates a modeling studio fully equipped with 5-axis milling machines with the capacity to develop various full-scale models (interior and exterior) in parallel.
Ferrari Design Centre entirely designed our most recent cars, such as the 488 GTB, the LaFerrari and the FXX K, while it designed other current range models, such as the F12berlinetta, in collaboration with Pininfarina. Although our collaboration with Pininfarina is still active with regard to certain special models and fuoriserie (see “Sports and GT Cars—Limited Edition Supercars, Fuoriserie and One-Offs—Sergio”), we expect that the design and development of most of our future models will be carried out primarily by our Ferrari Design Centre.
During the 5 years of activity of the Ferrari Design Centre, our cars have been granted several renowned design awards. Among the recent ones are the following:
FXX K: Red Dot: “Best of the Best” award for top design quality and ground-breaking design (2015).
F12berlinetta : “Compasso d’Oro 2014” (ADI); “Car of the Year 2014” (Robb Report); “Supercar of the Year 2013” (GQ); “Best Coupé 2013” ( L’Automobile Magazine ); “Design Award, 2012” (Auto Bild); “ Goldenes Lenkrad 2012 ” (Auto Bild); “Supercar of the Year 2012” (Top Gear).
LaFerrari : Red Dot design award for high design quality (2015); “Design Award” (AutoScout24 -11 th Internet Auto Awards); “Design of the Year 2014” (AutoDesign & Styling Awards); “Best Super Sportscar 2014” (Auto Zeitung); “2014 James May’s Car of the Year” (Top Gear); “Best Cars 2015 - Coupé Category” (Motor Presse Iberia).
California T : Red Dot design award for high design quality (2015); “The Most Beautiful Automobile Award 2014” (Car & Driver China); “Most Stylish Car 2014” ( Schweizer Illustrierte ).
458 Speciale : “Supercar of the Year 2013” (Top Gear - UK); “2014 Car of the Year” (Evo - UK); “James May’s Car of the Year 2013” (Top Gear - UK); “Supercar of the Year 2013” (Evo Middle East); “2014 Britain’s Best Driver’s Car” (Autocar - UK).
458 Speciale A : “Convertible of the Year 2014” (Top Gear UK).

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Product Development
Our product development process is highly structured with the aim of allowing us to respond quickly to market demand and technological breakthroughs and to maintain our position at the top end of the market for car performance and luxury. Our technology team is comprised of approximately 580 engineers and technicians at December 31, 2014. All of our cars are designed and engineered in Italy, at our factories in Maranello and Modena (Carrozzeria Scaglietti).
Our product development includes innovation programs, components programs and car programs, with regular management reviews and detailed cycle milestones. Our components programs are intended to ensure technological innovation and support the development of future models rather than to create an “off the shelf” catalog of available components.
All our cars are designed and manufactured based on two highly modular architectures incorporating front and mid-rear engines respectively. This allows for flexible manufacturing at low volumes and easy adaptation to different models with limited additional investment. Our architectures utilize a number of common structures, reducing tooling investment for new model production. When developing a new platform, we focus on innovation, leveraging on our collaboration with the select research centers and universities, and flexibility, allowing us to respond efficiently to potentially varied market demand. The flexibility of our platforms enables us to introduce our highly innovative contents on a wide range of models while, at the same time, reducing the fixed costs connected to the use of multiple platforms.
Consistent with our mission to develop cutting edge sports and GT cars, our product development efforts continually focus on improving core components, such as the powertrain, car dynamics, and the use of materials such as special aluminum alloys and carbon fiber (see “Design, Development and Manufacturing—Production Process”).
The expertise we acquired in these fields has recently guided our efforts to combine improved performance with reductions in CO 2 emissions. In recent years, calls for CO 2 emissions reductions have come from regulatory initiatives as well as market demand. LaFerrari is an example of such efforts, and we believe it shows our ability to apply our core mechanical know-how to new and expanding fields such as hybrid technology.
The design and development process for a new model currently takes approximately 40 months, depending on the modifications (approximately 33 months for M models), measured from the beginning of the development project to the start of production. We believe this fast development is made possible by our dedicated and concentrated development team as well as by the clarity and focus of the product marketing objectives. Our product marketing team is integrally involved in the entire development process, beginning with the initial product brief and, thereafter, through systematic interaction.
The cadence of production launches is designed to maintain our product portfolio’s leading position in the industry segment and optimize the length of the model lifecycle relative to demand, while limiting research and development spend to maximize its productivity.
Generally, we plan for a four to five year life cycle for our range models. After four to five years, we typically launch a “modified” or “M” model based on the same platform but featuring significant aesthetic updates and technological improvements. This is, for example, the case of the California T, launched in 2014, which replaced and updated the earlier California, featuring new sheet-metal, new interior, a revised chassis and a new turbocharged powertrain. Typically, four years after the launch of the M-model, we start production of an entirely new model based on an completely new or overhauled platform. Therefore, the cumulative life cycle of each of our models is approximately eight to nine years, and typically we have launched one new model every year while keeping four or more range models in production at any time. The actual life cycles of our models vary depending on various factors including market response. Special series have different, typically shorter, lifecycles. We usually utilize additional platforms for production of our supercars, such as LaFerrari.
We also run specific programs for our most critical components, independently from the development of new car models. This is the case of our engines, which we manufacture according to cycle milestones not necessarily connected with the release of a new car model. Since 2011, we have also been producing the new F160 3.0-litre V6 Turbo engine exclusively for Maserati. In 2014, we produced approximately 31,000 F160 engines for Maserati. (See “—Manufacturing of Engines for Maserati”). Many of our components, such as those relating to transmission, power steering, navigation systems and the instrument cluster, are co-designed by us and our suppliers based on our specifications.
Our research and development operations constantly focus on innovating our cars’ concept and package, on powertrains design, car architecture and components development. (See “—Research and Development”).

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Procurement
We source a variety of components (including transmissions, brakes, driving-safety systems, navigation systems, mechanical, electrical and electronic, plastic components as well as castings and tires), raw materials (aluminum, and precious metals including palladium and rhodium), supplies, utilities, logistics and other services from numerous suppliers.
Our focus on excellence, in terms of luxury and performance, require us to select suppliers and partners that are able to meet our high standards. For the sourcing of certain key components with highly technological specifications, we have developed strongly synergic relationships with some of our suppliers, which we consider “key strategic innovation partners.” We currently rely on 14 key strategic innovation partners, including GETRAG and Brembo for the supply of transmissions and brakes respectively. We have also developed strong relationships with other industrial partners for bodyworks and chassis manufacturing and for powertrain and transmissions, among other things. Pursuant to our make-or-buy strategy, we generally retain production in-house whenever we have an interest in preserving or developing technological know-how or when we believe that outsourcing would impair the efficiency and flexibility of our production process. Therefore, we continue to invest in the skills and processes required for low-volume production of components that we believe improve product quality.
For the year ended December 31, 2014, the purchases from our five largest suppliers by value accounted for approximately 22 percent of total procurement costs, and no supplier accounted for more than 10 percent of our total procurement costs.
We recognize the contribution of our suppliers to our success through various initiatives, including Podio Ferrari, an annual event since 2001 devoted to Ferrari’s suppliers who displayed particular excellence or innovative flair.
Production Process
Our production facilities are located in Maranello and in Modena, Italy (see “—Properties”). Our production processes include supply chain management, production and distribution logistics.
Notwithstanding the low volumes of cars produced, our production process requires a great variety of inputs - over 40,000 product identifier codes sourced from approximately 1,000 total suppliers - entailing a complex supply chain management to ensure continuity of production. Our stock of supplies is warehoused in Ubersetto, near Maranello, and its management is outsourced to the logistics company Kuehne & Nagel.
Most of the manufacturing process takes place in Maranello, including aluminum alloy casting in our foundry, engine construction, mechanical machining, painting, car assembly, and bench testing; at our second plant in Modena ( Carrozzeria Scaglietti) we manufacture our cars’ aluminum bodyworks and chassis. All parts and components not produced in house at Ferrari are sourced from our panel of suppliers (see “—Procurement”).
In recent years we have made significant investments in our manufacturing facilities, and between 2002 and 2012 the plants housing our production processes were entirely renovated or rebuilt. We plan our investment activities based on an estimated plant useful life of approximately 20 years. Equipment, on the other hand, may require substantial investment with the introduction of new models, particularly in the case of shell tools for the foundry, tools for machining, feature tools for body welding and special mounting equipment for the assembly.
At December 31, 2014, our production processes employed over 1,250 engineers, technicians and other personnel (approximately 1,100 engineering and production employees and approximately 150 white collar employees). Furthermore, in 2014 we employed additional 239 temporary engineering and production employees for the manufacturing of engines for Maserati. We have a flexible production organization, which allows us to adjust production capacity to accommodate our expected production requirements. This is primarily due to the low volume of cars we produce per year and to our highly skilled and flexible employee base that can be deployed across various production areas. In addition, we can adjust our make-or-buy strategies to address fluctuations in the level of demand on our internal production resources. Our facilities can accommodate a meaningful increase in production compared to current output with the increase of weekend shifts or, to address special peaks in demand, temporary employees. Production could be increased even further with the introduction of a second shift on car assembly lines compared to the single shift currently operated. We constantly work to increase the utilization rate and reduce the internal scrap rate and we closely monitor an index of our production efficiency. In the past few years we have reduced our cycle time by approximately three percent per year. We are also committed to improve the reliability of our cars, reduce their defects, and optimize their finishing.

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Unlike most low volume car producers, we operate our own foundry and machining department producing several of the main components of our engines, such as engine blocks, cylinders heads and crankshafts. We believe this accelerates product development and results in components that meet our specifications more closely.
Engine Production
Our engines are produced according to a vertical structure, from the casting of aluminum in our foundry up to the final assembly and testing of the engine. Several of the main components of our engines, such as blocks and cylinders heads are produced at our foundry in Maranello. For this purpose, we use a special aluminum alloy that includes seven percent silicon and a trace of iron, which improves mechanical integrity, and our own shell and sand casting molds. Once all components are ready, engines are assembled, on different lines for our V8 engines, V12 engines and for the V6 engines we manufacture for Maserati. The assembly process is a combination of automatic and manual operations. Since start of the assembly process, each engine is identified with a barcode and operations are recorded electronically. Every engine then goes to the test benches where its power and torque output are measured to ensure it delivers the expected performance. In 2014 we produced an average of 187 engines per day, including approximately nine V12, 47 V8 and 131 V6 for Maserati (see “—Manufacturing of Engines for Maserati”).
Chassis and Body Assembly
In parallel with the assembly of our engines, we prepare our body-shells and chassis at our panel shop Carrozzeria Scaglietti in Modena. The main components of body-shells and chassis are not manufactured internally but are sourced from manufacturers such as Officine Meccaniche Rezzatesi for chassis and Fontana Group for bodies. At Carrozzeria Scaglietti we have two different production lines dedicated to the assembly of our V8 and V12 cars. We carefully check the alignment of the various parts - most importantly the engine cover and the wings - with electronic templates and gauges. Our highly trained specialists also perform surface controls to the aluminum panels and work any imperfections on it by either filing or panel beating.
Painting
Our paint shop was inaugurated in 2004 with what we believe to be state-of-the-art technology. When transferred to our paint shop, all body-shells are cleaned with automatic pressure blowers (to avoid the electrostatic effect) and carefully brushed with emu feathers (because of their natural anti-electrostatic properties) to clean off any dirt particles or impurities. The bodies are then mounted on a loading bay, immersed in the cataphoresis tanks and subsequently transferred to a fixing gas fired oven at 140 degrees. Primers are then applied and fixed at 190 degrees until the completely grey body-shell is ready for painting. Painting is automated for the larger surfaces, while it is done by hand for some other localized areas. The whole car is painted at the same time to ensure color harmony. The bodies are finally polished with lacquer to fix the paint and give the bodies their final finish.
Assembly Line and Final Checks
The final assembly of our cars takes place in our new body-shop built in 2008. Assembly of our eight and 12 cylinder cars are carried out separately. For each model, the initial assembly operations take place simultaneously on different lines and sections to maximize efficiency.
Personalization and Road Tests
The final stage of our car production is the fitting of all bespoke interiors, components and special equipment options that our clients choose as part of our personalization program (see “Sports and GT Cars—Range Models and Special Series—Personalization Program and Tailor Made program”). After the personalization phase, every car completes a 40-kilometer road test-drive.
Finishing and Cleaning
After the road test all cars go to the finishing department. There, we thoroughly clean interior and exterior, check the whole car, polish and finish the bodies to give them their final appearance.

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Manufacturing of Engines for Maserati
We have been producing engines for Maserati since 2003. The V8 engines that we historically produced and continue to produce for Maserati are variants of Ferrari families of engines and are mounted on Maserati’s highest performing models, such as the Quattroporte (turbo engines), the Granturismo and the Grancabrio (aspirated engines). All of the V8 engines that we sell to Maserati are manufactured and assembled according to the same production processes we adopt for the V8s equipped on our cars (see “—Production Process”). In 2014, we sold approximately 800 V8 turbo engines and approximately 4,300 V8 aspirated engines to Maserati.
In 2011 we began producing a family of engines exclusively for Maserati, namely the F160 3.0-litre V6 Turbo engines, in much larger production volumes. Our arrangement with Maserati is currently governed by a framework agreement entered into in December 2014. Pursuant to this agreement, the initial production run of up to 160,000 engines in aggregate through 2020 is expected to increase to up to 275,000 engines in aggregate through 2023 to cater to Maserati’s planned expanded model range and sales. Volumes and pricing are adjusted from time to time to reflect Maserati’s changing requirements. Under the framework agreement, Maserati is required to compensate us for certain costs we may incur, such as penalties from our suppliers, if there is a shortfall in the annual volume of engines actually purchased by Maserati in that year. In 2014, we sold approximately 31,000 V6 engines to Maserati in three different versions, ranging from 330 hp to 410 hp.
In order to meet the V6 volumes and specifications requirements, we built a dedicated assembly facility at Maranello with a much higher level of industrialization compared to production of our V12 and V8 engines. Due to the larger volumes and product specifications, our make-or-buy strategy for the production of V6 F160 engines also differs from the one applicable to Ferrari engines. The vast majority of the engine components are sourced externally from our panel of suppliers (see “—Procurement”) and then assembled in Maranello on our highly automatized V6 assembly line.
From the sale of engines to Maserati, we recorded net revenues of €251 million in 2014 and €98 million in the six months ended June 30, 2015.
Financial Services
We offer retail client financing for the purchase of our cars through Ferrari Financial Services S.p.A. (“FFS”). FFS, together with its subsidiaries, operates in our major markets, including UK, Germany and the United States. We also offer dealer financing through FFS in the United States. Until December 2014 we offered dealer financing in UK, Germany, Belgium and Switzerland and until May 2014 in Japan.
Through FFS, we offer a range of flexible, bespoke financial and ancillary services to clients (both new and recurrent) interested in purchasing a wide range of cars, from our current product range of Sports and GT cars, to older pre-owned models, to classic models, special series and competition cars, including retired Formula 1 single-seaters. FFS also provides special financing arrangements to a selected group of our most valuable and loyal customers.
In December 2014, we entered into a partnership with FGA Capital S.p.A. (now FCA Bank S.p.A. or FCAB), a 50/50 joint venture between FCA Italy S.p.A. and Crédit Agricole Consumer Finance S.A. FCAB operates in 16 European countries and we believe that our partnership with FCAB will enable us to extend the reach of our dealer and retail financing services to a larger number of markets in which we operate. Our relationship with FCAB is not expected to change following the Separation.
In May 2015, we entered into a partnership with JACCS Co., Ltd to promote sales volume growth in the Japanese market with a full scale customer and dealer finance arrangement.
In light of our recent partnership with FCAB and JACCS Co., Ltd, and also due to recent changes to the banking and financial laws in Italy, which will subject FFS to much stricter capital and financial requirements, we are currently reviewing our go to market strategy. We expect this review to be completed by the end of 2015.
At December 31, 2014, FFS’s portfolio of financial receivables was €1,060 million in aggregate, including €546 million in the Americas (51 percent of total), €474 million in EMEA (45 percent of total), and €40 million in Rest of APAC (4 percent of total).

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Research and Development
We engage in research and development activities aimed at improving the design, performance, safety, efficiency and reliability of our cars.
Our research and development center is in Maranello and, at December 31, 2014, included approximately 300 employees who are part of our broader technology team. Our personnel support product development efforts and have expertise in a number of disciplines, including mechanical, electrical, materials, computer science and chemical engineering.
For the six months ended June 30, 2015, we capitalized development costs of €75 million (€67 million for the six months ended June 30, 2014). We capitalized development costs of €145 million in 2014, €93 million in 2013 and €84 million in 2012.
Research and development costs expensed during each period mainly include the research and development incurred for the Formula 1 racing activities to support the development of the sports and GT car models and prototypes, which are expensed as incurred. The following table summarizes our research and development expenditures in the years ended December 31, 2014, 2013 and 2012 and for the six months ended June 30, 2015 and 2014:
 
For the six months ended June 30,
 
For the years ended December 31,
 
2015
 
2014
 
2014
 
2013
 
2012
 
(€ thousand)
Amortization of capitalized development costs
55,858

 
61,706

 
125,497

 
120,444

 
97,949

Research and development costs expensed during the period
235,248

 
214,169

 
415,336

 
358,850

 
333,507

Total research and development costs
291,106

 
275,875

 
540,833

 
479,294

 
431,456

We transfer technologies developed by our racing team to our Sports and GT models across all core vehicle development areas, such as aerodynamics, powertrain, and car dynamics. To that end, we also transfer research and development personnel between the Formula 1 team and the sports and GT cars team, and the two teams regularly join forces for ad-hoc projects in areas such as combustion engine, new materials or computational fluid dynamics for aerodynamic performance.
Vehicle Concept
Achieving the most efficient combination of lightweight materials and optimal weight distribution gives our cars their superior longitudinal and lateral driving dynamics. We employ a range of technologies to reduce car weight. For our range models we are currently developing an aluminum lightweight chassis and body, which is lighter than a carbon fiber chassis. For LaFerrari we are currently using state of the art carbon fiber technologies, which we developed in conjunction with our Formula 1 research and development team. We are currently developing a new architecture, aimed at further reducing car weight and increasing performance, and thus improving stiffness and reducing noise, vibration and harshness (NVH), among other things.
Powertrain
The powertrain is a core area of our research and development. As with other research and development areas, powertrain research benefits from a constant exchange between the Formula 1 team and designers of our Sports and GT cars.
Engines
Our V12 engines’ output ranges from 660 hp (in the FF), to 740 hp (in the F12), and up to 800 hp (in the LaFerrari). This range highlights our versatility in developing V12 aspirated engines, as there are no other carmakers which currently boast such specific high power ratios. With the new California T and the 488 GTB, we transitioned from aspirated V8 engines to turbo charged engines. This allowed us to increase specific engine power more than 20 percent, while reducing emissions by up to eight percent. All Ferrari turbo engines are designed to have the same throttle response delivered by a naturally aspirated car. To achieve this goal we are investing in cutting edge turbo charging technologies (such as aluminum-titanium-alloys and ball bearings), with our strategic partner IHI.

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To further improve efficiency with respect to emissions and performance we continuously improve on our engines, researching new materials with higher specifications for friction, thermal and mechanical stress. We are also investing in technologies that improve the combustion process, with research focusing on high pressure injection and tumble flaps.
Transmissions
Our 7-shift double clutch gearbox is a core element of Ferrari powertrains. The architecture of the gearbox, combined with the shifting technologies developed by Ferrari, allow for one of the fastest and most performance orientated shifts on the market. The 488 GTB demonstrates the potential of this gearbox, reaching the 4th gear limiter in full acceleration in six seconds.
Vehicle dynamics
Suspension, braking systems and tires are key elements of vehicle dynamics. Our vehicle suspensions allow for a very rigid and direct force transmission which increases the response of the car, and we combine those with magnetorheological ride dampers. We continuously collaborate with our strategic partners in our effort to increase damper dynamics.
All Ferraris are equipped with carbon ceramic brakes, renowned for superior breaking performance. With the 458 Speciale we introduced a new generation of carbon ceramic brakes with even higher breaking performance and reduced weight. We plan on equipping future vehicles with these brakes.
Aerodynamics
We are constantly seeking to improve the aerodynamics of our models, working specifically on drag resistance and downforce. The new 488 GTB has an aerodynamic efficiency of 1.67 due to its specially designed front and its rear spoiler. We also use passive and active spoiler systems. Thanks to our collaboration with the racing team, who assist with calculations and testing, we believe we are able to develop innovative solutions in shorter timeframes.
Hybrid technology
With LaFerrari we developed not only a supercar with cutting edge engine performance and driving dynamics, but also a highly sophisticated hybrid car. In conjunction with our partner Magneti Marelli, we developed a compact electric power unit (120KW) and DC/DC charger. The battery (120KW/2,3KWH) was developed in conjunction with our Formula 1 team, who has extensive know-how in high performance powertrains.
The LaFerrari project greatly expanded our knowledge of powertrain electrification (and its implications on performance and efficiency). We actively work to improve performance and efficiency of electric powertrains and to extend the range of electric components in our cars (e.g. electric power steering).
Intellectual Property
We own a number of design and utility patents and registered designs. We expect the number to grow as we continue to pursue technological innovations and to develop our design and brand activities.
We file patent applications in Europe, and around the world (including in the United States) to protect technology and improvements considered important to our business. No single patent is material to our business as a whole.

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We also own a number of registered trademarks, designs and patents, including approximately 430 trademarks (word or figurative), registered in several countries and across a number classes. In particular, we ensure that the maximum level of protection is given to the following iconic trademarks, for which we filed a total of 4,609 registrations in 128 countries, in most of the main classes for goods and services:
“Ferrari” (word)
“Ferrari” logotype:
the “Prancing Horse” (figurative):
the trademark (figurative):
the racing shield (figurative):

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Scuderia Ferrari (word and figurative):
Our Sports and GT car models and Formula 1 single-seater models are also registered as trademarks (and logotypes) and we also register their designs and domain names.
The protection of intellectual property is also increasingly important in connection with our design and brand activities. Therefore, we adopt and follow internal processes and procedures to ensure both that all necessary protection is given to our intellectual property rights and that no third party rights are infringed by us. In addition, we are particularly active in seeking to limit any counterfeiting activities regarding our Ferrari branded products around the world. To reach this goal we closely monitor trademark applications and domain names worldwide, actively interact with national and local authorities and customs and avail ourselves of a network of experienced outside counsels.
Properties
Our principal manufacturing facility is located in Maranello (Modena), Italy. It has an aggregate covered area of approximately 630 thousand square meters. Our Maranello plant hosts our corporate offices and most of the facilities we operate for the design, development and production of our Sports and GT cars, as well as of our Formula 1 single-seaters. (See “Design, Development and Manufacturing—Production Process”). Except for some leased technical equipment, we own all of our facilities and equipment in Maranello.
Between 2003 and 2008 most of the buildings in Maranello, including the paint shop building and the production building, were either rebuilt or renovated. In 2015 we have completed construction of the new building entirely dedicated to our Formula 1 team and racing activities.
Adjacent to the plant is our approximately 3,000 meter Fiorano track, built in 1972 and remodeled in 1996. The track also houses the Formula 1 logistics offices. Additional facilities in Maranello include a product development center, a hospitality area and the Ferrari museum.
We also own the Mugello racing circuit in Scarperia, near Florence, which we rent to racing events organizers (see “Formula 1 Activities—The Mugello Circuit”).

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We own a second plant in Modena, named Carrozzeria Scaglietti. At this approximately 26 thousand square meter plant we manufacture aluminum bodyworks and chassis for our regular range, special series and prototype cars.
The total carrying value of our property, plant and equipment at June 30, 2015 was €589 million .
Employees
Human capital is a crucial factor in our success, in terms of building on our position as a global leader in the luxury performance car sector and creating long-term, sustainable value. To recognize excellence, encourage professional development and create equal opportunities, we adopt a number of initiatives, such as our Graduates Project, aimed at identifying and recruiting graduates from the world’s best universities; our appraisal system to assess our manager, professional and white collar employees, through performance management metrics; our talent management and succession planning; training and skill-building initiatives; employee satisfaction and engagement surveys, including our so-called “Pit Stop” and “Pole Position” programs; and flexible work arrangements, commuting programs and dedicated wellness programs, including our Formula Uomo program and Formula Benessere program (which offer medical assistance to employees and their families).
At December 31, 2014, we had a total of 2,858 employees, including 78 executives. Of these, approximately 2,700 were based at our Maranello facility, and approximately 140 in offices around the world, mostly in North America and China.
 
For the years ended December 31,
 
2014
 
2013
 
2012
White collar employees
1,177

 
1,088

 
1,036

Italy
1,045

 
968

 
936

Rest of the world
132

 
120

 
101

Blue collar employees
1,603

 
1,619

 
1,602

Italy
1,600

 
1,615

 
1,598

Rest of the world
3

 
4

 
4

Executives
78

 
80

 
81

Total
2,858

 
2,787

 
2,720

The increase in employees in recent periods principally related to a strengthening of technical competencies, particularly within our Formula 1 activities. Furthermore, in 2012, we began producing engines for the new Maserati cars. The planned production volumes required adoption of innovative work organization mechanisms, in terms of number of shifts and hours, thus enabling effective management of a varying production demand. The new activity required the addition of 239 workers, who are currently on agency contracts. These workers are not included in the total Ferrari employee head count referenced above.
Approximately 14 percent of the employees at our Maranello and Modena facilities were trade union members in 2014. Our employees’ principal trade unions are Federazione Italiana Metalmeccanici (FIM-CISL), Federazione Italiana Sindacati Metalmeccanici e Industrie Collegate (FISMIC), Unione Italiana Lavoratori Metalmeccanici (UILM-UIL) and Federazione Impiegati Operai Metallurgici (FIOM-CGIL).
All of our employees are covered by collective bargaining agreements. Our managers are represented by the Italian trade union, Federmanager, and are subject to a collective bargaining agreement renewed on July 30, 2014 and in effect through December 31, 2015. Our other employees are covered by the collective bargaining agreement entered into by FCA and FIM-CISL, UILM-IUL, FISMIC, UGL and Associazione Quadri e Capi FIAT, which has been recently renewed until December 31, 2018, and by a Ferrari Enterprise Bargaining Agreement signed by us and FIM, UILM and FISMIC which expires on December 31, 2015. This collective bargaining contract provides, among other things, for the payment of bonuses linked to performance up to a maximum of approximately €5,060 gross per year payable in three installments. We expect our employees will remain covered by these collective bargaining agreements after the Separation.
In addition to the collective agreements, we have individually negotiated agreements with several of our managers and other key employees providing for long-term incentives, exclusivity and non-compete provisions.

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Regulatory Matters
We manufacture and sell our cars around the world and our operations are therefore subject to a variety of laws and regulations relating to environmental, health and safety and other matters. These laws regulate our cars, including their emissions, fuel consumption and safety, as well as our manufacturing facilities and operations, setting strict requirements on emissions, treatment and disposal of waste, water and hazardous materials and prohibitions on environmental contamination. Our vehicles, together with the engines that power them, must comply with extensive regional, national and local laws and regulations, and industry self-regulations (including those that regulate vehicle safety). However, we currently benefit from certain regulatory exemptions, because we qualify as a SVM or similar designation in most of the jurisdictions where we sell cars (including the United States). As outlined below, these exemptions provide a range of benefits, from less stringent emissions caps and compliance date extensions, to exemptions from zero emission vehicle production requirements.
We are in substantial compliance with the relevant regulatory requirements affecting our facilities and products around the world. We constantly monitor such requirements and adjust our operations as necessary to remain in compliance.
Greenhouse gas/CO 2 /fuel economy legislation
Current European legislation limits fleet average greenhouse gas emissions for new passenger cars to 130 grams of CO 2 per kilometer. This target, implemented gradually between 2012 and 2015, calls for 65 percent of the manufacturer’s newly registered cars to comply with the 130 grams limit in 2012, rising to 75 percent in 2013, 80 percent in 2014, and 100 percent from 2015 onwards.
Due to our SVM status we benefit from a derogation from the 130 grams per kilometer emissions requirement available to small volume and niche manufacturers. Pursuant to that derogation, we are instead required to meet yearly CO 2 emissions targets, beginning in 2012, reaching a target level of 290 grams per kilometer in 2016 for our fleet of EU-registered vehicles that year. Ferrari has recently introduced two models featuring smaller engines which are expected to contribute to our efforts to meet the target.
In 2014, the European Union set new 2020 emissions targets, calling for 95 percent of a manufacturer’s full fleet of new passenger cars registered in the EU in 2020 to average 95 grams of CO 2 per kilometer, rising to 100 percent of the fleet in 2021. The 2014 regulation extends the small volume and niche manufacturers derogation. We will therefore submit, by the end of 2015, our proposed CO 2 emissions target for the 2017-2021 period to the E.U. Commission for approval.
In the United States, both Corporate Average Fuel Economy (CAFE) standards and greenhouse gas emissions standards are imposed on manufacturers of passenger cars. Because the control of fuel economy is closely correlated with the control of GHG emissions, the United States Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) have sought to harmonize fuel economy regulations with the regulation of GHG vehicle emissions (primarily CO 2 ). These agencies have set the federal standards for passenger cars and light trucks to meet an estimated combined average fuel economy (CAFE) level that is equivalent to 35.5 miles per U.S. gallon for 2016 model year vehicles (250 grams CO 2 per mile). In August 2012, these agencies extended this program to cars and light trucks for model years 2017 through 2025, targeting an estimated combined average emissions level of 163 grams per mile in 2025, which is equivalent to 54.5 miles per gallon.
However, for model years 2017-2025, the EPA allows a SVM, defined as manufacturers with less than 5,000 yearly unit sales in the United States, to petition for a less stringent standard. Based on our operational independence from FCA, the EPA has granted us SVM status. We have therefore petitioned the EPA for alternative standards for the 2017-2019 period, which are aligned to our technical and economic capabilities. We expect to receive feedback on this proposal by the end of 2015.
Following the Separation, we intend to petition NHTSA for recognition as an independent manufacturer of less than 10,000 vehicles globally, in order to be eligible for alternate CAFE standards, as permitted under the CAFE program. If our petition qualifying for alternate CAFE standards is successful, NHTSA will determine the appropriate level of CAFE applicable to us for future model years.
In February 2010, the California Air Resources Board (CARB) enacted regulations that deem manufacturers of vehicles for model years 2012-2016 which are in compliance with the EPA greenhouse gas emissions regulations to also be in compliance with California’s greenhouse gas emission regulations. In November 2012, the CARB extended these rules to include model years 2017-2025.

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While Europe and the United States lead the implementation of these emissions programs, other jurisdictions typically follow on with adoption of similar regulations within a few years thereafter. In China, for example, Stage III fuel consumption regulations target a national average fuel consumption of 6.9L/100km by 2015 and Stage IV targets a national average fuel consumption of 5.0L/100km by 2021. In response to severe air quality issues in Beijing and other major Chinese cities, the Chinese government also intends to adopt more stringent emissions standards beginning in 2016.
Exhaust and evaporative emissions requirements
In 2007, the European Union adopted the latest in a series of more-stringent standards for emissions of other air pollutants from passenger and light commercial vehicles, such as nitrogen oxides, carbon monoxide, hydrocarbons and particulates. These standards were phased in from September 2009 (Euro 5) and September 2014 (Euro 6) for passenger cars.
In April 2014, the “Tier 3” Motor Vehicle Emission and Fuel Standards issued by the EPA were finalized. With Tier 3, the EPA has established more stringent vehicle emission standards, requiring significant reductions in both tailpipe and evaporative emissions, including nitrogen oxides, volatile organic compounds, carbon monoxide and particulate matter. Beginning in 2017, the emission standards will be phased in and the requirement on fuel producers to reduce sulfur in gasoline will be effective. The new standards are intended to harmonize with California’s standards for 2015-2025 model years (so called “LEV3”) and will be implemented over the same timeframe as the U.S. federal CAFE and greenhouse gas emissions standards for cars and light trucks described above. Because of our status as an operationally independent SVM, Ferrari obtained a longer, more flexible schedule for compliance with these standards under both the EPA and California Program.
In addition, California is moving forward with other stringent emission regulations for vehicles, including the Zero Emission Vehicle regulation (ZEV). The ZEV regulation requires manufacturers to increase their sales of zero emissions vehicles year on year, up to an industry average of approximately 15 percent of vehicles sold in the state by 2025. Because we currently sell fewer than 4,500 units in California, we are exempt from these requirements.
Additional stringency of evaporative emissions also requires more-advanced materials and joints solutions to eliminate fuel evaporative losses, all for much longer warranty periods (up to 150,000 miles in the United States).
To comply with current and future environmental rules related to both fuel economy and pollutant emissions, we may have to incur substantial capital expenditure and research and development expenditure to upgrade products and manufacturing facilities, which would have an impact on our cost of production and results of operation.
Vehicle safety
Vehicles sold in Europe are subject to vehicle safety regulations established by the E.U. or by individual Member States. In 2009, the E.U. established a simplified framework for vehicle safety, repealing more than 50 directives and replacing them with a single regulation aimed at incorporating relevant United Nations standards. This incorporation process began in 2012. With respect to regulations on advanced safety systems, the E.U. now requires new model cars from 2011 on to have electronic stability control systems and tire pressure monitoring systems (beginning in 2012). Also introduced were regulations on low-rolling resistance tires. From April 2009, the criteria for whole vehicle type approval were extended to cover all new road vehicles, to be phased in over five years depending on the vehicle category.
Under U.S. federal law, all vehicles sold in the United States must comply with Federal Motor Vehicle Safety Standards (FMVSS) promulgated by NHTSA. Manufacturers need to provide certification that all vehicles are in compliance with those standards. In addition, if a vehicle contains a defect that is related to motor vehicle safety or does not comply with an applicable FMVSS, the manufacturer must notify vehicle owners and provide a remedy at no cost to the consumer. Moreover, the Transportation Recall Enhancement, Accountability, and Documentation Act requires manufacturers to report certain information related to claims and lawsuits involving fatalities and injuries in the United States if alleged to be caused by their vehicles, and other information related to client complaints, warranty claims, and field reports in the United States, as well as information about fatalities and recalls outside the United States Several new or amended FMVSSs will take effect during the next few years in certain instances under phase-in schedules that require only a portion of a manufacturer’s fleet to comply in the early years of the phase-in. These include an amendment to the side impact protection requirements that added several new tests and performance requirements (FMVSS No. 214), an amendment to roof crush resistance requirements (FMVSS No. 216), and a new rule for ejection mitigation requirements (FMVSS No. 226). Under the Transportation Recall Enhancement, Accountability, and Documentation Act (TREAD), we must log certain information, including incidents involving death or injury, with NHTSA. In 2014 we paid a $3.5 million civil penalty to NHTSA for reporting failures related to the period 2011-2014 and for failure to

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comply with early warning reporting requirements in connection with three fatalities. We have upgraded our procedures for compliance.
On July 14, 2015, we issued a safety recall report with the NHTSA, after being notified by Takata Corporation that certain driver’s side airbags manufactured by Takata, installed in certain model year 2015 cars, were defective.  The recall impacts 814 of our model year 2015 cars sold in the United States and also relates to up to an additional 1,600 model year 2015 cars in other regions.  The defect, caused by pre-assembled airbags supplied by Takata, relates to insufficient gluing of the airbag cover and a possible incorrect installation of the driver’s airbag cushion. The replacement component has been produced with improved gluing methods as well as improved airbag assembly measures.   We have implemented a recall to remedy this safety defect.
NHTSA recently published guidelines for driver distraction, and the associated compliance costs may be substantial. These guidelines focus, among other things, on the need to modify the design of car devices and other driver interfaces to minimize driver distraction. Compliance with these new requirements, as well as other possible future NHTSA requirements, is likely to be difficult and/or costly. We are in the process of evaluating these guidelines and determining what steps, if any, we will need to take to comply with the new requirements.

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THE RESTRUCTURING AND SEPARATION TRANSACTIONS
On October 29, 2014 FCA, the holder of 90 percent of our common shares, announced its intention to separate Ferrari from FCA. The separation is expected to occur through a series of transactions, which we refer to as the “Separation” and include (i) a restructuring of Ferrari that was completed shortly before the pricing of the offering to which this prospectus relates, (ii) this offering and (iii) the distribution, expected to take place in early 2016, to holders of FCA’s shares and mandatory convertible securities of FCA’s remaining ownership interest in us through a series of corporate steps including the Dutch law demergers and merger described below. Although each step of the Separation will have been approved by all necessary corporate action on our part prior to the completion of this offering, the Separation may not be carried out as described in this prospectus or completed within the expected timeline, or at all, because completion of the Separation is within FCA’s discretion and remains subject to various conditions as well as market conditions.
We believe that the Separation will enable us to pursue our business strategies with greater operational and financial independence while preserving the unique character of our business and organization. ‎ We believe that as a standalone company with an iconic brand name, we will be better positioned to promote and extend the value of our brand, maintain our heritage, attract and reward technical and management talent and further enhance Ferrari’s position among the world’s premier luxury lifestyle companies. We also expect that the Separation and our capital and organizational structure will offer a flexible and beneficial environment that will enable us to access directly sources of equity and debt capital to finance our business on favorable terms, as well as the opportunity to reward our most loyal shareholders with our loyalty voting program. Our listing on the New York Stock Exchange is also expected to increase our investment appeal, particularly in the United States which has historically been one of our largest ‎and most important markets. 
In connection with the Separation, we may apply for admission to listing and trading of our common shares on the Mercato Telematico Azionario, or MTA, organized and managed by Borsa Italiana S.p.A. Any listing on the MTA would occur at or after the completion of the Separation.
The Restructuring
We were originally established as a 100 percent owned subsidiary of FCA on May 24, 2013.  The restructuring was carried out shortly before the date of this prospectus through the following steps:

We acquired from Ferrari North Europe Limited (one of Ferrari’s existing trading subsidiaries) its assets and business of providing sales, after-sales and support services for the Ferrari brand and in exchange we issued to Ferrari North Europe Limited a note for €               (the “FNE Note”);

FCA transferred all of the issued and outstanding share capital that it previously held in Ferrari S.p.A. (representing at that point in time 90 percent of the share capital in Ferrari S.p.A.) to us and in exchange we issued to FCA      a note for €              (the “FCA Note”);

FCA contributed cash of €            to us in consideration of the issue to FCA of            of our common shares and the same number of our special voting shares. These common shares were issued at a nominal value of €           with a share premium of €           ;

We used €            billion of the cash proceeds received from FCA to pay €            billion to FCA in partial discharge of the FCA Note; the remaining principal outstanding on the FCA Note is €           billion;

Piero Ferrari transferred his 10 percent interest in Ferrari S.p.A. to us in exchange for our common shares and special voting shares representing approximately            percent of our share capital.

We used €            of the cash proceeds received as a result of issuing shares to FCA to repay the FNE Note; and

Piero Ferrari transferred approximately            percent of our common shares and the same number of our special voting shares to FCA in exchange for €          million. As a result, Piero Ferrari retains an interest representing 10 percent of the economic and voting interest in us.


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Therefore, following these transactions, FCA currently owns 90 percent of our common shares and voting power and Piero Ferrari holds the remaining 10 percent of our common shares and voting power. We hold all of the issued and outstanding share capital in Ferrari S.p.A.
Immediately following this offering and assuming that the underwriters’ option to purchase additional shares is exercised in full, FCA will own approximately 80 percent of our common shares, Piero Ferrari will own 10 percent of our common shares and public shareholders purchasing common shares in this offering will own the remaining approximately 10 percent of our common shares. Because FCA and Piero Ferrari are both expected to participate in our loyalty voting program, immediately following the offering FCA will hold approximately 84.2 percent of the voting power in us and Piero Ferrari will hold approximately 10.5 percent of such voting power. See “Principal Shareholders and Related Party Transactions.”
The chart below shows our shareholding structure immediately following completion of this offering:
The Spin-off
Following completion of the offering, FCA intends to separate its remaining ownership interest in us and distribute that ownership interest to holders of its shares and mandatory convertible securities. We and FCA currently expect that this portion of the Separation which we refer to as the “Spin-off” will be accomplished through the following steps, all of which we expect will occur at the beginning of 2016 and between consecutive trading days for our common shares and the FCA common shares:
Through a Dutch law demerger ( afsplitsing ) (the “First Demerger”), FCA would transfer all of the common shares and special voting shares held by it in us to FE Interim B.V., a newly-formed Dutch private limited liability company ( besloten vennootschap met beperkte aansprakelijkheid ) (“FE Interim”) wholly owned by a Dutch foundation ( stichting ) formed by FCA (“Stichting FCA”), with FE Interim issuing common shares and special voting shares to holders of FCA’s common shares and holders of FCA’s special voting shares. Pursuant to the First Demerger, each holder of FCA common shares will receive one common share in FE Interim for each common share in FCA immediately prior to the First Demerger and each holder of FCA special voting shares will receive one special voting share in FE Interim for each special voting share of FCA held immediately prior to the First Demerger;
Pursuant to a second Dutch law demerger ( afsplitsing ) (the “Second Demerger”), FE Interim will transfer all of its common shares and special voting shares in us to FE New N.V., a newly-formed Dutch public limited company ( naamloze vennootschap ) (“FE New”) wholly owned by Stichting FCA with FE New issuing common shares to the holders of FE Interim’s common shares and special voting shares to the holders of FE Interim's special voting

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shares. Pursuant to the Second Demerger, each holder of FE Interim’s common shares will receive one common share in FE New for every ten common shares in FE Interim held immediately prior to the Second Demerger, and each holder of FE Interim special voting shares will receive one special voting share in FE New for every ten special voting shares in FE Interim held immediately prior to the Second Demerger; and
In connection with the Second Demerger, all of the shares in FE New held by Stichting FCA will be repurchased by FE New for no consideration.
Immediately following the completion of the Second Demerger, (i) all common shares and special voting shares of FE Interim, except the shares held by Stichting FCA, will be cancelled in exchange for distribution of the nominal value of such shares to the shareholders and FE Interim will thereafter be liquidated; and (ii) the holders of FCA's mandatory convertible securities will receive common shares in FE New pursuant to the terms of those securities . We would thereafter be merged (the “Merger”) with and into FE New. At that time FE New would be renamed Ferrari N.V. Pursuant to the Merger:
Each holder (other than FE New) of our common shares (i.e. our public shareholders and Piero Ferrari) would receive one common share of the surviving company (i.e. FE New) for each common share in us they hold immediately prior to the Merger;
Each holder (other than FE New) of special voting shares in us would receive one special voting share in the surviving company (i.e. in FE New) for each special voting share held immediately prior to the Merger; and
The common shares and special voting shares in us held by FE New will be cancelled.
As a result of the Separation we expect that Piero Ferrari and any holders of special voting shares in FCA immediately prior to completion of the Separation, including Exor, will receive special voting shares in the surviving company, i.e. FE New. Prior to this offering, FCA and Piero Ferrari have approved each of the transactions making up this offering and part of the Separation. As a result you will not be asked to vote on any of these transactions or the Separation by virtue of your shareholding in us.
The First Demerger will require the resolution of an FCA shareholders meeting, which must be adopted with the affirmative vote of two thirds of the votes cast if less than half of the issued share capital is present or represented at the meeting, or by a majority of the votes cast if at least half of the issued share capital is present or represented at the meeting.
We currently expect that the Separation will be completed in early 2016. However, we cannot assure you that the Separation will be carried out as described in this prospectus or completed within the expected timeline or at all. Completion of the Separation is within FCA’s discretion and remains subject to various conditions, risks and uncertainties including market conditions.
Our shareholding following the Separation
Upon completion of the Separation, Ferrari N.V. would be the parent company of the Ferrari group through a 100 percent shareholding in Ferrari S.p.A. FCA would no longer have an ownership interest in Ferrari N.V. The common shares of Ferrari N.V. would be held as follows:
Exor S.p.A.: approximately 24 percent ;
Piero Ferrari: approximately 10 percent ; and
Public shareholders: approximately 66 percent .
The percentages of ownership shown above are based on the ownership of FCA common shares as reflected elsewhere in this prospectus under the heading “Principal Shareholders and Related Party Transactions” and assumes that the maximum number of common shares in FE New deliverable to holders of FCA mandatory convertible securities under the terms of the securities will be delivered.
As a result of our loyalty voting program, the voting power in us will depend on the level of participation in the loyalty voting program of FCA prior to the First Demerger, and on the participation in our loyalty voting program prior to the Merger.

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If the number of FCA special voting shares and Ferrari special voting shares remained unchanged from the date hereof until completion of the Separation, after the Separation Exor would hold approximately 33.4 percent voting power in us, Piero Ferrari would hold approximately 15.3 percent of the voting power in us and public shareholders would hold approximately 51.3 percent of the voting power in us. See “The Ferrari Shares, Articles of Association and Terms and Conditions of the Special Voting Shares.”

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MANAGEMENT
The following contains summaries of certain provisions of our Articles of Association and of Dutch law in effect at the date hereof.
Our Board of Directors is responsible for the management of Ferrari. Our board currently consists of three members but will be expanded to a larger number prior to the completion of this offering. The tasks of the executive and non-executive directors are allocated under or pursuant to our Articles of Association. The Board of Directors from time to time delegates certain of its powers to the Chairman and to the Chief Executive Officer of the Company.
Board of Directors
Set forth below is the name, year of birth and position of each of the persons currently serving as directors of New Business Netherlands N.V. (which will be renamed Ferrari NV upon the completion of this offering). Unless otherwise indicated, the business address of each person listed below will be c/o Ferrari, Via Abetone Inferiore n. 4, I-41053 Maranello (MO), Italy.
Name
 
Year of Birth
 
Position
Sergio Marchionne
 
1952
 
Chairman of the Board
Richard K. Palmer
 
1967
 
Director
Alessandro Gili
 
1971
 
Chief Financial Officer and Director
Mr. Palmer and Mr. Gili are expected to serve as directors only through the completion of the restructuring transactions that we will effect shortly prior to the completion of this offering. They are expected to resign as directors prior to completion of the offering and to be replaced by new directors. We have not yet identified all of the individuals who will serve on the Board of Directors following the offering, other than Mr. Marchionne, our Chairman, and Mr. Felisa, our Chief Executive Officer. Before the offering, we expect to designate the individuals who will serve on our Board of Directors following the completion of the offering, including independent directors under applicable law, the regulations of the securities exchanges on which our common shares will be listed and the Dutch Corporate Governance Code.
Summary biographies for persons who are currently directors of Ferrari are included below:
Sergio Marchionne . Mr. Marchionne has been the Chairman of Ferrari S.p.A. since October 2014. Mr. Marchionne currently serves as Chief Executive Officer of FCA and Chairman, Chief Executive Officer and Chief Operating Officer of FCA U.S. Mr. Marchionne leads FCA’s Group Executive Council and has been Chief Operating Officer of its NAFTA region since September 2011. He also serves as Executive Chairman of CNH Industrial N.V. (“CNHI”). He was the chairman of Fiat Industrial and CNH Global N.V. until the integration of these companies into CNHI in 2013.
Prior to joining FCA, Mr. Marchionne served as Chief Executive Officer of SGS SA, Chief Executive Officer of the Lonza Group Ltd. and Chief Executive Officer of Alusuisse Lonza (Algroup). He also served as Vice President of Legal and Corporate Development and Chief Financial Officer of the Lawson Group after serving as Vice President of Finance and Chief Financial Officer of Acklands Ltd. and Executive Vice President of Glenex Industries.
Mr. Marchionne holds a Bachelor of Laws from Osgoode Hall Law School at York University in Toronto, Canada and a Master of Business Administration from the University of Windsor, Canada. Mr. Marchionne also holds a Bachelor of Arts with a major in Philosophy and minor in Economics from the University of Toronto.
Mr. Marchionne serves on the Board of Directors of Philip Morris International Inc. and as Executive Chairman of SGS SA headquartered in Geneva. Additionally, Mr. Marchionne is a director of Exor. Mr. Marchionne is a member of the Board of Directors of ACEA (European Automobile Manufacturers Association). He previously served as appointed non-executive Vice Chairman and Senior Independent Director of UBS AG.
Richard K. Palmer. Mr. Palmer is the Chief Financial Officer of FCA and of FCA US LLC (formerly Chrysler Group LLC). Mr. Palmer became the Chief Financial Officer of FCA US in 2009 and Chief Financial Officer of Fiat in 2011. Mr. Palmer was appointed to the Board of Directors of FCA US in June 2014. Prior to joining FCA US, Mr. Palmer was Chief Financial

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Officer of Fiat Group Automobiles S.p.A., a position he held from December 2006. He joined the Fiat Group in 2003 as Chief Financial Officer of Comau and later moved to Iveco in the same role.
From 1997 until 2003, Mr. Palmer was Finance Manager for several business units at General Electric Oil and Gas. Mr. Palmer spent the first years of his career in Audit with UTC and Price Waterhouse. Mr. Palmer is a member of the Board of Directors of R.R. Donnelley & Sons Co.
Mr. Palmer is a Chartered Accountant and member of ICAEW (UK) and holds a Bachelor of Science degree in Microbiology and Microbial Technology from the University of Warwick (U.K.).
Alessandro Gili. Mr. Gili was appointed as our Chief Financial Officer in February 2015. In April 2015 he was also appointed as President of Ferrari Financial Services S.p.A. From 2002 to 2014 he held multiple positions with Fiat, FCA US and FCA, including Group Chief Accounting Officer and Principal Accounting Officer, Vice President of World Class Finance and Processes, Corporate Controller and Chief Accounting Officer for FCA US, Head of Accounting and World Class Finance, Fiat Group Automobiles Sector, Director at Fiat Gesco (now FCA Services S.p.A.) and senior manager for KeyG Consulting S.p.A. Prior to joining the Fiat Group Mr. Gili was a project manager for Innovative Redesign Managements Consultants. Mr. Gili spent the first years of his career in Audit at Coopers & Lybrand.
    
Mr. Gili holds a degree in economics, finance and administration from Turin University and is a Certified Public Accountant and Certified Public Auditor in Italy.

Committees

Prior to the completion of this offering, we expect that our Board of Directors will establish an Audit Committee, a Compensation Committee and a Governance and Sustainability Committee. Each member of the Audit Committee will be an “independent” member of the Board of Directors under Rule 10A-3 under the Exchange Act and within the meaning of the Dutch Corporate Governance Code.

The functions that these committees shall perform and their powers and responsibilities will be determined by the board of directors in light of our size and structure and the provisions of the Dutch Corporate Governance Code.

Executive Officers

Set forth below are the names, year of birth and position of each of the principal executive officers of Ferrari S.p.A., who are expected to be our principal executive officers upon completion of the offering. Unless otherwise indicated, the business address of each person listed below will be c/o Ferrari, Via Abetone Inferiore n. 4, I-41053 Maranello (MO), Italy.
Name
 
Year of Birth
 
Position
Sergio Marchionne
 
1952
 
Chairman
Amedeo Felisa
 
1946
 
Chief Executive Officer
Alessandro Gili
 
1971
 
Chief Financial Officer
Maurizio Arrivabene
 
1957
 
Managing Director of Gestione Sportiva
Luca Fuso
 
1961
 
Chief Brand Officer
Mario Mairano
 
1951
 
Chief Human Resources Officer
Michael Hugo Leiters
 
1971
 
Chief Technology Officer
Enrico Galliera
 
1966
 
Chief Marketing and Commercial Officer
Vincenzo Regazzoni
 
1963
 
Chief Manufacturing Officer
Ervino Riccobon
 
1964
 
Chief of Product and Processes Competitiveness
Nicola Boari
 
1970
 
Head of Product Marketing
Flavio Manzoni
 
1965
 
Head of Design
Biographies for the principal executive officers of Ferrari are included below:
Sergio Marchionne. See above.


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Amedeo Felisa. Mr. Felisa, who joined Ferrari in 1990, has been the CEO of Ferrari S.p.A. since 2008. From 2006 to 2008 he served as general manager and deputy general manager. From 1996 to 2004 he was the general manager of the GT department, coordinating the product development, powertrains and vehicle departments of both Ferrari and Maserati with respect to the market positioning of the two brands. In the 1990s, as a technical senior vice president, Mr. Felisa oversaw the planning, coordination and management of the entire technical department, including defining new business model plans, supervising the development of both innovation and products and managing the product development teams, including ensuring employee growth. Prior to joining Ferrari, he was a product development team leader at Alfa Romeo S.p.A. Mr. Felisa holds a degree in mechanic engineering from the Milan Politecnico.
Alessandro Gili. See above.
Maurizio Arrivabene. Mr. Arrivabene was appointed as our Managing Director of Gestione Sportiva (Formula 1 activities) and team principal of Scuderia Ferrari in January 2015. From 1997 to 2015 he held multiple positions with Philip Morris International and Philip Morris Europe, most recently responsible for consumer channel strategy and event marketing, gaining experience in marketing, events and promotion in Italy and abroad. Among his positions at Philip Morris were Vice President of Consumers, Channel Strategy and Event Marketing, Vice President of Marlboro Global Communication and Promotions and Manager of Event Marketing. Since 2010 Mr. Arrivabene has served on the F1 Commission as a member, first representing the Formula 1 sponsors and since January 2015, representing Scuderia Ferrari. Since 2012, Mr. Arrivabene has also served as a member of the Board of Directors, the Control and Risks Committee and the Nomination and Remuneration Committee of Juventus F.C. S.p.A. Mr. Arrivabene holds a degree in architecture from University of Venice and studied business management at the International Institute for Management Development in Lausanne, Switzerland.
Luca Fuso. Mr. Fuso was appointed as our Chief Brand Officer in September 2015. Prior to joining Ferrari, Mr. Fuso served as the Global Head of Proprietary Brands Division from 2013 to 2015 and as the Global Head of Licensed Brands Division from 2011 to 2013 of the SAFILO Group, an Italian eyewear designer and manufacturer. He has also previously served as Managing Director, Sportswear Division of Moncler - Industries S.p.A., an Italian apparel manufacturer and lifestyle brand, CEO and Managing Director of B&B Italia S.p.A., an Italian furniture company, and in various roles at Diesel S.p.A., an Italian clothing company. Mr. Fuso received his degree in Business Administration from Perugia University and is a graduate of the Strategic Marketing Program at SDA Bocconi in Milan.
Mario Mairano . Mr. Mairano was appointed as our Chief Human Resources Officer in August 2007. He served as Senior Vice President human resources of Fiat Group from 2005 to 2007. Mr. Mairano held senior human resources roles at the Banca di Roma Group - Capitalia from 2000 to 2004 and previously served as human resources and organization manager at Ferrari S.p.A. from 1993 to 2000. From 1987 to 1993 he was human resources director at Fiat Auto and, prior to that, he was head of human resources management at Iveco. Mr. Mairano holds a degree in literature from Turin University.
Michael Hugo Leiters . Mr. Leiters was appointed as our Chief Technology Officer in January 2014. Prior to joining Ferrari he worked at Porsche AG from 2000 to 2013 where he held multiple positions, ultimately becoming head of the SUV product line in 2010. From 1996 to 2000, he served as an engineer and manager at the Institut fur Produktionstechnologie in Aachen, Germany. Mr. Leiters holds a engineering diploma and an engineering doctorate from RWTH - Aachen.
Enrico Galliera. Mr. Galliera was appointed as our Chief Marketing and Commercial Officer in April 2010. From 1990 to 2010 he worked for Barilla S.p.A, where he held multiple positions, ultimately becoming Europe and export market unit director. During his time at Barilla S.p.A., Mr. Galliera also served as director of customer business development for Europe, general manager for South West Europe and trade marketing director for Italy. Mr. Galliera holds a degree in economics and political science from the University of Parma.
Vincenzo Regazzoni. Mr. Regazzoni was appointed as our Chief Manufacturing Officer in March 2015. Prior to his appointment to that role, he held various senior production and industrial performance roles at Ferrari and Maserati, including head of Technologies and Infrastructure from 2010 to 2015 and head of Process/Product Technologies from 2003 to 2010. Prior to joining Ferrari in 1998, he held production roles at Varian S.p.A. and Fiat Auto S.p.A. Mr. Regazzoni has a degree in mechanical engineering with a specialization in management systems and plant from Tor Vergata University in Rome.
Ervino Riccobon. Mr. Riccobon was appointed as our Chief of Product and Processes Competitiveness in November 2012, upon joining Ferrari. Prior to that, he was with McKinsey & Company, as a partner since 2000 and a Director since 2005, where he advised clients across a number of industries and geographies on operations, strategy and organization. Mr. Riccobon

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has a degree in mechanical engineering from Turin Politecnico University and an MBA from the Scuola di Amministrazione Aziendale at Turin University.
Nicola Boari. Mr. Boari was appointed as our Head of Product Marketing and Market Intelligence in March 2010. Prior to joining Ferrari he worked at Indesit Company from 2004 to 2010, where he held various positions including product marketing director, responsible for product development for all product lines. From 1998 to 2004 he was a manager with the Boston Consulting Group. Mr. Boari holds a master in finance and economics from the London School of Economics and a PhD in economics from the University of Ancona, as well as a degree in finance and economics from the University of Bologna.
Flavio Manzoni . Mr. Manzoni was appointed as our Head of Design in January 2010. From 2007 to 2010 he was Director of Creative Design at the Volkswagen Group where he was involved in designing most of the Skoda, Bentley, Bugatti and Vokswagen recent cars as well as redefining the aesthetic philosophy of these brands. From 2001 to 2006, he worked at Fiat Group as Head of Design for Lancia, Fiat and LCV. He has also held design positions at Lancia and Seat. Mr. Manzoni holds a degree in architecture with a specialization in industrial design from the University of Florence.
Compensation
No compensation was paid during the year ended December 31, 2014 by Ferrari and by its subsidiaries to the members of the Board of Directors named above in their capacities as directors. This information is not representative of the compensation that will be payable to members of the Board of Directors as constituted following this offering.
The compensation paid during the year ended December 31, 2014 by Ferrari and by its subsidiaries to the executive officers named above amounted to €12.8 million in aggregate.
Director and Officer Overlaps
We expect that we will have overlap among the directors and officers of FCA and our directors and officers who will continue to serve in such capacities after completion of the Separation. For example, Mr. Marchionne is also the Chief Executive Officer of FCA and Mr. Marchionne, and certain of our other directors and officers, may also be directors or officers of FCA or Exor, which after the Separation is expected to be our largest shareholder.  These individuals owe duties both to us and to the other companies that they serve as officers and/or directors, which may raise certain conflicts of interest. See “Risk Factors—We may have potential conflicts of interest with FCA and Exor due to our common ownership and management.”



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PRINCIPAL SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Prior to the offering, Fiat Chrysler Automobiles N.V. (“FCA”), our largest shareholder, holds an interest of 90 percent in our share capital and controls us pursuant to the applicable provisions of Dutch law.
Exor is the largest shareholder of FCA and holds 29.16 percent of FCA outstanding common shares (as of May 14, 2015). As a result of FCA loyalty voting mechanism, Exor’s voting power in FCA is approximately 44.27 percent. Exor is in turn controlled by Giovanni Agnelli e C. S.a.p.az (“G.A.”), which holds 51.39 percent of its share capital. G.A. is a limited partnership with interests represented by shares ( Societa’ in Accomandita per Azioni ), founded by Gianni Agnelli and currently held by members of the Agnelli and Nasi families, descendants of Giovanni Agnelli, founder of Fiat S.p.A. Its present principal business activity is to purchase, administer and dispose of equity interests in public and private entities and, in particular, to ensure the cohesion and continuity of the administration of its controlling equity interests.
Piero Ferrari, the son of our founder, currently holds the remaining 10 percent interest in the share capital of Ferrari. See “The Restructuring and Separation Transactions.”
The Ferrari common shares sold in the offering will consist exclusively of existing common shares to be sold by FCA. We will not issue new common shares to be sold in the offering. It is not expected that Piero Ferrari will sell any of his existing common shares in the offering.
The table below shows our current shareholders following the intended restructuring and our shareholders following the offering assuming all of the common shares offered by FCA are sold and that the underwriters’ option to purchase additional common shares in the offering in exercised in full.
Shareholders
Current Number of Shares
 
% Share Capital
 
Number of Offer Shares sold
 
Shareholding Post‑Offering
 
% Share Capital
 
Number of shares under the Over‑
Allotment Option
 
Shareholding Post‑Global Offering if Over‑Allotment Option exercised in full
 
% Share Capital
Fiat Chrysler Automobiles N.V.
 
 
90.00
%
 
 
 
 
 
80.00
%
 

 

 
%
Piero Ferrari
 
 
10.00
%
 
 
 
 
 
10.00
%
 

 
 
 
10.00
%
Public Shareholders
 
 
%
 
 
 
 
 
10.00
%
 

 

 
10.00
%
Total
 
 
100.00
%
 
 
 
 
 
100.00
%
 

 
 
 
100.00
%
Following the offering, FCA intends to demerge its interest in Ferrari. See “The Restructuring and Separation Transactions.”
Related Party Transactions
Parties related to us are all entities and individuals capable of exercising control, joint control or significant influence over us and our subsidiaries, companies belonging to the FCA group and the companies controlled by Exor (including CNH Industrial NV and its subsidiaries), and our unconsolidated subsidiaries. In addition, members of our Board of Directors, Board of Statutory Auditors and executives with strategic responsibilities and their families are also considered related parties.
We carry out transactions with related parties on commercial terms that are normal in the respective markets, considering the characteristics of the goods or services involved. Transactions carried out by us with these related parties are primarily of a commercial nature, which have had an effect on revenues, cost of sales, and trade receivables and payables. In particular, these transactions relate to:
Transactions with FCA
the sale of engines and car bodies to Maserati S.p.A. and Officine Maserati Grugliasco S.p.A. which are controlled by FCA;
the purchase of engine components from FCA US LLC, which is controlled by FCA, for use in Maserati engines;

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the purchase of automotive lighting and automotive components from Magneti Marelli S.p.A., Magneti Marelli Espana S.A. and Automotive Lighting Italia S.p.A., which are controlled by FCA; and
transactions with other FCA companies, mainly relating to the services provided by FCA companies, including human resources, payroll, tax, customs, procurement of insurance coverage, accounting and treasury services and sponsorship vehicles for the display of FCA Group logos on the Formula 1 cars.
Financial Transactions with FCA
we sell a portion of our trade and financial receivables to the FCA Bank Group, which is jointly controlled by FCA; on derecognition of the asset, the difference between the carrying amount and the consideration received or receivable is recognized in cost of sales;
certain of our financing companies obtain financing from FCA companies;
certain of our companies participate in the FCA group-wide cash management system where the operating cash management, main funding operations and liquidity investment of the Group are centrally coordinated by dedicated treasury companies of FCA. Deposits with FCA earn EURIBOR +15bps. Following the Separation, these arrangements will be terminated and we will manage our liquidity and treasury function on a standalone basis;
the Group has purchased trade receivables from the FCA on a non-recourse basis. The interest earned on such receivables is recorded in net revenues; and
the Group has financial receivables with Maserati S.p.A. and Automotive Lighting LLC, which will be settled in the ordinary course of business.
Transactions with Exor Group companies
the Group incurs rental costs from Iveco Finanziaria S.p.A. related to the rental of trucks used by the Formula 1 racing team; and
the Group earns sponsorship revenue from Iveco S.p.A.
Transactions with Other Related Parties
the purchase of leather goods from Poltrona Frau S.p.A., which was controlled by our former Chairman until March 25, 2014 when he sold his controlling interest;
the purchase of components for Formula 1 racing vehicles from COXA S.p.A., controlled by Mr. Piero Ferrari; and
consultancy services provided by HPE S.r.l., controlled by Mr. Piero Ferrari.
In accordance with IAS 24, transactions with related parties also include compensation payable to Directors, Statutory Auditors and managers with strategic responsibilities. Please see Note 27 to the Annual Consolidated Financial Statements for further details on our related party transactions.

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THE FERRARI SHARES, ARTICLES OF ASSOCIATION AND
TERMS AND CONDITIONS OF THE SPECIAL VOTING SHARES
Ferrari was incorporated as a public limited liability company ( naamloze vennootschap ) under the laws of the Netherlands on May 24, 2013 under the name New Business Netherlands N.V. and, upon completion of the offering, will be renamed Ferrari N.V. Its corporate seat ( statutaire zetel ) is in Amsterdam, the Netherlands, and its registered office and principal place of business is located at Via Abetone Inferiore n. 4, I-41053 Maranello (MO), Italy. Its telephone number is +39-0536-949111.
Since incorporation Ferrari has had, and it intends to continue to have, its place of effective management in Italy. It will therefore be a tax resident of Italy under both Italian tax law and Article 4 of the Convention between the Kingdom of the Netherlands and the Republic of Italy for the avoidance of a double taxation with respect to taxes on income and on capital of 1980.
Following is a summary of material information relating to the Ferrari common shares, including summaries of certain provisions of the Ferrari Articles of Association, the terms and conditions in respect of the special voting shares and the applicable Dutch law provisions in effect at the date of this prospectus. The summaries of the Ferrari Articles of Association and the Terms and Conditions of Special Voting Shares as set forth in this prospectus are qualified in their entirety by reference to the full text of the Ferrari Articles of Association, and the Ferrari’s Terms and Conditions of Special Voting Shares and are reflected as they will be amended with effect from the completion of this offering.
Share Capital
The authorized share capital of Ferrari is ______ Euro (€ ______ , divided into ______ ( ______ ) Ferrari common shares, nominal value of one Euro cent (€0.01) per share and an equal number of special voting shares, nominal value of one Euro cent (€0.01) per share.
The delegation of authority to the Ferrari Board of Directors to authorize the issuance of common shares without pre-emptive rights enables Ferrari to offer and sell newly issued common shares to investors free of pre-emptive rights. Under Dutch law, such authorization may not exceed a period of five years, but may be renewed by a resolution of the general meeting of shareholders for subsequent five-year periods at any time.
Ferrari common shares are registered shares represented by an entry in the share register of Ferrari. The Ferrari Board of Directors may determine that, for the purpose of trading and transfer of shares on a foreign stock exchange, such share certificates shall be issued in such form as shall comply with the requirements of such foreign stock exchange. A register of shareholders is maintained by Ferrari in the Netherlands and a branch register is maintained in the United States on Ferrari’s behalf by the Transfer Agent, which serves as branch registrar and transfer agent.
Beneficial interests in Ferrari common shares that are traded on the NYSE are held through the book-entry system provided by The Depository Trust Company (“DTC”) and are registered in Ferrari’s register of shareholders in the name of Cede & Co., as DTC’s nominee.
Directors
Set forth below is a summary description of the material provisions of the Ferrari Articles of Association (the “Ferrari Articles of Association”), relating to our directors. The summary does not restate the Articles of Association in their entirety.
Ferrari’s directors serve on the Ferrari Board of Directors for a term of approximately one year, such term ending on the day that the first annual general meeting of the shareholders is held in the following calendar year. Ferrari’s shareholders appoint the directors of the Ferrari Board of Directors at a general meeting. Each director may be reappointed at any subsequent general meeting of shareholders. The general meeting of shareholders determines whether a director is an executive director or a non-executive director.
The Ferrari Board of Directors is a one tier board and consists of three or more members, comprising both members having responsibility for the day-to-day management of Ferrari (executive directors) and members not having such day-to-day responsibility (non-executive directors). The tasks of the executive and non-executive directors in a one-tier board such as Ferrari’s Board of Directors may be allocated under or pursuant to the Ferrari Articles of Association, provided that the general

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meeting has stipulated whether such director is appointed as executive or as non-executive director and furthermore provided that the task to supervise the performance by the directors of their duties can only be performed by the non-executive directors. In addition, an executive director may not be appointed chairman of the board or delegated the task of establishing the remuneration of executive directors or nominating directors for appointment. Tasks that are not allocated fall within the power of the Ferrari Board of Directors as a whole. Regardless of an allocation of tasks, all directors remain collectively responsible for the proper management and strategy of Ferrari (including supervision thereof in case of non-executive directors). The Ferrari Board of Directors may determine that one or more directors can lawfully adopt board resolutions concerning matters belonging to his or their duties.
Ferrari has a policy in respect of the remuneration of the members of the Ferrari Board of Directors. With due observation of the remuneration policy, the Ferrari Board of Directors may determine the remuneration for the directors in respect of the performance of their duties. The Ferrari Board of Directors must submit to the general meeting of shareholders for its approval plans to award shares or the right to subscribe for shares.
Ferrari shall not grant the directors any personal loans or guarantees.
Loyalty Voting Program
In connection with the restructuring to be carried out as part of the Separation, Ferrari issued special voting shares with a nominal value of one Euro cent (€0.01) per share, to FCA and to Piero Ferrari in addition to Ferrari common shares. In addition, it is expected that one special voting share of FE New will be issued for every ten special voting shares in FE Interim in the Second Demerger, and that one FE New special voting share will be issued for each Ferrari special voting share in the merger. If the number of FCA special voting shares and Ferrari special voting shares remains unchanged from the date hereof until completion of the Separation, assuming the exercise in full of the underwriters’ option to purchase additional common shares, after the Separation Exor would hold approximately 33.4 percent of the voting power in us, Piero Ferrari would hold approximately 15.3 percent of the voting power in us and public shareholders would hold approximately 51.3 percent of the voting power in us. For more information on the Separation, see “The Restructuring and Separation Transactions.”
Subject to meeting certain conditions, after this offering our common shares can be registered in our loyalty register(the “Loyalty Register”) and all such common shares may qualify as qualifying common shares (“Qualifying Common Shares”). The holder of Qualifying Common Shares is entitled to receive without consideration one special voting share in respect of each such Qualifying Common Share. Pursuant to the terms and conditions of the Ferrari special voting shares (the “Terms and Conditions”), and for so long as the Ferrari common shares remain in the Loyalty Register, such Ferrari common shares shall not be sold, disposed of, transferred, except in very limited circumstances ( i.e., transfers to affiliates or to relatives through succession, donation or other transfers (defined in the Terms and Conditions as “Loyalty Transferee”), but a shareholder may create or permit to exist any pledge, lien, fixed or floating charge or other encumbrance over such Ferrari common shares, provided that the voting rights in respect of such Ferrari common shares and any corresponding special voting shares remain with such shareholder at all times. Ferrari’s shareholders who want to directly or indirectly sell, dispose of, trade or transfer such Ferrari common shares or otherwise grant any right or interest therein, or create or permit to exist any pledge, lien, fixed or floating charge or other encumbrance over such Ferrari common shares with a potential transfer of voting rights relating to such encumbrances will need to submit a de-registration request as referred to in the Terms and Conditions, in order to transfer the relevant Ferrari common shares to the regular trading system except that a Ferrari shareholder may transfer Ferrari common shares included in the Loyalty Register to a Loyalty Transferee (as defined in the Terms and Conditions) of such Ferrari shareholder without transferring such shares from the Loyalty Register to the regular trading system.
Ferrari’s shareholders who seek to qualify to receive special voting shares can also request to have their Ferrari common shares registered in the Loyalty Register. Upon registration in the Loyalty Register such shares will be eligible to be treated as Qualifying Common Shares, provided they meet the conditions more fully described under “—Terms and Conditions of the Special Voting Shares” below.
Notwithstanding the fact that Article 13 of the Ferrari Articles of Association permits the Board of Directors of Ferrari to approve transfers of special voting shares, the special voting shares cannot be traded and are transferable only in very limited circumstances ( i.e., to a Loyalty Transferee described above, or to Ferrari for no consideration ( om niet )).
Pursuant to Article 23 of the Ferrari Articles of Association, Ferrari shall maintain a special capital reserve to be credited against the share premium exclusively for the purpose of facilitating any issuance or cancellation of special voting shares. The special voting shares shall be issued and paid up against this special capital reserve.

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The special voting shares have immaterial economic entitlements. Such economic entitlements are designed to comply with Dutch law but are immaterial for investors. The special voting shares carry the same voting rights as Ferrari common shares.
Section 10 of the Terms and Conditions include liquidated damages provisions intended to deter any attempt by holders to circumvent the terms of the special voting shares. Such liquidated damages provisions may be enforced by Ferrari by means of a legal action brought by Ferrari before competent courts of Amsterdam, the Netherlands. In particular, a violation of the provisions of the Terms and Conditions concerning the transfer of special voting shares, Electing Common Shares (common shares registered in the Loyalty Register for the purpose of becoming Qualifying Common Shares in accordance with the Ferrari Articles of Association) and Qualifying Common Shares may lead to the imposition of liquidated damages. Because we expect the restrictions on transfers of the special voting shares to be effective in practice we do not expect the liquidated damages provisions to be used.
Pursuant to Section 12 of the Terms and Conditions, any amendment to the Terms and Conditions (other than merely technical, non-material amendments and unless such amendment is required to ensure compliance with applicable law or regulations or the listing rules of any securities exchange on which the Ferrari common shares are listed) may only be made with the approval of the general meeting of shareholders of Ferrari.
At any time, a holder of Qualifying Common Shares or Electing Common Shares may request the de-registration of such shares from the Loyalty Register to enable free trading thereof in the regular trading system (the “Regular Trading System”). Upon the de-registration from the Loyalty Register, such shares will cease to be Electing Common Shares or Qualifying Common Shares as the case may be and will be freely tradable and voting rights attached to the corresponding special voting shares will be suspended with immediate effect and such special voting shares shall be transferred to Ferrari for no consideration ( om niet ).
Terms and Conditions of the Special Voting Shares
The Terms and Conditions apply to the issuance, allocation, acquisition, holding, repurchase and transfer of special voting shares in our share capital of Ferrari and to certain aspects of Electing Common Shares, Qualifying Common Shares and Ferrari common shares, which are or will be registered in the Loyalty Register.
Application for Special Voting Shares
A Ferrari shareholder may at any time elect to participate in the loyalty voting program by requesting that Ferrari register all or some of the number of Ferrari common shares held by such Ferrari shareholder in the Loyalty Register. Such election shall be effective and registration in the Loyalty Register shall occur as of the end of the calendar month during which the election is made. If such Ferrari common shares (i.e. Electing Common Shares) have been registered in the Loyalty Register (and thus blocked from trading in the Regular Trading System) for an uninterrupted period of three years in the name of the same shareholder, the holder of such Ferrari common shares will be entitled to receive one Ferrari special voting share for each such Ferrari common share that has been registered. If at any moment in time such Ferrari common shares are de-registered from the Loyalty Register for whatever reason, the relevant shareholder loses its entitlement to hold a corresponding number of Ferrari special voting shares.
At the request, made within one month of the Spin-off, of any holder of shares in FCA that immediately prior to the Spin-off were registered in FCA's loyalty voting program, the three years period described in the preceding paragraph shall be deemed to have commenced on the date of initial registration of such holder's shares in FCA in the loyalty voting register of FCA.

Withdrawal of Special Voting Shares
As described above, a holder of Qualifying Common Shares or Electing Common Shares may request that some or all of its Qualifying Common Shares or Electing Common Shares be de-registered from the Loyalty Register and if held outside the Regular Trading System, transfer such shares back to the Regular Trading System, which will allow such shareholder to freely trade its Ferrari common shares, as described below. From the moment of such request, the holder of Qualifying Common Shares shall be considered to have waived his rights to cast any votes associated with the Ferrari special voting shares which were issued and allocated in respect of such Qualifying Common Shares. Any such request would automatically trigger a mandatory transfer requirement pursuant to which the Ferrari special voting shares will be offered and transferred to Ferrari for no consideration in accordance with the Ferrari Articles of Association and the Terms and Conditions. Ferrari may continue to hold the special voting shares as treasury stock, but will not be entitled to vote any such treasury stock. Alternatively, Ferrari

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may withdraw and cancel the special voting shares, as a result of which the nominal value of such shares will be allocated to the special capital reserves of Ferrari. Consequently, the loyalty voting feature will terminate as to the relevant Qualifying Common Shares being deregistered from the Loyalty Register. No shareholder required to transfer special voting shares pursuant to the Terms and Conditions shall be entitled to any purchase price for such special voting shares and each shareholder expressly waives any rights in that respect as a condition to participation in the loyalty voting program.
Change of Control
A shareholder who is a holder of Qualifying Common Shares or Electing Common Shares must promptly notify the Agent and Ferrari upon the occurrence of a “change of control” as defined in the Ferrari Articles of Association, as described below. The change of control will trigger the de-registration of the relevant Electing Common Shares or Qualifying Common Shares or the relevant Ferrari common shares in the Loyalty Register. The voting rights attached to the special voting shares issued and allocated in respect of the relevant Qualified Common Shares will be suspended upon a direct or indirect change of control in respect of the relevant holder of such Qualifying Common Shares that are registered in the Loyalty Register.
For the purposes of this section a “change of control” shall mean, in respect of any Ferrari shareholder that is not an individual ( natuurlijk persoon ), any direct or indirect transfer in one or a series of related transactions as a result of which (i) a majority of the voting rights of such shareholder, (ii) the de facto ability to direct the casting of a majority of the votes exercisable at general meetings of shareholders of such shareholder and/or (iii) the ability to appoint or remove a majority of the directors, executive directors or board members or executive officers of such shareholder or to direct the casting of a majority or more of the voting rights at meetings of the board of directors, governing body or executive committee of such shareholder has been transferred to a new owner, provided that no change of control shall be deemed to have occurred if (a) the transfer of ownership and/or control is an intra-group transfer under the same parent company, (b) the transfer of ownership and /or control is the result of the succession or the liquidation of assets between spouses or the inheritance, inter vivos donation or other transfer to a spouse or a relative up to and including the fourth degree or (c) the fair market value of the Qualifying Common Shares held by such shareholder represents less than twenty percent (20 percent) of the total assets of the Transferred Group at the time of the transfer and the Qualifying Common Shares held by such shareholder, in the sole judgment of the company, are not otherwise material to the Transferred Group or the Change of Control transaction. “Transferred Group” shall mean the relevant shareholder together with its affiliates, if any, over which control was transferred as part of the same change of control transaction within the meaning of the definition of Change of Control.
Liability to Further Capital Calls
All of the outstanding Ferrari common shares are fully paid and non-assessable.
Additional Issuances and Rights of Preference
Issuance of Shares
The general meeting of shareholders of Ferrari (the “General Meeting”) has the authority to resolve on any issuance of shares, unless such authority has been delegated to the Board of Directors of Ferrari. In such a resolution, the General Meeting must determine the price and other terms of issuance. The Board of Directors of Ferrari may have the power to issue shares if it has been authorized to do so by the General Meeting, or pursuant to the Ferrari Articles of Association. Under Dutch law, such authorization may not exceed a period of five years, but may be renewed by a resolution of the General Meeting for subsequent five-year periods at any time. The Ferrari Board of Directors has been designated by the Ferrari Articles of Association as the competent body to issue Ferrari common shares and special voting shares up to the maximum aggregate amount of the Ferrari authorized share capital for an initial period of five years from ______ , 2015, which may be extended by the General Meeting with additional consecutive periods of up to a maximum of five years each.
Ferrari will not be required to obtain approval from a General Meeting to issue shares pursuant to the exercise of a right to subscribe for shares that was previously granted pursuant to authority granted by the shareholders or pursuant to delegated authority by the Board of Directors. The General Meeting of Ferrari shall, for as long as any such designation of the Board of Directors of Ferrari for this purpose is in force, no longer has authority to decide on the issuance of shares.

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Rights of Pre-emption
Under Dutch law and the Ferrari Articles of Association, each Ferrari shareholder has a right of pre-emption in proportion to the aggregate nominal value of its shareholding upon the issuance of new Ferrari common shares (or the granting of rights to subscribe for Ferrari common shares). Exceptions to this right of pre-emption include the issuance of new Ferrari common shares (or the granting of rights to subscribe for common shares): (i) to employees of Ferrari or another member of its Group pursuant to a stock compensation plan of Ferrari, (ii) against payment in kind (contribution other than in cash) and (iii) to persons exercising a previously granted right to subscribe for Ferrari common shares.
In the event of an issuance of special voting shares, shareholders shall not have any right of pre-emption.
The General Meeting may resolve to limit or exclude the rights of pre-emption upon an issuance of Ferrari common shares, which resolution requires approval of at least two-thirds of the votes cast, if less than half of the issued share capital is represented at the General Meeting. The Ferrari Articles of Association or the General Meeting may also designate the Ferrari Board of Directors to resolve to limit or exclude the rights of pre-emption in relation to the issuance of Ferrari common shares. Pursuant to Dutch law, the designation by the General Meeting may be granted to the Ferrari Board of Directors for a specified period of time of not more than five years and only if the Ferrari Board of Directors has also been designated or is simultaneously designated the authority to resolve to issue Ferrari common shares. The Ferrari Board of Directors is designated in the Ferrari Articles of Association as the competent body to exclude or limit rights of pre-emption for an initial period of five years from ______ , 2015, which may be extended by the General Meeting with additional periods up to a maximum of five years per period.
Repurchase of Shares
Upon agreement with the relevant Ferrari shareholder, Ferrari may acquire its own shares at any time for no consideration ( om niet ), or subject to certain provisions of Dutch law and the Ferrari Articles of Association for consideration, if: (i) Ferrari’s shareholders’ equity less the payment required to make the acquisition does not fall below the sum of called-up and paid-in share capital and any statutory reserves, (ii) Ferrari and its subsidiaries would thereafter not hold shares or hold a pledge over Ferrari common shares with an aggregate nominal value exceeding 50 percent of the Ferrari’s issued share capital and (iii) the Board of Directors has been authorized to do so by the General Meeting.
The acquisition of fully paid-up shares by Ferrari other than for no consideration ( om niet ) requires authorization by the General Meeting. Such authorization may be granted for a period not exceeding 18 months and shall specify the number of shares, the manner in which the shares may be acquired and the price range within which shares may be acquired. The authorization is not required for the acquisition of shares for employees of Ferrari or another member of its Group, under a scheme applicable to such employees and no authorization is required for repurchase of shares acquired in certain other limited circumstances in which the acquisition takes place by operation of law, such as pursuant to mergers or demergers. Such shares must be officially listed on a price list of an exchange.
At a General Meeting the shareholders may resolve to designate the Board of Directors of Ferrari as the competent body to resolve on Ferrari acquiring any Ferrari’s fully paid up Ferrari common shares other than for no consideration ( om niet ) for a period of up to 18 months.
Ferrari may, jointly with its subsidiaries, hold Ferrari shares in its own capital exceeding one-tenth of its issued capital for no more than three years after acquisition of such Ferrari shares for no consideration ( om niet ) or in certain other limited circumstances in which the acquisition takes place by operation of law, such as pursuant to mergers or demergers. Any Ferrari shares held by Ferrari in excess of the amount permitted shall transfer to all members of the Ferrari Board of Directors jointly at the end of the last day of such three year period. Each member of the Ferrari Board of Directors shall be jointly and severally liable to compensate Ferrari for the value of the Ferrari shares at such time, with interest at the statutory rate thereon from such time. The term Ferrari shares in this paragraph shall include depositary receipts for shares and shares in respect of which Ferrari holds a right of pledge.
No votes may be cast at a General Meeting on the Ferrari shares held by Ferrari or its subsidiaries. Also no voting rights may be cast at a General Meeting in respect of Ferrari shares for which depositary receipts have been issued that are owned by Ferrari. Nonetheless, the holders of a right of usufruct or pledge in respect of shares held by Ferrari and its subsidiaries in Ferrari’s share capital are not excluded from the right to vote on such shares, if the right of usufruct or pledge was granted prior to the

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time such shares were acquired by Ferrari or its subsidiaries. Neither Ferrari nor any of its subsidiaries may cast votes in respect of a share on which it or its subsidiaries holds a right of usufruct or pledge.
Reduction of Share Capital
Shareholders at a General Meeting have the power to cancel shares acquired by Ferrari or to reduce the nominal value of the shares. A resolution to reduce the share capital requires a majority of at least two-thirds of the votes cast at the General Meeting, if less than one-half of the issued capital is present or represented at the meeting. If more than one-half of the issued share capital is present or represented at the meeting, a simple majority of the votes cast at the General Meeting is required. Any proposal for cancellation or reduction of nominal value is subject to general requirements of Dutch law with respect to reduction of share capital.
Transfer of Shares
In accordance with the provisions of Dutch law, pursuant to Article 12 of the Ferrari Articles of Association, the transfer or creation of shares or a right in rem thereon requires a deed of transfer executed before a Dutch civil law notary, unless shares are (or shall shortly be) admitted to trading on a regulated market or multilateral trading facility as referred to in Article 1:1 of the Dutch Financial Supervision Act or a system comparable to a regulated market or multilateral trading facility.
The transfer of Ferrari common shares that have not been entered into a book-entry system will be effected in accordance with Article 12 of the Ferrari Articles of Association.
Common shares that have been entered into the DTC book-entry system will be registered in the name of Cede & Co., as nominee for DTC and transfers of beneficial ownership of shares held through DTC will be effected by electronic transfer made by DTC participants. Article 12 of the Ferrari Articles of Association does not apply to the trading of such Ferrari common shares on a regulated market or the equivalent thereof.
Transfers of shares held outside of DTC (including Monte Titoli S.p.A., as a participant in DTC) or another direct registration system maintained by ______ , Ferrari’s transfer agent in New York (“Transfer Agent”) and not represented by certificates are effected by a stock transfer instrument and require the written acknowledgment by Ferrari. Transfer of registered certificates is effected by presenting and surrendering the certificates to the Transfer Agent. A valid transfer requires the registered certificates to be properly endorsed for transfer as provided for in the certificates and accompanied by proper instruments of transfer and stock transfer tax stamps for, or funds to pay, any applicable stock transfer taxes.
Ferrari common shares are freely transferable. As described below, special voting shares are generally not transferable.
At any time, a holder of Ferrari common shares that are registered in the Loyalty Register (i.e. Electing Common Shares or Qualifying Common Shares) wishing to transfer such Ferrari common shares other than in limited specified circumstances ( i.e., transfers to affiliates or to relatives through succession, donation or other transfers) must first request a de-registration of such shares from the Loyalty Register and if held outside the Regular Trading System, transfer such common shares back into the Regular Trading System. After de-registration from the Loyalty Register, such Ferrari common shares no longer qualify as Electing Common Shares or Qualifying Common Shares, as a result, the holder of such Ferrari common shares is required to offer and transfer the special voting shares associated with such Ferrari common shares that were previously Qualifying Common Shares to Ferrari for no consideration ( om niet ) as described in detail in “—Loyalty Voting Program—Terms and Conditions of the Special Voting Shares—Withdrawal of Special Voting Shares.”
Annual Accounts and Independent Auditor
Ferrari’s financial year is the calendar year. Within four months after the end of each financial year, the Ferrari Board of Directors will prepare the annual accounts, which must be accompanied by an annual report and an auditor’s report and will publish the accounts and annual report and will make those available for inspection at Ferrari’s registered office. All members of the Ferrari Board of Directors are required to sign the annual accounts and in case the signature of any member is missing, the reason for this must be stated. The annual accounts are to be adopted by the General Meeting at the annual general meeting of shareholders, at which meeting the members of the Ferrari Board of Directors will be discharged from liability for performance of their duties with respect to any matter disclosed in the annual accounts the relevant financial year insofar this appears from the annual accounts. The annual accounts, the annual report and independent auditor’s report are made available through Ferrari’s website to the shareholders for review as from the day of the notice convening the annual general meeting of shareholders.

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Payment of Dividends
Ferrari may make distributions to the shareholders and other persons entitled to the distributable profits only to the extent that its shareholders’ equity exceeds the sum of the paid-up and called up portion of the share capital and the reserves that must be maintained in accordance with Dutch law. No distribution of profits may be made to Ferrari itself for shares that Ferrari holds in its own share capital.
Ferrari may only make a distribution of dividends to the shareholders after the adoption of its statutory annual accounts demonstrating that such distribution is legally permitted. The Ferrari Board of Directors may determine that other freely distributable distributions shall be made, in whole or in part, from Ferrari’s share premium reserve or from any other reserve, provided that payments from reserves may only be made to the shareholders that are entitled to the relevant reserve upon the dissolution of Ferrari and provided further that the policy of Ferrari on additions to reserves and dividends is duly observed.
Holders of special voting shares will not receive any dividend in respect of the special voting shares, however Ferrari maintains a separate dividend reserve for the special voting shares for the sole purpose of the allocation of the mandatory minimal profits that accrue to the special voting shares. This allocation establishes a reserve for the amount that would otherwise be paid. The special voting shares do not carry any entitlement to any other reserve. Any distribution out of the special dividend reserve or the partial or full release of such reserve requires a prior proposal from the Ferrari Board of Directors and a subsequent resolution of the meeting of holders of special voting shares.
Insofar as the profits have not been distributed or allocated to the reserves, they may, by resolution of the General Meeting, be distributed as dividends on the Ferrari common shares only. The General Meeting may resolve, on the proposal of the Ferrari Board of Directors, to declare and distribute dividends in U.S. Dollars. The Ferrari Board of Directors may decide, subject to the approval of the General Meeting and the Ferrari Board of Directors having been designated as the body competent to pass a resolution for the issuance of shares, that a distribution shall, wholly or partially, be made in the form of shares, or that shareholders shall be given the option to receive a distribution either in cash or in the form of shares.
The right to dividends and distributions will lapse if the dividends or distributions are not claimed within five years following the day after the date on which they first became payable. Any dividends or other distributions made in violation of the Ferrari Articles of Association or Dutch law will have to be repaid by the shareholders who knew or should have known, of such violation.
General Meetings and Voting Rights
Annual Meeting
An annual General Meeting must be held within six months from the end of Ferrari’s preceding financial year. The purpose of the annual General Meeting is to discuss, among other things, the annual report, the adoption of the annual accounts, allocation of profits (including the proposal to distribute dividends), release of members of the Ferrari Board of Directors from liability for their management and supervision, and other proposals brought up for discussion by the Ferrari Board of Directors.
General Meeting and Place of Meetings
Other General Meetings will be held if requested by the Ferrari Board of Directors, the chairman of the Ferrari Board of Directors, the chairperson or the chief executive officer, or by the written request (stating the exact subjects to be discussed) of one or more shareholders representing in aggregate at least 10 percent of the issued share capital of the company (taking into account the relevant provisions of Dutch law, and the Ferrari Articles of Association and the applicable stock exchange regulations). General Meetings will be held in Amsterdam or Haarlemmermeer (Schiphol Airport), the Netherlands.
Convocation Notice and Agenda
General Meetings can be convened by a notice, specifying the subjects to be discussed, the place and the time of the meeting and admission and participation procedure, issued at least 15 days before the meeting or 42 days if shares of Ferrari or depositary receipts issued with cooperation of Ferrari have been admitted to trading on the MTA or another regulated market as referred to in Article 1:1 of the Dutch Financial Supervision Act. All convocations, announcements, notifications and communications to shareholders and other persons entitled to attend the General Meeting must be made on the company’s corporate website in accordance with the relevant provisions of Dutch law. The agenda for a General Meeting may contain the

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items requested by one or more shareholders representing at least three percent of the issued share capital of the company, taking into account the relevant provisions of Dutch law. Requests must be made in writing, including the reasons for adding the relevant item on the agenda, and received by the Ferrari Board of Directors at least 60 days before the day of the meeting.
Admission and Registration
Each shareholder entitled to vote, and each person holding a usufruct or pledge to whom the right to vote on the Ferrari common shares accrues, shall be authorized to attend the General Meeting, to address the General Meeting and to exercise its voting rights. The registration date of each General Meeting is the twenty-eighth day prior to the date of the General Meeting so as to establish which shareholders are entitled to attend and vote at the General Meeting. Only holders of shares and other persons entitled to vote or attend the General Meeting, at such registration date are entitled to attend and vote at the General Meeting. The convocation notice for the meeting shall state the registration date and the manner in which the persons entitled to attend the General Meeting may register and exercise their rights.
Those entitled to attend a General Meeting may be represented at a General Meeting by a proxy authorized in writing. The requirement that a proxy must be in written form is also fulfilled when it is recorded electronically.
Members of the Ferrari Board of Directors have the right to attend a General Meeting. In these General Meetings they have an advisory role.
Voting Rights
Each Ferrari common share and each special voting share confers the right on the holder to cast one vote at a General Meeting. Resolutions are passed by a simple majority of the votes cast, unless Dutch law or the Ferrari Articles of Association prescribes a larger majority. Under Dutch law and/or the Ferrari Articles of Association, the following matters require at least two-thirds of the votes cast at a meeting if less than half of the issued share capital is present or represented:
a resolution to reduce the issued share capital;
a resolution to amend the Ferrari Articles of Association;
a resolution to restrict or exclude rights of pre-emption;
a resolution to authorize the Ferrari Board of Directors to restrict or exclude shareholder rights of pre-emption;
a resolution to enter into a legal merger or a legal demerger; or
a resolution to liquidate Ferrari.
Shareholders’ Votes on Certain Transactions
Any important change in the identity or character of Ferrari must be approved by the General Meeting, including (i) the transfer to a third party of the business of Ferrari or practically the entire business of Ferrari; (ii) the entry into or breaking off of any long-term cooperation of Ferrari or a subsidiary with another legal entity or company or as a fully liable partner of a general partnership or limited partnership, where such entry into or breaking off is of far-reaching importance to Ferrari; and (iii) the acquisition or disposal by Ferrari or a subsidiary of an interest in the capital of a company with a value of at least one-third of Ferrari’s assets according to the consolidated statement of financial position with explanatory notes included in the last adopted annual accounts of Ferrari.
Amendments to the Ferrari Articles of Association, including Variation of Rights
A resolution of the General Meeting to amend the Ferrari Articles of Association or to wind up Ferrari may be approved only if proposed by the Ferrari Board of Directors and must be approved by a vote of a majority of at least two-thirds of the votes cast if less than one-half of the issued share capital is present or represented at such General Meeting.
The rights of shareholders may be changed only by amending the Ferrari Articles of Association in compliance with Dutch law.

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Dissolution and Liquidation
The General Meeting may resolve to dissolve Ferrari, upon a proposal of the Ferrari Board of Directors thereto. A majority of at least two-thirds of the votes cast shall be required if less than one-half of the issued capital is present or represented at the meeting. In the event of dissolution, Ferrari will be liquidated in accordance with Dutch law and the Ferrari Articles of Association and the liquidation shall be arranged by the members of the Ferrari Board of Directors, unless the General Meeting appoints other liquidators. During liquidation, the provisions of the Ferrari Articles of Association will remain in force as long as possible.
If Ferrari is dissolved and liquidated, whatever remains of Ferrari’s equity after all its debts have been discharged shall first be applied to distribute the aggregate balance of share premium reserves and other reserves (other than the special dividend reserve), to holders of Ferrari common shares in proportion to the aggregate nominal value of the Ferrari common shares held by each holder; secondly, from any balance remaining, an amount equal to the aggregate amount of the nominal value of the Ferrari common shares will be distributed to the holders of Ferrari common shares in proportion to the aggregate nominal value of Ferrari common shares held by each of them; thirdly, from any balance remaining, an amount equal to the aggregate amount of the special voting shares dividend reserve will be distributed to the holders of special voting shares in proportion to the aggregate nominal value of the special voting shares held by each of them; fourthly, from any balance remaining, the aggregate amount of the nominal value of the special voting shares will be distributed to the holders of special voting shares in proportion to the aggregate nominal value of the special voting shares held by each of them; and, lastly, any balance remaining will be distributed to the holders of Ferrari common shares in proportion to the aggregate nominal value of Ferrari common shares held by each of them.
Liability of Directors
Under Dutch law, the management of a company is a joint undertaking and each member of the Board of Directors can be held jointly and severally liable to Ferrari for damages in the event of improper or negligent performance of their duties. Further, members of the Board of Directors can be held liable to third parties based on tort, pursuant to certain provisions of the Dutch Civil Code. All directors are jointly and severally liable for failure of one or more co-directors. An individual director is only exempted from liability if he proves that he cannot be held seriously culpable for the mismanagement and that he has not been negligent in seeking to prevent the consequences of the mismanagement. In this regard a director may, however, refer to the allocation of tasks between the directors. In certain circumstances, directors may incur additional specific civil and criminal liabilities.
Indemnification of Directors and Officers
Under Dutch law, indemnification provisions may be included in a company’s articles of association. Under the Ferrari Articles of Association, Ferrari is required to indemnify its directors, officers, former directors, former officers and any person who may have served at Ferrari’s request as a director or officer of another company in which Ferrari owns shares or of which Ferrari is a creditor who were or are made a party or are threatened to be made a party or are involved in, any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative or investigative (each a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, against any and all liabilities, damages, reasonable and documented expenses (including reasonably incurred and substantiated attorney’s fees), financial effects of judgments, fines, penalties (including excise and similar taxes and punitive damages) and amounts paid in settlement in connection with such Proceeding by any of them. Notwithstanding the above, no indemnification shall be made in respect of any claim, issue or matter as to which any of the above-mentioned indemnified persons shall be adjudged to be liable for gross negligence or willful misconduct in the performance of such person’s duty to Ferrari. This indemnification by Ferrari is not exclusive of any other rights to which those indemnified may be entitled otherwise. Ferrari has purchased directors’ and officers’ liability insurance for the members of the Board of Directors and certain other officers, substantially in line with that purchased by similarly situated companies.
Dutch Corporate Governance Code
The Dutch Corporate Governance Code contains principles and best practice provisions that regulate relations between the board and the shareholders (e.g. the General Meeting). The Dutch Corporate Governance Code is divided into five sections which address the following topics: (i) compliance with and enforcement of the Dutch Corporate Governance Code; (ii) the management board, including matters such as the composition of the board, selection of board members and director qualification standards, director responsibilities, board committees and term of appointment; (iii) the supervisory board or the non-executive

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directors in a one-tier board; (iv) the shareholders and the general meeting of shareholders; and (v) the audit of the financial reporting and the position of the internal audit function and the external auditor.
Dutch companies whose shares are listed on a government-recognized stock exchange, such as the NYSE, are required under Dutch law to disclose in their annual reports whether or not they apply the provisions of the Dutch Corporate Governance Code and, in the event that they do not apply a certain provision, to explain the reasons why they have chosen to deviate.
Ferrari acknowledges the importance of good corporate governance and supports the best practice provisions of the Dutch Corporate Governance Code. Therefore, Ferrari intends to comply with the relevant best practice provisions of the Dutch Corporate Governance Code except as may be noted from time to time in Ferrari’s annual reports.
Dutch Financial Reporting Supervision Act
On the basis of the Dutch Financial Reporting Supervision Act ( Wet toezicht financiële verslaggeving ), or the FRSA, the Netherlands Authority for the Financial Markets ( stichting Autoriteit Financiële Markten , the “AFM”) supervises the application of financial reporting standards by, amongst others, companies whose corporate seat is in the Netherlands and whose securities are listed on a regulated market within the EU or in a non-EU country on a system similar to a regulated market.
Pursuant to the FRSA, the AFM has an independent right to (i) request an explanation from us regarding our application of the applicable financial reporting standards and (ii) recommend to us the making available of further explanations. If we do not comply with such a request or recommendation, the AFM may request that the Enterprise Chamber order us to (i) make available further explanations as recommended by the AFM, (ii) provide an explanation of the way we have applied the applicable financial reporting standards to our financial reports or (iii) prepare our financial reports in accordance with the Enterprise Chamber’s instructions.
Compulsory Acquisition
Pursuant to article 2:92a of the Dutch Civil Code, a shareholder who, for its own account, holds at least 95 percent of the issued share capital of Ferrari may institute proceedings against the other shareholders jointly for the transfer of their shares to it. The proceedings are held before the Dutch Enterprise Chamber and can be instituted by means of a writ of summons served upon each of the minority shareholders in accordance with the provisions of the Dutch Code of Civil Procedure. The Enterprise Chamber may grant the claim for the squeeze-out in relation to all minority shareholders and will determine the price to be paid for the shares, if necessary after appointment of one or three expert(s) who will offer an opinion to the Enterprise Chamber on the value to be paid for the shares of the minority shareholders. Once the order to transfer becomes final before the Enterprise Chamber, the person acquiring the shares must give written notice of the date and place of payment and the price to the holders of the shares to be acquired whose addresses are known to it. Unless the addresses of all of them are known to it, it must also publish the same in a Dutch daily newspaper with a national circulation. A shareholder can only appeal against the judgment of the Enterprise Chamber before the Dutch Supreme Court.
Disclosure of Trades in Listed Securities
Disclosure under Dutch Law
Pursuant to the Dutch Financial Supervision Act, each of the members of the Ferrari Board of Directors and any other person who has managerial responsibilities within Ferrari and who in that capacity is authorized to make decisions affecting the future developments and business prospects of Ferrari and who has regular access to inside information relating, directly or indirectly, to Ferrari (each, an “Insider”) must notify the AFM of all transactions, conducted or carried out for his/her own account, relating to Ferrari common shares or financial instruments, the value of which is (in part) determined by the value of Ferrari common shares.     
In addition, persons designated by the Market Abuse Decree ( Besluit marktmisbruik Wft , the “Market Abuse Decree”) who are closely associated with members of the Board of Directors or any of the Insiders must notify the AFM of all transactions conducted for their own account relating to Ferrari’s shares or financial instruments, the value of which is (in part) determined by the value of Ferrari’s shares. The Market Abuse Decree designates the following categories of persons: (i) the spouse or any partner considered by applicable law as equivalent to the spouse, (ii) dependent children, (iii) other relatives who have shared the same household for at least one year at the relevant transaction date, and (iv) any legal person, trust or partnership, among

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other things, whose managerial responsibilities are discharged by a member of the Board of Directors or any other Insider or by a person referred to under (i), (ii) or (iii) above.
The AFM must be notified of transactions effected in either Ferrari’s shares or financial instruments, the value of which is (in part) determined by the value of Ferrari’s shares, no later than the fifth business day following the transaction date by means of a standard form. Notification may be postponed until the date that the value of the transactions carried out on a person’s own account, together with the transactions carried out by the persons associated with that person, reaches or exceeds the amount of €5,000 in the calendar year in question. The AFM keeps a public register of all notifications made pursuant to the Dutch Financial Supervision Act.
Non-compliance with these reporting obligations under the Dutch Financial Supervision Act could lead to criminal penalties, administrative fines and cease-and-desist orders (and the publication thereof), imprisonment or other sanctions.
Insiders’ Register
Ferrari and its subsidiaries, as well as persons acting on their behalf or for their account, shall draw up, and keep regularly updated, a list of persons who, in the exercise of their employment, profession or duties, have access to inside information related to Ferrari.
Shareholder Disclosure and Reporting Obligations under U.S. Law
Holders of Ferrari shares are subject to certain U.S. reporting requirements under the Securities Exchange Act of 1934 (the “Exchange Act”) for shareholders owning more than 5 percent of any class of equity securities registered pursuant to Section 12 of the Exchange Act. Among the reporting requirements are disclosure obligations intended to inform the market of significant accumulations of shares that may lead to a change of control of an issuer.
If Ferrari were to fail to qualify as a foreign private issuer in the future, Section 16(a) of the Exchange Act would require Ferrari’s directors and executive officers, and persons who own more than ten percent of a registered class of Ferrari’s equity securities, to file reports of ownership of, and transactions in, Ferrari’s equity securities with the SEC. Such directors, executive officers and ten percent stockholders would also be required to furnish Ferrari with copies of all Section 16 reports they file.
Election and Removal of Directors
Ferrari’s Articles of Association provide that Ferrari’s Board of Directors shall be composed of three or more members.
Directors are appointed by a simple majority of the votes validly cast at a General Meeting. The General Meeting may at any time suspend or dismiss any director.
Exchange Controls and Other Limitations Affecting Shareholders
Under Dutch law, there are no exchange control restrictions on investments in, or payments on, the Ferrari common shares. There are no special restrictions in the Ferrari Articles of Association or Dutch law that limit the right of shareholders who are not citizens or residents of the Netherlands to hold or vote the Ferrari common shares.


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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have ______ common shares outstanding. All of the common shares sold in this offering will be freely transferable by persons other than by our “affiliates” (as defined under Rule 144) without restriction or further registration under the Securities Act of 1933 (the “Securities Act”). Sales of substantial amounts of our common shares in the public market could adversely affect prevailing market prices of our common shares.
Lock-Up Agreements
We, FCA, Piero Ferrari and certain of our directors and officers have agreed that, subject to certain exceptions, we and they will not, without the prior written consent of UBS Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated offer, pledge, sell, contract to sell or otherwise dispose of, or transfer all or a portion of the economic consequences of ownership of, any of our common shares or any securities convertible into or exercisable or exchangeable for our common shares for a period of 90 days after the date of this prospectus. For more information, see “Underwriting.” However, this lock-up does not restrict the consummation of, or any activities by us or FCA in furtherance of, any of the transactions relating to the separation of Ferrari from FCA described under “The Restructuring and Separation Transactions.”
Rule 144
Under Rule 144, a person (or persons whose shares are aggregated) (i) who is not considered to have been one of our affiliates at any time during the 90 days preceding a sale and (ii) who has beneficially owned the securities proposed to be sold for at least six months, including the holding period of any prior owner other than an affiliate is entitled to sell his securities without restriction, subject to our compliance with the reporting obligations under the Exchange Act.
In general, under Rule 144, beginning 90 days after the date of this prospectus, a person who is our affiliate and has beneficially owned common shares for at least six months is entitled to sell within any three-month period a number of common shares that does not exceed the greater of (i) 1.0 percent of the number of common shares then outstanding, which is expected to compare to approximately ______ common shares immediately after the completion of this offering; and (ii) the average weekly trading volume of the common shares on the NYSE during the four calendar weeks preceding the filing of a notice on Form 144 in connection with the sale.
Any such sales by an affiliate are also subject to manner of sale provisions, notice requirements and our compliance with Exchange Act reporting obligations.
Regulation S
Regulation S under the Securities Act provides that common shares owned by any person may be sold without registration in the United States, provided that the sale is effected in an offshore transaction and no directed selling efforts are made in the United States (as these terms are defined in Regulation S), subject to certain other conditions. In general, this means that our common shares may be sold in some other manner outside the United States without requiring registration in the United States.


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TAX CONSEQUENCES
Material Netherlands Tax Consequences
This section describes solely the material Dutch tax consequences of (i) the acquisition, ownership and disposal of Ferrari common shares and, if applicable, Ferrari special voting shares, (ii) the exchange of shares pursuant to the Merger, and (iii) the ownership and disposal of FE New common shares and, if applicable, FE New special voting shares. It does not consider every aspect of Dutch taxation that may be relevant to a particular holder of shares in Ferrari and/or FE New in special circumstances or who is subject to special treatment under applicable law. Shareholders and any potential investor should consult their own tax advisors regarding the Dutch tax consequences of (i) acquiring, owning and disposing of Ferrari common shares and, if applicable, Ferrari special voting shares, (ii) the Merger and (iii) the ownership and disposal of FE New common shares and, if applicable, FE New special voting shares in their particular circumstances. The following discussion assumes that the Separation will be carried out as described above under "The Restructuring and Separation Transactions".
Where in this section English terms and expressions are used to refer to Dutch concepts, the meaning to be attributed to such terms and expressions shall be the meaning to be attributed to the equivalent Dutch concepts under Dutch tax law. Where in this section the terms “the Netherlands” and “Dutch” are used, these refer solely to the European part of the Kingdom of the Netherlands. This summary also assumes that Ferrari and/or FE New are organized, and that the business will be conducted, in the manner outlined in this form. A change to the organizational structure or to the manner in which Ferrari and/or FE New conduct their business may invalidate the contents of this section, which will not be updated to reflect any such change.
This description is based on the tax law of the Netherlands (unpublished case law not included) as it stands at the date of this form. The law upon which this description is based is subject to change, perhaps with retroactive effect. Any such change may invalidate the contents of this description, which will not be updated to reflect such change.
To the extent this section consists of a statement as to matters of Dutch tax law, this section is the opinion of Loyens & Loeff N.V.
Where in this Dutch taxation discussion reference is made to “a holder of common shares and, if applicable, special voting shares,” that concept includes, without limitation:
1.
an owner of one or more common shares and, if applicable, special voting shares who in addition to the title to such common shares and, if applicable, special voting shares, has an economic interest in such common shares and, if applicable, special voting shares;
2.
a person who or an entity that holds the entire economic interest in one or more common shares and, if applicable, special voting shares;
3.
a person who or an entity that holds an interest in an entity, such as a partnership or a mutual fund, that is transparent for Dutch tax purposes, the assets of which comprise one or more common shares and, if applicable, special voting shares, within the meaning of 1. or 2. above; or
4.
a person who is deemed to hold an interest in common shares and, if applicable, special voting shares, as referred to under 1. to 3., pursuant to the attribution rules of article 2.14a, of the Dutch Income Tax Act 2001 ( Wet inkomstenbelasting 2001 ), with respect to property that has been segregated, for instance in a trust or a foundation.
For the purposes of this taxation section a holder is a “Dutch Individual holder” if such holder satisfies the following tests:
a.
such holder is an individual;
b.
such holder is a resident, or deemed to be a resident, in the Netherlands for Dutch income tax purposes;
c.
such holder’s common shares and, if applicable, special voting shares and any benefits derived or deemed to be derived therefrom have no connection with such holder’s past, present or future employment, if any; and

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d.
such holder’s common shares and, if applicable, special voting shares do not form part of a substantial interest (aanmerkelijk belang ) or a deemed substantial interest in Ferrari and/or FE New within the meaning of Chapter 4 of the Dutch Income Tax Act 2001 ( Wet inkomstenbelasting 2001 ).
Generally, if a person holds an interest in Ferrari and/or FE New such interest forms part of a substantial interest, or a deemed substantial interest, in Ferrari and/or FE New if any one or more of the following circumstances is present:
1.
Such person - either alone or, in the case of an individual, together with his partner, if any, or pursuant to article 2.14a, of the Dutch Income Tax Act 2001 ( Wet inkomstenbelasting 2001 ) - owns or is deemed to own, directly or indirectly, either a number of shares in Ferrari and/or FE New representing five percent or more of the total issued and outstanding capital (or the issued and outstanding capital of any class of shares), or rights to acquire, directly or indirectly, shares, whether or not already issued, representing five percent or more of the total issued and outstanding capital (or the issued and outstanding capital of any class of the shares), or profit-participating certificates ( winstbewijzen ) relating to five percent or more of the annual profit or to five percent or more of the liquidation proceeds. The common shares and the special voting shares are considered to be separate classes of shares.
2.
Such person’s shares, rights to acquire shares or profit-participating certificates in Ferrari and/or FE New are held by him or deemed to be held by him following the application of a non-recognition provision.
3.
Such person’s partner or any of his relatives by blood or by marriage in the direct line (including foster-children) or of those of his partner has a substantial interest (as described under (1) and (2) above) in Ferrari and/or FE New.
For the purposes of circumstances (1), (2) and (3) above, if a holder is entitled to the benefits from shares or profit-participating certificates (for instance if a holder is a holder of a right of usufruct), such holder is deemed to be a holder of shares or profit-participating certificates, as the case may be, and such holder’s entitlement to benefits is considered a share or profit-participating certificate, as the case may be.
If a Dutch Individual holder satisfies test (b), but does not satisfy test (c) and/or test (d) above, such holder’s Dutch income tax position is not discussed in this form. If a holder of common shares and, if applicable, special voting shares is an individual who does not satisfy test (b), please refer to the section “—Non-resident holders.”
For the purposes of this taxation section a holder is a “Dutch Corporate holder” if such holder satisfies the following tests:
i.
such holder is a corporate entity ( lichaam ), including an association that is taxable as a corporate entity, that is subject to Dutch corporation tax in respect of benefits derived from its common shares and, if applicable, special voting shares;
ii.
such holder is a resident, or deemed to be resident, in the Netherlands for Dutch corporation tax purposes;
iii.
such holder is not an entity that, although subject to Dutch corporation tax, is, in whole or in part, specifically exempt from that tax; and
iv.
such holder is not an investment institution ( beleggingsinstelling ) as defined in article 28 of the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ).
If a holder of common shares and, if applicable, special voting shares is not an individual and if such holder does not satisfy any one or more of these tests, with the exception of test (ii), such holder’s Dutch corporation tax position is not discussed in this form. If a holder of common shares and, if applicable, special voting shares is not an individual and if such holder does not satisfy test (ii), please refer to the section “—Non-resident holders.”
For the purposes of this taxation section, a holder of common shares and, if applicable, special voting shares, is a “Non-resident holder” if such holder satisfies the following tests:
a.
such holder is neither resident, nor deemed to be resident, in the Netherlands for purposes of Dutch income tax or corporation tax, as the case may be;

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b.
such holder’s common shares and, if applicable, special voting shares and any benefits derived or deemed to be derived from such shares have no connection with past, present or future employment, management activities and functions or membership of a management board ( bestuurder ) or a supervisory board ( commissaris );
c.
such holder’s common shares and, if applicable, special voting shares do not form part of a substantial interest or a deemed substantial interest in Ferrari and/or FE New within the meaning of Chapter 4 of the Dutch Income Tax Act 2001 ( Wet inkomstenbelasting 2001 ); and
d.
if such holder is not an individual, no part of the benefits derived from such holder’s common shares and, if applicable, special voting shares is exempt from Dutch corporation tax under the participation exemption as laid down in the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ).
See above for a description of the circumstances under which shares form part of a substantial interest or a deemed substantial interest.
If a holder of common shares and, if applicable, special voting shares satisfies test (a), but does not satisfy any one or more of tests (b), (c), and (d), such holder’s Dutch income tax position or corporation tax position, as the case may be, is not discussed in this form.
Taxes on income and capital gains in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares
General
The description set out in this section “—Taxes on income and capital gains” applies only to a holder of Ferrari common shares and, if applicable, Ferrari special voting shares, who is a “Dutch Individual holder of Ferrari common shares and, if applicable, Ferrari special voting shares,” a “Dutch Corporate holder of Ferrari common shares and, if applicable, Ferrari special voting shares” or a “Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares.”
Dutch Individual holders of Ferrari common shares and, if applicable, Ferrari special voting shares deriving profits or deemed to be deriving profits from an enterprise
If a Dutch Individual holder of Ferrari common shares and, if applicable, Ferrari special voting shares derives or is deemed to derive any benefits from such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares, including any capital gain realized on the disposal of such Ferrari common shares and, if applicable, Ferrari special voting shares, that are attributable to an enterprise from which such holder derives profits, whether as an entrepreneur ( ondernemer ) or pursuant to a co-entitlement to the net value of an enterprise, other than as a shareholder, such benefits are generally subject to Dutch income tax at progressive rates.
On receipt of the Ferrari special voting shares part of the book value for Dutch tax purposes of the Ferrari common shares will have to be attributed to the Ferrari special voting shares. The book value for Dutch tax purposes of the Ferrari common shares will be reduced accordingly.
Dutch Individual holders deriving benefits from miscellaneous activities
If a Dutch Individual holder of Ferrari common shares and, if applicable, Ferrari special voting shares derives or is deemed to derive (as outlined below) any benefits from such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares, including any gain realized on the disposal of such Ferrari common shares and, if applicable, Ferrari special voting shares, that constitute benefits from miscellaneous activities (as outlined below) ( resultaat uit overige werkzaamheden ), such benefits are generally subject to Dutch income tax at progressive rates.
A Dutch Individual holder of Ferrari common shares and, if applicable, Ferrari special voting shares may, inter alia , derive, or be deemed to derive, benefits from Ferrari common shares and, if applicable, Ferrari special voting shares that are taxable as benefits from miscellaneous activities if such holder’s investment activities go beyond the activities of an active portfolio investor, for instance in the case of use of insider knowledge or comparable forms of special knowledge.

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On receipt of the Ferrari special voting shares part of the book value for Dutch tax purposes of the Ferrari common shares will have to be attributed to the Ferrari special voting shares. The book value for Dutch tax purposes of the Ferrari common shares will be reduced accordingly.
Other Dutch Individual holders of Ferrari common shares and, if applicable, Ferrari special voting shares
If a Dutch Individual holder’s situation has not been discussed before in this section “—Taxes on income and capital gains in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares” benefits from such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares will be taxed annually as a benefit from savings and investments ( voordeel uit sparen en beleggen ). Such benefit is deemed to be four percent per annum of the holder’s “yield basis” ( rendementsgrondslag ), generally to be determined at the beginning of the relevant year, to the extent that such yield basis exceeds the “exempt net asset amount” ( heffingvrij vermogen ) for the relevant year. The benefit is taxed at the rate of 30 percent. The value of a holder’s Ferrari common shares and, if applicable, Ferrari special voting shares forms part of the holder’s yield basis. Under this rule, actual benefits derived from such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares, including any gain realized on the disposal of such Ferrari common shares and, if applicable, Ferrari special voting shares, are not as such subject to Dutch income tax.
Attribution rule
Benefits derived or deemed to be derived from certain miscellaneous activities by, and yield basis for benefits from savings and investments of, a child or a foster child who is under eighteen years of age are attributed to the parent who exercises, or to the parents who exercise, authority over the child, irrespective of the country of residence of the child.
Dutch Corporate holders of Ferrari common shares and, if applicable, Ferrari special voting shares
If a holder of Ferrari common shares and, if applicable, Ferrari special voting shares is a Dutch Corporate holder, any benefits derived or deemed to be derived by such holder from such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares, including any gain realized on the disposal thereof, are generally subject to Dutch corporation tax, except to the extent that the benefits are exempt under the participation exemption as laid down in the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ).
On receipt of the Ferrari special voting shares part of the book value for Dutch tax purposes of the Ferrari common shares will have to be attributed to the Ferrari special voting shares. The book value for Dutch tax purposes of the Ferrari common shares will be reduced accordingly.
Non-resident holders of Ferrari common shares and, if applicable, Ferrari special voting shares
A Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares will not be subject to any Dutch taxes on income or capital gains (other than the Dutch dividend withholding tax described below) in respect of any benefits derived or deemed to be derived by such holder from such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares, including any capital gain realized on the disposal thereof, unless:
1.
such holder derives profits from an enterprise directly, or pursuant to a co-entitlement to the net value of such enterprise, other than as a holder of securities, which enterprise either is managed in the Netherlands or carried on, in whole or in part, through a permanent establishment or a permanent representative which is taxable in the Netherlands, and such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares are attributable to such enterprise; or
2.
such holder is an individual and such holder derives benefits from Ferrari common shares and, if applicable, Ferrari special voting shares that are taxable as benefits from miscellaneous activities in the Netherlands.
See above for a description of the circumstances under which the benefits derived from Ferrari common shares and, if applicable, Ferrari special voting shares may be taxable as benefits from miscellaneous activities, on the understanding that such benefits will be taxable in the Netherlands only if such activities are performed or deemed to be performed in the Netherlands.

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On receipt of the Ferrari special voting shares part of the book value for Dutch tax purposes of the Ferrari common shares will have to be attributed to the Ferrari special voting shares. The book value for Dutch tax purposes of the Ferrari common shares will be reduced accordingly.
Attribution rule
Benefits derived or deemed to be derived from certain miscellaneous activities by a child or a foster child who is under eighteen years of age are attributed to the parent who exercises, or the parents who exercise, authority over the child, irrespective of the country of residence of the child.
Dividend withholding tax in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares
General
Ferrari is generally required to withhold Dutch dividend withholding tax at a rate of 15 percent from dividends distributed by it.
As an exception to this rule, Ferrari may not be required to withhold Dutch dividend withholding tax if it is considered to be a tax resident of both the Netherlands and Italy, in accordance with the domestic tax residency provisions applied by each of these jurisdictions, while the double tax treaty between the Netherlands and Italy attributes the tax residency exclusively to Italy. This exception does not apply to dividends distributed by Ferrari to a holder who is resident or deemed to be resident in the Netherlands for Dutch income tax purposes or Dutch corporation tax purposes.
The concept of “dividends distributed” as used in this section “Material Netherlands Tax Consequences” includes, but is not limited to, the following:
distributions in cash or in kind, deemed and constructive distributions and repayments of capital not recognized as paid-in for Dutch dividend withholding tax purposes;
liquidation proceeds and proceeds of repurchase or redemption of Ferrari common shares and, if applicable, Ferrari special voting shares or FE New common shares and, if applicable, FE New special voting shares in excess of the average capital recognized as paid-in for Dutch dividend withholding tax purposes;
the par value of common shares and/or special voting shares issued by Ferrari or FE New to a holder of common shares and, if applicable, special voting shares or an increase of the par value of common shares and/or special voting shares, as the case may be, to the extent that it does not appear that a contribution, recognized for Dutch dividend withholding tax purposes, has been made or will be made;
partial repayment of capital, recognized as paid-in for Dutch dividend withholding tax purposes, if and to the extent that there are net profits ( zuivere winst ), unless (a) the general meeting of shareholders of Ferrari or FE New has resolved in advance to make such repayment and (b) the par value of the common shares and/or special voting shares concerned has been reduced by an equal amount by way of an amendment to articles of association of Ferrari or FE New.
Dutch Individual holders of Ferrari common shares and, if applicable, Ferrari special voting shares and Dutch Corporate holders of Ferrari common shares and, if applicable, Ferrari special voting shares
If a holder is a Dutch Individual holder of Ferrari common shares and, if applicable, Ferrari special voting shares or a Dutch Corporate holder of Ferrari common shares and, if applicable, Ferrari special voting shares, such holder can generally credit Dutch dividend withholding tax against its Dutch income tax or Dutch corporation tax liability, as applicable, and such holder is generally entitled to a refund in the form of a negative assessment of Dutch income tax or Dutch corporation tax, as applicable, to the extent such Dutch dividend withholding tax, together with any other creditable domestic and/or foreign taxes, exceeds such holder’s aggregate Dutch income tax or aggregate Dutch corporation tax liability.
Pursuant to domestic rules to avoid dividend stripping, Dutch dividend withholding tax will only be credited against Dutch income tax or Dutch corporation tax, as applicable, exempted, reduced or refunded if a holder is the beneficial owner

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( uiteindelijk gerechtigde ) of dividends distributed by Ferrari. If a holder receives proceeds from Ferrari common shares and, if applicable, Ferrari special voting shares, such holder will not be recognized as the beneficial owner of such proceeds if, in connection with the receipt of the proceeds, such holder has given a consideration, in the framework of a composite transaction including, without limitation, the mere acquisition of one or more dividend coupons or the creation of short-term rights of enjoyment of shares ( kortlopende genotsrechten op aandelen ), whereas it may be presumed that (i) such proceeds in whole or in part, directly or indirectly, inure to a person who would not have been entitled to an exemption from, reduction or refund of, or credit for, Dutch dividend withholding tax, or who would have been entitled to a smaller reduction or refund of, or credit for, Dutch dividend withholding tax than such holder, the actual recipient of the proceeds; and (ii) such person acquires or retains, directly or indirectly, an interest in Ferrari common shares and, if applicable, Ferrari special voting shares or similar instruments, comparable to its interest in Ferrari common shares and, if applicable, Ferrari special voting shares prior to the time the composite transaction was first initiated.
See “—Dividend withholding tax in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares—General” for a description of the concept “dividends distributed.”
Non-resident holders of Ferrari common shares and, if applicable, Ferrari special voting shares
Relief—general
If a Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares is resident in the non-European part of the Kingdom of the Netherlands or in a country that has concluded a double tax treaty with the Netherlands, such holder may be eligible for a full or partial relief from the Dutch dividend withholding tax, provided such relief is timely and duly claimed. Pursuant to domestic rules to avoid dividend stripping, Dutch dividend withholding tax relief will only be available to a holder if such holder is the beneficial owner of dividends distributed by Ferrari.
In addition, a Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares that is not an individual is entitled to an exemption from Dutch dividend withholding tax, provided that the following tests are satisfied:
1.
such holder is, according to the tax law in a Member State of the European Union or a state designated by ministerial decree, that is a party to the Agreement regarding the European Economic Area, resident there and such holder is not transparent for tax purposes according to the tax law of such state;
2.
any one or more of the following threshold conditions are satisfied:
a.
at the time the dividend is distributed by Ferrari, such holder holds shares representing at least five percent of Ferrari’s nominal paid-up capital; or
b.
such holder has held shares representing at least five percent of Ferrari’s nominal paid up capital for a continuous period of more than one year at any time during the four years preceding the time the dividend is distributed by Ferrari; or
c.
such holder is connected with Ferrari within the meaning of article 10a, paragraph 4, of the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ); or
d.
an entity connected with such holder within the meaning of article 10a, paragraph 4, of the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ) holds at the time the dividend is distributed by Ferrari, shares representing at least five percent of Ferrari’s nominal paid-up capital;
3.
such holder is not considered to be resident outside the Member States of the European Union or the states designated by ministerial decree, that are a party to the Agreement regarding the European Economic Area, under the terms of a double tax treaty concluded with a third State; and
4.
such holder does not perform a similar function to an investment institution ( beleggingsinstelling ) as meant by article 6a or article 28 of the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ).
The exemption from Dutch dividend withholding tax is not available if a holder is a Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares and pursuant to a provision for the prevention of fraud or abuse

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included in a double tax treaty between the Netherlands and such holder’s country of residence, such holder would not be entitled to the reduction of tax on dividends provided for by such treaty. Furthermore, the exemption from Dutch dividend withholding tax will only be available to a holder if such holder is the beneficial owner of dividends distributed by Ferrari, as described above. If a holder is a Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares and such holder is resident in a Member State of the European Union with which the Netherlands has concluded a double tax treaty that provides for a reduction of tax on dividends based on the ownership of the number of voting rights, the test under (2)(a) above is also satisfied if such holder owns five percent of the voting rights in Ferrari.
Relief—U.S. holders of Ferrari common shares and, if applicable, Ferrari special voting shares
If Ferrari is considered to be a tax resident of both the Netherlands and Italy, in accordance with the domestic tax residency provisions applied by each of these jurisdictions, while the double tax treaty between the Netherlands and Italy attributes the tax residency exclusively to Italy, Ferrari may not be required to withhold Dutch dividend withholding tax on dividends distributed to U.S. holders of Ferrari common shares and, if applicable, Ferrari special voting shares.
If the double tax treaty between the Netherlands and Italy attributes the tax residency exclusively to the Netherlands, certain U.S. holders of Ferrari common shares and, if applicable, Ferrari special voting shares may qualify for full or partial relief of the Dutch dividend withholding tax under the convention between the Kingdom of the Netherlands and the U.S. for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, done in Washington, D.C. on December 18, 1992, as amended from time to time (the “Netherlands-U.S. Treaty”). On the basis of article 10 of the Netherlands-U.S. treaty, qualifying U.S. companies are under certain conditions entitled to a partial exemption from Dutch dividend withholding tax. On the basis of article 35 of the Netherlands-U.S. Treaty, qualifying U.S. pension trusts are under certain conditions entitled to a full exemption from Dutch dividend withholding tax. On the basis of article 36 of the Netherlands-U.S. Treaty, qualifying exempt U.S. organizations are under certain conditions entitled to a full exemption from Dutch dividend withholding tax.
Credit
If a Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares is subject to Dutch income tax or Dutch corporation tax in respect of any benefits derived or deemed to be derived from such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares, including any capital gain realized on the disposal thereof, such holder can generally credit Dutch dividend withholding tax against Dutch income tax or Dutch corporation tax liability, as applicable, and such holder is generally entitled to a refund pursuant to a negative tax assessment if and to the extent the Dutch dividend withholding tax, together with any other creditable domestic and/or foreign taxes, exceeds such holder’s aggregate Dutch income tax or aggregate Dutch corporation tax liability, respectively.
See the section “—Dividend withholding tax in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares—Dutch Individual holders and Dutch Corporate holders” for a description of the term beneficial owner.
See the section “—Dividend withholding tax in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares—General” for a description of the concept “dividends distributed.”
See the section “—Taxes on income and capital gains in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares—Non-resident holders of Ferrari common shares and, if applicable, Ferrari special voting shares” for a description of the circumstances in which a Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares is subject to Dutch income tax or Dutch corporation tax.

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Gift and inheritance taxes in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares
If a holder of Ferrari common shares and, if applicable, Ferrari special voting shares disposes of Ferrari common shares and/or Ferrari special voting shares by way of gift, in form or in substance, or if a holder of Ferrari common shares and, if applicable, Ferrari special voting shares who is an individual dies, no Dutch gift tax or Dutch inheritance tax, as applicable, will be due, unless:
i.
the donor is, or the deceased was, resident or deemed to be resident in the Netherlands for purposes of Dutch gift tax or Dutch inheritance tax, as applicable; or
ii.
the donor made a gift of Ferrari common shares and, if applicable, Ferrari special voting shares, then became a resident or deemed resident of the Netherlands, and died as a resident or deemed resident of the Netherlands within 180 days of the date of the gift.
For purposes of the above, a gift of Ferrari common shares and/or Ferrari special voting shares made under a condition precedent is deemed to be made at the time the condition precedent is satisfied.
For example, and without being exhaustive, an individual who has the Dutch nationality is deemed to be resident in the Netherlands at the time of his death or the making of the gift, if he resided in the Netherlands at any time during a period of ten years preceding the time of his death or the time of the gift. In addition, as a further example, and without being exhaustive, any individual who has been resident in the Netherlands and who has made a gift within a period of one year after he has taken up his residence outside the Netherlands, is deemed to be resident in the Netherlands at the time of the gift.
Value added tax in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares
No Dutch value added tax will arise in respect of any payment in consideration for the issue of Ferrari common shares and, if applicable, Ferrari special voting shares.
Registration taxes and duties in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares
No Dutch registration tax, transfer tax, stamp duty or any other similar documentary tax or duty, other than court fees, is payable in the Netherlands by a holder in respect of or in connection with (i) the subscription, issue, placement or allotment of Ferrari common shares and, if applicable, Ferrari special voting shares, (ii) the enforcement by way of legal proceedings (including the enforcement of any foreign judgment in the courts of the Netherlands) of the documents relating to the issue of Ferrari common shares and, if applicable, Ferrari special voting shares or the performance by Ferrari of Ferrari’s obligations under such documents, or (iii) the transfer of Ferrari common shares and, if applicable, Ferrari special voting shares.
Dutch tax consequences in connection with implementation of the Demergers
The First Demerger and Second Demerger will not be a taxable event for Dutch tax purposes with respect to a holder of Ferrari common shares and, if applicable, Ferrari special voting shares.
Dividend withholding tax in connection with implementation of the Merger
The exchange of Ferrari common shares and, if applicable, Ferrari special voting shares for FE New common shares and, if applicable, FE New special voting shares pursuant to the Merger will not be subject to Dutch dividend withholding tax.
Taxes on income and capital gains in connection with implementation of the Merger
General
The description set out in this section “—Taxes on income and capital gains in connection with implementation of the Merger” applies only to a holder of Ferrari common shares and, if applicable, Ferrari special voting shares, who is a “Dutch Individual holder of Ferrari common shares and, if applicable, Ferrari special voting shares,” a “Dutch Corporate holder of

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Ferrari common shares and, if applicable, Ferrari special voting shares” or a “Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares.”
Dutch Individual holders of Ferrari common shares and, if applicable, Ferrari special voting shares deriving profits or deemed to be deriving profits from an enterprise
For a Dutch Individual holder whose Ferrari common shares and, if applicable, special voting shares are attributable to an enterprise from which such holder derives profits, whether as an entrepreneur ( ondernemer ) or pursuant to a co-entitlement to the net value of an enterprise (other than as an entrepreneur or a shareholder), the exchange of Ferrari common shares and, if applicable, Ferrari special voting shares for FE New common shares and, if applicable, FE New special voting shares is considered to be a disposal of such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares and will result in recognition of a capital gain or a capital loss. Such benefits are generally subject to Dutch income tax at progressive rates. A Dutch Individual holder of Ferrari common shares and, if applicable, Ferrari special voting shares can opt for application of a roll-over facility for the capital gain if Ferrari and FE New are resident in a Member State of the European Union and certain requirements are met. If the roll-over facility is applied, the FE New common shares and, if applicable, FE New special voting shares received as Merger consideration must be reported in the balance sheet for Dutch tax purposes at the same tax book value as the divested shares in Ferrari. The roll-over facility does not apply to any cash consideration received.
Dutch Individual holders of Ferrari common shares and, if applicable, Ferrari special voting shares deriving benefits from miscellaneous activities
If a Dutch Individual holder of Ferrari common shares and, if applicable, Ferrari special voting shares derives or is deemed to derive any benefits from Ferrari common shares and, if applicable, Ferrari special voting shares, that constitute benefits from miscellaneous activities (as outlined below) ( resultaat uit overige werkzaamheden ), the exchange of such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares for FE New common shares and, if applicable, FE New special voting shares is considered to be a disposal of such holder’s Ferrari common shares, and if applicable, Ferrari special voting shares and will result in recognition of a capital gain or a capital loss. Such benefits are generally subject to Dutch income tax at progressive rates. A Dutch Individual holder of Ferrari common shares and, if applicable, Ferrari special voting shares can opt for a roll-over facility for the capital gain if Ferrari and FE New are resident in a Member State of the European Union and certain requirements are met. If the roll-over facility is applied, the FE New common shares and, if applicable, FE New special voting shares received as Merger consideration must be reported in the balance sheet for Dutch tax purposes at the same tax book value as the divested shares in Ferrari. The roll-over facility does not apply to any cash consideration received.
A Dutch Individual holder of Ferrari common shares and, if applicable, Ferrari special voting shares may, inter alia , derive, or be deemed to derive, benefits from Ferrari common shares and, if applicable, Ferrari special voting shares that are taxable as benefits from miscellaneous activities if such holder’s investment activities go beyond the activities of an active portfolio investor, for instance in the case of use of insider knowledge or comparable forms of special knowledge.
Other Dutch Individual holders of Ferrari common shares and, if applicable, Ferrari special voting shares
If a Dutch Individual holder’s situation has not been discussed before in this section “—Taxes on income and capital gains in connection with implementation of the Merger” benefits from such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares will be taxed annually as a benefit from savings and investments ( voordeel uit sparen en beleggen ). Such benefit is deemed to be four percent per annum of the holder’s “yield basis” ( rendementsgrondslag ), generally to be determined at the beginning of the relevant year, to the extent that such yield basis exceeds the “exempt net asset amount” ( heffingvrij vermogen ) for the relevant year. The benefit is taxed at the rate of 30 percent. The value of the shares forms part of the holder’s yield basis. Under this rule, any capital gain or loss realized upon the exchange of Ferrari common shares and, if applicable, Ferrari special voting shares for FE New common shares and, if applicable, FE New special voting shares is not as such subject to Dutch income tax.
Attribution rule
Benefits derived or deemed to be derived from certain miscellaneous activities by, and yield basis for benefits from savings and investments of, a child or a foster child who is under eighteen years of age are attributed to the parent who exercises, or to the parents who exercise, authority over the child, irrespective of the country of residence of the child.


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Dutch Corporate holders of Ferrari common shares and, if applicable, Ferrari special voting shares
For a Dutch Corporate holder of Ferrari common shares and, if applicable, Ferrari special voting shares, the disposal of such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares in exchange for FE New common shares and, if applicable, FE New special voting shares will result in recognition of a capital gain or a capital loss, except to the extent that the benefits are exempt under the participation exemption as laid down in the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ). If the participation exemption does not apply in respect of such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares, such holder can opt for application of a roll-over facility for the capital gain if Ferrari and FE New are resident in a Member State of the European Union and certain requirements are met. If the roll-over facility is applied, the FE New common shares and, if applicable, FE New special voting shares received as Merger consideration must be reported in the balance sheet for Dutch tax purposes at the same tax book value as the divested shares in Ferrari. The roll-over facility does not apply to any cash consideration received.
Non-resident holders of Ferrari common shares and, if applicable, Ferrari special voting shares
A Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares will not be subject to any Dutch taxes on income or capital gains in respect of the exchange of such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares for FE New common shares and, if applicable, FE New special voting shares, unless:
1.
such holder derives profits from an enterprise directly, or pursuant to a co-entitlement to the net value of such enterprise, other than as a holder of securities, which enterprise either is managed in the Netherlands or carried on, in whole or in part, through a permanent establishment or a permanent representative which is taxable in the Netherlands, and such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares are attributable to such enterprise; or
2.
such holder is an individual and such holder derives benefits from Ferrari common shares and, if applicable, Ferrari special voting shares that are taxable as benefits from miscellaneous activities in the Netherlands.
If a Non-resident holder of Ferrari common shares and, if applicable, Ferrari special voting shares falls under the exception (1) or (2), the disposal of such holder’s Ferrari common shares and, if applicable, Ferrari special voting shares in exchange for FE New common shares and, if applicable, FE New special voting shares will result in recognition of a capital gain or a capital loss. In these two cases and provided that the FE New common shares and, if applicable, Newco special voting shares received as Merger consideration are attributable to such enterprise or such miscellaneous activities in the Netherlands, such holder can opt for application of a roll-over facility for the capital gain if Ferrari and FE New are resident in a Member State of the European Union and certain requirements are met. If the roll-over facility is applied, the FE New common shares and, if applicable, FE New special voting shares received as Merger consideration must be reported in the balance sheet for Dutch tax purposes at the same tax book value as the divested shares in Ferrari. The roll-over facility does not apply to any cash consideration received.
See above for a description of the circumstances under which the benefits derived from Ferrari common shares and, if applicable, Ferrari special voting shares may be taxable as benefits from miscellaneous activities, on the understanding that such benefits will be taxable in the Netherlands only if such activities are performed or deemed to be performed in the Netherlands.
Attribution rule
Benefits derived or deemed to be derived from certain miscellaneous activities by a child or a foster child who is under eighteen years of age are attributed to the parent who exercises, or the parents who exercise, authority over the child, irrespective of the country of residence of the child.
Value added tax in connection with the implementation of the Merger
No Dutch value added tax will arise in respect of any payment in consideration for the exchange of Ferrari common shares and, if applicable, Ferrari special voting shares for FE New common shares and, if applicable, FE New special voting shares.
Registration taxes and duties in connection with the implementation of the Merger

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No Dutch registration tax, transfer tax, stamp duty or any other similar documentary tax or duty will be payable in the Netherlands in respect of or in connection with the exchange of Ferrari common shares and, if applicable, Ferrari special voting shares for FE New common shares and, if applicable, FE New special voting shares.
Taxes on income and capital gains from the ownership and disposition of FE New common shares and, if applicable, FE New special voting shares after implementation of the Merger
General
The description set out in this section “—Taxes on income and capital gains from the ownership and disposition of FE New common shares and, if applicable, FE New special voting shares after implementation of the Merger” applies only to a holder of FE New common shares and, if applicable, FE New special voting shares, who is a “Dutch Individual holder of FE New common shares and, if applicable, FE New special voting shares,” a “Dutch Corporate holder of FE New common shares and, if applicable, FE New special voting shares” or a “Non-resident holder of FE New common shares and, if applicable, FE New special voting shares.”
Dutch Individual holders of FE New common shares and, if applicable, FE New special voting shares deriving profits or deemed to be deriving profits from an enterprise
If a Dutch Individual holder of FE New common shares and, if applicable, FE New special voting shares derives or is deemed to derive any benefits from such holder’s FE New common shares and, if applicable, FE New special voting shares, including any capital gain realized on the disposal of such FE New common shares and, if applicable, FE New special voting shares, that are attributable to an enterprise from which such holder derives profits, whether as an entrepreneur ( ondernemer ) or pursuant to a co-entitlement to the net value of an enterprise, other than as a shareholder, such benefits are generally subject to Dutch income tax at progressive rates.
Dutch Individual holders of FE New common shares and, if applicable, FE New special voting shares deriving benefits from miscellaneous activities
If a Dutch Individual holder of FE New common shares and, if applicable, FE New special voting shares derives or is deemed to derive (as outlined below) any benefits from such holder’s FE New common shares and, if applicable, FE New special voting shares, including any gain realized on the disposal of such FE New common shares and, if applicable, FE New special voting shares, that constitute benefits from miscellaneous activities (as outlined below) ( resultaat uit overige werkzaamheden ), such benefits are generally subject to Dutch income tax at progressive rates.
A Dutch Individual holder may, inter alia , derive, or be deemed to derive, benefits from FE New common shares and, if applicable, FE New special voting shares that are taxable as benefits from miscellaneous activities if such holder’s investment activities go beyond the activities of an active portfolio investor, for instance in the case of use of insider knowledge or comparable forms of special knowledge.
Other Dutch Individual holders of FE New common shares and, if applicable, FE New special voting shares
If a Dutch Individual holder’s situation has not been discussed before in this section “—Taxes on income and capital gains from the ownership and disposition of FE New common shares and, if applicable, FE New special voting shares after implementation of the Merger” benefits from such holder’s FE New common shares and, if applicable, FE New special voting shares will be taxed annually as a benefit from savings and investments ( voordeel uit sparen en beleggen ). Such benefit is deemed to be four percent per annum of the holder’s “yield basis” ( rendementsgrondslag ), generally to be determined at the beginning of the relevant year, to the extent that such yield basis exceeds the “exempt net asset amount” ( heffingvrij vermogen ) for the relevant year. The benefit is taxed at the rate of 30 percent. The value of a holder’s FE New common shares and, if applicable, FE New special voting shares forms part of the holder’s yield basis. Under this rule, actual benefits derived from such holder’s FE New common shares and, if applicable, FE New special voting shares, including any gain realised on the disposal of such FE New common shares and, if applicable, FE New special voting shares, are not as such subject to Dutch income tax.

Attribution rule

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Benefits derived or deemed to be derived from certain miscellaneous activities by, and yield basis for benefits from savings and investments of, a child or a foster child who is under eighteen years of age are attributed to the parent who exercises, or to the parents who exercise, authority over the child, irrespective of the country of residence of the child.
Dutch Corporate holders of FE New common shares and, if applicable, FE New special voting shares
If a holder of FE New common shares and, if applicable, FE New special voting shares is a Dutch Corporate holder, any benefits derived or deemed to be derived by such holder from such holder’s FE New common shares and, if applicable, FE New special voting shares, including any gain realised on the disposal thereof, are generally subject to Dutch corporation tax, except to the extent that the benefits are exempt under the participation exemption as laid down in the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ).
Non-resident holders of FE New common shares and, if applicable, FE New special voting shares
A Non-resident holder of FE New common shares and, if applicable, FE New special voting shares will not be subject to any Dutch taxes on income or capital gains (other than the Dutch dividend withholding tax described below) in respect of any benefits derived or deemed to be derived by such holder from such holder’s FE New common shares and, if applicable, FE New special voting shares, including any capital gain realised on the disposal thereof, unless:
1.
such holder derives profits from an enterprise directly, or pursuant to a co-entitlement to the net value of such enterprise, other than as a holder of securities, which enterprise either is managed in the Netherlands or carried on, in whole or in part, through a permanent establishment or a permanent representative which is taxable in the Netherlands, and such holder’s FE New common shares and, if applicable, FE New special voting shares are attributable to such enterprise; or
2.
such holder is an individual and such holder derives benefits from FE New common shares and, if applicable, FE New special voting shares that are taxable as benefits from miscellaneous activities in the Netherlands.
See above for a description of the circumstances under which the benefits derived from FE New common shares and, if applicable, FE New special voting shares may be taxable as benefits from miscellaneous activities, on the understanding that such benefits will be taxable in the Netherlands only if such activities are performed or deemed to be performed in the Netherlands.
Attribution rule
Benefits derived or deemed to be derived from certain miscellaneous activities by a child or a foster child who is under eighteen years of age are attributed to the parent who exercises, or the parents who exercise, authority over the child, irrespective of the country of residence of the child.
Dividend withholding tax after implementation of the Merger
General
FE New is generally required to withhold Dutch dividend withholding tax at a rate of 15 percent from dividends distributed by it.
As an exception to this rule, FE New may not be required to withhold Dutch dividend withholding tax if it is considered to be a tax resident of both the Netherlands and Italy, in accordance with the domestic tax residency provisions applied by each of these jurisdictions, while the double tax treaty between the Netherlands and Italy attributes the tax residency exclusively to Italy. This exception does not apply to dividends distributed by FE New to a holder who is resident or deemed to be resident in the Netherlands for Dutch income tax purposes or Dutch corporation tax purposes.
Dutch Individual holders of FE New common shares and, if applicable, FE New special voting shares and Dutch Corporate holders of FE New common shares and, if applicable, FE New special voting shares
If a holder is a Dutch Individual holder of FE New common shares and, if applicable, FE New special voting shares or a Dutch Corporate holder of FE New common shares and, if applicable, FE New special voting shares, such holder can

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generally credit Dutch dividend withholding tax against its Dutch income tax or Dutch corporation tax liability, as applicable, and such holder is generally entitled to a refund in the form of a negative assessment of Dutch income tax or Dutch corporation tax, as applicable, to the extent such Dutch dividend withholding tax, together with any other creditable domestic and/or foreign taxes, exceeds such holder’s aggregate Dutch income tax or aggregate Dutch corporation tax liability.
Pursuant to domestic rules to avoid dividend stripping, Dutch dividend withholding tax will only be credited against Dutch income tax or Dutch corporation tax, as applicable, exempted, reduced or refunded if a holder is the beneficial owner ( uiteindelijk gerechtigde ) of dividends distributed by of FE New.
See “—Dividend withholding tax in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares—General” for a description of the concept “dividends distributed.”
See the section “—Dividend withholding tax in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares—Dutch Individual holders of Ferrari common shares and, if applicable, Ferrari special voting shares and Dutch Corporate holders of Ferrari common shares and, if applicable, Ferrari special voting shares” for a description of the term beneficial owner.
Non-resident holders of FE New common shares and, if applicable, FE New special voting shares
Relief—general
If a Non-resident holder of FE New common shares and, if applicable, FE New special voting shares is resident in the non-European part of the Kingdom of the Netherlands or in a country that has concluded a double tax treaty with the Netherlands, such holder may be eligible for a full or partial relief from the Dutch dividend withholding tax, provided such relief is timely and duly claimed. Pursuant to domestic rules to avoid dividend stripping, Dutch dividend withholding tax relief will only be available to a holder if such holder is the beneficial owner of dividends distributed by FE New.
In addition, a Non-resident holder of FE New common shares and, if applicable, Ferrari special voting shares that is not an individual is entitled to an exemption from Dutch dividend FE New tax, provided that the following tests are satisfied:
1.
such holder is, according to the tax law in a Member State of the European Union or a state designated by ministerial decree, that is a party to the Agreement regarding the European Economic Area, resident there and such holder is not transparent for tax purposes according to the tax law of such state;
2.
any one or more of the following threshold conditions are satisfied:
a.
at the time the dividend is distributed by FE New, such holder holds shares representing at least five percent of FE New’s nominal paid-up capital; or
b.
such holder has held shares representing at least five percent of FE New’s nominal paid up capital for a continuous period of more than one year at any time during the four years preceding the time the dividend is distributed by FE New; or
c.
such holder is connected with FE New within the meaning of article 10a, paragraph 4, of the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ); or
d.
an entity connected with such holder within the meaning of article 10a, paragraph 4, of the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ) holds at the time the dividend is distributed by FE New, shares representing at least five percent of FE New’s nominal paid-up capital;
3.
such holder is not considered to be resident outside the Member States of the European Union or the states designated by ministerial decree, that are a party to the Agreement regarding the European Economic Area, under the terms of a double tax treaty concluded with a third State; and
4.
such holder does not perform a similar function to an investment institution ( beleggingsinstelling ) as meant by article 6a or article 28 of the Dutch Corporation Tax Act 1969 ( Wet op de vennootschapsbelasting 1969 ).

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The exemption from Dutch dividend withholding tax is not available if a holder is a Non-resident holder of FE New common shares and, if applicable, FE New special voting shares and pursuant to a provision for the prevention of fraud or abuse included in a double tax treaty between the Netherlands and such holder’s country of residence, such holder would not be entitled to the reduction of tax on dividends provided for by such treaty. Furthermore, the exemption from Dutch dividend withholding tax will only be available to a holder if such holder is the beneficial owner of dividends distributed by FE New. If a holder is a Non-resident holder of FE New common shares and, if applicable, FE New special voting shares and such holder is resident in a Member State of the European Union with which the Netherlands has concluded a double tax treaty that provides for a reduction of tax on dividends based on the ownership of the number of voting rights, the test under (2)(a) above is also satisfied if such holder owns five percent of the voting rights in FE New.
Relief—U.S. holders of FE New common shares and, if applicable, FE New special voting shares
If FE New is considered to be a tax resident of both the Netherlands and Italy, in accordance with the domestic tax residency provisions applied by each of these jurisdictions, while the double tax treaty between the Netherlands and Italy attributes the tax residency exclusively to Italy, FE New may not be required to withhold Dutch dividend withholding tax on dividends distributed to U.S. holders of FE New common shares and, if applicable, FE New special voting shares.
If the double tax treaty between the Netherlands and Italy attributes the tax residency exclusively to the Netherlands, certain U.S. holders of FE New common shares and, if applicable, FE New special voting shares may qualify for full or partial relief of the Dutch dividend withholding tax under the convention between the Kingdom of the Netherlands and the U.S. for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, done in Washington, D.C. on December 18, 1992, as amended from time to time (the “Netherlands-U.S. Treaty”). On the basis of article 10 of the Netherlands-U.S. treaty, qualifying U.S. companies are under certain conditions entitled to a partial exemption from Dutch dividend withholding tax. On the basis of article 35 of the Netherlands-U.S. Treaty, qualifying U.S. pension trusts are under certain conditions entitled to a full exemption from Dutch dividend withholding tax. On the basis of article 36 of the Netherlands-U.S. Treaty, qualifying exempt U.S. organizations are under certain conditions entitled to a full exemption from Dutch dividend withholding tax.
Credit
If a Non-resident holder of FE New common shares and, if applicable, FE New special voting shares is subject to Dutch income tax or Dutch corporation tax in respect of any benefits derived or deemed to be derived from such holder’s FE New common shares and, if applicable, FE New special voting shares, including any capital gain realized on the disposal thereof, such holder can generally credit Dutch dividend withholding tax against Dutch income tax or Dutch corporation tax liability, as applicable, and such holder is generally entitled to a refund pursuant to a negative tax assessment if and to the extent the Dutch dividend withholding tax, together with any other creditable domestic and/or foreign taxes, exceeds such holder’s aggregate Dutch income tax or aggregate Dutch corporation tax liability, respectively.
See the section “—Dividend withholding tax in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares—Dutch Individual holders of Ferrari common shares and, if applicable, Ferrari special voting shares and Dutch Corporate holders of Ferrari common shares and, if applicable, Ferrari special voting shares” for a description of the term beneficial owner.
See the section “—Dividend withholding tax in connection with the offering of Ferrari common shares and, if applicable, Ferrari special voting shares—General” for a description of the concept “dividends distributed.”
See the section “—Taxes on income and capital gains from the ownership and disposition of FE New common shares and, if applicable, FE New special voting shares after implementation of the Merger—Non-resident holders of FE New common shares and, if applicable, FE New special voting shares” for a description of the circumstances in which a Non-resident holder of FE New common shares and, if applicable, FE New special voting shares is subject to Dutch income tax or Dutch corporation tax.
Gift and inheritance taxes after implementation of the Merger
If a holder of FE New common shares and, if applicable, FE New special voting shares disposes of FE New common shares and, if applicable, FE New special voting shares by way of gift, in form or in substance, or if a holder of FE New common

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shares and, if applicable, FE New special voting shares who is an individual dies, no Dutch gift tax or Dutch inheritance tax, as applicable, will be due, unless:
i.
the donor is, or the deceased was, resident or deemed to be resident in the Netherlands for purposes of Dutch gift tax or Dutch inheritance tax, as applicable; or
ii.
the donor made a gift of FE New common shares and, if applicable, FE New special voting shares, then became a resident or deemed resident of the Netherlands, and died as a resident or deemed resident of the Netherlands within 180 days of the date of the gift.
For purposes of the above, a gift of FE New common shares and, if applicable, FE New special voting shares made under a condition precedent is deemed to be made at the time the condition precedent is satisfied.
For example, and without being exhaustive, an individual who has the Dutch nationality is deemed to be resident in the Netherlands at the time of his death or the making of the gift, if he resided in the Netherlands at any time during a period of ten years preceding the time of his death or the time of the gift. In addition, as a further example, and without being exhaustive, any individual who has been resident in the Netherlands and who has made a gift within a period of one year after he has taken up his residence outside the Netherlands, is deemed to be resident in the Netherlands at the time of the gift.
Value added tax after implementation of the Merger
No Dutch value added tax will arise in respect of any payment in consideration for the acquisition, ownership and/or disposal of FE New common shares and, if applicable, FE New special voting shares.
Registration taxes and duties after implementation of the Merger
No Dutch registration tax, transfer tax, stamp duty or any other similar documentary tax or duty, other than court fees, is payable in the Netherlands by a holder in respect of or in connection with (i) the subscription, issue, placement or allotment of FE New common shares and, if applicable, FE New special voting shares, (ii) the enforcement by way of legal proceedings (including the enforcement of any foreign judgment in the courts of the Netherlands) of the documents relating to the subscription, issue, placement or allotment of FE New common shares and, if applicable, FE New special voting shares or the performance by FE New of FE New’s obligations under such documents, or (iii) the transfer of FE New common shares and, if applicable, FE New special voting shares.
Material Italian Income Tax Consequences
This section describes solely the material Italian tax consequences of acquiring, holding, and disposing of Ferrari common shares and, if applicable, Ferrari special voting shares. It does not consider every aspect of Italian taxation that may be relevant to a particular holder of Ferrari common shares and, if applicable, Ferrari special voting shares in special circumstances or who is subject to special treatment under applicable law, and it is not intended to be applicable in all respects to all classes of investors.
This section also briefly describes the material Italian income tax consequences of the statutory forward merger of Ferrari with and into FE New, with this latter as surviving company, which will then be renamed Ferrari N.V. (see “The Restructuring and Separation Transactions”) to holders of our common shares and special voting shares who have acquired such shares in this offering.
Shareholders and any potential prospective investors should consult their own tax advisors regarding the Italian tax consequences of acquiring, holding, and disposing of Ferrari common shares and, if applicable, Ferrari special voting shares in their particular circumstances and should investigate the nature and the origin of the amounts received as distributions in connection with the Ferrari common shares (dividends or reserves).
Where in this section English terms and expressions are used to refer to Italian concepts, the meaning to be given to these terms and expressions shall be the meaning to be given to the equivalent Italian concepts under Italian tax law. This summary assumes that Ferrari common shares will be listed on a regulated market. This summary also assumes that Ferrari is organized, and that the business will be conducted, in the manner outlined in this prospectus. A change to the organizational

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structure or to the manner in which Ferrari conducts its business may invalidate the contents of this section, which will not be updated to reflect any such change.
This summary is based on the tax laws of the Republic of Italy and case law / practice (unpublished case law / practice is not included) as it stands at the date of this prospectus. The law upon which this description is based is subject to change, potentially with retroactive effect. Any such change may invalidate the contents of this description, which will not be updated to reflect this change.
Definitions
In this section, the following terms have the meaning defined below:
“CITA”: Presidential Decree No. 917 of December 22, 1986 (the Consolidated Income Tax Act);
“Italian White List”: the list of countries and territories allowing a satisfactory exchange of information with Italy (i) currently included in the Italian Ministerial Decree of September 4, 1996, as subsequently amended and supplemented or (ii) once effective in any other decree or regulation that will be issued in the future to provide the list of such countries and territories (and that will replace Ministerial Decree of September 4, 1996), including any country or territory that will be deemed listed therein for the purpose of any interim rule;
“Non-Qualified Holdings”: holdings of common shares in Ferrari, including rights or securities through which Ferrari common shares may be acquired, other than Qualified Holdings;
“Qualified Holdings”: holdings of common shares in Ferrari, including rights or securities through which Ferrari common shares may be acquired, that represent, in case of shares listed on regulated markets, either (i) more than two percent of the overall voting rights exercisable at ordinary shareholders’ meetings or (ii) an interest in Ferrari’s issued and outstanding capital in excess of five percent; and
“Transfer of Qualified Holdings”: transfers of common shares in Ferrari, including rights or securities through which Ferrari common shares may be acquired, that exceed, over a period of 12 (twelve) months, the threshold for qualifying as Qualified Holdings. The twelve-month period starts from the date when the shares, securities and the rights owned represent a percentage of voting rights or interest in Ferrari’s capital that exceeds the aforesaid thresholds. In case of rights or securities through which Ferrari common shares may be acquired, the percentage of voting rights or interest in Ferrari’s capital potentially attributable to the holding of such rights and securities is taken into account.
Taxation of Dividends
The tax regime summarized in this subsection “Taxation of Dividends” applies only to classes of holders of Ferrari common shares and, if applicable, Ferrari special voting shares that are described here below.
Dividends paid by Ferrari are subject to the tax regime generally applicable to dividends paid by companies that are resident for tax purposes in the Republic of Italy.
The tax regime may vary as follows.
(A)
I TALIAN R ESIDENT P ERSONS
(i)
Individuals not engaged in business activity
Under Decree No. 600 of September 29, 1973 (“Decree 600”), dividends paid to Italian resident individuals who hold the Ferrari common shares neither in connection with a business activity nor in the context of the discretionary investment portfolio regime ( risparmio gestito ) as defined in subparagraph (A)(ii) below are subject to 26 percent withholding tax in Italy if the common shares in Ferrari held by such individuals represent Non-Qualified Holdings. In this case, the holders are not required to report the dividends in their income tax returns.

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Dividends paid to Italian resident individuals who do not hold the Ferrari common shares in connection with a business activity are not subject to any tax withheld at source in Italy if the Ferrari common shares held by such individuals represent Qualified Holdings, provided that, in this case, the holders declare at the time of receipt that the dividends relate to Qualified Holdings. In this case, dividends must be reported in the income tax return, but only 49.72 percent of such dividends are included in the holder’s overall income taxable in Italy.
(ii)
Individuals not engaged in business activity and holding the Ferrari common shares under the “risparmio gestito” regime
Dividends paid to Italian resident individuals who do not hold the Ferrari common shares in connection with a business activity are not subject to any tax withheld at source in Italy if (a) the common shares in Ferrari held by such individuals represent Non-Qualified Holdings, (b) the holder has entrusted the management of the shares to an authorized intermediary under a discretionary asset management contract, and (c) the holder has elected into the discretionary investment portfolio regime ( risparmio gestito ) under Article 7 of Legislative Decree No. 461 of November 21, 1997 (“Decree 461”). In this case, the dividends are included in the annual accrued management result ( risultato maturato annuo di gestione ), which is subjected to 26 percent substitute tax.
(iii)
Sole Proprietors
Dividends paid to Italian resident individuals who hold the Ferrari common shares in connection with a business activity (“Sole Proprietors”) are not subject to any tax withheld at source in Italy, provided that, in this case, the holders declare at the time of receipt that the profits collected are from holdings connected with their business activity. In this case, dividends must be reported in the income tax return, but only 49.72 percent of such dividends are included in the holder’s overall business income taxable in Italy.
(iv)
Partnerships (Italian “società in nome collettivo,” “società in accomandita semplice,” “società semplici and similar Italian partnerships as referred to in Article 5 CITA), as well as companies and other business entities referred to in Article 73(1)(a)-(b) CITA
No Italian tax is withheld at source on dividends paid to Italian partnerships (such as Italian “ società in nome collettivo ,” “ società in accomandita semplice,” “società semplici ” and similar partnerships as referred to in Article 5 CITA). Only 49.72 percent of such dividends are included in the overall income to be reported by the partnership.
No Italian tax is withheld at source on dividends paid to Italian resident companies and other Italian resident business entities as referred to in Article 73(1)(a)-(b) CITA, including, among others, corporations ( società per azioni ), partnerships limited by shares ( società in accomandita per azioni ), limited liability companies ( società a responsabilità limitata ) and public and private entities whose sole or primary purpose is to carry out business activities. Only five percent of the dividends are included in the overall business income subject to corporate income tax (“IRES”), unless the common shares in Ferrari are booked as shares held for trading by holders that apply IAS / IFRS international accounting standards under Regulation No. 1606/2002 of the European Parliament and Council of July 19, 2002. In this latter case, the full amount of the dividends is included in the holder’s overall business income subject to IRES.
For some types of companies and under certain conditions, dividends are also included in the net value of production, which is subject to the regional tax on productive activities (“IRAP”).
(v)
Non-business entities referred to in Article 73(1)(c) CITA
No Italian tax is withheld at source on dividends paid to Italian resident non-business entities referred to in Article 73(1)(c) CITA (including Italian resident trusts that do not carry out a business activity), except for Italian collective investment vehicles (“OICR”). Only 77.74 percent of the dividends are included in the holder’s overall income subject to IRES.
(vi)
Persons exempt from IRES and persons outside the scope of IRES
Dividends paid to Italian resident persons that are exempt from IRES are generally subject to 26 percent withholding tax.

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No Italian tax is instead withheld at source on dividends paid to persons that are outside the scope of IRES ( esclusi ) under Article 74(1) CITA.
(vii)
Pension funds and OICR (other than Real Estate AIF)
No Italian tax is withheld at source on dividends paid to (a) Italian pension funds governed by Legislative Decree No. 252 of December 5, 2005 (“Decree 252”) and (b) Italian OICR, other than real estate investment funds and Italian real estate SICAFs (real estate alternative investment funds, “Real Estate AIF”).
Dividends received by Italian pension funds are taken into account to compute the pension fund’s net annual accrued yield, which is subject to a 20 percent flat tax ( imposta sostitutiva ). A nine percent tax credit may be granted to the pension fund on income from its medium-and long-term financial investments (as identified by the decree of the Minister of Finance dated June 19, 2015 published on the Italian Gazzetta Ufficiale on July 30, 2015).
Dividends received by OICR that are set up in, and organized under the laws of, Italy and that are subject to regulatory supervision (other than Real Estate AIF) are not subject to taxation at the level of the OICR.
(viii)
Real Estate AIF
No Italian tax is withheld at source on dividends paid to Italian Real Estate AIF. Moreover, dividends are not subject to either IRES or IRAP at the level of the Real Estate AIF. However, income realized by Italian Real Estate AIF is attributed pro rata to Italian resident unitholders / shareholders, irrespective of any actual distribution, on a tax transparency basis if the Italian resident unitholders / shareholders are not institutional investors and hold units / shares in the Real Estate AIF representing more than five percent of the Real Estate AIF’s net asset value.
(B)
N ON -I TALIAN R ESIDENT P ERSONS
(i)
Non-resident persons holding the common shares in Ferrari through a permanent establishment in Italy
No Italian tax is withheld at source on dividends paid to non-resident persons that hold the common shares in Ferrari through a permanent establishment in Italy to which the common shares in Ferrari are effectively connected. Only five percent of the dividends are included in the overall income subject to IRES, unless the common shares in Ferrari are booked as shares held for trading by holders that apply IAS / IFRS international accounting standards under Regulation No. 1606/2002 of the European Parliament and the Council of July 19, 2002. In this latter case, the full amount of the dividends is included in the overall business income subject to IRES.
For some types of businesses and under certain conditions, dividends are also included in the net value of production, which is subject to IRAP.
If dividends are paid with respect to common shares in Ferrari that are not connected with a permanent establishment in Italy of a non-resident person, please see subparagraph (B)(ii) below.
(ii)
Non-resident persons that do not hold the common shares in Ferrari through a permanent establishment in Italy
A 26 percent withholding tax generally applies on dividends paid to non-resident persons that do not have a permanent establishment in Italy to which the common shares in Ferrari are effectively connected.
Subject to a specific application that must be submitted to the Italian tax authorities under the terms and conditions provided by law, non-resident holders are entitled to relief (in the form of a refund), which cannot be greater than 11/26 (eleven twenty-sixths) of the tax levied in Italy, if they can demonstrate that they have paid final tax abroad on the same profits. Holders who may be eligible for the relief should consult with their own independent tax advisors to determine whether they are eligible for, and how to obtain, the tax refund.
As an alternative to the relief described above, persons resident in countries that have a double tax treaty in force with Italy may request that the withholding tax on dividends be levied at the (reduced) rate provided under the applicable tax treaty.

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The domestic withholding tax rate on dividends is 1.375 percent (and not 26 percent) if the recipients and beneficial owners of the dividends on Ferrari common shares are companies or entities that are (a) resident for tax purposes in an EU Member State or in a State that is party to the European Economic Area Agreement (“EEA Member State”) and is included in the Italian White List and (b) subject to corporate income tax in such State. These companies and entities are not entitled to the relief described above.
The domestic withholding tax rate on dividends is 11 percent (and not 26 percent) if the recipients and beneficial owners of the dividends on Ferrari common shares are pension funds that are set up in an EU Member States or an EEA Member State included in the Italian White List. These pension funds are not entitled to the relief described above.
Under Article 27- bis of Decree 600, which implemented in Italy Directive 435/90/EEC of July 23, 1990, then recast in EU Directive 2011/96 of November 30, 2011 (the “Parent Subsidiary Directive”), a company is entitled to a full refund of the withholding tax levied on the dividends if it (a) has one of the legal forms provided for in the appendix to the Parent Subsidiary Directive, (b) is resident for tax purposes in an EU Member State without being considered to be resident outside the EU according to a double tax treaty signed with a non-EU country, (c) is subject in the country of residence to one of the taxes indicated in the appendix to the Parent Subsidiary Directive with no possibility of benefiting from optional or exemption regimes that have no territorial or time limitations, and (d) directly holds common shares in Ferrari that represent an interest in the issued and outstanding capital of Ferrari of no less than 10 percent for an uninterrupted period of at least one year. If these conditions are met, and as an alternative to submitting a refund request after the dividend distribution, the non-resident company may request that no tax be levied at the time the dividends are paid, provided that (x) the 1-year holding period under condition (d) above has already run and (y) the non-resident company promptly submits proper documentation. EU resident companies that are controlled directly or indirectly by persons that are not resident in a EU Member State may request the refund or the direct withholding exemption only if the EU resident companies prove that they do not hold the common shares in Ferrari for the sole or primary purpose of benefiting from the Parent Subsidiary Directive.
Under the Agreement between the European Community and the Swiss Confederation providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments, the withholding tax refund / exemption regime described above also applies to dividends paid to a company that (a) is resident for tax purposes in Switzerland without being considered to be resident outside Switzerland according to a double tax treaty signed with a non-EU country, (b) is a limited company, (c) is subject to Swiss corporate tax without being exempted or benefiting from preferential tax regimes, and (d) directly holds common shares in Ferrari that represent an interest in Ferrari’s issued and outstanding capital of no less than 25 percent for an uninterrupted period of at least two years.
Dividends distributed to international entities or bodies that benefit from exemption from taxation in Italy pursuant to international rules or treaties entered into force in Italy will not be subject to withholding tax.
(iii)
U.S. holders (without permanent establishment in Italy) of Ferrari common shares and, if applicable, Ferrari special voting shares
If Ferrari is considered to be a tax resident of both Italy and the Netherlands, in accordance with the domestic tax residency provisions applied by each of these jurisdictions, while the double tax treaty between Italy and the Netherlands attributes the tax residency exclusively to Italy, Ferrari will be required to apply Italian dividend withholding tax on dividends distributed to U.S. holders of Ferrari common shares and, if applicable, Ferrari special voting shares. However, certain U.S. holders of Ferrari common shares and, if applicable, Ferrari special voting shares may qualify for full or partial relief from the Italian dividend withholding tax under the Convention between the Government of the United States of America and the Government of the Italian Republic for the avoidance of double taxation with respect to taxes on income and the prevention of fraud or fiscal evasion signed in Washington, D.C. on August 25, 1999 (the “Italy-U.S. Treaty”). On the basis of Article 10 of the Italy-U.S. Treaty, (a) qualifying U.S. holders are entitled to a reduced Italian dividend withholding tax rate (i.e., 15 percent); (b) qualifying U.S. companies are entitled, under certain conditions, to a reduced Italian dividend withholding tax rate (5 percent) and (c) certain qualified U.S. governmental entities are entitled, under certain conditions, to a full exemption from Italian dividend withholding tax.
Taxation of distributions of Equity Reserves
The tax regime summarized in this subsection “Taxation of distributions of Equity Reserves” applies only to classes of holders of Ferrari common shares and, if applicable, Ferrari special voting shares that are described here below.

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The information provided in this subsection summarizes the Italian tax regime applicable to the distributions by Ferrari - other than in case of reduction of excess capital, withdrawal, exclusion, redemption or liquidation - of equity reserves as referred to under Article 47(5) CITA, such as, for instance, reserves or other funds formed with share premiums, equalizing interests ( interessi di conguaglio ) paid in by the subscribers, equity (other than share capital) contributions ( versamenti a fondo perduto ) or share capital account payments ( versamenti in conto capitale ) made by shareholders and tax-exempt revaluation reserves (the ‘‘Equity Reserves’’).
(A)
I TALIAN R ESIDENT P ERSONS
(i)
Individuals not engaged in business activity
Regardless of what holders have resolved upon in the shareholders’ meeting, the amounts received as distribution out of Equity Reserves of Ferrari by Italian resident individuals who do not hold the Ferrari common shares in connection with a business activity are deemed to be, and treated as, profits for the recipients to the extent that Ferrari has current year profits and retained profits (except for any portion thereof earmarked to a tax-deferred reserve or non-distributable reserves). Amounts treated as profits are subject to the same tax regime described above for dividends. Amounts received as distributions out of Equity Reserves, net of any amount already treated as profits as per the above, reduce the holder’s tax basis in Ferrari common shares correspondingly. Distributions out of Equity Reserves that are in excess of the holders’ tax basis in the Ferrari common shares are treated as dividends for tax purposes. Special rules may apply if the individual holders have elected with regard to the common shares in Ferrari into the discretionary investment portfolio regime ( regime del risparmio gestito ) described in subparagraph (A)(i) of the subsection “Taxation of capital gains” below.
(ii)
Sole Proprietors, business partnerships (Italian “società in nome collettivo,” “società in accomandita semplice” and similar Italian partnerships as referred to in Article 5 CITA), as well as companies and other business entities referred to in Article 73(1)(a)-(b) CITA
Regardless of what holders have resolved upon in the shareholders’ meeting, the amounts received as distribution out of Equity Reserves of Ferrari by Italian Sole Proprietors, Italian business partnerships (Italian “ società in nome collettivo ,” “ società in accomandita semplice ” and similar Italian partnerships as referred to in Article 5 CITA), and Italian resident companies and other business entities referred to in Article 73(1)(a)-(b) CITA are deemed to be, and are treated as, profits for the recipients to the extent that Ferrari has current year profits and retained profits (except for any portion thereof earmarked to a tax-deferred reserve or non-distributable reserves). Amounts treated as profits should be subject to the same tax regime described above for dividends. Amounts received as distributions out of Equity Reserves, net of any amount already treated as profits as per the above, reduce the holder’s tax basis in the Ferrari common shares correspondingly. Distributions out of Equity Reserves that are in excess of the holders’ tax basis in the common shares in Ferrari are treated as capital gains for tax purposes and should be subject to the same regime described in the subsection “Taxation of capital gains” below.
(iii)
Non-business entities referred to in Article 73(1)(c) CITA
Amounts received by Italian resident non-business entities referred to in Article 73(1)(c) CITA as distributions out of Equity Reserves, net of any amount already treated as profits as per the rules described in subparagraph (A)(i) above, reduce the holder’s tax basis in the Ferrari common shares correspondingly. Distributions out of Equity Reserves that are in excess of the holders’ tax basis in the common shares in Ferrari are treated as dividends for tax purposes.
(iv)
Persons exempt from IRES
Amounts received by Italian resident persons exempt from IRES as distributions out of Equity Reserves, net of any amount already treated as profits as per the rules described in subparagraph (A)(i) above, reduce the holder’s tax basis in the Ferrari common shares correspondingly. Distributions out of Equity Reserves that are in excess of the holders’ tax basis in the common shares in Ferrari are treated as dividends for tax purposes.
(v)
Pension funds and OICR (other than Real Estate AIF)
Based on a systematic interpretation of the statute, amounts received by Italian pension funds governed by Article 17 of Decree 252 as distributions out of Equity Reserves should be taken into account to compute the pension fund’s net annual accrued yield, which is subject to a 20 percent flat tax ( imposta sostitutiva ). The value of the common shares in Ferrari at the end of the same tax year should also be included in the net annual accrued yield.

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Conversely, any amounts received by OICR that are set up in, and organized under the laws of, Italy and that are subject to regulatory supervision (other than Real Estate AIF) as distributions out of Equity Reserves are not subject to taxation at the level of the OICR.
(vi)
Real Estate “AIF”
Amounts received by Italian Real Estate AIF as distributions out of Equity Reserves are not subject to IRES or IRAP at the level of the Real Estate AIF. However, income realized by Italian Real Estate AIF is attributed pro rata to the unitholders / shareholders, irrespective of any actual distribution, on a tax transparency basis if the unitholders / shareholders are not institutional investors and hold units / shares in the Real Estate AIF representing more than five percent of the Real Estate AIF’s net asset value.
(B)
N ON -I TALIAN R ESIDENT P ERSONS
(i)
Non-resident persons that do not hold the common shares in Ferrari through a permanent establishment in Italy
For non-Italian resident persons (whether individuals or corporations) without a permanent establishment in Italy to which the common shares in Ferrari are effectively connected, the amounts received as distributions out of Equity Reserves are subject to the same tax regime as applicable to Italian resident individuals not engaged in business activity. Therefore, the amounts received as distributions out of Equity Reserves, net of any amount that has already been treated as profits as per the rules described in subparagraph (A)(i) above, reduce the holder’s tax basis in the Ferrari common shares correspondingly. Distributions out of Equity Reserves that are in excess of the holders’ tax basis in the common shares in Ferrari are treated as dividends for tax purposes.
(ii)
Non-resident persons holding the common shares in Ferrari through a permanent establishment in Italy
For non-Italian resident persons that hold the common shares in Ferrari through a permanent establishment in Italy to which the Ferrari common shares are effectively connected, the amounts received as distributions out of Equity Reserves are subject to the same tax regime as applicable to Italian resident companies and other business entities referred to in Article 73(1)(a)-(b) CITA as described in subparagraph (A)(ii) above. If the Equity Reserves distribution relates to common shares in Ferrari that are not connected to a permanent establishment in Italy of the non-resident recipient, reference must be made to subparagraph (B)(i) above.
Taxation of Capital Gains
The tax regime summarized in this subsection “Taxation of Capital Gains” applies only to classes of holders of Ferrari common shares and, if applicable, Ferrari special voting shares that are described here below.
(A)
I TALIAN R ESIDENT P ERSONS
(i)
Italian resident individuals not engaged in business activity
The tax regime of capital gains realized by Italian resident individuals upon transfer for consideration of the common shares in Ferrari (as well as of securities or rights whereby common shares in Ferrari may be acquired), other than capital gains realized in connection with a business activity, depends on whether the transfer is a Transfer of Qualified Holdings.
T RANSFER O F Q UALIFIED H OLDINGS . 49.72 percent of the capital gains realized upon Transfers of Qualified Holdings must be included in the individual’s overall taxable income and reported in the individual’s annual income tax return. If the Transfer of Qualified Holdings gives rise to a capital loss, 49.72 percent of such loss may be offset against 49.72 percent of any capital gain of the same nature that is realized in the following years up to the fourth, provided that this capital loss is reported in the income tax return for the year when the capital loss is realized.

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T RANSFER O F N ON -Q UALIFIED H OLDINGS . Capital gains on Non-Qualified Holdings are subject to a 26 percent substitute tax (“CGT”). The taxpayer may opt for any of the following three tax regimes:
a.
Tax return regime ( regime della dichiarazione ). Under this regime, capital gains and capital losses realized during the tax year must be reported in the income tax return. CGT is computed on capital gains net of capital losses of the same nature and must be paid by the term for paying the balance of the annual income tax. Capital losses in excess of capital gains may be carried forward and offset against capital gains realized in any of the four following tax years. Capital losses may be carried forward and offset against capital gains of the same nature realized after June 30, 2014, but up to the following amount in case of capital losses realized up to June 30, 2014: (i) 48.08 percent of the relevant capital losses realized before January 1, 2012, and (ii) 76.92 percent of the capital losses realized from January 1, 2012 to June 30, 2014. This regime is the default regime if the taxpayer does not elect into any of the two alternative regimes described in (b) and (c) below.
b.
Nondiscretionary investment portfolio regime ( risparmio amministrato ) (optional). Under this regime, CGT is applied separately on capital gains realized on each transfer of common shares in Ferrari. This regime is allowed subject to (x) the Ferrari common shares being managed or in custody with Italian banks, broker-dealers ( società di intermediazione mobiliare ) or certain authorized financial intermediaries; and (y) an express election for the nondiscretionary investment portfolio regime being made in writing in due time by the relevant holder. Under this regime, the financial intermediary is responsible for accounting for and paying (on behalf of the taxpayer) CGT in respect of capital gains realized on each transfer of the common shares in Ferrari (as well as in respect of capital gains realized at revocation of the intermediary’s mandate), net of any relevant capital losses of the same nature. Capital losses may be carried forward and offset against capital gains of the same nature realized within the same relationship of deposit in the same tax year or in the following tax years up to the fourth. Capital losses may be carried forward and offset against capital gains of the same nature realized after June 30, 2014, but up to the following amount in case of capital losses realized up to June 30, 2014: (i) 48.08 percent of the relevant capital losses realized before January 1, 2012, and (ii) 76.92 percent of the capital losses realized from January 1, 2012 to June 30, 2014. Under this regime, the holder is not required to report capital gains in the annual income tax return.
c.
Discretionary investment portfolio regime ( risparmio gestito ) (optional). This regime is allowed for holders who have entrusted the management of their financial assets, including the Ferrari common shares, to an authorized intermediary and have elected in writing into this regime. Under this regime, capital gains accrued on the Ferrari common shares are included in the computation of the annual increase in value of the managed assets accrued (even if not realized) at year end, which is subject to CGT. The managing authorized intermediary applies the tax on behalf of the taxpayer. Any decrease in value of the managed assets accrued at year end may be carried forward and offset against any increase in value of the managed assets accrued in any of the four following tax years. Decreases in value of the managed assets may be carried forward and offset against any subsequent increase in value accrued at July 1, 2014, but up to the following amount in case of decreases in value occurred up to June 30, 2014: (i) 48.08 percent of the relevant decreases in value occurred before January 1, 2012; and (ii) 76.92 percent of the decreases in value occurred from January 1, 2012 to June 30, 2014. Under this regime, the holder is not required to report capital gains in the annual income tax return.
(ii)
Sole Proprietors and business partnerships (Italian “società in nome collettivo,” “società in accomandita semplice” and similar Italian partnerships as referred to in Article 5 CITA)
Capital gains realized by Italian Sole Proprietors and Italian business partnerships (Italian “ società in nome collettivo ,” “ società in accomandita semplice ” and similar Italian partnerships as referred to in Article 5 CITA) upon transfer for consideration of the common shares in Ferrari must be fully included in the overall business income and reported in the annual income tax return. Capital losses (or other negative items of income) derived by this class of holders upon transfer for consideration of the common shares in Ferrari would be fully deductible from the holder’s income.
However, if the conditions under a and b of subparagraph (A)(iii) below are met, only 49.72 percent of the capital gains must be included in the overall business income. Capital losses realized on common shares in Ferrari that meet the conditions under a and b of subparagraph (A)(iii) below are only partially deductible (similarly to what is provided for the taxation of capital gains).

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For the purpose of determining capital gains and capital losses, the holder’s tax basis in the Ferrari common shares is reduced by any write-down that the holder has deducted in previous tax years.
(iii)
Companies and other business entities referred to in Article 73(1)(a)-(b) CITA
Capital gains realized by Italian resident companies and other business entities as referred to in Article 73(1)(a)-(b) CITA (including partnerships limited by shares and public and private entities whose sole or primary purpose is carrying out business activity) upon transfer for consideration of the common shares in Ferrari must be fully included in the overall taxable business income subject to IRES in the tax year in which the capital gains are realized or, upon election, may be spread in equal installments over a maximum of five tax years (including the tax year when the capital gain is realized). The election for the installment computation is only available if the common shares in Ferrari have been held for no less than three years and booked as fixed financial assets ( immobilizzazioni finanziarie ) in the last three financial statements.
However, under Article 87 CITA (participation exemption), capital gains realized upon transfer of common shares in Ferrari are 95 percent exempt if both the following requirements are met:
a.
The common shares in Ferrari have been uninterruptedly held as of the first day of the twelfth month prior to the transfer, treating the Ferrari common shares acquired on the most recent date as being transferred first (on a “last in first out” basis); and
b.
The common shares in Ferrari have been booked as fixed financial assets in the first financial statement closed during the holding period. In case of holders that draft their financial statements according to IAS / IFRS international accounting standards, the common shares in Ferrari are deemed as fixed financial assets if they are not accounted as “held for trading.”
The law lays down certain additional conditions for the exemption to be available. Based on the assumption that Ferrari is a holding company, that its shares will be listed on a regulated market, and that pursuant to Article 87(5) CITA its assets are predominantly composed of shareholdings in companies which satisfy the additional conditions set forth by Article 87 CITA in order to enjoy the participation exemption regime (i.e., the companies are not resident in a State with a preferential tax system and carry on a business activity), these additional conditions should be met. 
The transfer of shares booked as fixed financial assets and shares booked as inventory must be considered separately with reference to each class. If the requirements for the participation exemption are met, any capital loss realized on the common shares in Ferrari cannot be deducted.
For the purpose of determining capital gains and capital losses, the holder’s tax basis in the Ferrari common shares is reduced by any write-down that the holder has deducted in previous tax years.
Capital losses (as well as negative differences between revenues and costs) relating to shares that do not meet the participation exemption requirements are not relevant (and cannot be deducted) to the extent of the non-taxable amount of dividends (or advance dividend) received by the holder in the 36 (thirty-six) months prior to the transfer (dividend washing rule). This anti-avoidance rule applies to shares acquired in the 36-month period preceding the realization of the capital loss (or the negative difference), provided that requirements under Article 87(1)(c)-(d) CITA (i.e., the company is not resident in a State with a preferential tax system and carries on a business activity) are met. The anti-avoidance rule does not apply to holders that draft their financial statements according to IAS / IFRS international accounting standards under Regulation (EC) No. 1606/2002 of the European Parliament and the Council of July 19, 2002. When the amount of the aforesaid capital losses (and negative differences) deriving from a transaction (or a series of transactions) on shares traded on regulated markets is greater than € 50,000.00, the taxpayer must report the data and the information regarding the transaction to the Italian tax authorities.
Moreover, in case of capital losses greater than €5,000,000.00 deriving from the transfer (or a series of transfers) of shares booked as fixed financial assets, the holder must report the data and the information to the Italian tax authorities. Holders that draft their financial statements according to IAS / IFRS international accounting standards are under no such obligation.
For some types of companies and under certain conditions, capital gains on common shares in Ferrari are also included in the net value of production that is subject to IRAP.

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(iv)
Non-business entities referred to in Article 73(1)(c) CITA and non-business partnerships referred to in Article 5 CITA
Capital gains realized, outside the scope of a business activity, by Italian resident non-business entities referred to in Article 73(1)(c) CITA (other than OICR) and Italian non-business partnerships as referred to in Article 5 CITA are subject to tax under the same rules as provided for capital gains realized by Italian resident individuals who do not hold the Ferrari common shares in connection with a business activity.
(v)
Pension funds and OICR (other than Real Estate “AIF”)
Capital gains on common shares in Ferrari held by Italian pension funds governed by Decree 252 must be taken into account to compute the pension fund’s net annual accrued yield, which is subject to a 20 percent flat tax ( imposta sostitutiva ). A nine percent tax credit may be granted to the pension fund on income from its medium-and long-term financial investments (as identified by the decree of the Minister of Finance dated June 19, 2015 published on the Italian Gazzetta Ufficiale on July 30, 2015).
Capital gains on common shares in Ferrari held by OICRs that are set up in, and organized under the laws of, Italy and that are subject to regulatory supervision (other than Real Estate AIF) are not subject to tax at the level of the OICR.
(vi)
Real Estate AIF
Capital gains on common shares in Ferrari held by Italian Real Estate AIF are not subject to IRES or IRAP at the level of the Real Estate AIF.
(B)
N ON -I TALIAN R ESIDENT P ERSONS
(i)
Non-resident persons holding the common shares in Ferrari through a permanent establishment in Italy
If non-Italian resident persons hold the common shares in Ferrari through a permanent establishment in Italy to which the common shares in Ferrari are effectively connected, capital gains realized upon disposal of the common shares in Ferrari must be included in the permanent establishment’s income taxable in Italy according to the tax regime as provided for the capital gains realized by Italian resident companies and other business entities as referred to in Article 73(1)(a)-(b) CITA, which is summarized under subparagraph (A)(iii) above. If the common shares in Ferrari are not connected to a permanent establishment in Italy of the non-resident person, reference must be made to subparagraph (B)(ii) below.
(ii)
Non-resident persons that do not hold the common shares in Ferrari through a permanent establishment in Italy
a.
Non-Qualified Holdings. No tax applies in Italy on capital gains realized by non-Italian resident holders without a permanent establishment in Italy upon transfer for consideration of common shares in Ferrari that do not qualify as Transfers of Qualified Holdings, even if the Ferrari common shares are held in Italy and regardless of the provisions set forth in any applicable double tax treaty. In such case, in order to benefit from this exemption, non-Italian resident holders who hold the Ferrari common shares with an Italian authorized financial intermediary and either are subject to the nondiscretionary investment portfolio regime or have elected into the discretionary investment portfolio regime may be required to timely submit to the Italian authorized financial intermediary an affidavit whereby they state that they are not resident in Italy for tax purposes.
b.
Qualified Holdings. Capital gains realized by non-Italian resident holders without a permanent establishment in Italy upon Transfers of Qualified Holdings are included in the holder’s income taxable in Italy according to the same rules as applicable to Italian resident individuals not engaged in business activity. These capital gains must be reported in the annual income tax return and cannot be subject to the nondiscretionary investment portfolio regime or the discretionary investment portfolio regime. However, the provisions of double tax treaties entered into by Italy may apply if more favorable.



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Special voting shares
No statutory, judicial or administrative authority directly discusses how the receipt, ownership or disposal of special voting shares should be treated for Italian income tax purposes and as a result, the Italian tax consequences are uncertain. Accordingly, we urge Ferrari shareholders to consult their tax advisors as to the tax consequences of the receipt, ownership and disposal of special voting shares.
Receipt of special voting shares
A shareholder that receives special voting shares issued by Ferrari should in principle not recognize any taxable income upon the receipt of special voting shares. Under a possible interpretation, the issue of special voting shares can be treated as the issue of bonus shares free of charge to the shareholders out of existing available reserves of Ferrari. Such issue should not have any material effect on the allocation of the tax basis of a shareholder between its Ferrari common shares and its Ferrari special voting shares. Because the special voting shares are not transferable and their limited economic rights can be enjoyed only at the time of the liquidation of Ferrari, we believe and intend to take the position that the fair market value of each Special Voting Share is minimal. However, because the determination of the fair market value of the special voting shares is not governed by any guidance that directly addresses such a situation and is unclear, the Italian tax authorities could assert that the value of the special voting shares as determined by us is incorrect.
Ownership of special voting shares
Shareholders of special voting shares should not have to recognize income in respect of any amount transferred to the special voting shares dividend reserve, but not paid out as dividends, in respect of the special voting shares.
Disposition of special voting shares
The tax treatment of a Ferrari shareholder that has its special voting shares redeemed for no consideration after removing its shares from the Loyalty Register is unclear. It is possible that a shareholder should recognize a loss to the extent of the shareholder’s tax basis (if any). The deductibility of such loss depends on individual circumstances and conditions generally required by Italian law. It is also possible that a Ferrari shareholder would not be allowed to recognize a loss upon the redemption of its special voting shares and instead should increase its basis in its Ferrari common shares by an amount equal to the tax basis (if any) in its special voting shares.
Transfer tax
Contracts or other legal instruments relating to the transfer of securities (including the transfer of the Ferrari common shares) are subject to registration tax as follows: (i) notary deeds ( atti pubblici ) and private deeds with notarized signatures ( scritture private authenticate ) executed in Italy must mandatorily be registered with the Italian tax authorities and are subject to €200.00 registration tax; and (ii) private deeds ( scritture private ) are subject to €200.00 registration tax only if they are voluntary filed for registration with the Italian tax authorities or if the so-called “ caso d’uso ” or “ enunciazione ” occurs.
Financial Transaction Tax
(i)
Transfer of ownership of the Ferrari shares
Article 1(491-500) of Law No. 228 of December 24, 2012 introduced a financial transaction tax (‘‘ FTT’’ ) applicable, among others, to the transfers of the ownership of (i) shares issued by Italian resident corporations, (ii) participating financial instruments (as defined under Article 2346(6) of the Italian Civil Code) issued by Italian resident corporations, and (iii) securities representing equity investments in Italian resident corporations such as American Depositary Receipts and Global Depositary Receipts, regardless of the place of residence of the issuer of such securities and of the place where the contract has been concluded.
The residence of the issuer for the purposes of FTT is the place where the issuer has its registered office.
Since the registered office of Ferrari is not in Italy, transfers of ownership of the shares in Ferrari will not be subject to FTT.

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(ii)
High-frequency trading
Transactions carried out on the Italian financial markets are subject to a tax on high-frequency trading with regard to financial instruments referred to in subparagraph ( i ) above “ Transfer of ownership of the Ferrari shares .”
Transfer of the Ferrari Shares upon Death or by Gift
Subject to certain exceptions, Italian inheritance and gift tax is generally payable on transfers of assets and rights (including common shares and the special voting shares in Ferrari) (i) by reason of death or gift by Italian resident persons (or other transfers for no consideration and the creation of liens on such assets for a specific purpose, including the segregation of assets into a trust), even if the transferred assets are held outside Italy, and (ii) by reason of death or gift by non-Italian resident persons, but limited to transferred assets held in Italy. Shares in corporations that are resident in Italy for tax purposes (because they have their registered office or their place of effective management or their main business purpose in Italy for the greater part of the tax year) are deemed to be held in Italy.
Subject to certain exceptions, transfers of assets and rights (including the common shares and the special voting shares in Ferrari) on death or by gift are generally subject to inheritance and gift tax as follows:
At a rate of four percent in case of transfers made to the spouse or relatives in direct line, on the portion of the global net value of the transferred assets, if any, exceeding, for each beneficiary, €1,000,000.00.
At a rate of six percent in case of transfers made to relatives up to the fourth degree or relatives-in-law up to the third degree on the entire value of the transferred assets (in the case of transfers to brothers or sisters, the six percent rate is applicable only on the portion of the global net value of the transferred assets, if any, exceeding, for each beneficiary, €100,000.00).
At a rate of eight percent in any other case.
If the transfer is made in favor of persons with severe disabilities, the tax applies on the value exceeding €1,500,000.00 at the rates illustrated above, depending on the type of relationship existing between the deceased or donor and the beneficiary.
Stamp Duty
Under Article 13(2 bis -2 ter ) of Decree No. 642 of October 26, 1972 (“Stamp Duty Act”), a 0.20 percent stamp duty generally applies on communications and reports that Italian financial intermediaries periodically send to their clients in relation to the financial products that are deposited with such intermediaries. Shares are included in the definition of financial products for these purposes. Communications and reports are deemed to be sent at least once a year even if the Italian financial intermediary is under no obligation to either draft or send such communications and reports.
The stamp duty cannot exceed €14,000.00 for investors other than individuals.
Based on the wording of the law and the implementing decree issued by the Italian Ministry of Finance on May 24, 2012, the 0.20 percent stamp duty does not apply to communications and reports that the Italian financial intermediaries send to investors who do not qualify as “clients” according to the regulations issued by the Bank of Italy on June 20, 2012. Communications and reports sent to this type of investors are subject to the ordinary €2.00 stamp duty for each copy.
The taxable base of the stamp duty is the market value or - in the lack thereof - the nominal value or the redemption amount of any financial product.
Wealth Tax on Financial Products Held Abroad
Under Article 19 of Decree No. 201 of December 6, 2011, Italian resident individuals holding certain financial products outside of Italian territory (including shares) are required to pay a wealth tax at the rate of 0.20 percent. The wealth tax applies on the market value at the end of the relevant year or - in the lack thereof - on the nominal value or the redemption value of such financial products held outside of Italian territory. Taxpayers may deduct from the Italian wealth tax a tax credit equal to any wealth tax paid in the country where the financial products are held (up to the amount of the Italian wealth tax due).

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Certain Reporting Obligations for Italian Resident Holders
Under Law Decree No. 167 of June 28, 1990, individuals, non-business entities and non-business partnerships that are resident in Italy for tax purposes and, during the fiscal year, hold financial assets abroad (including possibly the common shares and the special voting shares in Ferrari) must, in certain circumstances, disclose these financial assets to the Italian tax authorities in section RW of their income tax return (or if the income tax return is not due, in a proper form that must be filed within the same term as prescribed for the annual income tax return), regardless of the value of such assets. The requirement applies also if the persons above, being not the direct holder of the financial assets, are the actual economic owners thereof for the purposes of anti-money laundering legislation.
No disclosure requirements exist for financial assets (including the common shares and the special voting shares in Ferrari) under management or administration entrusted to Italian resident intermediaries (Italian banks, broker-dealers (SIM), fiduciary companies or other professional intermediaries as indicated under Article 1 of Decree No. 167 of June 28, 1990) and for contracts concluded through their intervention, provided that the cash flows and the income derived from such assets and contracts have been subjected to Italian withholding tax or substitute tax by such intermediaries.
Tax Consequences of the Separation
The following discussion describes the material tax consequences of the Separation, which is intended to be carried out as described above under “The Restructuring and Separation Transactions”.
Tax Consequences of the Demergers
The First Demerger and Second Demerger should not be a taxable event with respect to holders of Ferrari shares.
Tax Consequences of the Merger
The merger will qualify as a tax-free (neutral) transaction under Article 172 CITA. In particular, holders of our Ferrari shares and special voting shares will not recognize any gain or loss upon, or because of, the Merger. In particular, holders of Ferrari shares will recognize no gain or loss upon the receipt of shares of FE New in exchange for their Ferrari shares. Holders of Ferrari shares (excluding FE New) will have an exchange basis in the FE New (Ferrari N.V.) shares that they receive upon the merger (i.e., the same tax basis as they had in their Ferrari shares before the merger).
Tax Consequences of holding FE New shares
It is expected that the Italian income tax consequences of holding and disposing FE New common shares or special voting shares generally would be the same as the Italian income tax consequences of holding and disposing Ferrari common shares or special voting shares described above.
Material United States Federal Income Tax Consequences
This section describes the material U.S. federal income tax consequences of owning Ferrari common shares and special voting shares. It applies solely to persons that hold common shares or special voting shares of Ferrari as capital assets. This section does not apply to holders subject to special rules, including:
a dealer in securities or foreign currencies,
a regulated investment company,
a trader in securities that elects to use a mark-to-market method of accounting for securities holdings,
a tax-exempt organization,
a bank, financial institution, or insurance company,
a person liable for the alternative minimum tax,

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a person that actually or constructively owns 10 percent or more, by vote or value, of Ferrari,
a person that holds common shares or special voting shares of Ferrari as part of a straddle or a hedging, conversion, or other risk reduction transaction for U.S. federal income tax purposes,
a person that acquired common shares or special voting shares of Ferrari pursuant to the exercise of employee stock options or otherwise as compensation, or
a person whose functional currency is not the U.S. Dollar.
This section is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, existing and proposed regulations, published rulings and court decisions, as well as on applicable tax treaties, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis.
If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in an entity treated as a partnership for U.S. federal income tax purposes holding shares should consult its tax advisors with regard to the U.S. federal income tax treatment of the ownership of Ferrari common shares.
Holders should consult their own tax advisors regarding the U.S. federal, state and local and foreign and other tax consequences of owning and disposing of Ferrari common shares in their particular circumstances.
To the extent this section consists of a statement as to matters of U.S. tax law, this section is the opinion of Sullivan & Cromwell LLP.
Tax Consequences of Owning Ferrari Stock U.S. Holders
For purposes of this discussion, a “U.S. holder” is a beneficial owner of common shares of Ferrari that is:
an individual that is a citizen or resident of the United States;
a corporation, or other entity taxable as a corporation, created or organized under the laws of the United States;
an estate whose income is subject to U.S. federal income tax regardless of its source; or
a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust or (ii) the trust has made a valid election under applicable Treasury Regulations to be treated as a U.S. person.
Taxation of Dividends
Under the U.S. federal income tax laws, and subject to the discussion of PFIC taxation below, a U.S. holder must include in its gross income the gross amount of any dividend paid by Ferrari to the extent of its current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). Dividends will be taxed as ordinary income to the extent that they are paid out of Ferrari’s current or accumulated earnings and profits. Dividends paid to a non-corporate U.S. holder by certain “qualified foreign corporations” that constitute qualified dividend income are taxable to the holder at the preferential rates applicable to long-term capital gains provided that the holder holds the shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meets other holding period requirements. For this purpose, common shares of Ferrari are treated as stock of a “qualified foreign corporation” if Ferrari is eligible for the benefits of an applicable comprehensive income tax treaty with the United States or if such stock is readily tradable on an established securities market in the United States. The common shares of Ferrari are expected to be readily tradable on the New York Stock Exchange and Ferrari is expected to be eligible for the benefits of such a treaty. Accordingly, subject to the discussion of PFIC taxation below, dividends Ferrari pays with respect to the shares are expected to constitute qualified dividend income, assuming the holding period requirements are met. However, no assurance can be given that the common shares of Ferrari will be treated as readily tradable on an established securities market in the United States or that Ferrari will qualify for the benefits of a comprehensive income tax treaty with the United States.

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A U.S. holder must include any foreign tax withheld from the dividend payment in this gross amount even though the holder does not in fact receive the amount withheld. The dividend is taxable to a U.S. holder when the U.S. holder receives the dividend, actually or constructively.
The dividend will not be eligible for the dividends-received deduction allowed to U.S. corporations in respect of dividends received from other U.S. corporations.
Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a non-taxable return of capital to the extent of the U.S. holder’s basis in Ferrari common shares, causing a reduction in the U.S. holder’s adjusted basis in Ferrari common shares, and thereafter as capital gain.
Subject to certain limitations, any non-U.S. tax withheld and paid over to a non-U.S. taxing authority is eligible for credit against a U.S. holder’s U.S. federal income tax liability except to the extent a refund of the tax withheld is available to the U.S. holder under non-U.S. tax law or under an applicable tax treaty. The amount allowed to a U.S. holder as a credit is limited to the amount of the U.S. holder’s U.S. federal income tax liability that is attributable to income from sources outside the U.S. and is computed separately with respect to different types of income that the U.S. holder receives from non-U.S. sources. Subject to the discussion below regarding Section 904(h) of the Code, dividends paid by Ferrari will be foreign source income and will, depending on the circumstances of the U.S. holder, be either “passive” or “general” income for purposes of computing the foreign tax credit allowable to a U.S. holder.
Under Section 904(h) of the Code, dividends paid by a foreign corporation that is treated as 50 percent or more owned, by vote or value, by U.S. persons may be treated as U.S. source income (rather than foreign source income) for foreign tax credit purposes, to the extent the foreign corporation earns U.S. source income, unless such corporation has less than 10 percent of applicable earnings and profits attributable to sources within the U.S. In certain circumstances, U.S. holders may be able to choose the benefits of Section 904(h)(10) of the Code and elect to treat dividends that would otherwise be U.S. source dividends as foreign source dividends, but in such a case the foreign tax credit limitations would be separately determined with respect to such “resourced” income. In general, therefore, the application of Section 904(h) of the Code may adversely affect a U.S. holder’s ability to use foreign tax credits. Ferrari does not believe that, immediately after the issuance of Ferrari common shares pursuant to the offering, it will be 50 percent or more owned by U.S. persons. In addition, Ferrari believes that its earnings and profits attributable to sources within the U.S. will not exceed 10 percent of applicable earnings and profits. However, these conclusions are factual determinations and are subject to change; no assurance can therefore be given that Ferrari may not be treated as 50 percent or more owned by U.S. persons for purposes of Section 904(h) of the Code or that less than 10 percent of Ferrari’s earnings and profits will be attributable to sources within the U.S. U.S. holders are strongly urged to consult their own tax advisors regarding the possible impact if Section 904(h) of the Code should apply.
Taxation of Capital Gains
Subject to the discussion of PFIC taxation and expected tax consequences of the Separation below, a U.S. holder that sells or otherwise disposes of its Ferrari common shares will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. Dollar value of the amount that the U.S. holder realizes and the U.S. holder’s tax basis in those shares. Capital gain of a noncorporate U.S. holder is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will be U.S. source income or loss for foreign tax credit limitation purposes. The deduction of capital losses is subject to limitations.
Loyalty Voting Program
NO STATUTORY, JUDICIAL OR ADMINISTRATIVE AUTHORITY DIRECTLY DISCUSSES HOW THE RECEIPT, OWNERSHIP OR DISPOSITION OF SPECIAL VOTING SHARES SHOULD BE TREATED FOR U.S. FEDERAL INCOME TAX PURPOSES AND AS A RESULT, THE U.S. FEDERAL INCOME TAX CONSEQUENCES ARE UNCERTAIN. ACCORDINGLY, WE URGE U.S. HOLDERS TO CONSULT THEIR TAX ADVISOR AS TO THE TAX CONSEQUENCES OF THE RECEIPT, OWNERSHIP AND DISPOSITION OF SPECIAL VOTING SHARES.
Receipt of special voting shares
If a U.S. holder receives special voting shares, the tax consequences of the receipt of special voting shares is unclear. While distributions of stock are tax-free in certain circumstances, the distribution of special voting shares would be taxable if it were considered to result in a “disproportionate distribution.” A disproportionate distribution is a distribution or series of

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distributions, including deemed distributions, that have the effect of the receipt of cash or other property by some shareholders of Ferrari and an increase in the proportionate interest of other shareholders of Ferrari in Ferrari’s assets or earnings and profits. It is possible that the distribution of special voting shares to a U.S. holder and a distribution of cash in respect of Ferrari common shares could be considered together to constitute a “disproportionate distribution.” Unless Ferrari has not paid cash dividends in the 36 months prior to a U.S. holder’s receipt of special voting shares and Ferrari does not pay cash dividends in the 36 months following a U.S. holder’s receipt of special voting shares, Ferrari intends to treat the receipt of special voting shares as a distribution that is subject to tax as described above in “—Taxation of Dividends.” The amount of the dividend should equal the fair market value of the special voting shares received. For the reasons stated above, Ferrari believes and intends to take the position that the value of each special voting share is minimal. However, because the fair market value of the special voting shares is factual and is not governed by any guidance that directly addresses such a situation, the IRS could assert that the value of the special voting shares (and thus the amount of the dividend) as determined by Ferrari is incorrect.
Ownership of special voting shares
Ferrari believes that U.S. holders holding special voting shares should not have to recognize income in respect of amounts transferred to the special voting shares dividend reserve that are not paid out as dividends. Section 305 of the Code may, in certain circumstances, require a holder of preferred shares to recognize income even if no dividends are actually received on such shares if the preferred shares are redeemable at a premium and the redemption premium results in a “constructive distribution.” Preferred shares for this purpose refer to shares that do not participate in corporate growth to any significant extent. Ferrari believes that Section 305 of the Code should not apply to any amounts transferred to the special voting shares dividend reserve that are not paid out as dividends so as to require current income inclusion by U.S. holders because, among other things, (i) the special voting shares are not redeemable on a specific date and a U.S. holder is only entitled to receive amounts in respect of the special voting shares upon liquidation, (ii) Section 305 of the Code does not require the recognition of income in respect of a redemption premium if the redemption premium does not exceed a de minimis amount and, even if the amounts transferred to the special voting shares dividend reserve that are not paid out as dividends are considered redemption premium, the amount of the redemption premium is likely to be “ de minimis ” as such term is used in the applicable Treasury Regulations. Ferrari therefore intends to take the position that the transfer of amounts to the special voting shares dividend reserve that are not paid out as dividends does not result in a “constructive distribution,” and this determination is binding on all U.S. holders of special voting shares other than a U.S. holder that explicitly discloses its contrary determination in the manner prescribed by the applicable regulations. However, because the tax treatment of the loyalty voting program is unclear and because Ferrari’s determination is not binding on the IRS, it is possible that the IRS could disagree with Ferrari’s determination and require current income inclusion in respect of such amounts transferred to the special voting shares dividend reserve that are not paid out as dividends.
Disposition of special voting shares
The tax treatment of a U.S. holder that has its special voting shares redeemed for zero consideration after removing its common shares from the Loyalty Register is unclear. It is possible that a U.S. holder would recognize a loss to the extent of the U.S. holder’s basis in its special voting shares, which should equal the amount that was included in income upon receipt. Such loss would be a capital loss and would be a long-term capital loss if a U.S. holder has held its special voting shares for more than one year. It is also possible that a U.S. holder would not be allowed to recognize a loss upon the redemption of its special voting shares and instead a U.S. holder should increase the basis in its Ferrari common shares by an amount equal to the basis in its special voting shares. Such basis increase in a U.S. holder’s Ferrari common shares would decrease the gain, or increase the loss, that a U.S. holder would recognize upon the sale or other taxable disposition of its Ferrari common shares.
THE U.S. FEDERAL INCOME TAX TREATMENT OF THE LOYALTY VOTING PROGRAM IS UNCLEAR AND U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS IN RESPECT OF THE CONSEQUENCES OF ACQUIRING, OWNING, AND DISPOSING OF SPECIAL VOTING SHARES.
PFIC Considerations
Ferrari believes that its common shares will not be stock of a PFIC for U.S. federal income tax purposes, but this conclusion is based on a factual determination made annually and thus is subject to change. As discussed in greater detail below, if Ferrari common shares were to be treated as stock of a PFIC, gain realized (subject to the discussion below regarding a mark-to-market election) on the sale or other disposition of Ferrari common shares would not be treated as capital gain, and a U.S. holder would be treated as if such U.S. holder had realized such gain and certain “excess distributions” ratably over the U.S. holder’s holding period for its Ferrari common shares and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. With certain

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exceptions, a U.S. holder’s Ferrari common shares would be treated as stock in a PFIC if Ferrari were a PFIC at any time during such U.S. holder’s holding period in the shares. Dividends received from Ferrari would not be eligible for the special tax rates applicable to qualified dividend income if Ferrari were treated as a PFIC in the taxable years in which the dividends are paid or in the preceding taxable year (regardless of whether the U.S. holder held Ferrari common shares in such year) but instead would be taxable at rates applicable to ordinary income.
Ferrari would be a PFIC with respect to a U.S. holder if for any taxable year in which the U.S. holder held Ferrari common shares, after the application of applicable “look-through rules”:
75 percent or more of Ferrari’s gross income for the taxable year consists of “passive income” (including dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business, as defined in applicable Treasury Regulations); or
at least 50 percent of its assets for the taxable year (averaged over the year and determined based upon value) produce or are held for the production of passive income.
Because the determination whether a foreign corporation is a PFIC is primarily factual and there is little administrative or judicial authority on which to rely to make a determination, the IRS might not agree that Ferrari is not a PFIC. Moreover, no assurance can be given that Ferrari would not become a PFIC for any future taxable year if there were to be changes in Ferrari’s assets, income or operations.
If Ferrari were to be treated as a PFIC for any taxable year included in whole or in part in a U.S. holder’s holding period of Ferrari and such U.S. holder is treated as owning Ferrari common shares for purposes of the PFIC rules (and regardless of whether Ferrari remains a PFIC for subsequent taxable years), the U.S. holder (i) would be liable to pay U.S. federal income tax at the highest applicable income tax rates on (a) ordinary income upon the receipt of excess distributions (the portion of any distributions received by the U.S. holder on Ferrari common shares in a taxable year in excess of 125 percent of the average annual distributions received by the U.S. holder in the three preceding taxable years or, if shorter, the U.S. holder’s holding period for the Ferrari common shares) and (b) on any gain from the disposition of Ferrari common shares, plus interest on such amounts, as if such excess distributions or gain had been recognized ratably over the U.S. holder’s holding period of the Ferrari common shares, and (ii) may be required to annually file Form 8621 with the IRS reporting information concerning Ferrari.
If Ferrari were to be treated as a PFIC for any taxable year and provided that Ferrari common shares are treated as “marketable stock” within the meaning of applicable Treasury Regulations, which Ferrari believes will be the case, a U.S. holder may make a mark-to-market election with respect to such U.S. holder’s common shares. Under a mark-to-market election, any excess of the fair market value of the Ferrari common shares at the close of any taxable year over the U.S. holder’s adjusted tax basis in the Ferrari common shares is included in the U.S. holder’s income as ordinary income. These amounts of ordinary income would not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capital gains. In addition, the excess, if any, of the U.S. holder’s adjusted tax basis at the close of any taxable year over the fair market value of the Ferrari common shares is deductible in an amount equal to the lesser of the amount of the excess or the amount of the net mark-to-market gains that the U.S. holder included in income in prior years. A U.S. holder’s tax basis in Ferrari common shares would be adjusted to reflect any such income or loss. Gain realized on the sale, exchange or other disposition of Ferrari common shares would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of Ferrari common shares would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by the U.S. holder.
The adverse consequences of owning stock in a PFIC could also be mitigated if a U.S. holder makes a valid “qualified electing fund” election (“QEF election”), which, among other things, would require a U.S. holder to include currently in income its pro rata share of the PFIC’s net capital gain and ordinary earnings, based on earnings and profits as determined for U.S. federal income tax purposes. Because of the administrative burdens involved, Ferrari does not intend to provide information to its holders that would be required to make such election effective.
A U.S. holder that holds Ferrari common shares during a period when Ferrari is a PFIC will be subject to the foregoing rules for that taxable year and all subsequent taxable years with respect to that U.S. holder’s holding of Ferrari common shares, even if Ferrari ceases to be a PFIC, subject to certain exceptions for U.S. holders that made a mark-to-market or QEF election. U.S. holders are strongly urged to consult their tax advisors regarding the PFIC rules, and the potential tax consequences to them if Ferrari were determined to be a PFIC.

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Medicare Tax on Net Investment Income
A U.S. person that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8 percent tax (the “Medicare tax”) on the lesser of (i) the U.S. person’s “net investment income” (or “undistributed net investment income” in the case of an estate or trust) for the relevant taxable year and (ii) the excess of the U.S. person’s modified adjusted gross income (or adjusted gross income, in the case of an estate or trust) for the taxable year over a certain threshold (which in the case of individuals is between U.S.$125,000 and U.S.$250,000, depending on the individual’s circumstances). A holder’s net investment income generally includes its dividend income and its net gains from the disposition of shares, unless such dividends or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). If a holder is a U.S. person that is an individual, estate or trust, the holder is urged to consult the holder’s tax advisors regarding the applicability of the Medicare tax to the holder’s income and gains in respect of the holder’s investment in Ferrari common shares.
Information with Respect to Foreign Financial Assets
Owners of “specified foreign financial assets” with an aggregate value in excess of U.S.$50,000 (and in some cases, a higher threshold) may be required to file an information report with respect to such assets with their tax returns. “Specified foreign financial assets” include any financial accounts maintained by foreign financial institutions, as well as any of the following, but only if they are held for investment and not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons, (ii) financial instruments and contracts that have non-U.S. issuers or counterparties and (iii) interests in foreign entities. U.S. holders are urged to consult their tax advisors regarding the application of this legislation to their ownership of Ferrari common shares.
Backup Withholding and Information Reporting
Information reporting requirements for a noncorporate U.S. holder, on IRS Form 1099, will apply to:
dividend payments or other taxable distributions made to such U.S. holder within the U.S., and
the payment of proceeds to such U.S. holder from the sale of Ferrari common shares effected at a U.S. office of a broker.
Additionally, backup withholding (currently at a 28 percent rate) may apply to such payments to a noncorporate U.S. holder that:
fails to provide an accurate taxpayer identification number,
is notified by the IRS that such U.S. holder has failed to report all interest and dividends required to be shown on such U.S. holder’s federal income tax returns, or
in certain circumstances, fails to comply with applicable certification requirements.
A person may obtain a refund of any amounts withheld under the backup withholding rules that exceed the person’s income tax liability by properly filing a refund claim with the IRS.
Tax Consequences of Owning Ferrari Stock Non-U.S. Holders
For the purposes of this discussion, a “non-U.S. holder” is a beneficial owner of Ferrari common shares that is not a U.S. person for U.S. federal income tax purposes.
Taxation of Dividends
Dividends paid to a non-U.S. holder in respect of Ferrari common shares will not be subject to U.S. federal income tax unless the dividends are “effectively connected” with the non-U.S. holder’s conduct of a trade or business within the U.S., and, if required by an applicable income tax treaty as a condition for subjecting the non-U.S. holder to U.S. taxation on a net income basis, the dividends are attributable to a permanent establishment that the non-U.S. holder maintains in the United States. In such cases a non-U.S. holder will be taxed in the same manner as a U.S. holder. If a non-U.S. holder is a corporate non-U.S.

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holder, “effectively connected” dividends may, under certain circumstances, be subject to an additional “branch profits tax” at a 30 percent rate or at a lower rate if it is eligible for the benefits of an income tax treaty that provides for a lower rate.
Taxation of Capital Gains
A non-U.S. holder will not be subject to U.S. federal income tax on gain recognized on the sale or other disposition of the non-U.S. holder’s Ferrari common shares unless:
the gain is “effectively connected” with the non-U.S. holder’s conduct of a trade or business in the United States, and, if required by an applicable income tax treaty as a condition for subjecting the holder to U.S. taxation on a net income basis, the gain is attributable to a permanent establishment that the non-U.S. holder maintains in the United States, or
the non-U.S. holder is an individual, is present in the United States for 183 or more days in the taxable year of the sale and certain other conditions exist.
If a non-U.S. holder is a corporate non-U.S. holder, “effectively connected” gains it recognizes may, under certain circumstances, be subject to an additional “branch profits tax” at a 30 percent rate or at a lower rate if it is eligible for the benefits of an income tax treaty that provides for a lower rate.
Backup Withholding and Information Reporting
A non-U.S. holder is exempt from backup withholding and information reporting requirements with respect to:
dividend payments made to the non-U.S. holder outside the United States, and
other dividend payments and the payment of the proceeds from the sale of Ferrari common shares effected at a U.S. office of a broker, as long as the income associated with such payments is otherwise exempt from U.S. federal income tax, and:
the payor or broker does not have actual knowledge or reason to know that the holder is a U.S. person and the non-U.S. holder has furnished the payor or broker:
an IRS Form W-8BEN or W-8BEN-E, as applicable, or an acceptable substitute form upon which the non-U.S. holder certifies, under penalties of perjury, that the holder is a non-U.S. person, or
other documentation upon which it may rely to treat the payments as made to a non-U.S. person in accordance with Treasury Regulations, or
the non-U.S. holder otherwise establishes an exemption.
Payment of the proceeds from the sale of Ferrari common shares effected at a foreign office of a broker will not be subject to information reporting or backup withholding. However, a sale of Ferrari common shares 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 a non-U.S. holder in the United States,
the payment of proceeds or the confirmation of the sale is mailed to the non-U.S. holder at a U.S. address, or
the sale has some other specified connection with the United States as provided in Treasury Regulations, unless the broker does not have actual knowledge or reason to know that the holder is a U.S. person and the documentation requirements described above are met or the holder otherwise establishes an exemption.
In addition, a sale of Ferrari common shares will be subject to information reporting, but not backup withholding, if it is effected at a foreign office of a broker that is:
a U.S. person,

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a controlled foreign corporation for U.S. federal income tax purposes,
a foreign person 50 percent or more of whose gross income is effectively connected with the conduct of a U.S. 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 Treasury Regulations, which 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 U.S. trade or business, unless the broker does not have actual knowledge or reason to know that the person is a U.S. person and the documentation requirements described above are met or the person otherwise establishes an exemption.
Tax Consequences of the Separation
    
The following discussion describes the material tax consequences of the Separation, which is intended to be carried out as described above under “The Restructuring and Separation Transactions”. No statutory, judicial or administrative authority directly discusses how a transaction such as the Separation (including the First Demerger, the Second Demerger and the Merger) should be treated for U.S. federal income tax purposes. In particular, the application of U.S. federal income tax laws to such transactions governed by non-U.S. corporate law is unclear. Accordingly, there can be no assurance that the tax consequences of the Separation will be as described below, or that the holders of common shares of FE New will not recognize gain for U.S. federal income tax purposes in connection with the First Demerger, the Second Demerger, the Merger.
Tax Consequences of the Demergers
The First Demerger and Second Demerger should not be a taxable event with respect to holders of Ferrari common shares.
Tax Consequences of the Merger
A U.S. holder of Ferrari common shares generally should have the following tax consequences upon the exchange of Ferrari common shares for FE New common shares and special voting shares pursuant to the Merger:
such U.S. holder should recognize no gain or loss upon the exchange;
such U.S. holder’s aggregate basis in its common shares of FE New should be equal to the U.S. holder’s aggregate tax basis in its common shares of Ferrari;
such U.S. holder’s holding period in its FE New common shares should include such U.S. holder’s holding period in its Ferrari common shares in exchange for which such U.S. holder received such common shares of FE New.
U.S. holders that acquired blocks of Ferrari common shares at different times or at different prices should consult their own tax advisors regarding the allocation of their aggregate adjusted tax basis among, and the determination of their holding period in, the common shares of FE New received in the exchange.
Tax Consequences of Owning FE New Stock
It is expected that the U.S. federal income tax consequences of owning FE New common shares or special voting shares generally would be the same as the U.S. federal income tax consequences of owning Ferrari common shares or special voting shares described above.

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UNDERWRITING

The selling shareholder is offering our common shares described in this prospectus through the underwriters named below. UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Allen & Company LLC, Banco Santander, S.A., BNP Paribas Securities Corp., J.P. Morgan Securities LLC and Mediobanca - Banca di Credito Finanziario S.p.A. are acting as Joint Bookrunners and UBS Securities LLC is acting as Global Coordinator for the offering. UBS Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as representatives of the underwriters. We and the selling shareholder will enter into an underwriting agreement with the representatives. Subject to the terms and conditions of the underwriting agreement, each of the underwriters will severally agree to purchase, and the selling shareholder will agree to sell to the underwriters, the number of common shares listed next to each such underwriters’ name in the following table.
Underwriters
Number of Common Shares
UBS Securities LLC
 
Merrill Lynch, Pierce, Fenner & Smith
                     Incorporated
 
Allen & Company LLC
 
Banco Santander, S.A.
 
BNP Paribas Securities Corp.
 
J.P. Morgan Securities LLC
 
Mediobanca - Banca di Credito Finanziario S.p.A.
 
Total
 

The underwriting agreement will provide that the underwriters must buy all of the common shares if they buy any of them. However, the underwriters will not be required to purchase the common shares covered by the underwriters’ option to purchase additional common shares as described below unless and until the option is exercised in accordance with its terms.
Our common shares will be offered subject to a number of conditions, including:
receipt and acceptance of our common shares by the underwriters; and

the underwriters’ right to reject orders in whole or in part.

The underwriters initially propose to offer part of the common shares directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers. After the initial offering of the common shares, the offering price and other selling terms may from time to time be varied by the representatives.
In connection with the offering, certain of the underwriters or securities dealers may distribute prospectuses electronically.
Option to Purchase Additional Common Shares
The selling shareholder will grant the underwriters an option to buy up to an aggregate of             additional common shares. The underwriters will have 30 days from the date of this prospectus to exercise this option. If the underwriters exercise this option, they will each purchase additional common shares approximately in proportion to the amounts specified in the table above.
Underwriting Discounts and Commissions
Common shares sold by the underwriters to the public will initially be offered at the initial offering price set forth on the cover of this prospectus. Any common shares sold by the underwriters to securities dealers may be sold at a discount of up to $ per common share from the initial public offering price. Sales of common shares made outside of the United States may be made by affiliates of the underwriters. If all the common shares are not sold at the initial public offering price, the representatives

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may change the offering price and the other selling terms. Upon execution of the underwriting agreement, the underwriters will be obligated to purchase the common shares at the prices and upon the terms stated therein.
The following table shows the per share and total underwriting discount the selling shareholder will pay to the underwriters assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares.

 
 
Total
 
Per common share
No exercise
Full exercise
Public offering price
 
$
$
Underwriting discounts and commissions to be paid by the selling shareholder
 
$
$
Proceeds, before expenses, to the selling shareholder
 
$
$

We estimate that the total expenses of the offering will be approximately $             and the underwriters have agreed to reimburse us and the selling shareholder, as directed by the selling shareholder, for a portion of such expenses in an amount equal to $              .
No Sales of Similar Securities
We and the selling shareholder have agreed that we will not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act (other than a Registration Statement on Form S-8 with respect to employee benefit plans described herein) relating to, any common shares or securities convertible into or exchangeable or exercisable for any common shares or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, or (ii) enter into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any common shares or any such other securities (regardless of whether any of these transactions are to be settled by the delivery of common shares or such other securities, in cash or otherwise), in each case without the prior written consent of UBS Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, for a period of 90 days after the date of this prospectus, other than the common shares to be sold hereunder, share awards granted in the ordinary course pursuant to any company share plans and any common shares issued upon the exercise of options granted under our existing plans. However, we and the Selling Shareholder are not restricted from participating in any activities carried out in furtherance of any of the transactions described in “The Restructuring and Separation Transactions.”
Our directors, certain of our executives and Piero Ferrari have entered into lock-up agreements with the underwriters prior to the commencement of this offering, pursuant to which each of these persons or entities, with limited exceptions, for a period of 90 days after the date of this prospectus, may not, without the prior written consent of UBS Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any common shares or any securities convertible into or exercisable or exchangeable for our common shares (including, without limitation, common shares or such other securities which may be deemed to be beneficially owned by such directors, executives and individuals in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a share option or warrant), or publicly disclose the intention to make any offer, sale, pledge or disposition, (2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common shares or such other securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common shares or such other securities, in cash or otherwise, or (3) make any demand for or exercise any right with respect to the registration of any common shares or any security convertible into or exercisable or exchangeable for our common shares except, in each case, for certain limited exceptions.
UBS Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated may, at any time, without public notice and in their sole discretion, release some or all the securities from these lock-up agreements; provided, that in the case of a release given to any of our officers or directors, we will be required to announce such a release in a press release at least two business days prior to the effective date of such release as long as we are notified at least three business days in advance thereof. There are no agreements between the representatives, on the one hand, and our officers or directors, on the other hand, releasing any such officer or director from these lock-up agreements prior to the expiration of the 90-day period. If the restrictions under

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the lock-up agreements are waived, our common shares may become available for resale into the market, subject to applicable law, which could reduce the market price of our common shares.
Indemnification
We and the selling shareholder have agreed to indemnify the several underwriters against certain liabilities, including certain liabilities under the Securities Act. If we or the selling shareholder are unable to provide this indemnification, we and the selling shareholder have agreed to contribute to payments the underwriters may be required to make in respect of those liabilities.
New York Stock Exchange Listing
We intend to apply to have our common shares listed on the New York Stock Exchange under the symbol “FRRI.”
Price Stabilization, Short Positions
In connection with the offering, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our common shares during and after the offering, including:
stabilizing transactions;

short sales;

purchases to cover positions created by short sales;

imposition of penalty bids; and

syndicate covering transactions.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our common shares while the offering is in progress. Stabilization transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. These transactions may also include making short sales of our common shares, which involve the sale by the underwriters of a greater number of our common shares than they are required to purchase in the offering and purchasing our common shares on the open market to cover short positions created by short sales. Short sales may be “covered short sales,” which are short positions in an amount not greater than the underwriters’ option to purchase additional common shares referred to above, or may be “naked short sales,” which are short positions in excess of that amount.
The underwriters may close out any covered short position by either exercising their option, in whole or in part, or by purchasing common shares in the open market. In making this determination, the underwriters will consider, among other things, the price of common shares available for purchase in the open market as compared to the price at which they may purchase common shares through their option to purchase additional common shares.
Naked short sales are short sales made in excess of the option to purchase additional common shares. The underwriters must close out any naked short position by purchasing common shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common shares in the open market that could adversely affect investors who purchased in this offering.
The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representative has repurchased common shares sold by or for the account of that underwriter in stabilizing or short covering transactions.
These stabilizing transactions, short sales, purchases to cover positions created by short sales, the imposition of penalty bids and syndicate covering transactions may have the effect of raising or maintaining the market price of our common shares or preventing or retarding a decline in the market price of our common shares. As a result of these activities, the price of our common shares may be higher than the price that otherwise might exist in the open market. The underwriters may carry out these transactions on the NYSE, in the over-the-counter market or otherwise. Neither we nor the underwriters make any

184



representation or prediction as to the effect that the transactions described above may have on the price of the common shares. Neither we, nor any of the underwriters make any representation that the underwriters will engage in these stabilization transactions or that any transaction, once commenced, will not be discontinued without notice.
Determination of Offering Price
Prior to the offering, there was no public market for our common shares. The initial public offering price will be determined by negotiation among the selling shareholder and the representatives of the underwriters. The principal factors to be considered in determining the initial public offering price include:
the information set forth in this prospectus and otherwise available to the representatives;

our history and prospects and the history and prospects for the industry in which we compete;

our past and present financial performance;

our prospects for future earnings and the present state of our development;

the general condition of the securities market at the time of this offering;

the recent market prices of, and demand for, publicly traded common shares of generally comparable companies;

other factors deemed relevant by the underwriters and the selling shareholder.
The estimated public offering price range set forth on the cover page of this prospectus is subject to change as a result of market conditions and other factors. Neither we nor the underwriters can assure investors that an active trading market will develop for our common shares or that the common shares will trade in the public market at or above the initial public offering price.
Affiliations
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their affiliates have provided and in the future may continue to provide to us and the selling shareholder and our respective affiliates, certain commercial banking, financial advisory, investment banking and other services in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. In addition, Banco Santander, S.A. is one of the main sponsors of the Scuderia Ferrari racing team, for which we receive sponsorship fees. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of us or the selling shareholder. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of these securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in these securities and instruments.
Electronic Distributions
A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more of the underwriters participating in the offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter, prospective investors may be allowed to place orders online. The underwriters may agree with the selling shareholder to allocate a specific number of common shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the underwriters on the same basis as other allocations. Other than the prospectus in electronic format, the information on any underwriter’s website and any information contained in any other website maintained by an underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the selling shareholder or any underwriter in its capacity as underwriter and should not be relied upon by investors.

185



Notice to Prospective Investors
Certain of the underwriters are not U.S.-registered broker-dealers and, therefore, to the extent that they intend to effect any sales of the common shares in the United States, they will do so through one or more U.S.-registered broker-dealers, which may be affiliates of such underwriters, in accordance with the applicable U.S. securities laws and regulations, and as permitted by Financial Industry Regulatory Authority regulations.
Other than in the United States, no action has been taken by us, the selling shareholder or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), an offer to the public of any common shares which are the subject of the offering contemplated by this prospectus (the “Shares”) may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
(a)
to any legal entity which is a qualified investor as defined under the Prospectus Directive;
(b)
to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives of the underwriters for any such offer; or
(c)
in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Shares shall result in a requirement for us, the selling shareholder or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer to the public” in relation to any Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase any Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. The expression “Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive means Directive 2010/73/EU.
The EEA selling restriction is in addition to any other selling restrictions set out in this prospectus.
Netherlands
The common shares which are the subject of this prospectus have not been and shall not be offered, sold, transferred or delivered in the Netherlands other than to qualified investors (within the meaning of the Prospectus Directive (2003/71/EC, as amended).
Italy
The common shares which are the subject of this prospectus have not been and shall not be offered, sold, transferred or delivered in the Republic of Italy other than to qualified investors within the meaning of the Prospectus Directive and article 100, paragraph 1 of the Italian Unified Financial Act (Legislative Decree no. 58 of February 24, 1998, as amended) implemented

186



by article 34-ter of Commissione Nazionale per le Società e la Borsa (CONSOB) Regulation no. 11971 of May 14, 1999, as amended.
United Kingdom
This prospectus is only being distributed to and is only directed at: (1) persons who are outside the United Kingdom; (2) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (3) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons falling within (1)-(3) together being referred to as “relevant persons”). The common shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such common shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this prospectus or any of its contents.
Canada

The common shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations . Any resale of the common shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Australia
This prospectus is not a formal disclosure document and has not been, nor will be, lodged with the Australian Securities and Investments Commission. It does not purport to contain all information that an investor or their professional advisers would expect to find in a prospectus or other disclosure document (as defined in the Corporations Act 2001 (Australia)) for the purposes of Part 6D.2 of the Corporations Act 2001 (Australia) or in a product disclosure statement for the purposes of Part 7.9 of the Corporations Act 2001 (Australia), in either case, in relation to the securities.
The securities are not being offered in Australia to “retail clients” as defined in sections 761G and 761GA of the Corporations Act 2001 (Australia). The offering is being made in Australia solely to “wholesale clients” for the purposes of section 761G of the Corporations Act 2001 (Australia) and, as such, no prospectus, product disclosure statement or other disclosure document in relation to the securities has been, or will be, prepared.
This prospectus does not constitute an offer in Australia other than to persons who do not require disclosure under Part 6D.2 of the Corporations Act 2001 (Australia) and who are wholesale clients for the purposes of section 761G of the Corporations Act 2001 (Australia). By submitting an application for our securities, you represent and warrant to us that you are a person who does not require disclosure under Part 6D.2 and who is a wholesale client for the purposes of section 761G of the Corporations Act 2001 (Australia). If any recipient of this prospectus is not a wholesale client, no offer of, or invitation to apply for, our securities shall be deemed to be made to such recipient and no applications for our securities will be accepted from such recipient. Any offer to a recipient in Australia, and any agreement arising from acceptance of such offer, is personal and may only be accepted by the recipient. In addition, by applying for our securities you undertake to us that, for a period of 12 months from the date of issue of the securities, you will not transfer any interest in the securities to any person in Australia other than to a person who does not require disclosure under Part 6D.2 and who is a wholesale client.

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Hong Kong
The contents of this prospectus have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice. Please note that (i) our securities may not be offered or sold in Hong Kong, by means of this prospectus or any document other than to “professional investors” within the meaning of Part I of Schedule 1 of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) (SFO) and any rules made thereunder, or in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong) (CO) or which do not constitute an offer or invitation to the public for the purpose of the CO or the SFO, and (ii) no advertisement, invitation or document relating to our securities may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere) which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the SFO and any rules made thereunder.
Japan
Our securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and our securities will not be offered or sold, directly or indirectly, in Japan, or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan, or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our securities may not be circulated or distributed, nor may our securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (SFA), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where our securities are subscribed or purchased under Section 275 by a relevant person which is:
(a)
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
(b)
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired our securities pursuant to an offer made under Section 275 except:
(1)
to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(2)
where no consideration is or will be given for the transfer;
(3)
where the transfer is by operation of law; or
(4)
as specified in Section 276(7) of the SFA.

188



Switzerland
This Prospectus does not constitute an issue prospectus pursuant to Article 652a or Article 1156 of the Swiss Code of Obligations (CO) and the common shares will not be listed on the SIX Swiss Exchange. Therefore, the Prospectus may not comply with the disclosure standards of the CO and/or the listing rules (including any prospectus schemes) of the SIX Swiss Exchange. Accordingly, the common shares may not be offered to the public in or from Switzerland, but only to a selected and limited circle of investors, which do not subscribe to the common shares with a view to distribution.
Greece
The securities have not been approved by the Hellenic Capital Markets Commission for distribution and marketing in Greece. This document and the information contained therein do not and shall not be deemed to constitute an invitation to the public in Greece to purchase the securities. The securities may not be advertised, distributed, offered or in any way sold in Greece except as permitted by Greek law.
Dubai International Finance Centre
This prospectus relates to an Exempt Offer in accordance with the Markets Rules of the Dubai Financial Services Authority. This prospectus is intended for distribution only to Professional Clients who are not natural persons. It must not be delivered to, or relied on by, any other person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The Dubai Financial Services Authority has not approved this document nor taken steps to verify the information set out in it, and has no responsibility for it. The securities to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If you do not understand the contents of this document you should consult an authorized financial adviser.


189



LEGAL MATTERS
The validity of the Ferrari common shares to be sold will be passed upon by Loyens & Loeff N.V. Sullivan & Cromwell LLP has advised Ferrari and the selling shareholder as to certain U.S. legal matters. The underwriters have been represented by Cravath, Swaine & Moore LLP.
EXPERTS
The Annual Consolidated Financial Statements of New Business Netherlands N.V., to be renamed Ferrari N.V. shortly prior to completion of the offering at December 31, 2013 and 2014 and for each of the three years in the period ended December 31, 2014 appearing in this Prospectus and Registration Statement have been audited by Reconta Ernst & Young S.p.A., independent registered public accounting firm, as set forth in their report thereon, appearing elsewhere herein, and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing.
ENFORCEMENT OF CIVIL LIABILITIES
Ferrari is a public limited liability company ( naamloze vennootschap ) organized under the laws of the Netherlands with its corporate seat in the Netherlands. A majority of its directors and senior management, and some of the experts named in this prospectus, currently reside outside the United States. All or a substantial portion of the assets of these individuals are located outside the United States. As a result, it may not be possible for you to effect service of process within the United States upon non-U.S. resident directors or upon Ferrari, or it may be difficult to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. securities laws against Ferrari.
The Netherlands
As there is no treaty on the reciprocal recognition and enforcement of judgments other than arbitration awards in civil and commercial matters between the United States and the Netherlands, courts in the Netherlands will not automatically recognize and enforce a final judgment rendered by a U.S. court. In order to obtain a judgment enforceable in the Netherlands, claimants must litigate the relevant claim again before a Dutch court of competent jurisdiction. Under current practice, however, a Dutch court will generally recognize and consider as conclusive evidence a final and conclusive judgment for the payment of money rendered by a U.S. court and not rendered by default, provided that the Dutch court finds that:
the jurisdiction of the U.S. court has been based on grounds that are internationally acceptable;
the final judgment results from proceedings compatible with Dutch concepts of due process;
the final judgment does not contravene public policy of the Netherlands; and
the final judgment has not been rendered in proceedings of a penal, revenue or other public law nature.
If a Dutch court upholds and regards as conclusive evidence the final judgment, that court generally will grant the same judgment without litigating again on the merits.
Shareholders may originate actions in the Netherlands based upon applicable Dutch laws.
Under Dutch law, in the event that a third party is liable to Ferrari, only Ferrari itself can bring civil action against that party. The individual shareholders do not have the right to bring an action on behalf of Ferrari. Only in the event that the cause for the liability of a third party to Ferrari also constitutes a tortious act directly against a shareholder does that shareholder have an individual right of action against such third party in its own name. The Dutch Civil Code does provide for the possibility to initiate such actions collectively. A foundation or an association whose objective is to protect the rights of a group of persons having similar interests can institute a collective action. The collective action itself cannot result in an order for payment of monetary damages but may only result in a declaratory judgment ( verklaring voor recht ). In order to obtain compensation for damages, the foundation or association and the defendant may reach - often on the basis of such declaratory judgment - a settlement. A Dutch court may declare the settlement agreement binding upon all the injured parties with an opt out choice for an individual injured party. An individual injured party may also itself institute a civil claim for damages.

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Italy
Judgments of U.S. courts may be enforceable in Italy. 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 proceeding 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;
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. Italian courts may have jurisdiction on actions based on non-Italian law depending on the nature of the claims brought by the relevant shareholder and subject to the requirements set forth under the Council Regulations (EC) no. 66/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
Italian shareholders should seek advice from their own counsel based on the applicable circumstances.

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INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF NEW BUSINESS NETHERLANDS N.V.
 
 
 
Page
Interim Condensed Consolidated Financial Statements
 
 
 
 
 
 
 
 
 
 
 
Consolidated Financial Statements at December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013 and 2012
 
 
 
 
 
 
 
 
 

F-1




New Business Netherlands N.V.
INTERIM CONSOLIDATED INCOME STATEMENT
for the three and six months ended June 30, 2015 and 2014
(Unaudited)

 
 
 
For the three months ended June 30,
 
For the six months ended June 30,
 
Note
 
2015
 
2014
 
2015
 
2014
 
 
 
(€ thousand)
Net revenues
6
 
765,789

 
728,682

 
1,386,737

 
1,348,571

Cost of sales
7
 
415,473

 
408,380

 
721,738

 
737,946

Selling, general and administrative costs
8
 
87,088

 
77,414

 
152,100

 
143,383

Research and development costs
9
 
137,462

 
132,109

 
291,106

 
275,875

Other expenses, net
 
 
3,724

 
6,044

 
3,788

 
6,317

EBIT
 
 
122,042

 
104,735

 
218,005

 
185,050

Net financial (expenses)/income
10
 
(7,904
)
 
1,258

 
(5,962
)
 
1,509

Profit before taxes
 
 
114,138

 
105,993

 
212,043

 
186,559

Income tax expense
11
 
38,229

 
32,457

 
71,064

 
58,644

Profit from continuing operations
 
 
75,909

 
73,536

 
140,979

 
127,915

Net profit
 
 
75,909

 
73,536

 
140,979

 
127,915

Net profit attributable to:
 
 
 
 
 
 
 
 
 
Owners of the parent
 
 
75,260

 
72,139

 
139,634

 
125,780

Non-controlling interests
 
 
649

 
1,397

 
1,345

 
2,135

 
 
 
 
 
 
 
 
 
 
Basic and diluted earnings per ordinary share (in €)
12
 
 
 
 
 
 
 
 












The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

F-2



New Business Netherlands N.V.
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
for the three and six months ended June 30, 2015 and 2014
(Unaudited)

 
 
 
For the three months ended June 30,
 
For the six months ended June 30,
 
Note
 
2015
 
2014
 
2015
 
2014
 
 
 
(€ thousand)
Net profit
 
 
75,909

 
73,536

 
140,979

 
127,915

Items that may be reclassified to the consolidated income statement in subsequent periods:
 
 
 
 
 
 
 
 
 
Gains/(losses) on cash flow hedging instruments
19
 
86,805

 
(27,830
)
 
(49,622
)
 
(42,913
)
Exchange differences on translating foreign operations
19
 
(10,971
)
 
1,972

 
13,765

 
2,249

Related tax impact
19
 
(27,257
)
 
8,738

 
15,561

 
13,474

Total items that may be reclassified to the consolidated income statement in subsequent periods
 
 
48,577

 
(17,120
)
 
(20,296
)
 
(27,190
)
Total other comprehensive income/(loss), net of tax
19
 
48,577

 
(17,120
)
 
(20,296
)
 
(27,190
)
Total comprehensive income
 
 
124,486

 
56,416

 
120,683

 
100,725

Total comprehensive income/(loss) attributable to:
 
 
 
 
 
 
 
 
 
Owners of the parent
 
 
124,930

 
54,707

 
117,220

 
98,900

Non-controlling interests

 
(444
)
 
1,709

 
3,463

 
1,825













The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

F-3



New Business Netherlands N.V.
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at June 30, 2015 and December 31, 2014
(Unaudited)

 
Note
 
At June 30,
2015
 
At December 31,
2014
 
 
 
(€ thousand)
Assets

 

 

Goodwill

 
787,178

 
787,178

Intangible assets
13
 
282,683

 
265,262

Property, plant and equipment
14
 
588,697

 
585,185

Investments and other financial assets
15
 
48,351

 
47,431

Deferred tax assets
11
 
148,707

 
111,716

Total non-current assets
 
 
1,855,616

 
1,796,772

Inventories
16
 
352,425

 
296,005

Trade receivables
17
 
154,290

 
183,642

Receivables from financing activities
17
 
1,182,544

 
1,224,446

Current tax receivables
17
 
10,159

 
3,016

Other current assets
17
 
83,047

 
52,052

Current financial assets
18
 
6,523

 
8,747

Deposits in FCA Group cash management pools
17
 
1,098,395

 
942,469

Cash and cash equivalents

 
257,527

 
134,278

Total current assets
 
 
3,144,910

 
2,844,655

Total assets

 
5,000,526

 
4,641,427

 
 
 
 
 
 
Equity and liabilities
 
 
 
 
 
Equity attributable to owners of the parent

 
2,586,838

 
2,469,618

Non-controlling interests

 
12,158

 
8,695

Total equity
19
 
2,598,996

 
2,478,313

 
 
 
 
 
 
Employee benefits

 
77,500

 
76,814

Provisions
20
 
139,493

 
134,774

Deferred tax liabilities
11
 
22,713

 
21,612

Debt
21
 
566,678

 
510,220

Other liabilities
22
 
669,701

 
670,378

Other financial liabilities
18
 
165,833

 
104,093

Trade payables
23
 
577,939

 
535,707

Current tax payables

 
181,673

 
109,516

Total equity and liabilities

 
5,000,526

 
4,641,427




The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

F-4



New Business Netherlands N.V.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended June 30, 2015 and 2014
(Unaudited)
 
 
For the six months ended June 30,
 
2015
 
2014
 
(€ thousand)
Cash and cash equivalents at beginning of the period
134,278

 
113,786

Cash flows from operating activities:
 
 
 
Profit before taxes
212,043

 
186,559

Amortization and depreciation
130,180

 
139,714

Provision accruals
22,610

 
33,891

Other non-cash expense and income
31,338

 
4,928

Net gains on disposal of property, plant and equipment and intangible assets
(496
)
 
(219
)
Change in inventories
(51,973
)
 
(41,471
)
Change in trade receivables
17,445

 
(3,002
)
Change in trade payables
27,920

 
79,709

Change in receivables from financing activities
100,079

 
(139,096
)
Change in other operating assets and liabilities
(49,113
)
 
9,211

Income tax paid
(24,232
)
 
(7,950
)
Total
415,801

 
262,274

 
 
 
 
Cash flows used in investing activities:
 
 
 
Investments in property, plant and equipment
(72,543
)
 
(57,323
)
Investments in intangible assets
(78,299
)
 
(70,243
)
Proceeds from the sale of property, plant and equipment and intangible assets
703

 
235

Change in investments and other financial assets
(1,424
)
 
(184
)
Total
(151,563
)
 
(127,515
)
 
 
 
 
Cash flows from/(used in) financing activities:
 
 
 
Proceeds from bank borrowings
373

 
9,709

Repayment of bank borrowings
(11,818
)
 
(5,839
)
Net change in financial liabilities with FCA Group
16,509

 
95,082

Net change in other debt
8,900

 
(16,416
)
Net change in deposits in FCA Group cash management pools
(146,806
)
 
(214,054
)
Dividends paid to non-controlling interest
(17,509
)
 

Total
(150,351
)
 
(131,518
)
 
 
 
 
Translation exchange differences
9,362

 
669

Total change in cash and cash equivalents
123,249

 
3,910

Cash and cash equivalents at end of the period
257,527

 
117,696



The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

F-5



New Business Netherlands N.V.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the six months ended June 30, 2015 and 2014
(Unaudited)

 
Attributable to owners of the parent
 
 
 
 
 
Share capital
 
Other reserves
 
Retained earnings
 
Cash flow hedge reserve
 
Currency translation differences
 
Remeasurement of defined benefit plans
 
Non-controlling interests
 
Total
 
(€ thousand)
At December 31, 2013


 


 
2,246,093

 
43,196

 
4,477

 
(4,260
)
 
26,776

 
2,316,282




 


 


 


 


 


 


 


Net profit

 

 
125,780

 

 

 

 
2,135

 
127,915

Other comprehensive (loss)/income

 

 

 
(29,439
)
 
2,559

 

 
(310
)
 
(27,190
)
At June 30, 2014


 


 
2,371,873

 
13,757

 
7,036

 
(4,260
)
 
28,601

 
2,417,007

 
Attributable to owners of the parent
 
 
 
 
 
Share capital
 
Other reserves
 
Retained earnings
 
Cash flow hedge reserve
 
Currency translation differences
 
Remeasurement of defined benefit plans
 
Non-controlling interests
 
Total
 
(€ thousand)
At December 31, 2014


 


 
2,507,392

 
(58,557
)
 
29,912

 
(9,129
)
 
8,695

 
2,478,313




 


 


 


 


 


 


 


Net profit

 

 
139,634

 

 

 

 
1,345

 
140,979

Other comprehensive (loss)/income

 

 

 
(34,061
)
 
11,647

 

 
2,118

 
(20,296
)
At June 30, 2015


 


 
2,647,026

 
(92,618
)
 
41,559

 
(9,129
)
 
12,158

 
2,598,996













The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.

F-6



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. BACKGROUND AND GENERAL INFORMATION
Fiat S.p.A., merged with and into Fiat Chrysler Automobiles N.V. in October 2014 (Fiat S.p.A. and Fiat Chrysler Automobiles are defined as “FCA” as the context requires and together with their subsidiaries the “FCA Group”) acquired 50 percent of Ferrari S.p.A. in 1969, and over time expanded this shareholding to 90 percent ownership. The 90 percent shareholding was held by FCA until , while the remaining 10 percent non-controlling interest was owned by Piero Ferrari until .
On October 29, 2014, FCA announced its intention to separate Ferrari S.p.A. from FCA. The separation is expected to occur through a series of transactions (together defined as the “Separation”) including (i) an intra-group restructuring which will result in our acquisition of the assets and business of Ferrari North Europe Limited and the transfer by FCA of its 90 percent shareholding in Ferrari S.p.A. to New Business Netherlands N.V. to be renamed Ferrari N.V. (herein referred to as “Ferrari” or the “Company” and together with Ferrari S.p.A. and its subsidiaries the “Group”), (ii) the transfer of Piero Ferrari’s 10 percent shareholding in Ferrari S.p.A. to the Company, (iii) the initial public offering of common shares of the Company, and (iv) the distribution, following the initial public offering, of FCA’s remaining interest in Ferrari to its shareholders. After the Separation, Ferrari will operate as an independent, publicly traded company.
The transactions described above in (i) and (ii) (which are referred collectively to as the “Restructuring”) were completed on through the following steps:
The Company acquired from Ferrari North Europe Limited its assets and business of providing sales, after-sales and support services for the Ferrari brand and in exchange the Company issued to Ferrari North Europe Limited a note in the principal amount of € (the “FNE Note”).

FCA transferred to the Company all of the issued and outstanding share capital that it previously held in Ferrari S.p.A. (representing 90 percent of the share capital of Ferrari S.p.A.), and in exchange the Company issued to FCA a note in the principal amount of € (the “FCA Note”).

FCA contributed cash of € to the Company in consideration of the issue to FCA of common shares and the same number of special voting shares of the Company. These common shares and special voting shares were issued at a nominal value of € with a share premium of € . € of the cash proceeds received from FCA were used to settle a portion of the FCA Note, following which the principal outstanding on the FCA Note is € , which is expected to be refinanced through third party debt. The Company also used € of the cash proceeds received as a result of issuing shares to FCA to fully repay the FNE Note.

Piero Ferrari transferred his 10 percent interest in Ferrari S.p.A. to the Company and in exchange the Company issued to Piero Ferrari of its common shares and special voting shares. Following a subsequent transaction with FCA, Piero Ferrari will own 10.0 percent of the Company’s share capital. The Company did not receive any cash consideration as part of this transaction.

The Restructuring comprises: (i) a capital reorganization of the group under the Company, and (ii) the issuance of the FCA Note which is expected to be subsequently refinanced. In preparing these interim condensed consolidated financial statements at and for the six months ended June 30, 2015 (the "Interim Condensed Consolidated Finanancial Statements"), the Company has retrospectively applied FCA’s basis of accounting for the Restructuring based on the following:
(i)
The capital reorganization:

The Company was formed by FCA solely to effect the Separation and will be controlled by FCA until completion of the Separation. Therefore, the capital reorganization does not meet the definition of a business combination in the context of IFRS 3 - “Business Combinations” but rather a combination of entities under common control and as such is excluded from the scope of IFRS 3. IFRS (as defined below) has no applicable guidance in accounting for such transactions. IAS 8 - “Accounting Policies, Changes in Accounting Estimates and Errors” states that in the absence of an IFRS which specifically applies to a transaction, the Company may consider the most recent pronouncements of other standard-setting bodies that use a similar conceptual framework to develop accounting standards or other accounting literature and accepted industry practices, to the extent that these do not conflict with the requirements in IFRS for dealing with similar and related

F-7



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

issues or the definitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses in the IFRS Conceptual Framework for Financial Reporting (the “Framework”). Accordingly, the Company has considered the guidance in ASC 805-50-30-5 on common control transactions, which indicates that the receiving entity (the Company) is able to reflect the transferred assets and liabilities in its own accounting records at the carrying amount in the accounting records of the transferring entity (FCA). As a result, these consolidated financial statements include FCA’s recorded goodwill relating to Ferrari S.p.A. in the amount of €780,542 thousand.

The retrospective accounting for the capital reorganization is consistent with the principles underlying paragraph 64 of IAS 33 - “Earnings per Share” which requires calculation of basic and diluted earnings per share for all periods presented to be adjusted retrospectively if changes occur to the capital structure after the reporting period but before the financial statements are authorized for issue. SAB Topic 4C also requires that such changes be given retroactive effect in the balance sheet where they occur after the reporting period but before the financial statements are authorized for issue. The capital reorganization has been accounted for as though it had occurred effective January 1, 2014. In particular:
The issuance of shares in the Company to FCA has been reflected as an increase in share capital and share premium in the amounts of € and € , respectively, with an offset to retained earnings of € .
The issuance of shares in the Company to Piero Ferrari has been reflected as an increase in share capital and share premium in the amounts of € and € , respectively, with an offset to retained earnings of € .
The historical number of ordinary shares, nominal value per share, basic and diluted earnings per ordinary share amounts and other per share disclosures retrospectively reflect the capital structure of the Company post Restructuring for all periods presented, with the required disclosures presented in Notes 12 and 19.

(ii)
The issuance of the FCA Note:

The FCA Note and subsequent refinancing have not been reflected in the Interim Condensed Consolidated Financial Statements. The acquisition of the Ferrari North Europe Limited assets and business and the FNE Note eliminate on consolidation.

2. AUTHORIZATION OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
These Interim Condensed Consolidated Financial Statements of New Business Netherlands NV were authorized for issuance by the Board of Directors on August 31, 2015 and authorized in respect of the Restructuring and the matters described in Note 27 on , and have been prepared in accordance with IAS 34 - Interim Financial Reporting. The Interim Condensed Consolidated Financial Statements should be read in conjunction with the Group’s consolidated financial statements at and for the year ended December 31, 2014 (the “Consolidated Financial Statements”), which have been prepared in accordance with IFRS. The designation IFRS also includes International Accounting Standards (“IAS”) as well as all the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC” and “SIC”). The accounting policies adopted are consistent with those used at December 31, 2014, except as described in the following paragraph “—New standards and amendments effective from January 1, 2015.”
3. BASIS OF PREPARATION FOR INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The preparation of the Interim Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent liabilities. If in the future such estimates and assumptions, which are based on management’s best judgment at the date of these Interim Condensed Consolidated Financial Statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. Reference should be made to the section “—Use of estimates” in the Consolidated Financial Statements for a detailed description of the more significant valuation procedures used by the Group.

F-8



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Moreover, in accordance with IAS 34, certain valuation procedures, in particular those of a more complex nature regarding matters such as any impairment of non-current assets, are only carried out in full during the preparation of the annual financial statements, when all the information required is available, other than in the event that there are indications of impairment, when an immediate assessment is necessary. In the same way, the actuarial valuations that are required for the determination of employee benefit provisions are also usually carried out during the preparation of the annual consolidated financial statements, unless in the event of significant market fluctuation, plan amendments or curtailments and settlements.
The recognition of income taxes is based upon the best estimate of the actual tax rate expected for the full financial year for each entity included in the scope of consolidation.
The Group’s presentation currency is Euro, which is also the functional currency of the Company, and unless otherwise stated information is presented in thousands of Euro.
Format of the Interim Condensed Consolidated Financial Statements
The Interim Condensed Consolidated Financial Statements include the interim consolidated income statement, interim consolidated statement of comprehensive income/(loss), interim consolidated statement of financial position, interim consolidated statement of cash flows, interim consolidated statement of changes in equity and notes thereto.
New standards and amendments effective from January 1, 2015
The following new standards and amendments that are applicable from January 1, 2015 were adopted by the Group for the purpose of the preparation of the Interim Condensed Consolidated Financial Statements.
The Group adopted the narrow scope amendments to IAS 19 - Employee benefits entitled “Defined Benefit Plans: Employee Contributions” which apply to contributions from employees or third parties to defined benefit plans in order to simplify their accounting in specific cases. There was no effect from the adoption of these amendments.
The Group adopted the IASB’s Annual Improvements to IFRSs 2010 - 2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle. The most important topics addressed in these amendments are, among others, the definition of vesting conditions in IFRS 2 - Share-based payments , the disclosure on judgment used in the aggregation of operating segments in IFRS 8 - Operating Segments , the identification and disclosure of a related party transaction that arises when a management entity provides key management personnel service to a reporting entity in IAS 24 - Related Party disclosures , the extension of the exclusion from the scope of IFRS 3 - Business Combinations to all types of joint arrangements and to clarify the application of certain exceptions in IFRS 13 - Fair value Measurement . There was no significant effect from the adoption of these amendments.
At the date of these Interim Condensed Consolidated Financial Statements the IASB had not issued any new standards, amendments or interpretations in addition to those described in the Consolidated Financial Statements at December 31, 2014. Reference should be made to the section “New standards, amendments and interpretations not yet effective in the Consolidated Financial Statements” for a detailed description of new standards not yet effective at June 30, 2015.
4. FINANCIAL RISK FACTORS
The Group is exposed to various operational financial risks, including credit risk, liquidity risk, financial market risk (relating mainly to foreign currency exchange rates, interest rates). The Interim Condensed Consolidated Financial Statements do not include all the information and notes on financial risk management required in the preparation of the annual consolidated financial statements. For a detailed description of this information for the Group, reference should be made to Note 29 to the Consolidated Financial Statements.
There have been no changes in the risk management policies as compared to those disclosed in Note 29 to the Consolidated Financial Statements.

F-9



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

5. OTHER INFORMATION
The principal foreign currency exchange rates used to translate other currencies into Euro were as follows:

2015
 
2014

Average for the six months ended June 30,
 
At June 30,
 
Average for the six months ended June 30,
 
At June 30,
 
At December 31,
U.S. Dollar
1.1155

 
1.1189

 
1.3705

 
1.3658

 
1.2141

Pound Sterling
0.7323

 
0.7114

 
0.8214

 
0.8015

 
0.7789

Swiss Franc
1.0566

 
1.0413

 
1.2214

 
1.2156

 
1.2024

Japanese Yen
134.1676

 
137.0100

 
140.4121

 
138.4400

 
145.2300

Chinese Yuan
6.9389

 
6.9366

 
8.4513

 
8.4722

 
7.5358

Australian Dollar
1.4261

 
1.4550

 
1.4988

 
1.4537

 
1.4829

Singapore Dollar
1.5058

 
1.5068

 
1.7281

 
1.7047

 
1.6058


F-10



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


6. NET REVENUES
Net revenues are as follows:
 
For the three months ended June 30,
 
For the six months ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(€ thousand)
Revenues from:
 
 
 
 
 
 
 
Cars and spare parts
578,179

 
525,416

 
1,007,303

 
949,461

Engines
57,295

 
75,013

 
121,142

 
152,493

Sponsorship, commercial and brand
103,011

 
104,820

 
212,281

 
205,652

Other
27,304

 
23,433

 
46,011

 
40,965

Total net revenues
765,789

 
728,682

 
1,386,737

 
1,348,571

Other primarily includes interest income generated by the Ferrari Financial Services group and net revenues from the management of the Mugello racetrack.
7. COST OF SALES
Cost of sales for the three months ended June 30, 2015 and 2014 amounted to €415,473 thousand and €408,380 thousand , respectively, and for the six months ended June 30, 2015 and 2014 amounted to €721,738 thousand and €737,946 thousand , respectively, comprising mainly of expenses incurred in the manufacturing and distribution of cars and spare parts, including the engines sold to Maserati and rented to other Formula 1 racing teams, cost of materials, components and labor costs are the most significant portion. The remaining costs principally include depreciation, amortization, insurance and transportation costs. Cost of sales also includes warranty and product-related costs, which are estimated and recorded at the time of shipment of the car.
Interest and other financial expenses from financial services companies included within cost of sales for the three months ended June 30, 2015 and 2014 amounted to €3,972 thousand and €6,386 thousand , respectively and for the six months ended June 30, 2015 and 2014 amounted to €8,300 thousand and €10,753 thousand , respectively.
8. SELLING, GENERAL AND ADMINISTRATIVE COSTS
General and administrative costs for the three months ended June 30, 2015 and 2014 amounted to €44,677 thousand and €46,655 thousand , respectively, and for the six months ended June 30, 2015 and 2014 amounted to €84,518 thousand and €91,647 thousand , respectively, consisting mainly of administration expenses and other general expenses that are not directly attributable to sales, manufacturing or research and development functions.
Selling costs which mainly consist of marketing and sales personnel costs, amounted to €42,411 thousand and €30,759 thousand for the three months ended June 30, 2015 and 2014 , respectively, and for the six months ended June 30, 2015 and 2014 amounted to €67,582 thousand and €51,736 thousand respectively. Marketing and events expenses consist primarily of costs in connection with trade and auto shows, media and customer events for the launch of new models and sponsorship and indirect marketing costs incurred through the Formula 1 racing team, Scuderia Ferrari.

F-11



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

9. RESEARCH AND DEVELOPMENT COSTS
Research and development costs are as follows:
 
For the three months ended June 30,
 
For the six months ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(€ thousand)
Amortization of capitalized development costs
30,889

 
31,921

 
55,858

 
61,706

Research and development costs expensed during the period
106,573

 
100,188

 
235,248

 
214,169

Total research and development costs
137,462

 
132,109

 
291,106

 
275,875

The main component of research and development costs expensed relates to the research and development activities performed for the Formula 1 racing car, which included initiatives to maximize the performance, efficiency and safety of the car, which are expensed as incurred.
The U.S. National Highway Traffic Safety Administration (“NHTSA”) recently published guidelines for driver distraction. These guidelines focus, among other things, on the need to modify the design of car devices and other driver interfaces to minimize driver distraction. We are in the process of evaluating these guidelines and their potential impact on our results of operations and financial position and determining what steps, if any, we will need to take to comply with the new requirements.

10. NET FINANCIAL (EXPENSES)/INCOME
 
For the three months ended June 30,
 
For the six months ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(€ thousand)
Financial income
 
 
 
 
 
 
 
Related to:
 
 
 
 
 
 
 
Industrial companies (A)
1,350

 
821

 
3,600

 
2,592

Financial services companies (reported within net revenues)
14,922

 
10,500

 
29,233

 
20,815

 
 
 
 
 
 
 
 
Financial expenses and expenses from derivative financial instruments and foreign currency exchange rate differences
 
 
 
 
 
 
 
Related to:
 
 
 
 
 
 
 
Industrial companies (B)
(9,254
)
 
437

 
(9,562
)
 
(1,083
)
Financial services companies (reported within cost of sales)
(3,972
)
 
(6,386
)
 
(8,300
)
 
(10,753
)
Net financial (expenses)/income relating to industrial companies (A + B)
(7,904
)
 
1,258

 
(5,962
)
 
1,509



F-12



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

11. INCOME TAX EXPENSE
Income tax expense is as follows:
 
For the three months ended June 30,
 
For the six months ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(€ thousand)
Current tax expense
52,321

 
45,164

 
94,361

 
71,376

Deferred tax income
(13,636
)
 
(12,580
)
 
(23,316
)
 
(12,840
)
Taxes relating to prior periods
(456
)
 
(127
)
 
19

 
108

Total income tax expense
38,229

 
32,457

 
71,064

 
58,644

Income tax expense of €38,229 thousand for the three months ended June 30, 2015 compared to €32,457 thousand for the three months ended June 30, 2014, and €71,064 thousand for the six months ended June 30, 2015, compared to €58,644 thousand for the six months ended June 30, 2014, increased primarily as a result of an increase in profit before tax.
Income tax expense recorded in the Interim Condensed Consolidated Financial Statements has been calculated based on the tax rate expected for the full financial year. The tax rate net of Italian Regional Income Tax (“IRAP”), used for the six months ended June 30, 2015 is 28.3 percent ( 26.0 percent for the six months ended June 30, 2014). IRAP (current and deferred) for the six months ended June 30, 2015 and 2014 amounted to €11,102 thousand and €10,225 thousand , respectively.
IRAP is only applicable to Italian entities and is calculated on a measure of income defined by the Italian Civil Code as the difference between operating revenues and costs, before financial income and expense, and in particular before the cost of fixed-term employees, credit losses and any interest included in lease payments. IRAP is calculated using financial information prepared under Italian accounting standards. IRAP is applied on the tax base at 3.9 percent for each of the three and six months ended June 30, 2015 and 2014, respectively.
The Group recognizes in its interim consolidated statement of financial position within deferred tax assets, the amount of deferred tax assets less the deferred tax liabilities of the individual consolidated companies, where these may be offset.
The increase from the net deferred tax assets balance at December 31, 2014 to the balance at June 30, 2015 was primarily due to the effect of losses from our cash flow hedging instruments.
12. EARNINGS PER SHARE
As discussed in Note 1, the Restructuring has been retrospectively reflected in these Interim Condensed Consolidated Financial Statements in determining the number of shares outstanding as though the Restructuring had occurred effective January 1, 2014. Following the Restructuring, the Company has common shares outstanding. The June 30, 2015 and 2014 share amounts have been adjusted retrospectively to reflect this change.
Basic earnings per share     
Basic earnings per share is calculated by dividing the profit attributable to equity holders of Ferrari by the weighted average number of ordinary shares in issue. The following table provides the amounts used in the calculation of basic earnings per share for the periods presented:

F-13



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 
 
For the three months ended June 30,
 
For the six months ended June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
Ordinary shares
 
Ordinary shares
 
Ordinary shares
 
Ordinary shares
Profit attributable to owners of the parent
€ thousand
75,260

 
72,139

 
139,634

 
125,780

Weighted average number of ordinary shares
thousand


 


 


 


Basic and diluted earnings per ordinary share


 


 


 


 
 
 
 
 
Diluted earnings per share
Diluted earnings per share is equal to basic earnings per share as there were no potentially dilutive instruments for the periods presented.
13. INTANGIBLE ASSETS
 
Balance at December 31,
2014
 
Additions
 
Disposals
 
Amortization
 
Translation
differences
 
Balance at June 30,
2015
 
(€ thousand)
Intangible assets
265,262

 
78,299

 

 
(60,843
)
 
(35
)
 
282,683

Additions of €78,299 thousand in the six months ended June 30, 2015 primarily relate to externally acquired and internally generated development costs for the development of new models and investments to develop existing models.
For the six months ended June 30, 2015, the Group capitalized borrowing costs of €427 thousand . Those costs will be amortized over the useful life of the category of assets to which they relate.
14. PROPERTY, PLANT AND EQUIPMENT
 
Balance at December 31,
2014
 
Additions
 
Disposals
 
Depreciation
 
Translation differences
 
Balance at June 30,
2015
 
(€ thousand)
Property, plant and equipment
585,185

 
72,543

 
(207
)
 
(68,638
)
 
(186
)
 
588,697

Additions of €72,543 thousand for the six months ended June 30, 2015 were mainly comprised of additions to plant, machinery and equipment, advances and assets under construction.
For the six months ended June 30, 2015, the Group capitalized borrowing costs of €206 thousand . Those costs will be amortized over the useful life of the category of assets to which they relate.
At June 30, 2015, the Group had contractual commitments for the purchase of property, plant and equipment amounting to €65,576 thousand ( €52,389 thousand at December 31, 2014).
15. INVESTMENTS AND OTHER FINANCIAL ASSETS
Investments and other financial assets primarily relate to investment properties held for the purpose of earning rental income. Investments and other financial assets amounted to €48,351 thousand at June 30, 2015, compared to €47,431 thousand at December 31, 2014.

F-14



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

16. INVENTORIES
 
At June 30,
2015
 
At December 31,
2014
 
(€ thousand)
Raw materials
55,408

 
91,035

Semifinished goods
76,450

 
59,771

Finished goods
220,567

 
145,199

Total inventories
352,425

 
296,005

The amount of inventory write-downs recognized as an expense within cost of sales for the six months ended June 30, 2015 was €1,188 thousand (€1,042 thousand for the six months ended June 30, 2014).
The increase in finished goods primarily relates to an increase in inventories to support an orderly phase out of the 458 Italia and 458 Spider in 2015.
17. CURRENT RECEIVABLES, OTHER CURRENT ASSETS AND DEPOSITS IN FCA GROUP CASH MANAGEMENT POOLS
The composition of the current receivables, other current assets and deposits in FCA Group cash management pools is as follows:
 
At June 30,
2015
 
At December 31,
2014
 
(€ thousand)
Trade receivables
154,290

 
183,642

Deposits in FCA Group cash management pools
1,098,395

 
942,469

Receivables from financing activities
1,182,544

 
1,224,446

Current tax receivables
10,159

 
3,016

Other current assets
83,047

 
52,052

Total
2,528,435

 
2,405,625

Following the Separation, the arrangements related to the Deposits in FCA Group cash management pools will be terminated and we will manage our liquidity and treasury function on a standalone basis.
Receivables from financing activities
Receivables from financing activities are as follows:
 
At June 30,
2015
 
At December 31,
2014
 
(€ thousand)
Client financing
1,113,013

 
939,284

Financial receivables from FCA Group companies
1,340

 
161,303

Factoring receivables
43,053

 
89,821

Dealer financing
24,585

 
33,611

Other
553

 
427

Total
1,182,544

 
1,224,446

The decrease in financial receivables from FCA Group companies primarily relates to the full reimbursement of the financing of inventory related to the establishment of the Maserati standalone business in China.

F-15



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


18. CURRENT FINANCIAL ASSETS AND OTHER FINANCIAL LIABILITIES
 
At June 30, 2015
 
At December 31, 2014
 
Positive fair value
 
Negative fair value
 
Positive fair value
 
Negative fair value
 
(€ thousand)
Cash flow hedge:
 
 
 
 
 
 
 
Foreign currency forwards
5,976

 
(163,807
)
 
8,004

 
(100,620
)
Total cash flow hedges
5,976

 
(163,807
)
 
8,004

 
(100,620
)
Other foreign exchange derivatives
547

 
(2,026
)
 
743

 
(3,473
)
Other financial assets/(liabilities)
6,523

 
(165,833
)
 
8,747

 
(104,093
)
Other foreign exchange derivatives relate to foreign currency forwards entered into for hedging purposes that do not qualify for hedge accounting treatment.
19. EQUITY
As discussed in Note 1, with the exception of the FCA Note and subsequent refinancing (as detailed herein), the Restructuring has been retrospectively reflected in these Interim Condensed Consolidated Financial Statements in determining the number of shares outstanding as though the Restructuring had occurred effective January 1, 2014.
Share capital
Following the Restructuring, the fully paid up share capital of the Company is € thousand, consisting of ordinary shares and of special voting shares, all with a par value of € .
The Company will not issue new common shares or special voting shares in the anticipated initial public offering and will not receive any of the proceeds.
The loyalty voting structure

We expect that FCA and Piero Ferrari will participate in our loyalty voting program and, therefore, will effectively hold two votes for each of the common shares they hold. FCA shareholders that participate in FCA’s loyalty voting program will be entitled to participate on the same basis in our loyalty voting program effective upon the Separation. Investors who purchase common shares in the initial public offering may elect to participate in our loyalty voting program by registering their common shares in our loyalty share register and holding them for three years. The loyalty voting program will be effected by means of the issue of special voting shares to eligible holders of common shares. Each special voting share entitles the holder to exercise one vote at the Company’s shareholders meeting. Only a minimal dividend accrues to the special voting shares allocated to a separate special dividend reserve, and the special voting shares do not carry any entitlement to any other reserve of the Group. The special voting shares have only immaterial economic entitlements and, as a result, do not impact the Company’s earnings per share calculation.
Other reserves
Following the Restructuring, other reserves mainly include the share premium reserve of € thousand at June 30, 2015 and December 31, 2014, respectively, which resulted from the issuance of shares to FCA pursuant to the Restructuring.

F-16



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Other comprehensive income/(loss)
The following table presents other comprehensive income/(loss):
 
For the three months ended June 30,
 
For the six months ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(€ thousand)
Items that may be reclassified to the consolidated income statement in subsequent periods:
 
 
 
 
 
 
 
Gains/(losses) on cash flow hedging instruments arising during the period
46,927

 
(16,660
)
 
(141,259
)
 
(19,548
)
(Gains)/losses on cash flow hedging instruments reclassified to the consolidated income statement
39,878

 
(11,170
)
 
91,637

 
(23,365
)
Gains/(losses) on cash flow hedging instruments
86,805

 
(27,830
)
 
(49,622
)
 
(42,913
)
Exchange differences on translating foreign operations arising during the period
(10,971
)
 
1,972

 
13,765

 
2,249

Total items that may be reclassified to the consolidated income statement in subsequent periods
75,834

 
(25,858
)
 
(35,857
)
 
(40,664
)
Total other comprehensive income/(loss)
75,834

 
(25,858
)
 
(35,857
)
 
(40,664
)
Related tax impact
(27,257
)
 
8,738

 
15,561

 
13,474

Total other comprehensive income/(loss), net of tax
48,577

 
(17,120
)
 
(20,296
)
 
(27,190
)
Losses on cash flow hedging instruments arising during the six months ended June 30, 2015 and 2014 relate to losses recognized on the fair value measurement of derivative financial instruments used for cash flow hedging purposes. The increase in the losses on cash flow hedging instruments arising during the six months ended June 30, 2015 compared to June 30, 2014 is due to fluctuations in foreign currency exchange rates during the period.
The tax effect relating to other comprehensive loss are as follows:
 
For the three months ended June 30,
 
2015
 
2014
 
Pre-tax
balance
 
Tax
income/(expense)
 
Net
balance
 
Pre-tax
balance
 
Tax
income/(expense)
 
Net
balance
 
(€ thousand)
Gains/(losses) on cash flow hedging instruments
86,805

 
(27,257
)
 
59,548

 
(27,830
)
 
8,738

 
(19,092
)
Exchange gains on translating foreign operations
(10,971
)
 

 
(10,971
)
 
1,972

 

 
1,972

Total other comprehensive income/(loss)
75,834

 
(27,257
)
 
48,577

 
(25,858
)
 
8,738

 
(17,120
)
 
 
 
 
 
 
 
 
 
 
 
 

 
For the six months ended June 30,
 
2015
 
2014
 
Pre-tax
balance
 
Tax
income/(expense)
 
Net
balance
 
Pre-tax
balance
 
Tax
income/(expense)
 
Net
balance
 
(€ thousand)
Losses on cash flow hedging instruments
(49,622
)
 
15,561

 
(34,061
)
 
(42,913
)
 
13,474

 
(29,439
)
Exchange gains on translating foreign operations
13,765

 

 
13,765

 
2,249

 

 
2,249

Total other comprehensive loss
(35,857
)
 
15,561

 
(20,296
)
 
(40,664
)
 
13,474

 
(27,190
)

F-17



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 
 
 
 
 
 
 
 
 
 
 
 



20. PROVISIONS
The Group’s provisions are as follows:
 
At June 30,
2015
 
At December 31,
2014
 
(€ thousand)
Warranty provision
76,961

 
68,512

Legal proceedings and disputes
43,460

 
44,544

Other risks
19,072

 
21,718

Total provisions
139,493

 
134,774

The provision for other risks are related to disputes and matters which are not subject to legal proceedings, including contract related disputes with suppliers, employees and other parties.
Movements in provisions are as follows:
 
At December 31,
2014
 
Additional provisions
 
Utilization
 
Translation differences
 
At June 30,
2015
 
(€ thousand)
Warranty provision
68,512

 
17,299

 
(9,273
)
 
423

 
76,961

Legal proceedings and disputes
44,544

 
2,786

 
(3,870
)
 

 
43,460

Other risks
21,718

 
2,525

 
(5,682
)
 
511

 
19,072

Total provisions
134,774

 
22,610

 
(18,825
)
 
934

 
139,493

21. DEBT

At June 30, 2015
 
At December 31, 2014
 
(€ thousand)
Financial liabilities with FCA
428,039

 
378,542

Borrowings from banks
108,037

 
109,105

Other debt
30,602

 
22,573

Total debt
566,678

 
510,220


F-18



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Changes in total debt are as follows:
(€ thousands)
 
Balance at December 31, 2014
510,220

Proceeds from bank borrowings
373

Repayment of bank borrowings
(11,818
)
Net change in financial liabilities with FCA Group
16,509

Interest on financial liabilities with FCA Group
2,879

Net change in other debt
8,900

Translation differences
39,615

Balance at June 30, 2015
566,678

22. OTHER LIABILITIES
An analysis of other liabilities is as follows:
 
At June 30,
2015
 
At December 31,
2014
 
(€ thousand)
Deferred income
315,125

 
234,536

Advances
111,388

 
187,222

Accrued expenses
76,212

 
85,624

Security deposits
26,281

 
33,117

Payables to personnel
22,043

 
28,713

Social security payables
13,103

 
13,251

Other
105,549

 
87,915

Total other liabilities
669,701

 
670,378

Deferred income at June 30, 2015 primarily includes amounts received under the scheduled maintenance program as defined in the Consolidated Financial Statements (€122,373 thousand at June 30, 2015 and €111,589 thousand at December 31, 2014), which are deferred and recognized as net revenues over the length of the maintenance program. Deferred income also includes amounts collected under various other agreements, which are dependent upon the future performance of a service or other act of the Group.
Advances at June 30, 2015 and December 31, 2014 primarily includes advances from clients received for the purchase of special series, limited edition and supercars.
The classification ‘Other’ within other liabilities at June 30, 2015 includes €52,703 thousand (€64,307 thousand at December 31, 2014) related to dividends payable to the non-controlling interest in Ferrari International Cars Trading (Shanghai) Co. Ltd.
23. TRADE PAYABLES
Trade payables of €577,939 thousand at June 30, 2015 ( €535,707 thousand at December 31, 2014 ) are entirely due within one year. The carrying amount of trade payables is considered to be equivalent to their fair value.
24. FAIR VALUE MEASUREMENT
IFRS 13 establishes a hierarchy that categorizes into three levels the inputs to the valuation techniques used to measure fair value by giving the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1 inputs) and the lowest priority to unobservable inputs (level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value

F-19



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

measurement is categorized in its entirety in the same level of the fair value hierarchy at the lowest level input that is significant to the entire measurement.
Levels used in the hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the Group can access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly or indirectly.
Level 3 inputs are unobservable inputs for the assets and liabilities.
Assets and liabilities that are measured at fair value on a recurring basis
The following table shows the fair value hierarchy for financial assets and liabilities that are measured at fair value on a recurring basis at June 30, 2015 and at December 31, 2014:
 
 
 
At June 30, 2015
 
Note
 
Level 1 
 
Level 2 
 
Level 3 
 
Total 
 
 
 
(€ thousand)
Cash and cash equivalents
 
 
257,527

 

 

 
257,527

Investments and other financial assets - Delta Top Co option
15
 

 

 
10,746

 
10,746

Current financial assets
18
 

 
6,523

 

 
6,523

Total assets
 
 
257,527

 
6,523

 
10,746

 
274,796

Other financial liabilities
18
 

 
165,833

 

 
165,833

Total liabilities
 
 

 
165,833

 

 
165,833

 
 
 
At December 31, 2014
 
Note
 
Level 1 
 
Level 2 
 
Level 3 
 
Total 
 
 
 
(€ thousand)
Cash and cash equivalents
 
 
134,278

 

 

 
134,278

Investments and other financial assets - Delta Top Co option
15
 

 

 
10,546

 
10,546

Current financial assets
18
 

 
8,747

 

 
8,747

Total assets
 
 
134,278

 
8,747

 
10,546

 
153,571

Other financial liabilities
18
 

 
104,093

 

 
104,093

Total liabilities
 
 

 
104,093

 

 
104,093

In the six months ended June 30, 2015 and in the same period in 2014 there were no transfers between levels in the fair value hierarchy.
The fair value of current financial assets and other financial liabilities is related to derivative financial instruments and is measured by taking into consideration market parameters at the balance sheet date, using valuation techniques widely accepted in the financial business environment. In particular, the fair value of forward contracts and currency swaps is determined by taking the prevailing foreign currency exchange rate and interest rates at the balance sheet date.
The par value of cash and cash equivalents usually approximates fair value due to the short maturity of these instruments, which consist primarily of bank current accounts.
The following table presents the changes in the fair value of the Delta Top Co option (which is the only asset categorized in level 3) from December 31, 2014 to June 30, 2015.

F-20



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 
Investments and other financial assets - Delta Top Co option
 
(€ thousand)
At December 31, 2014
10,546

Gains recognized in net financial (expenses)/income
200

At June 30, 2015
10,746

Assets and liabilities not measured at fair value on a recurring basis
For financial instruments represented by short-term receivables and payables, for which the present value of future cash flows does not differ significantly from carrying value, the Group assumes that carrying value is a reasonable approximation of the fair value. In particular, the carrying amount of current receivables and other current assets and of trade payables and other liabilities approximates their fair value.
The following table represents carrying amount and fair value for the most relevant categories of financial assets and liabilities not measured at fair value on a recurring basis:
 
 
 
At June 30, 2015
 
At December 31, 2014
 
Note 
 
Carrying amount
 
Fair Value
 
Carrying
amount 
 
Fair
Value 
 
 
 
(€ thousand)
Deposits in FCA Group cash management pools
17
 
1,098,395

 
1,098,395

 
942,469

 
942,469

Receivables from financing activities
17
 
1,182,544

 
1,183,697

 
1,224,446

 
1,225,931

Customer financing
 
 
1,113,013

 
1,114,166

 
939,284

 
940,769

Financial receivables from FCA Group companies
 
 
1,340

 
1,340

 
161,303

 
161,303

Factoring receivables
 
 
43,053

 
43,053

 
89,821

 
89,821

Dealer financing
 
 
24,585

 
24,585

 
33,611

 
33,611

Other
 
 
553

 
553

 
427

 
427

Total
 
 
2,280,939

 
2,282,092

 
2,166,915

 
2,168,400

 
 
 
 
 
 
 
 
 
 
Debt
21
 
566,678

 
566,073

 
510,220

 
509,355

25. RELATED PARTY TRANSACTIONS
Pursuant to IAS 24, the related parties of the Group are entities and individuals capable of exercising control, joint control or significant influence over the Group and its subsidiaries, companies belonging to the FCA Group and Exor Group, and unconsolidated subsidiaries of the Group. In addition, members of Ferrari Group Board of Directors, Board of Statutory Auditors and executives with strategic responsibilities and their families are also considered related parties.
The Group carries out transactions with related parties on commercial terms that are normal in the respective markets, considering the characteristics of the goods or services involved. Transactions carried out by the Group with these related parties are primarily of those a commercial nature, which have had an effect on revenues, cost of sales, and trade receivables and payables; in particular, these transactions relate to:
Transactions with FCA Group companies
the sale of engines and car bodies to Maserati S.p.A. and Officine Maserati Grugliasco S.p.A. (together “Maserati”) which are controlled by the FCA Group;
the purchase of engines components for the use in the production of Maserati engines from FCA US LLC, which is controlled by FCA Group;

F-21



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

the purchase of automotive lighting and automotive components from Magneti Marelli S.p.A., Magneti Marelli Espana S.A. and Automotive Lighting Italia S.p.A. (which form part of “Magneti Marelli”), which is controlled by the FCA Group;
transactions with other FCA Group companies, mainly relating to the services provided by FCA Group companies, including human resources, payroll, tax, customs, procurement of insurance coverage, accounting and treasury services and sponsorship revenues for the display of FCA Group company logos on the Formula 1 cars.
The Group also has the following financial transactions with the FCA Group:
the Group sells a portion of its trade and financial receivables to the FCA Bank Group, which is a joint venture between FCA Group and Credit Agricole, on derecognition of the asset, the difference between the carrying amount and the consideration received or receivable is recognized in cost of sales;
certain Ferrari financing companies obtain financing from FCA Group companies. Debt from FCA Group companies relate to the amounts owed under such facilities at the dates presented. See Note 21;
Ferrari Group companies participate in the FCA group-wide cash management system where the operating cash management, main funding operations and liquidity investment of the Group are centrally coordinated by dedicated treasury companies of the FCA Group. Deposits in FCA Group cash management pools represent the Group’s participation in such pools. Deposits with FCA Group earn EURIBOR +15bps. See Note 17. Following the Separation, these arrangements will be terminated and we will manage our liquidity and treasury function on a standalone basis;
the Group has purchased trade receivables from the FCA Group on a non-recourse basis. The interest earned on such receivables is recorded in net revenues;
the Group has financial receivables with Maserati and Automotive Lighting LLC (“Automotive Lighting”), which will be settled in the ordinary course of business. See Note 17.
Transactions with Exor Group companies
the Group incurs rental costs from Iveco Finanziaria S.p.A. related to the rental of trucks used by the Formula 1 racing team;
the Group earns sponsorship revenue from Iveco S.p.A .
Transactions with other related parties
the purchase of leather goods from Poltrona Frau S.p.A. (“Poltrona Frau”). The former Chairman had significant influence over Poltrona Frau until March 25, 2014 when he sold his interest;
the purchase of components for Formula 1 racing cars from COXA S.p.A., controlled by Piero Ferrari; and
consultancy services provided by HPE S.r.l., controlled by Piero Ferrari.
In accordance with IAS 24, transactions with related parties also include compensation payable to Directors, Statutory Auditors and managers with strategic responsibilities.

F-22



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The amounts of the transactions with related parties recognized in the consolidated income statement are as follows:
 
For the six months ended June 30,
 
2015
 
2014
 
Net
revenues 
 
Cost (1)
 
Financial
income/
(expenses) 
 
Net
revenues 
 
Cost (1)
 
Financial
income/
(expenses) 
 
(€ thousand)
FCA Group Companies
 
 
 
 
 
 
 
 
 
 
 
Maserati
103,054

 
1,279

 

 
123,434

 
223

 

FCA US LLC

 
14,578

 

 

 
13,006

 

Magneti Marelli
960

 
14,419

 

 
565

 
10,653

 

Other FCA Group Companies
3,990

 
43,793

 
(7,447
)
 
2,724

 
20,250

 
1,971

Total FCA Group Companies
108,004

 
74,069

 
(7,447
)
 
126,723

 
44,132

 
1,971

 
 
 
 
 
 
 
 
 
 
 
 
Exor Group companies (excluding the FCA Group)
 
 
 
 
 
 
 
 
 
 
 
Exor Group companies
208

 
172

 

 
137

 
195

 

 
 
 
 
 
 
 
 
 
 
 
 
Other related parties
 
 
 
 
 
 
 
 
 
 
 
Poltrona Frau

 
11,945

 

 

 
10,128

 

COXA S.p.A.
111

 
4,846

 

 

 
3,922

 

HPE S.r.l.

 
1,201

 

 

 
1,284

 

Other related parties

 

 

 

 
4

 

Total other related parties
111

 
17,992

 

 

 
15,338

 

Total transactions with related parties
108,323

 
92,233

 
(7,447
)
 
126,860

 
59,665

 
1,971

Total for the Group
1,386,737

 
873,838

 
(5,962
)
 
1,348,571

 
881,329

 
1,509

______________________________
(1)    Costs include cost of sales and selling, general and administrative costs.

F-23



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Non-financial assets and liabilities originating from related party transactions are as follows:
 
At June 30, 2015
 
At December 31, 2014
 
Trade
receivables
 
Trade
payables
 
Other
current
assets 
 
Other
liabilities
 
Trade
receivables
 
Trade
payables
 
Other
current
assets 
 
Other
liabilities 
 
(€ thousand)
FCA Group companies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maserati
46,505

 
3,938

 

 
36,582

 
68,224

 
5,368

 

 
50,736

FCA US LLC
1,626

 
3,080

 

 

 
1,062

 
8,250

 

 

Magneti Marelli
741

 
7,268

 

 

 
516

 
6,239

 

 

Other FCA Group Companies
214

 
5,311

 
656

 
839

 
172

 
2,766

 
2,181

 
105

Total FCA Group Companies
49,086

 
19,597

 
656

 
37,421

 
69,974

 
22,623

 
2,181

 
50,841

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exor Group companies (excluding the FCA Group)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exor Group companies
291

 
44

 

 
103

 

 
28

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other related parties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Poltrona Frau
23

 
4,373

 

 

 
1,763

 
8,564

 

 

COXA S.p.A.
56

 
870

 

 

 
308

 
1,448

 

 

HPE S.r.l.

 
216

 

 

 

 
686

 

 

Other related parties

 
113

 

 

 
1,647

 
251

 

 

Total other related parties
79

 
5,572

 

 

 
3,718

 
10,949

 

 

Total transactions with related parties
49,456

 
25,213

 
656

 
37,524

 
73,692

 
33,600

 
2,181

 
50,841

Total for the Group
154,290

 
577,939

 
83,047

 
669,701

 
183,642

 
535,707

 
52,052

 
670,378

Financial assets and liabilities originating from related party transactions are as follows:
 
At June 30, 2015
 
At December 31, 2014
 
Deposits in FCA Group cash management pools
 
Receivables from financing activities
 
Debt
 
Deposits in FCA Group cash management pools
 
Receivables from financing activities
 
Debt
 
(€ thousand)
FCA Group finance companies
1,098,395

 

 
428,039

 
942,469

 

 
378,542

Maserati

 

 

 

 
147,071

 

Automotive Lighting LLC

 
1,340

 

 

 
14,232

 

Total transactions with related parties
1,098,395

 
1,340

 
428,039

 
942,469

 
161,303

 
378,542

 
 
 
 
 
 
 
 
 
 
 
 
Total for the Group
1,098,395

 
1,182,544

 
566,678

 
942,469

 
1,224,446

 
510,220


F-24



New Business Netherlands N.V.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

26. ENTITY-WIDE DISCLOSURES
The following table presents an analysis of net revenues by geographic location of the Group’s customers for the three and six months ended June 30, 2015 and 2014:
 
For the three months ended June 30,
 
For the six months ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(€ thousand)
Italy
61,257

 
119,808

 
115,794

 
227,920

Other EMEA
306,858

 
335,178

 
591,055

 
621,762

Americas (1)
258,202

 
155,689

 
436,333

 
285,836

Greater China (2)
54,398

 
65,044

 
101,163

 
107,754

Rest of APAC (3)
85,074

 
52,963

 
142,392

 
105,299

Total net revenues
765,789

 
728,682

 
1,386,737

 
1,348,571

______________________________
(1)    Includes United States of America, Canada, Mexico and the rest of Central and South America
(2)    Includes mainland China, Hong Kong and Taiwan
(3)    Mainly relates to Japan and Australia
27. SUBSEQUENT EVENTS
The Group has evaluated subsequent events through August 31, 2015, which is the date the Interim Condensed Consolidated Financial Statements were authorized for issuance.

On July 14, 2015, we issued a safety recall report with the NHTSA, after being notified by Takata Corporation that certain driver’s side airbags manufactured by Takata, installed in certain model year 2015 cars, were defective. The recall impacts 814 of our model year 2015 cars sold in the United States and also relates to up to an additional 1,600 model year 2015 cars in other regions. The defect, caused by pre-assembled airbags supplied by Takata, relates to insufficient gluing of the airbag cover and a possible incorrect installation of the driver’s airbag cushion. The replacement component has been produced with improved gluing methods as well as improved airbag assembly measures. We have implemented a recall to remedy this safety defect. The estimated costs associated with this recall are not expected to be material.



F-25




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders of
New Business Netherlands N.V.
 
We have audited the accompanying consolidated statements of financial position of New Business Netherlands N.V. as of December 31, 2014 and 2013, and the related consolidated income statements, statements of comprehensive income, cash flows and changes in equity for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of New Business Netherlands N.V. at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Reconta Ernst & Young S.p.A.
Turin, Italy
, 2015

The foregoing report is in the form that will be signed upon the completion of the Restructuring described in Note 1 and the matters described in Note 31 to the financial statements.

/s/ Reconta Ernst & Young S.p.A.
Turin, Italy
July 23, 2015




F-26



New Business Netherlands N.V.
CONSOLIDATED INCOME STATEMENT
for the years ended December 31, 2014, 2013 and 2012

 
 
 
For the years ended December 31,
 
Note
 
2014
 
2013
 
2012
 
 
 
(€ thousand)
Net revenues
4
 
2,762,360

 
2,335,270

 
2,225,207

Cost of sales
5
 
1,505,889

 
1,234,643

 
1,198,901

Selling, general and administrative costs
6
 
300,090

 
259,880

 
242,819

Research and development costs
7
 
540,833

 
479,294

 
431,456

Other expenses/(income), net
8
 
26,080

 
(2,096
)
 
16,534

EBIT
 
 
389,468

 
363,549

 
335,497

Net financial income/(expenses)
9
 
8,765

 
2,851

 
(898
)
Profit before taxes
 
 
398,233

 
366,400

 
334,599

Income tax expense
10
 
133,218

 
120,301

 
101,109

Net profit
 
 
265,015

 
246,099

 
233,490

Net profit attributable to:
 
 
 
 
 
 
 
Owners of the parent
 
 
261,371

 
240,774

 
225,403

Non-controlling interests
3
 
3,644

 
5,325

 
8,087

Basic and diluted earnings per ordinary share (in €)
12
 
 
 
 
 
 



















The accompanying notes are an integral part of the Consolidated Financial Statements.

F-27



New Business Netherlands N.V.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the years ended December 31, 2014, 2013 and 2012
 
 
 
 
For the years ended December 31,
 
Note
 
2014
 
2013
 
2012
 
 
 
(€ thousand)
Net profit
 
 
265,015

 
246,099

 
233,490

Items that will not be reclassified to the consolidated income statement in subsequent periods:
 
 
 
 
 
 
 
   Losses on remeasurement of defined benefit plans
20
 
(4,739
)
 
(2,412
)
 
(1,595
)
   Related tax impact
20
 
1,061

 
1,799

 

Total items that will not be reclassified to the consolidated income statement in subsequent periods
 
 
(3,678
)
 
(613
)
 
(1,595
)
Items that may be reclassified to the consolidated income statement in subsequent periods:
 
 
 
 
 
 
 
   (Losses)/gains on cash flow hedging instruments
20
 
(148,341
)
 
54,603

 
76,786

   Exchange differences on translating foreign operations
20
 
27,836

 
(7,467
)
 
(5,551
)
   Related tax impact
20
 
46,588

 
(17,146
)
 
(24,111
)
Total items that may be reclassified to the consolidated income statement in subsequent periods
 
 
(73,917
)
 
29,990

 
47,124

Total other comprehensive (loss)/income, net of tax
 
 
(77,595
)
 
29,377

 
45,529

Total comprehensive income
 
 
187,420

 
275,476

 
279,019

Total comprehensive income attributable to:
 
 
 
 
 
 
 
   Owners of the parent
 
 
181,375

 
270,790

 
271,075

   Non-controlling interests
 
 
6,045

 
4,686

 
7,944














The accompanying notes are an integral part of the Consolidated Financial Statements.

F-28



New Business Netherlands N.V.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at December 31, 2014 and 2013
 
 
 
 
At December 31,
 
Note
 
2014
 
2013
 
 
 
(€ thousand)
Assets
 
 
 
 
 
Goodwill
13
 
787,178

 
787,178

Intangible assets
14
 
265,262

 
242,167

Property, plant and equipment
15
 
585,185

 
567,814

Investments and other financial assets
16
 
47,431

 
37,911

Deferred tax assets
10
 
111,716

 
41,543

Total non-current assets
 
 
1,796,772

 
1,676,613

Inventories
17
 
296,005

 
237,496

Trade receivables
18
 
183,642

 
205,925

Receivables from financing activities
18
 
1,224,446

 
862,764

Current tax receivables
18
 
3,016

 
1,297

Other current assets
18
 
52,052

 
39,163

Current financial assets
19
 
8,747

 
74,759

Deposits in FCA Group cash management pools
18
 
942,469

 
683,672

Cash and cash equivalents
 
 
134,278

 
113,786

Total current assets
 
 
2,844,655

 
2,218,862

Total assets
 
 
4,641,427

 
3,895,475


 
 
 
 
 
Equity and liabilities
 
 
 
 
 
Equity attributable to owners of the parent
 
 
2,469,618

 
2,289,506

Non-controlling interests
 
 
8,695

 
26,776

Total equity
20
 
2,478,313

 
2,316,282


 
 
 
 
 
Employee benefits
21
 
76,814

 
65,479

Provisions
22
 
134,774

 
103,785

Deferred tax liabilities
10
 
21,612

 
27,958

Debt
23
 
510,220

 
317,304

Other liabilities
24
 
670,378

 
470,325

Other financial liabilities
19
 
104,093

 
4,485

Trade payables
25
 
535,707

 
485,948

Current tax payables
 
 
109,516

 
103,909

Total equity and liabilities
 
 
4,641,427

 
3,895,475





The accompanying notes are an integral part of the Consolidated Financial Statements.

F-29



New Business Netherlands N.V.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the years ended December 31, 2014, 2013 and 2012
 
 
 
For the years ended December 31,
 
 
2014
 
2013
 
2012
 
 
(€ thousand)
Cash and cash equivalents at beginning of the year
 
113,786

 
100,063

 
94,025

Cash flows from operating activities:
 
 
 
 
 
 
   Profit before taxes
 
398,233

 
366,400

 
334,599

   Amortization and depreciation
 
288,982

 
270,250

 
237,540

   Provision accruals
 
66,274

 
24,095

 
41,932

   Other non-cash expense and income
 
53,348

 
31,818

 
37,007

   Net gains on disposal of property, plant and equipment and intangible assets
 
(742
)
 
(1,259
)
 
(1,166
)
   Change in inventories
 
(65,548
)
 
(19,549
)
 
(18,940
)
   Change in trade receivables
 
824

 
(81,386
)
 
8,857

   Change in trade payables
 
12,986

 
14,260

 
24,770

   Change in receivables from financing activities
 
(201,692
)
 
(56,531
)
 
(148,422
)
   Change in other operating assets and liabilities
 
14,322

 
44,700

 
80,665

   Income tax paid
 
(140,920
)
 
(138,784
)
 
(134,322
)
Total
 
426,067

 
454,014

 
462,520

 
 
 
 
 
 
 
Cash flows used in investing activities:
 
 
 
 
 
 
   Investments in property, plant and equipment
 
(169,363
)
 
(161,653
)
 
(161,380
)
   Investments in intangible assets
 
(160,635
)
 
(109,250
)
 
(96,972
)
   Cash acquired in change in scope of consolidation
 
38,751

 

 

   Proceeds from the sale of property, plant and equipment and intangible assets
 
1,828

 
1,939

 
2,664

   Change in investments and other financial assets
 
(358
)
 
1,622

 
(1,960
)
Total
 
(289,777
)
 
(267,342
)
 
(257,648
)
 
 
 
 
 
 
 
Cash flows used in financing activities:
 
 
 
 
 
 
   Proceeds from bank borrowings
 
80,745

 
15,208

 
10,495

   Repayment of bank borrowings
 
(1,715
)
 
(10,010
)
 
(916
)
   Net change in financial liabilities with FCA Group
 
89,075

 
50,638

 
(292,588
)
   Net change in other debt
 
(27,638
)
 
8,189

 
22,877

   Net change in deposits in FCA Group cash management pools
 
(247,034
)
 
(227,495
)
 
72,887

   Dividends paid to non-controlling interest
 
(15,050
)
 

 
(7,148
)
Total
 
(121,617
)
 
(163,470
)
 
(194,393
)
 
 
 
 
 
 
 
   Translation exchange differences
 
5,819

 
(9,479
)
 
(4,441
)
Total change in cash and cash equivalents
 
20,492

 
13,723

 
6,038

Cash and cash equivalents at end of the year
 
134,278

 
113,786

 
100,063






The accompanying notes are an integral part of the Consolidated Financial Statements.

F-30



New Business Netherlands N.V.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the years ended December 31, 2014, 2013 and 2012
 
 
Attributable to owners of the parent
 
 
 
 
 
Share capital

Other reserves

Retained earnings

Cash flow hedge reserve

Currency translation differences

Remeasurement of defined benefit plans

Non-controlling interests

Total
 
(€ thousand)
At January 1, 2012


 


 
1,780,192

 
(46,936
)
 
16,713

 
(2,052
)
 
21,326

 
1,769,243

Dividends declared

 

 

 

 

 

 
(7,149
)
 
(7,149
)
Net profit

 

 
225,403

 

 

 

 
8,087

 
233,490

Other comprehensive income/(loss)

 

 

 
52,675

 
(5,408
)
 
(1,595
)
 
(143
)
 
45,529

At December 31, 2012


 


 
2,005,595

 
5,739

 
11,305

 
(3,647
)
 
22,121

 
2,041,113

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net profit

 

 
240,774

 

 

 

 
5,325

 
246,099

Other comprehensive income/(loss)

 

 

 
37,457

 
(6,828
)
 
(613
)
 
(639
)
 
29,377

Other changes

 


 
(276
)
 

 

 

 
(31
)
 
(307
)
At December 31, 2013


 


 
2,246,093

 
43,196

 
4,477

 
(4,260
)
 
26,776

 
2,316,282

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared

 

 

 

 

 

 
(79,369
)
 
(79,369
)
Transaction with non-controlling interest

 

 
(1,263
)
 

 

 

 
55,243

 
53,980

Net profit

 

 
261,371

 

 

 

 
3,644

 
265,015

Other comprehensive (loss)/income

 

 

 
(101,753
)
 
25,435

 
(3,678
)
 
2,401

 
(77,595
)
Reclassification (1)

 

 
1,191

 

 

 
(1,191
)
 

 

At December 31, 2014


 


 
2,507,392

 
(58,557
)
 
29,912

 
(9,129
)
 
8,695

 
2,478,313

______________________________
(1)
Relates to the reclassification of the actuarial gain recognized on the remeasurement of the defined benefit pension plan of the former Chairman of the Group.











The accompanying notes are an integral part of the Consolidated Financial Statements.

F-31



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012



1. BACKGROUND AND BASIS OF PRESENTATION
Background
Ferrari is among the world’s leading luxury brands. The activities of Ferrari S.p.A. and its subsidiaries are focused on the design, engineering, production and sale of luxury performance sports cars. The cars are designed, engineered and produced in Maranello and Modena, Italy and sold in more than 60 markets worldwide through a network of 180 independent dealers. The Ferrari brand is licensed to a select number of producers and retailers of luxury and lifestyle goods, with Ferrari branded merchandise also sold through a network of 32 Ferrari stores and on our website. To facilitate the sale of new and used cars, we provide various forms of financing, through our financial services entities, to both clients and dealers. We also participate in the Formula 1 World Championship through Scuderia Ferrari. The activities of Scuderia Ferrari are the core element of our marketing and promotion activities and an important source of innovation supporting the technological advancement of our sport and street cars.
Fiat S.p.A., subsequently merged with and into Fiat Chrysler Automobiles N.V. (Fiat S.p.A. and Fiat Chrysler Automobiles are defined as “FCA” as the context requires and together with their subsidiaries the “FCA Group”) acquired 50 percent of Ferrari S.p.A. in 1969, and over time expanded this shareholding to 90 percent ownership. The 90 percent shareholding was held by FCA until ____ , while the remaining 10 percent non-controlling interest was owned by Piero Ferrari until ____ .
On October 29, 2014, FCA announced its intention to separate Ferrari S.p.A. from FCA. The separation is expected to occur through a series of transactions (together defined as the “Separation”) including (i) an intra-group restructuring which will result in our acquisition of the assets and business of Ferrari North Europe Limited and the transfer by FCA of its 90 percent shareholding in Ferrari S.p.A. to New Business Netherlands N.V., to be renamed Ferrari N.V. (herein referred to as “Ferrari” or the “Company” and together with Ferrari S.p.A. and its subsidiaries the “Group”), (ii) the transfer of Piero Ferrari’s 10 percent shareholding in Ferrari S.p.A. to the Company, (iii) the initial public offering of common shares of the Company, and (iv) the distribution, following the initial public offering, of FCA’s remaining interest in Ferrari to its shareholders. After the Separation, Ferrari will operate as an independent, publicly traded company.
The transactions described above in (i) and (ii) (which are referred collectively to as the “Restructuring”) were completed on ____ through the following steps:
The Company acquired from Ferrari North Europe Limited its assets and business of providing sales, after-sales and support services for the Ferrari brand and in exchange the Company issued to Ferrari North Europe Limited a note in the principal amount of € ____ (the “FNE Note”).

FCA transferred to the Company all of the issued and outstanding share capital that it previously held in Ferrari S.p.A. (representing 90 percent of the share capital of Ferrari S.p.A.), and in exchange the Company issued to FCA a note in the principal amount of € ____ (the “FCA Note”).

FCA contributed cash of € ____ to the Company in consideration of the issue to FCA of ____ common shares and the same number of special voting shares of the Company. These common shares and special voting shares were issued at a nominal value of € ____ with a share premium of € ____ . € ____ of the cash proceeds received from FCA were used to settle a portion of the FCA Note, following which the principal outstanding on the FCA Note is € ____ , which is expected to be refinanced through third party debt. The Company also used € ____ of the cash proceeds received as a result of issuing shares to FCA to fully repay the FNE Note.

Piero Ferrari transferred his 10 percent interest in Ferrari S.p.A. to the Company and in exchange the Company issued to Piero Ferrari ____ of its common shares and special voting shares. Following a subsequent transaction with FCA, Piero Ferrari will own 10.0 percent of the Company’s share capital. The Company did not receive any cash consideration as part of this transaction.

    

F-32



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The Restructuring comprises: (i) a capital reorganization of the group under the Company, and (ii) the issuance of the FCA Note which is expected to be subsequently refinanced. In preparing these consolidated financial statements, the Company has retrospectively applied FCA’s basis of accounting for the Restructuring based on the following:
(i)
The capital reorganization:

The Company was formed by FCA solely to effect the Separation and will be controlled by FCA until completion of the Separation. Therefore, the capital reorganization does not meet the definition of a business combination in the context of IFRS 3 - “Business Combinations” but rather a combination of entities under common control and as such is excluded from the scope of IFRS 3. IFRS (as defined below) has no applicable guidance in accounting for such transactions. IAS 8 - “Accounting Policies, Changes in Accounting Estimates and Errors” states that in the absence of an IFRS which specifically applies to a transaction, the Company may consider the most recent pronouncements of other standard-setting bodies that use a similar conceptual framework to develop accounting standards or other accounting literature and accepted industry practices, to the extent that these do not conflict with the requirements in IFRS for dealing with similar and related issues or the definitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses in the IFRS Conceptual Framework for Financial Reporting (the “Framework”). Accordingly, the Company has considered the guidance in ASC 805-50-30-5 on common control transactions, which indicates that the receiving entity (the Company) is able to reflect the transferred assets and liabilities in its own accounting records at the carrying amount in the accounting records of the transferring entity (FCA). As a result, these consolidated financial statements include FCA’s recorded goodwill relating to Ferrari S.p.A. in the amount of €780,542 thousand.

The retrospective accounting for the capital reorganization is consistent with the principles underlying paragraph 64 of IAS 33 - “Earnings per Share” which requires calculation of basic and diluted earnings per share for all periods presented to be adjusted retrospectively if changes occur to the capital structure after the reporting period but before the financial statements are authorized for issue. SAB Topic 4C also requires that such changes be given retroactive effect in the balance sheet where they occur after the reporting period but before the financial statements are authorized for issue. The capital reorganization has been accounted for as though it had occurred effective January 1, 2012. In particular:
The issuance of ____ shares in the Company to FCA has been reflected as an increase in share capital and share premium in the amounts of € ____ and € ____ , respectively, with an offset to retained earnings of € ____ .
The issuance of ____ shares in the Company to Piero Ferrari has been reflected as an increase in share capital and share premium in the amounts of € ____ and € ____ , respectively, with an offset to retained earnings of € ____ .
The historical number of ordinary shares, nominal value per share, basic and diluted earnings per ordinary share amounts and other per share disclosures retrospectively reflect the capital structure of the Company post Restructuring for all periods presented, with the required disclosures presented in Notes 12 and 20.

(ii)
The issuance of the FCA Note:

The FCA Note and subsequent refinancing have not been reflected in the consolidated financial statements. The acquisition of the Ferrari North Europe Limited assets and business and the FNE Note eliminate on consolidation.


Basis of preparation
Authorization of consolidated financial statements and compliance with International Financial Reporting Standards
These consolidated financial statements of New Business Netherlands NV were authorized for issuance by the Board of Directors on July 19, 2015 and authorized in respect of the Restructuring and the matters described in Note 31 on ____ .

F-33



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). The designation IFRS also includes International Accounting Standards (“IAS”) as well as all the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC” and “SIC”).
The consolidated financial statements are prepared under the historical cost method, modified as required for the measurement of certain financial instruments, as well as on a going concern basis.
The Group’s presentation currency is Euro, which is also the functional currency of the Company, and unless otherwise stated information is presented in thousands of Euro.
Transactions with FCA
The Group generates a portion of its net revenues from sale of goods to other FCA Group companies. In particular, net revenues generated from FCA Group companies amounted to €266,641 thousand, €207,519 thousand and €86,123 thousand for the years ended December 31, 2014, 2013 and 2012, respectively. See Note 27 for further details.
The Group enters into commercial transactions with the FCA Group in the ordinary course of business. Receivables and payables are settled in the ordinary course of business and are recorded as assets and liabilities on the consolidated statement of financial position.
The Group receives various services, including human resources, payroll, financial reporting and tax, customs, accounting and treasury, institutional and industrial relations, procurement of insurance coverage, internal audit, IT and systems, risk, corporate security, executive compensation, legal and corporate affairs from the FCA Group. The costs associated with the services totaled €10,486 thousand, €10,773 thousand and €11,331 thousand for the years ended December 31, 2014, 2013 and 2012, respectively. Historically, these costs have been re-charged by the FCA Group based on the actual costs incurred for the services provided to the Group and are reflected as expenses according to their nature in the consolidated financial statements.
With respect to the general corporate costs that are incurred by FCA on behalf of its entire group, which include the costs of the executive officers of the FCA Group, costs of the corporate functions including treasury, human resources, finance and legal, business development, tax, headquarter costs and other related corporate costs, FCA allocates these costs to the Group based on the Group’s proportion of FCA’s consolidated revenues. During the years ended December 31, 2014, 2013 and 2012, corporate costs re-charged to the Group from FCA, amounted to €2,952 thousand, €3,328 thousand and €3,254 thousand, respectively and are reflected in the consolidated financial statements.
Historically the Group has participated in a group-wide cash management system at FCA Group, where the operating cash management, main funding operations and liquidity investment of the Group are centrally coordinated by dedicated treasury companies. The Group accesses funds deposited in these accounts on a daily basis, has the contractual right to withdraw these funds on demand and terminate these cash management arrangements depending on FCA's ability to pay at the relevant time. The deposits with FCA Group relating to the cash management are recorded in the consolidated statement of financial position as “Deposits in FCA Group cash management pools” and the finance income earned on such deposits is recorded in net financial income/expenses in the consolidated income statement. Certain entities of the Group have also entered into credit lines with FCA Group entities, these financial liabilities have been provided primarily to finance the activities of the Group’s financial services portfolio in North America and have been recorded as “Debt” in the consolidated statement of financial position. The finance expense associated with such financial liabilities is recorded in “Cost of sales” in the consolidated income statement.
Management believes that the assumptions underlying the consolidated financial statements, including the re-charges of expenses from FCA, are reasonable. Nevertheless, the consolidated financial statements may not include all of the actual expenses that would have been incurred by the Group and may not reflect the consolidated results of operations, financial position and cash flows had Ferrari been a stand-alone company during the periods presented. Actual costs that would have been incurred if Ferrari had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas.

F-34



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


2. SIGNIFICANT ACCOUNTING POLICIES
Format of the financial statements
The consolidated financial statements include the consolidated income statement, consolidated statement of comprehensive income/(loss), consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and notes thereto, (the “Consolidated Financial Statements”).
For presentation of the consolidated income statement, the Group uses a classification based on the function of expenses, as it is more representative of the format used for internal reporting and management purposes and is consistent with international practice.
In the consolidated income statement, the Group also presents a subtotal for Earnings Before Interest and Taxes (EBIT). EBIT distinguishes between the profit before taxes arising from operating items and those arising from financing activities. EBIT is the primary measure used by the Group’s Chief Operating Decision Maker (“CODM”), to assess performance.
For the consolidated statement of financial position, a mixed format has been selected to present current and non-current assets and liabilities, as permitted by IAS 1 paragraph 60. More specifically, the Consolidated Financial Statements include both industrial companies and financial services companies. The investment portfolios of the financial services companies are included in current assets, as the investments will be realized in their normal operating cycle. However, the financial services companies obtain only a portion of their funding from the market; the remainder has historically been obtained mainly through funding from certain of the Group’s operating companies and, to a lesser extent, intercompany funding from FCA Group, which provides funding to the financial services entities as the need arises. This financial service structure within the Group does not allow the separation of financial liabilities funding the financial services operations (whose assets are reported within current assets) and those funding the industrial operations. Presentation of financial liabilities as current or non-current based on their date of maturity would not facilitate a meaningful comparison with financial assets, which are categorized on the basis of their normal operating cycle. Disclosure as to the due date of the debt is provided in Note 23.
The consolidated statement of cash flows is presented using the indirect method.
New standards and amendments effective from January 1, 2014
The following new standards and amendments that are applicable from January 1, 2014 were adopted by the Group for the purpose of the preparation of the Consolidated Financial Statements. Their adoption had no significant impact on the Consolidated Financial Statements.
Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32 - Financial Instruments: Presentation)
The Group adopted the amendments to IAS 32 - Financial Instruments: Presentation effective January 1, 2014. The amendments clarify the application of certain offsetting criteria for financial assets and financial liabilities and are required to be applied retrospectively. The Group has no applicable netting agreements, accordingly these amendments had no impact on the Consolidated Financial Statements.
Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36 - Impairment of Assets)
The Group adopted the amendments to IAS 36 - Recoverable Amount Disclosures for Non-Financial Assets addressing the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less cost of disposal effective January 1, 2014, without reporting any effect on the Consolidated Financial Statements. The application of these amendments will result in expanded disclosure in the notes to future annual consolidated financial statements in case of an impairment that is based on fair value less cost of disposal. No effect arose on the Consolidated Financial Statements from the application of these amendments.

F-35



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39 - Financial Instruments: Recognition and Measurement)
These amendments, which were adopted from January 1, 2014, allow hedge accounting to continue in a situation where a derivative, which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met. No effect arose on the Consolidated Financial Statements from the application of these amendments.
Accounting for an obligation to pay a levy that is not income tax (IFRIC Interpretation 21 - Levies an interpretation of IAS 37 - Provisions, Contingent Liabilities and Contingent Assets)
The interpretation, effective from January 1, 2014, sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognized. No effect arose on the Consolidated Financial Statements from the application of this interpretation.
New standards, amendments and interpretations not yet effective
The standards, amendments and interpretations issued by the IASB that will have mandatory application in 2015 or subsequent years are listed below:
In November 2013, the IASB published narrow scope amendments to IAS 19 - Employee Benefits entitled “Defined Benefit Plans: Employee Contributions.” These amendments apply to contributions from employees or third parties to defined benefit plans in order to simplify their accounting in specific cases. The amendments are effective, retrospectively, for annual periods beginning on or after July 1, 2014 with earlier application permitted. No effect is expected from the first time adoption of these amendments.
In December 2013, the IASB issued the Annual Improvements to IFRSs 2010 - 2012 Cycle and Annual Improvements to IFRSs 2011 - 2013 Cycle. The most important topics addressed in these amendments for the Group are the definition of vesting conditions in IFRS 2 - Share-Based Payments, the disclosure on judgment used in the aggregation of operating segments in IFRS 8 - Operating Segments, the identification and disclosure of a related party transaction that arises when a management entity provides key management personnel service to a reporting entity in IAS 24 - Related Party Disclosures, the extension of the exclusion from the scope of IFRS 3 - Business Combinations to all types of joint arrangements and to clarify the application of certain exceptions in IFRS 13 - Fair Value Measurement. The improvements are effective for annual periods beginning on or after January 1, 2015. No significant effect is expected from the first time adoption of these amendments.
In May 2014, the IASB issued amendments to IFRS 11 - Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations, clarifying the accounting for acquisitions of an interest in a joint operation that constitutes a business. The amendments are effective, retrospectively, for annual periods beginning on or after January 1, 2016 with earlier application permitted. No effect is expected from the adoption of these amendments.
In May 2014, the IASB issued an amendment to IAS 16 - Property, Plant and Equipment and to IAS 38 - Intangible Assets. The IASB has clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The IASB also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances. These amendments are effective for annual periods beginning on or after January 1, 2016, with early application permitted. The Group is currently evaluating the impact of this standard on its Consolidated Financial Statements.
In May 2014, the IASB issued IFRS 15 - Revenue from Contracts with Customers. The standard requires a company to recognize revenue upon transfer of control of goods or services to a customer at an amount that reflects the consideration it expects to receive. This new revenue recognition model defines a five step process to achieve this objective. The updated guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The standard is effective for annual periods beginning on or after January 1, 2017, and requires either a full or modified retrospective application. The Group is currently evaluating the method of implementation and impact of this standard on its Consolidated Financial Statements.

F-36



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


In July 2014, the IASB issued IFRS 9 - Financial Instruments. The improvement package introduced by the new standard includes a logical approach for classification and measurement of financial instruments driven by cash flow characteristics and the business model in which an asset is held, a single “expected loss” impairment model for financial assets and a substantially reformed approach for hedge accounting. The standard is effective, retrospectively with limited exceptions, for annual periods beginning on or after January 1, 2018 with earlier application permitted. The Group is currently evaluating the impact of this standard on its Consolidated Financial Statements.
In September 2014, the IASB issued narrow amendments to IFRS 10 - Consolidated Financial Statements and IAS 28 - Investments in Associates and Joint Ventures (2011). The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011), in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. The amendments will be effective, prospectively, for annual periods commencing on or after January 1, 2016. The Group is currently evaluating the impact of these amendments on its Consolidated Financial Statements.
In September 2014, the IASB issued the Annual Improvements to IFRSs 2012 - 2014 cycle, a series of amendments to IFRSs in response to issues raised mainly on IFRS 5 - Non-Current Assets Held for Sale and Discontinued Operations, on the changes of method of disposal, on IFRS 7 - Financial Instruments: Disclosures on the servicing contracts, and on IAS 19 - Employee Benefits, on the discount rate determination. The effective date of the amendments is January 1, 2016. The Group is currently evaluating the impact of these amendments on its Consolidated Financial Statements.
In December 2014, the IASB issued amendments to IAS 1 - Presentation of Financial Statements as part of its major initiative to improve presentation and disclosure in financial reports. The amendments make clear that materiality applies to the whole of financial statements and that the inclusion of immaterial information can inhibit the usefulness of financial disclosures. Furthermore, the amendments clarify that companies should use professional judgment in determining where and in what order information is presented in the financial disclosures. The amendments are effective for annual periods beginning on or after January 1, 2016 with early application permitted. The Group is currently evaluating the impact of these amendments on its Consolidated Financial Statements.
Basis of consolidation
Subsidiaries
Subsidiaries are entities over which the Group has control. Control is achieved when the Group has power over the investee, when it is exposed to, or has rights to, variable returns from its involvement with the investee, and has the ability to use its power over the investee to affect the amount of the investor’s returns. Subsidiaries are consolidated on a line by line basis from the date on which the Group achieves control. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
The Group recognizes any non-controlling interests in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s share of the recognized amounts of the acquiree’s identifiable net assets. Net profit or loss and each component of other comprehensive income/(loss) are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income/(loss) of subsidiaries is attributed to owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
All significant intra-group balances and transactions and any unrealized gains and losses arising from intra-group transactions are eliminated in preparing the Consolidated Financial Statements.
Interests in joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

F-37



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


When the Group undertakes its activities under joint operations, it recognizes in relation to its interest in the joint operation: (i) its assets, including its share of any assets held jointly, (ii) its liabilities, including its share of any liabilities incurred jointly, (iii) its revenue from the sale of its share of the output arising from the joint operation, (iv) its share of the revenue from the sale of the output by the joint operation, and (v) its expenses, including its share of any expenses incurred jointly.
Foreign currency transactions
The functional currency of the Group’s entities is the currency of their primary economic environment. In individual companies, transactions in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign currency exchange rate prevailing at that date. Exchange differences arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the period or in previous financial statements, are recognized in the consolidated income statement.
Consolidation of foreign entities
All assets and liabilities of foreign consolidated companies with a functional currency other than the Euro are translated using the closing rates at the date of the consolidated statement of financial position. Income and expenses are translated into Euro at the average foreign currency exchange rate for the period. Translation differences resulting from the application of this method are classified as currency translation differences within other comprehensive income/(loss) until the disposal of the investment. Average foreign currency exchange rates for the period are used to translate the cash flows of foreign subsidiaries in preparing the consolidated statement of cash flows.
Goodwill, assets acquired and liabilities assumed arising from the acquisition of entities with a functional currency other than the Euro are recognized in the Consolidated Financial Statements in the functional currency and translated at the foreign currency exchange rate at the acquisition date. These balances are translated at subsequent balance sheet dates at the relevant foreign currency exchange rate.
The principal foreign currency exchange rates used to translate other currencies into Euro were as follows:
 
2014
 
2013
 
2012
 
Average
 
At December 31,
 
Average
 
At December 31,
 
Average
 
At December 31,
U.S. Dollar
1.3287

 
1.2141

 
1.3279

 
1.3791

 
1.2848

 
1.3194

Pound Sterling
0.8062

 
0.7789

 
0.8492

 
0.8337

 
0.8109

 
0.8161

Swiss Franc
1.2146

 
1.2024

 
1.2310

 
1.2276

 
1.2053

 
1.2072

Japanese Yen
140.3146

 
145.2300

 
129.6283

 
144.7200

 
102.4919

 
113.6100

Chinese Yuan
8.1874

 
7.5358

 
8.1638

 
8.3491

 
8.1058

 
8.2207

Australian Dollar
1.4720

 
1.4829

 
1.3771

 
1.5423

 
1.2407

 
1.2712

Singapore Dollar
1.6826

 
1.6058

 
1.6616

 
1.7414

 
1.6055

 
1.6111

Intangible assets
Goodwill
Goodwill is not amortized, but is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Development costs
Development costs for car project production and related components, engines and systems are recognized as an asset if, and only if, both of the following conditions under IAS 38 - Intangible Assets are met: that development costs can be measured reliably and that the technical feasibility of the product, volumes and pricing support the view that the development expenditure will generate future economic benefits. Capitalized development costs include all direct and indirect costs that may be directly attributed to the development process.

F-38



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Capitalized development costs are amortized on a straight-line basis from the start of production over the estimated lifecycle of the model and the useful life of the components (generally between four and eight years). All other research and development costs are expensed as incurred.
In particular the Group incurs significant research and development costs through the Formula 1 racing activities. These costs are considered fundamental to the development of the sports and street car models and prototypes. The model for the Formula 1 racing activities continually evolves and as such these costs are expensed as incurred.
Patents, concessions and licenses
Separately acquired patents, concessions and licenses are initially recognized at cost. Patents, concessions and licenses acquired in a business combination are initially recognized at fair value. Patents, concessions and licenses are amortized on a straight-line basis over their useful economic lives, which is generally between three and five years.
Other intangible assets
Other intangible assets mainly relate to the registration of trademarks and have been recognized in accordance with IAS 38 - Intangible Assets , where it is probable that the use of the asset will generate future economic benefits for the Group and where the cost of the asset can be measured reliably. Other intangible assets are measured at cost less any impairment losses and amortized on a straight-line basis over their estimated life, which is generally between three and five years.
Property, plant and equipment
Cost
Property, plant and equipment is initially recognized at cost which comprises the purchase price, any costs directly attributable to bringing the assets to the location and condition necessary to be capable of operating in the manner intended by management, capitalized borrowing costs and any initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Self-constructed assets are initially recognized at production cost. Subsequent expenditures and the cost of replacing parts of an asset are capitalized only if they increase the future economic benefits embodied in that asset. All other expenditures are expensed as incurred. When such replacement costs are capitalized, the carrying amount of the parts that are replaced is recognized as a loss in the period of replacement in the consolidated income statement.
Depreciation
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:
 
Depreciation rates
Industrial buildings
3% - 20%
Plant, machinery and equipment
5% - 22%
Other assets
12% - 25%
Land is not depreciated.
If the asset being depreciated consists of separately identifiable components whose useful lives differ from that of the other parts making up the asset, depreciation is charged separately for each of its component parts through application of the ‘component approach’.
Investment property
Investment property is defined as property held by the Group to earn rental income or for capital appreciation or both, rather than for sale in the ordinary course of business or for use in supply of goods or services or for administrative purposes and includes investment property under construction. Investment property is measured initially at cost including transaction costs. Subsequent to initial recognition, the Group elected to measure investment property at cost less accumulated depreciation and accumulated impairment losses, if any. Investment property is depreciated on a straight-line basis over 33 years.

F-39



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The rental income generated by investment properties is recognized within net revenues in the consolidated income statement.
Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use.
All other borrowing costs are expensed in net financial expenses if related to the Group’s industrial activities or cost of sales if related to the Group’s financial services activities in the consolidated income statement, as incurred.
Impairment of assets
The Group continuously monitors its operations to assess whether there is any indication that its intangible assets (including development costs) and its property, plant and equipment may be impaired. Goodwill is tested for impairment annually or more frequently, if there is an indication that an asset may be impaired.
If indications of impairment are present, the carrying amount of the asset is reduced to its recoverable amount, which is the higher of fair value less costs of disposal and its value in use. The recoverable amount is determined for the individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the asset is tested as part of the cash-generating unit (“CGU”) to which the asset belongs. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. In assessing the value in use of an asset or CGU, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognized if the recoverable amount is lower than the carrying amount.
Where an impairment loss for assets other than goodwill, subsequently no longer exists or has decreased, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but not in excess of the carrying amount that would have been recorded had no impairment loss been recognized. The reversal of an impairment loss is recognized in the consolidated income statement immediately.
Financial instruments
Presentation
Financial instruments held by the Group are presented in the Consolidated Financial Statements as described in the following paragraphs.
Investments and other financial assets include investment properties, investments in unconsolidated companies and other non-current financial assets.
Current financial assets, as defined in IAS 39 - Financial Instruments: Recognition and Measurement , include trade receivables, receivables from financing activities and current financial assets (which include derivative financial instruments stated at fair value), deposits in FCA Group cash management pools and cash and cash equivalents.
Financial liabilities comprise debt (which include bank borrowings and financial liabilities with FCA Group) and other financial liabilities (which mainly include derivative financial instruments stated at fair value), trade payables and other liabilities.
Measurement
Non-current financial assets other than investments, as well as current financial assets and financial liabilities, are accounted for in accordance with IAS 39.
Current financial assets are recognized on the basis of the settlement date and, on initial recognition, are measured at acquisition cost. Subsequent to initial recognition, current financial assets are measured at fair value. When market prices are

F-40



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


not directly available, the fair value of current financial assets are measured using appropriate valuation techniques (e.g. discounted cash flow analysis based on market information available at the balance sheet date).
Loans and receivables which are not held by the Group for trading (loans and receivables originating in the ordinary course of business) and equity investments whose fair value cannot be determined reliably, are measured, to the extent that they have a fixed term, at amortized cost, using the effective interest rate method. When the financial assets do not have a fixed term, they are measured at acquisition cost. Receivables with maturities of over one year which bear no interest or an interest rate significantly lower than market rates are discounted using market rates. Assessments are made regularly as to whether there is any objective evidence that a financial asset or group of assets may be impaired. If any such evidence exists, an impairment loss is included in the consolidated income statement for the period within net financial income/(expenses).
Except for derivative instruments, financial liabilities are measured at amortized cost using the effective interest rate method.
Derivative financial instruments
Derivative financial instruments are used for economic hedging purposes, in order to reduce currency risks. In accordance with IAS 39, derivative financial instruments qualify for hedge accounting only when at the inception of the hedge there is formal designation and documentation of the hedging relationship, the hedge is expected to be highly effective, its effectiveness can be reliably measured and it is highly effective throughout the financial reporting periods for which it is designated.
All derivative financial instruments are measured at fair value.
When derivative financial instruments qualify for hedge accounting, the following accounting treatments apply:
Cash flow hedges - Where a derivative financial instrument is designated as a hedge of the exposure to variability in future cash flows of a recognized asset or liability or a highly probable forecasted transaction and could affect the consolidated income statement, the effective portion of any gain or loss on the derivative financial instrument is recognized directly in other comprehensive income/(loss). The cumulative gain or loss is reclassified from other comprehensive income/(loss) to the consolidated income statement at the same time as the economic effect arising from the hedged item affects the consolidated income statement. The gain or loss associated with a hedge or part of a hedge that has become ineffective is recognized in the consolidated income statement immediately within net financial income/(expense). When a hedging instrument or hedge relationship is terminated but the hedged transaction is still expected to occur, the cumulative gain or loss realized to the point of termination remains in other comprehensive income/(loss) and is recognized in the consolidated income statement at the same time as the underlying transaction occurs. If the hedged transaction is no longer probable, the cumulative unrealized gain or loss held in other comprehensive income/(loss) is recognized in the consolidated income statement immediately.
The Group did not use fair value hedges or hedges of a net investment in the period covered by these Consolidated Financial Statements.
For further information on the effects reflected on the consolidated income statement from derivative financial instruments refer to Note 19.
If hedge accounting cannot be applied, the gains or losses from the fair value measurement of derivative financial instruments are recognized immediately in the consolidated income statement within net financial income/(expenses).
Trade receivables
Trade receivables are amounts due from clients for goods sold or services provided in the ordinary course of business. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method, less any provision for allowances.

F-41



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Inventories
Inventories of raw materials, semi-finished products and finished goods are stated at the lower of cost and net realizable value, cost being determined on a first in-first-out (FIFO) basis. The measurement of inventories includes the direct costs of materials, labor and indirect costs (variable and fixed). Purchase costs include ancillary costs. Prototypes are recognized at their estimated realizable value, if lower than production cost. Provision is made for obsolete and slow-moving raw materials, finished goods, spare parts and other supplies based on their expected future use and realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs for sale and distribution.
Transfers of financial assets
The Group sells a significant part of its trade and financial receivables to external parties outside of the FCA Group through factoring transactions. Factoring transactions of the Group are all without recourse.
The Group derecognizes financial assets when, and only when, the contractual rights and risks to the cash flows arising from the asset are no longer held or if it transfers the financial asset. In case of a transfer of financial asset, if the Group transfers substantially all the risks and rewards of ownership of the financial asset, it derecognizes the financial asset and recognizes separately as assets or liabilities any rights and obligations created or retained in the transfer.
On derecognition of financial assets, the difference between the carrying amount of the asset and the consideration received or receivable for the transfer of the asset is recognized in the consolidated income statement in cost of sales.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. Cash and cash equivalents do not include deposits in FCA Group cash management pools.
Employee benefits
Defined contribution plans
Costs arising from defined contribution plans are expensed as incurred.
Defined benefit plans
The Group’s net obligations are determined separately for each plan by estimating the present value of future benefits that employees have earned in the current and prior periods, and deducting the fair value of any plan assets. The present value of the defined benefit obligation is measured using actuarial techniques and actuarial assumptions that are unbiased and mutually compatible and attributes benefits to periods in which the obligation to provide post-employment benefits arise by using the Projected Unit Credit Method.
The components of the defined benefit cost are recognized as follows:
the service costs are recognized in the consolidated income statement by function and presented in the relevant line items (cost of sales, selling, general and administrative costs, research and development costs, etc.);
the net interest on the defined benefit liability is recognized in the consolidated income statement as net financial income /(expenses), and is determined by multiplying the net liability/(asset) by the discount rate used to discount obligations taking into account the effect of contributions and benefit payments made during the year; and
the remeasurement components of the net obligations, which comprise actuarial gains and losses and any change in the effect of the asset ceiling are recognized immediately in other comprehensive income/(loss). These remeasurement components are not reclassified in the consolidated income statement in a subsequent period.

F-42



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Other long-term employee benefits
The Group’s obligations represent the present value of future benefits that employees have earned in return for their service during the current and prior periods. Remeasurement components on other long-term employee benefits are recognized in the consolidated income statement in the period in which they arise.
Provisions
Provisions are recognized when the Group has a present obligation, legal or constructive, as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made.
Warranty provision
All cars are sold with warranty coverage. The warranty coverage generally applies to defects that may become apparent within a certain period from the purchase of the car.
The warranty provision is recognized at the time of the sale of the car, based on the present value of management’s estimate of the expected cost to fulfill the obligations over the contractual warranty period, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the warranty provision. Estimates are principally based on the Group’s historical claims or costs experience and the cost of parts and services to be incurred in the activities. The costs related to these provisions are recognized within cost of sales.
Deferred income
Deferred income relates to amounts received by the Group under various agreements, which are reliant on the future performance of a service or other act of the Group. Deferred income is recognized as net revenues when the Group has fulfilled its obligations under the terms of the various agreements.
Range models (models belonging to our product portfolio, excluding special series, limited edition and one-off ( fuori-serie) models) are sold with a scheduled maintenance program to ensure that the cars are maintained to the highest standards to meet the Group’s strict requirements for performance and safety. Amounts attributable to the maintenance program are not recognized as income immediately, but are deferred over the maintenance program term. The amount of the deferred income related to this program, is based on the estimated fair value of the service to be provided.
Advances
Advances relate to amounts received from or billed to clients in advance of having provided the related supplies or in advance of having begun the supply of the related services.
Revenue recognition
Revenues from shipments of cars are recognized if it is probable that the economic benefits associated with a transaction will flow to the Group and the revenue can be reliably measured. Revenues are recognized when the risks and rewards of ownership are transferred to our dealers, the sales price is agreed or determinable and collectability is reasonably assured; for cars this generally corresponds to the date when the cars are released to the carrier responsible for transporting cars to dealers.
Revenues are recognized net of discounts including but not limited to, sales incentives and performance based bonuses.
Revenues from separately-priced extended warranty contracts are recognized over the contract period in proportion to the costs expected to be incurred based on historical information. A loss on these contracts is recognized if the sum of the expected costs for services under the contract exceeds unearned revenues. The Group offers a scheduled maintenance program on range models, which is not separately priced. The Group allocates revenue between the car and the maintenance program based on their relative estimated fair values. Amounts paid and attributed to the maintenance program are deferred and recognized as net revenues over the maintenance program period.

F-43



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Revenues from sponsorship and licensing agreements are recognized on a straight-line basis over the contract term. Certain of the sponsorship agreements contain performance related conditions while certain of the licensing agreements contain minimum guaranteed payments. Performance related sponsorship revenues and licensing revenues in excess of the minimum guaranteed payment are recognized when certain, which is typically when the related conditions have been achieved.
Revenues also include operating lease rentals in conjunction with the rental of engines to other Formula 1 racing teams. Revenues from operating leases are recognized on a straight-line basis over the relevant term of the lease.
Interest income earned in conjunction with the provision of client and dealer financing are reported within the line item “Finance income from financial services companies” using the effective interest rate method.
Revenues from commercial activities relate to the revenues received from participating in the Formula 1 World Championship. The revenues attributable to each racing team are governed by a specific agreement and depend upon, among other factors, the prior year ranking of each of the racing teams. Revenues of the commercial activities are recognized pro-rata over the year.
Cost of sales
Cost of sales comprises expenses incurred in the manufacturing and distribution of cars and parts, including the engines rented to other Formula 1 racing teams, of which, cost of materials, components and labor costs are the most significant portion. The remaining costs principally include depreciation, amortization, insurance and transportation costs. Cost of sales also includes warranty and product-related costs, which are estimated and recorded at the time of sale of the car.
Expenses which are directly attributable to the financial services companies, including the interest expenses related to their financing as a whole and provisions for risks and write-downs of assets, are also reported in cost of sales.
Taxes
Income taxes include all taxes based upon the taxable profits of the Group. Current and deferred taxes are recognized as income or expense and are included in the consolidated income statement for the period, except tax arising from (i) a transaction or event which is recognized, in the same or a different period, either in other comprehensive income/(loss) or directly in equity, or (ii) a business combination.
Deferred taxes are accounted using the full liability method. Deferred tax liabilities are recognized for all taxable temporary differences between the carrying amounts of assets or liabilities and their tax base, except to the extent that the deferred tax liabilities arise from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized, unless the deferred tax assets arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax assets and liabilities are measured at the substantively enacted tax rates in the respective jurisdictions in which the Group operates that are expected to apply to the period when the asset is realized or liability is settled.
The recoverability of deferred tax assets is dependent on the Group’s ability to generate sufficient future taxable income in the period in which it is assumed that the deductible temporary differences reverse and tax losses carried forward can be utilized. In making this assessment, the Group considers future taxable income arising on the most recent budgets and plans, prepared by using the same criteria described for testing the impairment of assets and goodwill, moreover, it estimates the impact of the reversal of taxable temporary differences on earnings and it also considers the period over which these assets could be recovered. The carrying amount of deferred tax assets is reduced to the extent that it is not probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax assets to be utilized.
The Group recognizes deferred tax liabilities associated with the existence of a subsidiary’s undistributed profits, except when it is able to control the timing of the reversal of the temporary difference; and it is probable that this temporary difference will not reverse in the foreseeable future. The Group recognizes deferred tax assets associated with the deductible temporary

F-44



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


differences on investments in subsidiaries only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.
Deferred tax assets relating to the carry-forward of unused tax losses and tax credits, as well as those arising from deductible temporary differences, are recognized to the extent that it is probable that future profits will be available against which they can be utilized.
Current income taxes and deferred taxes are offset when they relate to the same taxation authority and there is a legally enforceable right of offset.
Italian Regional Income Tax (IRAP) is recognized within income tax expense. IRAP is calculated on a measure of income defined by the Italian Civil Code as the difference between operating revenues and costs, before financial income and expense, and in particular before cost of employees, credit losses and any interest included in lease payments. IRAP is applied on the tax base at 3.9 percent for the years ended December 31, 2014, 2013 and 2012.
Other taxes not based on income, such as property taxes and capital taxes, are included in other expenses/(income), net.
Dividends
Dividends payable by the Group are reported as a change in equity in the period in which they are approved by shareholders.
Segment reporting
The Group has determined that it has one operating and one reportable segment based on the information reviewed by its CODM in making decisions regarding allocation of resources and to assess performance.
Use of estimates
The Consolidated Financial Statements are prepared in accordance with IFRS which require the use of estimates, judgments and assumptions that affect the carrying amount of assets and liabilities, the disclosure of contingent assets and liabilities and the amounts of income and expenses recognized. The estimates and associated assumptions are based on elements that are known when the financial statements are prepared, on historical experience and on any other factors that are considered to be relevant.
The estimates and underlying assumptions are reviewed periodically and continuously by the Group. If the items subject to estimates do not perform as assumed, then the actual results could differ from the estimates, which would require adjustment accordingly. The effects of any changes in estimate are recognized in the consolidated income statement in the period in which the adjustment is made, or prospectively in future periods.
The items requiring estimates for which there is a risk that a material difference may arise in respect of the carrying amounts of assets and liabilities in the future are discussed below.
Allowance for doubtful accounts
The allowances for doubtful accounts reflect management’s estimate of losses inherent in the dealer and end-client credit portfolio. The allowances for doubtful accounts are based on management’s estimation of the losses to be incurred, which derives from past experience with similar receivables, current and historical past due amounts, write-offs and collections, and careful monitoring of portfolio credit quality.
At December 31, 2014, the Group had gross receivables from financing activities of €1,238,647 thousand (€873,629 thousand at December 31, 2013), and allowances for doubtful accounts of €14,201 thousand at December 31, 2014 or 1.1 percent of the gross balance (€10,865 thousand at December 31, 2013, or 1.2 percent of the gross balance). Provisions for doubtful accounts charged to the consolidated income statement as cost of sales were €6,769 thousand for the year ended December 31, 2014 (€3,997 thousand for the year ended December 31, 2013 and €7,923 thousand for year ended December 31, 2012).

F-45



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


At December 31, 2014, the Group had gross trade receivables of €198,306 thousand (€236,123 thousand at December 31, 2013), and allowances for doubtful accounts of €14,664 thousand, or 7.4 percent of the gross trade receivable balance (€30,198 thousand at December 31, 2013, or 12.8 percent of the gross trade receivable balance). Provisions for doubtful accounts charged to the consolidated income statement as selling, general and administrative costs were €6,356 thousand for the year ended December 31, 2014 (€10,521 thousand for the year ended December 31, 2013 and €9,540 thousand for year ended December 31, 2012).
Should economic conditions worsen resulting in an increase in default risk, or if other circumstances arise, the estimates of the recoverability of amounts due to the Group could be overstated, and additional allowances could be required, which could have an adverse impact on the Group’s results.
Recoverability of non-current assets with definite useful lives
Non-current assets with definite useful lives include property, plant and equipment and intangible assets. Intangible assets with definite useful lives mainly consist of capitalized development costs.
The Group periodically reviews the carrying amount of non-current assets with definite useful lives when events and circumstances indicate that an asset may be impaired. Impairment tests are performed by comparing the carrying amount and the recoverable amount of the cash-generating unit (“CGU”). The recoverable amount is the higher of the CGU’s fair value less costs of disposal and its value in use. In assessing the 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 CGU.
For the period covered by these Consolidated Financial Statements, the Group has not recognized any impairment charges for non-current assets with definite useful lives.
Development costs
Development costs are capitalized if the conditions under IAS 38 - Intangible Assets have been met. The starting point for capitalization is based upon the technological and commercial feasibility of the project, which is usually when a product development project has reached a defined milestone according to the Group’s established product development model. Feasibility is based on management’s judgment which is formed on the basis of estimated future cash flows. Capitalization ceases and amortization of capitalized development costs begins on start of production of the relevant project.
The amortization of development costs requires management to estimate the lifecycle of the related model. Any changes in such assumptions would impact the amortization charge recorded and the carrying amount of capitalized development costs. The periodic amortization charge is derived after determining the expected lifecycle of the related model and, if applicable any expected residual value at the end of its life. Increasing an asset’s expected lifecycle or its residual value would result in a reduced amortization charge in the consolidated income statement.
The useful lives and residual values of the Group’s models are determined by management at the time of capitalization and reviewed annually for appropriateness. The lives are based on historical experience with similar assets as well as anticipation of future events which may impact their life such as changes in technology. Historically changes in useful lives and residual values have not resulted in material changes to the Group’s depreciation charge.
For the year ended December 31, 2014, the Group capitalized development costs of €144,757 thousand (€93,486 thousand for the year ended December 31, 2013).
Recoverability of goodwill
In accordance with IAS 36 - Impairment of Assets, goodwill is not amortized and is tested for impairment annually or more frequently if facts or circumstances indicate that the asset may be impaired.
As the Group is composed of one operating segment, goodwill is tested at Group level, which represents the lowest level within the Group at which goodwill is monitored for internal management purposes in accordance with IAS 36. The impairment test is performed by comparing the carrying amount (which mainly comprises property, plant and equipment, goodwill

F-46



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


and capitalized development costs) and the recoverable amount of the CGU, to which goodwill has been allocated. The recoverable amount of the CGU is the higher of its fair value less costs of disposal and its value in use.
Product warranties and liabilities
The Group establishes reserves for product warranties at the time the sale is recognized. The Group issues various types of product warranties under which the performance of products delivered is generally guaranteed for a certain period or term, which is generally defined by the legislation in the country where the car is sold. The reserve for product warranties includes the expected costs of warranty obligations imposed by law or contract, as well as the expected costs for policy coverage. The estimated future costs of these actions are principally based on assumptions regarding the lifetime warranty costs of each car line and each model year of that car line, as well as historical claims experience for the Group’s cars. In addition, the number and magnitude of additional service actions expected to be approved, and policies related to additional service actions, are taken into consideration. Due to the uncertainty and potential volatility of these estimated factors, changes in the assumptions used could materially affect the results of operations.
The Group periodically initiates voluntary service actions to address various client satisfaction, safety and emissions issues related to cars sold. Included in the reserve is the estimated cost of these services and recall actions. The estimated future costs of these actions are based primarily on historical claims experience for the Group’s cars. Estimates of the future costs of these actions are inevitably imprecise due to several uncertainties, including the number of cars affected by a service or recall action. It is reasonably possible that the ultimate cost of these service and recall actions may require the Group to make expenditures in excess of (or less than) established reserves over an extended period of time. The estimate of warranty and additional service obligations is periodically reviewed during the year.
In addition, the Group makes provisions for estimated product liability costs arising from property damage and personal injuries including wrongful death, and potential exemplary or punitive damages alleged to be the result of product defects. By nature, these costs can be infrequent, difficult to predict and have the potential to vary significantly in amount. Costs associated with these provisions are recorded in the consolidated income statement and any subsequent adjustments are recorded in the period in which the adjustment is determined.
Other contingent liabilities
The Group makes provisions in connection with pending or threatened disputes or legal proceedings when it is considered probable that there will be an outflow of funds and when the amount can be reasonably estimated. If an outflow of funds becomes possible but the amount cannot be estimated, the matter is disclosed in the notes to the Consolidated Financial Statements. The Group is the subject of legal and tax proceedings covering a wide range of matters in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the outflow of funds that could result from such disputes with any certainty. Moreover, the cases and claims against the Group often derive from complex legal issues which are subject to a differing degree of uncertainty, including the facts and circumstances of each particular case and the manner in which applicable law is likely to be interpreted and applied to such fact and circumstances, and the jurisdiction and the different laws involved. The Group monitors the status of pending legal proceedings and consults with experts on legal and tax matters on a regular basis. It is therefore possible that the provisions for the Group’s legal proceedings and litigation may vary as the result of future developments in pending matters.
Litigation
Various legal proceedings, claims and governmental investigations are pending against the Group on a wide range of topics, including car safety; emissions and fuel economy, early warning reporting; dealer, supplier and other contractual relationships; intellectual property rights and product warranties matters. Some of these proceedings allege defects in specific component parts or systems (including airbags, seat belts, brakes, transmissions, engines and fuel systems) in various car models or allege general design defects relating to car handling and stability, sudden unintended movement or crashworthiness. These proceedings seek recovery for damage to property, personal injuries or wrongful death and in some cases could include a claim for exemplary or punitive damages. Adverse decisions in one or more of these proceedings could require the Group to pay substantial damages, or undertake service actions, recall campaigns or other costly actions.
Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. An accrual is established in connection with pending or threatened litigation if a loss is probable and a reliable estimate can be made.

F-47



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Since these accruals represent estimates, it is reasonably possible that the resolution of some of these matters could require the Group to make payments in excess of the amounts accrued. It is also reasonably possible that the resolution of some of the matters for which accruals could not be made may require the Group to make payments in an amount or range of amounts that could not be reasonably estimated.
The term “reasonably possible” is used herein to mean that the chance of a future transaction or event occurring is more than remote but less than probable. Although the final resolution of any such matters could have a material effect on the Group’s operating results for the particular reporting period in which an adjustment of the estimated reserve is recorded, it is believed that any resulting adjustment would not materially affect the consolidated financial position of the Group.

F-48



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


3. SCOPE OF CONSOLIDATION
The Consolidated Financial Statements at December 31, 2014, 2013 and 2012 include New Business Netherlands N.V., Ferrari S.p.A. and its subsidiaries. The Group had the following subsidiaries at December 31, 2014:
Name
 
Country
 
Nature of business
 
Shares held by the Group
 
Shares held by non-controlling interests (NCI)
Directly held interests
 
 
 
 
 
 
 
 
Ferrari North America Inc.
 
USA
 
Importer and distributor
 
100
%
 
%
Ferrari Japan KK
 
Japan
 
Importer and distributor
 
100
%
 
%
Ferrari Australasia Pty Limited
 
Australia
 
Importer and distributor
 
100
%
 
%
Ferrari International Cars Trading (Shanghai) Co. L.t.d. (1)
 
China
 
Importer and distributor
 
80
%
 
20
%
Ferrari Far East Pte Limited
 
Singapore
 
Service company
 
100
%
 
%
Ferrari Management Consulting (Shanghai) Co. L.t.d.
 
China
 
Service company
 
100
%
 
%
Ferrari South West Europe S.a.r.l.
 
France
 
Service company
 
100
%
 
%
Ferrari Central East Europe GmbH
 
Germany
 
Service company
 
100
%
 
%
G.S.A. S.A.
 
Switzerland
 
Service company
 
100
%
 
%
Ferrari North Europe L.t.d.
 
UK
 
Service company
 
100
%
 
%
Ferrari GED S.p.A.
 
Italy
 
Investment property
 
100
%
 
%
Mugello Circuit S.p.A.
 
Italy
 
Racetrack management
 
100
%
 
%
Ferrari Financial Services S.p.A.
 
Italy
 
Financial services
 
90
%
 
10
%
Indirectly held interests
 
 
 
 
 
 
 
 
Ferrari Financial Services A.G. (2)
 
Germany
 
Financial services
 
90
%
 
10
%
Ferrari Financial Services Inc. (2)
 
USA
 
Financial services
 
90
%
 
10
%
Ferrari Financial Services Japan KK (2)
 
Japan
 
Financial services
 
90
%
 
10
%
410, Park Display Inc. (3)
 
USA
 
Company holding real estate
 
100
%
 
%
______________________________
(1)
In August 2014 the Group’s shareholding in Ferrari International Cars Trading (Shanghai) Co. L.t.d. increased from 59 percent to 80 percent. See “Non-controlling interests” for further information.
(2)
Shareholding held by Ferrari Financial Services S.p.A.
(3)
Shareholding held by Ferrari North America Inc.
The proportion of voting rights in the subsidiaries held directly by Ferrari S.p.A. does not differ from the proportion of ordinary shares held. Ferrari S.p.A. does not have any shareholdings in preference shares of subsidiaries.
As permitted by IFRS, certain subsidiaries (mainly dormant companies or entities with insignificant operations) are excluded from consolidation on a line-by-line basis and are accounted for at cost. Their aggregate assets and revenues represent less than 1 percent of the Group’s respective amounts for each period and at each date presented by these Consolidated Financial Statements.

F-49



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Non-controlling interests
The non-controlling interests arise from the Group’s holdings in Ferrari International Cars Trading (Shanghai) Co. Ltd (“FICTS”) and Ferrari Financial Services S.p.A. and its subsidiaries (the “FFS Group”):
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Equity attributable to non-controlling interests
8,695

 
26,776

Of which attributable to FICTS
4,109

 
23,102

Of which attributable to FFS Group
4,586

 
3,674

 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ thousand)
Net profit attributable to non-controlling interests
3,644

 
5,325

 
8,087

Of which attributable to FICTS
3,059

 
4,497

 
6,999

Of which attributable to FFS Group
585

 
828

 
1,088

The non-controlling interests in the FFS Group and FICTS are not considered to be significant to the Group.
Restrictions
The Group may be subject to restrictions which limit its ability to use cash in relation to its interest in FICTS. In particular, cash held in China is subject to certain repatriation restrictions (and may only be repatriated as dividends). Based on the Group’s review, it does not believe that such transfer restrictions have any adverse impacts on its ability to meet liquidity requirements.

4. NET REVENUES
Net revenues are as follows:
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ thousand)
Cars and spare parts
1,943,729

 
1,655,185

 
1,695,285

Engines
311,155

 
187,915

 
76,535

Sponsorship, commercial and brand
416,673

 
412,004

 
384,793

Other
90,803

 
80,166

 
68,594

Total net revenues
2,762,360

 
2,335,270

 
2,225,207

Other primarily includes interest income generated by the Ferrari Financial Services group and net revenues from the management of the Mugello racetrack.
5. COST OF SALES
Cost of sales in 2014 , 2013 and 2012 amounted to €1,505,889 thousand , €1,234,643 thousand and €1,198,901 thousand , respectively, comprising mainly of expenses incurred in the manufacturing and distribution of cars and parts, including the engines rented to other Formula 1 racing teams, of which, cost of materials, components and labor costs are the most significant

F-50



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


portion. The remaining costs principally include depreciation, amortization, insurance and transportation costs. Cost of sales also includes warranty and product-related costs, which are estimated and recorded at the time of shipment of the car.
Cost of sales in 2014 , 2013 and 2012 includes €15,992 thousand , €16,855 thousand and €18,681 thousand , respectively, of interest cost and other financial expenses from financial services companies.
6. SELLING, GENERAL AND ADMINISTRATIVE COSTS
General and administrative costs in 2014 , 2013 and 2012 amounted to €167,843 thousand , €136,687 thousand and €128,787 thousand , respectively, and mainly consist of administration expenses and other general expenses that are not directly attributable to sales, manufacturing or research and development functions.
Selling costs in 2014 , 2013 and 2012 amounted to €132,247 thousand , €123,193 thousand and €114,032 thousand , respectively, and mainly consist of marketing and sales personnel costs. Marketing and events expenses consist primarily of costs in connection with trade and auto shows, media and client events for the launch of new models and sponsorship and indirect marketing costs incurred through the Formula 1 racing team, Scuderia Ferrari.
In 2014 , general and administrative costs include €15,027 thousand in costs related to the resignation of the former Chairman of the Group.
7. RESEARCH AND DEVELOPMENT COSTS
Research and development costs are as follows:
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ thousand)
Amortization of capitalized development costs
125,497

 
120,444

 
97,949

Research and development costs expensed during the year
415,336

 
358,850

 
333,507

Total research and development costs
540,833

 
479,294

 
431,456

The main component of research and development costs expensed related to the research and development performed for the Formula 1 racing car, which included initiatives to maximize the performance, efficiency and safety of the car, which are expensed as incurred. See Note 14 for information on development costs capitalized.
The U.S. National Highway Traffic Safety Administration (“NHTSA”) recently published guidelines for driver distraction. These guidelines focus, among other things, on the need to modify the design of car devices and other driver interfaces to minimize driver distraction. We are in the process of evaluating these guidelines and their potential impact on our results of operations and financial position and determining what steps, if any, we will need to take to comply with the new requirements.

8. OTHER EXPENSES/(INCOME), NET
Other expenses/(income), net include other expenses of €39,190 thousand in 2014 ( €15,218 thousand in 2013 and €29,079 thousand in 2012 ), net of other income of €13,110 thousand in 2014 ( €17,314 thousand in 2013 and €12,545 thousand in 2012 ).
Other expenses/(income), net mainly relate to accruals to provisions for legal proceedings and disputes and other risks, indirect taxes and other miscellaneous expenses, partially offset by reversal of provisions for legal proceedings and disputes and other risks and other miscellaneous income.
Other expenses/(income), net in 2014 include €21,372 thousand of accruals to provisions of which €12,783 thousand relates to legal proceedings and disputes, and €8,589 thousand primarily relates to disputes with suppliers, employees and other parties relating to contracts. The most significant accruals to the provision for legal proceedings and disputes recognized in 2014, relate to litigation with a former distributor.

F-51



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


9. NET FINANCIAL INCOME/(EXPENSES)
The following table sets out details of financial income and expenses, including the amounts reported in the consolidated income statement within the financial income/(expenses) line item, as well as interest income from financial services activities, recognized under net revenues, and interest cost and other financial charges from financial services companies, recognized under cost of sales:
 
For the years ended December 31,
 
2014
 
2013
 
2012
Financial income:
(€ thousand)
Interest income from bank deposits
2,333

 
447

 
665

Other interest income and financial income
4,774

 
1,981

 
2,916

Interest income and other financial income:
7,107

 
2,428

 
3,581

Finance income from financial services companies
45,760

 
38,047

 
39,481

Total financial income
52,867

 
40,475

 
43,062




 


 


Total financial income relating to:


 


 


Industrial companies (A)
7,107

 
2,428

 
3,581

Financial services companies (reported within net revenues)
45,760

 
38,047

 
39,481




 


 


Financial expenses:


 


 


Interest expenses on financial liabilities with FCA Group
(6,141
)
 
(5,129
)
 
(5,047
)
Capitalized borrowing costs
1,588

 
1,981

 
2,042

Other interest cost and financial expenses
(985
)
 
(718
)
 
(940
)
Interest expense and other financial expenses
(5,538
)
 
(3,866
)
 
(3,945
)
Interest expenses from banks
(817
)
 
(315
)
 
(1,490
)
Write-downs of financial receivables
(6,769
)
 
(3,997
)
 
(7,923
)
Net interest expenses on employee benefits provisions
(400
)
 
(603
)
 
(906
)
Other financial expenses
(2,007
)
 
(7,769
)
 
(3,961
)
Total financial expenses
(15,531
)
 
(16,550
)
 
(18,225
)
Net income/(expenses) from derivative financial instruments and foreign currency exchange rate differences
1,197

 
118

 
(4,935
)
Total financial expenses and net expenses from derivative financial instruments and foreign currency exchange rate differences
(14,334
)
 
(16,432
)
 
(23,160
)



 


 


Total financial expenses and net income/(expenses) from derivative financial instruments and foreign currency exchange rate differences relating to:


 


 


Industrial companies (B)
1,658

 
423

 
(4,479
)
Financial services companies (reported in cost of sales)
(15,992
)
 
(16,855
)
 
(18,681
)
 
 
 
 
 
 
Net financial income/(expenses) relating to industrial companies (A+B)
8,765

 
2,851

 
(898
)

F-52



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


10. INCOME TAXES
Income tax expense is as follows:
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ thousand)
Current tax expense
137,468

 
132,904

 
135,533

Deferred tax (income)
(4,600
)
 
(12,067
)
 
(36,458
)
Taxes relating to prior periods
350

 
(536
)
 
2,034

Total income tax expense
133,218

 
120,301

 
101,109

The reconciliation between the income tax expense recorded in the Consolidated Financial Statements and the theoretical tax charge, calculated on the basis of the theoretical tax rates in effect in Italy, is as follows:
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ thousand)
Theoretical income tax expense
109,514

 
100,760

 
91,741

Tax effect on:
 
 
 
 
 
Recognition and utilization of previously unrecognized deferred tax assets

 

 
(8,170
)
Permanent differences
(3,061
)
 
(4,411
)
 
(3,639
)
Differences between foreign tax rates and the theoretical Italian tax rate and tax holidays
680

 
642

 
982

Taxes relating to prior years
350

 
(536
)
 
2,034

Withholding tax on earnings
6,607

 
6,358

 
2,457

Total income tax expense, excluding IRAP
114,090

 
102,813

 
85,405

Effective tax rate
28.6
%
 
28.1
%
 
25.6
%
IRAP (current and deferred)
19,128

 
17,488

 
15,704

Total income tax expense
133,218

 
120,301

 
101,109

Theoretical income taxes have been calculated at a rate of 27.5 percent for each of the years ended December 31, 2014 , 2013 and 2012 , which is the theoretical corporate rate of taxation in Italy.
In order to facilitate the understanding of the tax rate reconciliation presented above, IRAP has been presented separately. IRAP is calculated on a measure of income defined by the Italian Civil Code as the difference between operating revenues and costs, before financial income and expense, and in particular before cost of employees, credit losses and any interest included in lease payments. IRAP is applied on the tax base at 3.9 percent for each of the years ended December 31, 2014, 2013 and 2012.

F-53



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The analysis of deferred tax assets and deferred tax liabilities at December 2014 and 2013, is as follows:
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Deferred tax assets:
 
 
 
Deferred tax assets to be recovered after 12 months
63,935

 
24,807

Deferred tax assets to be recovered within 12 months
47,781

 
16,736

 
111,716

 
41,543

Deferred tax liabilities:
 
 
 
Deferred tax liability to be recovered after 12 months
(5,368
)
 
(5,581
)
Deferred tax liability to be recovered within 12 months
(16,244
)
 
(22,377
)
 
(21,612
)
 
(27,958
)
Net deferred tax assets
90,104

 
13,585

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
 
 
At December 31, 2012
 
Recognized in consolidated income statement
 
Charged to equity 
 
Changes in the scope of consolidation
 
Translation
differences
and other
changes 
 
At December 31, 2013
 
 
(€ thousand)
Deferred tax assets arising on:
 
 
 
 
 
 
 
 
 
 
Provisions
 
58,336

 
(1,291
)
 

 

 
(1,243
)
 
55,802

Deferred income
 
16,774

 
6,125

 

 

 
3,264

 
26,163

Employee benefits
 
220

 
268

 
1,799

 

 
(342
)
 
1,945

Foreign currency exchange rate differences
 
5,652

 
(4,562
)
 

 

 

 
1,090

Inventory obsolescence
 
15,541

 
907

 

 

 
(122
)
 
16,326

Allowances for doubtful accounts
 
6,936

 
2,170

 

 

 

 
9,106

Depreciation
 
17,785

 
1,643

 

 

 

 
19,428

Board of Directors compensation
 
1,053

 
(28
)
 

 

 

 
1,025

Other
 
3,290

 
159

 

 

 
(1,833
)
 
1,616

Total assets
 
125,587

 
5,391

 
1,799

 

 
(276
)
 
132,501

 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred tax liabilities arising on:
 
 
 
 
 
 
 
 
 
 
Depreciation
 
(10,711
)
 
1,135

 

 

 
121

 
(9,455
)
Capitalization of development costs
 
(78,936
)
 
8,597

 

 

 

 
(70,339
)
Employee benefits
 
(1,526
)
 
(107
)
 

 

 
342

 
(1,291
)
Foreign currency exchange rate differences
 
(4,521
)
 
3,717

 

 

 

 
(804
)
Cash flow hedge reserve
 
(2,579
)
 

 
(17,146
)
 

 

 
(19,725
)
Lease accounting
 
(12,826
)
 
277

 

 

 

 
(12,549
)
Withholding tax on undistributed earnings
 

 
(6,075
)
 

 

 

 
(6,075
)
Total liabilities
 
(111,099
)
 
7,544

 
(17,146
)
 

 
463

 
(120,238
)
Deferred tax asset arising on tax loss
carry-forward
 
2,218

 
(868
)
 

 

 
(28
)
 
1,322

Total net deferred tax assets
 
16,706

 
12,067

 
(15,347
)
 

 
159

 
13,585


F-54



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


 
 
At December 31, 2013
 
Recognized in consolidated income statement
 
Charged to equity 
 
Changes in the scope of consolidation
 
Translation
differences
and other
changes 
 
At December 31, 2014
 
 
(€ thousand)
Deferred tax assets arising on:
 
 
 
 
 
 
 
 
 
 
 
 
Provisions
 
55,802

 
5,597

 

 
13,178

 
(1,814
)
 
72,763

Deferred income
 
26,163

 
9,096

 

 

 
(220
)
 
35,039

Employee benefits
 
1,945

 
367

 
1,061

 

 

 
3,373

Cash flow hedge reserve
 

 

 
26,864

 

 
5

 
26,869

Foreign currency exchange rate differences
 
1,090

 

 

 

 

 
1,090

Inventory obsolescence
 
16,326

 
(338
)
 

 

 
435

 
16,423

Allowances for doubtful accounts
 
9,106

 
(1,587
)
 

 

 
(2,227
)
 
5,292

Depreciation
 
19,428

 
2,791

 

 

 

 
22,219

Board of Directors compensation
 
1,025

 
2,391

 

 

 

 
3,416

Other
 
1,616

 
(7,899
)
 

 
8,631

 
9,498

 
11,846

Total assets
 
132,501

 
10,418

 
27,925

 
21,809

 
5,677

 
198,330

 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred tax liabilities arising on:
 
 
 
 
 
 
 
 
 
 
Depreciation
 
(9,455
)
 
(2,014
)
 

 

 
(518
)
 
(11,987
)
Capitalization of development costs
 
(70,339
)
 
(3,536
)
 

 

 
(2,695
)
 
(76,570
)
Employee benefits
 
(1,291
)
 
(284
)
 

 

 

 
(1,575
)
Foreign currency exchange rate differences
 
(804
)
 
(1,546
)
 

 

 

 
(2,350
)
Cash flow hedge reserve
 
(19,725
)
 

 
19,724

 

 

 
(1
)
Lease accounting
 
(12,549
)
 
(76
)
 

 

 

 
(12,625
)
Withholding tax on undistributed earnings
 
(6,075
)
 
847

 

 

 

 
(5,228
)
Total liabilities
 
(120,238
)
 
(6,609
)
 
19,724

 

 
(3,213
)
 
(110,336
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred tax asset arising on tax loss
carry-forward
 
1,322

 
791

 

 

 
(3
)
 
2,110

Total net deferred tax assets
 
13,585

 
4,600

 
47,649

 
21,809

 
2,461

 
90,104

The decision to recognize deferred tax assets is made for each company in the Group by assessing critically whether the conditions exist for the future recoverability of such assets by taking into account the basis of the most recent forecasts from budgets and plans.
Deferred taxes on the undistributed earnings of subsidiaries have not been recognized, except in cases where it is probable the distribution will occur in the foreseeable future.
11. OTHER INFORMATION BY NATURE
Personnel costs in 2014 , 2013 and 2012 amounted to €279,680 thousand , €246,207 thousand and €232,575 thousand , respectively. These amounts include costs that were capitalized mainly in connection to product development activities.
In 2014 , the Group had an average number of employees of 2,843 ( 2,774 employees in 2013 and 2,708 employees in 2012 ).
12. EARNINGS PER SHARE
As discussed in Note 1, the Restructuring has been retrospectively reflected in these Consolidated Financial Statements in determining the number of shares outstanding as though the Restructuring had occurred effective January 1, 2012. Following the Restructuring, the Company has ____ common shares outstanding. The December 31, 2014, 2013 and 2012 share amounts have been adjusted to retrospectively reflect this change.

F-55



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012



Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of Ferrari by the weighted average number of ordinary shares in issue. The following table provides the amounts used in the calculation of basic earnings per share for the years ended December 31, 2014, 2013 and 2012:
 
 
For the years ended December 31,
 
 
2014
 
2013
 
2012
Profit attributable to owners of Ferrari
€ thousand
261,371

 
240,774

 
225,403

Weighted average number of ordinary shares
thousand


 


 


Basic earnings per ordinary share


 


 


Diluted earnings per share
Diluted earnings per share is equal to basic earnings per share as there were no potentially dilutive instruments for the years presented .
13. GOODWILL
At December 31, 2014, goodwill amounted to €787,178 thousand (€787,178 thousand at December 31, 2013).
In accordance with IAS 36, goodwill is not amortized and is tested for impairment annually, or more frequently if facts or circumstances indicate that the asset may be impaired. Impairment testing is performed by comparing the carrying amount and the recoverable amount of the CGU. The recoverable amount of the CGU is the higher of its fair value less costs to sell and its value in use.
The assumptions used in this process represent management’s best estimate for the period under consideration. The estimate of the value in use of the CGU for purposes of performing the annual impairment test was based on the following assumptions:
The expected future cash flows covering the period from 2015 through 2019 have been derived from the Ferrari business plan. In particular the estimate considers expected EBITDA adjusted to reflect the expected capital expenditure. These cash flows relate to the CGU in its condition when preparing the financial statements and exclude the estimated cash flows that might arise from restructuring plans or other structural changes. Volumes and sales mix used for estimating the future cash flows are based on assumptions that are considered reasonable and sustainable and represent the best estimate of expected conditions regarding market trends for the CGU over the period considered.
The expected future cash flows include a normalized terminal period used to estimate the future results beyond the time period explicitly considered, which were calculated by using the specific medium/long-term growth rate for the sector equal to 1.0 percent (1.0 percent in 2013 and 2.0 percent in 2012).
The expected future cash flows have been estimated in Euro, and discounted using a post-tax discount rate appropriate for that currency, determined by using a base WACC of 8.2 percent (8.4 percent in 2013 and 8.1 percent in 2012). The WACC used reflects the current market assessment of the time value of money for the period being considered and the risks specific to the CGU under consideration.
The recoverable amount of the CGU was significantly higher than its carrying amount. Furthermore, the exclusivity of the business, its historical profitability and its future earnings prospects indicate that the carrying amount of the goodwill will continue to be recoverable, even in the event of difficult economic and market conditions.

F-56



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


14. INTANGIBLE ASSETS
 
 
Externally
acquired
development
costs
 
Development
costs
internally
generated
 
Patents,
concessions
and licenses
 
Other
intangible
assets
 
Total
 
 
(€ thousand)
Gross carrying amount
Balance at January 1, 2013
 
610,808

 
268,277

 
98,256

 
32,139

 
1,009,480

Additions
 
63,777

 
29,709

 
12,770

 
2,994

 
109,250

Divestitures
 

 

 
(1,356
)
 

 
(1,356
)
Translation differences
 

 

 
(164
)
 
(142
)
 
(306
)
Balance at December 31, 2013
 
674,585

 
297,986

 
109,506

 
34,991

 
1,117,068

Additions
 
42,788

 
101,969

 
13,270

 
2,608

 
160,635

Divestitures
 

 

 
(645
)
 

 
(645
)
Translation differences
 

 

 
(9
)
 
(88
)
 
(97
)
Balance at December 31, 2014
 
717,373

 
399,955

 
122,122

 
37,511

 
1,276,961

 
 
 
 
 
 
 
 
 
 
 
Accumulated amortization and
impairment losses
Balance at January 1, 2013
 
443,502

 
181,621

 
89,095

 
30,196

 
744,414

Amortization
 
80,980

 
39,464

 
9,036

 
2,082

 
131,562

Divestitures
 

 

 
(940
)
 

 
(940
)
Translation differences
 

 

 
(46
)
 
(89
)
 
(135
)
Balance at December 31, 2013
 
524,482

 
221,085

 
97,145

 
32,189

 
874,901

Amortization
 
87,564

 
37,933

 
10,091

 
2,057

 
137,645

Divestitures
 

 

 
(630
)
 

 
(630
)
Translation differences
 

 

 
(6
)
 
(211
)
 
(217
)
Balance at December 31, 2014
 
612,046

 
259,018

 
106,600

 
34,035

 
1,011,699

 
 
 
 
 
 
 
 
 
 
 
Carrying amount at:
 
 
 
 
 
 
 
 
 
 
January 1, 2013
 
167,306

 
86,656

 
9,161

 
1,943

 
265,066

December 31, 2013
 
150,103

 
76,901

 
12,361

 
2,802

 
242,167

December 31, 2014
 
105,327

 
140,937

 
15,522

 
3,476

 
265,262

Additions of €160,635 thousand in 2014 ( €109,250 thousand in 2013 ) primarily relate to externally acquired and internally generated development costs for the development of new models and investments to develop existing models.
In the year ended December 31, 2014 the Group capitalized borrowing costs of €892 thousand ( €1,127 thousand in the year ended December 31, 2013). Those costs will be amortized over the useful life of the category of assets to which they relate.

F-57



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


15. PROPERTY, PLANT AND EQUIPMENT
 
Land
 
Industrial
buildings
 
Plant, machinery and equipment
 
Other
assets
 
Advances and assets under construction
 
Total
 
(€ thousand)
Gross carrying amount
Balance at January 1, 2013
22,382

 
258,686

 
1,330,391

 
111,705

 
54,377

 
1,777,541

Additions
98

 
9,882

 
129,253

 
11,536

 
10,884

 
161,653

Divestitures

 
(645
)
 
(20,147
)
 
(4,367
)
 
(2
)
 
(25,161
)
Translation differences
(10
)
 
(211
)
 
(109
)
 
(720
)
 
(13
)
 
(1,063
)
Reclassification

 
3,729

 
46,149

 
1,684

 
(51,562
)
 

Balance at December 31, 2013
22,470

 
271,441

 
1,485,537

 
119,838

 
13,684

 
1,912,970

Additions

 
4,371

 
76,918

 
11,974

 
76,100

 
169,363

Divestitures

 
(2
)
 
(11,985
)
 
(3,097
)
 

 
(15,084
)
Translation differences
30

 
636

 
(892
)
 
(482
)
 

 
(708
)
Balance at December 31, 2014
22,500

 
276,446

 
1,549,578

 
128,233

 
89,784

 
2,066,541

Accumulated amortization
Balance at January 1, 2013

 
97,485

 
1,048,823

 
86,627

 

 
1,232,935

Depreciation

 
9,558

 
119,586

 
8,135

 

 
137,279

Divestitures

 
(379
)
 
(19,853
)
 
(4,272
)
 

 
(24,504
)
Translation differences

 
(160
)
 
(118
)
 
(276
)
 

 
(554
)
Balance at December 31, 2013

 
106,504

 
1,148,438

 
90,214

 

 
1,345,156

Depreciation

 
9,712

 
131,303

 
8,938

 

 
149,953

Divestitures

 
(1
)
 
(11,848
)
 
(2,499
)
 

 
(14,348
)
Translation differences

 
503

 
189

 
(97
)
 

 
595

Balance at December 31, 2014

 
116,718

 
1,268,082

 
96,556

 

 
1,481,356

Carrying amount at:
 
 
 
 
 
 
 
 
 
 
 
January 1, 2013
22,382

 
161,201

 
281,568

 
25,078

 
54,377

 
544,606

December 31, 2013
22,470

 
164,937

 
337,099

 
29,624

 
13,684

 
567,814

December 31, 2014
22,500

 
159,728

 
281,496

 
31,677

 
89,784

 
585,185

Additions of €169,363 thousand in 2014 were mainly comprised of additions of €76,918 thousand to plant, machinery and equipment and additions of €76,100 thousand related to advances and assets under construction. Additions to plant, machinery and equipment in 2014 mainly related to investments in engine assembly lines, engine testing equipment and machinery and related to upgrade works performed on the wind tunnel. Additions to advances and assets under construction in 2014 mainly related to the construction of the new building to house the Formula 1 racing team, inaugurated in 2015 and the construction of a new assembly line of V6 engines to be used in the Formula 1 World Championship.
Additions of €161,653 thousand in 2013 were mainly comprised of additions of €129,253 thousand primarily related to plant, machinery and engine testing equipment and amounts related to the construction of a new assembly line for the V12 hybrid engine for use in the LaFerrari which entered into production in 2013.
Reclassifications relate mainly to the completion of industrial plant and machinery put into use during the year (and classified as assets in progress at the beginning of the year) in connection with the production launch of new models.
In the year ended December 31, 2014, the Group capitalized borrowing costs of €696 thousand ( €854 thousand in the year ended December 31, 2013). Those costs will be amortized over the useful life of the category of assets to which they relate.
At December 31, 2014 , the Group had contractual commitments for the purchase of property, plant and equipment amounting to €52,389 thousand ( €39,776 thousand at December 31, 2013 ).

F-58



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


16. INVESTMENTS AND OTHER FINANCIAL ASSETS
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Investment properties
35,565

 
36,640

Delta Top Co option
10,546

 

Other securities and other financial assets
1,320

 
1,271

Total investments and other financial assets
47,431

 
37,911

Investment properties
Investment properties relate to two buildings the Group owns in Modena, Italy, which are held for the purpose of earning rental income. The properties are leased to Maserati S.p.A., an FCA Group company. The fair value of the investment properties approximate the carrying amount. The fair value of the investment properties are considered to be the value of the individual assets on the reporting date, assuming that they were to be sold in arms-length transactions between market operators at market conditions. The movement in the net book value is as follows:
 
 
At
January 1, 2013
 
Movements
 
At
December 31, 2013
 
Movements
 
At
December 31, 2014
 
 
(€ thousand)
Gross carrying amount
 
53,178

 
143

 
53,321

 
309

 
53,630

Accumulated depreciation
 
(15,272
)
 
(1,409
)
 
(16,681
)
 
(1,384
)
 
(18,065
)
Carrying amount
 
37,906

 
 
 
36,640

 
 
 
35,565

The rental income of €3,179 thousand in 2014 ( €3,170 thousand in 2013 and €3,158 thousand in 2012 ) was recognized in the consolidated income statement within net revenues.
Delta Top Co option
The Group has been granted an option by Delta Top Co, a company belonging to the Formula 1 Group (the entity responsible for the promotion of the Formula 1 World Championship).
The option allows Ferrari to purchase a fixed number of shares in Delta Top Co for a fixed price on the occurrence of certain events.
The option was granted from 2014 until 2020, is renewable, has been subject to an independent valuation and has been measured at fair value. For additional information, see Note 26.
17. INVENTORIES
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Raw materials
91,035

 
77,947

Semi-finished goods
59,771

 
58,277

Finished goods
145,199

 
101,272

Total inventories
296,005

 
237,496

The amount of inventory write-downs recognized as an expense within cost of sales during 2014 was €3,091 thousand ( €2,451 thousand in 2013 and €7,218 thousand in 2012 ).

F-59



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Changes in the provision for slow moving and obsolete inventories were as follows:
 
2014
 
2013
 
(€ thousand)
At January 1,
53,566

 
51,177

Provision
3,091

 
2,451

Use and other changes
(1,964
)
 
(62
)
At December 31,
54,693

 
53,566

18. CURRENT RECEIVABLES, OTHER CURRENT ASSETS AND DEPOSITS IN FCA GROUP CASH MANAGEMENT POOLS
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Trade receivables
183,642

 
205,925

Deposits in FCA Group cash management pools
942,469

 
683,672

Receivables from financing activities
1,224,446

 
862,764

Current tax receivables
3,016

 
1,297

Other current assets
52,052

 
39,163

Total
2,405,625

 
1,792,821

Trade receivables
The following table sets forth a breakdown of trade receivables by nature:
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Trade receivables due from:
 
 
 
FCA Group companies
69,974

 
105,148

Dealers
46,421

 
32,772

Sponsors
25,474

 
20,921

Brand activities
15,383

 
16,181

Other
26,390

 
30,903

Total
183,642

 
205,925

Trade receivables due from dealers relate to receivables for the sale of cars across the dealer network and are generally settled within 15 to 60 days from the date of invoice.
Trade receivables due from FCA Group companies mainly relate to the sale of engines and car bodies to Maserati S.p.A. and Officine Maserati Grugliasco S.p.A. (together “Maserati”) which are controlled by the FCA Group. For additional information, see Note 27.
Trade receivables due from sponsors relate to amounts receivable from sponsors of the Group’s Formula 1 activities.
Trade receivables due from brand activities relate to amounts receivable for licensing and merchandising activities.
The Group is not exposed to concentration of third party credit risk.

F-60



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The following table sets forth a breakdown of trade receivables by currency:
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Trade receivables denominated in:
 
 
 
Euro
160,582

 
180,316

U.S. Dollar
18,485

 
19,759

Pound Sterling
1,456

 
1,402

Chinese Yuan
1,292

 
2,717

Japanese Yen
1,271

 
591

Other
556

 
1,140

Total
183,642

 
205,925

Trade receivables are shown net of an allowance for doubtful accounts determined on the basis of insolvency risk and historical experience. Accruals to the allowance for doubtful accounts are recorded in selling, general and administrative costs in the consolidated income statement. Changes in the allowance for doubtful accounts during the year were as follows:
 
2014
 
2013
 
(€ thousand)
At January 1,
30,198

 
24,926

Provision
6,356

 
10,521

Use and other changes
(21,890
)
 
(5,249
)
At December 31,
14,664

 
30,198

Deposits in FCA Group cash management pools
Deposits in FCA Group cash management pools represent the Group’s participation in a group-wide cash management system at FCA Group, where the operating cash management, main funding operations and liquidity investment of the Group are centrally coordinated by dedicated treasury companies with the objective of ensuring effective and efficient management of funds. Deposits with FCA Group earned Euro Interbank Offered Rate (“EURIBOR”) + 15 bps throughout the period covered by these Consolidated Financial Statements. FCA Group invests the deposits in highly rated, highly liquid money market instruments or bank deposits. The Group accesses funds deposited in these accounts on a daily basis and has the contractual right to withdraw these funds on demand and terminate these cash management arrangements depending on FCA's ability to pay at the relevant time. The carrying value of current accounts with FCA Group approximates fair value based on the short maturity of these investments. For additional information on deposits in FCA Group cash management pools, see Note 27. Following the Separation, these arrangements will be terminated and we will manage our liquidity and treasury function on a standalone basis.

F-61



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Receivables from financing activities
Receivables from financing activities are as follows:
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Client financing
939,284

 
666,947

Financial receivables from FCA Group companies
161,303

 
59,108

Factoring receivables
89,821

 
67,349

Dealer financing
33,611

 
65,981

Other
427

 
3,379

Total receivables from financing activities
1,224,446

 
862,764

Receivables from financing activities are shown net of an allowance for doubtful accounts determined on the basis of insolvency risks. Accruals to the allowance for doubtful accounts are recorded in cost of sales in the consolidated income statement. Changes in the allowance accounts during the year are as follows:
 
2014
 
2013
 
(€ thousand)
At January 1,
10,865

 
10,285

Provision
6,769

 
3,997

Use and other changes
(3,433
)
 
(3,417
)
At December 31,
14,201

 
10,865

Of which:
 
 
 
Client financing
11,903

 
9,983

Factoring receivables
2,150

 
882

Dealer financing
148

 

Total
14,201

 
10,865

Client financing
Client financing relates to financing provided by the Group to Ferrari clients to finance their car acquisition. The average duration of such contracts is approximately 47 months and the weighted average interest rate ranges from 5.6 percent to 6.3 percent. Receivables for client financing are generally secured on the titles of cars or other personal guarantees.

F-62



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The following table sets forth a breakdown of client financing by geography:
 
At December 31,
 
2014
 
2013
 
(€ thousand)
United States
482,782

 
304,914

United Kingdom
207,238

 
163,718

Germany
74,167

 
43,657

Switzerland
52,971

 
52,463

Italy
45,817

 
50,748

France
38,323

 
35,122

Japan
28,864

 
6,307

Belgium
9,122

 
10,018

Total client financing
939,284

 
666,947

Financial receivables from FCA Group companies
Financial receivables from FCA Group companies includes €147,071 thousand and €55,515 thousand due from Maserati at December 31, 2014 and 2013 , respectively.
The remaining receivables are due from Automotive Lighting LLC and Fiat Powertrain Technologies (Shanghai) R&D Co. Ltd. See Note 27 for further details.
Factoring receivables
Factoring receivables relate to the purchase of trade receivables from the FCA Group. Such receivables are purchased on a non-recourse basis and the Group generally earns interest of EURIBOR or London Interbank Offered Rate (“LIBOR”) + 350 bps. The interest earned amounted to €534 thousand for 2014 ( €326 thousand for 2013 , and €647 thousand for 2012 ) and is recorded in net revenues, within interest income of financial services activities.
Dealer financing
Receivables for dealer financing are typically generated by sales of cars managed under dealer network financing programs as a component of the portfolio of the financial services companies. These receivables are interest bearing at a rate between 1.5 percent and 3.6 percent, with the exception of an initial limited, non-interest bearing period. The contractual terms governing the relationships with the dealer network vary from country to country, although payment terms generally range from one to six months. The Group provides dealer financing in Japan and the United States. Until the end of 2014, the Group also provided dealer financing in the UK, Germany, Belgium and Switzerland. Receivables on dealer financing are generally secured by the title of the car or other collateral.
The following table sets forth a breakdown of dealer financing by geography:
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Europe
952

 
49,892

United States
21,965

 
8,848

Japan
10,694

 
7,241

Total dealer financing
33,611

 
65,981


F-63



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Other current assets
Other current assets are as follows:
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Prepayments
14,191

 
8,670

Italian and foreign VAT credits
17,205

 
11,778

Due from personnel
1,382

 
587

Security deposits
895

 
708

Other receivables
18,379

 
17,420

Total other current assets
52,052

 
39,163

At December 31, 2014, the Group had provided guarantees through third parties, amounting to €126,677 thousand (€118,853 thousand at December 31, 2013), principally to the relevant tax authorities in relation to (i) the validity of value added tax (“VAT”) and duties for which the Group requested reimbursement from the relevant tax authorities and (ii) the VAT related to temporary import of classic cars for restoration activities which would become due if the car is not exported.
The analysis of current receivables, other current assets and deposits in FCA Group cash management pools by due date (excluding the prepayments) is as follows:
 
At December 31, 2014
 
Due within one year
 
Due between one and five years
 
Due beyond five years
 
Overdue
 
Total
 
(€ thousand)
Trade receivables
177,607

 
1,882

 

 
4,153

 
183,642

Deposits in FCA Group cash management pools
942,469

 

 

 

 
942,469

Receivables from financing activities
429,179

 
729,360

 
53,875

 
12,032

 
1,224,446

Client financing
159,361

 
714,534

 
53,875

 
11,514

 
939,284

Financial receivables from FCA Group companies
161,303

 

 

 

 
161,303

Factoring receivables
89,821

 

 

 

 
89,821

Dealer financing
18,267

 
14,826

 

 
518

 
33,611

Other
427

 

 

 

 
427

Current tax receivables
3,016

 

 

 

 
3,016

Other current receivables
37,163

 
692

 
6

 

 
37,861

Total
1,589,434

 
731,934

 
53,881

 
16,185

 
2,391,434

    

F-64



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


 
At December 31, 2013
 
Due within one year
 
Due between one and five years
 
Due beyond five years
 
Overdue
 
Total
 
(€ thousand)
Trade receivables
175,119

 

 

 
30,806

 
205,925

Deposits in FCA Group cash management pools
683,672

 

 

 

 
683,672

Receivables from financing activities
345,025

 
470,865

 
32,167

 
14,707

 
862,764

Client financing
149,208

 
470,865

 
32,167

 
14,707

 
666,947

Financial receivables from FCA Group companies
59,108

 

 

 

 
59,108

Factoring receivables
67,349

 

 

 

 
67,349

Dealer financing
65,981

 

 

 

 
65,981

Other
3,379

 

 

 

 
3,379

Current tax receivables
1,297

 

 

 

 
1,297

Other current receivables
28,762

 
1,025

 
6

 
700

 
30,493

Total
1,233,875

 
471,890

 
32,173

 
46,213

 
1,784,151

Total receivables from financing activities includes €1,059,592 thousand (€799,872 thousand at December 31, 2013) which relate to the financial services portfolio and such receivables are generally secured on the titles of cars or with other guarantees.
Overdue trade receivables at December 31, 2013 included €25,237 thousand related to the rental of engines to other Formula 1 racing teams, of which €19,345 thousand was collected and €4,000 thousand was written-off in 2014.
19. CURRENT FINANCIAL ASSETS AND OTHER FINANCIAL LIABILITIES
 
At December 31,
 
2014
 
2013
 
Positive fair
value  
 
Negative fair
value
 
Positive fair
value  
 
Negative fair
value  
 
(€ thousand)
Cash flow hedge:
 
 
 
 
 
 
 
Foreign currency forwards
8,004

 
(100,620
)
 
73,314

 
(2,776
)
Total cash flow hedges
8,004

 
(100,620
)
 
73,314

 
(2,776
)
Other foreign exchange derivatives
743

 
(3,473
)
 
1,445

 
(1,709
)
Current financial assets/(liabilities)
8,747

 
(104,093
)
 
74,759

 
(4,485
)
Other foreign exchange derivatives relate to foreign currency forwards which do not meet the requirements to be recognized as cash flow hedges.

F-65



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The following tables provide an analysis by foreign currency and due date of outstanding derivative financial instruments based on their fair value and notional amounts:
 
At December 31, 2014
 
Fair value due within one year
 
Fair value due between one and two years
 
Total fair value
 
Notional amount due within one year
 
Notional amount due between one and two years
 
Total notional amount
 
(€ thousand)
Currencies:
 
 
 
 
 
 
 
 
 
 
 
U.S. Dollar
(46,896
)
 
(29,555
)
 
(76,451
)
 
513,373

 
304,934

 
818,307

Pound Sterling
(7,909
)
 
(2,177
)
 
(10,086
)
 
299,304

 
51,263

 
350,567

Chinese Yuan
(8,755
)
 
(4,126
)
 
(12,881
)
 
136,573

 
38,920

 
175,493

Swiss Franc
(1,144
)
 
(406
)
 
(1,550
)
 
129,246

 
32,332

 
161,578

Japanese Yen
5,962

 
893

 
6,855

 
73,499

 
35,110

 
108,609

Other (1)
(1,073
)
 
(160
)
 
(1,233
)
 
47,012

 
12,167

 
59,179

Total amount
(59,815
)
 
(35,531
)
 
(95,346
)
 
1,199,007

 
474,726

 
1,673,733

______________________________
(1)    Other mainly includes Australian Dollar and Hong Kong Dollar
 
At December 31, 2013
 
Fair value due within one year
 
Fair value due between one and two years
 
Total fair value
 
Notional amount due within one year
 
Notional amount due between one and two years
 
Total notional amount
 
(€ thousand)
Currencies:
 
 
 
 
 
 
 
 
 
 
 
U.S. Dollar
28,399

 
13,715

 
42,114

 
453,976

 
303,466

 
757,442

Pound Sterling
(1,191
)
 
(1,252
)
 
(2,443
)
 
234,833

 
53,559

 
288,392

Chinese Yuan
771

 
56

 
827

 
77,757

 
63,718

 
141,475

Swiss Franc
1,382

 
(207
)
 
1,175

 
123,239

 
44,731

 
167,970

Japanese Yen
16,223

 
5,506

 
21,729

 
67,128

 
44,379

 
111,507

Other (1)
4,784

 
2,088

 
6,872

 
51,529

 
21,863

 
73,392

Total amount
50,368

 
19,906

 
70,274

 
1,008,462

 
531,716

 
1,540,178

______________________________
(1)    Other mainly includes Australian Dollar and Hong Kong Dollar
Cash flow hedges
The effects recognized in the consolidated income statement mainly relate to currency risk management and in particular the exposure to Euro / U.S. Dollar for sales in U.S. Dollar in the United States of America, Canada and Mexico and other markets where the U.S. Dollar is the reference currency.
The policy of the Group for managing currency risk normally requires that projected future cash flows from trading activities which will occur within the following 24 months, and from orders acquired (or contracts in progress), whatever their due dates, be hedged. It is considered reasonable that the hedging effect arising from this and recorded in the cash flow hedge reserve will be recognized in the consolidated income statement, mainly during the following two years.
Derivatives relating to currency risk management are treated as cash flow hedges where the derivative qualifies for hedge accounting. The amount recorded in the cash flow hedge reserve will be recognized in the consolidated income statement according to the timing of the flows of the underlying transaction.

F-66



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The Group reclassified gains and losses, net of the tax effect, from other comprehensive income/(loss) to the consolidated income statement as follows:
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ thousand)
Net revenues
20,111

 
7,636

 
(43,184
)
Net financial (expenses)/income
(16,788
)
 
10,982

 
2,688

Income tax (expense)/income
(1,043
)
 
(5,846
)
 
12,716

Total recognized in the consolidated income statement
2,280

 
12,772

 
(27,780
)
The ineffectiveness of cash flow hedges was not material for the years 2014 , 2013 and 2012 .
20. EQUITY
As discussed in Note 1, with the exception of the FCA Note and subsequent refinancing (as defined herein), the Restructuring has been retrospectively reflected in these Consolidated Financial Statements in determining the number of shares outstanding as though the Restructuring had occurred effective January 1, 2012.
Share capital
Following the Restructuring, the fully paid up share capital of the Company is € ____ thousand, consisting of ____ ordinary shares and of special voting shares, all with a par value of € ____ .
The Company will not issue new common shares or special voting shares in the anticipated initial public offering and will not receive any of the proceeds.
The loyalty voting structure

We expect that FCA and Piero Ferrari will participate in our loyalty voting program and, therefore, will effectively hold two votes for each of the common shares they hold. FCA shareholders that participate in FCA’s loyalty voting program will be entitled to participate on the same basis in our loyalty voting program effective upon the Separation. Investors who purchase common shares in the initial public offering may elect to participate in our loyalty voting program by registering their common shares in our loyalty share register and holding them for three years. The loyalty voting program will be effected by means of the issue of special voting shares to eligible holders of common shares. Each special voting share entitles the holder to exercise one vote at the Company’s shareholders meeting. Only a minimal dividend accrues to the special voting shares allocated to a separate special dividend reserve, and the special voting shares do not carry any entitlement to any other reserve of the Group. The special voting shares have only immaterial economic entitlements and, as a result, do not impact the Company’s earnings per share calculation.

Other reserves
Following the Restructuring, other reserves mainly include the share premium reserve of € ____ thousand at December 31, 2014, 2013 and 2012, respectively, which resulted from the issuance of shares to FCA pursuant to the Restructuring.

F-67



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Other comprehensive income/(loss)
The following table presents other comprehensive income/(loss):
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ thousand)
Items that will not be reclassified to the consolidated income statement in subsequent periods:
 
 
 
 
 
Losses on remeasurement of defined benefit plans
(4,739
)
 
(2,412
)
 
(1,595
)
Total items that will not be reclassified to the consolidated income statement in subsequent periods
(4,739
)
 
(2,412
)
 
(1,595
)
Items that may be reclassified to the consolidated income statement in subsequent periods:
 
 
 
 
 
(Losses)/gains on cash flow hedging instruments arising during the period
(145,018
)
 
73,221

 
36,290

(Gains)/losses on cash flow hedging instruments reclassified to the consolidated income statement
(3,323
)
 
(18,618
)
 
40,496

(Losses)/gains on cash flow hedging instruments
(148,341
)
 
54,603

 
76,786

Exchange differences on translating foreign operations arising during the period
27,836

 
(7,467
)
 
(5,551
)
Total items that may be reclassified to the consolidated income statement in subsequent periods
(120,505
)
 
47,136

 
71,235

Total other comprehensive (loss)/income
(125,244
)
 
44,724

 
69,640

Related tax impact
47,649

 
(15,347
)
 
(24,111
)
Total other comprehensive (loss)/income, net of tax
(77,595
)
 
29,377

 
45,529

Losses on remeasurement of defined benefit plans mainly include actuarial gains and losses arising during the period. These gains and losses are offset against the related net defined benefit liabilities.
The tax effect relating to other comprehensive income/(loss) are as follows:
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
Pre-tax balance
 
Tax income/(expense)
 
Net balance
 
Pre-tax balance
 
Tax income/(expense)
 
Net balance
 
Pre-tax balance
 
Tax income/(expense)
 
Net balance
 
(€ thousand)
(Losses)/gains on remeasurement of defined benefit plans
(4,739
)
 
1,061

 
(3,678
)
 
(2,412
)
 
1,799

 
(613
)
 
(1,595
)
 

 
(1,595
)
(Losses)/gains on cash flow hedging instruments
(148,341
)
 
46,588

 
(101,753
)
 
54,603

 
(17,146
)
 
37,457

 
76,786

 
(24,111
)
 
52,675

Exchange gains/(losses) on translating foreign operations
27,836

 

 
27,836

 
(7,467
)
 

 
(7,467
)
 
(5,551
)
 

 
(5,551
)
Total other comprehensive (loss)/income
(125,244
)
 
47,649

 
(77,595
)
 
44,724

 
(15,347
)
 
29,377

 
69,640

 
(24,111
)
 
45,529

Transactions with non-controlling interests and dividends declared
Transaction with non-controlling interests

F-68



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


 
 For the year ended
December 31, 2014
 
 Group
 
 NCI
 
(€ thousand)
Transactions with non-controlling interests
 

 
 

FICTS
 

 
 

Capital reduction and change in ownership percentage of FICTS from 59% to 80%
3,832

 
(5,050
)
Expiration and renegotiation of FICTS constitution and change in operations
(5,095
)
 
59,074

FFS Inc.
 

 
 

Capital increase

 
1,219

Total change in scope of consolidation
(1,263
)
 
55,243

Capital reduction and change in ownership percentage of FICTS from 59 percent to 80 percent - In June 2014, the Board of Directors of FICTS agreed to perform a capital reduction, returning all of the capital investment to two of the non-controlling interests in FICTS, and reducing the interest of the third non-controlling interest. As a result of the capital reductions, Ferrari’s proportional shareholding in FICTS increased from 59 percent to 80 percent. The carrying value of the non-controlling interest, and Ferrari’s interest in FICTS was adjusted to reflect the change in shareholding structure.
Expiration and renegotiation of FICTS constitution and change in operations - In 2014, the agreement between Ferrari and the non-controlling interests expired. Also in 2014, the agreement between Ferrari and Maserati, which governed how FICTS imported and sold Maserati cars in China, and how Maserati was compensated for such transactions expired. Maserati incorporated a new Chinese entity to distribute Maserati vehicles in China. Accordingly, Ferrari no longer accounted for FICTS as a Joint Operation, but rather as a subsidiary. Such change resulted in the recognition of additional assets and liabilities, previously excluded from the scope of consolidation, and the derecognition of certain assets, which are now accounted for as intercompany transactions.
Dividends declared
FICTS shareholders’ declared dividends to non-controlling interests of €79,369, representing the aggregate distributable profits at December 31, 2014. An amount of €15,050 was paid to the non-controlling interests in 2014 and the remaining balance at December 31, 2014, equivalent to €64,319 thousand, has been recorded as other liabilities and will be paid in 2015. See Note 24.
In 2012, FICTS paid a dividend to the non-controlling interests of €7,149 thousand.
The amounts stated above have been translated into Euro using the foreign currency exchange rate at the date the transactions were performed.
Policies and processes for managing capital
The Group’s objectives when managing capital are to create value for shareholders as a whole, safeguard business continuity and support the growth of the Group. As a result, the Group endeavors to maintain a satisfactory economic return for its shareholders and guarantee economic access to external sources of funds.

F-69



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


21. EMPLOYEE BENEFITS
The Group’s provisions for employee benefits are as follows:
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Present value of defined benefit obligations:
 
 
 
Italian employee severance indemnity (TFR)
25,837

 
24,423

Pension plans
10,492

 
12,955

Total present value of defined benefit obligations
36,329

 
37,378

 
 
 
 
Other provisions for employees
40,485

 
28,101

Total provisions for employee benefits
76,814

 
65,479

Defined contribution plan
The Group recognizes the cost for defined contribution plans over the period in which the employee renders service and classifies this by function in cost of sales, selling, general and administrative costs and research and development costs. The total income statement expense for defined contributions plans in the years ended December 31, 2014 , 2013 and 2012 was €13,986 thousand , €8,939 thousand and €8,480 thousand , respectively.
Defined benefit obligations
Italian employee severance indemnity (TFR)
Trattamento di fine rapporto or “TFR” relates to the amounts that employees in Italy are entitled to receive when they leave the company and is calculated based on the period of employment and the taxable earnings of each employee. Under certain conditions the entitlement may be partially advanced to an employee during the employee’s working life.
The Italian legislation regarding this scheme was amended by Law 296 of 27 December 2006 and subsequent decrees and regulations issued in the first part of 2007. Under these amendments, companies with at least 50 employees are obliged to transfer the TFR to the “Treasury fund” managed by the Italian state-owned social security body (“INPS”) or to supplementary pension funds. Prior to the amendments, accruing TFR for employees of all Italian companies could be managed by the company itself. Consequently, the Italian companies’ obligation to INPS and the contributions to supplementary pension funds take the form, under IAS 19 revised, of “Defined contribution plans” whereas the amounts recorded in the provision for employee severance pay retain the nature of “Defined benefit plans”. Accordingly, the provision for employee severance indemnity in Italy consists of the residual obligation for TFR until December 31, 2006. This is an unfunded defined benefit plan as the benefits have already been almost entirely earned, with the sole exception of future revaluations. Since 2007 the scheme has been classified as a defined contribution plan, and the Group recognizes the associated cost, being the required contributions to the pension funds, over the period in which the employee renders service.
Pension plans
Group companies, primarily in Germany sponsor non-contributory defined benefit pension plans, for which the Group meets the benefit payment obligation when it falls due. Benefits provided depends on the employee’s length of service and their salary in the final years leading up to retirement.

F-70



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The expected benefit payments for defined benefit obligations are as follows:
 
Expected benefit payments
 
TFR
 
Pension plans
 
(€ thousand)
2015
1,612

 
87

2016
1,648

 
98

2017
1,650

 
65

2018
1,705

 
182

2019
1,562

 
206

2020-2024
9,310

 
427

Total
17,487

 
1,065

The following table summarizes the changes in the defined benefit obligations:
 
TFR liability
 
Pension plans
 
Total
 
(€ thousand)
Amounts at December 31, 2012
23,353

 
11,371

 
34,724

 
 
 
 
 
 
Included in the consolidated income statement
350

 
1,266

 
1,616

Included in other comprehensive income/loss
 
 
 
 
 
Actuarial (gains)/losses from:
 
 
 
 
 
- Demographic assumptions
(297
)
 
12

 
(285
)
- Financial assumptions
1,415

 
1,422

 
2,837

- Other
964

 
(1,104
)
 
(140
)
Other
 
 
 
 
 
Benefits paid
(1,529
)
 
(24
)
 
(1,553
)
Other changes
167

 
12

 
179

Amounts at December 31, 2013
24,423

 
12,955

 
37,378

 
 
 
 
 
 
Included in the consolidated income statement
195

 
5,319

 
5,514

Included in other comprehensive income/loss
 
 
 
 
 
Actuarial (gains)/losses from:
 
 
 
 
 
- Demographic assumptions
(67
)
 

 
(67
)
- Financial assumptions
2,516

 
1,380

 
3,896

- Other
186

 
724

 
910

Other
 
 
 
 
 
Benefits paid
(1,675
)
 
(9,830
)
 
(11,505
)
Other changes
259

 
(56
)
 
203

Amounts at December 31, 2014
25,837

 
10,492

 
36,329


F-71



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Amounts recognized in the consolidated income statement are as follows:
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
TFR
 
Pension plans
 
Total
 
TFR
 
Pension plans
 
Total
 
TFR
 
Pension plans
 
Total
 
(€ thousand)
Current service cost
7

 
5,120

 
5,127

 
18

 
1,016

 
1,034

 
20

 
1,120

 
1,140

Interest expense
188

 
199

 
387

 
332

 
250

 
582

 
549

 
324

 
873

Total recognized in the consolidated income statement
195

 
5,319

 
5,514

 
350

 
1,266

 
1,616

 
569

 
1,444

 
2,013

The discount rates used for the measurement of the Italian TFR obligation are based on yields of high-quality (AA rated) fixed income securities for which the timing and amounts of payments match the timing and amounts of the projected benefit payments. For this plan, the single weighted average discount rate that reflects the estimated timing and amount of the scheme future benefit payments for 2014 is equal to 1.9 percent ( 3.0 percent in 2013 and 3.6 percent in 2012 ). The average duration of the Italian TFR is approximately 9 years . Retirement or employee leaving rates are developed to reflect actual and projected Group experience and legal requirements for retirement in Italy.
The discount rates are used in measuring the pension plan obligation (excluding TFR) and the interest expense/(income) of net period cost. The Group selects these rates on the basis of the rate on return on high-quality (AA rated) fixed income investments for which the timing and amounts of payments match the timing and amounts of the projected pension defined benefit plan which for 2014 was equal to approximately 2.1 percent ( 3.0 percent in 2013 and 3.6 percent in 2012 ). The average duration of the obligations is approximately 5 years .
Current service cost is recognized by function in cost of sales, selling, general and administrative costs or research and development costs.
Other provisions for employees
Other provisions for employees consist of the expected future amounts payable to employees in connection with other remuneration schemes, which are not subject to actuarial valuation, including long-term bonus plans.
At December 31, 2014 , other provisions for employees comprised long term bonus benefits amounting to €38,582 thousand ( €26,457 thousand at December 31, 2013 ), jubilee benefits granted to certain employees by the Group in the event of achieving 30 years of service amounting to €1,856 thousand ( €1,643 thousand at December 31, 2013 ), and other provisions for employees amounting to €47 thousand ( €1 thousand at December 31, 2013 ). Interest expense on other provisions for employees amounted to €13 thousand for the year ended December 31, 2014 ( €21 thousand and €33 thousand for the years ended December 31, 2013 and 2012 , respectively).
22. PROVISIONS
Changes in provisions were as follows:
 
At
December 31,
2013
 
Additional provisions
 
Utilization
 
Translation differences
 
At
December 31,
2014
 
(€ thousand)
Warranty provision
70,849

 
26,997

 
(29,900
)
 
566

 
68,512

Legal proceedings and disputes
23,347

 
24,283

 
(3,086
)
 

 
44,544

Other risks
9,589

 
14,994

 
(3,624
)
 
759

 
21,718

Total provisions
103,785

 
66,274

 
(36,610
)
 
1,325

 
134,774


F-72



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The warranty provision represents the best estimate of commitments given by the Group for contractual, legal, or constructive obligations arising from product warranties given for a specified period of time. Such provisions are recognized on shipment of the car to the dealer.
The warranty provision is estimated on the basis of the Group’s past experience and contractual terms, related costs are recognized within cost of sales. The additional provisions recognized in 2014 were related to an increase in shipment volumes from 2013 to 2014 and to a reassessment of the estimated cost assumptions used to determine the provision performed in 2014.
The provision for legal proceedings and disputes represents management’s best estimate of the expenditures expected to be required to settle or otherwise resolve legal proceedings and disputes. The most significant accruals to the provision for legal proceedings and disputes recognized in 2014, relate to ongoing disputes with a former commercial partner previously responsible for operating certain Ferrari stores in Italy, and litigation with a former distributor. This class of claims relate to allegations by contractual counterparties that we have violated the terms of our arrangements, including by terminating the applicable relationships. Judgments in these proceedings may be issued before the end of 2015 or in 2016, although any such judgment may remain subject to judicial review. While the outcome of such proceedings is uncertain, any losses in excess of the provisions recorded are not expected to be material to our financial condition or results of operations.
The utilization related to reversal of accruals for legal proceedings and disputes resolved in 2014. Accruals to the provision for legal proceedings and disputes are recognized within other expenses/(income), net, with the exception of the provision relating to the former commercial partner previously responsible for operating certain Ferrari stores in Italy, which have been recognized within selling, general and administrative costs.
The provision for other risks are related to disputes and matters which are not subject to legal proceeding including disputes with suppliers, employees and other parties relating to contracts.
The following table sets forth total other risks recognized for the years ended December 31, 2014 , 2013 and 2012 .
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ thousand)
Recorded in the consolidated income statement within:
 
 
 
 
 
Cost of sales
5,088

 
2,239

 
2,458

Other expenses/(income), net
8,589

 
296

 
952

Selling, general and administrative costs
1,317

 
347

 
93

 
14,994

 
2,882

 
3,503

23. DEBT
The breakdown of debt by nature and by maturity is as follows:
 
At December 31,
 
2014
 
2013
 
Due within one year
 
Due between
one and
five years
 
Due beyond five years
 
Total
 
Due within one year
 
Due between
one and
five years
 
Due beyond five years
 
Total
 
(€ thousand)
Financial liabilities with FCA Group
378,542

 

 

 
378,542

 
241,577

 

 

 
241,577

Borrowings from banks
91,982

 
16,197

 
926

 
109,105

 
7,325

 
15,746

 
2,470

 
25,541

Other debt
20,796

 
1,777

 

 
22,573

 
47,883

 
2,086

 
217

 
50,186

Total debt
491,320

 
17,974

 
926

 
510,220

 
296,785

 
17,832

 
2,687

 
317,304


F-73



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Financial liabilities with FCA Group
At December 31, 2014 , financial liabilities with FCA Group consisted of a credit line held with Fiat Chrysler Finance North America of €378,542 thousand ( €241,577 thousand at December 31, 2013 ). The facility is denominated in U.S. Dollar and bears interest at 30-day LIBOR + 100 bps. The purpose of which is to finance our financial services portfolio in the Americas.
Borrowing from banks
The following table details the maturity dates and interest rates (or range of maturity dates and interest rates) of borrowings from banks:
 
Third party bank
 
Principal
 
Currency
 
Interest rate
 
Maturity date
 
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
(€ thousand)
 
 
 
 
 
 
Ferrari Financial Services Inc.
Sumitomo Bank (UK)
 
62,009

 

 
U.S. Dollar
 
LIBOR + 175bps
 
July 2015
Ferrari Financial Services Japan KK
The Chiba Bank Ltd.
 
13,771

 
12,438

 
Japanese Yen
 
TIBOR* + 100bps
 
November 2016
Ferrari Financial Services Japan KK
Shinsei Bank, Limited
 
6,886

 

 
Japanese Yen
 
TIBOR* + 90bps
 
March 2015
Ferrari Financial Services Japan KK
Intesa Sanpaolo S.p.A.
 
13,771

 

 
Japanese Yen
 
162bps
 
January 2015
Ferrari S.p.A.
Various
 
12,668

 
13,103

 
Euro
 
Various
 
From August 2015 to June 2020
Total borrowings from banks
 
 
109,105

 
25,541

 
 
 
 
 
 
______________________________
*     TIBOR is defined as the Tokyo Interbank Offered Rate
Other debt
At December 31, 2014 other debt, mainly related to the financial services entities, amounted to €22,573 thousand (€50,186 thousand at December 31, 2013).
24. OTHER LIABILITIES
An analysis of other liabilities is as follows:
 
At December 31,
 
2014
 
2013
 
(€ thousand)
Deferred income
234,536

 
194,321

Advances
187,222

 
139,671

Accrued expenses
85,624

 
31,028

Security deposits
33,117

 
24,965

Payables to personnel
28,713

 
20,438

Social security payables
13,251

 
13,134

Other
87,915

 
46,768

Total other liabilities
670,378

 
470,325

Deferred income at December 31, 2014 and 2013 primarily includes amounts received under the scheduled maintenance program ( €111,589 thousand at December 31, 2014 and €83,319 thousand at December 31, 2013), which are deferred and recognized as net revenues over the maintenance program term. Deferred income also includes amounts collected under various other agreements, which are reliant on the future performance of a service or other act of the Group.
Advances at December 31, 2014 and 2013 primarily includes advances from clients received for the purchase of special series, limited edition and supercars.

F-74



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Other liabilities at December 31, 2014 includes €64,319 thousand related to dividends payable to the non-controlling interest in FICTS.
An analysis of other liabilities (excluding accrued expenses and deferred income) by due date is as follows:
 
At December 31,
 
2014
 
2013
 
Due within one year
 
Due between
one and
five years
 
Due beyond five years
 
Total
 
Due within one year
 
Due between
one and
five years
 
Due beyond five years
 
Total
 
(€ thousand)
Total other liabilities (excluding accrued expenses and deferred income)
306,630

 
35,982

 
7,606

 
350,218

 
243,486

 
1,390

 
100

 
244,976

25. TRADE PAYABLES
Trade payables of €535,707 thousand at December 31, 2014 ( €485,948 thousand at December 31, 2013) are entirely due within one year. The carrying amount of trade payables is considered to be equivalent to their fair value.
26. FAIR VALUE MEASUREMENT
IFRS 13 establishes a hierarchy that categorizes into three levels the inputs to the valuation techniques used to measure fair value by giving the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1 inputs) and the lowest priority to unobservable inputs (level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy at the lowest level input that is significant to the entire measurement.
Levels used in the hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the Group can access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly or indirectly.
Level 3 inputs are unobservable inputs for the assets and liabilities.
Assets and liabilities that are measured at fair value on a recurring basis
The following table shows the fair value hierarchy for financial assets and liabilities that are measured at fair value on a recurring basis at December 31, 2014 and 2013 :
 
 
 
At December 31, 2014
 
Note
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
 
(€ thousand)
Cash and cash equivalents
 
 
134,278

 

 

 
134,278

Investments and other financial assets - Delta Top Co option
16
 

 

 
10,546

 
10,546

Current financial assets
19
 

 
8,747

 

 
8,747

Total assets
 
 
134,278

 
8,747

 
10,546

 
153,571

Other financial liabilities
19
 

 
104,093

 

 
104,093

Total liabilities
 
 

 
104,093

 

 
104,093


F-75



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


 
 
 
At December 31, 2013
 
Note
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
 
(€ thousand)
Cash and cash equivalents
 
 
113,786

 

 

 
113,786

Current financial assets
19
 

 
74,759

 

 
74,759

Total assets
 
 
113,786

 
74,759

 

 
188,545

Other financial liabilities
19
 

 
4,485

 

 
4,485

Total liabilities
 
 

 
4,485

 

 
4,485

In 2014 and 2013 , there were no transfers between levels in the fair value hierarchy.
The fair value of current financial assets and other financial liabilities is related to derivative financial instruments and is measured by taking into consideration market parameters at the balance sheet date, using valuation techniques widely accepted in the financial business environment. In particular, the fair value of forward contracts and currency swaps is determined by taking the prevailing foreign currency exchange rate and interest rates at the balance sheet date.
The par value of cash and cash equivalents usually approximates fair value due to the short maturity of these instruments, which consist primarily of bank current accounts.
The following table provides a reconciliation from the opening balances to the closing balances for fair value measurements categorized in level 3 in 2014 :
 
Other non- current securities
 
Other financial assets/(liabilities)
 
(€ thousand)
At December 31, 2013

 

Gains/(losses) recognized in consolidated income statement

 

Gains/(losses) recognized in other comprehensive income

 

Issues/(settlements)
10,546

 

At December 31, 2014
10,546

 

Assets and liabilities not measured at fair value on a recurring basis
For financial instruments represented by short-term receivables and payables, for which the present value of future cash flows does not differ significantly from carrying value, the Group assumes that carrying value is a reasonable approximation of the fair value. In particular, the carrying amount of current receivables and other current assets and of trade payables and other liabilities approximates their fair value.

F-76



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The following table represents carrying amount and fair value for the most relevant categories of financial assets and liabilities not measured at fair value on a recurring basis:
 
 
 
At December 31,
 
 
 
2014
 
2013
 
Note
 
Carrying amount
 
Fair value
 
Carrying amount
 
Fair value
 
 
 
(€ thousand)
Deposits in FCA Group cash management pools
18
 
942,469

 
942,469

 
683,672

 
683,672

Receivables from financing activities
 
 
1,224,446

 
1,225,931

 
862,764

 
863,407

Client financing
 
 
939,284

 
940,769

 
666,947

 
667,590

Financial receivables from FCA Group companies
18
 
161,303

 
161,303

 
59,108

 
59,108

Factoring receivables
18
 
89,821

 
89,821

 
67,349

 
67,349

Dealer financing
18
 
33,611

 
33,611

 
65,981

 
65,981

Other
18
 
427

 
427

 
3,379

 
3,379

Total
 
 
2,166,915

 
2,168,400

 
1,546,436

 
1,547,079

 
 
 
 
 
 
 
 
 
 
Debt
23
 
510,220

 
509,355

 
317,304

 
315,806

27. RELATED PARTY TRANSACTIONS
Pursuant to IAS 24, the related parties of the Group are entities and individuals capable of exercising control, joint control or significant influence over the Group and its subsidiaries, companies belonging to the FCA Group and Exor Group, and unconsolidated subsidiaries of the Group. In addition, members of Ferrari Group Board of Directors, Board of Statutory Auditors and executives with strategic responsibilities and their families are also considered related parties.
The Group carries out transactions with related parties on commercial terms that are normal in the respective markets, considering the characteristics of the goods or services involved. Transactions carried out by the Group with these related parties are primarily of those a commercial nature, which have had an effect on revenues, cost of sales, and trade receivables and payables; in particular, these transactions relate to:
Transactions with FCA Group companies
the sale of engines and car bodies to Maserati S.p.A. and Officine Maserati Grugliasco S.p.A. (together “Maserati”) which are controlled by the FCA Group;
the purchase of engine components for the use in the production of Maserati engines from FCA US LLC, which is controlled by FCA Group;
the purchase of automotive lighting and automotive components from Magneti Marelli S.p.A., Magneti Marelli Espana S.A. and Automotive Lighting Italia S.p.A. (which form part of “Magneti Marelli”), which is controlled by the FCA Group;
transactions with other FCA Group companies, mainly relating to the services provided by FCA Group companies, including human resources, payroll, tax, customs, procurement of insurance coverage, accounting and treasury services and sponsorship revenues for the display of FCA Group company logos on the Formula 1 cars.
The Group also has the following financial transactions with the FCA Group:
the Group sells a portion of its trade and financial receivables to the FCA Bank Group, which is jointly controlled by FCA Group and a third party, on derecognition of the asset, the difference between the carrying amount and the consideration received or receivable is recognized in cost of sales;

F-77



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


certain Ferrari financing companies obtain financing from FCA Group companies. Debt from FCA Group companies relate to the amounts owed under such facilities at the dates presented. See Note 23;
Ferrari Group companies participate in the FCA group-wide cash management system where the operating cash management, main funding operations and liquidity investment of the Group are centrally coordinated by dedicated treasury companies of the FCA Group. Deposits in FCA Group cash management pools represent the Group’s participation in such pools. Deposits with FCA Group earn EURIBOR +15bps. See Note 18. Following the Separation, these arrangements will be terminated and we will manage our liquidity and treasury function on a standalone basis;
the Group has purchased trade receivables from the FCA Group on a non-recourse basis. The interest earned on such receivables is recorded in net revenues. See Note 18;
the Group has financial receivables with Maserati and Automotive Lighting LLC (“Automotive Lighting”), which will be settled in the ordinary course of business. See Note 18.
Transactions with Exor Group companies
the Group incurs rental costs from Iveco Finanziaria S.p.A. related to the rental of trucks used by the Formula 1 racing team;
the Group earns sponsorship revenue from Iveco S.p.A.
Transactions with other related parties
the purchase of leather goods from Poltrona Frau S.p.A. (“Poltrona Frau”). The former Chairman had significant influence over Poltrona Frau until March 25, 2014 when he sold his interest;
the purchase of components for Formula 1 racing cars from COXA S.p.A., controlled by Piero Ferrari; and
consultancy services provided by HPE S.r.l., controlled by Piero Ferrari.
In accordance with IAS 24, transactions with related parties also include compensation payable to Directors, Statutory Auditors and managers with strategic responsibilities.

F-78



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


The amounts of the transactions with related parties recognized in the consolidated income statement are as follows:
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
Net revenues
 
Costs (1)
 
Net financial income/(expenses)
 
Net revenues
 
Costs (1)
 
Net financial income/(expenses)
 
Net revenues
 
Costs (1)
 
Net financial income/(expenses)
 
(€ thousand)
FCA Group companies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maserati
259,143

 
31,381

 
1,274

 
194,760

 
38,254

 

 
78,405

 
18,136

 

FCA US LLC
1,110

 
33,898

 

 

 
14,997

 

 

 
1,143

 

Magneti Marelli
1,190

 
24,233

 

 
970

 
20,666

 

 
801

 
22,391

 

Other FCA Group companies
5,198

 
38,706

 
2,793

 
11,789

 
19,069

 
(53
)
 
6,917

 
19,964

 
(4,142
)
Total FCA Group companies
266,641

 
128,218

 
4,067

 
207,519

 
92,986

 
(53
)
 
86,123

 
61,634

 
(4,142
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exor Group companies (excluding the FCA Group)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exor Group companies
279

 
404

 

 
281

 
387

 

 
282

 
402

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other related parties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Poltrona Frau
98

 
20,115

 

 
177

 
22,073

 

 
190

 
21,427

 

COXA S.p.A.
279

 
8,774

 

 
1

 
5,732

 

 
16

 
4,674

 

HPE S.r.l.

 
3,461

 

 

 
3,175

 

 

 
2,634

 

Other related parties

 
120

 

 

 
543

 

 
2

 
1,082

 

Total other related parties
377

 
32,470

 

 
178

 
31,523

 

 
208

 
29,817

 

Total transactions with related parties
267,297

 
161,092

 
4,067

 
207,978

 
124,896

 
(53
)
 
86,613

 
91,853

 
(4,142
)
Total for the Group
2,762,360

 
1,805,979

 
8,765

 
2,335,270

 
1,494,523

 
2,851

 
2,225,207

 
1,441,720

 
(898
)
______________________________
(1)    Costs include cost of sales and selling, general and administrative costs.

F-79



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Non-financial assets and liabilities originating from related party transactions are as follows:
 
At December 31,
 
2014
 
2013
 
Trade receivables
 
Trade payables
 
Other current assets
 
Other liabilities
 
Trade receivables
 
Trade payables
 
Other current assets
 
Other liabilities
 
(€ thousand)
FCA Group companies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maserati
68,224

 
5,368

 

 
50,736

 
104,334

 
5,002

 

 
87,510

FCA US LLC
1,062

 
8,250

 

 

 

 
8,069

 

 

Magneti Marelli
516

 
6,239

 

 

 
628

 
6,286

 

 

Other FCA Group companies
172

 
2,766

 
2,181

 
105

 
186

 
2,302

 
48

 

Total FCA Group companies
69,974

 
22,623

 
2,181

 
50,841

 
105,148

 
21,659

 
48

 
87,510

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exor Group companies (excluding the FCA Group)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exor Group companies

 
28

 

 

 

 
61

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other related parties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Poltrona Frau
1,763

 
8,564

 

 

 
1,665

 
6,293

 

 

COXA S.p.A.
308

 
1,448

 

 

 
29

 
1,173

 

 

HPE S.r.l.

 
686

 

 

 
1

 
557

 

 

Other related parties
1,647

 
251

 

 

 
1,647

 
29

 

 

Total other related parties
3,718

 
10,949

 

 

 
3,342

 
8,052

 

 

Total transactions with related parties
73,692

 
33,600

 
2,181

 
50,841

 
108,490

 
29,772

 
48

 
87,510

Total for the Group
183,642

 
535,707

 
52,052

 
670,378

 
205,925

 
485,948

 
39,163

 
470,325

Financial assets and liabilities originating from related party transactions are as follows:
 
At December 31,
 
2014
 
2013
 
Deposits in FCA Group cash management pools
 
Receivables from financing activities
 
Debt
 
Deposits in FCA Group cash management pools
 
Receivables from financing activities
 
Debt
 
(€ thousand)
FCA Group finance companies
942,469

 

 
378,542

 
683,672

 

 
241,577

Maserati

 
147,071

 

 

 
55,515

 

Automotive Lighting LLC

 
14,232

 

 

 

 

Fiat Powertrain Technologies (Shanghai) R&D Co. Ltd.

 

 

 

 
3,593

 

Total transactions with related parties
942,469

 
161,303

 
378,542

 
683,672

 
59,108

 
241,577

Total for the Group
942,469

 
1,224,446

 
510,220

 
683,672

 
862,764

 
317,304


F-80



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


Emoluments to Directors and Statutory Auditors
The fees of the Directors and Statutory Auditors of Ferrari S.p.A. for carrying out their respective functions, including those in other consolidated companies, are as follows:
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ thousand)
Directors
20,676

 
8,198

 
9,217

Statutory auditors
164

 
139

 
139

Total emoluments
20,840

 
8,337

 
9,356

The aggregate compensation payable to directors was €20,676 thousand for 2014 ( €8,198 thousand in 2013 and €9,217 thousand in 2012 ). This is inclusive of the following:
an amount of €4,132 thousand in 2014 ( €7,566 thousand in 2013 and €7,781 thousand in 2012 ) for salary;
an amount of €15,027 thousand in 2014 for compensation costs related to the resignation of the former Chairman of the Group. At December 31, 2014, the total payable to the former Chairman amounted to €22,083 thousand , and included the amount due for the post employment benefit plan; and
an amount of € 1,517 thousand in 2014 (€ 632 thousand in 2013 and € 1,436 thousand in 2012 ) as the Group’s contribution to defined benefit obligations and long-term bonus plans.
28. COMMITMENTS
Arrangements with Key Suppliers
From time to time, in the ordinary course of our business, the Group enters into various arrangements with key third party suppliers in order to establish strategic and technological advantages. A limited number of these arrangements contain unconditional purchase obligations to purchase a fixed or minimum quantity of goods and/or services with fixed and determinable price provisions. Future minimum purchase obligations under these arrangements at December 31, 2014 were as follows:
 
At December 31, 2014
 
Due within one year
 
Due between one and three years
 
Due between three and five years
 
Due beyond five years
 
Total
 
(€ thousand)
Minimum purchase obligations
56,261

 
40,500

 
7,434

 
5,953

 
110,148

Operating lease agreements
The future aggregate minimum lease payments under non-cancellable operating leases, mainly relating to the lease of property and cars, are as follows:
 
At December 31, 2014
 
Due within one year
 
Due between one and three years
 
Due between three and five years
 
Due beyond five years
 
Total
 
(€ thousand)
Future minimum lease payments under operating lease agreements
9,181

 
12,848

 
3,149

 
486

 
25,664


F-81



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


During 2014 , the Group’s operating lease expenses amounted to €14,881 thousand ( €15,349 thousand in 2013 and €14,813 thousand in 2012 ).
29. QUALITATIVE AND QUANTITATIVE INFORMATION ON FINANCIAL RISKS
The Group is exposed to the following financial risks connected with its operations:
credit risk, arising both from its normal commercial relations with final clients and dealers, and its financing activities;
liquidity risk, with particular reference to the availability of funds and access to the credit market, should the Group require, and to financial instruments in general;
financial market risk (principally relating to foreign currency exchange rates, and to a much lesser extent, interest rates), as the Group operates internationally in different currencies.
These risks could significantly affect the Group’s financial position and results of operations, and for this reason the Group identifies and monitors these risks, in order to detect potential negative effects in advance and take the necessary action to mitigate them, primarily through its operating and financing activities and if required, through the use of derivative financial instruments.
The following section provides qualitative and quantitative disclosures on the effect that these risks may have upon the Group. The quantitative data reported in the following section does not have any predictive value, in particular the sensitivity analysis on finance market risks does not reflect the complexity of the market or the reaction which may result from any changes that are assumed to take place.
Credit risk
Credit risk is the risk of economic loss arising from the failure to collect a receivable. Credit risk encompasses the direct risk of default and the risk of a deterioration of the creditworthiness of the counterparty.
The maximum credit risk to which the Group is theoretically exposed at December 31, 2014 is represented by the carrying amounts of the financial assets stated in the consolidated statement of financial position sheet and the nominal value of the guarantees provided.
Dealers and clients are subject to a specific evaluation of their creditworthiness. Additionally, it is Group practice to obtain financial guarantees against risks associated with credit granted for the purchase of cars and parts. These guarantees are further strengthened, where possible, by retaining title on cars subject to financing agreement.
Credit positions of material significance are evaluated on an individual basis. Where objective evidence exists that they are uncollectible, in whole or in part, specific write-downs are recognized. The amount of the write-down is based on an estimate of the recoverable cash flows, timing of those cash flows, the cost of recovery and the fair value of any guarantees received.
Receivables from financing activities amounting to €1,224,446 thousand at December 31, 2014 (€862,764 thousand at December 31, 2013) are shown net of the allowance for doubtful accounts amounting to €14,201 thousand (€10,865 thousand at December 31, 2013). After considering the allowance for doubtful accounts, €12,032 thousand of receivables were overdue (€14,707 thousand at December 31, 2013). Therefore, overdue receivables represent a minor portion of our receivables from financing activities.
In addition, of the total receivables from financing activities, €1,059,592 thousand (€799,872 thousand at December 31, 2013) relate to the financial services portfolio and such receivables are generally secured on the titles of cars or with other guarantees.
Trade receivables amounting to €183,642 thousand at December 31, 2014 (€205,925 thousand at December 31, 2013) are shown net of the allowance for doubtful accounts amounting to €14,664 thousand (€30,198 thousand at December 31, 2013). After considering the allowance for doubtful accounts, €4,153 thousand of receivables were overdue (€30,806

F-82



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


thousand at December 31, 2013). The overdue receivables at December 31, 2013 included €25,237 thousand related to the rental of engines to other Formula 1 racing teams, of which €19,345 thousand was collected during 2014.
Liquidity risk
Liquidity risk arises if the Group is unable to obtain the funds needed to carry out its operations under economic conditions. The main determinant of the Group’s liquidity position is the cash generated by or used in operating and investing activities.
Intercompany financing between Group entities is not restricted other than through the application of covenants requiring that transactions with related parties be conducted at arm’s length terms.
Details on the maturity profile of the Group’s financial assets and liabilities and on the structure of derivative financial instruments are provided in Notes 19 and 23. Details of the repayment of derivative financial instruments are provided in Note 19.
The Group believes that the funds currently available to it, in addition to those that will be generated from operating activities, will enable Ferrari to satisfy the requirements of its investing activities and working capital needs, fulfill its obligations to repay its debt and ensure an appropriate level of operating and strategic flexibility. The Group, therefore believes there is no significant risk of a lack of liquidity. As a consequence, potential fluctuations in interest rates would not have a material impact on the consolidated income statement and, therefore, an interest rate sensitivity analysis has not been conducted.
Financial market risks
The Group’s primary market risk is exposure to foreign currency, which arises both in connection with the geographical distribution of the Group’s industrial activities compared to the markets in which it sells its products, and in relation to the use of external borrowing denominated in foreign currencies.
Exchange differences arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the period or in previous financial statements, are recognized in the consolidated income statement within the net financial income/(expenses) line item or as cost of sales for charges arising from financial services companies.
The impact of foreign currency exchange rate differences recorded within financial income/(expenses) for the year ended December 31, 2014, except for those arising on financial instruments measured at fair value, amounted to net income of €15,663 thousand (net expenses of €9,110 thousand and €704 thousand for the years ended December 31, 2013 and 2012, respectively).
The impact of foreign currency exchange rate differences arising from financial services companies, recognized under cost of sales, for the year ended December 31, 2014 amounted to net income of €14,575 thousand (net expenses of €4,107 thousand and €148 thousand for the years ended December 31, 2013 and 2012, respectively).
The Group’s exposure to interest rate risk, though less significant, arises from the need to fund industrial and financial operating activities and the necessity to deploy surplus funds. Changes in market interest rates may have the effect of either increasing or decreasing the Group’s net profit/(loss), thereby indirectly affecting the costs and returns of financing and investing transactions.
These financial market risks could significantly affect the Group’s financial position and results of operations, and for this reason these risks are identified and monitored, in order to detect potential negative effects in advance and take the necessary actions to mitigate them, primarily through its operating and financing activities and if required, through the use of derivative financial instruments.
As part of the FCA Group, the Group has applied the FCA Group policy, which foresees the use of derivative financial instruments to hedge foreign currency exchange rate risk. In particular, the Group has used derivative financial instruments as cash flow hedges for the purpose of fixing the foreign currency exchange rate at which a predetermined proportion of forecasted transactions denominated in foreign currencies will be accounted for. Accordingly, as as result of applying the FCA Group

F-83



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


policies with respect to foreign currency exchange exposure, the Group’s results of operations have not been fully exposed to fluctuations in foreign currency exchange rates.
The foreign currency exchange rate exposure on forecasted commercial flows is hedged by derivative financial instruments. Despite these hedging transactions, sudden adverse movements in foreign currency exchange rates could have a significant effect on the Group’s earnings and cash flows.
Information on the fair value of derivative financial instruments held is provided in Note 19.
The following section provides qualitative and quantitative disclosures on the effect that these risks may have. The quantitative data reported below does not have any predictive value, in particular the sensitivity analysis on financial market risks does not reflect the complexity of the market or the reaction which may result from any changes that are assumed to take place.
Quantitative information on foreign currency exchange rate risk
The Group is exposed to risk resulting from changes in foreign currency exchange rates, which can affect its earnings and equity. In particular:
where a Group company incurs costs in a currency different from that of its revenues, any change in foreign currency exchange rates can affect the operating results of that company. In 2014, the total trade flows exposed to foreign currency exchange rate risk amounted to the equivalent of 44 percent of the Group’s turnover (45 percent in 2013).
The main foreign currency exchange rate to which the Group is exposed is the Euro/U.S. Dollar for sales in U.S. Dollar in the United States, Canada and Mexico and other markets where the U.S. Dollar is the reference currency. In 2014, the value of commercial activity exposed to changes in the Euro/U.S. Dollar exchange rate accounted for about 63 percent (63 percent in 2013) of the total currency risk from commercial activity. Other significant exposures included the exchange rate between the Euro and the following currencies: Swiss Franc, Pound Sterling, Australian Dollar, Japanese Yen, Chinese Yuan and Hong Kong Dollar. None of these exposures, taken individually, exceeded 10 percent of the Group’s total foreign currency exchange rate exposure for commercial activity in 2014, with the exception of the Pound Sterling, which represented approximately 12 percent (13 percent in 2013). It is the Group’s policy to use derivative financial instruments to hedge a certain percentage of the exposure, on average between 50 percent and 90 percent. Until 2014, some exposures were covered over a 24-month rolling period, and since 2015 such timeframe has been reduced to 12 months for all currencies. For firm commitments, the policy is to fully hedge the exposure.
Several subsidiaries are located in countries that are outside the Eurozone, in particular the United States, the United Kingdom, Switzerland, China, Hong Kong, Japan, Australia and Singapore. As the Group’s reporting currency is the Euro, the income statements of those companies are converted into Euro using the average exchange rate for the period and, even if revenues and margins are unchanged in local currency, changes in exchange rates can impact the amount of revenues, costs and profit as restated in Euro.
The amount of assets and liabilities of consolidated companies that report in a currency other than the Euro may vary from period to period as a result of changes in exchange rates. The effects of these changes are recognized directly in equity as a component of other comprehensive income/(loss) under gains/(losses) from currency translation differences.
The Group monitors its principal exposure to conversion exchange risk, although there was no specific hedging in this respect at the reporting date.
There have been no substantial changes in 2014 in the nature or structure of exposure to foreign currency exchange rate risk or in the Group’s hedging policies.
The potential decrease in fair value of derivative financial instruments held by the Group at December 31, 2014 to hedge against foreign currency exchange rate risk, which would arise in the case of a hypothetical, immediate and adverse change of 10 percent in the exchange rates of the major foreign currencies with the Euro, would be approximately €177,704 thousand (€147,312 thousand at December 31, 2013). Receivables, payables and future trade flows for which hedges have been put in

F-84



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


place were not included in the analysis. It is reasonable to assume that changes in foreign currency exchange rates will produce the opposite effect, of an equal or greater amount, on the underlying transactions that have been hedged.
Information on interest rate risk
Our exposure to interest rate risk, though less significant, arises from the need to fund industrial and financial operating activities and the necessity to deploy surplus funds. Changes in market interest rates may have the effect of either increasing or decreasing our net profit/(loss), thereby indirectly affecting the costs and returns of financing and investing transactions.
These financial market risks could significantly affect our financial position and results of operations, and for this reason these risks are identified and monitored, in order to detect potential negative effects in advance and take the necessary actions to mitigate them, primarily through our operating and financing activities and if required, through the use of derivative financial instruments. The Company did not enter into any interest rate derivatives in the periods covered by the Consolidated Financial Statements.
Our most significant floating rate financial assets are our deposits in FCA Group cash management pools, cash and cash equivalents and certain receivables from financing activities (mainly financial receivables from FCA Group companies, factoring receivables, dealer financing and some client financing receivables) while our debt generally bears floating rates of interest. At December 31, 2014, a 10 basis point decrease in interest rates on such floating rate financial assets and debt, with all other variables held constant, would have resulted in a decrease in profit before taxes of €598 thousand on an annual basis (€481 thousand at December 31, 2013). The analysis is based on the assumption that floating rate financial assets and debt which expires during the projected 12 month period will be renewed or reinvested in similar instruments, bearing the hypothetical short-term interest rates.

30. ENTITY-WIDE DISCLOSURES
The following table presents an analysis of net revenues by geographic location of the Group’s clients:
 
For the years ended December 31,
 
2014
 
2013
 
2012
 
(€ thousand)
Italy
514,277

 
372,817

 
216,331

Other EMEA
1,113,823

 
1,008,015

 
1,049,188

Americas (1)
635,507

 
536,483

 
505,940

Greater China (2)
289,069

 
235,399

 
239,589

Rest of APAC (3)
209,684

 
182,556

 
214,159

Total net revenues
2,762,360

 
2,335,270

 
2,225,207


F-85



New Business Netherlands N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, 2013 and 2012


______________________________
(1)
Includes United States, Canada, Mexico and the rest of Central and South America
(2)
Includes mainland China, Hong Kong and Taiwan
(3)
Mainly relates to Japan and Australia
The following table presents an analysis of non-current assets other than financial instruments and deferred tax assets by geographic location:
 
At December 31,
 
2014
 
2013
 
Property, plant and equipment
 
Investment properties
 
Goodwill
 
Intangible assets
 
Property, plant and equipment
 
Investment properties
 
Goodwill
 
Intangible assets
 
(€ thousand)
Italy
576,388

 
35,565

 
787,178

 
260,990

 
559,007

 
36,640

 
787,178

 
238,324

Other EMEA
3,194

 

 

 
2,205

 
3,373

 

 

 
2,288

Americas  (1)
3,696

 

 

 
1,035

 
3,366

 

 

 
657

Greater China  (2)
711

 

 

 
1

 
1,589

 

 

 
229

Rest of APAC  (3)
1,196

 

 

 
1,031

 
479

 

 

 
669

Total
585,185

 
35,565

 
787,178

 
265,262

 
567,814

 
36,640

 
787,178

 
242,167

31. SUBSEQUENT EVENTS
The Group has evaluated subsequent events through July 19, 2015, which is the date the consolidated financial statements were authorized for issuance.

On July 14, 2015, we issued a safety recall report with the NHTSA, after being notified by Takata Corporation that certain driver’s side airbags manufactured by Takata, installed in certain model year 2015 cars, were defective. The recall impacts 814 of our model year 2015 cars sold in the United States and also relates to up to an additional 1,600 model year 2015 cars in other regions. The defect, caused by pre-assembled airbags supplied by Takata, relates to insufficient gluing of the airbag cover and a possible incorrect installation of the driver’s airbag cushion. The replacement component has been produced with improved gluing methods as well as improved airbag assembly measures. We have implemented a recall to remedy this safety defect. The estimated costs associated with this recall are not expected to be material.
    


F-86









                
shares

Common Shares


PROSPECTUS
 

Joint Bookrunners
UBS Investment Bank                                      BofA Merrill Lynch
Allen & Company LLC Banco Santander BNP PARIBAS J.P. Morgan Mediobanca




, 2015



Until , 2015 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.



PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 6. Indemnification of Directors and Officers
Pursuant to Dutch law, Ferrari’s directors and officers may be liable to Ferrari for improper or negligent performance of their duties. They may also be liable to third parties for damages in the event of bankruptcy, default on tax or social security payments, improper performance of duties, or tort. In certain circumstances, directors or officers may also incur criminal liability.
The Ferrari Articles of Association provide that:
“The company shall indemnify any and all of its directors, officers, former directors, former officers and any person who may have served at its request as a director or officer of another company in which it owns shares or of which it is a creditor, who were or are made a party or are threatened to be made a party to or are involved in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (each a Proceeding), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, against any and all liabilities, damages, reasonable and documented expenses (including reasonably incurred and substantiated attorneys’ fees), financial effects of judgments, fines, penalties (including excise and similar taxes and punitive damages) and amounts paid in settlement in connection with such Proceeding by any of them. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled otherwise.”
The provisions of Dutch law governing the liability of directors and officers are mandatory in nature. Although Dutch law does not provide for any provisions with respect to the indemnification of directors and officers, the concept of indemnification of directors and officers of a company for liabilities arising from actions undertaken because of their position in the company is, in principle, accepted in the Netherlands.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.



Item 8. Exhibits and Financial Statement Schedules
(a) Exhibits
The following exhibits are filed as part of this registration statement, unless otherwise indicated.
1.1
Form of Underwriting Agreement
3.1
English translation of the Deed of Incorporation of Ferrari N.V.
3.2
English translation of the Articles of Association of Ferrari N.V.
5.1
Form of opinion of Loyens & Loeff N.V. as to the legality of the common shares being registered
8.1
Opinion of Loyens & Loeff N.V. as to Dutch taxation
8.2
Opinion of Sullivan & Cromwell LLP as to U.S. taxation
8.3
Opinion of Maisto e Associati as to Italian taxation
11.1
Statement regarding computation of per share earnings (incorporated by reference to Note 12 of the New Business Netherlands N.V. Consolidated Financial Statements included in the prospectus that forms a part of this Registration Statement)
21.1
Subsidiaries*
23.1
Consent of Reconta Ernst & Young S.p.A.
23.2
Consents of Loyens & Loeff N.V. (included in Exhibits 5.1 and 8.1)
23.3
Consent of Sullivan & Cromwell LLP (included in Exhibit 8.2)
23.4
Consent of Maisto e Associati (included in Exhibit 8.3)
99.1
Ferrari N.V. Terms and Conditions of the Special Voting Shares
99.2
Proposal relating to the demerger from Fiat Chrysler Automobiles N.V to FE Interim B.V.
99.3
Proposal relating to the demerger from FE Interim B.V. to FE New N.V.
99.4
Proposal relating to the merger between FE New N.V. and New Business Netherlands N.V.
______________________

* Previously filed with the New Business Netherlands N.V. Registration Statement of July 23, 2015





Item 9. Undertakings
Each of the undersigned registrants hereby undertakes:
(1)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable, In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(2)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(3)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(4)
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.



SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Maranello (MO), Italy, on this 22nd day of September, 2015.
 
N EW  B USINESS  N ETHERLANDS  N.V.
 
 
 
 
By:
/s/ Alessandro Gili
 
 
 
 
 
 
Name: Alessandro Gili
 
Title: Chief Financial Officer
 
 
 



SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 22, 2015.
Signature
 
Title
 
 
 
/s/ Sergio Marchionne
 
Director and Chairman of the Board
Sergio Marchionne
 
 
 
 
 
*
 
Principal Executive Officer
Amedeo Felisa
 
 
 
 
 
/s/ Alessandro Gili
 
Director, Principal Financial Officer and Principal Accounting Officer
Alessandro Gili
 
 
 
 
 
/s/ Richard K. Palmer
 
Director
Richard K. Palmer
 
 
 
 
 
 
 
 
*
 
Authorized Representative in the United States
David Gubbini
 
 
 
 
 
*By:
/s/ Alessandro Gili
 
 
 
Alessandro Gili, Attorney in fact
 
 





Exhibits Index
1.1
Form of Underwriting Agreement
3.1
English translation of the Deed of Incorporation of Ferrari N.V.
3.2
English translation of the Articles of Association of Ferrari N.V.
5.1
Form of opinion of Loyens & Loeff N.V. as to the legality of the common shares being registered
8.1
Opinion of Loyens & Loeff N.V. as to Dutch taxation
8.2
Opinion of Sullivan & Cromwell LLP as to U.S. taxation
8.3
Opinion of Maisto e Associati as to Italian taxation
11.1
Statement regarding computation of per share earnings (incorporated by reference to Note 12 of the New Business Netherlands N.V. Consolidated Financial Statements included in the prospectus that forms a part of this Registration Statement)
21.1
Subsidiaries*
23.1
Consent of Reconta Ernst & Young S.p.A.
23.2
Consents of Loyens & Loeff N.V. (included in Exhibits 5.1 and 8.1)
23.3
Consent of Sullivan & Cromwell LLP (included in Exhibit 8.2)
23.4
Consent of Maisto e Associati (included in Exhibit 8.3)
99.1
Ferrari N.V. Terms and Conditions of the Special Voting Shares
99.2
Proposal relating to the demerger from Fiat Chrysler Automobiles N.V. to FE Interim B.V.
99.3
Proposal relating to the demerger from FE Interim B.V. to FE New N.V.
99.4
Proposal relating to the merger between FE New N.V. and New Business Netherlands N.V.
______________________

* Previously filed with the New Business Netherlands N.V. Registration Statement of July 23, 2015



Exhibit 1.1

FERRARI N.V.

[●] Common Shares


Underwriting Agreement
October [●], 2015

UBS Securities LLC
Merrill Lynch, Pierce, Fenner & Smith
        Incorporated

As Representatives of the

    several Underwriters listed
    in Schedule 1 hereto


Ladies and Gentlemen:
Fiat Chrysler Automobiles N.V. (the “ Selling Shareholder ”) proposes to sell to the several Underwriters listed in Schedule 1 hereto (the “ Underwriters ”), for whom you are acting as representatives (the “ Representatives ”), an aggregate of [●] common shares, par value €0.01 per share (the “ Underwritten Shares ”), of Ferrari N.V., a public company with limited liability incorporated under the laws of the Netherlands (the “ Company ”). In addition, the Selling Shareholder proposes to sell, at the option of the Underwriters, up to an additional [●] common shares, par value €0.01 of the Company (the “ Option Shares ”). The Underwritten Shares and the Option Shares are herein referred to as the “ Shares ”. The common shares of the Company outstanding on the date hereof are referred to herein as the “ Common Shares ”.
Prior to the date of this Agreement, a series of transactions was carried out as a result of which at the date hereof (i) the Company owns 100% of the ordinary shares of Ferrari S.p.A., (ii) the Selling Shareholder owns 90% of the Common Shares and (iii) Mr. Piero Ferrari owns 10% of the Common Shares.
The Company and the Selling Shareholder hereby confirm their agreement with the several Underwriters concerning the purchase and sale of the Shares, as follows:
1. Registration Statement . The Company has prepared and filed with the Securities and Exchange Commission (the “ Commission ”) under the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the “ Securities Act ”), a registration statement on Form F-1 (File No. 333-205804), including a prospectus, relating to the Shares. Such registration statement, as amended at the time it became effective, including the information, if any, deemed pursuant to Rule 430A under the Securities Act to be part of the registration statement at the time of its effectiveness (“ Rule 430 Information ”), is referred to herein as the “ Registration Statement ”; and as used herein, the term “ Preliminary Prospectus ” means each prospectus included in such registration statement (and any amendments thereto) before effectiveness, any prospectus filed with the Commission pursuant to Rule 424(a) under the Securities Act and the prospectus included in the Registration Statement at the time of its effectiveness that omits Rule 430 Information, and the term “ Prospectus ” means the prospectus in the form first used (or made available upon request of purchasers pursuant to






Rule 173 under the Securities Act) in connection with confirmation of sales of the Shares. If the Company has filed an abbreviated registration statement pursuant to Rule 462(b) under the Securities Act (the “ Rule 462 Registration Statement ”), then any reference herein to the term “Registration Statement” shall be deemed to include such Rule 462 Registration Statement. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Registration Statement and the Prospectus.
At or prior to the Applicable Time (as defined below), the Company had prepared the following information (collectively with the pricing information set forth on Annex A, the “ Pricing Disclosure Package ”): a Preliminary Prospectus dated December 4, 2014 and each “free-writing prospectus” (as defined pursuant to Rule 405 under the Securities Act) listed on Annex A hereto.
Applicable Time ” means [●] [A/P].M., New York City time, on October [●], 2015.
2.      Purchase of the Shares by the Underwriters .
(a)      The Selling Shareholder agrees to sell the Underwritten Shares to the several Underwriters as provided in this Underwriting Agreement (the “ Agreement ”), and each Underwriter, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase at a price per share (the “ Purchase Price ”) of $[●] from the Selling Shareholder the number of Underwritten Shares to be purchased by such Underwriter as set forth opposite the name of such Underwriter in Schedule 1 hereto.
In addition, the Selling Shareholder agrees to sell the Option Shares to the several Underwriters as provided in this Agreement, and the Underwriters, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, shall have the option to purchase, severally and not jointly, from the Selling Shareholder the Option Shares at purchase at a price per share (the “ Option Purchase Price ”) of $[●], less an amount equal to any dividends or distributions per share payable on the Underwritten Shares but not payable on the Option Shares.
If any Option Shares are to be purchased, the number of Option Shares to be purchased by each Underwriter shall be the number of Option Shares which bears the same ratio to the aggregate number of Option Shares being purchased as the number of Underwritten Shares set forth opposite the name of such Underwriter in Schedule 1 hereto (or such number as it may be increased pursuant to Section 12 hereof) bears to the aggregate number of Underwritten Shares being purchased from the Company by the several Underwriters, subject, however, to such adjustments to eliminate any fractional Shares as the Representatives in their sole discretion shall make.
The Underwriters may exercise the option to purchase Option Shares at any time in whole, or from time to time in part, on or before the thirtieth day following the date of the Prospectus, by written notice from the Representatives to the Company and the Selling Shareholder. Such notice shall set forth the aggregate number of Option Shares as to which the option is being exercised and the date and time when the Option Shares are to be delivered and paid for, which may be the same date and time as the Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than the third (3 rd ) full business day (as hereinafter defined) after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 12 hereof). Any such notice shall be given at least two business days prior to the date and time of delivery specified therein.
(b)      The Company and the Selling Shareholder understand that the Underwriters intend to make a public offering of the Shares as soon after the effectiveness of this Agreement as in the judgment of the Representatives is advisable, and initially to offer the Shares on the terms set forth in the

-2-





Prospectus. The Company acknowledges and agrees that the Underwriters may offer and sell Shares to or through any affiliate of an Underwriter.
(c)      Payment for the Shares shall be made by wire transfer in immediately available funds to the account specified by the Selling Shareholder to the Representatives in the case of the Underwritten Shares, at the offices of Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 10004 at 10:00 A.M., New York City time, on October [●], 2015, or at such other time or place on the same or such other date, not later than the third business day thereafter, as the Representatives, the Company and the Selling Shareholder may agree upon in writing or, in the case of the Option Shares, on the date and at the time and place specified by the Representatives in the written notice of the Underwriters’ election to purchase such Option Shares. The time and date of such payment for the Underwritten Shares is referred to herein as the “ Closing Date ”, and the time and date for such payment for the Option Shares, if other than the Closing Date, is herein referred to as the “ Additional Closing Date ”.
(d)      Each of the Company and the Selling Shareholder acknowledges and agrees that the Underwriters are acting solely in the capacity of an arm’s length contractual counterparty to the Company and the Selling Shareholder, respectively, with respect to the offering of Shares contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company, the Selling Shareholder or any other person. Additionally, neither the Representatives nor any other Underwriter is advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. Each of the Company and the Selling Shareholder shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability to the Company or the Selling Shareholder with respect thereto. Any review by the Underwriters of the Company, the Selling Shareholder, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Company or the Selling Shareholder.
Payment for the Shares to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against delivery to the Representatives for the respective accounts of the several Underwriters of the Shares to be purchased on such date, with any transfer taxes payable in connection with the sale of such Shares duly paid by the Selling Shareholder. Delivery of the Shares shall be made through the facilities of The Depository Trust Company (“ DTC ”) unless the Representatives shall otherwise instruct.
3.      Representations and Warranties of the Company . The Company represents and warrants to each Underwriter and to the Selling Shareholder that:
(a)      Preliminary Prospectus. No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus included in the Pricing Disclosure Package, at the time of filing thereof, complied in all material respects with the Securities Act, and no Preliminary Prospectus, at the time of filing thereof, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter or the Selling Shareholder furnished to the Company in writing by such Underwriter through the Representatives or by the Selling Shareholder, as the case may be,

-3-





expressly for use in any Preliminary Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 9(c) hereof.
(b)      Pricing Disclosure Package . The Pricing Disclosure Package as of the Applicable Time did not, and as of the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter or the Selling Shareholder furnished to the Company in writing by such Underwriter or the Selling Shareholder, as the case may be, through the Representatives expressly for use in such Pricing Disclosure Package, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 9(c) hereof, and it being further understood and agreed that such information furnished by the Selling Shareholder consists of the Selling Shareholder Information (as defined in Section 4(e) hereof).
(c)      Issuer Free Writing Prospectus. Other than the Registration Statement, the Preliminary Prospectus and the Prospectus, the Company (including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared, used, authorized, approved or referred to and will not prepare, use, authorize, approve or refer to any “written communication” (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy the Shares (each such communication by the Company or its agents and representatives (other than a communication referred to in clause (i) below) an “ Issuer Free Writing Prospectus ”) other than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act or (ii) the documents listed on Annex A hereto, each electronic road show and any other written communications approved in writing in advance by the Representatives. Each such Issuer Free Writing Prospectus complied in all material respects with the Securities Act, has been or will be (within the time period specified in Rule 433) filed in accordance with the Securities Act (to the extent required thereby) and, when taken together with the Preliminary Prospectus accompanying, or delivered prior to delivery of, such Issuer Free Writing Prospectus, did not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty with respect to any statements or omissions made in each such Issuer Free Writing Prospectus or Preliminary Prospectus in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in such Issuer Free Writing Prospectus or Preliminary Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 9(c) hereof.
(d)      Registration Statement and Prospectus. The Registration Statement has been declared effective by the Commission. No order suspending the effectiveness of the Registration Statement has been issued by the Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or related to the offering of the Shares has been initiated or threatened by the Commission; as of the applicable effective date of the Registration Statement and any post-effective amendment thereto, the Registration Statement and

-4-





any such post-effective amendment complied and will comply in all material respects with the Securities Act, and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading; and as of the date of the Prospectus and any amendment or supplement thereto and as of the Closing Date and as of the Additional Closing Date, as the case may be, the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement and the Prospectus and any amendment or supplement thereto, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 9(c) hereof.
(e)      Financial Statements. The Financial Statements comply in all material respects with the applicable requirements of the Securities Act and present fairly the consolidated financial position of the Company and its subsidiaries as of the dates indicated and the results of their operations and the changes in their cash flows for the periods specified; the Financial Statements have been prepared in conformity with the International Financial Reporting Standards issued by the International Accounting Standards Board (“ IFRS ”) applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto; and the pro forma financial information and the related notes thereto included in the Registration Statement, the Pricing Disclosure Package and the Prospectus have been prepared in accordance with the applicable requirements of the Securities Act and the assumptions underlying such pro forma financial information set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus have been prepared and applied in good faith. For purposes of this Agreement, “ Financial Statements ” means the consolidated financial statements, together with the related schedules and notes, of the Company and its consolidated subsidiaries included in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(f)      No Material Adverse Change. Except as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus (exclusive of any amendment or supplement thereto following the Applicable Time), since the date of the most recent financial statements of the Company included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the business, financial condition or results of operations of the Company and its subsidiaries, considered as one entity (any such change being a “ Material Adverse Change ”), and (ii) there has been no dividend or distribution of any kind declared, paid or made by the Company or, except for dividends paid to the Company or other subsidiaries, any of its subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock.
(g)      Organization and Good Standing. The Company and each of its Significant Subsidiaries have been duly incorporated or formed, as applicable, and are validly existing under the laws of their respective jurisdictions of organization and are duly qualified to do business in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, result in a Material Adverse Change. The Company

-5-





is in good standing (where such concept is applicable) under the laws of its jurisdiction of organization and is in good standing (where such concept is applicable) in each jurisdiction in which its respective ownership or lease of property or the conduct of its respective businesses requires such qualification. The Company and each of its Significant Subsidiaries have all corporate power and authority necessary to own or hold their respective properties and to conduct the businesses in which they are engaged, except where the failure to be so qualified or have such power or authority would not, individually or in the aggregate, result in a Material Adverse Change. All of the issued and outstanding capital stock or other ownership interest of each subsidiary has been duly authorized and validly issued, is fully paid and nonassessable (if applicable) and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim, except as described in the Registration Statement, the Pricing Disclosure Package or the Prospectus or except as would not be material to the Company and its subsidiaries, taken as a whole. The Company does not own or control, directly or indirectly, any corporation, association or other entity required to be listed in Exhibit 21.1 to the Registration Statement that is not so listed. “ Significant Subsidiary ” means each of the subsidiaries of the Company listed in Schedule 2 to this Agreement.
(h)      Capitalization. The Company has an authorized capitalization as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; all of the outstanding common shares and special voting shares of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and are not subject to any pre-emptive or similar rights; except as described in or expressly contemplated by the Pricing Disclosure Package and the Prospectus, there are no outstanding rights (including, without limitation, pre-emptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of capital stock or other equity interest in the Company or any of its subsidiaries, or any contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance of any capital stock of the Company or any such subsidiary, any such convertible or exchangeable securities or any such rights, warrants or options; the capital stock of the Company conforms in all material respects to the description thereof contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(i)      Share Awards. Neither the Company nor any of its subsidiaries has any awards (the “ Share Awards ”) granted pursuant to the stock-based compensation plans of the Company and its subsidiaries (the “ Company Share Plans ”).
(j)      Due Authorization. The Company has full right, power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and all corporate action required to be taken for the due and proper authorization, execution and delivery by it of this Agreement and the consummation by it of the transactions contemplated hereby has been duly and validly taken.
(k)      Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company.
(l)      The Shares . The Shares have been duly and validly issued and conform to the descriptions thereof in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

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(m)      No Violation or Default. Neither the Company nor any of its Significant Subsidiaries is (i) in violation of its articles of association, charter, bylaws or other similar organizational document or (ii) in default (or, with the giving of notice or lapse of time, would be in default) (“ Default ”) under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which the Company or any of its Significant Subsidiaries is a party or by which it or any of them may be bound or to which any of the property or assets of the Company or any of its Significant Subsidiaries is subject (each, an “ Existing Instrument ”), except, in the case of clause (ii) of this Section 3(m), for such Defaults as would not, individually or in the aggregate, result in a Material Adverse Change.
(n)      No Conflicts. The execution and delivery of and the performance by the Company of its obligations under this Agreement, the consummation by the Company of the transactions contemplated by this Agreement and the consummation by the Company and the Selling Shareholder of the transactions described under the heading “The Restructuring and Separation Transactions” in the Registration Statement, Pricing Disclosure Package and Prospectus will not (i) result in any violation of the provisions of the articles of association, charter, bylaws or similar organizational document of the Company or any of its Significant Subsidiaries, (ii) conflict with or constitute a breach of, or Default or a Debt Repayment Triggering Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument, except for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not, individually or in the aggregate, result in a Material Adverse Change and (iii) result in any violation of any law, administrative regulation or administrative or court decree applicable to the Company or any subsidiary, except for such conflicts, breaches or violations as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change. As used herein, a “ Debt Repayment Triggering Event ” means any event or condition which gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.
(o)      No Consents Required. No consent, approval, authorization, order, license, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution and delivery of and the performance by the Company of its obligations under this Agreement and the consummation by the Company of the transactions contemplated by this Agreement, except for the registration of the Shares under the Securities Act and such consents, approvals, authorizations, orders and registrations or qualifications as may be required by the Financial Industry Regulatory Authority, Inc. (“ FINRA ”), the blue sky laws of any jurisdiction and under applicable state securities laws in connection with the purchase and distribution of the Shares by the Underwriters and any notification of the Netherlands Authority for the Financial Markets ( Autoriteit Financiele Markten ) pursuant to Section 5:34 and Section 5:35 of the Dutch Financial Supervision Act ( Wet op het financieel toezicht ).
(p)      Legal Proceedings. Except as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no legal or governmental actions, suits or proceedings pending or, to the Company’s knowledge, threatened (i) against or affecting the Company or any of its subsidiaries or (ii) that have as the subject thereof any property owned or leased by the Company or any of its subsidiaries which action, suit or proceeding, in the case

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of either clause (i) or (ii), is reasonably likely to result in a Material Adverse Change or which would restrain or enjoin the delivery of the Shares by the Selling Shareholder or which in any way affects the validity of the Shares. Except as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no labor dispute with the employees of the Company or any of its subsidiaries or, to the Company’s knowledge, with the employees of any principal supplier of the Company, exists or, to the Company’s knowledge, is threatened or imminent that is reasonably likely to result in a Material Adverse Change.
(q)      Independent Accountants . Reconta Ernst & Young S.p.A., who has certified certain Financial Statements of the Company and its subsidiaries, is an independent registered public accounting firm with respect to the Company and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) (“ PCAOB ”) and as required by the Securities Act.
(r)     No Undisclosed Relationships . No relationship, direct or, to the Company’s knowledge, indirect, exists between or among any of the Company or any affiliate of the Company, on the one hand, and any director, officer, member, shareholder, customer or supplier of the Company or any affiliate of the Company, on the other hand, which would be required by the Securities Act to be disclosed in a registration statement on Form F-1 which is not so disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus. There are no outstanding loans, advances (except advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Company or any of its subsidiaries to or for the benefit of any of the officers or directors of the Company or any affiliate of the Company or any of their respective family members, other than intercompany loans between or among the Company and its consolidated subsidiaries.
(r)      Investment Company Act . The Company is not and, after giving effect to the offering and sale of the Shares as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be an “investment company” required to register under the Investment Company Act of 1940, as amended (the “ Investment Company Act ” which term, as used herein, includes the rules and regulations of the Commission thereunder).
(s)      Taxes. The Company and its subsidiaries have filed all material necessary national, federal, state and foreign income and franchise tax returns or have properly requested extensions thereof and have paid all material taxes required to be paid by any of them in all jurisdictions in which they are required to so pay, and withheld in full all taxes required to be withheld by any of them in all jurisdictions in which they are required to so withhold, including any related or similar material assessment, fine or penalty levied against any of them except as may be being contested in good faith and by appropriate proceedings. The Company has made adequate charges, accruals and reserves in accordance with IFRS in the Financial Statements in respect of all national, federal, state and foreign income and franchise taxes for all periods as to which the tax liability of the Company or any of its Significant Subsidiaries has not been finally determined.
(t)      Licenses and Permits. Except as would not reasonably be expected to result in a Material Adverse Change, the Company and each of its Significant Subsidiaries possess such valid and current certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to own, lease and operate their respective properties and to conduct their respective businesses in all material respects as described in the

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Registration Statement, the Pricing Disclosure Package and the Prospectus, and neither the Company nor any subsidiary has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit which, singly or in the aggregate, would reasonably be expected to result in a Material Adverse Change.
(u)      Labor Matters. There is no strike, labor dispute, labor disturbance, slowdown or stoppage pending or, to the Company’s knowledge, threatened against the Company or any of its subsidiaries or threatened or pending against any of their respective principal suppliers, except as would not, individually or in the aggregate, result in a Material Adverse Change. There has been no violation, except as would not, individually or in the aggregate, result in a Material Adverse Change, of any (A) national, state, provincial or local law relating to discrimination in hiring, promotion or pay of employees, or (B) applicable classification, wage or hour laws applicable to the Company.
(v)      Compliance with and Liability under Environmental Laws. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus or as would otherwise not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change:
(i) each of the Company and its subsidiaries, and their respective operations and facilities, are in compliance with applicable Environmental Laws (as defined below), and have obtained and are in compliance with all permits, licenses or other governmental authorizations or approvals, and have made all filings and provided all financial assurances and notices, required for the ownership and operation of their respective businesses, properties and facilities under applicable Environmental Laws;
(ii) there is no claim, proceeding, action or cause of action filed with a court or governmental authority, no investigation with respect to which the Company has received written notice alleging actual or potential liability on the part of the Company or any of its subsidiaries based on or pursuant to any Environmental Law pending or, to the Company’s knowledge, threatened against the Company or any of its subsidiaries or any person or entity whose liability under or pursuant to any Environmental Law the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law;
(iii) neither the Company nor any of its subsidiaries is conducting or paying for, in whole or in part, any investigation, response or other corrective action pursuant to any Environmental Law at any site or facility, nor is any of them subject or a party to any order, judgment, decree, contract or agreement which imposes any obligation or liability under any Environmental Law; and
(iv) there has been no Release (as defined below) of any Materials of Environmental Concern (as defined below) and, to the Company’s knowledge, there are no other past or present actions, activities, circumstances, conditions or occurrences, that would reasonably be expected to result in a violation of or liability under any Environmental Law on the part of the Company or any of its subsidiaries, including without limitation, any such liability which the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law.
For purposes of this Agreement, “ Environment ” means ambient air, indoor air, surface water, groundwater, drinking water, soil, surface and subsurface strata, and natural resources such

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as wetlands, flora and fauna. “ Environmental Laws ” means the common law and all federal, state, local and foreign laws, rules, regulations, ordinances, codes, orders, decrees, judgments and injunctions issued, promulgated or entered thereunder, relating to pollution or protection of the Environment or human health from exposure to Materials of Environmental Concern, including without limitation, those relating to (x) the Release of Materials of Environmental Concern or (y) the manufacture, processing, distribution, use, generation, treatment, storage, transport, handling or recycling of Materials of Environmental Concern. “ Materials of Environmental Concern ” means any substance, material, pollutant, contaminant, chemical, waste, compound, or constituent, in any form, including without limitation, petroleum and petroleum products, subject to regulation or which can give rise to liability under any Environmental Law. “ Release ” means any release, spill, emission, discharge, deposit, disposal, leaking, pumping, pouring, dumping, emptying, injection or leaching into the Environment, or into, from or through any building, structure or facility.
(w)      Compliance with Pension Laws . Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, all employee benefit plans and all pension plans established or maintained by the Company, its subsidiaries, or for which the Company or its subsidiaries could have any liability, are in compliance with all applicable statutes, orders, rule and regulations and other law, except for any violations that, individually or in the aggregate, would not be reasonably likely to result in material liability to the Company and its subsidiaries taken as a whole. All such plans (i) have been maintained in accordance with all applicable legal requirements, (ii) if they are intended to qualify for special tax treatment, meet all the requirements for such treatment and (iii) if they are intended to be funded and/or book-reserved, are fully funded and/or book-reserved, as appropriate, based upon reasonable actuarial assumptions, except in each case as would not, individually or in the aggregate, result in a Material Adverse Change.
(x)      Disclosure Controls . The Company has established and maintains “disclosure controls and procedures” (as such term is defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended and the rules and regulations of the Commission thereunder (collectively, the “ Exchange Act ”)) that are designed to ensure that material information relating to the Company and its subsidiaries is made known to the chief executive officer and chief financial officer of the Company by persons within the Company or its subsidiaries, and such disclosure controls and procedures are reasonably effective to perform the functions for which they were established subject to the limitations of any such control system. The Company’s auditors and the Audit Committee of the Company’s Board of Directors have been advised of: (i) any significant deficiencies or material weaknesses known to the Company in the design or operation of internal control over financial reporting that have materially adversely affected or are reasonably likely to materially adversely affect the Company’s ability to record, process, summarize, and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
(y)      Accounting Controls. The Company and its subsidiaries maintain a system of accounting controls designed to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is

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compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(z)      No Unlawful Payments. Neither the Company nor, to the knowledge of the Company, any subsidiary, director, officer, employee, agent, affiliate or other person associated with or acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee, including of any government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office; (iii) violated in the three years preceding the date of this Agreement or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom or any other applicable anti-bribery or anti-corruption laws or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit, except in each case as would not, individually or in the aggregate, result in a Material Adverse Change. The Company and its subsidiaries have instituted and maintain policies and procedures designed to promote and achieve compliance with such anti-bribery and anti-corruption laws in all material respects.
(aa)      Compliance with Anti-Money Laundering Laws . The operations of the Company and its subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of all jurisdictions where the Company or any of its subsidiaries conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental or regulatory agency (collectively, the “ Anti-Money Laundering Laws ”) and no action, suit or proceeding by or before any court or governmental or regulatory agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(bb)      No Conflicts with Sanctions Laws. Neither the Company nor, to the knowledge of the Company, any subsidiary, director, officer, employee, agent, affiliate or other person acting on behalf of the Company or any of its subsidiaries, is currently the subject or, to the Company’s knowledge, the target of any sanctions administered or enforced by the U.S. government, (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State and including, without limitation, the designation as a “specially designated national” or “blocked person”), the United Nations Security Council, the European Union or Her Majesty’s Treasury (collectively, “ Sanctions ”), nor is the Company, any of its subsidiaries located, incorporated, organized or resident in a country or territory that is the subject or the target of Sanctions, including, without limitation, Cuba, Burma (Myanmar), Iran, North Korea, Sudan and Syria (each, a “ Sanctioned Country ”).

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(cc)      No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Shares.
(dd)      No Stabilization. The Company has not taken, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Shares, it being understood that any action of any of the Underwriters and their respective affiliates shall not constitute action by the Company.
(ee)      Status under the Securities Act . At the time of filing the Registration Statement and any post-effective amendment thereto, at the earliest time thereafter that the Company or any offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) of the Shares and at the date hereof, the Company was not and is not an “ineligible issuer”, as defined in Rule 405 under the Securities Act.
(ff)      Stamp, Value Added and Withholding Taxes . Except (a) for any net income, capital gains or franchise taxes imposed on the Underwriters by Italy, the Netherlands, or the United States or any political subdivision or taxing authority thereof or therein as a result of any present or former connection (other than any connection resulting solely from the transactions contemplated by this Agreement) between the Underwriters and the jurisdiction imposing such tax or (b) as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no value added tax or other similar taxes levied by reference to added value or sales (“ VAT ”), stamp duties, registration taxes (other than Italian registration tax arising if this Agreement or any agreement for the sale of the Shares or any transfer of the Shares by the Underwriters is (i) filed with an Italian court or with an Italian administrative authority, (ii) referred to in another document executed between the same parties and subject to registration or in a judicial decision (including arbitration), (iii) voluntarily registered or (iv) executed in Italy), issuance or transfer taxes or other similar taxes or duties are payable by or on behalf of the Underwriters in Italy, the Netherlands, the United States or any political subdivision or taxing authority thereof (each, a “ Taxing Jurisdiction ”) solely in connection with (A) the execution, delivery and performance of this Agreement, (B) the transfer and delivery of the Shares to the Underwriters in the manner contemplated by this Agreement and the Prospectus or (C) the sale and delivery by the Underwriters of the Shares as contemplated herein and disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and all payments to be made by the Company on or by virtue of the execution, delivery, performance or enforcement of this Agreement, under the current laws of any Taxing Jurisdiction, will not be subject to withholding, duties, levies, deductions, charges or other taxes and are otherwise payable free and clear of any other withholding, duty, levy, deduction, charge or other tax in the Taxing Jurisdiction and without the necessity of obtaining any governmental authorization in the Taxing Jurisdiction.
(gg)      No Immunity . Neither the Company nor any of its properties or assets has immunity from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution, set-off or otherwise) or from jurisdiction of any Dutch, U.S. federal or New York state court.

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(hh)      Passive Foreign Investment Company . Subject to the qualifications, limitations, exceptions and assumptions set forth in the Preliminary Prospectus and the Prospectus, the Company does not believe that it is a passive foreign investment company, as defined in section 1297 of the Code.
(ii)      Legality . The legality, validity, enforceability or admissibility into evidence of this Agreement or the Shares in the Netherlands is not dependent upon any such document being submitted into, filed or recorded with any court or other authority in any such jurisdiction on or before the date hereof or that any tax, imposition or charge be paid in any such jurisdiction on or in respect of any such document.
(jj)      Foreign Issuer . The Company is a “foreign private issuer” as defined in Rule 405 under the Securities Act.
4.      Representations and Warranties of the Selling Shareholder . The Selling Shareholder represents and warrants to each Underwriter that:
(a)      Required Consents; Authority . All consents, approvals, authorizations and orders necessary for the execution and delivery by the Selling Shareholder of this Agreement, and for the sale and delivery of the Shares to be sold by the Selling Shareholder hereunder, have been obtained; and the Selling Shareholder has full right, power and authority to enter into this Agreement and to sell, assign, transfer and deliver the Shares to be sold by the Selling Shareholder hereunder; this Agreement has been duly authorized, executed and delivered by the Selling Shareholder.
(b)      No Conflicts . The execution, delivery and performance by the Selling Shareholder of this Agreement, the sale of the Shares to be sold by the Selling Shareholder and the consummation by the Selling Shareholder of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Selling Shareholder pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Selling Shareholder is a party or by which the Selling Shareholder is bound or to which any of the property or assets of the Selling Shareholder is subject, (ii) result in any violation of the provisions of the charter or by-laws or similar organizational documents of the Selling Shareholder or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory agency.
(c)      Title to Shares. The Selling Shareholder has good and valid title to the Shares to be sold at the Closing Date or the Additional Closing Date, as the case may be, by the Selling Shareholder hereunder, free and clear of all liens, encumbrances, equities or adverse claims; the Selling Shareholder will have, immediately prior to the Closing Date or the Additional Closing Date, as the case may be, good and valid title to the Shares to be sold at the Closing Date or the Additional Closing Date, as the case may be, by the Selling Shareholder, free and clear of all liens, encumbrances, equities or adverse claims; and, upon delivery of the certificates representing such Shares and payment therefor pursuant hereto, good and valid title to such Shares, free and clear of all liens, encumbrances, equities or adverse claims, will pass to the several Underwriters.

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(d)      No Stabilization. The Selling Shareholder has not taken and will not take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Shares, it being understood that any action of any of the Underwriters and their respective affiliates shall not constitute an indirect action by the Company.
(e)      Pricing Disclosure Package . All Selling Shareholder Information included in the Registration Statement and the Pricing Disclosure Package, at the Applicable Time was, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will be, true, correct and complete in all material respects; it being understood that the “ Selling Shareholder Information ” shall consist solely of information relating to the Selling Shareholder that has been furnished to the Company in writing by the Selling Shareholder expressly for use in the Pricing Disclosure Package (including any Pricing Disclosure Package that has subsequently been amended), Registration Statement or the Prospectus (or any amendment or supplement thereto).
(f)      Issuer Free Writing Prospectus. Other than the Registration Statement, the Preliminary Prospectus and the Prospectus, the Selling Shareholder (including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared, used, authorized, approved or referred to and will not prepare, use, authorize, approve or refer to any Issuer Free Writing Prospectus, other than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act or (ii) the documents listed on Annex B hereto, each electronic road show and any other written communications approved in writing in advance by the Company and the Representatives.
(g)      Legality . The legality, validity, enforceability or admissibility into evidence of any of the Registration Statement, the Pricing Disclosure Package, the Prospectus, this Agreement or the Shares in the Netherlands or the United Kingdom is not dependent upon such document being submitted into, filed or recorded with any court or other authority in any such jurisdiction on or before the date hereof or that any tax, imposition or charge be paid in any such jurisdiction on or in respect of any such document.
(h)      No Broker’s Fees. The Selling Shareholder is not a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Shares.
5.      Further Agreements of the Company . The Company covenants and agrees with each Underwriter and the Selling Shareholder that:
(a)      Required Filings. The Company will file the final Prospectus with the Commission within the time periods specified by Rule 424(b) and Rule 430A under the Securities Act, will file any Issuer Free Writing Prospectus to the extent required by Rule 433 under the Securities Act; and will furnish copies of the Prospectus and each Issuer Free Writing Prospectus (to the extent not previously delivered) to the Underwriters (copies of which will also be delivered to the Selling Shareholder) in New York City prior to 10:00 A.M., New York City time, on the business day next succeeding the date of this Agreement in such quantities as the Representatives may reasonably request.
(b)      Delivery of Copies. The Company will upon request deliver, without charge, (i) to the Representatives, two signed copies of the Registration Statement as originally filed and

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each amendment thereto, in each case including all exhibits and consents filed therewith and (ii) to each Underwriter (A) a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) and (B) during the Prospectus Delivery Period (as defined below), as many copies of the Prospectus (including all amendments and supplements thereto and each Issuer Free Writing Prospectus) as the Representatives may reasonably request (copies of the Registration Statement and Prospectus will also be delivered to the Selling Shareholder). As used herein, the term “ Prospectus Delivery Period ” means such period of time after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters a prospectus relating to the Shares is required by law to be delivered (or required to be delivered but for Rule 172 under the Securities Act) in connection with sales of the Shares by any Underwriter or dealer.
(c)      Amendments or Supplements, Issuer Free Writing Prospectuses. Before preparing, using, authorizing, approving, referring to or filing any Issuer Free Writing Prospectus, and before filing any amendment or supplement to the Registration Statement or the Prospectus, the Company will furnish to the Representatives and counsel for the Underwriters a copy of the proposed Issuer Free Writing Prospectus, amendment or supplement (a copy will also be delivered to the Selling Shareholder) for review and will not prepare, use, authorize, approve, refer to or file any such Issuer Free Writing Prospectus or file any such proposed amendment or supplement to which the Representatives or the Selling Shareholder reasonably object, in writing, on a timely basis (unless, in the Company’s good faith judgment, such action is necessary to comply with applicable law).
(d)      Notice to the Representatives and Selling Shareholder. The Company will advise the Representatives and the Selling Shareholder promptly (i) when the Registration Statement has become effective; (ii) when any amendment to the Registration Statement has been filed or becomes effective; (iii) when any supplement to the Prospectus or any Issuer Free Writing Prospectus or any amendment to the Prospectus has been filed or distributed; (iv) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or the receipt of any comments from the Commission relating to the Registration Statement or any other request by the Commission for any additional information; (v) of the issuance by the Commission of any order suspending the effectiveness of the Registration Statement or preventing or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package or the Prospectus or the initiation or, to the Company’s knowledge, threatening of any proceeding for that purpose or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any event or development within the Prospectus Delivery Period as a result of which the Prospectus, the Pricing Disclosure Package or any Issuer Free Writing Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus, the Pricing Disclosure Package, or any such Issuer Free Writing Prospectus is delivered to a purchaser, not misleading and (vii) of the receipt by the Company of any notice with respect to any suspension of the qualification of the Shares for offer and sale in any jurisdiction or the initiation or, to the Company’s knowledge, threatening of any proceeding for such purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such order suspending the effectiveness of the Registration Statement, preventing or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package or the Prospectus or suspending any such qualification of the Shares and, if any such order is issued, will obtain as soon as possible the withdrawal thereof.

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(e)      Ongoing Compliance. (i) If during the Prospectus Delivery Period (A) any event or development shall occur or condition shall exist as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (B) it is necessary to amend or supplement the Prospectus to comply with law, the Company will promptly after becoming aware of such circumstances notify the Underwriters and the Selling Shareholder thereof and forthwith prepare and, subject to paragraph (c) of this Section 4, file with the Commission and furnish to the Underwriters, the Selling Shareholder and to such dealers as the Representatives may designate such amendments or supplements to the Prospectus as may be necessary so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law and (ii) if at any time prior to the Closing Date (A) any event or development shall occur or condition shall exist as a result of which the Pricing Disclosure Package as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, not misleading or (B) it is necessary to amend or supplement the Pricing Disclosure Package to comply with law, the Company will promptly notify the Underwriters and the Selling Shareholder thereof and forthwith prepare and, subject to paragraph (c) of this Section 4, file with the Commission (to the extent required) and furnish to the Underwriters, to the Selling Shareholder and to such dealers as the Representatives may designate such amendments or supplements to the Pricing Disclosure Package as may be necessary so that the statements in the Pricing Disclosure Package as so amended or supplemented will not, in the light of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, be misleading or so that the Pricing Disclosure Package will comply with law.
(f)      Blue Sky Compliance. The Company will qualify the Shares for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as the Representatives shall reasonably request and will continue such qualifications in effect so long as required for distribution of the Shares; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any jurisdiction in which it is not otherwise so subject.
(g)      Earning Statement. The Company will make generally available to its security holders and the Representatives as soon as practicable an earning statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after the “effective date” (as defined in Rule 158) of the Registration Statement; provided that the Company will be deemed to have furnished such statements to its security holders and the Representatives to the extent they are filed on the Commission’s Electronic Data Gathering, Analysis and Retrieval (“ EDGAR ”) system.
(h)      Clear Market. For a period of 90 days after the date of the Prospectus, the Company will not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration

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statement under the Securities Act (other than a Registration Statement on Form S-8 with respect to employee benefit plans described in the Registration Statement, the Pricing Disclosure Package and the Prospectus) relating to, any Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Shares or any such other securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Shares or such other securities, in cash or otherwise, without the prior written consent of [the Representatives], other than the Shares to be sold hereunder, Share Awards granted in the ordinary course pursuant to the Company Share Plans and any Common Shares issued upon the exercise of options granted under Company Share Plans or issued upon the vesting or settlement of Share Awards; provided , however , that this provision shall not restrict any activities by the Company or the Selling Shareholder in furtherance of, or the consummation by the Company and the Selling Shareholder of, any of the transactions described under the heading “The Restructuring and Separation Transactions” in the Registration Statement.
If [the Representatives], in their sole discretion, agree to release or waive the restrictions set forth in Section 6(a) or a lock-up letter as described in Section 8(n) hereof for an officer or director of the Company and provide the Company with notice of the impending release or waiver at least three business days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit B hereto through a major news service at least two business days before the effective date of the release or waiver.
(i)      No Stabilization. The Company will not take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Common Shares, it being understood that any action of any of the Underwriters and their respective affiliates shall not constitute an indirect action by the Company.
(j)      Exchange Listing. The Company will use its reasonable best efforts to list, subject to notice of issuance, the Shares on the New York Stock Exchange (the “ Exchange ”).
(k)      Reports. For a period of two years from the date hereof, the Company will furnish to the Representatives, as soon as they are available, copies of all reports or other communications (financial or other) furnished to holders of the Shares, and copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange or automatic quotation system; provided the Company will be deemed to have furnished such reports and financial statements to the Representatives to the extent they are filed on the Commission’s EDGAR system.
(l)      Record Retention . The Company will, pursuant to reasonable procedures developed in good faith, retain copies of each Issuer Free Writing Prospectus that is not filed with the Commission in accordance with Rule 433 under the Securities Act.
6.      Further Agreements of the Selling Shareholder . The Selling Shareholder covenants and agrees with each Underwriter that:
(a)      Clear Market . For a period of 90 days after the date of the Prospectus, the Selling Shareholder will not (i) offer, pledge, sell, contract to sell, sell any option or contract to

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purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Shares or any such other securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Shares or such other securities, in cash or otherwise, without the prior written consent of [the Representatives], other than the Shares to be sold hereunder; provided however that this provision shall not restrict any activities by the Company or the Selling Shareholder in furtherance of, or the consummation by the Company and the Selling Shareholder of, any of the transactions described under the heading “The Restructuring and Separation Transactions” in the Registration Statement.
(b)      Tax Form. It will deliver or has delivered to the Representatives prior to or at the Closing Date a properly completed and executed United States Treasury Department Form W-8 (or other applicable form or statement specified by the United States Treasury Department regulations in lieu thereof) in order to facilitate the Underwriters’ documentation of their compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated.
7.      Certain Agreements of the Underwriters .     Each Underwriter hereby represents and warrants to the Company and the Selling Shareholder and agrees that:
(a)      It has not used, authorized use of, referred to or participated in the planning for use of, and will not use, authorize use of, refer to or participate in the planning for use of, any “free writing prospectus”, as defined in Rule 405 under the Securities Act (which term includes use of any written information furnished to the Commission by the Company and any press release issued by the Company) other than (i) a free writing prospectus that contains no “issuer information” (as defined in Rule 433(h)(2) under the Securities Act) that was not included in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus, (ii) any Issuer Free Writing Prospectus listed on Annex A or prepared pursuant to Section 3(c) or Section 5(c) above (including any electronic road show) or (iii) any free writing prospectus prepared by such underwriter and approved by the Company in advance in writing.
(b)      It has not and will not, without the prior written consent of the Company, use any free writing prospectus that contains the final terms of the sale of the Shares unless such terms have previously been included in a free writing prospectus filed with the Commission.
(c)      It is not subject to any pending proceeding under Section 8A of the Securities Act with respect to the offering (and will promptly notify the Company and the Selling Shareholder if any such proceeding against it is initiated during the Prospectus Delivery Period).
(d)      It will not take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Common Shares except in accordance with all applicable law and as described in the Registration Statement, Pricing Disclosure Package and Prospectus.
8.      Conditions of Underwriters’ Obligations. The obligation of each Underwriter to purchase the Underwritten Shares on the Closing Date or the Option Shares on the Additional Closing Date, as the case may be, as provided herein is subject to the performance by the Company and the Selling

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Shareholder of their respective covenants and other obligations hereunder and to the following additional conditions:
(a)      Registration Compliance; No Stop Order. No order suspending the effectiveness of the Registration Statement shall be in effect, and no proceeding for such purpose or pursuant to Section 8A under the Securities Act shall be pending before or threatened in writing by the Commission; the Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the Commission under the Securities Act (in the case of an Issuer Free Writing Prospectus, to the extent required by Rule 433 under the Securities Act) and in accordance with Section 5(a) hereof; and all requests by the Commission for additional information shall have been complied with to the reasonable satisfaction of the Representatives.
(b)      Representations and Warranties. The respective representations and warranties of the Company and the Selling Shareholder contained herein shall be true and correct on the date hereof and on and as of the Closing Date; and the statements of the Company and its officers and of the Selling Shareholder and its representatives made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date.
(c)      No Material Adverse Change. No event or condition of a type described in Section 3(f) hereof shall have occurred or shall exist, which event or condition is not described in the Pricing Disclosure Package (excluding any amendment or supplement thereto) and the Prospectus (excluding any amendment or supplement thereto) and the effect of which in the reasonable judgment of the Representatives is so material and adverse that it is impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares on the Closing Date, on the terms and in the manner contemplated by this Agreement, the Pricing Disclosure Package and the Prospectus.
(d)      Officer’s Certificate. The Representatives shall have received on and as of the Closing Date, (x) a certificate of the chief financial officer or chief accounting officer of the Company (i) confirming that such officers have carefully reviewed the Registration Statement, the Pricing Disclosure Package and the Prospectus and, to the knowledge of such officers, (A) the representations of the Company in this Agreement that are qualified as to materiality are true and correct and (B) the other representations and warranties of the Company in this Agreement are true and correct in all material respects, (ii) confirming that the Company has complied in all material respects with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date and (iii) to the effect set forth in paragraphs (a) and (c) of this Section 8; and (y) a certificate of the Selling Shareholder, in form and substance reasonably satisfactory to the Representatives, (i) confirming that (A) the representations of the Selling Shareholder set forth in this Agreement that are qualified as to materiality are true and correct and (B) the other representations and warranties of the Selling Shareholder in this Agreement are true and correct in all material respects and (ii) confirming that that the Selling Shareholder has complied in all material respects with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date.
(e)      Comfort Letters. On the date of this Agreement Reconta Ernst & Young S.p.A. shall have furnished to the Representatives, at the request of the Company, a letter, dated the date of delivery thereof and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, containing statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements

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and certain financial information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus; and on the Closing Date Reconta Ernst & Young S.p.A. shall have furnished to the Representatives, at the request of the Company, a letter, dated the date of delivery thereof and addressed to the Underwriters bringing down to a more recent date customary statements in the letter delivered on the date of this Agreement provided, that the letter delivered on the Closing Date shall use a “cut-off” date no more than five business days prior to such Closing Date.
(f)      Opinion and Disclosure Letter of U.S. Counsel for the Company and the Selling Shareholder. Sullivan & Cromwell LLP, U.S. counsel for the Company and the Selling Shareholder, shall have furnished to the Representatives, at the request of the Company and the Selling Shareholder, their written opinion and disclosure letter, dated the Closing Date, and addressed to the Underwriters, in the form set forth in Annex B-1 hereto.
(g)      Opinion of Dutch Counsel for the Company and the Selling Shareholder . Loyens & Loeff N.V., Dutch counsel for the Company and the Selling Shareholder, shall have furnished to the Representatives, at the request of the Company and the Selling Shareholder, their written opinion, dated the Closing Date, and addressed to the Underwriters, in the form set forth in Annex B-2 hereto.
(h)      Opinion of Italian Counsel for the Company and the Selling Shareholder . Maisto e Associati, Italian tax counsel for the Company, shall have furnished to the Representatives, at the request of the Company, their written opinion, dated the Closing Date, and addressed to the Underwriters, with respect to Italian tax consequences described in the Registration Statement in the form set forth in Annex B-3 hereto.
(i)      Opinion of Internal Counsel of the Company . Internal Counsel of the Company, shall have furnished to the Representatives his or her written opinion, dated the Closing Date, and addressed to the Underwriters, in the form set forth in Annex B-4 hereto.
(j)      Opinion and 10b-5 Statement of Counsel for the Underwriters. The Representatives shall have received on and as of the Closing Date, an opinion and 10b-5 statement of Cravath, Swaine & Moore LLP, counsel for the Underwriters, with respect to such matters as described in Annex B-5.
(k)      No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any competent national or state governmental or regulatory authority that would, as of the applicable Closing Date, prevent the sale of the Shares by the Selling Shareholder; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the applicable Closing Date, prevent the sale of the Shares by the Selling Shareholder.
(l)      Good Standing . The Representatives shall have received on and as of the Closing Date satisfactory evidence of the good standing (or the applicable equivalent thereof in the Netherlands) of the Company in the Netherlands, in writing or any standard form of telecommunication from the appropriate governmental authorities of the Netherlands.
(m)      Exchange Listing. The Shares to be delivered on the applicable Closing Date shall have been approved for listing on the Exchange, subject to official notice of issuance.

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(n)      Lock-up Agreements . The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between you and the individuals and entities listed on Schedule 3 hereto relating to sales and certain other dispositions of Common Shares or certain other securities, delivered to you on or before the date hereof, shall be in full force and effect on the applicable Closing Date.
9.      Indemnification and Contribution .
(a)      Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless each Underwriter, its affiliates, directors and officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, any road show as defined in Rule 433(h) under the Securities Act (a “road show”) or any Pricing Disclosure Package (including any Pricing Disclosure Package that has subsequently been amended), or caused by any omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case of (i) and (ii) above, except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in subsection (c) of this Section 9.
(b)      Indemnification of the Company and the Underwriters by the Selling Shareholder . The Selling Shareholder agrees to indemnify and hold harmless the Company, each Underwriter and the Company’s or such Underwriter’s affiliates, directors and officers and each person, if any, who controls the Company or such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in subsection (a) of this Section 9, in each case only insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or alleged untrue statement or omission contained in the Selling Shareholder Information.
(c)      Indemnification by the Underwriters. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and the Selling Shareholder, its officers, directors, employees and each person, if any, who controls the Selling Shareholder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same extent as the indemnity set forth in paragraph (a) of this Section 9, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the

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Registration Statement, the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus, any road show or any Pricing Disclosure Package (including any Pricing Disclosure Package that has subsequently been amended), it being understood and agreed upon that the only such information furnished by any Underwriter consists of the following information in the Prospectus furnished on behalf of each Underwriter: the names of the Underwriters, the concession figure appearing in the first paragraph under the heading “Underwriting Discounts and Commissions” and the information regarding stabilizing transactions contained in the first five paragraphs under the heading “Price Stabilization, Short Positions”, in each case under the caption “Underwriting” relating to the Shares.
(d)      Notice and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to any of the preceding paragraphs of this Section 9, such person (the “ Indemnified Person ”) shall promptly notify the person against whom such indemnification may be sought (the “ Indemnifying Person ”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under the preceding paragraphs of this Section 9 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided , further , that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under the preceding paragraphs of this Section 9. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be paid or reimbursed as they are incurred. Any such separate firm for any Underwriter, its affiliates, directors and officers and any control persons of such Underwriter shall be designated in writing by the Representatives; any such separate firm for the Company, its directors, its officers who signed the Registration Statement and any control persons of the Company shall be designated in writing by the Company and any such separate firm for the Selling Shareholder shall be designated in writing by the Selling Shareholder. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (A) such settlement is entered into more than 30 days after receipt by the Indemnifying Person of such request and (B) the Indemnifying Person shall not have reimbursed the

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Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.
(e)      Contribution. If the indemnification provided for in paragraphs (a), (b) and (c) of this Section 9 is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Shareholder, on the one hand, and the Underwriters on the other hand, from the offering of the Shares or (ii) if the allocation provided by clause (i) of this Section 9(e) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) of this Section 9(e) but also the relative fault of the Company and the Selling Shareholder, on the one hand, and the Underwriters on the other, in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Shareholder, on the one hand, and the Underwriters on the other, shall be deemed to be in the same respective proportions as the net proceeds (before deducting expenses) received by the Company and the Selling Shareholder from the sale of the Shares and the total underwriting discounts and commissions received by the Underwriters in connection therewith, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate offering price of the Shares. The relative fault of the Company and the Selling Shareholder, on the one hand, and the Underwriters on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Selling Shareholder or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(f)      Limitation on Liability. The Company, the Selling Shareholder and the Underwriters agree that it would not be just and equitable if contribution pursuant to paragraph (e) of this Section 9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (e) of this Section 9. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (e) of this Section 9 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of paragraphs (e) and (f) of this Section 9, (i) in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Underwriter with respect to the offering of the Shares exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission (ii) in no event shall the Selling Shareholder be required to contribute any amount in excess of the among by which the aggregate net proceeds from the Shares sold by the Selling Shareholder exceed the amount of any damages that the Selling Shareholder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be

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entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to paragraphs (e) and (f) of this Section 9 are several in proportion to their respective purchase obligations hereunder and not joint.
(g)      Non-Exclusive Remedies. The remedies provided for in this Section 9 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.
10.      Effectiveness of Agreement . This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.
11.      Termination . This Agreement may be terminated by the Representatives, by notice to the Company and the Selling Shareholder, if after the execution and delivery of this Agreement and prior to the Closing Date or, in the case of the Option Shares, prior to the Additional Closing Date (i) trading generally shall have been suspended or materially limited on or by the Exchange; (ii) trading of any securities issued or guaranteed by the Company shall have been suspended on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking activities shall have been declared by Italian, New York State or U.S. federal authorities or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, either within or outside the United States, that, in the judgment of the Representatives, is so material and adverse that it makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement, the Pricing Disclosure Package and the Prospectus.
12.      Defaulting Underwriter .
(a)      If, on the Closing Date, any Underwriter defaults on its obligation to purchase the Shares that it has agreed to purchase hereunder on such date, the non-defaulting Underwriters may in their discretion arrange for the purchase of such Shares by other persons satisfactory to the Company in its discretion and the Selling Shareholder on the terms contained in this Agreement. If, within 36 hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such Shares, then the Company and the Selling Shareholder shall be entitled to a further period of 36 hours within which to procure other persons reasonably satisfactory to the non-defaulting Underwriters to purchase such Shares on such terms. If other persons become obligated or agree to purchase the Shares of a defaulting Underwriter, either the non‑defaulting Underwriters, the Company or the Selling Shareholder may postpone the Closing Date for up to five full business days in order to effect any changes that in the opinion of counsel for the Company, counsel for the Selling Shareholder or counsel for the Underwriters may be necessary in the Registration Statement and the Prospectus or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Registration Statement and the Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter” includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto that, pursuant to this Section 12, purchases Shares that a defaulting Underwriter agreed but failed to purchase.
(b)      If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the non-defaulting Underwriters, the Company and the Selling Shareholder as provided in paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date does not exceed one-eleventh of the aggregate number of Shares to be purchased on such date, then the Company or the Selling Shareholder shall have the right to require each non-defaulting

-24-





Underwriter to purchase the number of Shares that such Underwriter agreed to purchase hereunder on such date plus such Underwriter’s pro rata share (based on the number of Shares that such Underwriter agreed to purchase on such date) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made.
(c)      If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the non-defaulting Underwriters, the Company and the Selling Shareholder as provided in paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date exceeds one-eleventh of the aggregate amount of Shares to be purchased on such date, or if the Company shall not exercise the right described in paragraph (b) above, then this Agreement shall terminate without liability on the part of the non-defaulting Underwriters. Any termination of this Agreement pursuant to this Section 12 shall be without liability on the part of the Company and the Selling Shareholder, except that the Company will continue to be liable for the payment of expenses as set forth in Section 13 hereof and except that the provisions of Section 9 hereof shall not terminate and shall remain in effect.
(d)      Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company, the Selling Shareholder or any non-defaulting Underwriter for damages caused by its default.
13.      Payment of Expenses .
(a)      Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company will pay or cause to be paid all reasonable costs and expenses incident to the performance of its obligations hereunder (together with any irrecoverable VAT payable in respect of such costs or expenses), including without limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Shares and any taxes payable in that connection; (ii) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement, the Preliminary Prospectus, any Issuer Free Writing Prospectus, any Pricing Disclosure Package and the Prospectus (including all exhibits, amendments and supplements thereto) and the distribution thereof; (iii) the costs of reproducing and distributing this Agreement; (iv) the fees and expenses of the Company’s counsel and independent accountants; (v) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility for investment of the Shares under the state or foreign securities or blue sky laws of such jurisdictions as the Representatives may designate and the preparation, printing and distribution of a Blue Sky Memorandum (including the related reasonable fees and expenses of counsel for the Underwriters in an amount not to exceed $10,000); (vi) the cost of preparing stock certificates; if any; (vii) the costs and charges of any transfer agent and any registrar; (viii) all expenses and application fees incurred in connection with any filing with, and clearance of the offering by, FINRA (including the related reasonable fees and expenses of counsel for the Underwriters in an amount not to exceed $10,000 (it being agreed and understood that any filing fees shall be reimbursed in full)); (ix) all expenses incurred by the Company in connection with any “road show” presentation to potential investors and (x) all expenses and application fees related to the listing of the Shares on the Exchange. It is understood that except as provided in this Section 13 and Section 9 entitled “Indemnification and Contribution”, the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel, share transfer taxes payable on resale of any of the Shares by them and any advertising expenses connected with any offers they may make.
(b)      If (A) the Selling Shareholder for any reason fails to tender the Shares for delivery to the Underwriters or (B) the Underwriters decline to purchase the Shares as a result of a breach of the Selling

-25-





Shareholder’s obligations under this Agreement or a failure to satisfy one of the conditions in Section 8(a), 8(b), 8(c), 8(d), 8(e), 8(f), 8(g), 8(h) and 8(i), the Company agrees to reimburse the Underwriters for all reasonable out-of-pocket costs and expenses (including reasonable fees and expenses of their counsel) reasonably incurred by the Underwriters in connection with this Agreement and the offering contemplated hereby, in an amount not to exceed $[ ] (exclusive of reasonable fees and expenses of their counsel, which shall not exceed $[ ]).
14.      Persons Entitled to Benefit of Agreement . This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and any controlling persons referred to in Section 9 hereof. Nothing in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. No purchaser of Shares from any Underwriter shall be deemed to be a successor merely by reason of such purchase.
15.      Survival . The respective indemnities, rights of contribution, representations, warranties and agreements of the Company, the Selling Shareholder and the Underwriters contained in this Agreement or made by or on behalf of the Company, the Selling Shareholder or the Underwriters pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Shares and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company, the Selling Shareholder or the Underwriters.
16.      Certain Defined Terms . For purposes of this Agreement, (a) except where otherwise expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities Act; (b) the term “business day” means any day other than a day on which banks are permitted or required to be closed in New York City; (c) the term “subsidiary” has the meaning set forth in Rule 405 under the Securities Act and (d) the term “significant subsidiary” has the meaning set forth in Rule 1-02 of Regulation S-X under the Exchange Act.
17.      Miscellaneous .
(a)      Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication. Notices to the Underwriters shall be given to the Representatives c/o UBS Securities LLC, 1285 Avenue of the Americas, New York, NY 10019, Attention: Syndicate; and Merrill Lynch, Pierce, Fenner & Smith Incorporated, One Bryant Park, New York, NY 10036, (fax: +1-646-855-3073), Attention: Syndicate Department, with a copy to: Attention: ECM Legal (fax:+1-212- 230-8730). Notices to the Selling Shareholder shall be given to it at Fiat Chrysler Automobiles N.V., 25 St. James’ Street, London SW1A 1HA, United Kingdom (fax: +44 (0) 207 724 2829); Attention: Richard K. Palmer, with a copy to Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 10004 (fax: +1-212-558-3588), Attention: Scott Miller. Notices to the Company shall be given to it at via Abetone Inferiore n. 4, I-41053 Maranello (MO), Italy, Attention: Alessandro Gili, with a copy to Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 10004 (fax: +1-212-558-3588), Attention: Scott Miller.
(b)      Governing Law. This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such state.
(c)     Waiver of Immunity . (i) To the extent that the Company has or hereafter may acquire any immunity (sovereign or otherwise) from jurisdiction of any court of (i) Italy, or any political subdivision

-26-





thereof, (ii) the Netherlands, or any political subdivision thereof, (iii) the United States, the State of New York or any political subdivision thereof; (iv) any jurisdiction in which it owns or leases property or assets or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution, set-off or otherwise) with respect to themselves or their respective property and assets or this Agreement, the Company hereby irrevocably waives such immunity in respect of its obligations under this Agreement to the fullest extent permitted by applicable law. (ii) To the extent that the Selling Shareholder has or hereafter may acquire any immunity (sovereign or otherwise) from jurisdiction of any court of (i) the Netherlands, or any political subdivision thereof, (ii) Italy, or any political subdivision thereof, (iii) the United Kingdom, or any political subdivision thereof, (iv) the United States, the State of New York or any political subdivision thereof; (v) any jurisdiction in which it owns or leases property or assets or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution, set-off or otherwise) with respect to themselves or their respective property and assets or this Agreement, the Selling Shareholder hereby irrevocably waives such immunity in respect of its obligations under this Agreement to the fullest extent permitted by applicable law.
(d)      Submission to Jurisdiction . The Company, the Selling Shareholder and the Underwriters hereby submit to the non-exclusive jurisdiction of the U.S. federal and New York state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. Each of the Company and the Selling Shareholder waives any objection which it may now or hereafter have to the laying of venue of any such suit or proceeding in such courts. Each of the Company and the Selling Shareholder agrees that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon the Company and may be enforced in any court to the jurisdiction of which Company is subject by a suit upon such judgment. The Company and the Selling Shareholder each irrevocably appoints Fiat Chrysler Finance North America, Inc., 7 Times Square, Suite 4306, New York, NY 10036 as its authorized agent in the Borough of Manhattan in The City of New York upon which process may be served in any such suit or proceeding, and agrees to accept service of process upon such authorized agent, accompanied by written notice of such service to the Company or the Selling Shareholder as the case may be by the person serving the same to the address provided in this Section 17, and not dispute that such service will be in every respect effective service of process upon the Company in any such suit or proceeding.
(e)      Waiver of Jury Trial . Each of the Company, the Selling Shareholder and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
(f)      Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.
(g)      Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
(h)      Headings. The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

-27-





If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below.
Very truly yours,
FERRARI N.V.
By:         
    Name:
    Title:
FIAT CHRYSLER AUTOMOBILES N.V.
By:         
    Name:
    Title:

Accepted: As of the date first written above
UBS SECURITIES LLC

By:             
        Authorized Signatory

By:             
        Authorized Signatory

MERRILL LYNCH, PIERCE, FENNER & SMITH
    INCORPORATED

By:             
        Authorized Signatory

For themselves and the other
several Underwriters named in
Schedule 1 to this Agreement.


-28-





Schedule 1

Underwriter
Number of Shares
UBS Securities LLC
 
Merrill Lynch, Pierce, Fenner & Smith
   Incorporated
 
Allen & Company LLC
 
Banco Santander, S.A.
 
BNP Paribas Securities Corp
 
J.P. Morgan Securities LLC.
 
Mediobanca – Banca di Credito Finanziario S.p.A.
 
Total
[●]


-29-





Schedule 2
Significant Subsidiaries
Ferrari North America, Inc.
Ferrari Cars International Trading (Shanghai) Co. Ltd.
Ferrari Financial Services S.p.A.
Ferrari Financial Services, Inc.

Schedule 3
Lock-up Signatories

Shareholders
Fiat Chrysler Automobiles N.V.
Piero Ferrari

Directors
[●]

Executives
[●]

Annex A
a.     Issuer Free Writing Prospectuses
[●]
b.     Pricing Information Provided Orally by Underwriters
[Key information included in script that will be used by Underwriters to confirm sales to be set out]


 

-30-





Annex B-1
Form of Opinion of Sullivan & Cromwell LLP, U.S. Counsel to the Company and the Selling Shareholder

-31-





Annex B-2

Form of Opinion of Loyens & Loeff, Dutch Counsel to the Company and the Selling Shareholder

-32-





Annex B-3
Form of Opinion of Maisto e Associati, Italian Counsel to the Company and the Selling Shareholder


-33-






Annex B-4
Form of Opinion of Internal Counsel of the Company

-34-






Annex B-5
Matters covered by Opinion of Cravath, Swaine & Moore LLP, counsel for the Underwriters

-35-







Exhibit A
FORM OF LOCK-UP AGREEMENT
[●], 2015


UBS Securities LLC
1285 Avenue of the Americas
New York, NY 10019

Merrill Lynch, Pierce, Fenner & Smith
Incorporated
One Bryant Park
New York, New York 10036

As Representatives of
the several Underwriters listed in
Schedule 1 to the Underwriting
Agreement referred to below

Re:     Ferrari N.V. --- Initial Public Offering
Ladies and Gentlemen:
The undersigned understands that you, as Representatives of the several Underwriters, propose to enter into (a) an underwriting agreement (the “ Underwriting Agreement ”) with Ferrari N.V., a public company with limited liability incorporated under the laws of the Netherlands (the “ Company ”), providing for the initial public offering (the “ Public Offering ”) by the several Underwriters named in Schedule 1 to the Underwriting Agreement (the “ Underwriters ”), of the common shares, nominal value € 0.01 per share, of the Company (the “ Common Shares ”). Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Underwriting Agreement.
In consideration of the Underwriters’ agreement to purchase and make the Public Offering of the Common Shares , and for other good and valuable consideration receipt of which is hereby acknowledged, the undersigned hereby agrees that, without the prior written consent of [the Representatives], the undersigned will not, during the period (the “ Lock-Up Period ”) ending 90 days after the date of the prospectus relating to the Public Offering (the “ Prospectus ”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares (including without limitation, Common Shares or such other securities which may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission and securities which may be issued upon exercise of a stock option or warrant), or

-36-





publicly disclose the intention to make any offer, sale, pledge or disposition, (2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Shares or such other securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Shares or such other securities, in cash or otherwise or (3) make any demand for or exercise any right with respect to the registration of any Common Shares or any security convertible into or exercisable or exchangeable for Common Shares, in each case other than (A) (i) transfers of Common Shares as a bona fide gift or gifts, (ii) if the undersigned is a natural person, transfers of Common Shares or any securities convertible into or exercisable or exchangeable for Common Shares to any beneficiary of the undersigned pursuant to a will or other testamentary document or applicable laws of descent, (iii) if the undersigned is a natural person, transfers of Common Shares to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, and (iv) if the undersigned is a natural person, transfers of Common Shares to any partnership or limited liability company controlled by the undersigned or the immediate family of the undersigned and (B) distributions of Common Shares to members or shareholders of the undersigned; provided that in the case of any such transfer or distribution pursuant to clause (A) or (B), each donee, trustee, transferee or distributee shall execute and deliver to the Representatives a lock-up letter in the form of this paragraph; and provided , further , that in the case of any such permitted transfer or distribution, no filing by any party (donor, donee, trustee, transferor or transferee) under the Securities Exchange Act of 1934, as amended, or other public announcement shall be required or shall be made voluntarily in connection with such transfer or distribution. For purposes of this Letter Agreement, “immediate family” shall mean any relationship by blood, marriage, domestic partnership or adoption, not more remote than first cousin.
If the undersigned is an officer or director of the Company, (1) [the Representatives] on behalf of the Underwriters agree that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of Common Shares, [the Representatives] on behalf of the Underwriters will notify the Company of the impending release or waiver, and (2) the Company has agreed in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver. Any release or waiver granted by [the Representatives] on behalf of the Underwriters hereunder to any such officer or director shall only be effective two business days after the publication date of such press release. The provisions of this paragraph will not apply if (A) the release or waiver is effected solely to permit a transfer not for consideration and (B) the transferee has agreed in writing to be bound by the same terms described in this Letter Agreement to the extent and for the duration that such terms remain in effect at the time of the transfer.
In furtherance of the foregoing, the Company, and any duly appointed transfer agent for the registration or transfer of the securities described herein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Letter Agreement. All authority herein conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, assigns, heirs or personal representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does not become effective, or if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the Common Shares to be sold thereunder, the undersigned shall be released from, all obligations under this Letter Agreement. The undersigned

-37-





understands that the Underwriters are entering into the Underwriting Agreement and proceeding with the Public Offering in reliance upon this Letter Agreement.
This Letter Agreement and any claim, controversy or dispute arising under or related to this Letter Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof.
Very truly yours,
[ NAME OF DIRECTOR, OFFICER OR SHAREHOLDER ]
By:         
    Name:
    Title:

Exhibit B
FORM OF PRESS RELEASE

Ferrari N.V.
[Date]

Ferrari N.V. (the “Company”) announced today that [UBS Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated], the lead book-running managers in the Company’s recent public sale of common shares, are [waiving] [releasing] a lock-up restriction with respect to of the Company’s common shares held by [certain officers or directors] [an officer or director] of the Company. The [waiver] [release] will take effect on , 20 , and the shares may be sold on or after such date.

This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.


-38-


Exhibit 3.1

In this translation an attempt has been made to be as literal as possible without jeopardizing the overall continuity. Inevitably, differences may occur in translation, and if so, the Dutch text will by law govern.
UNOFFICIAL OFFICE TRANSLATION OF THE DEED OF INCORPORATION OF NEW BUSINESS NETHERLANDS N.V.
On the twenty-fourth day of May two thousand and thirteen there appeared before me, Dirk-Jan Jeroen Smit, civil law notary, officiating in Amsterdam, the Netherlands:
Lucien Rikkinus Lambertus Spijkervet, with office address at Strawinskylaan 10, 1077 XZ Amsterdam, the Netherlands, born in Zwolle, the Netherlands, on the twelfth day of February nineteen hundred and eighty, who for the purpose hereof is acting as attorney authorised in writing of:
Fiat S.p.A. , a public company ( Società per Azioni ) organised under the laws of the Republic of Italy, having its registered office in Turin, Italy, and its office address at Via Nizza 250, 10126 - Turin, Italy (the Incorporator ).

LS
AMSN366039/1+    



The person appearing declared that the Incorporator hereby incorporates a company with limited liability ( naamloze vennootschap ) with the following:

II



III


ARTICLES OF ASSOCIATION:
CHAPTER I.
Definitions.
Article 1.
In these articles of association the following expressions shall have the following meanings:
a.
General Meeting: the body of the company formed by shareholders and other persons entitled to vote;
b.
General Meeting of Shareholders: the meeting of shareholders and other persons entitled to attend the general meetings of shareholders;
c.
Accountant: a “register-accountant” or other accountant referred to in Section 2:393, of the Dutch Civil Code, as well as an organisation within which such accountants practice;
d.
Distributable part of the net assets: that part of the company's net assets which exceeds the aggregate of the issued capital and the reserves which must be maintained by virtue of the law;
e.
Annual Accounts: the balance sheet and the profit and loss account with the explanatory notes;
f.
Annual Meeting: the General Meeting of Shareholders held for the purpose of the discussion and adoption of the Annual Accounts; and
g.
Management Board: the body of the company referred to in article 13.
CHAPTER II.
Name. Seat. Objects.
Article 2. Name and seat.
1.
The name of the company is: New Business Netherlands N.V.
2.
The official seat of the company is in Amsterdam.
Article 3. Objects.
The objects of the company are:
a.
to incorporate, to participate in any way whatsoever, to manage, to supervise businesses and companies and to act as holding company;
b.
to finance companies and businesses;
c.
to render advice and services to businesses and companies with which the company forms a group and to third parties;

/

IV


d.
to borrow, to lend and to raise funds, including the issue of bonds, promissory notes or other securities as well as to enter into agreements related thereto;
e.
to render guarantees, to bind the company and to pledge its assets for obligations of the companies and businesses with which it forms a group and in favour of third parties;
f.
to obtain, manage, exploit and alienate registered property and items of property in general;
g.
to trade and invest in currencies, securities and items of property in general;
h.
to develop and to trade in patents, trade marks, licenses, know-how and other industrial property rights;
i.
to perform any and all activity of industrial, financial or commercial nature,
as well as everything pertaining the foregoing, relating thereto or conductive thereto, all in the widest sense of the word.
CHAPTER III.
Capital and shares. Register.
Article 4. Authorised capital.
1.
The authorised capital amounts to two hundred thousand euro (€ 200,000).
2.
The authorised capital is divided into twenty million (20,000,000) shares with a nominal value of one eurocent (€ 0.01) each, numbered 1 up to and including 20,000,000.
3.
All shares are to be registered shares. No share certificates shall be issued.
Article 5. Register of shareholders.
1.
The Management Board shall keep a register in which the names and addresses of all holders of registered shares are recorded, showing the date on which they acquired the shares, the date of the acknowledgement or notification as well as the amount paid on each share.
2.
The names and addresses of those with a right of usufruct (“life interest”) or a pledge on the shares shall also be entered in the register, stating the date on which they acquired the right and the date of acknowledgement or notification.
3.
Each shareholder, each beneficiary of a life interest and each pledgee is required to give written notice of his address to the company.
4.
The register shall be kept accurate and up to date. All entries and notes in the register shall be signed by a member of the Management Board.



V


5.
On application by a shareholder, a beneficiary of a life interest or a pledgee, the Management Board shall furnish an extract from the register, free of charge, showing its rights in a share.
6.
The Management Board shall make the register available at the company's office for inspection by the shareholders.
CHAPTER IV.
Issuance of shares. Own shares. Capital reduction.
Article 6. Issuance of shares. Body competent to issue shares. Notarial deed.
1.
The issuance of shares may only be effected pursuant to a resolution of the General Meeting or of another corporate body designated in this respect by resolution of the General Meeting for a fixed period not exceeding five years.
Such designation may be renewed, each time for a period not exceeding five years and may not be withdrawn, unless otherwise provided for in the resolution to designate.
2.
The issuance of a share shall furthermore require a deed drawn up for that purpose in the presence of a civil law notary registered in the Netherlands to which those involved are party.
Article 7. Conditions of issuance. Rights of pre-emption.
1.
A resolution to issue shares shall stipulate the price and further conditions of issuance.
2.
Upon issuance of shares, each shareholder shall have a right of pre-emption in proportion to the aggregate nominal amount of his shares, in accordance with and subject to the limitations set out in Section 2:96a of the Civil Code.
Each shareholder shall also have a pre-emption right in respect of shares issued for a non-cash contribution. A shareholder shall have no pre-emption right in respect of shares issued to employees of the company.
3.
Prior to each issuance, the right of pre-emption may be limited or excluded by a resolution of the General Meeting or by a resolution of the corporate body designated pursuant to article 6, paragraph 1, if, by a resolution of the General Meeting the said corporate body was designated and authorised for a fixed period, not exceeding five years, to limit or to exclude such pre-emption right. A resolution to limit or exclude a pre-emption right requires at least two-thirds of the votes cast if less than half of the issued capital is represented at the meeting.



VI


4.
Within eight days after the resolution to issue shares or to designate another corporate body has been adopted, the Management Board shall deposit the full text thereof at the trade register of the Chamber of Commerce and Industries in which territory the company is registered.
5.
Within eight days upon the end of a calendar quarter, the Management Board shall report any issuance of shares during the previous quarter to the trade register of the Chamber of Commerce and Industries, in which territory the company is registered.
6.
Shareholders shall have a right of pre-emption if rights to subscribe for shares are granted by the company; the preceding paragraphs shall apply mutatis mutandis. Shareholders shall have no pre-emption right in respect of shares issued to a person who exercises a previously acquired right to subscribe for shares.
Article 8. Payment for shares.
1.
On the issuance of each share, the full nominal amount must be paid up.
2.
Payment for shares must be made in cash in so far as no other form of payment has been agreed. Payment in foreign currency can only take place with the approval of the company.
3.
The company may not provide collateral, guarantee the price, otherwise act as surety or bind itself jointly and severally with or for third parties, for the purpose of the subscription or the acquisition by third parties of shares in its own capital or of depository receipts issued thereof.
4.
The company may only provide loans for the purpose of the subscription or the acquisition by third parties of shares in its own capital or of depository receipts issued thereof if made in accordance with and subject to Section 2:98c of the Civil Code.
5.
Paragraphs 3 and 4 shall not apply if shares are subscribed or acquired by or for employees of the company or of a group company as referred to in Section 2:24b of the Civil Code.
Article 9. Own shares.
1.
When issuing shares, the company shall not be entitled to subscribe for its own shares.
2.
The company may, in accordance with the relevant provisions of the law, acquire fully paid in shares in its own capital or depository receipts thereof.



VII


3.
The disposal of shares or depository receipts thereof held by the company shall be effected pursuant to a resolution of the General Meeting. Such resolution shall also stipulate the conditions of the disposal. The disposal of shares held by the company shall be effected with due observance of the provisions of the blocking clause.
4.
No voting rights may be exercised in the General Meeting of Shareholders for any share held by the company or any of its subsidiaries, nor in respect of any share of which the company or any of its subsidiaries holds depository receipts.
Article 10. Reduction of capital.
1.
The General Meeting may resolve to reduce the issued share capital, in accordance with the relevant provisions of the law, either by cancelling shares held by the company or by reducing the nominal value of shares in its own capital by an amendment to the articles of association.
2.
The notice to the General Meeting of Shareholders at which a resolution referred to in this article is proposed, shall state the purpose of the capital reduction and the manner in which it is to be achieved.
CHAPTER V.
Transfer of shares. Limited rights. Issuance of depository receipts.
Article 11.
1.
The transfer of a registered share or the transfer of a right in rem thereon shall require a deed drawn up for that purpose in the presence of a civil law notary officiating in the Netherlands to which those involved are party.
2.
Unless the company itself is party to the legal act, the rights attached to the share can only be exercised after the company has acknowledged the legal act or the deed has been served on it in accordance with the relevant provisions of the law.
3.
On the creation of a life interest or a pledge in respect of a share, the voting rights cannot accrue to the beneficiary of the life interest, nor to the pledgee.
4.
The pledgee and the beneficiairy of a life interest shall not have the rights which by virtue of the law accrue to the holders of depositary receipts issued with the company's cooperation.
5.
The company cannot lend its cooperation to the issuance of depository receipts.
CHAPTER VI.



VIII


Blocking clause.
Article 12.
1.
A transfer of shares in the company may only be effected with due observance of paragraphs 2 through 7 inclusive of this article.
2.
A shareholder who wishes to transfer one or more shares shall require the approval of the General Meeting.
3.
If the General Meeting has granted the approval, the transfer must be effected within three months thereafter.
4.
The approval shall be deemed to have been granted if the General Meeting, simultaneously with the refusal to grant its approval, does not provide the requesting shareholder with the names of one or more prospective purchasers who are prepared to purchase all the shares referred to in the request for approval, against payment in cash, against the purchase price determined in accordance with paragraph 5 of this article. The company itself holding shares in its own capital may only be designated as prospective purchaser with the approval of the requesting shareholder.
The approval shall likewise be deemed granted if the General Meeting has not made a decision in respect of the request for approval within six weeks upon receipt of such request.
5.
The requesting shareholder and the prospective purchaser accepted by him shall determine the purchase price referred to in paragraph 4 of this article by mutual agreement. Failing agreement, the purchase price shall be determined by an independent expert, to be designated by mutual consent between the prospective purchaser and the requesting shareholder.
6.
Should the requesting shareholder and the prospective purchaser fail to reach agreement on the designation of the independent expert, such designation shall be made by the President of the Chamber of Commerce and Industries within the district in which the company is registered.
7.
Once the purchase price of the shares has been determined by the independent expert, the requesting shareholder shall be free, during a period of one month after such determination of the purchase price, to decide whether or not he will transfer his shares to the designated prospective purchaser.
CHAPTER VII.
Management.



IX


Article 13. Management Board.
1.
The management of the company shall be constituted by a Management Board consisting of one or more members.
2.
The General Meeting shall appoint the members of the Management Board.
Article 14. Suspension and dismissal.
1.
Any member of the Management Board may at any time be suspended or dismissed by the General Meeting.
2.
A suspension may be extended one or more times, but may not last longer than three months in the aggregate. If at the end of that period no decision has been taken on the termination of the suspension, or on dismissal, the suspension shall cease.
Article 15. Remuneration.
1.
The company shall have a remuneration policy with regard to the remuneration of the Management Board. The General Meeting shall adopt the remuneration policy. The remuneration policy shall at least entail the subjects as described in Section 2:383c up to and including e of the Civil Code, to the extent these relate to the Management Board.
2.
The remuneration and further conditions of employment for each member of the Management Board shall, subject to the remuneration policy, be determined by the General Meeting.
Article 16. Duties of the board. Decision making process. Allocation of duties.
1.
Subject to the restrictions imposed by the articles of association, the Management Board shall be entrusted with the management of the company.
2.
The Management Board may lay down rules regarding its own decision making process. The rules shall require the approval of the General Meeting.
3.
The Management Board shall adopt resolutions with a simple majority of votes.
4.
The Management Board may determine the duties with which each member of the Management Board shall be charged in particular. The allocation of duties shall require the approval of the General Meeting.
5.
A member of the Management Board may be represented by a co-member of the Management Board authorised in writing. The expression: "in writing" shall include any message transmitted by current means of (electronic) communication and received in writing (or electronically reflected). A



X


member of the Management Board may not act as representative for more than one co-member.
6.
Meetings of the Management Board can take place by way of the contemporaneous linking together by telephone conference or audio – visual communication facilities of members of the Management Board, wherever in the world they are, and such a meeting shall be deemed to constitute a meeting of the Management Board for the duration of the connection.
7.
Resolutions of the Management Board may also be adopted in writing without recourse to a Management Board meeting, provided they are adopted by unanimous vote of all members of the Management Board. The second sentence of paragraph 5 shall apply accordingly.
8.
Each director is obliged to inform the board of directors of any conflict of interest between such director and the company without delay. A director shall not participate in any deliberations or decision-making process of the board of directors, if such director has a direct or indirect personal interest which conflicts with the interest of the company or its business. In such case the other non-conflicted directors shall pass the resolution. If all directors are conflicted as referred to above, then the general meeting shall pass the resolution.
Article 17. Representation.
1.
The Management Board shall be authorised to represent the company.
Each member of the Management Board acting solely shall be authorised to represent the company as well.
2.
The Management Board may appoint staff members with general or limited power to represent the company ( procuratiehouders ). Each of these staff members shall be able to represent the company with due observance of any restrictions imposed on him. The Management Board shall determine their titles.
Article 18. Approval of decisions of the Management Board.
1.
The General Meeting is entitled to require resolutions of the Management Board to be subject to its approval. These resolutions shall be clearly specified and notified to the Management Board in writing.
2.
The lack of approval referred to in this article does not affect the authority of the Management Board or its members to represent the company.
Article 19. Absence or prevention.



XI


If a member of the Management Board is absent or prevented from performing his duties, the remaining members or member of the Management Board shall be temporarily entrusted with the entire management of the company. If all members of the Management Board, or the sole member of the Management Board, is/are absent or prevented from performing their duties, the management of the company shall be temporarily entrusted to the person designated by the General Meeting for that purpose.
CHAPTER VIII.
Annual accounts. Profits.
Article 20. Financial year. Drawing up of the Annual Accounts. Filing for inspection. Accountant.
1.
The financial year of the company shall be the calendar year.
2.
Annually, not later than five months after the end of the financial year, unless by reason of special circumstances this term is extended by the General Meeting by not more than six months, the Management Board shall draw up the Annual Accounts.
3.
The Management Board shall file the Annual Accounts for inspection by the shareholders at the office of the company within the period referred to in paragraph 2. Within this period the Management Board shall also file the annual report for inspection by the shareholders.
4.
The Annual Accounts shall be signed by all members of the Management Board; if the signature of one or more of them is lacking, this shall be stated and reasons therefore shall be given.
5.
The company may and if the law so requires shall appoint an Accountant to audit the Annual Accounts.
Article 21. Adoption of the Annual Accounts. Publication.
1.
The company shall ensure that the Annual Accounts, the annual report and the information to be added by virtue of the law are held at its office as from the day on which the Annual Meeting is convened. Shareholders may inspect the documents at that place and obtain a copy thereof, free of charge.
2.
The General Meeting shall adopt the Annual Accounts.
3.
The provisions of these articles of association regarding the annual report and the information to be added by virtue of the law shall not apply if Section 2:403 of the Civil Code applies to the company. The provisions of



XII


these articles of association regarding the annual report shall not apply either if Section 2:396 paragraph 6 of the Civil Code is applicable.
Article 22. Profits.
1.
The allocation of profits earned in a financial year shall be determined by the General Meeting.
2.
Distributions can only take place up to the amount of the Distributable part of the net assets.
3.
Distribution of profits shall take place upon adoption of the Annual Accounts from which it appears that such is allowed.
4.
The General Meeting may resolve to make distributions on account of the profits of the current financial year, provided that the aggregate amount of such distributions will not exceed the amount of the Distributable part of the net assets, which has to be evidenced by an interim balance sheet within the meaning of and in accordance with Section 2:105 of the Civil Code.
5.
The General Meeting may, subject to due observance of paragraphs 2 and 4, at any time resolve to make distributions on account of any reserve.
6.
A claim of a shareholder for payment of a dividend shall be barred after five years have elapsed.
CHAPTER IX.
General Meetings of Shareholders.
Article 23. Annual Meeting.
1.
The Annual Meeting shall be held annually, and no later than six months after the end of the financial year.
2.
The agenda for that meeting shall contain in any way the following items for discussion:
a.
the annual report;
b.
adoption of the Annual Accounts;
c.
appropriation of accrued profits;
d.
granting of discharge to members of the Management Board for their management during the financial year concerned.
3.
Shareholders representing at least one hundredth of the issued share capital may request the company in writing to put an item on the agenda, unless this would violate an important interest of the company. The request must have been received by the company not later than on the sixtieth day prior to that of the meeting.



XIII


Article 24. Other meetings.
1.
Other General Meetings of Shareholders shall be held as often as the Management Board deems such necessary.
2.
Shareholders representing in the aggregate at least one tenth of the issued capital may request the Management Board to convene a General Meeting of Shareholders, stating the subjects to be discussed. If the Management Board has not convened a meeting within four weeks in such a manner that the meeting can be held within six weeks after the request, the persons who made the request shall be authorised to convene a meeting themselves.
Article 25. Convocation. Agenda.
1.
General Meetings of Shareholders shall be convened by the Management Board.
2.
The convocation shall take place no later than on the fifteenth day prior to the date of the meeting.
3.
The notice of convocation shall specify the subjects to be discussed. Subjects which were not specified in the notice of convocation may be announced at a later date, provided with due observance of the provisions of this article.
4.
The convocation of the General Meeting shall take place in accordance with article 33 of these articles of association.
Article 26. Place of meetings.
The General Meetings of Shareholders shall be held in Amsterdam or at Schiphol Airport (Municipality of Haarlemmermeer).
Article 27. Waiver of formalities.
As long as the entire issued capital is represented at a General Meeting of Shareholders, valid resolutions can be adopted on all subjects brought up for discussion, even if the formalities prescribed by law or by the articles of association for the convocation and holding of meetings have not been complied with, provided such resolutions are adopted unanimously.
Article 28. Chairman.
The General Meeting shall itself choose a chairman. Until that moment a member of the Management Board shall act as chairman and in the absence of such a member the eldest person present at the meeting shall act as chairman.
Article 29. Minutes. Records.
1.
Minutes shall be kept of the proceedings at every General Meeting of Shareholders by a secretary to be designated by the chairman. The minutes



XIV


shall be adopted by the chairman and the secretary and shall be signed by them as evidence thereof.
2.
The chairman or the person who has convened the meeting may determine that notarial minutes shall be drawn up of the proceedings of the meeting. The notarial minutes shall be co-signed by the chairman.
3.
The Management Board keeps a record of the resolutions made. If the Management Board is not represented at the meeting, the chairman of the meeting shall provide the Management Board with a transcript of the resolutions made as soon as possible after the meeting. The records shall be deposited at the offices of the company for inspection by the shareholders.
Article 30. Rights at meetings. Admittance.
1.
Each shareholder shall be entitled to attend the General Meeting of Shareholders, to address the meeting and to exercise his voting rights.
2.
Each share confers the right to cast one vote.
3.
Each person entitled to vote, or his proxy, shall sign the attendance list.
4.
The right to take part in the meeting in accordance with paragraph 1 of this article may be exercised by a proxy authorised in writing. The provision of article 16 paragraph 5, second sentence, shall apply accordingly.
5.
The members of the Management Board shall, as such, have the right to give advice in the General Meeting of Shareholders.
6.
The chairman of the General Meeting shall decide on the admittance of persons other than those mentioned above in this article.
Article 31. Votings.
1.
To the extent that these articles of association or Dutch law do not require a qualified majority, all shareholders resolutions shall be adopted by a simple majority of the votes cast.
2.
If in an election of persons a majority is not obtained, a second vote shall be taken. If votes in such second vote are equal in an election between two persons, it shall be decided by lot who is elected.
3.
If there is a tie of votes in a vote other than a vote for the election of persons, the proposal is thus rejected.
4.
All votes may be cast orally. If it concerns an election of persons, a person present at the meeting and entitled to vote can demand a vote by a secret ballot. Voting by secret ballot shall take place by means of secret, unsigned ballot papers.



XV


5.
Abstentions and invalid votes shall not be counted as votes.
6.
Voting by acclamation shall be possible if none of the persons present and entitled to vote objects against it.
7.
The chairman's decision at the General Meeting of Shareholders on the result of a vote shall be final and binding. The same shall apply to the contents of an adopted resolution insofar as the same arises out of an unwritten proposal. If, however, the correctness of that decision is challenged immediately after its pronouncement, a new vote shall be taken if either the majority of the persons present and entitled to vote, or, if the original vote was not taken by roll call or in writing, any person present and entitled to vote, so desires. As a result of the new vote, the original vote shall have no legal consequences.
Article 32. Resolutions outside of meetings. Records.
1.
Resolutions of shareholders may also be adopted in writing without recourse to a General Meeting of Shareholders, provided they are adopted by unanimous vote representing the entire issued capital.
2.
The provision of article 30 paragraph 5 shall apply correspondingly to the adoption of resolutions outside a meeting as referred to in paragraph 1.
3.
The Management Board shall keep a record of the resolutions thus made. Each of the shareholders shall procure that the Management Board is informed in writing of the resolutions made in accordance with paragraph 1 as soon as possible. The records shall be deposited at the offices of the company for inspection by the shareholders. Upon request each of them shall be provided with a copy or an extract of such record at not more than the actual costs.
CHAPTER X.
Convocation and notification.
Article 33.
All convocations of General Meetings of Shareholders and all notifications to shareholders shall be made by registered letter mailed to the addresses as shown in the register of shareholders.
CHAPTER XI.
Amendment of the articles of association and dissolution. Liquidation.
Article 34. Amendment of the articles of association and dissolution.
When a proposal of the Management Board to amend the articles of association or to dissolve the company is to be made to the General Meeting, this must be



XVI


mentioned in the notification of the General Meeting of Shareholders and, if it regards an amendment of the articles of association, a copy of the proposal including the text of the proposed amendment must at the same time be deposited and held available at the company's office for inspection by the shareholders until the end of the meeting. Such copy will also be available for inspection at the General Meeting of Shareholders.
Article 35. Liquidation.
1.
In the event of dissolution of the company by virtue of a resolution of the General Meeting the members of the Management Board shall be charged with the liquidation of the business of the company.
2.
During liquidation, the provisions of these articles of association shall remain in force as far as possible.
3.
The balance of the company remaining after payment of debts shall be transferred to the shareholders in proportion to the aggregate nominal amount of their shares.
Transitional Provision.
Article 36.
The first financial year of the company shall end on the thirty-first day of December two thousand and thirteen.
This transitional provision shall lapse and cease to exist after the first financial year.
Final statements.
Finally, the person appearing declared that:
(A)
upon incorporation, the issued share capital of the company amounts to fifty- thousand euros (€ 50,000) and the Incorporator is participating in the issued capital for five million (5,000,000) ordinary shares, numbered 1 through 5,000,000;
(B)
the Incorporator acting on its own behalf and on behalf of the company agreed that the issued share capital shall be paid up in cash. The provisions relating to the payment for shares as said out in Section 2:93a paragraph 1 of the Dutch Civil Code have been complied with. The Company accepts the payments on the shares issued at the incorporation, insofar the subscription price has been paid in accordance with paragraph 1 subsection b of the aforementioned Section; and
(C)
the first members of the management board are:



XVII


(i)    Antonio Picca Piccon, born in Turin, Italy, on the fifth day of November nineteen hundred and sixty-four;
(ii)    Giorgio Fossati, born in Orbassano, Italy, on the twelfth day of March nineteen hundred and sixty-one; and
(iii)    Fabio Spirito, born in Turin, Italy, on the seventh day of December nineteen hundred sixty-two.
The documents which must be attached by virtue of Section 2:93a of the Dutch Civil Code have been attached to this deed.
Power of attorney.
The power of attorney granted to the person appearing appears from a written power of attorney, a copy of which is attached to this deed. Sufficient proof of the existence of the power of attorney has been given to me, civil law notary.
Final
In witness whereof the original of this deed, which shall be retained by me, civil law notary aforementioned, is executed in Amsterdam, the Netherlands, on the date first given in the head of this deed.
Before reading out, a concise summary of the contents of this instrument was given to the person appearing. He then declared that he had noted the contents, that he agreed to the contents and did not want a full reading thereof. Thereupon, after limited reading, this instrument was signed by the person appearing, who is known to me, civil law notary, and by me, civil law notary.






Exhibit 3.2

GMP/MvA/5155169/40064372
#19560094-v2A


NOTE ABOUT TRANSLATION:
This document is an English translation of a document prepared in Dutch, which deed will be executed in the Dutch language. In preparing this document, an attempt has been made to translate as literally as possible without jeopardizing the overall continuity of the text. The definitions in article 1.1 of this document are listed in the English alphabetical order which may differ from the Dutch alphabetical order. Inevitably, however, differences may occur in translation and if they do, the Dutch text will govern by law. In this translation, Dutch legal concepts are expressed in English terms and not in their original Dutch terms. The concepts concerned may not be identical to concepts described by the English terms as such terms may be understood under the laws of other jurisdictions.

These articles of association are to be in effect from the issuance of common shares and special voting shares to FCA until the merger of the company with and into FE New N.V.



AMENDMENT ARTICLES OF ASSOCIATION
( New Business Netherlands N.V.; new name: Ferrari N.V. )



This l day of l two thousand fifteen, there appeared before me, Guido Marcel Portier, civil law notary officiating in Amsterdam, the Netherlands:
[ l associate Loyens & Loeff N.V. ]
The person appearing declared the following:
on the l day of l two thousand fifteen the general meeting of New Business Netherlands N.V. , a public company ( naamloze vennootschap ) under Dutch law, having its official seat in Amsterdam, the Netherlands, and its registered office address at Via Abetone Inferiore N.4, I-41053 Maranello, Italy, registered with the Dutch trade register under number 57991561 ( Company ), resolved to amend and completely readopt the articles of association of the Company, as well as to authorise the person appearing to have this deed executed. The adoption of such resolutions is evidenced by a shareholder's resolution, a copy of which shall be attached to this deed ( Annex ).
The articles of association of the Company were established at the incorporation of the Company, by a deed, executed on the twenty-fourth day of May two thousand thirteen before D.J.J. Smit, civil law notary officiating in Amsterdam, the Netherlands. The articles of association of the Company have not been amended since.
In implementing the aforementioned resolution, the articles of association of the Company are hereby amended and completely readopted as follows:
ARTICLES OF ASSOCIATION:
1.
Definitions



2

1.1
In these Articles of Association the following words shall have the following meanings:
accountant : a chartered accountant ( registeraccountant ) or other accountant referred to in Section 2:393 of the Dutch Civil Code, or an organisation in which such accountants work together;
Affiliate : with respect to any specified person, any other person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative of the foregoing;
board of directors : the board of directors of the company;
Change of Control : in respect of any shareholder that is not an individual, any direct or indirect transfer in one or a series of related transactions as a result of which (i) a majority of the voting rights of such shareholder, (ii) the de facto ability to direct the casting of a majority of the votes exercisable at general meetings of shareholders of such shareholder and/or (iii) the ability to appoint or remove a majority of the directors, executive directors or board members or executive officers of such shareholder or to direct the casting of a majority or more of the voting rights at meetings of the board of directors, governing body or executive committee of such shareholder has been transferred to a new owner, provided that no change of control shall be deemed to have occurred if (a) the transfer of ownership and/or control is an intragroup transfer under the same parent company, (b) the transfer of ownership and/or control is the result of the succession or the liquidation of assets between spouses or the inheritance, inter vivo donation or other transfer to a spouse or a relative up to and including the fourth degree or (c) the fair market value of the Qualifying Common Shares held by such shareholder represents less than twenty percent (20%) of the total assets of the Transferred Group at the time of the transfer and the Qualifying Common Shares held by such shareholder, in the sole judgment of the company, are not otherwise material to the Transferred Group or the Change of Control transaction;
common share : a common share in the share capital of the company;
director : a member of the board of directors;
electing common shares : common shares registered in the Loyalty Register for the purpose of becoming Qualifying Common Shares;
general meeting of shareholders : the body of the company consisting of shareholders entitled to vote, together with usufructuaries and pledgees to whom voting rights attributable to shares accrue or a meeting of shareholders and other persons entitled to attend meetings of shareholders (as the case may be);
in writing : by letter, by telecopier, by e-mail, or by a legible and reproducible message otherwise sent (including electronically), provided that the identity of the sender can be reasonably established;



3

Initial Allocation Procedures : the procedures pursuant to which Initial Qualifying Shareholders are given the opportunity to opt for an initial allocation of special voting shares;
Initial Qualifying Shareholders : shareholders who prior to the IPO have complied with the requirements to receive special voting shares as determined by the board of directors;
IPO : the initial public offering of common shares;
group company : a group company as referred to in Section 2:24b of the Dutch Civil Code;
Loyalty Register : the register kept by or on behalf of the company for the registration of any Qualifying Common Shares and any electing common shares;
Loyalty Transferee : (i) with respect to any shareholder that is not an individual, any Affiliate of such shareholder (including any successor of such shareholder) that is beneficially owned in substantially the same manner (including percentage) as the beneficial ownership of the transferring shareholder or the beneficiary company as part of a statutory demerger ( splitsing ) of such shareholder and (ii) with respect to any shareholder that is an individual, any transferee of common shares following succession or the liquidation of assets between spouses or the inheritance, inter vivo donation or other transfer to a spouse or a relative up to and including the fourth degree;
person : any individual ( natuurlijk persoon ), firm, legal entity (in whatever form and wherever formed or incorporated), governmental entity, joint venture, association or partnership;
Qualifying Common Shares : with respect to any shareholder, (i) the number of common shares that has, pursuant to the Initial Allocation Procedures, been allocated to such shareholder and registered in the Loyalty Register and continue to be so registered in the name of such shareholder or its Loyalty Transferee(s) and (ii) the number of electing common shares that has for an uninterrupted period of at least three (3) years, been registered in the Loyalty Register in the name of such shareholder or its Loyalty Transferee(s) and continue to be so registered. For the avoidance of doubt, it is not necessary that specific common shares satisfy the requirements as referred to under (i) and (ii) in order for a number of common shares to qualify as Qualifying Common Shares; accordingly, it is permissible for common shares to be substituted into the Loyalty Register for different common shares without affecting the total number of Qualifying Common Shares or the total number of common shares that would become Qualifying Common Shares after an uninterrupted period of at least three (3) years after registration in the Loyalty Register, held by the shareholder or its Loyalty Transferee(s);
Qualifying Shareholder : a holder of one or more Qualifying Common Shares;
Record Date : has the meaning assigned thereto in Article 19.12;
share : a share in the share capital of the company; unless the contrary is apparent, this shall include each common share and each special voting share;
shareholder : a holder of one or more shares; unless the contrary is apparent, this shall include each holder of common shares and/or special voting shares;



4

special voting share : a special voting share in the share capital of the company;
subsidiary : a subsidiary of the company as referred to in Section 2:24a of the Dutch Civil Code;
Transferred Group : the relevant shareholder together with its Affiliates, if any, over which control was transferred as part of the same change of control transaction within the meaning of the definition of Change of Control.
1.2
References to Articles shall be deemed to refer to articles of these Articles of Association, unless the contrary is apparent.
2.
Name and corporate seat
2.1
The name of the company is: Ferrari N.V.
2.2
The company has its corporate seat in Amsterdam, the Netherlands.
3.
Objects
3.1
The objects for which the company is established are to carry on, either directly or through wholly or partially-owned companies and entities, activities relating in whole or in any part to passenger and commercial vehicles, transport, mechanical engineering, energy, engines, capital machinery and equipment and related goods and propulsion, as well as any other manufacturing, commercial, financial or service activity.
3.2
[Within the scope and for the achievement of the purposes mentioned in Article 3.1, the company may:
(a)
operate in, among other areas, the mechanical, electrical, electro mechanical, thermo mechanical, electronic, nuclear, chemical, mining, steel and metallurgical industries, as well as in telecommunications, civil, industrial and agricultural engineering, publishing, information services, tourism and other service industries;
(b)
acquire shareholdings and interests in companies and enterprises of any kind or form and purchase, sell or place shares, debentures, bonds, promissory notes or other securities or evidence of indebtedness;
(c)
provide financing to companies and entities it wholly or partially owns and carry on the technical, commercial, financial and administrative coordination of their activities;
(d)
provide or arrange for the provision (including through partially owned entities) of financing for distributors, dealers, retail customers, vendors and other business partners and carry on the technical, commercial, financial and administrative coordination of their activities;
(e)
purchase or otherwise acquire, on its own behalf or on behalf of companies and entities it wholly or partially owns, the ownership or right of use of intangible assets providing them for use by those companies and entities;
(f)
promote and ensure the performance of research and development activities, as well as the use and exploitation of the results thereof;
(g)
undertake, on its own behalf or on behalf of companies and entities it wholly or partially owns, any investment, real estate, financial,



5

commercial, or partnership transaction whatsoever, including the assumption of loans and financing in general and the granting to third parties of endorsements, surety ships and other guarantees, including real security; and
(h)
undertake and perform any management or support services or any other activity ancillary, preparatory or complementary to any of the above.]
4.
Share capital and shares
4.1
The authorized share capital of the company amounts to l euro (EUR l ), divided into l ( l ) common shares and l ( l ) special voting shares with a nominal value of one eurocent (EUR 0.01) each.
4.2
When shares are subscribed for, the par value thereof and, if the shares are subscribed at a higher amount, the difference between such amounts, shall be paid-up, without prejudice to the provision of Section 2:80 paragraph 2 of the Dutch Civil Code. Where shares of a particular class are subscribed at a higher amount than the nominal value, the difference between such amounts shall be carried to the share premium reserve of that class of shares.
4.3
Upon the establishment of a right of pledge on a common share or the creation or transfer of a right of usufruct on a common share, the right to vote may be vested in the pledgee or the usufructuary, with due observance of the relevant provisions of Dutch law.
4.4
Both the holder of one or more common shares without voting right and the pledgee or usufructuary of one or more common shares with voting right shall have the rights conferred by law upon holders of depositary receipts issued with a company’s cooperation for shares in its share capital.
4.5
No right of pledge may be established on a special voting share.
4.6
The voting rights attributable to a special voting share may not be assigned to the usufructuary.
4.7
The usufructuary of one or more special voting shares shall not have the rights conferred by law upon holders of depositary receipts issued with a company's cooperation for shares in its share capital.
4.8
The company may cooperate in the issuance of registered depositary receipts for common shares, but only pursuant to a resolution to that effect of the board of directors. Each holder of such depositary receipts shall have the rights conferred by law or by the applicable depositary agreement upon holders of depositary receipts issued with a company’s cooperation for shares in its share capital.
5.
Holding requirement in respect of special voting shares
5.1
Special voting shares may only be held by a Qualifying Shareholder and the company itself. A Qualifying Shareholder may hold no more than one (1) special voting share for each Qualifying Common Share held by such shareholder. Other



6

than as provided in the Articles 8.8 and 8.9, there shall be no limit on the number of special voting shares that may be held by the company.
5.2
Subject to a prior resolution of the board of directors, which may set certain terms and conditions, the holder of one (1) or more Qualifying Common Shares will be eligible to hold one (1) special voting share for each such Qualifying Common Share.
5.3
In the event of a Change of Control in respect of a Qualifying Shareholder or in the event that a Qualifying Shareholder requests that some or all of its Qualifying Common Shares be de-registered from the Loyalty Register in accordance with Article 11.3, or transfers some or all of its Qualifying Common Shares to any other party (other than a Loyalty Transferee):
(a)
a corresponding number of Qualifying Common Shares of such shareholder shall be de-registered from the Loyalty Register with immediate effect and as a consequence shall no longer qualify as Qualifying Common Shares;
(b)
such shareholder shall be obliged to immediately offer and transfer a number of special voting shares equal to the number of Qualifying Common Shares referred to in Article 5.3 (a) to the company and any and all voting rights attached to such special voting shares will be suspended with immediate effect.
5.4
In the event of a Change of Control in respect of a shareholder who is registered in the Loyalty Register but is not yet a Qualifying Shareholder with respect to one or more of its common shares, a corresponding number of common shares of such shareholder shall be de-registered from the Loyalty Register with immediate effect.
5.5
In respect of special voting shares offered to the company pursuant to Article 5.3, the offering shareholder and the company shall determine the purchase price by mutual agreement. If they do not reach agreement on the purchase price, the purchase price shall be determined by one or more accountants appointed jointly by them. If they do not reach agreement on the accountant or accountants, as the case may be, the price shall be determined by three accountants, one to be appointed by the offering shareholder, one to be appointed by the company and the third one to be appointed jointly by the accountants thus appointed. The appointed accountants shall be authorized to inspect all books and records of the company and to obtain all such information as will be useful to them determining the price.
6.
Issuance of shares
6.1
The general meeting of shareholders or alternatively the board of directors, if it has previously been designated to do so by the general meeting of shareholders, shall have authority to resolve on any issuance of shares. The general meeting of shareholders shall, for as long as any such designation of the board of directors for this purpose is in force, no longer have authority to decide on the issuance



7

of shares. For a period of five (5) years from [the l day of l two thousand fifteen – effective date articles of association ], the board of directors shall irrevocably be authorized to issue shares up to the maximum aggregate amount of shares as provided for in the company’s authorized share capital as set out in Article 4.1, as amended from time to time.
6.2
The general meeting of shareholders or the board of directors if so designated in accordance with Article 6.1, shall decide on the price and the further terms and conditions of issuance, with due observance of what is required in relation thereto in the law and in these Articles of Association.
6.3
If the board of directors is designated to have authority to decide on the issuance of shares by the general meeting of shareholders, such designation shall specify the class of shares and the maximum number of shares that can be issued under such designation. When making such designation the duration thereof, which shall not be for more than five (5) years, shall be resolved upon at the same time. The designation may be extended from time to time for periods not exceeding five (5) years from the date of such extension. The designation may not be withdrawn unless otherwise provided in the resolution in which the designation is made.
6.4
Within eight (8) days after the passing of a resolution of the general meeting of shareholders to issue shares or to designate the board of directors as provided in Article 6.1, the company shall deposit the complete text of such resolution at the office of the Dutch trade register. Within eight (8) days after the end of each quarter of the financial year, the company shall notify the Dutch trade register of each issuance of shares which occurred during such quarter. Such notification shall state the number of shares issued and their class. Failure to duly make such notification shall neither affect the authority of the general meeting of shareholders or the board of directors to issue shares nor the validity of the shares issued.
6.5
What has been provided in the Articles 6.1 up to and including 6.4 shall mutatis mutandis be applicable to the granting of rights to subscribe for shares, but shall not be applicable to the issuance of shares to persons exercising a previously granted right to subscribe for shares.
6.6
Payment for shares shall be made in cash unless another form of contribution has been agreed. Payment in a currency other than euro may only be made with the consent of the company. Payment in a currency other than euro will discharge the obligation to pay up the nominal value to the extent that the amount paid can be freely exchanged into an amount in euro equal to the nominal value of the relevant shares. The rate of exchange on the day of payment will be decisive, unless the company requires payment against the rate of exchange on a specified date which is not more than two (2) months before the last day on which payment for such shares is required to be made, provided that such shares will be admitted to trading on a regulated market or multilateral trading



8

facility as referred to in Section 1:1 of the Dutch Financial Supervision Act ( Wet op het financieel toezicht ) or a regulated market or multilateral trading facility of a state, which is not a European Union member state, which is comparable thereto.
6.7
The board of directors is expressly authorized to enter into the legal acts referred to in Section 2:94 of the Dutch Civil Code, without the prior consent of the general meeting of shareholders.
7.
Right of pre-emption
7.1
Subject to Article 7.9 and the remainder of this Article 7, in the event of an issuance of common shares, every holder of common shares shall have a right of pre-emption with regard to the common shares to be issued in proportion to the aggregate nominal value of his common shares, provided however that no such right of pre-emption shall exist in respect of shares to be issued to employees of the company or of a group company pursuant to any option plan of the company.
7.2
A shareholder shall have no right of pre-emption for shares that are issued against a non-cash contribution.
7.3
In the event of an issuance of special voting shares to Qualifying Shareholders, shareholders shall not have any right of pre-emption.
7.4
The general meeting of shareholders or the board of directors, as the case may be, shall decide when passing the resolution to issue shares in which manner the shares shall be issued and, to the extent that rights of pre-emption apply, within what period those rights may be exercised.
7.5
The company shall give notice of an issuance of shares that is subject to a right of pre-emption and of the period during which such right may be exercised by announcement in the Dutch State Gazette and in a nationally distributed newspaper.
7.6
The right of pre-emption may be exercised during a period of at least two (2) weeks after the announcement in the Dutch State Gazette.
7.7
Subject to Article 7.9, the right of pre-emption may be limited or excluded by a resolution of the general meeting of shareholders or a resolution of the board of directors if the board of directors has been designated to do so by the general meeting of shareholders and provided the board of directors has also been authorized to resolve on the issuance of shares. In the proposal to the general meeting of shareholders to limit or exclude pre-emption rights the reasons for the proposal and a substantiation of the proposed issuance price shall be explained in writing. With respect to designation of the board of directors the provisions of the last three sentences of Article 6.3 shall apply mutatis mutandis .
7.8
For a resolution of the general meeting of shareholders to limit or exclude the right of pre-emption or to designate the board of directors as authorized to do so, a simple majority of the votes cast is required to approve such resolution, provided, however, that if less than one half of the issued share capital is



9

represented at the meeting, then a majority of at least two thirds of the votes cast is required to adopt such resolution. Within eight (8) days from the resolution the company shall deposit a complete text thereof at the office of the Dutch trade register.
7.9
For a period of five (5) years from [the l day of l two thousand fifteen – effective date articles of association ], the board of directors shall irrevocably be authorized to limit or exclude the right of pre-emption as set out in this Article 7 (including Article 7.10).
7.10
When rights are granted to subscribe for common shares the shareholders shall also have a right of pre-emption with respect to such rights; what has been provided hereinbefore in this Article 7 shall apply mutatis mutandis . Shareholders shall have no right of pre-emption in respect of shares that are issued to anyone who exercises a previously acquired right.
8.
Acquisition by the company of shares in its own share capital
8.1
The company shall at all times have the authority to acquire fully paid-up shares in its own share capital, provided that such acquisition is made for no consideration ( om niet ).
8.2
The company shall also have authority to acquire fully paid-up shares in its own share capital or depositary receipts thereof for consideration, if:
(a)
the general meeting of shareholders has authorized the board of directors to make such acquisition – which authorization shall be valid for no more than eighteen (18) months and has specified the number of shares which may be acquired, the manner in which they may be acquired and the (criteria to establish the) limits within which the price must be set;
(b)
the company's equity, after deduction of the acquisition price of the relevant shares, is not less than the sum of the paid-in and called up portions of the share capital and the reserves that have to be maintained pursuant to Dutch law and these Articles of Association; and
(c)
the aggregate nominal value of the shares to be acquired and the shares in its share capital the company already holds, holds as pledgee or are held by a subsidiary, does not amount to more than one half of the issued share capital.
8.3
The company's equity as shown in the last confirmed and adopted balance sheet, after deduction of the acquisition price for shares in the share capital of the company, the amount of the loans as referred to in Section 2:98c of the Dutch Civil Code and distributions from profits or reserves to any other persons that became due by the company and its subsidiaries after the date of the balance sheet, shall be decisive for purposes of Article 8.2 subs (b) and (c). If more than six (6) months have elapsed since the end of a financial year without the annual accounts having been adopted, an acquisition in accordance with Article 8.2 shall not be allowed until such time as the annual accounts shall be adopted.
8.4
No authorization shall be required if the company acquires its own shares for the purpose of transferring the same to employees of the company or a group



10

company under a scheme applicable to such employees. Such own shares must be officially listed on a price list of a stock exchange.
8.5
The Articles 8.1 and 8.2 shall not apply to shares which the company acquires under universal title of succession ( algemene titel ).
8.6
Any acquisition by the company of shares that have not been fully paid up shall be void.
8.7
Any disposal of shares held by the company will require a resolution of the board of directors. Such resolution shall also stipulate any conditions of the disposal.
8.8
The company may, jointly with its subsidiaries, hold shares in its own capital exceeding one-tenth of its issued capital for no more than three years after acquisition of shares for no consideration or under universal title of succession. Any shares held by the company in excess of the amount permitted shall transfer to the directors jointly at the end of the last day of such three year period. Each director shall be jointly and severally liable to compensate the company for the value of the shares at such time, with interest at the statutory rate thereon from such time. For the purpose of this Article 8.8 the term shares shall include depositary receipts for shares and shares in respect of which the company holds a right of pledge.
8.9
Article 8.8 shall apply correspondingly to shares and depositary receipt for shares acquired by the company in accordance with Article 8.4 without the authorization of the general meeting of shareholders and held by the company for more than one year after acquisition thereof.
9.
Reduction of the issued share capital
9.1
The general meeting of shareholders shall have the authority to pass a resolution to reduce the issued share capital (i) by the cancellation of shares and/or (ii) by reducing the nominal value of the shares by means of an amendment to these Articles of Association. The shares to which such resolution relates shall be stated in the resolution and it shall also be stated therein how the resolution shall be implemented.
9.2
A resolution to cancel shares may only relate to shares held by the company itself in its own share capital.
9.3
Any reduction of the nominal value of the shares without repayment must be made pro rata on all shares of the same class.
9.4
A partial repayment on shares shall only be allowed in implementation of a resolution to reduce the nominal value of the shares. Such a repayment must be made in respect of all shares of the same class on a pro rata basis, or in respect of the special voting shares only. The pro rata requirement may be waived with the consent of all the shareholders of the affected class.
9.5
A resolution to reduce the share capital shall require a simple majority of the votes cast in a general meeting of shareholders, provided, however, that such resolution shall require a majority of at least two-thirds of the votes cast in a



11

general meeting of shareholders if less than one half of the issued capital is represented at the meeting.
9.6
The notice convening a general meeting of shareholders at which a resolution to reduce the share capital is to be passed shall state the purpose of the reduction of the share capital and the manner in which effect is to be given thereto. Section 2:123 paragraphs 1 and 2 of the Dutch Civil Code shall apply mutatis mutandis .
9.7
The company shall deposit the resolutions referred to in Article 9.1 at the office of the Dutch trade register and shall publish a notice of such deposit in a nationally distributed daily newspaper; what has been provided in Section 2:100 paragraphs 2 up to and including 6 of the Dutch Civil Code shall be applicable to the company.
10.
Shares and share certificates
10.1
The shares shall be registered shares and they shall for each class be numbered as the board of directors shall determine.
10.2
The board of directors may resolve that, at the request of the shareholder, share certificates shall be issued in respect of shares in such denominations as the board of directors shall determine, which certificates are exchangeable at the request of the shareholder.
10.3
Share certificates shall not be provided with dividend coupons or a talon.
10.4
Each share certificate carries the number(s), if any, of the share(s) in respect of which they were issued.
10.5
The exchange referred to in Article 10.2 shall be free of charge.
10.6
Share certificates shall be signed by a director. The board of directors may resolve that the signature shall be replaced by a facsimile signature.
10.7
The board of directors may determine that for the purpose of trading and transfer of shares at a foreign stock exchange, share certificates shall be issued in such form as shall comply with the requirements of such foreign stock exchange.
10.8
On a request in writing by the party concerned and upon provision of satisfactory evidence as to title, replacement share certificates may be issued in respect of share certificates which have been mislaid, stolen or damaged, on such conditions, including, without limitation, the provision of indemnity to the company as the board of directors shall determine.
10.9
The costs of the issuance of replacement share certificates may be charged to the applicant. As a result of the issuance of replacement share certificates the original share certificates will become void and the company will have no further obligation with respect to such original share certificates. Replacement share certificates will bear the numbers of the documents they replace.
11.
Register of shareholders and Loyalty Register
11.1
The board of directors shall appoint a registrar who shall keep a register of shareholders in which the name and address of each shareholder shall be entered, the number and class of shares held by each of them, and, in so far as



12

applicable, the further particulars referred to in Section 2:85 of the Dutch Civil Code.
11.2
The registrar shall be authorized to keep the register of shareholders in an electronic form and to keep a part of the register of shareholders outside the Netherlands if required to comply with applicable foreign legislation or the rules of a stock exchange where the shares are listed.
11.3
The board of directors shall determine the form and contents of the register of shareholders with due observance of the provisions of Articles 11.1 and 11.2 and Section 2:85 of the Dutch Civil Code.
11.4
The registrar shall separately administer a Loyalty Register which does not form part of the company’s register of shareholders. The registrar shall enter in the Loyalty Register the name and address of shareholders who have requested the board of directors to be registered in such register in order to become eligible to acquire special voting shares, recording the entry date and number and amount of common shares in respect of which the relevant request was made.
11.5
A holder of common shares that are included in the Loyalty Register may at any time request to de-register from the Loyalty Register some or all of its common shares included therein.
11.6
The register of shareholders and Loyalty Register shall be kept up to date regularly.
11.7
Upon request and free of charge, the registrar shall provide shareholders and those who have a right of usufruct or pledge in respect of such shares with an extract from the register of shareholders and Loyalty Register in respect of their registration.
11.8
The registrar shall be authorized to disclose information and data contained in the register of shareholders and Loyalty Register and/or have the same inspected to the extent that this is requested to comply with applicable legislation or rules of a stock exchange where the shares are listed from time to time.
12.
Transfer of shares
12.1
The transfer of shares or of a restricted right thereto shall require an instrument intended for such purpose and, save when the company itself is a party to such legal act, the written acknowledgement by the company of the transfer. The acknowledgement shall be made in the instrument or by a dated statement on the instrument or on a copy or extract thereof mentioning the acknowledgement signed as a true copy by the notary or the transferor, or in the manner referred to in Article 12.2. Service of such instrument or such copy or extract on the company shall be considered to have the same effect as an acknowledgement.
12.2
If a share certificate has been issued for a share the surrender to the company of the share certificate shall also be required for such transfer.
The company may acknowledge the transfer by making an annotation on such share certificate as proof of the acknowledgement or by replacing the surrendered certificate by a new share certificate registered in the name of the transferee.



13

13.
Blocking Clause in respect of special voting shares
13.1
Common shares are freely transferable. A transfer of special voting shares other than pursuant to Article 5.3 may only be effected with due observance of Articles 5.1 and 13.
13.2
A shareholder who wishes to transfer one or more special voting shares shall require the approval of the board of directors.
13.3
If the board of directors grants the approval, or if approval is deemed to have been granted as provided for in Article 13.4, the transfer must be effected within three (3) months of the date of such approval or deemed approval.
13.4
If the board of directors does not grant the approval, then the board of directors should at the same time provide the requesting shareholder with the names of one or more prospective purchasers who are prepared to purchase all the special voting shares referred to in the request for approval, against payment in cash. If the board of directors does not grant the approval but at the same time fails to designate prospective purchasers, then approval shall be deemed to have been granted. The approval shall likewise be deemed granted if the board of directors has not made a decision in respect of the request for approval within six (6) weeks upon receipt of such request.
13.5
The requesting shareholder and the prospective purchaser accepted by him shall determine the purchase price referred to in Article 13.4 by mutual agreement. If they do not reach agreement on the purchase price, Article 5.5 shall apply mutatis mutandis .
14.
Board of directors
14.1
The company shall have a board of directors, consisting of three (3) or more directors, comprising both directors having responsibility for the day-to-day management of the company (executive directors) and directors not having such day-to-day responsibility (non-executive directors). The board of directors as a whole will be responsible for the strategy of the company. The majority of the directors shall consist of non-executive directors.
14.2
Subject to Article 14.1, the board of directors shall determine the number of directors.
14.3
The general meeting of shareholders shall appoint the directors and shall at all times have power to suspend or to dismiss any director. Upon appointment the general meeting of shareholders shall determine whether a director is an executive director or a non-executive director. The term of office of directors will be for a period of approximately one year after appointment, such period expiring on the day the first annual general meeting of shareholders is held in the following calendar year at the end of the relevant meeting. If as a result of resignations or other reasons the majority of the directors elected by shareholders is no longer in office, a general meeting of shareholders will be convened on an urgent basis by the directors still in office for the purpose of electing a new board of directors. In such case, the term of office of all directors in office that are not reappointed



14

at that general meeting of shareholders will be deemed to have expired at the end of the relevant meeting. Each director may be reappointed for an unlimited number of terms.
14.4
The company shall have a policy in respect of the remuneration of the directors. Such remuneration policy shall be adopted by the general meeting of shareholders. The remuneration policy shall at a minimum address the matters referred to in Section 2:383 (c) to (e) of the Dutch Civil Code, to the extent they relate to the board of directors.
14.5
With due observation of the remuneration policy referred to in Article 14.4 and the provisions of law, including those in respect of allocation of responsibilities between executive and non-executive directors, the board of directors may determine the remuneration for the directors in respect of the performance of their duties, provided that nothing herein contained shall preclude any directors from serving the company or any subsidiary or related company thereof in any other capacity and receiving compensation therefor and provided further that the executive directors may not participate in the decision-making regarding the determination of the remuneration for the executive directors.
14.6
The board of directors shall submit to the general meeting of shareholders for its approval plans to award shares or the right to subscribe for shares. The plans shall at least set out the number of shares and rights to subscribe for shares that may be awarded to the board of directors and the criteria that shall apply to the award or any change thereto.
14.7
Failure to obtain the approval of the general meeting of shareholders required under Article 14.6 shall not affect the powers of representation of the board of directors.
14.8
The company shall not grant its directors any personal loans, guarantees or the like other than in the normal course of business, as regards executive directors on terms applicable to the personnel as a whole, and after approval of the board of directors.
15.
Management, regulations and decision-making
15.1
The board of directors shall exercise its duties, including the oversight of the company, subject to the limitations contained in these Articles of Association.
15.2
The chairman of the board of directors as referred to by law shall be a non-executive director and shall have the title Chair. The board of directors may grant other titles to the directors. The board of directors may furthermore appoint or delegate the appointment of a Secretary, who need not be selected from among its members.
The board of directors shall draw up board regulations to deal with matters that concern the board of directors internally.
15.3
The regulations shall include an allocation of tasks amongst the executive directors and non-executive directors and may provide for general or specific delegation of powers.



15

The regulations shall contain provisions concerning the manner in which meetings of the board of directors are called and held, including the decision-making process. Subject to Article 2.3, these regulations may provide that meetings may be held by telephone conference or video conference, provided that all participating directors can follow the proceedings and participate in real time discussion of the items on the agenda.
15.4
The board of directors may determine that one or more directors can lawfully adopt resolutions ( rechtsgeldig besluiten ) concerning matters belonging to his or their duties within the meaning of Section 2:129a paragraph 3 of the Dutch Civil Code. Any directors that adopt any resolutions within the meaning of this provision will have to inform the other directors thereof within a reasonable time.
15.5
The board of directors can only adopt valid resolutions when the majority of the directors in office shall be present or represented at the meeting of the board of directors.
15.6
A director may be represented by a co-director if authorized in writing; provided that a director may not act as proxy for more than one co-director.
15.7
All resolutions shall be adopted by the favorable vote of the majority of the directors present or represented at the meeting, provided that the regulations may contain specific provisions in this respect. Each director shall have one (1) vote.
15.8
The board of directors shall be authorized to adopt resolutions without convening a meeting if all directors shall have expressed their opinions in writing, unless one or more directors shall object in writing to the resolution being adopted in this way prior to the adoption of the resolution.
15.9
The board of directors shall require the approval of the general meeting of shareholders for resolutions concerning an important change in the company's identity or character, including in any case:
(a)
the transfer to a third party of the business of the company or practically the entire business of the company;
(b)
the entry into or breaking off of any long-term cooperation of the company or a subsidiary with another legal entity or company or as a fully liable partner of a general partnership or limited partnership, where such entry or breaking off is of far-reaching importance to the company;
(c)
the acquisition or disposal by the company or a subsidiary of an interest in the share capital of a company with a value of at least one/third of the company's assets according to the consolidated balance sheet with explanatory notes included in the last adopted annual accounts of the company.
15.10
Failure to obtain the approval required under Article 15.9 shall not affect the powers of representation of the board of directors.
15.11
In the event of receipt by the board of directors of a third party offer to acquire a business or one or more subsidiaries for an amount in excess of the threshold referred to in Article 15.9 sub (c), the board of directors shall, if and when such



16

bid is made public, at its earliest convenience or otherwise in compliance with applicable law issue a public position statement in respect of such offer.
15.12
If the office(s) of one or more directors be vacated or if one or more directors be otherwise unavailable, the remaining directors or the remaining director shall have the full power of the board of directors without interruption, provided however that in such event the board of directors shall have power to designate one or more persons to temporarily assist the remaining director(s) to manage the company. If the offices of all directors be vacated or if all directors be otherwise unable to act, the management shall temporarily be vested in the person or persons whom the general meeting of shareholders shall appoint for that purpose.
15.13
A director shall not participate in deliberations and the decision-making process in the event of a direct or indirect personal conflict of interest between that director and the company and the enterprise connected with it. If there is such personal conflict of interest in respect of all directors, the preceding sentence does not apply and the board of directors shall maintain its authority, subject to the approval of the general meeting of shareholders.
16.
Committees
16.1
The board of directors shall have power to appoint any committees, composed of directors and officers of the company and of group companies.
16.2
The board of directors shall determine the specific functions, tasks and procedures, as well as the duration of any of the committees referred to in this Article 16. For the avoidance of doubt, as such committees act on the basis of delegation of certain responsibilities of the board of directors, the board of directors shall remain fully responsible for the actions undertaken by such committees and may withdraw the delegation of powers to such committees in its discretion.
17.
Representation
17.1
The general authority to represent the company shall be vested in the board of directors and the Chief Executive Officer.
17.2
The board of directors or the Chief Executive Officer may also confer authority to represent the company, jointly or severally, to one or more individuals ( procuratiehouders ) who would thereby be granted powers of representation with respect to such acts or categories of acts as the board of directors or the Chief Executive Officer may determine and shall notify to the Dutch trade register. Such authority may be revoked provided that any authority conferred by the board of directors may be revoked only by the board of directors.
18.
Indemnity
18.1
The company shall indemnify any and all of its directors, officers, former directors, former officers and any person who may have served at its request as a director or officer of another company in which it owns shares or of which it is a creditor, who were or are made a party or are threatened to be made a party to or are



17

involved in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (each a Proceeding ), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, against any and all liabilities, damages, reasonable and documented expenses (including reasonably incurred and substantiated attorneys’ fees), financial effects of judgments, fines, penalties (including excise and similar taxes and punitive damages) and amounts paid in settlement in connection with such Proceeding by any of them. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled otherwise.
18.2
Indemnification under this Article 18 shall continue as to any person who has ceased to serve in the capacity which initially entitled such person to indemnity under Article 18.1 related to and arising from such person's activities while acting in such capacity. No amendment, modification or repeal of this Article 18 shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings arising prior to any such amendment, modification or repeal.
18.3
Notwithstanding Article 18.1 hereof, no indemnification shall be made in respect of any claim, issue or matter as to which such person shall be adjudged to be liable for gross negligence or wilful misconduct in the performance of such person’s duty to the company.
18.4
The right to indemnification conferred in this Article 18 shall include a right to be paid or reimbursed by the company for any and all reasonable and documented expenses incurred by any person entitled to be indemnified under this Article 18 who was, or is threatened, to be made a named defendant or respondent in a Proceeding in advance of the final disposition of the Proceeding and without any determination as to such person's ultimate entitlement to indemnification; provided, however, that such person shall undertake to repay all amounts so advanced if it shall ultimately be determined that such person is not entitled to be indemnified under this Article 18.
19.
General meeting of shareholders
19.1
At least one (1) general meeting of shareholders shall be held every year, which meeting shall be held within six (6) months after the close of the financial year.
19.2
Furthermore, general meetings of shareholders shall be held in the case referred to in Section 2:108a of the Dutch Civil Code and as often as the board of directors, the Chairman or Chief Executive Officer deems it necessary to hold them, without prejudice to what has been provided in Article 19.3.
19.3
Shareholders solely or jointly representing at least ten percent (10%) of the issued share capital may request the board of directors, in writing, to call a general meeting of shareholders, stating the matters to be dealt with.
If the board of directors fails to call a meeting, then such shareholders may, on their application, be authorized by the interim provisions judge of the court ( voorzieningenrechter van de rechtbank ) to convene a general meeting of shareholders. The interim provisions judge shall reject the application if he is



18

not satisfied that the applicants have previously requested the board of directors in writing, stating the exact subjects to be discussed, to convene a general meeting of shareholders.
19.4
General meetings of shareholders shall be held in Amsterdam or Haarlemmermeer (Schiphol Airport), the Netherlands, and shall be called by the board of directors, the Chairman or Chief Executive Officer of the board of directors, in such manner as is required to comply with the law and the applicable stock exchange regulations, in accordance with Section 2:115 of the Dutch Civil Code, no later than on the fifteenth day before the day of the meeting, or if shares of the company or depositary receipts issued with the cooperation of the company have been admitted to trading on a regulated market as referred to in Section 1:1 of the Act on financial supervision ( Wet op het financieel toezicht ), no later than on the forty-second day before the day of the meeting.
19.5
All convocations of general meetings of shareholders and all announcements, notifications and communications to shareholders and other persons entitled to attend the meeting shall be made by means of an announcement on the company’s corporate website and such announcement shall remain accessible until the relevant general meeting of shareholders. Any communication to be addressed to the general meeting of shareholders by virtue of law or these Articles of Association, may be either included in the notice, referred to in the preceding sentence or, to the extent provided for in such notice, on the company’s corporate website and/or in a document made available for inspection at the office of the company and such other place(s) as the board of directors shall determine.
19.6
In addition to Article 19.5, convocations of general meetings of shareholders may be sent to shareholders and other persons entitled to attend the meeting through the use of an electronic means of communication to the address provided by such shareholders and other persons to the company for this purpose.
19.7
The notice shall state the place, date and hour of the meeting and the agenda of the meeting as well as the other data required by law.
19.8
An item proposed in writing by such number of shareholders and other persons entitled to attend the meeting who, by law, are entitled to make such proposal, shall be included in the notice or shall be announced in a manner similar to the announcement of the notice, provided that the company has received the relevant request or a proposed resolution, including the reasons for putting the relevant item on the agenda, no later than on the sixtieth day before the day of the meeting.
19.9
The agenda of the annual general meeting of shareholders shall contain, inter alia , the following items:
(a)
the implementation of the remuneration policy;
(b)
adoption of the annual accounts;
(c)
granting of discharge to the directors in respect of the performance of their duties in the relevant financial year;



19

(d)
the appointment of directors;
(e)
the policy of the company on additions to reserves and on dividends, if any;
(f)
if, applicable, the proposal to pay a dividend;
(g)
if applicable, discussion of any substantial change in the corporate governance structure of the company; and
(h)
any matters decided upon by the person(s) convening the meeting and any matters placed on the agenda with due observance of Article 19.8.
19.10
The board of directors shall provide the general meeting of shareholders with all requested information, unless this would be contrary to an overriding interest of the company. If the board of directors invokes an overriding interest, it must give reasons.
19.11
If a right of approval is granted to the general meeting of shareholders by law or these Articles of Association (for instance as referred to in Article 14.6 and Article 15.9) or the board of directors requests a delegation of powers or authorization (for instance as referred to in Article 6), the board of directors shall inform the general meeting of shareholders by means of a circular or explanatory notes to the agenda of all facts and circumstances relevant to the approval, delegation or authorization to be granted.
19.12
For the purpose of Articles 19 and 20, persons with the right to vote or attend meetings shall be considered those persons who have these rights at the twenty-eighth day prior to the day of the meeting ( Record Date ) and are registered as such in a register to be designated by the board of directors for such purpose, irrespective whether they will have these rights at the date of the meeting. In addition to the Record Date, the notice of the meeting shall further state the manner in which shareholders and other persons entitled to attend the meeting may have themselves registered and the manner in which those rights can be exercised.
19.13
If a proposal to amend these Articles of Association is to be dealt with, a copy of that proposal, in which the proposed amendments are stated verbatim, shall be made available for inspection to the shareholders and other persons entitled to attend the meeting, at the office of the company and on the website of the company, as from the day the general meeting of shareholders is called until after the close of that meeting. Upon request, each of them shall be entitled to obtain a copy thereof, without charge.
20.
Chairman, minutes, rights, admittance and voting
20.1
The general meeting of shareholders shall be presided over by the Chairman or, in his absence, by the person chosen by the board of directors to act as chairman for such meeting.
20.2
One of the persons present designated for that purpose by the chairman of the meeting shall act as secretary of the meeting and take minutes of the business



20

transacted. The minutes shall be adopted by the chairman of the meeting and the secretary of the meeting and signed by them in witness thereof.
20.3
The minutes of the general meeting of shareholders shall be made available, on request, to the shareholders no later than three (3) months after the end of the meeting, after which the shareholders shall have the opportunity to react to the minutes in the following three (3) months. The minutes shall then be adopted in the manner as described in Article 20.2.
20.4
If an official notarial record is made of the business transacted at the meeting then minutes need not be drawn up and it shall suffice that the official notarial record be signed by the notary.
20.5
As a prerequisite to attending the meeting and, to the extent applicable, exercising voting rights, the shareholders and other persons entitled to attend the meeting shall be obliged to inform the board of directors in writing within the time frame mentioned in the convening notice. At the latest this notice must be received by the board of directors on the day mentioned in the convening notice.
20.6
Shareholders and other persons entitled to attend the meetings may procure to be represented at any meeting by a proxy duly authorized in writing, provided they shall notify the company in writing of their wish to be represented at such time and place as shall be stated in the notice of the meetings. For the avoidance of doubt, such attorney is also authorized in writing if the proxy is documented electronically. The board of directors may determine further rules concerning the deposit of the powers of attorney; these shall be mentioned in the notice of the meeting.
20.7
The chairman of the meeting shall decide on the admittance to the meeting of persons other than those who are entitled to attend.
20.8
For each general meeting of shareholders, the board of directors may decide that shareholders and other persons entitled to attend the meeting shall be entitled to attend, address and exercise voting rights at such meeting through the use of electronic means of communication, provided that shareholders and other persons who participate in the meeting are capable of being identified through the electronic means of communication and have direct cognizance of the discussions at the meeting and the exercising of voting rights (if applicable). The board of directors may set requirements for the use of electronic means of communication and state these in the convening notice. Furthermore, the board of directors may for each general meeting of shareholders decide that votes cast by the use of electronic means of communication prior to the meeting and received by the board of directors shall be considered to be votes cast at the meeting. Such votes may not be cast prior to the Record Date. Whether the provision of the foregoing two sentences applies and the procedure for exercising the rights referred to in that sentence shall be stated in the notice.
20.9
Prior to being allowed admittance to a meeting, a shareholder and each other person entitled to attend the meeting, or their attorney, shall sign an attendance



21

list, while stating his name and, to the extent applicable, the number of votes to which he is entitled. Each shareholder and other person attending a meeting by the use of electronic means of communication and identified in accordance with Article 20.8 shall be registered on the attendance list by the board of directors. In the event that it concerns an attorney of a shareholder or another person entitled to attend the meeting, the name(s) of the person(s) on whose behalf the attorney is acting, shall also be stated. The chairman of the meeting may decide that the attendance list must also be signed by other persons present at the meeting.
20.10
The chairman of the meeting may determine the time for which shareholders and others entitled to attend the general meeting of shareholders may speak if he considers this desirable with a view to the order by conduct of the meeting as well as other procedures that the chairman considers desirable for the efficient and orderly conduct of the business of the meeting.
20.11
Every share (whether common or special voting) shall confer the right to cast one (1) vote.
Shares in respect of which the law determines that no votes may be cast shall be disregarded for the purposes of determining the proportion of shareholders voting, present or represented or the proportion of the share capital present or represented.
20.12
All resolutions shall be passed with an absolute majority of the votes validly cast unless otherwise specified herein.
Blank votes shall not be counted as votes cast.
20.13
All votes shall be cast in writing or electronically. The chairman of the meeting may, however, determine that voting by raising hands or in another manner shall be permitted.
20.14
Voting by acclamation shall be permitted if none of the shareholders present or represented objects.
20.15
No voting rights shall be exercised in the general meeting of shareholders for shares or depositary receipts thereof owned by the company or by a subsidiary. Pledgees and usufructuaries of shares owned by the company and its subsidiaries shall however not be excluded from exercising their voting rights, if the right of pledge or usufruct was created before the shares were owned by the company or a subsidiary. Neither the company nor any of its subsidiaries may exercise voting rights for shares in respect of which it holds a right of pledge or usufruct.
20.16
Without prejudice to the other provisions of this Article 20, the company shall determine for each resolution passed:
(a)
the number of shares on which valid votes have been cast;
(b)
the percentage that the number of shares as referred to under (a) represents in the issued share capital;
(c)
the aggregate number of votes validly cast; and



22

(d)
the aggregate number of votes cast in favour of and against a resolution, as well as the number of abstentions.
21.
Audit
21.1
The general meeting of shareholders shall appoint an accountant to examine the annual accounts drawn up by the board of directors, to report thereon to the board of directors, and to express an opinion with regard thereto.
21.2
If the general meeting of shareholders fails to appoint the accountant as referred to in Article 21.1, this appointment shall be made by the board of directors.
21.3
To the extent permitted by law, the appointment provided for in Article 21.1 may be cancelled by the general meeting of shareholders and if the appointment has been made by the board of directors, by the board of directors.
21.4
The accountant may be questioned by the general meeting of shareholders in relation to the accountant’s statement on the fairness of the annual accounts. The accountant shall therefore be invited to attend the general meeting of shareholders convened for the adoption of the annual accounts.
21.5
The accountant shall, in any event, attend the meeting of the board of directors at which the report of the accountant is discussed, and at which the annual accounts are to be approved.
22.
Financial year, annual accounts and distribution of profits
22.1
The financial year of the company shall coincide with the calendar year.
22.2
The board of directors shall annually close the books of the company as at the last day of every financial year and shall within four (4) months thereafter draw up annual accounts consisting of a balance sheet, a profit and loss account and explanatory notes. Within such four (4) month period the board of directors shall publish the annual accounts, including the accountant’s certificate, the annual report and any other information that would need to be made public in accordance with the applicable provisions of law and the requirements of any stock exchange on which common shares are listed.
22.3
The company shall publish its annual accounts and annual report and the other documents referred to in Section 2:392 of the Dutch Civil Code in the English language and in accordance with Section 2:394 of the Dutch Civil Code.
22.4
If the activity of the company or the international structure of its group justifies the same as determined by the board of directors, its annual accounts or its consolidated accounts may be prepared in a foreign currency.
22.5
The broad outline of the corporate governance structure of the company shall be explained in a separate chapter of the annual report. In the explanatory notes to the annual accounts the company shall state, in addition to the information to be included pursuant to Section 2:383d of the Dutch Civil Code, the value of the options granted to the executive directors and employees and shall indicate how this value is determined.



23

22.6
The annual accounts shall be signed by all the directors; should any signature be missing, then this shall be mentioned in the annual accounts, stating the reason.
22.7
The company shall ensure that the annual accounts, the annual report and the other data referred to in Article 22.2 and the statements are available at its office as from the date on which the general meeting of shareholders at which they are intended to be dealt with is called, as well as on the website of the company. The shareholders and those entitled to attend general meetings of shareholders shall be permitted to inspect these documents at the company’s office and to obtain copies thereof free of charge.
22.8
The general meeting of shareholders shall adopt the annual accounts.
22.9
At the general meeting of shareholders at which it is resolved to adopt the annual accounts, a proposal concerning release of the directors from liability for their respective duties, insofar as the exercise of such duties is reflected in the annual accounts or otherwise disclosed to the general meeting of shareholders prior to the adoption of the annual accounts, shall be brought up separately for discussion. The scope of any such release from liability shall be subject to limitations by virtue of the law.
23.
Reserves and profits
23.1
The company shall maintain a special capital reserve to be credited against the share premium exclusively for the purpose of facilitating any issuance or cancellation of special voting shares. The special voting shares shall not carry any entitlement to the balance of the special capital reserve. The board of directors shall be authorized to resolve upon (i) any distribution out of the special capital reserve to pay up special voting shares or (ii) re-allocation of amounts to credit or debit the special capital reserve against or in favour of the share premium reserve.
23.2
The company shall maintain a separate dividend reserve for the special voting shares. The special voting shares shall not carry any entitlement to any other reserve of the company. Any distribution out of the special voting rights dividend reserve or the partial or full release of such reserve will require a prior proposal from the board of directors and a subsequent resolution of the meeting of holders of special voting shares.
23.3
From the profits, shown in the annual accounts, as adopted, such amounts shall be reserved as the board of directors may determine.
23.4
The profits remaining thereafter shall first be applied to allocate and add to the special voting shares dividend reserve an amount equal to one percent (1%) of the aggregate nominal value of all outstanding special voting shares. The calculation of the amount to be allocated and added to the special voting shares dividend reserve shall occur on a time-proportionate basis. If special voting shares are issued during the financial year to which the allocation and addition pertains, then the amount to be allocated and added to the special voting shares



24

dividend reserve in respect of these newly issued special voting shares shall be calculated as from the date on which such special voting shares were issued until the last day of the financial year concerned. The special voting shares shall not carry any other entitlement to the profits.
23.5
Any profits remaining thereafter shall be at the disposal of the general meeting of shareholders for distribution of profits on the common shares only, subject to the provision of Article 23.8.
23.6
Subject to a prior proposal of the board of directors, the general meeting of shareholders may declare and pay distributions of profits and other distributions in United States Dollars. Furthermore, subject to the approval of the general meeting of shareholders and the board of directors having been designated as the body competent to pass a resolution for the issuance of shares in accordance with Article 6, the board of directors may decide that a distribution shall be made in the form of shares or that shareholders shall be given the option to receive a distribution either in cash or in the form of shares.
23.7
The company shall only have power to make distributions to shareholders and other persons entitled to distributable profits to the extent the company's equity exceeds the sum of the paid in and called up part of the share capital and the reserves that must be maintained pursuant to Dutch law and these Articles of Association. No distribution of profits or other distributions may be made to the company itself for shares that the company holds in its own share capital.
23.8
The distribution of profits shall be made after the adoption of the annual accounts, from which it appears that the same is permitted.
23.9
The board of directors shall have power to declare one or more interim distributions of profits, provided that the requirements of Article 23.7 are duly observed as evidenced by an interim statement of assets and liabilities as referred to in Section 2:105 paragraph 4 of the Dutch Civil Code and provided further that the policy of the company on additions to reserves and distributions of profits is duly observed. The provisions of Articles 23.2 and 23.3 shall apply mutatis mutandis .
23.10
The board of directors may determine that distributions are made from the company's share premium reserve or from any other reserve, provided that payments from reserves may only be made to the shareholders that are entitled to the relevant reserve upon the dissolution of the company.
23.11
Distributions of profits and other distributions shall be made payable in the manner and at such date(s) - within four (4) weeks after declaration thereof - and notice thereof shall be given, as the general meeting of shareholders, or in the case of interim distributions of profits, the board of directors shall determine.
23.12
Distributions of profits and other distributions, which have not been collected within five (5) years and one (1) day after the same have become payable, shall become the property of the company.
24.
Amendment of the Articles of Association



25

A resolution to amend these Articles of Association can only be passed by a general meeting of shareholders pursuant to a prior proposal of the board of directors. A majority of at least two-thirds of the votes cast shall be required if less than one half of the issued share capital is present or represented at the meeting.
25.
Dissolution and winding-up
25.1
A resolution to dissolve the company can only be passed by a general meeting of shareholders pursuant to a prior proposal of the board of directors. A majority of at least two-thirds of the votes cast shall be required if less than one half of the issued share capital is present or represented at the meeting. In the event a resolution is passed to dissolve the company, the directors shall become liquidators ( vereffenaars ) of the dissolved company’s property, unless the general meeting of shareholders resolves otherwise.
25.2
The general meeting of shareholders shall appoint and decide on the remuneration of the liquidators.
25.3
Until the winding-up of the company has been completed, these Articles of Association shall to the extent possible, remain in full force and effect.
25.4
Whatever remains of the company's equity after all its debts have been discharged:
(a)
shall first be applied to distribute the aggregate balance of share premium reserves and other reserves than the special voting shares dividend reserve of the company to the holders of common shares in proportion to the aggregate nominal value of the common shares held by each of them;
(b)
secondly, from any balance remaining, an amount equal to the aggregate amount of the nominal value of the common shares will be distributed to the holders of common shares in proportion to the aggregate nominal value of common shares held by each of them;
(c)
thirdly, from any balance remaining, an amount equal to the aggregate amount of the special voting shares dividend reserve will be distributed to the holders of special voting shares in proportion to the aggregate nominal value of the special voting shares held by each of them;
(d)
fourthly, from any balance remaining, the aggregate amount of the nominal value of the special voting shares will be distributed to the holders of special voting shares in proportion to the aggregate nominal value of the special voting shares held by each of them; and
(e)
lastly, the balance remaining will be distributed to the holders of the common shares in proportion to the aggregate nominal value of common shares held by each of them.
25.5
After the company has ceased to exist the books and records of the company shall remain in the custody of the person designated for that purpose by the liquidators for the period provided by law.
25.6
In addition, the liquidation shall be subject to the relevant provisions of Book 2, Title 1, of the Dutch Civil Code.



26

Final provisions
Finally, the person appearing declared that:
(a)
the general meeting of shareholders resolved on the l day of l two thousand fifteen, under the condition precedent that the foregoing amendment of the articles of association takes effect, to issue l ( l ) common shares and l ( l ) special voting shares; and
(c)
at the time the foregoing amendment of the articles of association takes effect, the issued capital of the Company equals l euro (EUR  l ), divided into l ( l ) common shares and l ( l ) special voting shares.
End
The person appearing is known to me, civil law notary.
This deed was executed in Amsterdam, the Netherlands, on the date stated in the first paragraph of this deed. The contents of the deed have been stated and clarified to the person appearing. The person appearing has declared not to wish the deed to be fully read out, to have noted the contents of the deed timely before its execution and to agree with the contents. After limited reading, this deed was signed first by the person appearing and thereafter by me, civil law notary.


Exhibit 5.1



 
 
To:
New Business Netherlands N.V.
Via Abetone Inferiore n. 4
I-41053 Maranello
ITALY


re
Dutch law legal opinion – Ferrari N.V. – Initial public offering of Common Shares – Form F-1 Filing
reference
18127205-v6


Amsterdam, l 2015

Dear Sir, Madam,

1
INTRODUCTION
We have acted as special counsel on certain matters of Dutch law to the Company (as defined below) in connection with, amongst other things, the registration of the Common Shares (as defined below) in accordance with the Registration Statement (as defined below).
2
DEFINITIONS
2.1
Capitalised terms used but not (otherwise) defined herein are used as defined in the Schedules to this opinion letter.
2.2
In this opinion letter:
Company means Ferrari N.V. registered with the Trade Register under number 57991561.
Common Shares means the [ l number ] common shares in the capital of the Company issued to Fiat Chrysler Automobiles N.V. pursuant to the Deed of Issuance and as referred to in the Registration Statement.
Relevant Date means the date of the Shareholders’ Resolution, the date of the Deed of Issuance and the date of this opinion letter.
Reviewed Documents means the documents listed in Schedule 1 (Reviewed documents).
SEC means the United States Securities and Exchange Commission.
Securities Act means the United States of America’s Securities Act of 1933, as amended from time to time.



  




Trade Register means the trade register of the Chamber of Commerce in the Netherlands.
3
SCOPE OF INQUIRY
3.1
For the purpose of rendering this opinion letter, we have only examined and relied upon electronically transmitted copies of the Reviewed Documents, which we consider to be the documents necessary under Dutch law for the purpose of providing the opinions set out in this opinion letter.
3.2
We have undertaken only the following searches and inquiries (the Checks ) at the date of this opinion letter which we consider to be the investigations necessary under Dutch law for the purpose of providing the opinions set out in this opinion letter:
(a)
an inquiry by telephone at the Trade Register, confirming that no changes were registered after the date of the Excerpt;
(b)
an inquiry by telephone at the bankruptcy clerk's office ( faillissementsgriffie ) of the court in Amsterdam, the Netherlands, confirming that the Company is not listed in the insolvency register;
(c)
    an online inquiry on the relevant website (www.rechtspraak.nl) of the EU Registrations with the Central Insolvency Register ( Centraal Insolventie Register ) confirming that the Company is not listed on the EU Registrations with the Central Insolvency Register; and
(d)
an online inquiry on the relevant website (http://eur-lex.europa.eu/) of the Annex to Council regulation (EC) No 2580/2001, Annex I of Council regulation (EC) No 881/2002 and the Annex to Council Common Position 2001/931 relating to measures to combat terrorism, all as amended from time to time, confirming that the Company is not listed on such annexes.
3.3
We have not reviewed any documents incorporated by reference or referred to in the Reviewed Documents (unless included as a Reviewed Document) and therefore our opinions do not extend to such documents.
4
NATURE OF OPINION
4.1
We only express an opinion on matters of Dutch law and the law of the European Union, to the extent directly applicable in the Netherlands, in force on the date of this opinion letter, excluding unpublished case law. We do not express an opinion on tax law, competition law and financial assistance. The terms the "Netherlands" and "Dutch" in this opinion letter refer solely to the European part of the Kingdom of the Netherlands.
4.2
Our opinion is strictly limited to the matters stated herein. We do not express any opinion on matters of fact, on the commercial and other non-legal aspects of the transactions contemplated by the Deed of Issuance and on any representations, warranties and other information included in the Deed of Issuance and any other document examined in connection with this opinion letter, except as expressly stated in this opinion letter.

    

  




4.3
In this opinion letter Dutch legal concepts are sometimes expressed in English terms and not in their original Dutch terms. The concepts concerned may not be identical to the concepts described by the same English term as they exist under the laws of other jurisdictions. For the purpose of tax law a term may have a different meaning than for the purpose of other areas of Dutch law.
4.4
This opinion letter and any non-contractual obligations arising out of or in relation to this opinion letter are governed by Dutch law.
4.5
This opinion letter refers to the date hereof. No obligation is assumed to update this opinion letter or to inform any person of any changes of law or other matters coming to our knowledge and occurring after the date of this opinion letter, which may have effect on the opinions set out in this opinion letter.
4.6
This opinion letter is issued by Loyens & Loeff N.V. Individuals or legal entities that are involved in the services provided by or on behalf of Loyens & Loeff N.V. cannot be held liable in any manner whatsoever.
5
OPINIONS
The opinions expressed in this paragraph 5 (Opinions) should be read in conjunction with the assumptions set out in Schedule 2 (Assumptions) and the qualifications set out in Schedule 3 (Qualifications). On the basis of these assumptions and subject to these qualifications and any factual matters or information not disclosed to us in the course of our investigation, we are of the opinion that as at the date of this opinion letter:
5.1
Corporate status
The Company has been duly incorporated as a naamloze vennootschap (public limited liability company) under Dutch law.
5.2
No insolvency, dissolution, merger or demerger
Based solely on the Excerpt and the Checks, the Company is validly existing and has not been dissolved ( ontbonden ), merged ( gefuseerd ) involving the Company as disappearing entity, demerged ( gesplitst ), granted a suspension of payments ( surseance verleend ), declared bankrupt ( failliet verklaard ) or been subjected to any insolvency proceedings listed in Annex A or winding up proceedings listed in Annex B of the 29 May 2000 Council Regulation (EC) No 1346/2000 on Insolvency Proceedings (the Insolvency Regulation ).
5.3
Issued share capital
The Common Shares have been duly authorised, validly issued, fully paid and are non-assessable.
6
ADDRESSEES

    

  




6.1
This opinion letter is addressed to you in relation to and as an exhibit to the Registration Statement and may not be disclosed to and relied upon by any other person without our prior written consent other than as an exhibit to the Registration Statement. This opinion letter is not to be used or relied upon for any purpose other than in connection with the filing of the Registration Statement.
6.2
We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the references to Loyens & Loeff N.V. under the heading “Legal Matters” in the Registration Statement. In giving the consent set out in the previous sentence, we do not thereby admit or imply that we are in the category of persons whose consent is required under Section 7 of the Securities Act or any rules and regulations of the SEC promulgated thereunder.

Yours faithfully,
Loyens & Loeff N.V.



_____________________________



_____________________________

    

  





Schedule 1
REVIEWED DOCUMENTS
1
An excerpt of the registration of the Company in the Trade Register dated [to be updated] 2015 (the Excerpt ).
2
The deed of incorporation of the Company dated 24 May 2013 (the Deed of Incorporation ).
3
The articles of association of the Company dated l 2015 (the Articles )
4
The resolution of the general meeting of the Company dated l 2015 (the Shareholders’ Resolution ).
5
The deed of issuance relating to the issuance of, inter alia , the Common Shares, dated l 2015 (the Deed of Issuance ).
6
The shareholders' register ( aandeelhoudersregister ) of the Company (the Shareholders' Register ), showing the issuance of, inter alia , the Common Shares set forth in the Deed of Issuance.
7
The registration statement on Form F-1 originally filed by the Company with the SEC under the Securities Act on 23 July 2015 (File No. 333-205804) as amended to the date of this opinion letter (the Registration Statement ).

    

  





Schedule 2     
ASSUMPTIONS
The opinions in this opinion letter are subject to the following assumptions:
1
Documents
1.1
All signatures are genuine, all original documents are authentic and all copies are complete and conform to the originals.
1.2
The information recorded in the Excerpt is true, accurate and complete on the Relevant Date (although not constituting conclusive evidence thereof this assumption is supported by the Checks).
1.3
The information recorded in the Shareholders' Register is true, accurate and complete on the date of this opinion letter.
1.4
The Registration Statement has been or will have been filed with the SEC and declared effective pursuant to the Securities Act.
2
Incorporation, existence and corporate power
2.1
The Deed of Incorporation is a valid notarial deed ( notariële authentieke akte ), the contents thereof are correct and complete and there were no defects in the incorporation process (not appearing on the face of the Deed of Incorporation) for which a court might dissolve the Company.
2.2
The Company has not been listed on the list referred to in article 2 (3) of Council Regulation (EC) No 2580/2001 of 27 December 2001, listed in Annex I to Council Regulation (EC) No 881/2002 of 27 May 2002 or listed and marked with an asterisk in the Annex to Council Common Position 2001/931 of 27 December 2001 relating to measures to combat terrorism, as amended from time to time (although not constituting conclusive evidence thereof, this assumption is supported by the contents of the Checks).
2.3
The Company has its centre of main interest (as described in the Insolvency Regulation) in the Netherlands and does not have an establishment (as described in the Insolvency Regulation) which has been subjected to any insolvency proceeding or winding up proceeding outside the Netherlands.
2.4
The Articles are the articles of association ( statuten ) of the Company in force on the Relevant Date.
3
Corporate authorisations
3.1
The Shareholders’ Resolution (a) correctly reflects the resolutions made by general meeting of the Company in respect of the transactions contemplated by the Deed of Issuance, (b)

    

  




has been made with due observance of the Articles and any applicable by-laws and (c) remains in full force and effect.
4
Other parties
4.1
Each party to the Deed of Issuance, other than the Company, is validly existing under the laws by which it is purported to be governed.
4.2
Each party to the Deed of Issuance, other than the Company, has all requisite power or capacity (corporate and otherwise) to execute and to perform its obligations under the Deed of Issuance and the Deed of Issuance has been duly authorised, executed and delivered by or on behalf of the parties thereto other than the Company.
5
Issued share capital
The Common Shares have not been repurchased ( ingekocht ), cancelled ( ingetrokken ), reduced ( afgestempeld ), split, or combined.

    

  





Schedule 3     
QUALIFICATIONS
The opinions in this opinion letter are subject to the following qualifications:
1
Insolvency
The opinions expressed herein may be affected or limited by the provisions of any applicable bankruptcy ( faillissement ), suspension of payments ( surseance van betaling ), emergency regulations ( noodregeling ), other insolvency proceedings and fraudulent conveyance ( actio pauliana ), reorganisation, and other laws of general application now or hereafter in effect, relating to or affecting the enforcement or protection of creditors' rights.
2
Enforceability
The opinions expressed herein with respect to the Deed of Issuance may be affected by the availability of general defences under Dutch law such as the principles of reasonableness and fairness, modification on grounds of unforeseen circumstances, duress, deceit, mistake, undue influence and, if and to the extent not validly waived, force majeure, the right to suspend performance as long as the other party is in default in respect of its obligations, the right to set-off and the right to dissolve a transaction upon default by the other party.
3
Accuracy of information
3.1
The information obtained from a bankruptcy clerk's office ( faillissementsgriffie ) and the online international bankruptcy clerk's office of the court of The Hague ( internationale faillissementsgriffie ) does not provide conclusive evidence that the Company has not been granted a suspension of payments, declared bankrupt or subjected to any other insolvency proceedings listed in Annex A or winding up proceedings listed in Annex B of the Insolvency Regulation. Under the Dutch Bankruptcy Act ( Faillissementswet ) the declaration of a bankruptcy is effected by a court order, with effect from and including the day on which the bankruptcy order is issued. The clerk of the bankruptcy court is under an obligation to keep a public register in which, among others, extracts from the court orders by which a bankruptcy order is declared are registered. We have made enquiries with the clerk of the bankruptcy court whether the Company is registered as being declared bankrupt in the register kept by the clerk. We have received oral confirmation that this is not the case. Such confirmation, however, does not constitute conclusive evidence that the Company is not declared bankrupt, as a proper registration of a bankruptcy order is not a condition for the bankruptcy order to be effective.
3.2
Any dissolution ( ontbinding ), merger ( fusie ), demerger ( splitsing ) or conversion ( omzetting ) involving the Company must be notified to the trade register of the Chamber of Commerce in the Netherlands. However, it cannot be assured that such notification has actually been made and therefore the Excerpt does not constitute conclusive evidence that the Company

    

  




is not dissolved ( ontbonden ), merged ( gefuseerd ), demerged ( gesplitst ) or converted ( omgezet ) as a notification to the trade register is not a condition for a dissolution ( ontbinding ), merger ( fusie ), demerger ( splitsing ) or conversion ( omzetting ) to be effective.
3.3
The Excerpt does not provide conclusive evidence that the facts set out therein are correct and complete. However, subject to limited exceptions, a company cannot invoke the incorrectness or incompleteness of its trade register registration against third parties who were unaware thereof.

    
  


 
To:
Ferrari N.V.
Via Abetone Inferiore n. 4
I-41053 Maranello
ITALY


re
Dutch tax opinion – Ferrari N.V. – Initial public offering of Shares – Form F-1 Filing
reference
19800114


Amsterdam, 22 September 2015

Sir, Madam,

1
INTRODUCTION
We have acted as special counsel on certain matters of Dutch tax law to the Company (as defined below) in connection with, amongst other things, the registration of the Shares (as defined below) in accordance with the Registration Statement (as defined below).
2
DEFINITIONS
2.1
Capitalised terms used but not (otherwise) defined herein are used as defined in the Registration Statement and in the Schedules to this opinion letter.
2.2
In this opinion letter:
Company means New Business Netherlands N.V., a public company with limited liability duly incorporated and existing under the laws of the Netherlands, registered with the Dutch Trade Register under number 57991561.
Registration Statement means the final draft dated 22 September 2015 of the registration statement on Form F-1 to be filed by the Company with the SEC under the Securities Act.
SEC means the United States Securities and Exchange Commission.
Securities Act means the United States of America's Securities Act of 1933, as amended from time to time.
Shares means the common shares, nominal value € 0,01 per share, and the special voting shares, nominal value € 0,01 per share, as defined in the Registration Statement.
3
SCOPE OF INQUIRY
3.1
For the purpose of rendering this opinion letter, we have only examined and relied upon electronically transmitted copy of the Registration Statement, except for the part in the Registration Statement under the caption "Tax Consequences - Material Netherlands Tax Consequences".
3.2
We have not reviewed any documents incorporated by reference or referred to in the Registration Statement and therefore our opinions do not extend to such documents.
4
NATURE OF OPINION
4.1
We only express an opinion on matters of Dutch tax law as it stands on the date of this opinion letter, excluding unpublished case law. The terms the "Netherlands" and "Dutch" in this opinion letter refer solely to the European part of the Kingdom of the Netherlands.
4.2
Our opinion is strictly limited to the matters stated herein. We do not express any opinion on matters of fact.
4.3
In this opinion letter Dutch concepts are sometimes expressed in English terms and not in their original Dutch terms. The concepts concerned may not be identical to the concepts described by the same English term as they exist under the laws of other jurisdictions. The meaning to be attributed to such concepts shall be the meaning to be attributed to the equivalent Dutch concepts under Dutch tax law.
4.4
This opinion letter and any non-contractual obligations arising out of or in relation to this opinion letter are governed by Dutch law.
4.5
This opinion letter refers to the date hereof. No obligation is assumed to update this opinion letter or to inform any person of any changes of law or other matters coming to our knowledge and occurring after the date of this opinion letter, which may have effect on the opinions set out in this opinion letter.
4.6
This opinion letter is issued by Loyens & Loeff N.V. Individuals or legal entities that are involved in the services provided by or on behalf of Loyens & Loeff N.V. cannot be held liable in any manner whatsoever.
5
OPINIONS
The opinions expressed in this paragraph 5 (Opinions) should be read in conjunction with the assumptions set out in Schedule 1 (Assumptions). On the basis of these assumptions and subject to any factual matters or information not disclosed to us in the course of our investigation, we are of the opinion that as at the date of this opinion letter:
5.1
Registration Statement
The statements contained in the Registration Statement under the caption "Tax Consequences - Material Netherlands Tax Consequences" constitute our opinion and are true and accurate and provide a fair and complete summary of the principal material Dutch tax consequences of acquiring, owning and selling of Shares.
6
ADDRESSEES
6.1
This opinion letter is addressed to you in relation to and as an exhibit to the Registration Statement and may not be disclosed to and relied upon by any other person without our prior written consent other than as an exhibit to the Registration Statement. This opinion letter is not to be used or relied upon for any purpose other than in connection with the filing of the Registration Statement.
6.2
We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the references to Loyens & Loeff N.V. under the heading "Tax Consequences - Material Netherlands Tax Consequences" in the Registration Statement. In giving the consent set out in the previous sentence, we do not thereby admit or imply that we are in the category of persons whose consent is required under Section 7 of the Securities Act or any rules and regulations of the SEC promulgated thereunder.

Yours faithfully,
 
Loyens & Loeff N.V.
 


/s/ Loyens & Loeff N.V.
 


/s/ Loyens & Loeff N.V.
 
 
 



Schedule 1

ASSUMPTIONS
The opinions in this opinion letter are subject to the following assumptions:
1
Documents
1.1
All signatures are genuine, all original documents are authentic and all copies are complete and conform to the originals.
1.2
The Registration Statement has been or will have been filed with the SEC and declared effective pursuant to the Securities Act.



Exhibit 8.2


[Letterhead of Sullivan & Cromwell LLP]

September 22, 2015

New Business Netherlands N.V.,    
Via Abetone Inferiore n. 4,
I-41053 Maranello (MO),
Italy.
                

Ladies and Gentlemen:
We have acted as United States federal income tax counsel to New Business Netherlands N.V. (the “Company”), a public limited liability company ( naamloze vennootschap ) incorporated under the laws of the Netherlands, in connection with the registration statement on Form F-1 filed by the Company under the Securities Act of 1933 for the registration of the Company’s common shares and special voting shares (as amended or supplemented through the date hereof, the “Registration Statement”). We hereby confirm to you that the statements of U.S. tax law under the heading “Tax Consequences—Material United States Federal Income Tax Consequences” are our opinion and constitute a fair and accurate summary of the matters set forth therein in all material respects, subject to the qualifications, limitations and assumptions set forth in the Registration Statement.
Our opinion set forth above is based on the Internal Revenue Code of 1986, as amended, Treasury Regulations promulgated thereunder, administrative pronouncements and judicial precedents, all as of the date hereof. The foregoing authorities may be repealed, revoked or modified, and any such change may have retroactive effect.
We express no opinion with respect to the transactions referred to herein or in the Registration Statement other than as expressly set forth herein, nor do we express any opinion herein concerning any law other than the federal income tax law of the United States. Moreover, we note that our opinion is not binding on the Internal Revenue Service or courts, either of which could take a contrary position.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ Sullivan & Cromwell LLP
Sullivan & Cromwell LLP



Exhibit 8.3

[Maisto e Associati Letterhead]


Milan, 22 September, 2015

To:
New Business Netherlands N.V.
Via Abetone Inferiore, 4
I-41053 Maranello (MO)
Italy


Dear Sirs,

We have acted as your Italian tax counsel in connection with your Registration Statement on Form F-1 originally filed with the Securities and Exchange Commission on July 23, 2015 as amended to date (the “Registration Statement”). We have reviewed the sections set forth under the captions “Risks Related to Taxation”, as far as Italian tax law is concerned, and “Material Italian Income Tax Consequences” in the prospectus/circular included in the Registration Statement. We confirm that the description pertaining to Italian tax matters given in these sections are our opinion and fairly reflect Italian tax law as in force as of the date hereof.
We express no opinion as to, and have not made any investigation of, the laws of any jurisdiction other than the tax laws of Italy.
We hereby consent to the filing of this opinion as an exhibit to that Registration Statement. In giving this consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.
Yours sincerely,
(Riccardo Michelutti)

/s/ Riccardo Michelluti

Exhibit 23.1





Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption "Experts" and to the use of our report dated , 2015, in Amendment No. 2 to the Registration Statement (Form F-1 No. 333-205804) and related Prospectus of New Business Netherlands N.V. for the registration of shares of its common stock.

Reconta Ernst & Young S.p.A.
Turin, Italy
, 2015

The foregoing consent is in the form that will be signed upon the completion of the Restructuring described in Note 1 and the matters described in Note 31 to the financial statements.
 
/s/ Reconta Ernst & Young S.p.A.
Turin, Italy
September 22, 2015




Exhibit 99.1

FERRARI N.V.    

SPECIAL VOTING SHARES – TERMS AND CONDITIONS
These terms and conditions will apply to the issuance, allocation, acquisition, holding, repurchase and transfer of special voting and common shares in the share capital of (i) Ferrari N.V. , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 57991561 up to the Merger (as defined below) becoming effective, and thereafter (ii) FE New N.V., to be renamed Ferrari N.V. upon the Merger becoming effective , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 64060977.
1.
DEFINITIONS AND INTERPRETATION
1.1
In these terms and conditions the following words and expressions shall have the following meanings, except if the context requires otherwise:
Affiliate
with respect to any specified person, any other person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative of the foregoing;
Agent
the bank, depositary or trust appointed by the Board from time to time and in relation to the relevant jurisdiction in which Company’s shares are listed for trading. Computershare (U.S.) has been appointed as the first Agent;
Articles of Association
the articles of association of the Company as in effect from time to time;
Board
the board of directors of the Company;
Broker
the financial institution or broker at which the relevant Shareholder operates his securities account;
Business Day
a calendar day which is not a Saturday or a Sunday or a public holiday in the State of New York, United Kingdom, the Netherlands or any jurisdiction in which the Company’s shares are listed for trading;
Change of Control
has the meaning set out in the Articles of Association;
Change of Control Notification
a notification to be made by a Qualifying Shareholder in respect of whom a Change of Control has occurred, in accordance with the form annexed hereto as Exhibit A;
Common Shares
common shares in the share capital of the Company;






Company
(i) Ferrari N.V. , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 57991561 up to the Merger (as defined below) becoming effective, and thereafter (ii) FE New N.V., to be renamed Ferrari N.V. upon the Merger becoming effective , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 64060977 ;
Compensation Amount
has the meaning set out in clause 10;
Deed of Allocation
a private deed of allocation ( onderhandse akte van toekenning ) of Special Voting Shares, substantially in the form as annexed hereto as Exhibit B;
Deed of Withdrawal
a private deed of repurchase and transfer ( onderhandse akte van inkoop en overdracht ) of Special Voting Shares, substantially in the form as annexed hereto as Exhibit C;
Demerger
the legal demerger ( afsplitsing ) from FE Interim B.V., a private limited liability company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 64060438, to FE New N.V. (to be renamed Ferrari N.V. upon the Merger becoming effective) , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 64060977;
De-Registration Form
a form to be completed by a Shareholder requesting to de-register some or all of his Common Shares from the Loyalty Register, substantially in the form as annexed hereto as Exhibit D;

De-Registration Request
has the meaning set out in clause 7.1;
DTC
The Depository Trust Company;
Electing Common Shares
Common Shares registered in the Loyalty Register for the purpose of becoming Qualifying Common Shares in accordance with the Articles of Association;
Election Form
a form to be completed by a Shareholder requesting the Company to register some or all of his Common Shares in the Loyalty Register, substantially in the form as annexed hereto as Exhibit E;
Initial Allocation Procedures
means the procedures pursuant to which Special Voting Shares are allocated to Initial Qualifying Shareholders, as such procedures have been described in clause 6;
Initial Deed of Allocation
a private deed of allocation ( onderhandse akte van toekenning ) of Special Voting Shares between the Company and an Initial Qualifying Shareholder, substantially in the form as annexed hereto as Exhibit F;






Initial Election Form
a form to be completed by an Initial Qualifying Shareholder requesting the Company to register some or all of the Common Shares to be held by such Shareholder in the Loyalty Register and applying for a corresponding number of Special Voting Shares, substantially in the form as annexed hereto as Exhibit G;
Initial Qualifying Shareholders
has the meaning set out in clause 6.1;
IPO
the initial public offering of Common Shares;
Loyalty Intermediary Account
any securities account designated by the Company for the purpose of keeping in custody the Common Shares registered in the Loyalty Register;
Loyalty Register
has the meaning set out in the Articles of Association;
Loyalty Transferee
has the meaning set out in the Articles of Association;
Merger
the legal merger ( juridische fusie ) of Ferrari N.V. , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 57991561, with and into FE New N.V. (to be renamed Ferrari N.V. upon this merger becoming effective) , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 64060977;
Power of Attorney
a power of attorney pursuant to which a Shareholder irrevocably authorizes and instructs the Agent to represent such Shareholder and act on such Shareholder’s behalf in connection with any issuance, allocation, acquisition, transfer and/or repurchase of any Special Voting Shares and/or Common Shares in accordance with and pursuant to these Terms and Conditions, as referred to in clauses 4.3 and 6.1.






Qualifying Common Shares
with respect to any Shareholder, (i) the number of Common Shares that has pursuant to the Initial Allocation Procedures, been allocated to such Shareholder and registered in the Loyalty Register and continue to be so registered in the name of such Shareholder or its Loyalty Transferee(s) and (ii) the number of Electing Common Shares that has for an uninterrupted period of at least three (3) years, or such shorter period determined in accordance with clause 5.2, been registered in the Loyalty Register in the name of such Shareholder or its Loyalty Transferee(s) and continue to be so registered. For the avoidance of doubt, it is not necessary that specific Common Shares satisfy the requirements as referred to under (i) and (ii) in order for a number of Common Shares to qualify as Qualifying Common Shares; accordingly, it is permissible for Common Shares to be substituted into the Loyalty Register for different Common Shares without affecting the total number of Qualifying Common Shares or the total number of Common Shares that would become Qualifying Common Shares after an uninterrupted period of at least three (3) years, or such shorter period determined in accordance with clause 5.2, after registration in the Loyalty Register, held by the Shareholder or its Loyalty Transferee(s);
Qualification Date
has the meaning as set out in clause 5.1;
Qualifying Shareholder
a holder of one or more Qualifying Common Shares;
Reference Price
the average closing price of a Common Share on the New York Stock Exchange calculated on the basis of the period of 20 trading days prior to the day of the breach as referred to in clause 10 or, if such day is not a Business Day, the preceding Business Day;
Regular Trading System
the system maintained and operated by DTC or the direct registration system maintained by the Agent, as applicable;
Request
has the meaning as set out in clause 4.1;
Shareholder
a holder of one or more Common Shares;
Special Voting Shares
special voting shares in the share capital of the Company;
Terms and Conditions
the terms and conditions established by this deed as they currently read and may be amended from time to time.
1.2
In these Terms and Conditions, unless the context requires otherwise:
(a)
references to a person shall be construed so as to include any individual, firm, legal entity (wherever formed or incorporated), governmental entity, joint venture, association or partnership;
(b)
the headings are inserted for convenience only and shall not affect the construction of this agreement;
(c)
the singular shall include the plural and vice versa ;
(d)
references to one gender include all genders; and






(e)
references to times of the day are to local time in the relevant jurisdiction unless otherwise stated.
2.
PURPOSE OF SPECIAL VOTING SHARES
The purpose of the Special Voting Shares is to reward long-term ownership of Common Shares and to promote stability of the Company’s shareholder base.
3.
R OLE OF A GENT
3.1
The Agent shall on behalf of the Company manage, organize and administer the Loyalty Register and process the issuance, allocation, acquisition, sale, repurchase and transfer of Special Voting Shares and the transfer of Common Shares in accordance with these Terms and Conditions. In this respect, the Agent will represent the Company and process and sign on behalf of the Company all relevant documentation in respect of the Loyalty Intermediary Account, the Loyalty Register, the Special Voting Shares and the Common Shares, including - without limitation - deeds, confirmations, acknowledgements, transfer forms and entries in the Company’s register of shareholders.
3.2
In accordance with the Power of Attorney, the Agent shall accept instructions from Shareholders to act on their behalf in connection with the issuance, allocation, acquisition, sale, repurchase and transfer of Special Voting Shares and the transfer of Common Shares in accordance with these Terms and Conditions.
3.3
The Board shall ensure that up-to-date contact details of the Agent will be published on the Company’s corporate website.
4.
APPLICATION FOR SPECIAL VOTING SHARES - LOYALTY REGISTER
4.1
A Shareholder may at any time opt to become eligible for Special Voting Shares by requesting the Agent, acting on behalf of the Company, to register all or some of his Common Shares in the Loyalty Register. Such a request (a Request ) will need to be made by the relevant Shareholder through its Broker, by submitting (i) a duly completed Election Form and (ii) a confirmation from the relevant Shareholder’s Broker that such Shareholder holds title to the number of Common Shares included in the Request.
4.2
In respect of any number of Common Shares which are registered in the direct registration system maintained by the Agent, a Request may also be made by a Shareholder directly to the Agent, acting on behalf of the Company (i.e. not through the intermediary services of a Broker), provided, however, that the Agent may in such case set additional rules and procedures to validate any such Request, including - without limitation - the verification of the identity of the relevant Shareholder, the evidence with respect to such Shareholder’s title to the number of Common Shares, included in the Request and the authenticity of such Shareholder’s submission.
4.3
Together with the Election Form, the relevant Shareholder must submit a duly signed Power of Attorney, irrevocably instructing and authorizing the Agent to act on his behalf and to represent him in connection with the issuance, allocation, acquisition,






sale, transfer and repurchase of Special Voting Shares and the transfer of a designated number of Common Shares from the Regular Trading System or to the Loyalty Intermediary Account (as applicable), and vice versa , in accordance with and pursuant to these Terms and Conditions, and to sign on behalf of the relevant Shareholder all relevant documentation in respect of the Loyalty Intermediary Account, the Loyalty Register, the Special Voting Shares and the Common Shares, including - without limitation - deeds, confirmations, acknowledgements, transfer forms and entries in the Company’s register of shareholders.
4.4
The Company and the Agent may establish an electronic registration system in order to allow for the submission of Requests by email or other electronic means of communication. The Company will publish the procedure and details of any such electronic facility, including registration instructions, on its corporate website.
4.5
Upon receipt of the Election Form, the Broker confirmation, if applicable, as referred to in clause 4.1 and the Power of Attorney, the Agent will examine the same and use its reasonable efforts to inform the relevant Shareholder, through his Broker, as to whether the Request is accepted or rejected (and, if rejected, the reasons why) within ten Business Days of receipt of the above-mentioned documents. The Agent may reject a Request for reasons of incompleteness or incorrectness of the Election Form, the Power of Attorney or the Broker confirmation, if applicable, as referred to in clause 4.1 or in case of serious doubts with respect to the validity or authenticity of such documents. If the Agent requires further information from the relevant Shareholder in order to process the Request, then such Shareholder shall provide all necessary information and assistance required by the Agent in connection therewith.
4.6
If the Request is accepted, then the designated number of Common Shares will be taken out of the Regular Trading System or transferred to the Loyalty Intermediary Account (as applicable) and will be registered in the Loyalty Register in the name of the requesting Shareholder (and not in the name of any custodian, Broker, bank or nominee).
4.7
Without prejudice to clause 4.8, the transfer of Common Shares from the Regular Trading System or to the Loyalty Intermediary Account (as applicable) and the registration of Common Shares in the Loyalty Register will not affect the nature of such shares, nor any of the rights attached thereto. All Common Shares will continue to be part of the class of common shares in which they were issued, and any stock exchange listing or registration with the U.S. Securities and Exchange Commission shall continue to apply to such shares. All Common Shares shall be identical in all respects.
4.8
Once any number of Common Shares is included in the Loyalty Register by a Shareholder:
(a)
such Shareholder shall not, directly or indirectly, sell, dispose of, trade or transfer such number of Common Shares, or otherwise grant any right or interest therein (other than to a Loyalty Transferee of such Shareholder);
(b)
such Shareholder may create or permit to exist any pledge, lien, fixed or floating charge or other encumbrance over such Common Shares or any






interest in any such Common Shares, provided that the voting rights in respect of such Common Shares remain with such Shareholder at all times; and
(c)
such Shareholder wanting to, directly or indirectly, sell, dispose of, trade or transfer such number of Common Shares (other than to a Loyalty Transferee), or create or permit to exist any pledge, lien, fixed or floating charge or other encumbrance over such Common Shares or any interest in any such Common Shares without maintaining the voting rights in respect of such Common Shares, will need, either directly or through such Shareholder’s Broker pursuant to a power of attorney, to submit a De-Registration Request as referred to in clause 7.1.
4.9
In addition to the procedures referred to in clauses 3.1 and 4.3, the Company and the Agent will establish a procedure with DTC to facilitate the transfer of Common Shares in accordance with these Terms and Conditions.
5.
ALLOCATION OF SPECIAL VOTING SHARES
5.1
As per the date on which a number of Common Shares has been registered in the Loyalty Register in the name of one and the same Shareholder or a Loyalty Transferee of such Shareholder for an uninterrupted period of three years or such shorter period as determined in accordance with clause 5.2 (the Qualification Date ), such number of Common Shares will become Qualifying Common Shares and the holder thereof will be entitled to receive one Special Voting Share in respect of each of such Qualifying Common Shares and therefore any transfer of such number of Common Shares between such Shareholder and any Loyalty Transferee shall be deemed not to interrupt the three year period referred to in this clause 5.1. The Merger shall also be deemed not to interrupt the three year period referred to in this clause 5.1.
5.2
If Common Shares are or have been acquired pursuant to the Demerger and/or the Merger and a Request is submitted by a person of whom a number of common shares in FCA and/or the Company are or were registered in the loyalty register of FCA and/or the Company, the period of three years referred to in clause 5.1 shall in respect of a corresponding number of Common Shares be deemed to have commenced on the date of initial registration of such common shares in FCA and/or the Company in the loyalty register of FCA and/or the Company, as applicable, provided that such Request is submitted within one month after the effective date of the Demerger. For the purpose of this clause 5.2 the defined term Company shall be deemed to refer to Ferrari N.V., a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 57991561.
5.3
On the Qualification Date, the Agent will, on behalf of both the Company and the relevant Qualifying Shareholder, process the execution of a Deed of Allocation pursuant to which such number of Special Voting Shares will be allocated to the Qualifying Shareholder as will correspond to the number of newly Qualifying Common Shares.






5.4
Any allocation of Special Voting Shares to a Qualifying Shareholder will be effectuated for no consideration ( om niet ) and be subject to these Terms and Conditions. The par value of newly issued Special Voting Shares will be funded out of, and debited to, the part of the reserves of the Company that is labelled “Special Capital Reserve”.
6.
INITIAL ALLOCATION PROCEDURES
6.1
In addition to the registration and allocation procedures set out in clauses 4 and 5, Special Voting Shares will be allocated (a) to Shareholders who prior to the IPO have complied with the requirement to submit a duly completed Initial Election Form no later than 5 Business Days prior to the IPO, which contains a Power of Attorney and have not withdrawn such election, (b) to Shareholders eligible to receive Special Voting Shares pursuant to the Demerger and (c) to Shareholders eligible to receive Special Voting Shares pursuant to the Merger ( Initial Qualifying Shareholders ).
6.2
The Common Shares to be acquired by Initial Qualifying Shareholders will be held in the Loyalty Intermediary Account and registered in the Loyalty Register in accordance with the Initial Allocation Procedures. Following such registration, each Initial Qualifying Shareholder shall be entitled to such number of Special Voting Shares as correspond to the number of Common Shares registered in the name of such Initial Qualifying Shareholder in the Loyalty Register.
6.3
The allocation of Special Voting Shares to Initial Qualifying Shareholders will be carried out by the Agent on behalf of and as hereby authorized by both the Company and the Initial Qualifying Shareholders, by execution of an Initial Deed of Allocation. For the avoidance of doubt, any allocation of Special Voting Shares to Initial Qualifying Shareholders will be carried out for no consideration ( om niet ) and will be subject to these Terms and Conditions. The nominal value of newly issued Special Voting Shares will be funded out of, and debited to, the part of the reserves of the Company that is labelled “Special Capital Reserve”.
7.
DE-REGISTRATION – WITHDRAWAL OF SPECIAL VOTING SHARES
7.1
A Shareholder with Common Shares registered in the Loyalty Register may at any time request the Agent acting on behalf of the Company to de-register some or all of such Common Shares registered in the Loyalty Register and, to the extent that the relevant Common Shares are held outside the Regular Trading System, to transfer such Common Shares back to the Regular Trading Register. Such a request (a De-Registration Request ) must be made by the relevant Shareholder through its Broker, by submitting a duly completed De- Registration Form.
7.2
A De-Registration Request may also be made by a Shareholder directly to the Agent acting on behalf of the Company (i.e. not through the intermediary services of a Broker); provided, however, that the Agent may in such case set additional rules and procedures to validate any such De-Registration Request, including - without limitation - the verification of the identity of the relevant Shareholder and the authenticity of such Shareholder’s submission.






7.3
By means of and immediately upon a Shareholder submitting the De-Registration Form, such Shareholder shall have waived all rights to cast any votes that accrue to the Special Voting Shares concerned in the De-Registration Form.
7.4
Upon receipt of the duly completed De-Registration Form, the Agent will examine the same and procure that such number of Common Shares as specified in the De-Registration Form will be transferred from the Loyalty Intermediary Account, or, if the relevant Common Shares are held outside the Regular Trading System, to the Regular Trading System, as promptly as practible, but in any event within three Business Days of receipt of the De-Registration Form.
7.5
Upon de-registration from the Loyalty Register, such Common Shares will no longer qualify as Electing Common Shares or Qualifying Common Shares, as the case may be, and the holder of the relevant shares will no longer be entitled to hold a corresponding number of Special Voting Shares allocated in respect of any such Common Shares which qualify as Qualifying Common Shares and will be bound to offer and transfer such number of Special Voting Shares to the Company, and the Company will accept and acquire such number of Special Voting Shares, for no consideration ( om niet ).
7.6
The offering and transfer of the Special Voting Shares referred to in clause 7.5 by the relevant Shareholder to the Company and the repurchase and acquisition of such shares by the Company will be processed by the Agent on behalf of both the Company and the relevant Shareholder, by execution of a Deed of Withdrawal.
7.7
Upon completion of the repurchase of Special Voting Shares as referred to in clauses 7.5 and 7.6, the Company may proceed with the withdrawal and cancellation of such shares or, alternatively, continue to hold such shares as treasury stock until their disposal in accordance with the Articles of Association and these Terms and Conditions.
7.8
If the Company determines (in its discretion) that a Shareholder has taken any action a principal purpose of which is to avoid the application of clause 4.8 under (a) or (b) regarding transfer restrictions, clause 8 regarding transfer restrictions or clause 9 regarding a Change of Control of such Shareholder, the Company may instruct the Agent to transfer such Shareholder’s number of Common Shares registered in the Loyalty Register from the Loyalty Intermediary Account, or, if the relevant Common Shares are held outside the Regular Trading System, to the Regular Trading System and such Shareholder shall immediately be deemed to have (i) waived all rights to cast any votes that accrue to any Special Voting Shares allocated in respect of such number of Common Shares and (ii) transferred such Special Voting Shares allocated in respect thereof to the Company for no consideration ( om niet ).
7.9
For the avoidance of doubt, no Shareholder required to transfer Special Voting Shares pursuant to clause 7.5 or clause 7.8 shall be entitled to any purchase price referred to in the articles 5.5 or 13.5 of the Articles of Association for such Special Voting Shares and each Shareholder waives its rights in that respect, which waiver the Company hereby accepts and authorizes the Agent to take any and all actions in respect of the Common Shares and Special Voting Shares to give effect to the Terms and Conditions.






8.
TRANSFER RESTRICTIONS
8.1
In view of the purpose of the Special Voting Shares (as set out in clause 2) and the obligation of a Shareholder to re-transfer his Special Voting Shares to the Company as referred to in clauses 7.5, 7.8 and 9, no Shareholder shall, directly or indirectly:
(a)
sell, dispose of or transfer any Special Voting Share or otherwise grant any right or interest therein; or
(b)
create or permit to exist any pledge, lien, fixed or floating charge or other encumbrance over any Special Voting Share or any interest in any Special Voting Share.
8.2
Notwithstanding the foregoing, upon any transfer of Qualifying Common Shares to a Loyalty Transferee in accordance with the terms hereof, the associated Special Voting Shares shall also be transferred to such Loyalty Transferee.
9.
CHANGE OF CONTROL
9.1
Upon the occurrence of a Change of Control in respect of a Qualifying Shareholder or a Shareholder with Common Shares registered in the Loyalty Register, such Shareholder must promptly notify the Agent and the Company thereof, by submitting a Change of Control Notification, and must make a De-Registration Request as referred to in clauses 7.1 and 7.2.
9.2
The procedures described in clauses 7.3, 7.4, 7.5, 7.6, 7.7 and 7.9 will apply accordingly to the De-Registration Request submitted pursuant to clause 9.1.
9.3
Notwithstanding that the Agent and the Company have not received a Change of Control Notification, upon the Company becoming aware that a Change of Control has occurred, the Company may provide the Agent with notice thereof and instruct the Agent to transfer such Shareholder’s shares registered in the Loyalty Register from the Loyalty Intermediary Account, or, if the relevant Common Shares are held outside the Regular Trading System, to the Regular Trading System, in which case the procedures of clauses 7.8 and 7.9 will apply mutatis mutandis .
10.
BREACH, COMPENSATION PAYMENT
In the event of a breach of any of the covenants set out in clauses 4.8, 7.3, 7.5, 8.1 and 9.1, the relevant Shareholder shall without prejudice to the Company’s right to request specific performance, be bound to pay to the Company an amount equal to the Reference Price multiplied by the number of Special Voting Shares that are affected by the relevant breach (the Compensation Amount ).
The above-mentioned obligation to pay the Compensation Amount shall constitute a penalty clause ( boetebeding ) as referred to in article 6:91 of the Dutch Civil Code. The Compensation Amount payment shall be deemed to be in lieu of, and not in addition to, any liability ( schadevergoedingsplicht ) of the relevant Shareholder towards the Company in respect of the relevant breach - so that the provisions of this clause 10 shall be deemed to be a "liquidated damages" clause ( schadevergoedingsbeding ) and not a "punitive damages" clause ( strafbeding ).






The provisions of article 6:92, paragraphs 1 and 3 of the Dutch Civil Code shall, to the maximum extent possible, not apply.
11.
LOYALTY REGISTER
The Agent, acting on behalf of the Company, shall keep the Loyalty Register up to date.
12.
AMENDMENT OF THESE TERMS AND CONDITIONS
12.1
These Terms and Conditions:
(a)
have been established by the board of directors and approved by the general meeting of shareholders of Ferrari N.V. , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 57991561, on l 2015; and
(b)
have been established by the board of directors and approved by the general meeting of shareholders of FE New N.V. , to be renamed Ferrari N.V. upon the Merger becoming effective , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 64060977,on l 2015.
12.2
These Terms and Conditions may be amended pursuant to a resolution by the Board, provided, however, that any amendment that is not merely technical and is material to Shareholders that are registered in the Loyalty Register, will be subject to the approval of the general meeting of shareholders of the Company unless such amendment is required to ensure compliance with applicable law or regulations or the listing rules of any securities exchange on which the Common Shares are listed.
12.3
Any amendment of the Terms and Conditions shall require a private deed to that effect.
12.4
The Company shall publish any amendment of these Terms and Conditions on the Company’s corporate website and notify the Qualifying Shareholders of any such amendment through their Brokers.
13.
C OSTS
All costs of the Agent in connection with these Terms and Conditions, any Power of Attorney and any Initial Deed of Allocation, Deed of Allocation and Deed of Withdrawal, shall be for the account of the Company. Any other costs shall be for the account of the relevant Shareholder.
14.
GOVERNING LAW, DISPUTES
14.1
These Terms and Conditions are governed by and construed in accordance with the laws of the Netherlands.
14.2
Any dispute in connection with these Terms and Conditions and/or the Special Voting Shares and/or Common Shares and/or Qualifying Common Shares will be brought before the courts of Amsterdam, the Netherlands.



Exhibit 99.2

DEMERGER PROPOSAL – VOORSTEL TOT SPLITSING
17 SEPTEMBER 2015
 
FIAT CHRYSLER AUTOMOBILES N.V.
&
FE INTERIM B.V.
 
 
 

demerger proposal – voorstel tot splitsing



DEMERGER PROPOSAL
 
VOORSTEL TOT SPLITSING
The boards of directors of:
 
De besturen van:
1.      Fiat Chrysler Automobiles N.V. , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, and its registered office address at 25 St. James’s Street, SW1A 1HA London, United Kingdom, registered with the Dutch trade register under number 60372958 ( FCA ); and
 
1. Fiat Chrysler Automobiles N.V. , een naamloze vennootschap naar Nederlands recht, statutair gevestigd te Amsterdam en kantoorhoudende te 25 St. James’s Street, SW1A 1HA, Londen, Verenigd Koninkrijk, ingeschreven in het handelsregister onder nummer 60372958 ( FCA ); en
2.      FE Interim B.V. , a private limited liability company under Dutch law, having its official seat in Amsterdam, the Netherlands, and its registered office address at Via Abetone Inferiore N.4, I-41053, Maranello, Italy, registered with the Dutch trade register under number 64060438 ( Acquiring Company ),
 
2. FE Interim B.V. , een besloten vennootschap met beperkte aansprakelijkheid naar Nederlands recht, statutair gevestigd te Amsterdam en kantoorhoudende te Via Abetone Inferiore N.4, I-41053, Maranello, Italië, ingeschreven in het handelsregister onder nummer 64060438 ( Verkrijgende Vennootschap ),
FCA and the Acquiring Company are hereinafter together also referred to as: Demerging Companies ,
 
FCA en de Verkrijgende Vennootschap worden hierna gezamenlijk aangeduid als: Splitsende Vennootschappen ,
whereas,
 
in aanmerking nemende,
(A) none of the Demerging Companies has a supervisory board;
 
(A) bij geen van de Splitsende Vennootschappen is een raad van commissarissen ingesteld;
(B) the Demerging Companies have not been dissolved or declared bankrupt, nor has a suspension of payment been declared with respect to the Demerging Companies;
 
(B) de Splitsende Vennootschappen zijn niet ontbonden en verkeren niet in staat van faillissement, noch hebben zij surseance van betaling aangevraagd;
(C) there are no holders of shares without voting rights or shares without profit rights in the capital of the Acquiring Company, nor are there holders of depositary receipts for shares in the capital of the Acquiring Company that have meeting rights;
 
(C) er zijn geen houders van aandelen zonder stemrecht of aandelen zonder winstrecht in het kapitaal van de Verkrijgende Vennootschap, noch zijn er houders van certificaten van aandelen in het kapitaal van de Verkrijgende Vennootschap met vergaderrecht;
(D) none of the Demerging Companies or their subsidiaries have a works council entitled to render advice in respect of the Demerger (as defined below); and
 
(D) geen van de Splitsende Vennootschappen of hun dochtermaatschappijen heeft een ondernemingsraad die het recht heeft om advies te geven met betrekking tot de Splitsing (zoals hierna gedefinieerd); en

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(E) there is no trade union entitled to render comments in respect of the Demerger that has amongst its members employees of (a subsidiary of) one of the Demerging Companies,
 
(E) er is geen vereniging van werknemers die werknemers van (een dochtermaatschappij van) één van de Splitsende Vennootschappen onder haar leden telt die het recht heeft om opmerkingen in te dienen met betrekking tot de Splitsing,
propose a demerger ( Demerger ) in accordance with Title 7, Book 2 of the Dutch Civil Code ( DCC ) at which FCA will continue to exist and as a consequence whereof:
 
stellen voor een splitsing ( Splitsing ) in de zin van Titel 7 van Boek 2 van het Burgerlijk Wetboek ( BW ) tot stand te brengen waarbij FCA zal blijven bestaan en als gevolg waarvan:
- the Acquiring Company will acquire a part of the assets of FCA under a universal title of succession; and
 
- de Verkrijgende Vennootschap een deel van het vermogen van FCA onder algemene titel zal krijgen; en
- the shareholders of FCA will be granted shares in the capital of the Acquiring Company.
 
- de aandeelhouders van FCA aandelen in het kapitaal van de Verkrijgende Vennootschap krijgen toegekend.
This Demerger proposal will be filed and published in accordance with the applicable laws and regulations. The Demerger proposal will also be made available on the corporate website of FCA ( www.fcagroup.com ) and at the registered office address of FCA and the Acquiring Company for inspection by whomever is entitled thereto by applicable law.
 
Dit voorstel tot Splitsing zal worden gedeponeerd en gepubliceerd in overeenstemming met de toepasselijke wetten en regelgeving. Het voorstel tot Splitsing zal ook beschikbaar worden gesteld op de bedrijfswebsite van FCA ( www.fcagroup.com ) en ten kantore van FCA en de Verkrijgende Vennootschap ter inzage worden gelegd voor degenen die daartoe volgens toepasselijk recht gerechtigd zijn.
Pursuant to Section 2:334n DCC, the Demerger shall be executed in accordance with the relevant provisions of Dutch law and as such will become effective on the day following the day on which the notarial deed of Demerger is executed before a civil law notary, officiating in the Netherlands ( Demerger Effective Date ).
 
Ingevolge artikel 2:334n BW zal de Splitsing worden uitgevoerd in overeenstemming met de relevante bepalingen van Nederlands recht en zodanig van kracht worden op de dag volgend op de dag waarop de notariële akte van Splitsing wordt verleden voor een notaris met plaats van vestiging in Nederland ( Splitsing Effectieve Datum ).
Prior to the effectiveness of the Demerger, New Business Netherlands NV (as defined below), will complete a restructuring inter alia  including the acquisition of all shares in the capital of Ferrari S.p.A. ( Restructuring ).
 
Voorafgaand aan het van kracht worden van de Splitsing, zal New Business Netherlands NV (zoals hierna gedefinieerd) een herstructurering voltooien onder meer inhoudende de verkrijging van alle aandelen in het kapitaal van Ferrari S.p.A. ( Herstructurering ).

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The Acquiring Company will effect a subsequent demerger in accordance with Title 7, Book 2 of the DCC to FE New N.V., a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 64060977, to be renamed Ferrari N.V. ( FE New NV ), as a consequence whereof (i) the Acquiring Company will continue to exist, (ii) FE New NV will acquire part of the assets of the Acquiring Company under universal title of succession and (iii) the shareholders of the Acquiring Company will become shareholders of FE New NV ( Subsequent Demerger ).
 
De Verkrijgende Vennootschap zal een opvolgende splitsing in de zin van Titel 7 van Boek 2 van het BW tot stand brengen naar FE New NV, een naamloze vennootschap naar Nederlands recht, gevestigd te Amsterdam, ingeschreven in het handelsregister onder nummer 64060977, waarvan de naam zal worden gewijzigd in Ferrari N.V. ( FE New NV ), als gevolg waarvan (i) de Verkrijgende Vennootschap zal blijven bestaan, (ii) FE New NV een deel van het vermogen van de Verkrijgende Vennootschap onder algemene titel zal verkrijgen en (iii) de aandeelhouders van de Verkrijgende Vennootschap aandeelhouders van FE New NV zullen worden ( Opvolgende Splitsing ).
The data to be mentioned pursuant to the Sections 2:334f and 2:334y DCC are as follows:
 
De ingevolge de artikelen 2:334f en 2:334y BW te vermelden gegevens zijn de volgende:
1 Type of legal entity, name and official seat of the Demerging Companies
 
1 Rechtsvorm, naam en zetel van de Splitsende Vennootschappen
1.1 FCA
 
1.1 FCA
   The public company under Dutch law Fiat Chrysler Automobiles N.V., having its official seat in Amsterdam, the Netherlands.
 
   De naamloze vennootschap naar Nederlands recht Fiat Chrysler Automobiles N.V., gevestigd te Amsterdam.
1.2 Acquiring Company
 
1.2 Verkrijgende Vennootschap
   The private limited liability company under Dutch law FE Interim B.V., having its official seat in Amsterdam, the Netherlands.
 
   De besloten vennootschap met beperkte aansprakelijkheid naar Nederlands recht FE Interim B.V., gevestigd te Amsterdam.
2 Articles of association of FCA and the Acquiring Company
 
2 Statuten van FCA en van de Verkrijgende Vennootschap
2.1 FCA
 
2.1 FCA
   The articles of association of FCA were most recently amended by a deed of amendment to the articles of association executed on 11 October 2014 before G.M. Portier, civil law notary officiating in Amsterdam, the Netherlands, which amendment to the articles of association came into effect on 12 October 2014. The consecutive wording of the current articles of association of FCA is attached to this Demerger proposal as Annex A .
 
   De statuten van FCA zijn laatstelijk gewijzigd bij akte van statutenwijziging verleden op 11 oktober 2014 voor mr. G.M. Portier, notaris met plaats van vestiging in Amsterdam, welke statutenwijziging van kracht is geworden op 12 oktober 2014. De doorlopende tekst van de huidige statuten van FCA is als Bijlage A  aan dit voorstel tot Splitsing gehecht.
   The articles of association of FCA shall not be amended in connection with the Demerger.
 
   De statuten van FCA zullen ter gelegenheid van de Splitsing niet gewijzigd worden.
2.2 Acquiring Company
 
2.2 Verkrijgende Vennootschap

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   The articles of association of the Acquiring Company were drawn up by a deed of incorporation executed on 4 September 2015 before G.M. Portier, aforementioned. The consecutive wording of the current articles of association of the Acquiring Company is attached to this Demerger proposal as Annex B .
 
   De statuten van de Verkrijgende Vennootschap zijn vastgesteld bij akte van oprichting verleden op 4 september 2015 voor mr. G.M. Portier, voornoemd. De doorlopende tekst van de huidige statuten van de Verkrijgende Vennootschap is als Bijlage B  aan dit voorstel tot Splitsing gehecht.
   The articles of association of the Acquiring Company shall not be amended in connection with the Demerger.
 
   De statuten van de Verkrijgende Vennootschap zullen ter gelegenheid van de Splitsing niet gewijzigd worden.
3 Transfer of assets and liabilities FCA
 
3 Overgang vermogen FCA
   A part of the assets of FCA will transfer to the Acquiring Company; see below under 4. No liabilities of FCA will transfer to the Acquiring Company.
 
   Een deel van het vermogen van FCA gaat over op de Verkrijgende Vennootschap; zie verder hierna onder 4. Er zullen geen schulden van FCA overgaan op de Verkrijgende Vennootschap.
4 Detailed description of the assets and liabilities that transfer to the Acquiring Company and of the assets and liabilities that remain with FCA
 
4 Nauwkeurige beschrijving van de vermogensbestanddelen die overgaan op de Verkrijgende Vennootschap en van de vermogensbestanddelen die FCA zal behouden
4.1 Acquiring Company
 
4.1 Verkrijgende Vennootschap
   To the Acquiring Company will only transfer the following assets:
 
   Op de Verkrijgende Vennootschap gaan slechts de volgende vermogensbestanddelen over:
   - all common and special voting shares held by FCA at the moment the Demerger becomes effective in the capital of New Business Netherlands N.V. (to be renamed Ferrari N.V.), having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 57991561 ( New Business Netherlands NV ); and
 
   - alle gewone aandelen en bijzondere stemrechtaandelen gehouden door FCA per het moment van het van kracht worden van de Splitsing in het kapitaal van New Business Netherlands N.V. (waarvan de naam zal worden gewijzigd in Ferrari N.V.), gevestigd te Amsterdam, ingeschreven in het handelsregister onder nummer 57991561 ( New Business Netherlands NV ); en
   - an amount in cash (euro) equal to the aggregate amount of the nominal capital to be allocated by the Acquiring Company pursuant to the Demerger ( Cash Amount ).
 
   - een bedrag in contanten (euro) gelijk aan het gezamenlijk bedrag van het nominale kapitaal dat door de Verkrijgende Vennootschap toegekend wordt als gevolg van de Splitsing ( Bedrag in Contanten ).
4.2 FCA
 
4.2 FCA
   Other than the assets listed under 4.1 above, all assets and liabilities of FCA will remain with FCA. No liabilities of FCA will transfer to the Acquiring Company.
 
   Anders dan de vermogensbestanddelen hierboven vermeld onder 4.1, worden alle vermogensbestanddelen van FCA behouden door FCA. Er zullen geen schulden van FCA overgaan op de Verkrijgende Vennootschap.

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   The auditor’s statement issued by KPMG Accountants N.V. pursuant to Section 2:334aa paragraph 2 DCC is attached to this Demerger proposal as Annex C .
 
   De accountantsverklaring afgegeven door KPMG Accountants N.V. als bedoeld in artikel 2:334aa lid 2 BW is als Bijlage C  aan dit voorstel tot Splitsing gehecht.
4.3 Pro forma profit and loss accounts
 
4.3 Pro forma winst- en verliesrekeningen
   The pro forma profit and loss accounts of the Acquiring Company and of FCA as of 30 June 2015 are attached to this Demerger proposal as Annex D1  and Annex D2  respectively.
 
   De pro forma winst- en verliesrekeningen van de Verkrijgende Vennootschap en van FCA per 30 juni 2015 zijn als Bijlage D1  respectievelijk Bijlage D2  aan dit voorstel tot Splitsing gehecht.
5 Value of the assets and liabilities that the Acquiring Company will acquire and value of the assets and liabilities that remain with FCA
 
5 Waarde van het vermogen dat de Verkrijgende Vennootschap zal verkrijgen en waarde van het vermogen dat FCA zal behouden
   The value of the part of the assets that the Acquiring Company will acquire at the Demerger, established to comply with Section 2:334f paragraph 2 under (e) DCC, as of 31 December 2014 and 30 June 2015 is EUR 50,000 plus the Cash Amount. Based on the current issued and outstanding nominal share capital of FCA and the Exchange Ratio (as defined below) the Cash Amount would be EUR 16,649,915.81. In case FCA issues shares in its capital after the date of this Demerger proposal, the Cash Amount will increase with an amount equal to the aggregate nominal value of the additional shares issued. The maximum Cash Amount is EUR 25,000,000, which is the maximum nominal share capital that can be issued under the Acquiring Company’s authorized share capital.
 
   De waarde van het deel van het vermogen dat de Verkrijgende Vennootschap bij de Splitsing zal verkrijgen, vastgesteld om te voldoen aan artikel 2:334f lid 2 sub (e) BW, per 31 december 2014 en per 30 juni 2015 is EUR 50.000 vermeerderd met het Bedrag in Contanten. Op grond van het huidige geplaatste en uitstaande nominale aandelenkapitaal van FCA en de Ruilverhouding (zoals hierna gedefinieerd) zou het Bedrag in Contanten EUR 16.649.915,81 bedragen. In geval FCA aandelen in haar kapitaal na de datum van dit voorstel tot Splitsing uitgeeft, zal het Bedrag in Contanten toenemen met een bedrag gelijk aan de gezamenlijke nominale waarde van de additioneel uitgegeven aandelen. Het maximum Bedrag in Contanten is EUR 25.000.000, zijnde het maximale nominale aandelenkapitaal dat uitgegeven kan worden binnen het maatschappelijk kapitaal van de Verkrijgende Vennootschap.
   Based on the above, the value of the part of the assets that will transfer to the Acquiring Company is between EUR 16,699,915.81 and EUR 25,000,000 as of 31 December 2014 and 30 June 2015.
 
   Op grond van het bovenstaande, ligt de waarde van het deel van het vermogen dat zal overgaan op de Verkrijgende Vennootschap tussen EUR 16.699.915,81 en EUR 25.000.000 per 31 december 2014 en 30 juni 2015.
   Also based on the above, the value of the assets and liabilities that will remain with FCA, established to comply with Section 2:334f paragraph 2 under (e) DCC, is between EUR 13,400 million and EUR 13,408 million as of 31 December 2014 and between EUR 14,653 million and EUR 14,661 million as of 30 June 2015.
 
   Eveneens op grond van het bovenstaande, ligt de waarde van het vermogen dat FCA zal behouden, vastgesteld om te voldoen aan artikel 2:334f lid 2 sub (e) BW, tussen EUR 13.400 miljoen en EUR 13.408 miljoen per 31 december 2014 en tussen EUR 14.653 miljoen en EUR 14.661 miljoen per 30 juni 2015.

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   No shares in the capital of the Acquiring Company will be allocated to FCA in the Demerger.
 
   In het kader van de Splitsing worden geen aandelen in het kapitaal van de Verkrijgende Vennootschap toegekend aan FCA.
   As a result of the Restructuring it is expected that the respective values mentioned above will change significantly.
 
Als gevolg van de Herstructurering zullen naar verwachting de respectievelijke waarden als hierboven vermeld significant wijzigen.
   As FCA complies with the requirements in Section 5:25d of the Act on financial supervision ( Wet op het financieel toezicht ) with respect to half-year financial reporting, Section 2:334g paragraph 2 DCC does not apply to FCA in this Demerger and FCA is exempted from the requirement to publish interim financial statements referred to in that Section of the DCC. The aforementioned values have been determined on the basis of the relevant book value as of the day to which respectively FCA’s annual accounts and half-year financial statements as of 30 June 2015 of FCA relate.
 
   Aangezien FCA voldoet aan de vereisten genoemd in artikel 5:25d Wet op het financieel toezicht met betrekking tot halfjaarlijkse financiële verslaggeving, is artikel 2:334g lid 2 BW niet van toepassing op FCA in deze Splitsing en is FCA vrijgesteld van het vereiste om een tussentijdse vermogensopstelling als bedoeld in dat artikel van het BW te publiceren. De voormelde waarden zijn vastgesteld op basis van de relevante boekwaarde per de dag waarop FCA’s jaarrekening respectievelijk halfjaarlijkse financiële verslaggeving per 30 juni 2015 betrekking heeft.
   The interim financial statement of the Acquiring Company as referred to in Section 2:334g paragraph 2 DCC as of 8 September 2015 is attached to this Demerger proposal as Annex E .
 
   De tussentijdse vermogensopstelling van de Verkrijgende Vennootschap als bedoeld in artikel 2:334g lid 2 BW per 8 september 2015 is als Bijlage E  aan dit voorstel tot Splitsing gehecht.
6 Rights and compensations at the expense of the Acquiring Company granted pursuant to Section 2:334p DCC
 
6 Rechten en vergoedingen ten laste van de Verkrijgende Vennootschap toegekend ingevolge artikel 2:334p BW
   In connection with the 7.875% mandatory convertible security ( MCS ) issued by FCA in accordance with the indenture dated 16 December 2014 among FCA and The Bank of New York Mellon as trustee ( Indenture ) and outstanding immediately prior to the Demerger Effective Date, the holders of the MCS shall receive such number of common shares in the capital of FE New NV as agreed in and determined pursuant to the terms of the Indenture, compensating them for the financial effects of the Demerger, and as a consequence no rights and compensations will be granted to the holders of the MCS at the expense of the Acquiring Company.
 
   In samenhang met het 7,875% verplicht converteerbaar effect ( MCS ) uitgegeven door FCA in overeenstemming met de indenture met datum 16 december 2014 tussen FCA en The Bank of New York Mellon als trustee ( Indenture ) en dat onmiddellijk voorafgaand aan de Splitsing Effectieve Datum uitstaat, zullen de houders van de MCS een zodanig aantal gewone aandelen in het kapitaal van FE New NV verkrijgen als overeengekomen in en bepaald volgens de voorwaarden van de Indenture, om hen te compenseren voor de financiële effecten van de Splitsing, en als gevolg waarvan geen rechten en vergoedingen ten laste van de Verkrijgende Vennootschap aan de houders van de MCS worden toegekend.

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   In connection with any outstanding compensation plans ( Compensation Plans ) of FCA, the number of rights to acquire shares in FCA held by the beneficiaries under the Compensation Plans shall be adjusted to compensate such beneficiaries for the financial consequences of the Demerger in accordance with the terms of the Compensation Plans and therefore no rights and compensations will be granted to the beneficiaries under the Compensation Plans at the expense of the Acquiring Company.
 
   In samenhang met elk uitstaand beloningsplan ( Beloningsplannen ) van FCA, zal het aantal rechten om aandelen in FCA te verkrijgen, gehouden door de begunstigden onder de Beloningsplannen, aangepast worden om deze begunstigden te compenseren voor de financiële consequenties van de Splitsing overeenkomstig de voorwaarden van de Beloningsplannen en daarom zullen geen rechten en vergoedingen aan de begunstigden onder de Beloningsplannen ten laste van de Verkrijgende Vennootschap worden toegekend.
   Since there are no other persons than the holders of the MCS or the beneficiaries under the Compensation Plans who, in any other capacity than as shareholder, have special rights against FCA, no special rights and compensations will be granted at the expense of the Acquiring Company to anyone.
 
   Aangezien er geen andere personen dan de houders van de MCS of de begunstigden onder de Compensatieplannen die, anders dan als aandeelhouder, speciale rechten hebben ten aanzien van FCA, worden er geen speciale rechten en vergoedingen aan iemand toegekend ten laste van de Verkrijgende Vennootschap.
7 Benefits to be granted to members of the boards of directors of the Demerging Companies or to others involved with the Demerger, in connection with the Demerger
 
7 Voordelen, welke in verband met de Splitsing aan leden van het bestuur van de Splitsende Vennootschappen of aan anderen betrokken bij de Splitsing worden toegekend
   No benefits will be granted to members of the boards of directors of FCA or the Acquiring Company or to others involved with the Demerger, other than in such person’s capacity as shareholder of FCA.
 
   Er worden geen voordelen toegekend aan leden van het bestuur van FCA of de Verkrijgende Vennootschap of aan anderen betrokken bij de Splitsing, anders dan aan anderen in hoedanigheid van aandeelhouder van FCA.
8 Intentions with regard to the composition of the boards of directors of the Demerging Companies after the Demerger
 
8 Voornemens over de samenstelling van het bestuur van de Splitsende Vennootschappen na de Splitsing
8.1 FCA
 
8.1 FCA
   The current composition of the board of directors of FCA is as follows:
 
De huidige samenstelling van het bestuur van FCA is als volgt:
   executive directors:
-      John Philip Elkann; and
-      Sergio Marchionne,
 
uitvoerende bestuurders:
- John Philip Elkann; en
- Sergio Marchionne,

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   non-executive directors:
-      Andrea Agnelli;
-      Tiberto Brandolini d’Adda;
-      Glenn Peter Jonathan Earle;
-      Valerie Anne Mars;
-      Ruth Jean Simmons;
-      Ronald Lurie Thompson;
-      Patience Jane Wheatcroft;
-      Stephen Michael Wolf; and
-      Ermenegildo Zegna di Monte Rubello.
 
niet-uitvoerende bestuurders:
- Andrea Agnelli;
- Tiberto Brandolini d’Adda;
- Glenn Peter Jonathan Earle;
- Valerie Anne Mars;
- Ruth Jean Simmons;
- Ronald Lurie Thompson;
- Patience Jane Wheatcroft;
- Stephen Michael Wolf; en
- Ermenegildo Zegna di Monte Rubello.
   There is no intention to change the composition of the board of directors of FCA after the Demerger.
 
   Er bestaat geen voornemen na de Splitsing wijziging te brengen in de samenstelling van het bestuur van FCA.
8.2 Acquiring Company
 
8.2 Verkrijgende Vennootschap
   The current composition of the board of directors of the Acquiring Company is as follows:
   executive directors:
-      Richard Keith Palmer; and
-      Fabio Spirito,
 
   De huidige samenstelling van het bestuur van de Verkrijgende Vennootschap is als volgt:
uitvoerende bestuurders:
-      Richard Keith Palmer; en
-      Fabio Spirito,
   non-executive director:
-      Ferrante Zileri Dal Verme.
 

niet-uitvoerende bestuurder:
-      Ferrante Zileri Dal Verme.
   There is no intention to change the composition of the board of directors of the Acquiring Company after the Demerger.
 
   Er bestaat geen voornemen na de Splitsing wijziging te brengen in de samenstelling van het bestuur van de Verkrijgende Vennootschap.
9 Date as of which the financial data regarding the part of the assets and liabilities of FCA that will transfer to the Acquiring Company will be accounted for in the annual accounts of the Acquiring Company
 
9 Tijdstip met ingang waarvan de financiële gegevens met betrekking het gedeelte van het vermogen van FCA dat zal overgaan op de Verkrijgende Vennootschap zullen worden verantwoord in de jaarstukken van de Verkrijgende Vennootschap
   The financial data of FCA will as for the part of its assets that will transfer to the Acquiring Company be accounted for in the annual accounts of the Acquiring Company as of 1 January 2016. No liabilities of FCA will transfer to the Acquiring Company.
 
   De financiële gegevens van FCA zullen voor het gedeelte van haar vermogen dat zal overgaan op de Verkrijgende Vennootschap worden verantwoord in de jaarstukken van de Verkrijgende Vennootschap per 1 januari 2016. Er zullen geen schulden van FCA overgaan op de Verkrijgende Vennootschap.

#17909008    demerger proposal – voorstel tot splitsing    9


10 Proposed measures in connection with the acquisition by the shareholders of FCA of shares in the capital of the Acquiring Company
 
10 Voorgenomen maatregelen in verband met de verkrijging door de aandeelhouders van FCA van aandelen in het kapitaal van de Verkrijgende Vennootschap
   The granting of registered shares in the Acquiring Company in connection with the Demerger will be registered in the shareholder’s register of the Acquiring Company upon the Demerger becoming effective, or, to the extent applicable, as soon as the relevant details have been provided to the Acquiring Company in writing.
 
   De toekenning van aandelen op naam in de Verkrijgende Vennootschap in samenhang met de Splitsing zal worden geregistreerd in het aandeelhoudersregister van de Verkrijgende Vennootschap per het moment van het kracht worden van de Splitsing, of, voor zover van toepassing, zo snel mogelijk nadat de relevante details schriftelijk aan de Verkrijgende Vennootschap zijn verstrekt.
   A holder of a right of pledge or usufruct in a share in the capital of FCA shall acquire the same right in respect of the share in the capital of the Acquiring Company acquired by the relevant holder of that share pursuant to the deed of Demerger.
 
   Een houder van een pandrecht of vruchtgebruik op een aandeel in het kapitaal van FCA zal hetzelfde recht ten aanzien van het aandeel in het kapitaal van de Verkrijgende Vennootschap, verkregen door de relevante houder van dat aandeel als gevolg van de akte van Splitsing, verkrijgen.
11 Intentions involving continuance or termination of activities
 
11 Voornemens omtrent voortzetting of beëindiging van activiteiten
   The activities of FCA relating to the assets of FCA that the Acquiring Company will acquire in the Demerger will be continued by the Acquiring Company in all material respects, including any changes currently contemplated by FCA.
 
   De activiteiten van FCA ten aanzien van het vermogen van FCA dat de Verkrijgende Vennootschap zal verkrijgen bij de Splitsing zullen worden voortgezet door de Verkrijgende Vennootschap in elk materieel opzicht, inclusief elke wijziging op dit moment voorzien door FCA.
12 Approval of the resolution to effect the Demerger
 
12 Goedkeuring van het besluit tot Splitsing
12.1 FCA
 
12.1 FCA
   The resolution to effect the Demerger has to be adopted by the general meeting of shareholders of FCA. The resolution to effect the Demerger is not subject to the approval of any other corporate body of FCA or governmental authority.
 
   Het besluit tot Splitsing moet door de algemene vergadering van aandeelhouders van FCA worden genomen. Het besluit tot Splitsing is niet onderworpen aan de goedkeuring van enig ander orgaan van FCA noch van enig overheidsorgaan.
12.2 Acquiring Company
 
12.2 Verkrijgende Vennootschap
   The resolution to effect the Demerger has to be adopted by the general meeting of shareholders or the board of directors of the Acquiring Company. The resolution to effect the Demerger is not subject to the approval of any other corporate body of the Acquiring Company or governmental authority.
 
   Het besluit tot Splitsing moet door de algemene vergadering van aandeelhouders of het bestuur van de Verkrijgende Vennootschap worden genomen. Het besluit tot Splitsing is niet onderworpen aan de goedkeuring van enig ander orgaan van de Verkrijgende Vennootschap noch van enig overheidsorgaan.
13 Effects of the Demerger on the goodwill and the distributable reserves of the Acquiring Company and FCA
 
13 Invloed van de Splitsing op de grootte van de goodwill en de uitkeerbare reserves van de Verkrijgende Vennootschap en FCA

#17909008    demerger proposal – voorstel tot splitsing    10


 The Demerger will take place on the basis of the book value and will therefore have no goodwill impact.
 
   De Splitsing zal plaatsvinden op basis van de boekwaarde en zal hierdoor geen invloed hebben op de grootte van de goodwill.
   To the extent that the Acquiring Company must maintain reserves pursuant to Dutch law or its articles of association, as a result of the Demerger, the freely distributable reserves of the Acquiring Company will increase with the difference between (i) the value of the assets of FCA that the Acquiring Company will acquire in the Demerger and (ii) the reserves the Acquiring Company must maintain pursuant to Dutch law or its articles of association.
 
   Voor zover de Verkrijgende Vennootschap reserves krachtens Nederlands recht of haar statuten moet aanhouden, zullen als gevolg van de Splitsing de vrij uitkeerbare reserves van de Verkrijgende Vennootschap toenemen met het verschil tussen (i) de waarde van het vermogen van FCA dat de Verkrijgende Vennootschap bij de Splitsing zal verkrijgen en (ii) de reserves die de Verkrijgende Vennootschap krachtens Nederlands recht of haar statuten moet aanhouden.
   Pursuant to Section 2:334q paragraph 4 DCC, following the Demerger the Acquiring Company must create reserves pursuant to Dutch law in the same way as FCA had to maintain such reserves, unless there is no longer any further legal basis for maintaining the same.
 
   Ingevolge artikel 2:334q lid 4 BW, moet de Verkrijgende Vennootschap reserves krachtens Nederlands recht vormen op dezelfde wijze als FCA deze reserves moest aanhouden, tenzij hiervoor niet langer enige wettelijke basis is.
   As a result of the Demerger, the freely distributable reserves of FCA will decrease with the difference between (i) the value of the assets of FCA that the Acquiring Company will acquire in the Demerger and (ii) the reserves that FCA following the Demerger no longer has to maintain pursuant to Dutch law.
 
   Als gevolg van de Splitsing, zullen de vrij uitkeerbare reserves van FCA afnemen met het verschil tussen (i) de waarde van het vermogen van FCA dat de Verkrijgende Vennootschap bij de Splitsing zal verkrijgen en (ii) de reserves die FCA als gevolg van Splitsing niet meer krachtens Nederlands recht hoeft aan te houden.
14 The exchange ratio of the shares. No cash payments
 
14 De ruilverhouding van de aandelen. Geen betalingen in contanten
   The Acquiring Company has been incorporated with an issued capital of one eurocent. As a result of the Demerger, the Acquiring Company shall acquire a part of the assets of FCA as described in more detail in this Demerger proposal ( Demerger Assets ) and the value of the Acquiring Company as of the Demerger Effective Date will equal the value of the Demerger Assets immediately preceding the Demerger Effective Date. In view thereof the following exchange ratio ( Exchange Ratio ), based on the nominal value of the shares in the Acquiring Company and FCA, with any excess being considered non-obliged share premium, shall apply:
 
De Verkrijgende Vennootschap is opgericht met een geplaatst kapitaal van één eurocent. Als gevolg van de Splitsing, zal de Verkrijgende Vennootschap een deel van het vermogen van FCA verkrijgen zoals nader in dit voorstel tot Splitsing omschreven ( Splitsing Vermogen ) en de waarde van de Verkrijgende Vennootschap per de Splitsing Effectieve Datum zal gelijk zijn aan de waarde van het Splitsing Vermogen onmiddellijk voorafgaand aan de Splitsing Effectieve Datum. In dat verband zal de volgende ruilverhouding ( Ruilverhouding ) worden toegepast, gebaseerd op de nominale waarde van de aandelen in de Verkrijgende Vennootschap en FCA, waarbij enige overwaarde wordt beschouwd als niet-bedongen agio:

#17909008    demerger proposal – voorstel tot splitsing    11


(a) the holders of common shares in the capital of FCA (FCA Common Shares) will receive common shares in the Acquiring Company (Acquiring Company Common Shares) with an aggregate nominal value equal to the aggregate nominal value of the FCA Common Shares held by them at the Demerger Effective Date; and
 
(a) de houders van gewone aandelen in het kapitaal van FCA (FCA Gewone Aandelen) zullen gewone aandelen in de Verkrijgende Vennootschap (Verkrijgende Vennootschap Gewone Aandelen) verkrijgen met een gezamenlijke nominale waarde gelijk aan de gezamenlijk nominale waarde van de FCA Gewone aandelen gehouden door hen per de Splitsing Effectieve Datum; en
(b) the holders of special voting shares in the capital of FCA (FCA Special Voting Shares) will receive special voting shares in the Acquiring Company (Acquiring Company Special Voting Shares) with an aggregate nominal value equal to the aggregate nominal value of the FCA Special Voting Shares held by them at the Demerger Effective Date.
 
(b) de houders van bijzondere stemrechtaandelen in het kapitaal van FCA ( FCA Bijzondere Stemrechtaandelen ) zullen bijzondere stemrechtaandelen in de Verkrijgende Vennootschap ( Verkrijgende Vennootschap Bijzondere Stemrechtaandelen ) verkrijgen met een gezamenlijke nominale waarde gelijk aan de gezamenlijke nominale waarde van de FCA Bijzondere Stemrechtaandelen gehouden door hen op de Splitsing Effectieve Datum.
   No cash payments shall be made in this Demerger.
 
   Er zullen geen betalingen in contanten worden gedaan bij deze Splitsing.
15 Date as of which the shareholders of FCA will share in the profits of the Acquiring Company
 
15 Datum waarop de aandeelhouders van FCA zullen delen in de winst van de Verkrijgende Vennootschap
   As of the Demerger Effective Date, (i) each holder of FCA Common Shares will share in any distribution of profits by the Acquiring Company in proportion to the relevant participation in the aggregate issued and outstanding common share capital of the Acquiring Company to which holders of Acquiring Company Common Shares are entitled and (ii) each holder of FCA Special Voting Shares will share in any distribution of profits by the Acquiring Company in proportion to the relevant participation in the aggregate issued and outstanding special voting share capital of the Acquiring Company to which holders of Acquiring Company Special Voting Shares are entitled. No particular rights to dividends will be granted in connection with the Demerger.
 
   Per de Splitsing Effectieve Datum, zal (i) elke houder van FCA Gewone Aandelen delen in elke uitkering van winst door de Verkrijgende Vennootschap naar evenredigheid van het relevante gedeelte van het gehele geplaatste en uitstaande gewone aandelenkapitaal van de Verkrijgende Vennootschap waartoe de houders van Verkrijgende Vennootschap Gewone Aandelen gerechtigd zijn en (ii) elke houder van FCA Bijzondere Stemrechtaandelen delen in elke uitkering van winst door de Verkrijgende Vennootschap naar evenredigheid van het relevante gedeelte van het gehele geplaatste en uitstaande bijzondere stemrechtaandelenkapitaal waartoe de houders van Verkrijgende Vennootschap Bijzondere Stemrechtaandelen gerechtigd zijn. Geen bijzondere rechten op dividend worden toegekend in verband met de Splitsing.
16 Shares to be cancelled pursuant to Section 2:334x paragraph 3 DCC
 
16 In te trekken aandelen ingevolge artikel 2:334x lid 3 BW
   Not applicable.
 
Niet van toepassing.

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17 The consequences for holders of non-voting shares or shares without profit sharing rights
 
17 De gevolgen voor houders van stemrechtloze aandelen of winstrechtloze aandelen
   Not applicable because FCA does not have non-voting shares or shares without profit sharing rights in its capital.
 
   Niet van toepassing aangezien FCA geen stemrechtloze aandelen of winstrechtloze aandelen in haar kapitaal heeft.
18 The amount of compensation for a share pursuant to Section 2:334ee1 DCC
 
18 Het bedrag van de schadevergoeding voor een aandeel ingevolge artikel 2:334ee1 BW
   Not applicable because FCA does not have non-voting shares or shares without profit sharing rights in its capital.
 
   Niet van toepassing aangezien FCA geen stemrechtloze aandelen of winstrechtloze aandelen in haar kapitaal heeft.
19 The maximum amount for which compensation may be requested pursuant to Section 2:334ee1 DCC
 
19 Het maximumbedrag aan schadevergoeding dat kan worden verzocht ingevolge artikel 2:334ee1 BW
   Not applicable because FCA does not have non-voting shares or shares without profit sharing rights in its capital.
 
   Niet van toepassing aangezien FCA geen stemrechtloze aandelen of winstrechtloze aandelen in haar kapitaal heeft.
20 Auditor's statement on the proposed Exchange Ratio
 
20 Accountantsverklaring op de voorgestelde Ruilverhouding
   KPMG Accountants N.V. has issued a statement as referred to in Section 2:334aa paragraph 1 DCC. This statement is attached to this Demerger proposal as Annex F .
 
   KPMG Accountants N.V. heeft een verklaring als bedoeld in artikel 2:334aa lid 1 BW afgegeven. Deze verklaring is als Bijlage F aan dit voorstel tot Splitsing gehecht.
21 Signing formalities and governing law
 
21 Ondertekeningsformaliteiten en toepasselijk recht
   Pursuant to Section 2:334f DCC this Demerger proposal will have to be signed by each member of the boards of directors of FCA and the Acquiring Company.
 
   Ingevolge artikel 2:334f BW moet dit voorstel tot Splitsing ondertekend worden door elk lid van het bestuur van FCA en de Verkrijgende Vennootschap.
   This Demerger proposal is governed by, and interpreted in accordance with, Dutch law. In the event of a conflict between the Dutch and the English version of this Demerger proposal, the Dutch version will prevail.
 
   Dit voorstel tot Splitsing wordt beheerst door, en geïnterpreteerd in overeenstemming met, Nederlands recht. Ingeval van tegenstrijdigheid tussen de Nederlandse en de Engelse versie van dit voorstel tot Splitsing, zal de Nederlandse versie voorgaan.
( signature pages follow )
 
(handtekeningenpagina volgt)


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SIGNATURE PAGE – HANDTEKENINGPAGINA
Board of directors of Fiat Chrysler Automobiles N.V.



____________________________________



____________________________________



Name:
John Elkann
Name:
Sergio Marchionne
 
 
Title:
executive director – Chairman
Title:
executive director – CEO
 
 



____________________________________



____________________________________



____________________________________
Name:
Andrea Agnelli
Name:
Tiberto Brandolini d’Adda
Name:
Glenn Earle
Title:
non-executive director
Title:
non-executive director
Title:
non-executive director



____________________________________



____________________________________



____________________________________
Name:
Valerie Mars
Naam:
Ruth Simmons
Naam:
Ronald Thompson
Title:
non-executive director
Titel:
non-executive director
Titel:
non-executive director



____________________________________



____________________________________



____________________________________
Name:
Patience Wheatcroft
Name:
Stephen Wolf
Name:
Ermenegildo Zegna di Monte Rubello
Title:
non-executive director
Title:
non-executive director
Title:
non-executive director



demerger proposal – voorstel tot splitsing



SIGNATURE PAGE – HANDTEKENINGPAGINA
Board of directors of FE Interim B.V.



____________________________________



____________________________________



Name:
Richard Palmer
Name:
Fabio Spirito
 
 
Title:
executive director
Title:
executive director
 
 



____________________________________
 
 
 
 
Name:
Ferrante Zileri Dal Verme
 
 
 
 
Title:
non-executive director
 
 
 
 


demerger proposal – voorstel tot splitsing



ANNEX A
Current articles of association Fiat Chrysler Automobiles N.V.


demerger proposal – voorstel tot splitsing



ANNEX B
Current articles of association FE Interim B.V.




demerger proposal – voorstel tot splitsing



ANNEX C
Auditor’s statement KPMG
Section 2:334aa paragraph 2 DCC


demerger proposal – voorstel tot splitsing



ANNEX D1
Pro forma FE Interim B.V.
ANNEX D2
Pro forma FCA


demerger proposal – voorstel tot splitsing



ANNEX E
Interim financial statement FE Interim B.V.

demerger proposal – voorstel tot splitsing



ANNEX F
Auditor’s statement KPMG
Section 2:334aa paragraph 1 DCC

demerger proposal – voorstel tot splitsing
Exhibit 99.3

DEMERGER PROPOSAL – VOORSTEL TOT SPLITSING
17 SEPTEMBER 2015
 
FE INTERIM B.V.
&
FE NEW N.V.
 
 
 

demerger proposal – voorstel tot splitsing





DEMERGER PROPOSAL
 
VOORSTEL TOT SPLITSING
The boards of directors of:
 
De besturen van:
1.      FE Interim B.V. , a private limited liability company under Dutch law, having its official seat in Amsterdam, the Netherlands, and its registered office address at Via Abetone Inferiore N.4, I-41053, Maranello, Italy, registered with the Dutch trade register under number 64060438 ( FE Interim ); and
 
1. FE Interim B.V. , een besloten vennootschap met beperkte aansprakelijkheid naar Nederlands recht, gevestigd te Amsterdam en kantoorhoudende te Via Abetone Inferiore N.4, I-41053, Maranello, Italië, ingeschreven in het handelsregister onder nummer 64060438 ( FE Interim ); en
2.      FE New N.V.  (to be renamed: Ferrari N.V.), a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, and its registered office address at Via Abetone Inferiore N.4, I-41053, Maranello, Italy, registered with the Dutch trade register under number 64060977 ( Acquiring Company ),
 
2. FE New N.V.  (waarvan de naam zal worden gewijzigd in Ferrari N.V.), een naamloze vennootschap naar Nederlands recht, gevestigd te Amsterdam en kantoorhoudende te Via Abetone Inferiore N.4, I-41053, Maranello, Italië, ingeschreven in het handelsregister onder nummer 64060977 ( Verkrijgende Vennootschap ),
FE Interim and the Acquiring Company are hereinafter together also referred to as: Demerging Companies ,
 
FE Interim en de Verkrijgende Vennootschap worden hierna gezamenlijk aangeduid als: Splitsende Vennootschappen ,
whereas,
 
in aanmerking nemende,
(A) none of the Demerging Companies has a supervisory board;
 
(A) bij geen van de Splitsende Vennootschappen is een raad van commissarissen ingesteld;
(B) the Demerging Companies have not been dissolved or declared bankrupt, nor has a suspension of payment been declared with respect to the Demerging Companies;
 
(B) de Splitsende Vennootschappen zijn niet ontbonden en verkeren niet in staat van faillissement, noch hebben zij surseance van betaling aangevraagd;
(C) there are no holders of shares without voting rights or shares without profit rights in the capital of FE Interim, nor are there holders of depositary receipts for shares in the capital of FE Interim that have meeting rights;
 
(C) er zijn geen houders van aandelen zonder stemrecht of aandelen zonder winstrecht in het kapitaal van FE Interim, noch zijn er houders van certificaten van aandelen in het kapitaal van FE Interim met vergaderrecht;
(D) none of the Demerging Companies has a works council entitled to render advice in respect of the Demerger (as defined below); and
 
(D) geen van de Splitsende Vennootschappen heeft een ondernemingsraad die het recht heeft om advies te geven met betrekking tot de Splitsing (zoals hierna gedefinieerd); en

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(E) there is no trade union entitled to render comments in respect of the Demerger that has amongst its members employees of (a subsidiary of) one of the Demerging Companies,
 
(E) er is geen vereniging van werknemers die werknemers van (een dochtermaatschappij van) één van de Splitsende Vennootschappen onder haar leden telt die het recht heeft om opmerkingen in te dienen met betrekking tot de Splitsing,
propose a demerger ( Demerger ) in accordance with Title 7, Book 2 of the Dutch Civil Code ( DCC ) at which FE Interim will continue to exist and as a consequence whereof:
 
stellen voor een splitsing (Splitsing) in de zin van Titel 7 van Boek 2 van het Burgerlijk Wetboek (BW) tot stand te brengen waarbij FE Interim zal blijven bestaan en als gevolg waarvan:
- the Acquiring Company will acquire a part of the assets of FE Interim under a universal title of succession; and
 
- de Verkrijgende Vennootschap een deel van het vermogen van FE Interim onder algemene titel zal verkrijgen; en
- the shareholders of FE Interim will be granted shares in the capital of the Acquiring Company.
 
- de aandeelhouders van FE Interim aandelen in het kapitaal van de Verkrijgende Vennootschap krijgen toegekend.
This Demerger proposal will be filed and published in accordance with the applicable laws and regulations. The Demerger proposal will also be made available at the registered office address of FE Interim and the Acquiring Company for inspection by whomever is entitled thereto by applicable law.
 
Dit voorstel tot Splitsing zal worden gedeponeerd en gepubliceerd in overeenstemming met de toepasselijke wetten en regelgeving. Het voorstel tot Splitsing zal ook beschikbaar worden gesteld ten kantore van FE Interim en de Verkrijgende Vennootschap ter inzage voor degenen die daartoe volgens toepasselijk recht gerechtigd zijn.
Pursuant to Section 2:334n DCC, the Demerger shall be executed in accordance with the relevant provisions of Dutch law and as such will become effective on the day following the day on which the notarial deed of Demerger is executed before a civil law notary, officiating in the Netherlands ( Demerger Effective Date ).
 
Ingevolge artikel 2:334n BW zal de Splitsing worden uitgevoerd in overeenstemming met de relevante bepalingen van Nederlands recht en als zodanig van kracht worden op de dag volgend op de dag waarop de notariële akte van Splitsing wordt verleden voor een notaris met plaats van vestiging in Nederland ( Splitsing Effectieve Datum ).
It is contemplated that prior to the Demerger Effective Date, Fiat Chrysler Automobiles N.V., a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 60372958 ( FCA ), will effect a preceding demerger in accordance with Title 7, Book 2 of the DCC to FE Interim, as a consequence whereof (i) FCA will continue to exist, (ii) FE Interim will acquire part of the assets of FCA under universal title of succession and (iii) the shareholders of FCA will become shareholders of FE Interim ( Preceding Demerger ).
 
Het voornemen bestaat dat voorafgaand aan de Splitsing Effectieve Datum, Fiat Chrysler Automobiles N.V., een naamloze vennootschap naar Nederlands recht, gevestigd te Amsterdam, ingeschreven in het handelsregister onder nummer 60372958 ( FCA ), een voorafgaande splitsing in de zin van Titel 7 van Boek 2 van het BW naar FE Interim tot stand zal brengen, als gevolg waarvan (i) FCA zal blijven bestaan, (ii) FE Interim een deel van het vermogen van FCA onder algemene titel zal verkrijgen en (iii) de aandeelhouders van FCA aandeelhouders van FE Interim zullen worden ( Voorafgaande Splitsing ).

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It is further contemplated that prior to the Demerger Effective Date, New Business Netherlands NV (as defined below) will complete a restructuring inter alia  including an acquisition of all issued and outstanding shares in the capital of Ferrari S.p.A. ( Restructuring ).
 
Eveneens wordt overwogen dat voorafgaand aan de Splitsing Effectieve Datum, New Business Netherlands NV (zoals hierna gedefinieerd) een herstructurering zal voltooien onder meer inhoudende een verkrijging van alle uitgegeven en geplaatste aandelen in het kapitaal van Ferrari S.p.A. ( Herstructurering ).
Application will be made to list and admit the common shares in the capital of the Acquiring Company, with a nominal value of one eurocent each ( Acquiring Company Common Shares ), to trading on the New York Stock Exchange ( NYSE ) upon effectiveness of the Demerger and, on or after such date, the common shares may also be admitted to listing and trading on the Mercato Telematico Azionario organized and managed by Borsa Italiana S.p.A. For purpose of trading on the NYSE a registration statement on Form F-1 has been prepared and filed with the U.S. Securities and Exchange Commission. Delivery of the Acquiring Company Common Shares granted pursuant to the Demerger is expected to take place within three business days following the Demerger Effective Date.
 
Een aanvraag zal worden ingediend om alle gewone aandelen in het kapitaal van de Verkrijgende Vennootschap, met een nominale waarde van één eurocent elk ( Verkrijgende Vennootschap Gewone Aandelen ), te noteren en toe te laten tot de handel op de New York Stock Exchange ( NYSE ) per het moment van het van kracht worden van de Splitsing en, op of na die datum, kunnen de gewone aandelen ook worden toegelaten tot de notering en handel op de Mercato Telematico Azionario georganiseerd en beheerd door Borsa Italiana S.p.A. Voor de handel op de NYSE is een registratieverklaring op Formulier F-1 voorbereid en gedeponeerd bij de U.S. Securities and Exchange Commission. Levering van de Verkrijgende Vennootschap Gewone Aandelen, toegekend als gevolg van de Splitsing, zal naar verwachting plaatsvinden binnen drie werkdagen na de Splitsing Effectieve Datum.
The data to be mentioned pursuant to the Sections 2:334f and 2:334y DCC are as follows:
 
De ingevolge de artikelen 2:334f en 2:334y BW te vermelden gegevens zijn de volgende:
1 Type of legal entity, name and official seat of the Demerging Companies
 
1 Rechtsvorm, naam en zetel van de Splitsende Vennootschappen
1.1 FE Interim
 
1.1 FE Interim
   The private limited liability company under Dutch law FE Interim B.V., having its official seat in Amsterdam, the Netherlands.
 
   De besloten vennootschap met beperkte aansprakelijkheid naar Nederlands recht FE Interim B.V., gevestigd te Amsterdam.
1.2 Acquiring Company
 
1.2 Verkrijgende Vennootschap
   The public company under Dutch law FE New N.V., having its official seat in Amsterdam, the Netherlands.
 
   De naamloze vennootschap naar Nederlands recht FE New N.V., gevestigd te Amsterdam.
2 Articles of association of FE Interim and the Acquiring Company
 
2 Statuten van FE Interim en van de Verkrijgende Vennootschap
2.1 FE Interim
 
2.1 FE Interim

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   The articles of association of FE Interim were drawn up by a deed of incorporation executed on 4 September 2015 before G.M. Portier, civil law notary officiating in Amsterdam, the Netherlands. The consecutive wording of the current articles of association is attached to this Demerger proposal as Annex A .
 
   De statuten van FE Interim zijn vastgesteld bij akte van oprichting verleden op 4 september 2015 voor mr. G.M. Portier, notaris met plaats van vestiging in Amsterdam. De doorlopende tekst van de huidige statuten is als Bijlage A  aan dit voorstel tot Splitsing gehecht.
   The articles of association of FE Interim shall not be amended in connection with the Demerger.
 
   De statuten van FE Interim zullen ter gelegenheid van de Splitsing niet gewijzigd worden.
2.2 Acquiring Company
 
2.2 Verkrijgende Vennootschap
   The articles of association of the Acquiring Company were drawn up by a deed of incorporation executed on 4 September 2015 before G.M. Portier, aforementioned. The consecutive wording of the current articles of association of the Acquiring Company is attached to this Demerger proposal as Annex B .
 
   De statuten van de Verkrijgende Vennootschap zijn vastgesteld bij akte van oprichting verleden op 4 september 2015 voor mr. G.M. Portier, voornoemd. De doorlopende tekst van de huidige statuten van de Verkrijgende Vennootschap is als Bijlage B  aan dit voorstel tot Splitsing gehecht.
   The articles of association of the Acquiring Company shall be amended in connection with the Demerger. The consecutive wording of the articles of association of the Acquiring Company as they will read following the Demerger is attached to this Demerger proposal as Annex C .
 
   De statuten van de Verkrijgende Vennootschap zullen ter gelegenheid van de Splitsing gewijzigd worden. De doorlopende tekst van de statuten van de Verkrijgende Vennootschap zoals zij zullen luiden na de Splitsing is als Bijlage C  aan dit voorstel tot Splitsing gehecht.
3 Transfer of assets and liabilities of FE Interim
 
3 Overgang vermogen FE Interim
   A part of the assets of FE Interim will transfer to the Acquiring Company; see below under 4. No liabilities of FE Interim will transfer to the Acquiring Company.
 
   Een deel van het vermogen van FE Interim gaat over op de Verkrijgende Vennootschap; zie verder hierna onder 4. Er zullen geen schulden van FE Interim overgaan op de Verkrijgende Vennootschap.
4 Detailed description of the assets and liabilities that transfer to the Acquiring Company and of the assets and liabilities that remain with FE Interim
 
4 Nauwkeurige beschrijving van de vermogensbestanddelen die overgaan op de Verkrijgende Vennootschap en van de vermogensbestanddelen die FE Interim zal behouden
4.1 Acquiring Company
 
4.1 Verkrijgende Vennootschap
   To the Acquiring Company will only transfer the following assets:
 
   Op de Verkrijgende Vennootschap gaan slechts de volgende vermogensbestanddelen over:

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   - all common and special voting shares held by FE Interim at the moment the Demerger becomes effective in the capital of New Business Netherlands N.V. (to be renamed Ferrari N.V.), having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 57991561 ( New Business Netherlands NV ).
 
      alle gewone aandelen en bijzondere stemrechtaandelen gehouden door FE Interim per het moment van het van kracht worden van de Splitsing in het kapitaal van New Business Netherlands N.V. (waarvan de naam zal worden gewijzigd in Ferrari N.V.), gevestigd te Amsterdam, ingeschreven in het handelsregister onder nummer 57991561 ( New Business Netherlands NV ).
   The description of the assets that transfer to the Acquiring Company refers to the situation as of 8 September 2015.
 
   De beschrijving van het vermogen dat overgaat naar de Verkrijgende Vennootschap verwijst naar de situatie per 8 september 2015.
   This description of the assets required pursuant to Section 2:334bb DCC is attached to this Demerger proposal as Annex D .
 
   Deze beschrijving van het vermogen vereist op grond van artikel 2:334bb BW is aan dit voorstel tot Splitsing gehecht als Bijlage D .
4.2 FE Interim
 
4.2 FE Interim
   Other than the assets listed under 4.1 above, all assets and liabilities of FE Interim will remain with FE Interim. No liabilities of FE Interim will transfer to the Acquiring Company.
 
   Met uitzondering van de vermogensbestanddelen hierboven vermeld onder 4.1, worden alle vermogensbestanddelen van FE Interim behouden door FE Interim. Er zullen geen schulden van FE Interim overgaan op de Verkrijgende Vennootschap.
   The description of the assets and liabilities that remain with FE Interim refers to the situation as of 8 September 2015.
 
   De beschrijving van het vermogen dat FE Interim zal behouden verwijst naar de situatie per 8 september 2015.
   The auditor’s statement issued by KPMG Accountants N.V. pursuant to Section 2:334aa paragraph 2 DCC is attached to this Demerger proposal as Annex E .
 
   De accountantsverklaring afgegeven door KPMG Accountants N.V. als bedoeld in artikel 2:334aa lid 2 BW is als Bijlage E  aan dit voorstel tot Splitsing gehecht.
4.3 Pro forma profit and loss accounts
 
4.3 Pro forma winst- en verliesrekeningen
   The pro forma profit and loss accounts of FE Interim and the Acquiring Company as of 30 June 2015 are attached to this Demerger proposal as Annex F1  and Annex F2  respectively.
 
   De pro forma winst- en verliesrekeningen van FE Interim en de Verkrijgende Vennootschap per 30 juni 2015 zijn als Bijlage F1  respectievelijk Bijlage F2  aan dit voorstel tot Splitsing gehecht.
5 Value of the assets and liabilities that the Acquiring Company will acquire and value of the assets and liabilities that remain with FE Interim
 
5 Waarde van het vermogen dat de Verkrijgende Vennootschap zal verkrijgen en waarde van het vermogen dat FE Interim zal behouden

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   As the assets that the Acquiring Company will acquire at the Demerger do not form part of the assets of FE Interim on the date of this Demerger proposal but are held by FCA, these assets are valued in accordance with the same accounting method as applied to these assets in the proposal for the Preceding Demerger, being the historic cost price of these assets as of 8 September 2015, resulting in a value of EUR 59,150,061.60. No liabilities of FE Interim will transfer to the Acquiring Company.
 
   Aangezien het vermogen dat de Verkrijgende Vennootschap bij de Splitsing zal verkrijgen geen deel uitmaakt van het vermogen van FE Interim per de datum van dit voorstel tot Splitsing maar gehouden wordt door FCA, wordt dit vermogen gewaardeerd in overeenstemming met dezelfde waarderingsmethode als toepast op dit vermogen in het voorstel tot de Voorafgaande Splitsing, zijnde de historische kostprijs van dit vermogen per 8 september 2015, resulterend in een waarde van EUR 59.150.061,60. Er zullen geen schulden van FE Interim overgaan op de Verkrijgende Vennootschap.
   The value of the part of the assets and liabilities that will remain with FE Interim, established to comply with Section 2:334f paragraph 2 under (e) DCC, is EUR 16,649,915.81, or such higher amount as equals the aggregate nominal value of the shares issued by FE Interim in the Preceding Demerger, up to EUR 25,000,000, which is the maximum nominal share capital that can be issued under FE Interim’s authorized share capital. The aforementioned value has been determined on the basis of the relevant book value as per the day to which the interim financial statements as referred to in Section 2:334g paragraph 2 DCC as of 8 September 2015 of FE Interim relate, and is furthermore calculated taking into account Section 2:334g paragraph 2 third sentence DCC.
 
   De waarde van het deel van het vermogen dat FE Interim zal behouden, vastgesteld om te voldoen aan artikel 2:334f lid 2 sub e BW, is EUR 16.649.915,81, of een hoger bedrag gelijk aan de gezamenlijke nominale waarde van de aandelen uitgegeven door FE Interim bij de Voorafgaande Splitsing, tot een bedrag van EUR 25.000.000, zijnde het maximale nominale aandelenkapitaal dat uitgegeven kan worden binnen het maatschappelijk kapitaal van FE Interim. De voornoemde waarde is vastgesteld op basis van de relevante boekwaarde per de dag waarop de tussentijdse vermogensopstelling als bedoeld in artikel 2:334g lid 2 BW per 8 september 2015 van FE Interim betrekking heeft, en is bovendien berekend met inachtneming van artikel 2:334g lid 2 derde volzin BW.
   No shares in the capital of the Acquiring Company will be allocated to FE Interim in the Demerger.
 
   In het kader van de Splitsing worden geen aandelen in het kapitaal van de Verkrijgende Vennootschap toegekend aan FE Interim.
   It is expected that as a result of the Restructuring the respective values mentioned above will change significantly.
 
 Als gevolg van de Herstructurering zullen naar verwachting de respectievelijke waarden als hierboven vermeld significant wijzigen.
   The interim financial statements of FE Interim and the Acquiring Company as referred to in Section 2:334g paragraph 2 DCC as of 8 September 2015 are attached to this Demerger proposal as Annex G1 and Annex G2 respectively.
 
  De tussentijdse vermogensopstelling van FE Interim en de Verkrijgende Vennootschap als bedoeld in artikel 2:334g lid 2 BW per 8 september 2015 zijn als Bijlage G1 respectievelijk Bijlage G2 aan dit voorstel tot Splitsing gehecht.

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6 Rights and compensations at the expense of the Acquiring Company granted pursuant to Section 2:334p DCC
 
6 Rechten en vergoedingen ten laste van de Verkrijgende Vennootschap toegekend ingevolge artikel 2:334p BW
In connection with the 7.875% mandatory convertible security ( MCS ) issued by FCA in accordance with the indenture dated 16 December 2014 among FCA and The Bank of New York Mellon as trustee ( Indenture ) and outstanding immediately prior to the effective date of the Preceding Demerger, the holders of the MCS shall receive such number of common shares in the capital of the Acquiring Company as agreed in and determined pursuant to the terms of the Indenture, compensating them for the financial effects of the Preceding Demerger and this Demerger.
 
 In samenhang met het 7,875% verplicht converteerbaar effect ( MCS ) uitgegeven door FCA in overeenstemming met de indenture met datum 16 december 2014 tussen FCA en The Bank of New York Mellon als trustee ( Indenture ) en dat onmiddellijk voorafgaand aan het van kracht worden van de Voorafgaande Splitsing uitstaat, zullen de houders van de MCS een zodanig aantal gewone aandelen in het kapitaal van de Verkrijgende Vennootschap verkrijgen als overeengekomen in en bepaald volgens de voorwaarden van de Indenture, om hen te compenseren voor de financiële effecten van de Voorafgaande Splitsing en deze Splitsing.
   Since there are no persons who, in any other capacity than as shareholder, have special rights against FE Interim, no special rights and compensations will be granted at the expense of the Acquiring Company to anyone.
 
   Aangezien er geen personen zijn die, anders dan als aandeelhouder, speciale rechten hebben ten aanzien van FE Interim, worden er geen speciale rechten en vergoedingen aan iemand toegekend ten laste van de Verkrijgende Vennootschap.
7 Benefits to be granted to members of the boards of directors of FE Interim or the Acquiring Company or to others involved with the Demerger, in connection with the Demerger
 
7 Voordelen, welke in verband met de Splitsing aan leden van het bestuur van FE Interim of de Verkrijgende Vennootschap of aan anderen betrokken bij de Splitsing worden toegekend.
   No benefits will be granted to members of the boards of directors of FE Interim or the Acquiring Company or to others involved with the Demerger, other than in such person’s capacity as shareholder of FE Interim.
 
Er worden geen voordelen toegekend aan leden van het bestuur van FE Interim of de Verkrijgende Vennootschap of aan anderen betrokken bij de Splitsing, anders dan aan anderen in hoedanigheid van aandeelhouder van FE Interim.
8 Intentions with regard to the composition of the boards of directors of the Demerging Companies after the Demerger
 
8 Voornemens over de samenstelling van het bestuur van de Splitsende Vennootschappen na de Splitsing
8.1 FE Interim
 
8.1 FE Interim
   The current composition of the board of directors of FE Interim is as follows:
 
   De huidige samenstelling van het bestuur van FE Interim is als volgt:
   executive directors:
-      Richard Keith Palmer; and
-      Fabio Spirito,
 
   uitvoerende bestuurders:
-      Richard Keith Palmer; en
-      Fabio Spirito,

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   non-executive director:
-      Ferrante Zileri Dal Verme.
 
   niet-uitvoerende bestuurder:
-      Ferrante Zileri Dal Verme.
   There is no intention to change the composition of the board of directors of FE Interim after the Demerger.
 
   Er bestaat geen voornemen na de Splitsing wijziging te brengen in de samenstelling van het bestuur van FE Interim.
8.2 Acquiring Company
 
8.2 Verkrijgende Vennootschap
   The current composition of the board of directors of the Acquiring Company is as follows:
 
De huidige samenstelling van het bestuur van de Verkrijgende Vennootschap is als volgt:
   executive directors:
-      Alessandro Gili; and
-      Giorgio Fossati,
 
   Uitvoerende bestuurders:
-      Alessandro Gili; en
-      Giorgio Fossati,
   non-executive director:
-      Carlo Daneo.
 
   niet-uitvoerende bestuurder:
-      Carlo Daneo.
   It is the intention to change the composition of the board of directors of the Acquiring Company in connection with the Demerger.
 
   Het voornemen bestaat wijziging te brengen in de samenstelling van het bestuur van de Verkrijgende Vennootschap in verband met de Splitsing.
9 Date as of which the financial data regarding the part of the assets and liabilities of FE Interim that will transfer to the Acquiring Company will be accounted for in the annual accounts of the Acquiring Company
 
9 Tijdstip met ingang waarvan de financiële gegevens met betrekking het gedeelte van het vermogen van FE Interim dat zal overgaan op de Verkrijgende Vennootschap zullen worden verantwoord in de jaarstukken van de Verkrijgende Vennootschap
   The financial data of FE Interim will as for the part of its assets that will transfer to the Acquiring Company be accounted for in the annual accounts of the Acquiring Company as of 1 January 2016. No liabilities of FE Interim will transfer to the Acquiring Company.
 
   De financiële gegevens van FE Interim zullen voor het gedeelte van haar vermogen dat zal overgaan op de Verkrijgende Vennootschap worden verantwoord in de jaarstukken van de Verkrijgende Vennootschap per 1 januari 2016. Er zullen geen schulden van FE Interim overgaan op de Verkrijgende Vennootschap.
10 Proposed measures in connection with the acquisition by the shareholders of FE Interim of shares in the capital of the Acquiring Company
 
10 Voorgenomen maatregelen in verband met de verkrijging door de aandeelhouders van FE Interim van aandelen in het kapitaal van de Verkrijgende Vennootschap
   The shares in the capital of the Acquiring Company to be granted in connection with the Demerger will be in the form of registered shares.
 
   De aandelen in het kapitaal van de Verkrijgende Vennootschap die worden toegekend in verband met de Splitsing, worden uitgegeven in vorm van aandelen op naam.

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   The Acquiring Company Common Shares (as defined below) to be granted in connection with the Demerger are expected to be delivered to the beneficiaries in book entry form through the direct registration system facilitated by the Depositary Trust Company, a limited purpose trust company under New York law, within three business days following the Demerger Effective Date.
 
De Verkrijgende Vennootschap Gewone Aandelen (zoals hieronder gedefinieerd) die worden toegekend in verband met de Splitsing, worden naar verwachting geleverd aan de begunstigden in girale vorm door middel van een direct registratie systeem, gefaciliteerd door de Depositary Trust Company, een trustmaatschappij voor een bepaald doel naar het recht van New York, binnen drie werkdagen na de Splitsing Effectieve Datum.
   The granting of Acquiring Company Special Voting Shares (as defined below) in connection with the Demerger will be registered in the shareholder’s register of the Acquiring Company upon the Demerger becoming effective.
 
De toekenning van Verkrijgende Vennootschap Bijzondere Stemrechtaandelen (zoals hieronder gedefinieerd) in samenhang met de Splitsing, zal worden geregistreerd in het aandeelhoudersregister van de Verkrijgende Vennootschap per het moment van het van kracht worden van de Splitsing.
   A holder of a right of pledge or usufruct in shares in the capital of FE Interim shall acquire the same right in respect of the shares in the capital of the Acquiring Company acquired by the relevant holder of that share pursuant to the deed of Demerger with due regard to the Exchange Ratio (as defined below).
 
   Een houder van een pandrecht of vruchtgebruik op aandelen in het kapitaal van FE Interim zal eenzelfde recht verkrijgen ten aanzien van de aandelen in het kapitaal van de Verkrijgende Vennootschap verkregen door de houder van dat aandeel als gevolg van de akte van Splitsing met inachtneming van de Ruilverhouding (zoals hierna gedefinieerd).
   The Acquiring Company will adopt terms and conditions which will apply to the issuance, allocation, acquisition, holding, repurchase and transfer of the Acquiring Company Common Shares and the Acquiring Company Special Voting Shares (both as defined below), substantially in the form (without annexes) attached as Annex H .
 
De Verkrijgende Vennootschap zal voorwaarden vaststellen die van toepassing zullen zijn op de uitgifte, toekenning, verkrijging, het houden, de inkoop en levering van de Verkrijgende Vennootschap Gewone Aandelen en de Verkrijgende Vennootschap Bijzondere Stemrechtaandelen (allebei zoals hierna gedefinieerd), substantieel in de vorm (zonder bijlagen) aangehecht als Bijlage H.
11 Intentions involving continuance or termination of activities
 
11 Voornemens omtrent voortzetting of beëindiging van activiteiten
   The activities of FE Interim relating to the assets of FE Interim that the Acquiring Company will acquire in the Demerger will be continued by the Acquiring Company in all material respects, including any changes currently contemplated by FE Interim.
 
   De activiteiten van FE Interim ten aanzien van het vermogen van FE Interim dat de Verkrijgende Vennootschap zal verkrijgen bij de Splitsing zullen worden voortgezet door de Verkrijgende Vennootschap in elk materieel opzicht, inclusief elke wijziging op dit moment voorzien door FE Interim.
12 Approval of the resolution to effect the Demerger
 
12 Goedkeuring van het besluit tot Splitsing

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12.1 FE Interim
 
12.1 FE Interim
   The resolution to effect the Demerger has to be adopted by the general meeting of shareholders of FE Interim. The resolution to effect the Demerger is not subject to the approval of any other corporate body of FE Interim or governmental authority.
 
   Het besluit tot Splitsing moet door de algemene vergadering van aandeelhouders van FE Interim worden genomen. Het besluit tot Splitsing is niet onderworpen aan de goedkeuring van enig ander orgaan van FE Interim noch van enig overheidsorgaan.
12.2 Acquiring Company
 
12.2 Verkrijgende Vennootschap
   The resolution to effect the Demerger has to be adopted by the general meeting of shareholders or the board of directors of the Acquiring Company. The resolution to effect the Demerger is not subject to the approval of any other corporate body of the Acquiring Company or governmental authority.
 
   Het besluit tot Splitsing moet door de algemene vergadering van aandeelhouders of het bestuur van de Verkrijgende Vennootschap worden genomen. Het besluit tot Splitsing is niet onderworpen aan de goedkeuring van enig ander orgaan van de Verkrijgende Vennootschap noch van enig overheidsorgaan.
13 Effects of the Demerger on the goodwill and the distributable reserves of the Acquiring Company and FE Interim
 
13 Invloed van de Splitsing op de grootte van de goodwill en de uitkeerbare reserves van de Verkrijgende Vennootschap en FE Interim
 The Demerger will take place on the basis of the book value and will therefore have no goodwill impact.
 
   De Splitsing zal plaatsvinden op basis van de boekwaarde en zal hierdoor geen invloed hebben op de grootte van de goodwill.
   To the extent that the Acquiring Company must maintain reserves pursuant to Dutch law or its articles of association, as a result of the Demerger, the freely distributable reserves of the Acquiring Company will increase with the difference between (i) the value of the assets of FE Interim that the Acquiring Company will acquire in the Demerger and (ii) the aggregate nominal value of the shares in the capital of the Acquiring Company allocated in the Demerger plus the reserves the Acquiring Company must maintain pursuant to Dutch law and its articles of association.
 
   Voor zover de Verkrijgende Vennootschap reserves krachtens Nederlands recht of haar statuten moet aanhouden, zullen als gevolg van de Splitsing de vrij uitkeerbare reserves van de Verkrijgende Vennootschap toenemen met het verschil tussen (i) de waarde van het vermogen van FE Interim dat de Verkrijgende Vennootschap bij de Splitsing zal verkrijgen en (ii) de gezamenlijke nominale waarde van de aandelen in het kapitaal van de Verkrijgende Vennootschap toegekend bij de Splitsing vermeerderd met de reserves die de Verkrijgende Vennootschap krachtens Nederlands recht en haar statuten moet aanhouden.
   Pursuant to Section 2:334q paragraph 4 DCC, following the Demerger the Acquiring Company must create reserves pursuant to Dutch law in the same way as FE Interim had to maintain such reserves, unless there is no longer any further legal basis for maintaining the same.
 
   Ingevolge artikel 2:334q lid 4 BW, moet de Verkrijgende Vennootschap reserves krachtens Nederlands recht vormen op dezelfde wijze als FE Interim deze reserves moest aanhouden, tenzij hiervoor niet langer enige wettelijke basis is.

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   As a result of the Demerger, the freely distributable reserves of FE Interim will decrease with the difference between (i) the value of the assets of FE Interim that the Acquiring Company will acquire in the Demerger and (ii) the reserves that FE Interim following the Demerger no longer has to maintain pursuant to Dutch law.
 
   Als gevolg van de Splitsing, zullen de vrij uitkeerbare reserves van FE Interim afnemen met het verschil tussen (i) de waarde van het vermogen van FE Interim dat de Verkrijgende Vennootschap bij de Splitsing zal verkrijgen en (ii) de reserves die FE Interim als gevolg van Splitsing niet langer krachtens Nederlands recht hoeft aan te houden.
14 The exchange ratio of the shares. No cash payments
 
14 De ruilverhouding van de aandelen. Geen betalingen in contanten
As a result of the Demerger, the Acquiring Company shall acquire part of the assets of FE Interim as described in paragraph 4 (Demerger Assets) and the value of the Acquiring Company as per the Demerger Effective Date will equal the value of the Demerger Assets immediately preceding the Demerger Effective Date. In view thereof the following exchange ratio (Exchange Ratio), based on the nominal value of the shares in the Acquiring Company and FE Interim, with any excess being considered non-obliged share premium, shall apply:
 
 Als gevolg van de Splitsing, zal de Verkrijgende Vennootschap een deel van het vermogen van FE Interim verkrijgen zoals nader omschreven in paragraaf 4 (Splitsing Vermogen) en de waarde van de Verkrijgende Vennootschap per de Splitsing Effectieve Datum zal gelijk zijn aan de waarde van het Splitsing Vermogen onmiddellijk voorafgaand aan de Splitsing Effectieve Datum. In dat verband zal de volgende ruilverhouding (Ruilverhouding) worden toegepast, gebaseerd op de nominale waarde van de aandelen in de Verkrijgende Vennootschap en FE Interim, waarbij enige overwaarde wordt beschouwd als niet-bedongen agio:
   (a) the holders of common shares in the capital of FE Interim ( FE Interim Common Shares ) will receive common shares in the Acquiring Company ( Acquiring Company Common Shares ) in accordance with an exchange ratio of one Acquiring Company Common Share for each ten FE Interim Common Shares held by them at the Demerger Effective Date; and
 
(a) de houders van gewone aandelen in het kapitaal van FE Interim (FE Interim Gewone Aandelen) zullen gewone aandelen in de Verkrijgende Vennootschap (Verkrijgende Vennootschap Gewone Aandelen) verkrijgen conform een ruilverhouding van één Verkrijgende Vennootschap Gewoon Aandeel voor elke tien FE Interim Gewone Aandelen gehouden door hen op de Splitsing Effectieve Datum; en

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   (b) the holders of special voting shares in the capital of FE Interim (FE Interim Special Voting Shares) will receive special voting shares in the Acquiring Company (Acquiring Company Special Voting Shares) in accordance with an exchange ratio of one Acquiring Company Special Voting Share for each ten FE Interim Special Voting Shares held by them at the Demerger Effective Date.
 
(b) de houders van bijzondere stemrechtaandelen in het kapitaal van FE Interim (FE Interim Bijzondere Stemrechtaandelen) zullen bijzondere stemrechtaandelen in de Verkrijgende Vennootschap (Verkrijgende Vennootschap Bijzondere Stemrechtaandelen) verkrijgen conform een ruilverhouding van één Verkrijgende Vennootschap Bijzonder Stemrechtaandeel voor elke tien FE Interim Bijzondere Stemrechtaandelen gehouden door hen op de Splitsing Effectieve Datum.
As (i) the aggregate value of ten FE Interim Common Shares and one Acquiring Company Common Share immediately after the Demerger equals the value of ten FE Interim Common Shares immediately prior to the Demerger and (ii) the aggregate value of ten FE Interim Special Voting Shares and one Acquiring Company Special Voting Share immediately after the Demerger equals the value of ten FE Interim Special Voting Shares immediately prior to the Demerger, the above Exchange Ratio has been applied. No cash payments shall be made by the Acquiring Company in connection with the Exchange Ratio. One or more intermediaries will aggregate fractional entitlements into whole shares in the capital of the Acquiring Company and sell such shares with payment of the proceeds being distributed to the beneficial holders of such entitlements.
 
Aangezien (i) de gezamenlijke waarde van tien FE Interim Gewone Aandelen en één Verkrijgende Vennootschap Gewoon Aandeel onmiddellijk na de Splitsing, gelijk is aan de waarde van tien FE Interim Gewone Aandelen onmiddellijk voorafgaand aan de Splitsing en (ii) de totale waarde van tien FE Interim Bijzondere Stemrechtaandelen en één Verkrijgende Vennootschap Bijzonder Stemrechtaandeel onmiddellijk na de Splitsing, gelijk is aan de waarde van één FE Interim Bijzonder Stemrechtaandeel onmiddellijk voorafgaand aan de Splitsing, is bovengenoemde Ruilverhouding toegepast. Er zullen geen betalingen in contanten worden gedaan door de Verkrijgende Vennootschap in verband met de Ruilverhouding. Eén of meer tussenpersonen zullen gedeeltelijke aanspraken samenvoegen tot hele aandelen in het kapitaal van de Verkrijgende Vennootschap en zullen deze aandelen verkopen met uitbetaling van de verkoopopbrengst aan de begunstigden van zulke aanspraken.
15 Date as of which the shareholders of FE Interim will share in the profits of the Acquiring Company
 
15 Datum waarop de aandeelhouders van FE Interim zullen delen in de winst van de Verkrijgende Vennootschap

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   As of the Demerger Effective Date, (i) each holder of FE Interim Common Shares will share in any distribution of profits by the Acquiring Company in proportion to the relevant participation in the aggregate issued and outstanding common share capital of the Acquiring Company to which holders of Acquiring Company Common Shares are entitled and (ii) each holder of FE Interim Special Voting Shares will share in any distribution of profits by the Acquiring Company in proportion to the relevant participation in the aggregate issued and outstanding special voting share capital of the Acquiring Company to which holders of Acquiring Company Special Voting Shares are entitled. No particular rights to dividends will be granted in connection with the Demerger.
 
   Per de Splitsing Effectieve Datum, zal (i) elke houder van FE Interim Gewone Aandelen delen in elke uitkering van winst door de Verkrijgende Vennootschap naar evenredigheid van het relevante gedeelte van het gehele geplaatste en uitstaande gewone aandelenkapitaal van de Verkrijgende Vennootschap waartoe de houders van Verkrijgende Vennootschap Gewone Aandelen gerechtigd zijn en (ii) elke houder van FE Interim Bijzondere Stemrechtaandelen delen in elke uitkering van winst door de Verkrijgende Vennootschap naar evenredigheid van het relevante gedeelte van het gehele geplaatste en uitstaande bijzondere stemrechtaandelenkapitaal waartoe de houders van Verkrijgende Vennootschap Bijzondere Stemrechtaandelen gerechtigd zijn. Geen bijzondere rechten op dividend worden toegekend in verband met de Splitsing.
16 Shares to be cancelled pursuant to Section 2:334x paragraph 3 DCC
 
16 In te trekken aandelen ingevolge artikel 2:334x lid 3 BW
   Not applicable.
 
   Niet van toepassing.
17 The consequences for holders of non-voting shares or shares without profit sharing rights
 
17 De gevolgen voor houders van stemrechtloze aandelen of winstrechtloze aandelen
   Not applicable because FE Interim does not have non-voting shares or shares without profit sharing rights in its capital.
 
    Niet van toepassing aangezien FE Interim geen stemrechtloze aandelen of winstrechtloze aandelen in haar kapitaal heeft.
18 The amount of compensation for a share pursuant to Section 2:334ee1 DCC
 
18 Het bedrag van de schadevergoeding voor een aandeel ingevolge artikel 2:334ee1 BW
   Not applicable because FE Interim does not have non-voting shares or shares without profit sharing rights in its capital.
 
    Niet van toepassing aangezien FE Interim geen stemrechtloze aandelen of winstrechtloze aandelen in haar kapitaal heeft.
19 The maximum amount for which compensation may be requested pursuant to Section 2:334ee1 DCC
 
19 Het maximumbedrag aan schadevergoeding dat kan worden verzocht ingevolge artikel 2:334ee1 BW
   Not applicable because FE Interim does not have non-voting shares or shares without profit sharing rights in its capital.
 
    Niet van toepassing aangezien FE Interim geen stemrechtloze aandelen of winstrechtloze aandelen in haar kapitaal heeft.
20 Auditor's statement on the proposed Exchange Ratio
 
20 Accountantsverklaring op de voorgestelde Ruilverhouding

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   KPMG Accountants N.V. has issued a statement as referred to in Section 2:334aa paragraph 1 DCC. This statement is attached to this Demerger proposal as Annex I .
 
   KPMG Accountants N.V. heeft een verklaring als bedoeld in artikel 2:334aa lid 1 BW afgegeven. Deze verklaring is als Bijlage I  aan dit voorstel tot Splitsing gehecht.
21 Signing formalities and governing law
 
21 Ondertekeningsformaliteiten en toepasselijk recht
   Pursuant to Section 2:334f DCC this Demerger proposal will have to be signed by each member of the boards of directors of FE Interim and the Acquiring Company.
 
   Ingevolge artikel 2:334f BW moet dit voorstel tot Splitsing ondertekend worden door elk lid van het bestuur van FE Interim en de Verkrijgende Vennootschap.
   This Demerger proposal is governed by, and interpreted in accordance with, Dutch law. In the event of a conflict between the Dutch and English version of this Demerger proposal, the Dutch version will prevail.
 
   Dit voorstel tot Splitsing wordt beheerst door, en geïnterpreteerd in overeenstemming met, Nederlands recht. Ingeval van tegenstrijdigheid tussen de Nederlandse en Engelse versie van dit voorstel tot Splitsing, zal de Nederlandse versie voorgaan.
( signature pages follow )
 
    (handtekeningenpagina volgt)


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SIGNATURE PAGE – HANDTEKENINGPAGINA
Board of directors of FE Interim B.V.



____________________________________



____________________________________
Name:
Richard Palmer
Name:
Fabio Spirito
Title:
executive director
Title:
executive director



____________________________________
 
 
Name:
Ferrante Zileri Dal Verme
 
 
Title:
non-executive director
 
 
Board of directors of FE New N.V.



____________________________________



____________________________________
Name:
Alessandro Gili
Name:
Giorgio Fossati
Title:
executive director
Title:
executive director



____________________________________
 
 
Name:
Carlo Daneo
 
 
Title:
non-executive director
 
 

demerger proposal – voorstel tot splitsing






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ANNEX A
Current articles of association FE Interim B.V.

demerger proposal – voorstel tot splitsing



ANNEX B
Current articles of association FE New N.V.

demerger proposal – voorstel tot splitsing



ANNEX C
Proposed articles of association FE New N.V.

demerger proposal – voorstel tot splitsing



ANNEX D
Description
Section 2:334bb DCC

demerger proposal – voorstel tot splitsing



ANNEX E
Auditor’s statement KPMG
Section 2:334aa paragraph 2 DCC

demerger proposal – voorstel tot splitsing



ANNEX F1
Pro forma FE Interim B.V.
ANNEX F2
Pro forma FE New N.V.



demerger proposal – voorstel tot splitsing



ANNEX G1
Interim financial statement FE Interim B.V.
ANNEX G2
Interim financial statement FE New N.V.



demerger proposal – voorstel tot splitsing



ANNEX H
Terms and conditions

demerger proposal – voorstel tot splitsing



ANNEX I
Auditor’s Statement KPMG
Section 2:334aa paragraph 1 DCC



demerger proposal – voorstel tot splitsing
Exhibit 99.4

MERGER PROPOSAL – VOORSTEL TOT FUSIE
10 SEPTEMBER 2015
 
FE NEW N.V.
&
NEW BUSINESS NETHERLANDS N.V.
 
 
 

merger proposal – voorstel tot fusie



MERGER PROPOSAL
 
VOORSTEL TOT FUSIE
The boards of directors of:
 
De besturen van:
1.      FE New N.V. , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, and its registered office address at Via Abetone Inferiore N. 4, I-41053, Maranello, Italy, registered with the Dutch trade register under number 64060977, to be renamed Ferrari N.V. upon the effectuation of the Merger (as defined below) ( Acquiring Company ); and
 
1. FE New N.V. , een naamloze vennootschap naar Nederlands recht, gevestigd te Amsterdam en kantoorhoudende te Via Abetone Inferiore N.4, I-41053, Maranello, Italië, ingeschreven in het handelsregister onder nummer 64060977, waarvan de naam wordt gewijzigd in Ferrari N.V. per het moment van het van kracht worden van de Fusie (zoals hierna gedefinieerd) ( Verkrijgende Vennootschap ); en
2.      New Business Netherlands N.V. , a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, and its registered office address at Via Abetone Inferiore N. 4, I-41053, Maranello, Italy, registered with the Dutch trade register under number 57991561, to be renamed Ferrari N.V. prior to effectuation of the Merger ( Company Ceasing to Exist ),
 
2. New Business Netherlands N.V. , een naamloze vennootschap naar Nederlands recht, gevestigd te Amsterdam en kantoorhoudende te Via Abetone Inferiore N.4, I-41053, Maranello, Italië, ingeschreven in het handelsregister onder nummer 57991561, waarvan de naam wordt gewijzigd in Ferrari N.V. voorafgaand aan het moment van het van kracht worden van de Fusie ( Verdwijnende Vennootschap ),
the Acquiring Company and the Company Ceasing to Exist are hereinafter together also referred to as: Merging Companies ,
 
de Verkrijgende Vennootschap en de Verdwijnende Vennootschap worden hierna gezamenlijk aangeduid als: Fuserende Vennootschappen,
whereas,
 
in aanmerking nemende,
(A) none of the Merging Companies has a supervisory board;
 
(A) bij geen van de Fuserende Vennootschappen is een raad van commissarissen ingesteld;
(B) the Merging Companies have not been dissolved or declared bankrupt, nor has a suspension of payment been declared with respect to the Merging Companies;
 
(B) de Fuserende Vennootschappen zijn niet ontbonden en verkeren niet in staat van faillissement, noch hebben zij surseance van betaling aangevraagd;
(C) none of the Merging Companies has a works council entitled to render advice in respect of the Merger (as defined below);
 
(C) geen van de Fuserende Vennootschappen heeft een ondernemingsraad die het recht heeft om advies te geven met betrekking tot de Fusie (zoals hierna gedefinieerd);

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(D) there is no trade union entitled to render comments in respect of the Merger that has amongst its members employees of (a subsidiary of) one of the Merging Companies;
 
(D) er is geen vereniging van werknemers die werknemers van (een dochtermaatschappij van) één van de Fuserende Vennootschappen onder haar leden telt;
(E) prior to the effectiveness of the Merger, the common shares in the capital of the Company Ceasing to Exist will be admitted to listing and trading on the New York Stock Exchange ( NYSE ) and upon effectiveness of the Merger the common shares in the capital of the Acquiring Company will be admitted to listing and trading on the NYSE and, on or after such date, may also be admitted to listing and trading on the Mercato Telematico Azionario organized and managed by Borsa Italiana S.p.A.,
 
(E) voorafgaand aan het van kracht worden van de Fusie, worden de gewone aandelen in het kapitaal van de Verdwijnende Vennootschap toegelaten tot de notering en handel op de New York Stock Exchange ( NYSE ) en per het moment van het van kracht worden van de Fusie worden de gewone aandelen in het kapitaal van de Verkrijgende Vennootschap toegelaten tot de notering en handel op de NYSE en, op of na deze datum, kunnen ook worden toegelaten tot de notering en handel op de Mercato Telematico Azionario georganiseerd en beheerd door Borsa Italiana S.p.A.,
propose a merger ( Merger ) in accordance with Title 7, Book 2 of the Dutch Civil Code ( DCC ) at which the Company Ceasing to Exist will cease to exist and as a consequence whereof:
 
stellen voor een fusie ( Fusie ) in de zin van Titel 7 van Boek 2 van het Burgerlijk Wetboek ( BW ) tot stand te brengen waarbij de Verdwijnende Vennootschap zal ophouden te bestaan en als gevolg waarvan:
- the Acquiring Company will acquire the assets and/or liabilities of the Company Ceasing to Exist under a universal title of succession; and
 
- de Verkrijgende Vennootschap het vermogen van de Verdwijnende Vennootschap onder algemene titel verkrijgt; en
- the shareholders of the Company Ceasing to Exist will be granted shares in the capital of the Acquiring Company.
 
- de aandeelhouders van de Verdwijnende Vennootschap aandelen in het kapitaal van de Verkrijgende Vennootschap krijgen toegekend.
This Merger proposal will be filed and published in accordance with the applicable laws and regulations. The proposal will also be made available at the registered office address of the Merging Companies for inspection by whomever is entitled thereto by applicable law.
 
Dit voorstel tot Fusie zal worden gedeponeerd en gepubliceerd in overeenstemming met de toepasselijke wetten en regelgeving. Het voorstel zal ook beschikbaar worden gemaakt ten kantore van de Fuserende Vennootschappen ter inzage voor degenen die daartoe volgens toepasselijk recht gerechtigd zijn.
Pursuant to Section 2:318 DCC, the Merger shall be executed in accordance with the relevant provisions of Dutch law and as such will become effective on the day following the day on which the notarial deed of Merger is executed before a civil law notary, officiating in the Netherlands ( Merger Effective Date ).
 
Ingevolge artikel 2:318 BW zal de Fusie worden uitgevoerd in overeenstemming met de relevante bepalingen van Nederlands recht en zodanig van kracht worden op de dag volgend op de dag waarop de notariële akte van Fusie wordt verleden voor een notaris met plaats van vestiging in Nederland ( Fusie Effectieve Datum ).

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In connection with the 7.875% mandatory convertible security ( MCS ) issued by Fiat Chrysler Automobiles N.V. ( FCA ) in accordance with the indenture dated 16 December 2014 among FCA and The Bank of New York Mellon as trustee ( Indenture ) and outstanding immediately prior to the Merger Effective Date, the holders of the MCS shall receive such number of common shares in the capital of the Acquiring Company as agreed in and determined pursuant to the terms of the Indenture ( MCS Shares ).
 
In samenhang met het 7,875% verplicht converteerbaar effect ( MCS ) uitgegeven door Fiat Chrysler Automobiles N.V. ( FCA ) in overeenstemming met de indenture met datum 16 december 2014 tussen FCA en The Bank of New York Mellon als trustee ( Indenture ) en dat onmiddellijk voorafgaand aan de Fusie Effectieve Datum uitstaat, zullen de houders van de MCS een zodanig aantal gewone aandelen in het kapitaal van de Verkrijgende Vennootschap verkrijgen als overeengekomen in en bepaald volgens de voorwaarden van de Indenture ( MCS Aandelen ).
The data to be mentioned pursuant to the Sections 2:312 and 2:326 DCC are as follows:
 
De ingevolge de artikelen 2:312 en 2:326 BW te vermelden gegevens zijn de volgende:
1 Type of legal entity, name and official seat of the Merging Companies
 
1 Rechtsvorm, naam en zetel van de Fuserende Vennootschappen
1.1 Acquiring Company
 
1.1 Verkrijgende Vennootschap
   The public company under Dutch law FE New N.V., having its official seat in Amsterdam, the Netherlands.
 
   De naamloze vennootschap naar Nederlands recht FE New N.V., gevestigd Amsterdam.
1.2 Company Ceasing to Exist
 
1.2 Verdwijnende Vennootschap
   The public company under Dutch law New Business Netherlands N.V., having its official seat in Amsterdam, the Netherlands.
 
   De naamloze vennootschap naar Nederlands recht New Business Netherlands N.V., gevestigd Amsterdam.
2 Articles of association of the Acquiring Company
 
2 Statuten van de Verkrijgende Vennootschap
   The articles of association of the Acquiring Company were drawn up by a deed of incorporation executed on 4 September 2015 before G.M. Portier, civil law notary officiating in Amsterdam, the Netherlands. The consecutive wording of the current articles of association is attached to this Merger proposal as Annex A .
 
   De statuten van de Verkrijgende Vennootschap zijn vastgesteld bij akte van oprichting verleden op 4 september 2015 voor mr. G.M. Portier, notaris met plaats van vestiging in Amsterdam. De doorlopende tekst van de huidige statuten is als Bijlage A  aan dit voorstel tot Fusie gehecht.
   The articles of association of the Acquiring Company shall be amended before or upon effectuation of the Merger in the form attached to this Merger proposal as Annex B , as a result of which inter alia  the name of the Acquiring Company will be changed to Ferrari N.V.
 
   De statuten van de Verkrijgende Vennootschap zullen gewijzigd worden voorafgaand of per het moment van het van kracht worden van de Fusie in de vorm als Bijlage B  aan dit voorstel tot Fusie gehecht, als gevolg waarvan onder meer de naam van de Verkrijgende Vennootschap gewijzigd zal worden in Ferrari N.V.
3 Rights and compensations at the expense of the Acquiring Company granted pursuant to Section 2:320 DCC
 
3 Rechten en vergoedingen ten laste van de Verkrijgende Vennootschap toe te kennen ingevolge artikel 2:320 BW

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   As there are no persons who, in any other capacity than as shareholder, have special rights against the Company Ceasing to Exist, no special rights and no compensations will be granted at the expense of the Acquiring Company to anyone. At the same time as the Merger becomes effective, the MCS Shares will be issued to the holders of the MCS entitled thereto pursuant to the Indenture.
 
   Aangezien er geen personen zijn die anders dan als aandeelhouder bijzondere rechten hebben jegens de Verdwijnende Vennootschap, worden geen bijzondere rechten of vergoedingen aan iemand ten laste van de Verkrijgende Vennootschap toegekend. Tegelijkertijd met het van kracht worden van de Fusie, worden de MCS Aandelen uitgegeven aan de houders van de MCS daartoe gerechtigd volgens de Indenture.
4 Benefits to be granted to members of the boards of directors of the Merging Companies or to others involved with the Merger, in connection with the Merger
 
4 Voordelen, welke in verband met de Fusie aan leden van het bestuur van de Fuserende Vennootschappen of aan anderen betrokken bij de Fusie worden toegekend
   No benefits will be granted to members of the boards of directors of the Merging Companies or to others involved with the Merger, other than in such person’s capacity as shareholder of the Company Ceasing to Exist.
 
   Er worden geen voordelen toegekend aan leden van het bestuur van de Fuserende Vennootschappen of aan anderen betrokken bij de Fusie, anders dan aan anderen in hoedanigheid van aandeelhouder van de Verdwijnende Vennootschap.
5 Intentions with regard to the composition of the board of directors of the Acquiring Company after the Merger
 
5 Voornemens over de samenstelling van het bestuur van de Verkrijgende Vennootschap na de Fusie
   The current composition of the board of directors of the Acquiring Company is as follows:
   executive directors:
-      Alessandro Gili; and
-      Giorgio Fossati,
 
   De huidige samenstelling van het bestuur van de Verkrijgende Vennootschap is als volgt:
   uitvoerende bestuurders:
-      Alessandro Gili; en
-      Giorgio Fossati,
   non-executive director:
-      Carlo Daneo.
 
   niet-uitvoerende bestuurder:
-      Carlo Daneo.
   It is the intention to change the composition of the board of directors of the Acquiring Company in connection with the Merger.
 
   Het voornemen bestaat in verband met de Fusie wijziging te brengen in de samenstelling van het bestuur van de Verkrijgende Vennootschap.
6 Date as of which the financial data regarding the assets and liabilities of the Company Ceasing to Exist will be accounted for in the annual accounts of the Acquiring Company
 
6 Tijdstip met ingang waarvan de financiële gegevens met betrekking tot het gedeelte van het vermogen van de Verdwijnende Vennootschap zullen worden verantwoord in de jaarstukken van de Verkrijgende Vennootschap

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   The financial data of the Company Ceasing to Exist will be accounted for in the annual accounts of the Acquiring Company as of 1 January 2016. The last financial year of the Company Ceasing to Exist will therefore end on 31 December 2015.
 
   De financiële gegevens van de Verdwijnende Vennootschap zullen worden verantwoord in de jaarstukken van de Verkrijgende Vennootschap per 1 januari 2016. Derhalve zal het laatste boekjaar van de Verdwijnende Vennootschap eindigen op 31 december 2015.
7 Proposed measures in connection with the conversion of the shareholdership of the Company Ceasing to Exist
 
7 Voorgenomen maatregelen in verband met de overgang van het aandeelhouderschap van de Verdwijnende Vennootschap
   The shares in the capital of the Acquiring Company to be granted in connection with the Merger will be in the form of registered shares.
 
   De aandelen in het kapitaal van de Verkrijgende Vennootschap zullen in verband met de Fusie worden toegekend in de vorm van aandelen op naam.
   The Acquiring Company Common Shares (as defined below) are expected to be delivered to the beneficiaries in book-entry form through the direct registration system facilitated by the Depositary Trust Company, a limited purpose trust company under New York law, within three business days following the Merger Effective Date.
 
 De Verkrijgende Vennootschap Gewone Aandelen (zoals hierna gedefinieerd) worden naar verwachting geleverd aan de begunstigden in girale vorm via een direct registratie systeem gefaciliteerd door de Depositary Trust Company, een trust vennootschap voor een bepaald doel onder het recht van New York, binnen drie werkdagen na de Fusie Effectieve Datum.
   The granting of Acquiring Company Special Voting Shares (as defined below) in connection with the Merger will be registered in the shareholders’ register of the Acquiring Company upon the Merger becoming effective.
 
 Het toekennen van Verkrijgende Vennootschap Bijzondere Stemrechtaandelen (zoals hierna gedefinieerd) in verband met de Fusie zullen worden geregistreerd in het aandeelhoudersregister van de Verkrijgende Vennootschap per het moment van het van kracht worden van de Fusie.
   A holder of a right of pledge or usufruct in a share in the capital of the Company Ceasing to Exist shall acquire the same right in respect of the share in the capital of the Acquiring Company acquired by the relevant holder of that share pursuant to the deed of Merger.
 
   Een houder van een pandrecht of vruchtgebruik op een aandeel in het kapitaal van de Verdwijnende Vennootschap zal hetzelfde recht ten aanzien van het aandeel in het kapitaal van de Verkrijgende Vennootschap krijgen, verkregen door de relevante houder van dat aandeel als gevolg van de akte van Fusie.
8 Intentions involving continuance or termination of activities
 
8 Voornemens omtrent voortzetting of beëindiging van activiteiten
   The activities of the Company Ceasing to Exist will be continued by the Acquiring Company in all material respects, including any changes currently contemplated by the Company Ceasing to Exist.
 
   De activiteiten van de Verdwijnende Vennootschap zullen worden voortgezet door de Verkrijgende Vennootschap in elk materieel opzicht, inclusief elke wijziging die op dit moment door de Verdwijnende Vennootschap wordt overwogen.

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9 Effects of the Merger on the goodwill and the distributable reserves of the Acquiring Company
 
9 Invloed van de Fusie op de grootte van de goodwill en de uitkeerbare reserves van de Verkrijgende Vennootschap
   The Merger will take place on the basis of the book value and will therefore have no goodwill impact.
 
    De Fusie zal plaatsvinden op basis van de boekwaarde en zal hierdoor geen invloed hebben op de grootte van de goodwill.
   To the extent that the Acquiring Company must maintain reserves pursuant to Dutch law or its articles of association, as a result of the Merger, the freely distributable reserves of the Acquiring Company will increase with the difference between (i) the value of the assets and liabilities of the Company Ceasing to Exist that the Acquiring Company will acquire at the Merger and (ii) the aggregate nominal value of the shares in the capital of the Acquiring Company allotted at the Merger plus the reserves the Acquiring Company must maintain pursuant to Dutch law or its articles of association.
 
   Voor zover de Verkrijgende Vennootschap reserves krachtens Nederlands recht of haar statuten moet aanhouden, zullen als gevolg van de Fusie de vrij uitkeerbare reserves van de Verkrijgende Vennootschap toenemen met het verschil tussen (i) de waarde van het vermogen van de Verdwijnende Vennootschap dat de Verkrijgende Vennootschap bij de Fusie zal verkrijgen en (ii) de gezamenlijke nominale waarde van de aandelen in het kapitaal van de Verkrijgende Vennootschap toegekend bij de Fusie vermeerderd met de reserves die de Verkrijgende Vennootschap krachtens Nederlands recht of haar statuten moet aanhouden.
10 Approval of the resolution to effect the Merger
 
10 Goedkeuring van het besluit tot Fusie
10.1 Acquiring Company
 
10.1 Verkrijgende Vennootschap
   The resolution to effect the Merger has to be adopted by the general meeting of shareholders or the board of directors of the Acquiring Company. The resolution to effect the Merger is not subject to the approval of any other corporate body of the Acquiring Company or governmental authority.
 
   Het besluit tot Fusie moet door de algemene vergadering van aandeelhouders of het bestuur van de Verkrijgende Vennootschap worden genomen. Het besluit tot Fusie is niet onderworpen aan de goedkeuring van enig ander orgaan van de Verkrijgende Vennootschap noch van enig overheidsorgaan.
10.2 Company Ceasing to Exist
 
10.2 Verdwijnende Vennootschap
   The resolution to effect the Merger has to be adopted by the general meeting of shareholders of the Company Ceasing to Exist. The resolution to effect the Merger is not subject to the approval of any other corporate body of the Company Ceasing to Exist or governmental authority.
 
    Het besluit tot Fusie moet door de algemene vergadering van aandeelhouders van de Verdwijnende Vennootschap worden genomen. Het besluit tot Fusie is niet onderworpen aan de goedkeuring van enig ander orgaan van de Verdwijnende Vennootschap noch van enig overheidsorgaan.
11 The exchange ratio of the shares. No cash payments
 
11 De ruilverhouding van de aandelen. Geen betalingen in contanten

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   The holders of common shares in the capital of the Company Ceasing to Exist ( Company Ceasing to Exist Common Shares ), will receive common shares in the capital of the Acquiring Company ( Acquiring Company Common Shares ) in accordance with an exchange ratio of one Acquiring Company Common Share for each Company Ceasing to Exist Common Share held by them at the Merger Effective Date, and the holders of special voting shares in the capital of the Company Ceasing to Exist ( Company Ceasing to Exist Special Voting Shares ), will receive special voting shares in the capital of the Acquiring Company ( Acquiring Company Special Voting Shares ) in accordance with an exchange ratio of one Acquiring Company Special Voting Share for each Company Ceasing to Exist Special Voting Share held by them at the Merger Effective Date ( Exchange Ratio ), provided that shares in the capital of the Company Ceasing to Exist which are held by or for the account of the Merging Companies will be cancelled pursuant to the provisions of Section 2:325 paragraph 4 DCC. The aggregate nominal value of the shares in the capital of the Acquiring Company to be issued in the Merger shall not exceed EUR 7.5 million.
 
   De houders van gewone aandelen in het kapitaal van de Verdwijnende Vennootschap ( Verdwijnende Vennootschap Gewone Aandelen ) zullen gewone aandelen in het kapitaal van de Verkrijgende Vennootschap verkrijgen ( Verkrijgende Vennootschap Gewone Aandelen ) in overeenstemming met een ruilverhouding van één Verkrijgende Vennootschap Gewoon Aandeel voor elk Verdwijnende Vennootschap Gewoon Aandeel door hen gehouden per de Fusie Effectieve Datum, en de houders van bijzondere stemrechtaandelen in het kapitaal van de Verdwijnende Vennootschap ( Verdwijnende Vennootschap Bijzondere Stemrechtaandelen ) zullen bijzondere stemrechtaandelen in het kapitaal van de Verkrijgende Vennootschap verkrijgen ( Verkrijgende Vennootschap Bijzondere Stemrechtaandelen ) in overeenstemming met een ruilverhouding van één Verkrijgende Vennootschap Bijzonder Stemrechtaandeel voor elk Verdwijnende Vennootschap Bijzonder Stemrechtaandeel door hen gehouden per de Fusie Effectieve Datum ( Ruilverhouding ), met dien verstande dat aandelen in het kapitaal van de Verdwijnende Vennootschap die worden gehouden door of namens de Fuserende Vennootschappen ingevolge artikel 2:325 lid 4 BW zullen worden ingetrokken. De gezamenlijke nominale waarde van de aandelen in het kapitaal van de Verkrijgende Vennootschap die worden uitgegeven bij de Fusie kan niet meer bedragen dan EUR 7,5 miljoen.
   No cash payments shall be made pursuant to the Exchange Ratio in connection with the Merger.
 
   Er zullen geen betalingen in contanten worden gedaan volgens de Ruilverhouding in verband met de Fusie.
12 Date as of which the shareholders of the Company Ceasing to Exist will share in the profits of the Acquiring Company
 
12 Datum waarop de aandeelhouders van de Verdwijnende Vennootschap zullen delen in de winst van de Verkrijgende Vennootschap

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   As of the Merger Effective Date, (i) each holder of Company Ceasing to Exist Common Shares will share in any distribution of profits by the Acquiring Company in proportion to the relevant participation in the aggregate issued and outstanding common share capital of the Acquiring Company to which holders of Acquiring Company Common Shares are entitled and (ii) each holder of Company Ceasing to Exist Special Voting Shares will share in any distribution of profits by the Acquiring Company in proportion to the relevant participation in the aggregate issued and outstanding special voting share capital of the Acquiring Company to which holders of Acquiring Company Special Voting Shares are entitled. No particular rights to dividends will be granted in connection with the Merger.
 
Per de Fusie Effectieve Datum, zal (i) elke houder van de Verkrijgende Vennootschap Gewone Aandelen delen in elke uitkering van winst door de Verkrijgende Vennootschap naar evenredigheid van het relevante gedeelte van het gehele geplaatste en uitstaande gewone aandelenkapitaal van de Verkrijgende Vennootschap waartoe de houders van Verkrijgende Vennootschap Gewone Aandelen gerechtigd zijn en (ii) elke houder van Verdwijnende Vennootschap Bijzondere Stemrechtaandelen delen in elke uitkering van winst door de Verkrijgende Vennootschap naar evenredigheid van het relevante gedeelte van het gehele geplaatste en uitstaande bijzondere stemrechtaandelenkapitaal waartoe de houders van Verkrijgende Vennootschap Bijzondere Stemrechtaandelen gerechtigd zijn. Geen bijzondere rechten op dividend worden toegekend in verband met de Fusie.
13 Shares to be cancelled pursuant to Section 2:325 paragraph 3 DCC
 
13 In te trekken aandelen ingevolge artikel 2:325 lid 3 BW
   No shares in the capital of the Acquiring Company which are held by or for the account of the Merging Companies will be cancelled pursuant to the provisions of Section 2:325 paragraph 3 DCC.
 
   Geen aandelen in het kapitaal van de Verkrijgende Vennootschap die worden gehouden door of voor rekening van de Fuserende Vennootschappen zullen als gevolg van het bepaalde in artikel 2:325 lid 3 BW ingetrokken worden.
14 The consequences for holders of non-voting shares or shares without profit sharing rights
 
14 De gevolgen voor houders van stemrechtloze aandelen of winstrechtloze aandelen
   Not applicable because the Company Ceasing to Exist does not have non-voting shares or shares without profit sharing rights in its capital.
 
   Niet van toepassing aangezien de Verdwijnende Vennootschap geen stemrechtloze aandelen of winstrechtloze aandelen in haar kapitaal heeft.
15 The amount of compensation for a share pursuant to Section 2:330a DCC
 
15 Het bedrag van de schadevergoeding voor een aandeel ingevolge artikel 2:330a BW
   Not applicable because the Company Ceasing to Exist does not have non-voting shares or shares without profit sharing rights in its capital.
 
   Niet van toepassing aangezien de Verdwijnende Vennootschap geen stemrechtloze aandelen of winstrechtloze aandelen in haar kapitaal heeft.

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16 The maximum amount for which compensation may be requested pursuant to Section 2:330a DCC
 
16 Het maximumbedrag aan schadevergoeding dat kan worden verzocht ingevolge artikel 2:330a BW
   Not applicable because the Company Ceasing to Exist does not have non-voting shares or shares without profit sharing rights in its capital.
 
   Niet van toepassing aangezien de Verdwijnende Vennootschap geen stemrechtloze aandelen of winstrechtloze aandelen in haar kapitaal heeft.
17 Auditor’s statements
 
17 Accountantsverklaringen
   KPMG Accountants N.V. and Deloitte Accountants B.V. have each issued a statement as referred to in Section 2:328 paragraph 1 second sentence DCC. These statements are attached to this Merger proposal as Annex C1  and Annex C2  respectively.
 
    KPMG Accountants N.V. en Deloitte Accountants B.V. hebben elk een verklaring als bedoeld in artikel 2:328 lid 1 tweede volzin BW afgegeven. Deze verklaringen zijn als Bijlage C1  respectievelijk Bijlage C2  aan dit voorstel tot Fusie gehecht.
18 Interim financial statements
 
18 Tussentijdse vermogensopstellingen
   The interim financial statements of the Acquiring Company and the Company Ceasing to Exist as referred to in Section 2:313 paragraph 2 DCC are attached to this Merger proposal as Annex D1  and Annex D2  respectively.
 
    De tussentijdse vermogensopstelling van de Verkrijgende Vennootschap en de Verdwijnende Vennootschap als bedoeld in artikel 2:313 lid 2 BW zijn als Bijlage D1  respectievelijk Bijlage D2  aan dit voorstel tot Fusie gehecht.
19 Signing formalities and governing law
 
19 Ondertekeningsformaliteiten en toepasselijk recht
   Pursuant to Section 2:312 DCC this Merger proposal will have to be signed by each member of the boards of directors of the Merging Companies.
 
   Ingevolge artikel 2:312 BW moet dit voorstel tot Fusie ondertekend worden door elk lid van het bestuur van de Fuserende Vennootschappen.
   This Merger proposal is governed by, and interpreted in accordance with, Dutch law. In the event of a conflict between the Dutch and the English version of this Merger proposal, the Dutch version will prevail.
 
   Dit voorstel tot Fusie wordt beheerst door, en geïnterpreteerd in overeenstemming met, Nederlands recht. Ingeval van tegenstrijdigheid tussen de Nederlandse en de Engelse versie van dit voorstel tot Fusie, zal de Nederlandse versie voorgaan.
( signature pages follow )
 
(handtekeningenpagina volgt)


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SIGNATURE PAGE – HANDTEKENINGPAGINA
Board of directors of New Business Netherlands N.V.



____________________________________



____________________________________
Name:
Sergio Marchionne
Name:
Richard Palmer
Title:
director
Title:
director



____________________________________
 
 
Name:
Alessandro Gili
 
 
Title:
director
 
 
Board of directors of FE New N.V.



____________________________________



____________________________________
Name:
Alessandro Gili
Name:
Giorgio Fossati
Title:
executive director
Title:
executive director



____________________________________
 
 
Name:
Carlo Daneo
 
 
Title:
non-executive director
 
 

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ANNEX A
Current articles of association FE New N.V.


ANNEX B
Proposed articles of association FE New N.V.

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GMP/MvA/5155169/40064372
ARTICLES OF ASSOCIATION:
1.
Definitions
1.1
In these Articles of Association the following words shall have the following meanings:
accountant : a chartered accountant ( registeraccountant ) or other accountant referred to in Section 2:393 of the Dutch Civil Code, or an organisation in which such accountants work together;
Affiliate : with respect to any specified person, any other person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative of the foregoing;
board of directors : the board of directors of the company;
Change of Control : in respect of any shareholder that is not an individual, any direct or indirect transfer in one or a series of related transactions as a result of which (i) a majority of the voting rights of such shareholder, (ii) the de facto ability to direct the casting of a majority of the votes exercisable at general meetings of shareholders of such shareholder and/or (iii) the ability to appoint or remove a majority of the directors, executive directors or board members or executive officers of such shareholder or to direct the casting of a majority or more of the voting rights at meetings of the board of directors, governing body or executive committee of such shareholder has been transferred to a new owner, provided that no change of control shall be deemed to have occurred if (a) the transfer of ownership and/or control is an intragroup transfer under the same parent company, (b) the transfer of ownership and/or control is the result of the succession or the liquidation of assets between spouses or the inheritance, inter vivo donation or other transfer to a spouse or a relative up to and including the fourth degree or (c) the fair market value of the Qualifying Common Shares held by such shareholder represents less than twenty percent (20%) of the total assets of the Transferred Group at the time of the transfer and the Qualifying Common Shares held by such shareholder, in the sole judgment of the company, are not otherwise material to the Transferred Group or the Change of Control transaction;
common share : a common share in the share capital of the company;
Demerger : the statutory demerger ( afsplitsing ) of assets of FE Interim B.V., a private limited liability company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 64060438, to the company;
director : a member of the board of directors;
electing common shares : common shares registered in the Loyalty Register for the purpose of becoming Qualifying Common Shares;
general meeting of shareholders : the body of the company consisting of shareholders entitled to vote, together with usufructuaries and pledgees to whom voting rights attributable to shares accrue or a meeting of shareholders and other persons entitled to attend meetings of shareholders (as the case may be);

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in writing : by letter, by telecopier, by e-mail, or by a legible and reproducible message otherwise sent (including electronically), provided that the identity of the sender can be reasonably established;
Initial Allocation Procedures : the procedures pursuant to which Initial Qualifying Shareholders are given the opportunity to opt for an initial allocation of special voting shares;
Initial Qualifying Shareholders : (a) shareholders who received special voting shares pursuant to the Demerger and (b) shareholders who received special voting shares pursuant to the Merger;
group company : a group company as referred to in Section 2:24b of the Dutch Civil Code;
Loyalty Register : the register kept by or on behalf of the company for the registration of any Qualifying Common Shares and any electing common shares;
Loyalty Transferee : (i) with respect to any shareholder that is not an individual, any Affiliate of such shareholder (including any successor of such shareholder) that is beneficially owned in substantially the same manner (including percentage) as the beneficial ownership of the transferring shareholder or the beneficiary company as part of a statutory demerger ( splitsing ) of such shareholder and (ii) with respect to any shareholder that is an individual, any transferee of common shares following succession or the liquidation of assets between spouses or the inheritance, inter vivo donation or other transfer to a spouse or a relative up to and including the fourth degree;
Merger : the statutory merger ( fusie ) of New Business Netherlands N.V. (to be renamed Ferrari N.V.), a public company under Dutch law, having its official seat in Amsterdam, the Netherlands, registered with the Dutch trade register under number 57991561, with and into the company;
person : any individual ( natuurlijk persoon ), firm, legal entity (in whatever form and wherever formed or incorporated), governmental entity, joint venture, association or partnership;
Qualifying Common Shares : with respect to any shareholder, (i) the number of common shares that has, pursuant to the Initial Allocation Procedures, been allocated to such shareholder and registered in the Loyalty Register and continue to be so registered in the name of such shareholder or its Loyalty Transferee(s) and (ii) the number of electing common shares that has for an uninterrupted period of at least three (3) years, been registered in the Loyalty Register in the name of such shareholder or its Loyalty Transferee(s) and continue to be so registered. For the avoidance of doubt, it is not necessary that specific common shares satisfy the requirements as referred to under (i) and (ii) in order for a number of common shares to qualify as Qualifying Common Shares; accordingly, it is permissible for common shares to be substituted into the Loyalty Register for different common shares without affecting the total number of Qualifying Common Shares or the total number of common shares that would become Qualifying Common Shares after an uninterrupted period of at least three (3) years after registration in the Loyalty Register, held by the shareholder or its Loyalty Transferee(s);
Qualifying Shareholder : a holder of one or more Qualifying Common Shares;
Record Date : has the meaning assigned thereto in Article 19.12;
share : a share in the share capital of the company; unless the contrary is apparent, this shall include each common share and each special voting share;

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shareholder : a holder of one or more shares; unless the contrary is apparent, this shall include each holder of common shares and/or special voting shares;
special voting share : a special voting share in the share capital of the company;
subsidiary : a subsidiary of the company as referred to in Section 2:24a of the Dutch Civil Code;
Transferred Group : the relevant shareholder together with its Affiliates, if any, over which control was transferred as part of the same change of control transaction within the meaning of the definition of Change of Control.
1.2
References to Articles shall be deemed to refer to articles of these Articles of Association, unless the contrary is apparent.
2.
Name and corporate seat
2.1
The name of the company is: Ferrari N.V.
2.2
The company has its corporate seat in Amsterdam, the Netherlands.
3.
Objects
3.1
The objects for which the company is established are to carry on, either directly or through wholly or partially-owned companies and entities, activities relating in whole or in any part to passenger and commercial vehicles, transport, mechanical engineering, energy, engines, capital machinery and equipment and related goods and propulsion, as well as any other manufacturing, commercial, financial or service activity.
3.2
Within the scope and for the achievement of the purposes mentioned in Article 3.1, the company may:
(a)
operate in, among other areas, the mechanical, electrical, electro mechanical, thermo mechanical, electronic, nuclear, chemical, mining, steel and metallurgical industries, as well as in telecommunications, civil, industrial and agricultural engineering, publishing, information services, tourism and other service industries;
(b)
acquire shareholdings and interests in companies and enterprises of any kind or form and purchase, sell or place shares, debentures, bonds, promissory notes or other securities or evidence of indebtedness;
(c)
provide financing to companies and entities it wholly or partially owns and carry on the technical, commercial, financial and administrative coordination of their activities;
(d)
provide or arrange for the provision (including through partially owned entities) of financing for distributors, dealers, retail customers, vendors and other business partners and carry on the technical, commercial, financial and administrative coordination of their activities;
(e)
purchase or otherwise acquire, on its own behalf or on behalf of companies and entities it wholly or partially owns, the ownership or right of use of intangible assets providing them for use by those companies and entities;
(f)
promote and ensure the performance of research and development activities, as well as the use and exploitation of the results thereof;
(g)
undertake, on its own behalf or on behalf of companies and entities it wholly or partially owns, any investment, real estate, financial, commercial, or partnership transaction whatsoever, including the assumption of loans and financing in general and the granting to third parties of endorsements, surety ships and other guarantees, including real security; and
(h)
undertake and perform any management or support services or any other activity ancillary, preparatory or complementary to any of the above.
4.
Share capital and shares

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4.1
The authorized share capital of the company amounts to seven million five hundred thousand euro (EUR 7,500,000), divided into three hundred seventy-five million (375,000,000) common shares and three hundred seventy-five million (375,000,000) special voting shares with a nominal value of one eurocent (EUR 0.01) each.
4.2
When shares are subscribed for, the par value thereof and, if the shares are subscribed at a higher amount, the difference between such amounts, shall be paid-up, without prejudice to the provision of Section 2:80 paragraph 2 of the Dutch Civil Code. Where shares of a particular class are subscribed at a higher amount than the nominal value, the difference between such amounts shall be carried to the share premium reserve of that class of shares.
4.3
Upon the establishment of a right of pledge on a common share or the creation or transfer of a right of usufruct on a common share, the right to vote may be vested in the pledgee or the usufructuary, with due observance of the relevant provisions of Dutch law.
4.4
Both the holder of one or more common shares without voting right and the pledgee or usufructuary of one or more common shares with voting right shall have the rights conferred by law upon holders of depositary receipts issued with a company’s cooperation for shares in its share capital.
4.5
No right of pledge may be established on a special voting share.
4.6
The voting rights attributable to a special voting share may not be assigned to the usufructuary.
4.7
The usufructuary of one or more special voting shares shall not have the rights conferred by law upon holders of depositary receipts issued with a company's cooperation for shares in its share capital.
4.8
The company may cooperate in the issuance of registered depositary receipts for common shares, but only pursuant to a resolution to that effect of the board of directors. Each holder of such depositary receipts shall have the rights conferred by law or by the applicable depositary agreement upon holders of depositary receipts issued with a company’s cooperation for shares in its share capital.
5.
Holding requirement in respect of special voting shares
5.1
Special voting shares may only be held by a Qualifying Shareholder and the company itself. A Qualifying Shareholder may hold no more than one (1) special voting share for each Qualifying Common Share held by such shareholder. Other than as provided in the Articles 8.8 and 8.9, there shall be no limit on the number of special voting shares that may be held by the company.
5.2
Subject to a prior resolution of the board of directors, which may set certain terms and conditions, the holder of one (1) or more Qualifying Common Shares will be eligible to hold one (1) special voting share for each such Qualifying Common Share.
5.3
In the event of a Change of Control in respect of a Qualifying Shareholder or in the event that a Qualifying Shareholder requests that some or all of its Qualifying Common Shares be de-registered from the Loyalty Register in accordance with Article 11.3, or transfers some or all of its Qualifying Common Shares to any other party (other than a Loyalty Transferee):
(a)
a corresponding number of Qualifying Common Shares of such shareholder shall be de-registered from the Loyalty Register with immediate effect and as a consequence shall no longer qualify as Qualifying Common Shares;
(b)
such shareholder shall be obliged to immediately offer and transfer a number of special voting shares equal to the number of Qualifying Common Shares referred to in Article 5.3 (a) to the company and any and all voting rights attached to such special voting shares will be suspended with immediate effect.
5.4
In the event of a Change of Control in respect of a shareholder who is registered in the Loyalty Register but is not yet a Qualifying Shareholder with respect to one or more of its common

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shares, a corresponding number of common shares of such shareholder shall be de-registered from the Loyalty Register with immediate effect.
5.5
In respect of special voting shares offered to the company pursuant to Article 5.3, the offering shareholder and the company shall determine the purchase price by mutual agreement. If they do not reach agreement on the purchase price, the purchase price shall be determined by one or more accountants appointed jointly by them. If they do not reach agreement on the accountant or accountants, as the case may be, the price shall be determined by three accountants, one to be appointed by the offering shareholder, one to be appointed by the company and the third one to be appointed jointly by the accountants thus appointed. The appointed accountants shall be authorized to inspect all books and records of the company and to obtain all such information as will be useful to them determining the price.
6.
Issuance of shares
6.1
The general meeting of shareholders or alternatively the board of directors, if it has previously been designated to do so by the general meeting of shareholders, shall have authority to resolve on any issuance of shares. The general meeting of shareholders shall, for as long as any such designation of the board of directors for this purpose is in force, no longer have authority to decide on the issuance of shares. For a period of five (5) years from [the l day of l two thousand fifteen – effective date articles of association ], the board of directors shall irrevocably be authorized to issue shares up to the maximum aggregate amount of shares as provided for in the company’s authorized share capital as set out in Article 4.1, as amended from time to time.
6.2
The general meeting of shareholders or the board of directors if so designated in accordance with Article 6.1, shall decide on the price and the further terms and conditions of issuance, with due observance of what is required in relation thereto in the law and in these Articles of Association.
6.3
If the board of directors is designated to have authority to decide on the issuance of shares by the general meeting of shareholders, such designation shall specify the class of shares and the maximum number of shares that can be issued under such designation. When making such designation the duration thereof, which shall not be for more than five (5) years, shall be resolved upon at the same time. The designation may be extended from time to time for periods not exceeding five (5) years from the date of such extension. The designation may not be withdrawn unless otherwise provided in the resolution in which the designation is made.
6.4
Within eight (8) days after the passing of a resolution of the general meeting of shareholders to issue shares or to designate the board of directors as provided in Article 6.1, the company shall deposit the complete text of such resolution at the office of the Dutch trade register. Within eight (8) days after the end of each quarter of the financial year, the company shall notify the Dutch trade register of each issuance of shares which occurred during such quarter. Such notification shall state the number of shares issued and their class. Failure to duly make such notification shall neither affect the authority of the general meeting of shareholders or the board of directors to issue shares nor the validity of the shares issued.
6.5
What has been provided in the Articles 6.1 up to and including 6.4 shall mutatis mutandis be applicable to the granting of rights to subscribe for shares, but shall not be applicable to the issuance of shares to persons exercising a previously granted right to subscribe for shares.
6.6
Payment for shares shall be made in cash unless another form of contribution has been agreed. Payment in a currency other than euro may only be made with the consent of the company. Payment in a currency other than euro will discharge the obligation to pay up the nominal value to the extent that the amount paid can be freely exchanged into an amount in euro equal to the nominal value of the relevant shares. The rate of exchange on the day of payment will

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be decisive, unless the company requires payment against the rate of exchange on a specified date which is not more than two (2) months before the last day on which payment for such shares is required to be made, provided that such shares will be admitted to trading on a regulated market or multilateral trading facility as referred to in Section 1:1 of the Dutch Financial Supervision Act ( Wet op het financieel toezicht ) or a regulated market or multilateral trading facility of a state, which is not a European Union member state, which is comparable thereto.
6.7
The board of directors is expressly authorized to enter into the legal acts referred to in Section 2:94 of the Dutch Civil Code, without the prior consent of the general meeting of shareholders.
7.
Right of pre-emption
7.1
Subject to Article 7.9 and the remainder of this Article 7, in the event of an issuance of common shares, every holder of common shares shall have a right of pre-emption with regard to the common shares to be issued in proportion to the aggregate nominal value of his common shares, provided however that no such right of pre-emption shall exist in respect of shares to be issued to employees of the company or of a group company pursuant to any option plan of the company.
7.2
A shareholder shall have no right of pre-emption for shares that are issued against a non-cash contribution.
7.3
In the event of an issuance of special voting shares to Qualifying Shareholders, shareholders shall not have any right of pre-emption.
7.4
The general meeting of shareholders or the board of directors, as the case may be, shall decide when passing the resolution to issue shares in which manner the shares shall be issued and, to the extent that rights of pre-emption apply, within what period those rights may be exercised.
7.5
The company shall give notice of an issuance of shares that is subject to a right of pre-emption and of the period during which such right may be exercised by announcement in the Dutch State Gazette and in a nationally distributed newspaper.
7.6
The right of pre-emption may be exercised during a period of at least two (2) weeks after the announcement in the Dutch State Gazette.
7.7
Subject to Article 7.9, the right of pre-emption may be limited or excluded by a resolution of the general meeting of shareholders or a resolution of the board of directors if the board of directors has been designated to do so by the general meeting of shareholders and provided the board of directors has also been authorized to resolve on the issuance of shares. In the proposal to the general meeting of shareholders to limit or exclude pre-emption rights the reasons for the proposal and a substantiation of the proposed issuance price shall be explained in writing. With respect to designation of the board of directors the provisions of the last three sentences of Article 6.3 shall apply mutatis mutandis .
7.8
For a resolution of the general meeting of shareholders to limit or exclude the right of pre-emption or to designate the board of directors as authorized to do so, a simple majority of the votes cast is required to approve such resolution, provided, however, that if less than one half of the issued share capital is represented at the meeting, then a majority of at least two thirds of the votes cast is required to adopt such resolution. Within eight (8) days from the resolution the company shall deposit a complete text thereof at the office of the Dutch trade register.
7.9
For a period of five (5) years from [the l day of l two thousand fifteen – effective date articles of association ], the board of directors shall irrevocably be authorized to limit or exclude the right of pre-emption as set out in this Article 7 (including Article 7.10).
7.10
When rights are granted to subscribe for common shares the shareholders shall also have a right of pre-emption with respect to such rights; what has been provided hereinbefore in this

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Article 7 shall apply mutatis mutandis . Shareholders shall have no right of pre-emption in respect of shares that are issued to anyone who exercises a previously acquired right.
8.
Acquisition by the company of shares in its own share capital
8.1
The company shall at all times have the authority to acquire fully paid-up shares in its own share capital, provided that such acquisition is made for no consideration ( om niet ).
8.2
The company shall also have authority to acquire fully paid-up shares in its own share capital or depositary receipts thereof for consideration, if:
(a)
the general meeting of shareholders has authorized the board of directors to make such acquisition – which authorization shall be valid for no more than eighteen (18) months and has specified the number of shares which may be acquired, the manner in which they may be acquired and the (criteria to establish the) limits within which the price must be set;
(b)
the company's equity, after deduction of the acquisition price of the relevant shares, is not less than the sum of the paid-in and called up portions of the share capital and the reserves that have to be maintained pursuant to Dutch law and these Articles of Association; and
(c)
the aggregate nominal value of the shares to be acquired and the shares in its share capital the company already holds, holds as pledgee or are held by a subsidiary, does not amount to more than one half of the issued share capital.
8.3
The company's equity as shown in the last confirmed and adopted balance sheet, after deduction of the acquisition price for shares in the share capital of the company, the amount of the loans as referred to in Section 2:98c of the Dutch Civil Code and distributions from profits or reserves to any other persons that became due by the company and its subsidiaries after the date of the balance sheet, shall be decisive for purposes of Article 8.2 subs (b) and (c). If more than six (6) months have elapsed since the end of a financial year without the annual accounts having been adopted, an acquisition in accordance with Article 8.2 shall not be allowed until such time as the annual accounts shall be adopted.
8.4
No authorization shall be required if the company acquires its own shares for the purpose of transferring the same to employees of the company or a group company under a scheme applicable to such employees. Such own shares must be officially listed on a price list of a stock exchange.
8.5
The Articles 8.1 and 8.2 shall not apply to shares which the company acquires under universal title of succession ( algemene titel ).
8.6
Any acquisition by the company of shares that have not been fully paid up shall be void.
8.7
Any disposal of shares held by the company will require a resolution of the board of directors. Such resolution shall also stipulate any conditions of the disposal.
8.8
The company may, jointly with its subsidiaries, hold shares in its own capital exceeding one-tenth of its issued capital for no more than three years after acquisition of shares for no consideration or under universal title of succession. Any shares held by the company in excess of the amount permitted shall transfer to the directors jointly at the end of the last day of such three year period. Each director shall be jointly and severally liable to compensate the company for the value of the shares at such time, with interest at the statutory rate thereon from such time. For the purpose of this Article 8.8 the term shares shall include depositary receipts for shares and shares in respect of which the company holds a right of pledge.
8.9
Article 8.8 shall apply correspondingly to shares and depositary receipt for shares acquired by the company in accordance with Article 8.4 without the authorization of the general meeting of shareholders and held by the company for more than one year after acquisition thereof.

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9.
Reduction of the issued share capital
9.1
The general meeting of shareholders shall have the authority to pass a resolution to reduce the issued share capital (i) by the cancellation of shares and/or (ii) by reducing the nominal value of the shares by means of an amendment to these Articles of Association. The shares to which such resolution relates shall be stated in the resolution and it shall also be stated therein how the resolution shall be implemented.
9.2
A resolution to cancel shares may only relate to shares held by the company itself in its own share capital.
9.3
Any reduction of the nominal value of the shares without repayment must be made pro rata on all shares of the same class.
9.4
A partial repayment on shares shall only be allowed in implementation of a resolution to reduce the nominal value of the shares. Such a repayment must be made in respect of all shares of the same class on a pro rata basis, or in respect of the special voting shares only. The pro rata requirement may be waived with the consent of all the shareholders of the affected class.
9.5
A resolution to reduce the share capital shall require a simple majority of the votes cast in a general meeting of shareholders, provided, however, that such resolution shall require a majority of at least two-thirds of the votes cast in a general meeting of shareholders if less than one half of the issued capital is represented at the meeting.
9.6
The notice convening a general meeting of shareholders at which a resolution to reduce the share capital is to be passed shall state the purpose of the reduction of the share capital and the manner in which effect is to be given thereto. Section 2:123 paragraphs 1 and 2 of the Dutch Civil Code shall apply mutatis mutandis .
9.7
The company shall deposit the resolutions referred to in Article 9.1 at the office of the Dutch trade register and shall publish a notice of such deposit in a nationally distributed daily newspaper; what has been provided in Section 2:100 paragraphs 2 up to and including 6 of the Dutch Civil Code shall be applicable to the company.
10.
Shares and share certificates
10.1
The shares shall be registered shares and they shall for each class be numbered as the board of directors shall determine.
10.2
The board of directors may resolve that, at the request of the shareholder, share certificates shall be issued in respect of shares in such denominations as the board of directors shall determine, which certificates are exchangeable at the request of the shareholder.
10.3
Share certificates shall not be provided with dividend coupons or a talon.
10.4
Each share certificate carries the number(s), if any, of the share(s) in respect of which they were issued.
10.5
The exchange referred to in Article 10.2 shall be free of charge.
10.6
Share certificates shall be signed by a director. The board of directors may resolve that the signature shall be replaced by a facsimile signature.
10.7
The board of directors may determine that for the purpose of trading and transfer of shares at a foreign stock exchange, share certificates shall be issued in such form as shall comply with the requirements of such foreign stock exchange.
10.8
On a request in writing by the party concerned and upon provision of satisfactory evidence as to title, replacement share certificates may be issued in respect of share certificates which have been mislaid, stolen or damaged, on such conditions, including, without limitation, the provision of indemnity to the company as the board of directors shall determine.
10.9
The costs of the issuance of replacement share certificates may be charged to the applicant. As a result of the issuance of replacement share certificates the original share certificates will become void and the company will have no further obligation with respect to such original

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share certificates. Replacement share certificates will bear the numbers of the documents they replace.
11.
Register of shareholders and Loyalty Register
11.1
The board of directors shall appoint a registrar who shall keep a register of shareholders in which the name and address of each shareholder shall be entered, the number and class of shares held by each of them, and, in so far as applicable, the further particulars referred to in Section 2:85 of the Dutch Civil Code.
11.2
The registrar shall be authorized to keep the register of shareholders in an electronic form and to keep a part of the register of shareholders outside the Netherlands if required to comply with applicable foreign legislation or the rules of a stock exchange where the shares are listed.
11.3
The board of directors shall determine the form and contents of the register of shareholders with due observance of the provisions of Articles 11.1 and 11.2 and Section 2:85 of the Dutch Civil Code.
11.4
The registrar shall separately administer a Loyalty Register which does not form part of the company’s register of shareholders. The registrar shall enter in the Loyalty Register the name and address of shareholders who have requested the board of directors to be registered in such register in order to become eligible to acquire special voting shares, recording the entry date and number and amount of common shares in respect of which the relevant request was made.
11.5
A holder of common shares that are included in the Loyalty Register may at any time request to de-register from the Loyalty Register some or all of its common shares included therein.
11.6
The register of shareholders and Loyalty Register shall be kept up to date regularly.
11.7
Upon request and free of charge, the registrar shall provide shareholders and those who have a right of usufruct or pledge in respect of such shares with an extract from the register of shareholders and Loyalty Register in respect of their registration.
11.8
The registrar shall be authorized to disclose information and data contained in the register of shareholders and Loyalty Register and/or have the same inspected to the extent that this is requested to comply with applicable legislation or rules of a stock exchange where the shares are listed from time to time.
12.
Transfer of shares
12.1
The transfer of shares or of a restricted right thereto shall require an instrument intended for such purpose and, save when the company itself is a party to such legal act, the written acknowledgement by the company of the transfer. The acknowledgement shall be made in the instrument or by a dated statement on the instrument or on a copy or extract thereof mentioning the acknowledgement signed as a true copy by the notary or the transferor, or in the manner referred to in Article 12.2. Service of such instrument or such copy or extract on the company shall be considered to have the same effect as an acknowledgement.
12.2
If a share certificate has been issued for a share the surrender to the company of the share certificate shall also be required for such transfer.
The company may acknowledge the transfer by making an annotation on such share certificate as proof of the acknowledgement or by replacing the surrendered certificate by a new share certificate registered in the name of the transferee.
13.
Blocking Clause in respect of special voting shares
13.1
Common shares are freely transferable. A transfer of special voting shares other than pursuant to Article 5.3 may only be effected with due observance of Articles 5.1 and 13.
13.2
A shareholder who wishes to transfer one or more special voting shares shall require the approval of the board of directors.

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13.3
If the board of directors grants the approval, or if approval is deemed to have been granted as provided for in Article 13.4, the transfer must be effected within three (3) months of the date of such approval or deemed approval.
13.4
If the board of directors does not grant the approval, then the board of directors should at the same time provide the requesting shareholder with the names of one or more prospective purchasers who are prepared to purchase all the special voting shares referred to in the request for approval, against payment in cash. If the board of directors does not grant the approval but at the same time fails to designate prospective purchasers, then approval shall be deemed to have been granted. The approval shall likewise be deemed granted if the board of directors has not made a decision in respect of the request for approval within six (6) weeks upon receipt of such request.
13.5
The requesting shareholder and the prospective purchaser accepted by him shall determine the purchase price referred to in Article 13.4 by mutual agreement. If they do not reach agreement on the purchase price, Article 5.5 shall apply mutatis mutandis .
14.
Board of directors
14.1
The company shall have a board of directors, consisting of three (3) or more directors, comprising both directors having responsibility for the day-to-day management of the company (executive directors) and directors not having such day-to-day responsibility (non-executive directors). The board of directors as a whole will be responsible for the strategy of the company. The majority of the directors shall consist of non-executive directors.
14.2
Subject to Article 14.1, the board of directors shall determine the number of directors.
14.3
The general meeting of shareholders shall appoint the directors and shall at all times have power to suspend or to dismiss any director. Upon appointment the general meeting of shareholders shall determine whether a director is an executive director or a non-executive director. The term of office of directors will be for a period of approximately one year after appointment, such period expiring on the day the first annual general meeting of shareholders is held in the following calendar year at the end of the relevant meeting. If as a result of resignations or other reasons the majority of the directors elected by shareholders is no longer in office, a general meeting of shareholders will be convened on an urgent basis by the directors still in office for the purpose of electing a new board of directors. In such case, the term of office of all directors in office that are not reappointed at that general meeting of shareholders will be deemed to have expired at the end of the relevant meeting. Each director may be reappointed for an unlimited number of terms.
14.4
The company shall have a policy in respect of the remuneration of the directors. Such remuneration policy shall be adopted by the general meeting of shareholders. The remuneration policy shall at a minimum address the matters referred to in Section 2:383 (c) to (e) of the Dutch Civil Code, to the extent they relate to the board of directors.
14.5
With due observation of the remuneration policy referred to in Article 14.4 and the provisions of law, including those in respect of allocation of responsibilities between executive and non-executive directors, the board of directors may determine the remuneration for the directors in respect of the performance of their duties, provided that nothing herein contained shall preclude any directors from serving the company or any subsidiary or related company thereof in any other capacity and receiving compensation therefor and provided further that the executive directors may not participate in the decision-making regarding the determination of the remuneration for the executive directors.
14.6
The board of directors shall submit to the general meeting of shareholders for its approval plans to award shares or the right to subscribe for shares. The plans shall at least set out the

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number of shares and rights to subscribe for shares that may be awarded to the board of directors and the criteria that shall apply to the award or any change thereto.
14.7
Failure to obtain the approval of the general meeting of shareholders required under Article 14.6 shall not affect the powers of representation of the board of directors.
14.8
The company shall not grant its directors any personal loans, guarantees or the like other than in the normal course of business, as regards executive directors on terms applicable to the personnel as a whole, and after approval of the board of directors.
15.
Management, regulations and decision-making
15.1
The board of directors shall exercise its duties, including the oversight of the company, subject to the limitations contained in these Articles of Association.
15.2
The chairman of the board of directors as referred to by law shall be a non-executive director and shall have the title Chair. The board of directors may grant other titles to the directors. The board of directors may furthermore appoint or delegate the appointment of a Secretary, who need not be selected from among its members.
The board of directors shall draw up board regulations to deal with matters that concern the board of directors internally.
15.3
The regulations shall include an allocation of tasks amongst the executive directors and non-executive directors and may provide for general or specific delegation of powers.
The regulations shall contain provisions concerning the manner in which meetings of the board of directors are called and held, including the decision-making process. Subject to Article 2.3, these regulations may provide that meetings may be held by telephone conference or video conference, provided that all participating directors can follow the proceedings and participate in real time discussion of the items on the agenda.
15.4
The board of directors may determine that one or more directors can lawfully adopt resolutions ( rechtsgeldig besluiten ) concerning matters belonging to his or their duties within the meaning of Section 2:129a paragraph 3 of the Dutch Civil Code. Any directors that adopt any resolutions within the meaning of this provision will have to inform the other directors thereof within a reasonable time.
15.5
The board of directors can only adopt valid resolutions when the majority of the directors in office shall be present or represented at the meeting of the board of directors.
15.6
A director may be represented by a co-director if authorized in writing; provided that a director may not act as proxy for more than one co-director.
15.7
All resolutions shall be adopted by the favorable vote of the majority of the directors present or represented at the meeting, provided that the regulations may contain specific provisions in this respect. Each director shall have one (1) vote.
15.8
The board of directors shall be authorized to adopt resolutions without convening a meeting if all directors shall have expressed their opinions in writing, unless one or more directors shall object in writing to the resolution being adopted in this way prior to the adoption of the resolution.
15.9
The board of directors shall require the approval of the general meeting of shareholders for resolutions concerning an important change in the company's identity or character, including in any case:
(a)
the transfer to a third party of the business of the company or practically the entire business of the company;
(b)
the entry into or breaking off of any long-term cooperation of the company or a subsidiary with another legal entity or company or as a fully liable partner of a general partnership or limited partnership, where such entry or breaking off is of far-reaching importance to the company;

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(c)
the acquisition or disposal by the company or a subsidiary of an interest in the share capital of a company with a value of at least one/third of the company's assets according to the consolidated balance sheet with explanatory notes included in the last adopted annual accounts of the company.
15.10
Failure to obtain the approval required under Article 15.9 shall not affect the powers of representation of the board of directors.
15.11
In the event of receipt by the board of directors of a third party offer to acquire a business or one or more subsidiaries for an amount in excess of the threshold referred to in Article 15.9 sub (c), the board of directors shall, if and when such bid is made public, at its earliest convenience or otherwise in compliance with applicable law issue a public position statement in respect of such offer.
15.12
If the office(s) of one or more directors be vacated or if one or more directors be otherwise unavailable, the remaining directors or the remaining director shall have the full power of the board of directors without interruption, provided however that in such event the board of directors shall have power to designate one or more persons to temporarily assist the remaining director(s) to manage the company. If the offices of all directors be vacated or if all directors be otherwise unable to act, the management shall temporarily be vested in the person or persons whom the general meeting of shareholders shall appoint for that purpose.
15.13
A director shall not participate in deliberations and the decision-making process in the event of a direct or indirect personal conflict of interest between that director and the company and the enterprise connected with it. If there is such personal conflict of interest in respect of all directors, the preceding sentence does not apply and the board of directors shall maintain its authority, subject to the approval of the general meeting of shareholders.
16.
Committees
16.1
The board of directors shall have power to appoint any committees, composed of directors and officers of the company and of group companies.
16.2
The board of directors shall determine the specific functions, tasks and procedures, as well as the duration of any of the committees referred to in this Article 16. For the avoidance of doubt, as such committees act on the basis of delegation of certain responsibilities of the board of directors, the board of directors shall remain fully responsible for the actions undertaken by such committees and may withdraw the delegation of powers to such committees in its discretion.
17.
Representation
17.1
The general authority to represent the company shall be vested in the board of directors and the Chief Executive Officer.
17.2
The board of directors or the Chief Executive Officer may also confer authority to represent the company, jointly or severally, to one or more individuals ( procuratiehouders ) who would thereby be granted powers of representation with respect to such acts or categories of acts as the board of directors or the Chief Executive Officer may determine and shall notify to the Dutch trade register. Such authority may be revoked provided that any authority conferred by the board of directors may be revoked only by the board of directors.
18.
Indemnity
18.1
The company shall indemnify any and all of its directors, officers, former directors, former officers and any person who may have served at its request as a director or officer of another company in which it owns shares or of which it is a creditor, who were or are made a party or are threatened to be made a party to or are involved in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (each a Proceeding ), or any appeal in such a Proceeding or any inquiry or investigation that

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could lead to such a Proceeding, against any and all liabilities, damages, reasonable and documented expenses (including reasonably incurred and substantiated attorneys’ fees), financial effects of judgments, fines, penalties (including excise and similar taxes and punitive damages) and amounts paid in settlement in connection with such Proceeding by any of them. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled otherwise.
18.2
Indemnification under this Article 18 shall continue as to any person who has ceased to serve in the capacity which initially entitled such person to indemnity under Article 18.1 related to and arising from such person's activities while acting in such capacity. No amendment, modification or repeal of this Article 18 shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings arising prior to any such amendment, modification or repeal.
18.3
Notwithstanding Article 18.1 hereof, no indemnification shall be made in respect of any claim, issue or matter as to which such person shall be adjudged to be liable for gross negligence or wilful misconduct in the performance of such person’s duty to the company.
18.4
The right to indemnification conferred in this Article 18 shall include a right to be paid or reimbursed by the company for any and all reasonable and documented expenses incurred by any person entitled to be indemnified under this Article 18 who was, or is threatened, to be made a named defendant or respondent in a Proceeding in advance of the final disposition of the Proceeding and without any determination as to such person's ultimate entitlement to indemnification; provided, however, that such person shall undertake to repay all amounts so advanced if it shall ultimately be determined that such person is not entitled to be indemnified under this Article 18.
19.
General meeting of shareholders
19.1
At least one (1) general meeting of shareholders shall be held every year, which meeting shall be held within six (6) months after the close of the financial year.
19.2
Furthermore, general meetings of shareholders shall be held in the case referred to in Section 2:108a of the Dutch Civil Code and as often as the board of directors, the Chairman or Chief Executive Officer deems it necessary to hold them, without prejudice to what has been provided in Article 19.3.
19.3
Shareholders solely or jointly representing at least ten percent (10%) of the issued share capital may request the board of directors, in writing, to call a general meeting of shareholders, stating the matters to be dealt with.
If the board of directors fails to call a meeting, then such shareholders may, on their application, be authorized by the interim provisions judge of the court ( voorzieningenrechter van de rechtbank ) to convene a general meeting of shareholders. The interim provisions judge shall reject the application if he is not satisfied that the applicants have previously requested the board of directors in writing, stating the exact subjects to be discussed, to convene a general meeting of shareholders.
19.4
General meetings of shareholders shall be held in Amsterdam or Haarlemmermeer (Schiphol Airport), the Netherlands, and shall be called by the board of directors, the Chairman or Chief Executive Officer of the board of directors, in such manner as is required to comply with the law and the applicable stock exchange regulations, in accordance with Section 2:115 of the Dutch Civil Code, no later than on the fifteenth day before the day of the meeting, or if shares of the company or depositary receipts issued with the cooperation of the company have been admitted to trading on a regulated market as referred to in Section 1:1 of the Act on financial

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supervision ( Wet op het financieel toezicht ), no later than on the forty-second day before the day of the meeting.
19.5
All convocations of general meetings of shareholders and all announcements, notifications and communications to shareholders and other persons entitled to attend the meeting shall be made by means of an announcement on the company’s corporate website and such announcement shall remain accessible until the relevant general meeting of shareholders. Any communication to be addressed to the general meeting of shareholders by virtue of law or these Articles of Association, may be either included in the notice, referred to in the preceding sentence or, to the extent provided for in such notice, on the company’s corporate website and/or in a document made available for inspection at the office of the company and such other place(s) as the board of directors shall determine.
19.6
In addition to Article 19.5, convocations of general meetings of shareholders may be sent to shareholders and other persons entitled to attend the meeting through the use of an electronic means of communication to the address provided by such shareholders and other persons to the company for this purpose.
19.7
The notice shall state the place, date and hour of the meeting and the agenda of the meeting as well as the other data required by law.
19.8
An item proposed in writing by such number of shareholders and other persons entitled to attend the meeting who, by law, are entitled to make such proposal, shall be included in the notice or shall be announced in a manner similar to the announcement of the notice, provided that the company has received the relevant request or a proposed resolution, including the reasons for putting the relevant item on the agenda, no later than on the sixtieth day before the day of the meeting.
19.9
The agenda of the annual general meeting of shareholders shall contain, inter alia , the following items:
(a)
the implementation of the remuneration policy;
(b)
adoption of the annual accounts;
(c)
granting of discharge to the directors in respect of the performance of their duties in the relevant financial year;
(d)
the appointment of directors;
(e)
the policy of the company on additions to reserves and on dividends, if any;
(f)
if, applicable, the proposal to pay a dividend;
(g)
if applicable, discussion of any substantial change in the corporate governance structure of the company; and
(h)
any matters decided upon by the person(s) convening the meeting and any matters placed on the agenda with due observance of Article 19.8.
19.10
The board of directors shall provide the general meeting of shareholders with all requested information, unless this would be contrary to an overriding interest of the company. If the board of directors invokes an overriding interest, it must give reasons.
19.11
If a right of approval is granted to the general meeting of shareholders by law or these Articles of Association (for instance as referred to in Article 14.6 and Article 15.9) or the board of directors requests a delegation of powers or authorization (for instance as referred to in Article 6), the board of directors shall inform the general meeting of shareholders by means of a circular or explanatory notes to the agenda of all facts and circumstances relevant to the approval, delegation or authorization to be granted.
19.12
For the purpose of Articles 19 and 20, persons with the right to vote or attend meetings shall be considered those persons who have these rights at the twenty-eighth day prior to the day of the meeting ( Record Date ) and are registered as such in a register to be designated by

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the board of directors for such purpose, irrespective whether they will have these rights at the date of the meeting. In addition to the Record Date, the notice of the meeting shall further state the manner in which shareholders and other persons entitled to attend the meeting may have themselves registered and the manner in which those rights can be exercised.
19.13
If a proposal to amend these Articles of Association is to be dealt with, a copy of that proposal, in which the proposed amendments are stated verbatim, shall be made available for inspection to the shareholders and other persons entitled to attend the meeting, at the office of the company and on the website of the company, as from the day the general meeting of shareholders is called until after the close of that meeting. Upon request, each of them shall be entitled to obtain a copy thereof, without charge.
20.
Chairman, minutes, rights, admittance and voting
20.1
The general meeting of shareholders shall be presided over by the Chairman or, in his absence, by the person chosen by the board of directors to act as chairman for such meeting.
20.2
One of the persons present designated for that purpose by the chairman of the meeting shall act as secretary of the meeting and take minutes of the business transacted. The minutes shall be adopted by the chairman of the meeting and the secretary of the meeting and signed by them in witness thereof.
20.3
The minutes of the general meeting of shareholders shall be made available, on request, to the shareholders no later than three (3) months after the end of the meeting, after which the shareholders shall have the opportunity to react to the minutes in the following three (3) months. The minutes shall then be adopted in the manner as described in Article 20.2.
20.4
If an official notarial record is made of the business transacted at the meeting then minutes need not be drawn up and it shall suffice that the official notarial record be signed by the notary.
20.5
As a prerequisite to attending the meeting and, to the extent applicable, exercising voting rights, the shareholders and other persons entitled to attend the meeting shall be obliged to inform the board of directors in writing within the time frame mentioned in the convening notice. At the latest this notice must be received by the board of directors on the day mentioned in the convening notice.
20.6
Shareholders and other persons entitled to attend the meetings may procure to be represented at any meeting by a proxy duly authorized in writing, provided they shall notify the company in writing of their wish to be represented at such time and place as shall be stated in the notice of the meetings. For the avoidance of doubt, such attorney is also authorized in writing if the proxy is documented electronically. The board of directors may determine further rules concerning the deposit of the powers of attorney; these shall be mentioned in the notice of the meeting.
20.7
The chairman of the meeting shall decide on the admittance to the meeting of persons other than those who are entitled to attend.
20.8
For each general meeting of shareholders, the board of directors may decide that shareholders and other persons entitled to attend the meeting shall be entitled to attend, address and exercise voting rights at such meeting through the use of electronic means of communication, provided that shareholders and other persons who participate in the meeting are capable of being identified through the electronic means of communication and have direct cognizance of the discussions at the meeting and the exercising of voting rights (if applicable). The board of directors may set requirements for the use of electronic means of communication and state these in the convening notice. Furthermore, the board of directors may for each general meeting of shareholders decide that votes cast by the use of electronic means of communication prior to the meeting and received by the board of directors shall be considered to be votes cast at the meeting. Such votes may not be cast prior to the Record Date. Whether

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the provision of the foregoing two sentences applies and the procedure for exercising the rights referred to in that sentence shall be stated in the notice.
20.9
Prior to being allowed admittance to a meeting, a shareholder and each other person entitled to attend the meeting, or their attorney, shall sign an attendance list, while stating his name and, to the extent applicable, the number of votes to which he is entitled. Each shareholder and other person attending a meeting by the use of electronic means of communication and identified in accordance with Article 20.8 shall be registered on the attendance list by the board of directors. In the event that it concerns an attorney of a shareholder or another person entitled to attend the meeting, the name(s) of the person(s) on whose behalf the attorney is acting, shall also be stated. The chairman of the meeting may decide that the attendance list must also be signed by other persons present at the meeting.
20.10
The chairman of the meeting may determine the time for which shareholders and others entitled to attend the general meeting of shareholders may speak if he considers this desirable with a view to the order by conduct of the meeting as well as other procedures that the chairman considers desirable for the efficient and orderly conduct of the business of the meeting.
20.11
Every share (whether common or special voting) shall confer the right to cast one (1) vote.
Shares in respect of which the law determines that no votes may be cast shall be disregarded for the purposes of determining the proportion of shareholders voting, present or represented or the proportion of the share capital present or represented.
20.12
A holder of special voting shares acquired pursuant to the Demerger will not be entitled to exercise the right to vote attributed to those special voting shares, unless such shareholder has agreed to be subject to the terms and conditions that applied to all holders of special voting shares, immediately before the Demerger became effective.
20.13
All resolutions shall be passed with an absolute majority of the votes validly cast unless otherwise specified herein.
Blank votes shall not be counted as votes cast.
20.14
All votes shall be cast in writing or electronically. The chairman of the meeting may, however, determine that voting by raising hands or in another manner shall be permitted.
20.15
Voting by acclamation shall be permitted if none of the shareholders present or represented objects.
20.16
No voting rights shall be exercised in the general meeting of shareholders for shares or depositary receipts thereof owned by the company or by a subsidiary. Pledgees and usufructuaries of shares owned by the company and its subsidiaries shall however not be excluded from exercising their voting rights, if the right of pledge or usufruct was created before the shares were owned by the company or a subsidiary. Neither the company nor any of its subsidiaries may exercise voting rights for shares in respect of which it holds a right of pledge or usufruct.
20.17
Without prejudice to the other provisions of this Article 20, the company shall determine for each resolution passed:
(a)
the number of shares on which valid votes have been cast;
(b)
the percentage that the number of shares as referred to under (a) represents in the issued share capital;
(c)
the aggregate number of votes validly cast; and
(d)
the aggregate number of votes cast in favour of and against a resolution, as well as the number of abstentions.
21.
Audit

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21.1
The general meeting of shareholders shall appoint an accountant to examine the annual accounts drawn up by the board of directors, to report thereon to the board of directors, and to express an opinion with regard thereto.
21.2
If the general meeting of shareholders fails to appoint the accountant as referred to in Article 21.1, this appointment shall be made by the board of directors.
21.3
To the extent permitted by law, the appointment provided for in Article 21.1 may be cancelled by the general meeting of shareholders and if the appointment has been made by the board of directors, by the board of directors.
21.4
The accountant may be questioned by the general meeting of shareholders in relation to the accountant’s statement on the fairness of the annual accounts. The accountant shall therefore be invited to attend the general meeting of shareholders convened for the adoption of the annual accounts.
21.5
The accountant shall, in any event, attend the meeting of the board of directors at which the report of the accountant is discussed, and at which the annual accounts are to be approved.
22.
Financial year, annual accounts and distribution of profits
22.1
The financial year of the company shall coincide with the calendar year.
22.2
The board of directors shall annually close the books of the company as at the last day of every financial year and shall within four (4) months thereafter draw up annual accounts consisting of a balance sheet, a profit and loss account and explanatory notes. Within such four (4) month period the board of directors shall publish the annual accounts, including the accountant’s certificate, the annual report and any other information that would need to be made public in accordance with the applicable provisions of law and the requirements of any stock exchange on which common shares are listed.
22.3
The company shall publish its annual accounts and annual report and the other documents referred to in Section 2:392 of the Dutch Civil Code in the English language and in accordance with Section 2:394 of the Dutch Civil Code.
22.4
If the activity of the company or the international structure of its group justifies the same as determined by the board of directors, its annual accounts or its consolidated accounts may be prepared in a foreign currency.
22.5
The broad outline of the corporate governance structure of the company shall be explained in a separate chapter of the annual report. In the explanatory notes to the annual accounts the company shall state, in addition to the information to be included pursuant to Section 2:383d of the Dutch Civil Code, the value of the options granted to the executive directors and employees and shall indicate how this value is determined.
22.6
The annual accounts shall be signed by all the directors; should any signature be missing, then this shall be mentioned in the annual accounts, stating the reason.
22.7
The company shall ensure that the annual accounts, the annual report and the other data referred to in Article 22.2 and the statements are available at its office as from the date on which the general meeting of shareholders at which they are intended to be dealt with is called, as well as on the website of the company. The shareholders and those entitled to attend general meetings of shareholders shall be permitted to inspect these documents at the company’s office and to obtain copies thereof free of charge.
22.8
The general meeting of shareholders shall adopt the annual accounts.
22.9
At the general meeting of shareholders at which it is resolved to adopt the annual accounts, a proposal concerning release of the directors from liability for their respective duties, insofar as the exercise of such duties is reflected in the annual accounts or otherwise disclosed to the general meeting of shareholders prior to the adoption of the annual accounts, shall be

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brought up separately for discussion. The scope of any such release from liability shall be subject to limitations by virtue of the law.
23.
Reserves and profits
23.1
The company shall maintain a special capital reserve to be credited against the share premium exclusively for the purpose of facilitating any issuance or cancellation of special voting shares. The special voting shares shall not carry any entitlement to the balance of the special capital reserve. The board of directors shall be authorized to resolve upon (i) any distribution out of the special capital reserve to pay up special voting shares or (ii) re-allocation of amounts to credit or debit the special capital reserve against or in favour of the share premium reserve.
23.2
The company shall maintain a separate dividend reserve for the special voting shares. The special voting shares shall not carry any entitlement to any other reserve of the company. Any distribution out of the special voting rights dividend reserve or the partial or full release of such reserve will require a prior proposal from the board of directors and a subsequent resolution of the meeting of holders of special voting shares.
23.3
From the profits, shown in the annual accounts, as adopted, such amounts shall be reserved as the board of directors may determine.
23.4
The profits remaining thereafter shall first be applied to allocate and add to the special voting shares dividend reserve an amount equal to one percent (1%) of the aggregate nominal value of all outstanding special voting shares. The calculation of the amount to be allocated and added to the special voting shares dividend reserve shall occur on a time-proportionate basis. If special voting shares are issued during the financial year to which the allocation and addition pertains, then the amount to be allocated and added to the special voting shares dividend reserve in respect of these newly issued special voting shares shall be calculated as from the date on which such special voting shares were issued until the last day of the financial year concerned. The special voting shares shall not carry any other entitlement to the profits.
23.5
Any profits remaining thereafter shall be at the disposal of the general meeting of shareholders for distribution of profits on the common shares only, subject to the provision of Article 23.8.
23.6
Subject to a prior proposal of the board of directors, the general meeting of shareholders may declare and pay distributions of profits and other distributions in United States Dollars. Furthermore, subject to the approval of the general meeting of shareholders and the board of directors having been designated as the body competent to pass a resolution for the issuance of shares in accordance with Article 6, the board of directors may decide that a distribution shall be made in the form of shares or that shareholders shall be given the option to receive a distribution either in cash or in the form of shares.
23.7
The company shall only have power to make distributions to shareholders and other persons entitled to distributable profits to the extent the company's equity exceeds the sum of the paid in and called up part of the share capital and the reserves that must be maintained pursuant to Dutch law and these Articles of Association. No distribution of profits or other distributions may be made to the company itself for shares that the company holds in its own share capital.
23.8
The distribution of profits shall be made after the adoption of the annual accounts, from which it appears that the same is permitted.
23.9
The board of directors shall have power to declare one or more interim distributions of profits, provided that the requirements of Article 23.7 are duly observed as evidenced by an interim statement of assets and liabilities as referred to in Section 2:105 paragraph 4 of the Dutch Civil Code and provided further that the policy of the company on additions to reserves and distributions of profits is duly observed. The provisions of Articles 23.2 and 23.3 shall apply mutatis mutandis .

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23.10
The board of directors may determine that distributions are made from the company's share premium reserve or from any other reserve, provided that payments from reserves may only be made to the shareholders that are entitled to the relevant reserve upon the dissolution of the company.
23.11
Distributions of profits and other distributions shall be made payable in the manner and at such date(s) - within four (4) weeks after declaration thereof - and notice thereof shall be given, as the general meeting of shareholders, or in the case of interim distributions of profits, the board of directors shall determine.
23.12
Distributions of profits and other distributions, which have not been collected within five (5) years and one (1) day after the same have become payable, shall become the property of the company.
24.
Amendment of the Articles of Association
A resolution to amend these Articles of Association can only be passed by a general meeting of shareholders pursuant to a prior proposal of the board of directors. A majority of at least two-thirds of the votes cast shall be required if less than one half of the issued share capital is present or represented at the meeting.
25.
Dissolution and winding-up
25.1
A resolution to dissolve the company can only be passed by a general meeting of shareholders pursuant to a prior proposal of the board of directors. A majority of at least two-thirds of the votes cast shall be required if less than one half of the issued share capital is present or represented at the meeting. In the event a resolution is passed to dissolve the company, the directors shall become liquidators ( vereffenaars ) of the dissolved company’s property, unless the general meeting of shareholders resolves otherwise.
25.2
The general meeting of shareholders shall appoint and decide on the remuneration of the liquidators.
25.3
Until the winding-up of the company has been completed, these Articles of Association shall to the extent possible, remain in full force and effect.
25.4
Whatever remains of the company's equity after all its debts have been discharged:
(a)
shall first be applied to distribute the aggregate balance of share premium reserves and other reserves than the special voting shares dividend reserve of the company to the holders of common shares in proportion to the aggregate nominal value of the common shares held by each of them;
(b)
secondly, from any balance remaining, an amount equal to the aggregate amount of the nominal value of the common shares will be distributed to the holders of common shares in proportion to the aggregate nominal value of common shares held by each of them;
(c)
thirdly, from any balance remaining, an amount equal to the aggregate amount of the special voting shares dividend reserve will be distributed to the holders of special voting shares in proportion to the aggregate nominal value of the special voting shares held by each of them;
(d)
fourthly, from any balance remaining, the aggregate amount of the nominal value of the special voting shares will be distributed to the holders of special voting shares in proportion to the aggregate nominal value of the special voting shares held by each of them; and
(e)
lastly, the balance remaining will be distributed to the holders of the common shares in proportion to the aggregate nominal value of common shares held by each of them.

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25.5
After the company has ceased to exist the books and records of the company shall remain in the custody of the person designated for that purpose by the liquidators for the period provided by law.
25.6
In addition, the liquidation shall be subject to the relevant provisions of Book 2, Title 1, of the Dutch Civil Code.
26.
Transitory provision
Until the Merger becomes effective, Article 2.1 shall read as follows:
"2.1
The name of the company is: FE New N.V. ".
This provision and its heading shall cease to exist as per the moment the Merger becomes effective

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ANNEX C1
Auditor’s statement KPMG
Section 2:328 paragraph 1 second sentence DCC

merger proposal – voorstel tot fusie



ANNEX C2
Auditor’s statement Deloitte
Section 2:328 paragraph 1 second sentence DCC


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ANNEX D1
Interim financial statement FE New N.V.

merger proposal – voorstel tot fusie



ANNEX D2
Interim financial statement New Business Netherlands N.V.



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