As filed with the Securities and
  Exchange Commission on April 23, 2003

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SECURITIES
  AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 20-F

| | REGISTRATION STATEMENT PURSUANT
      TO SECTION 12(b) OR 
| | ----------------------------------------------------------
| | 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934              
| | or                                                        
| | ANNUAL REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF    
| | THE SECURITIES EXCHANGE ACT OF 1934                       
| | For the Fiscal Year Ended December 31, 2002               
| | or                                                        
| | TRANSITION REPORT PURSUANT
      TO SECTION 13 OR 15(d) OF
| | THE SECURITIES EXCHANGE ACT OF 1934                       
| | For the transaction period from      to                   



(Commission file number)


SAES
  Getters S.p.A.(Exact Name of Registrant as Specified
  in Its Charter)

SAES
  Getters S.p.A.(Translation of Registrant’s
  Name Into English)

Italy(Jurisdiction of Incorporation or Organization)Viale Italia 77, 20020 Lainate (Milan) Italy(Address of Principal Executive Offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities
  registered or to be registered pursuant to Section 12(g) of the Act:

|Title of each
      class                                    | Name of each exchange on which
      registered
|------------------------------------------------------------ | -----------------------------------------------
|                                                             |                                                
|American Depositary Shares                                   | The Nasdaq Stock Market                        
|                                                             |                                                
|Savings Shares with a nominal
      value of Euro 0.52 each* | The Nasdaq Stock Market                        

Securities
  for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2002, nominal value Euro 0.52 per share:

| | 13,874,930 |  | Ordinary Shares | 
| | ---------- |  | --------------- | 
| | 9,625,070  |  | Savings Shares  | 

Indicate
  by check mark whether the registrant: (1) has filed all reports required to
  be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
  the preceding 12 months (or for such shorter period that the registrant was
  required to file such reports), and (2) has been subject to such filing requirements
  for the past 90 days.   Yes            No

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17            Item
  18

* Not for trading, but
  only in connection with the registration of the American Depositary Shares.









TABLE
  OF CONTENTS

| |         |  |  |                                                                  |  | Page | 
| | ------- |  |  | ---------------------------------------------------------------- |  | ---- | 
| |         |  |  | Part I                                                           |  |      | 
| | Item 1  |  |  | Identity of
      Directors, Senior Management and Advisers      |  | 3    | 
| |         |  |  |                                                                  |  |      | 
| | Item 2  |  |  | Offer Statistics
      and Expected Timetable                    |  | 3    | 
| |         |  |  |                                                                  |  |      | 
| | Item 3  |  |  | Key Information                                                  |  | 3    | 
| |         |  |  |                                                                  |  |      | 
| | A       |  |  | Selected financial
      data                                    |  | 3    | 
| |         |  |  |                                                                  |  |      | 
| | B       |  |  | Capitalization
      and indebtedness                            |  | 7    | 
| |         |  |  |                                                                  |  |      | 
| | C       |  |  | Reasons for the
      offer and use of proceeds                  |  | 7    | 
| |         |  |  |                                                                  |  |      | 
| | D       |  |  | Risk factors                                                     |  | 7    | 
| |         |  |  |                                                                  |  |      | 
| | Item 4  |  |  | Information
      on the Company                                 |  | 13   | 
| |         |  |  |                                                                  |  |      | 
| | A       |  |  | History and development
      of the Company                     |  | 13   | 
| |         |  |  |                                                                  |  |      | 
| | B       |  |  | Business overview                                                |  | 15   | 
| |         |  |  |                                                                  |  |      | 
| | C       |  |  | Organizational
      structure                                   |  | 31   | 
| |         |  |  |                                                                  |  |      | 
| | D       |  |  | Property, plants
      and equipment                             |  | 31   | 
| |         |  |  |                                                                  |  |      | 
| | Item 5  |  |  | Operating
      and Financial Review and Prospects               |  | 33   | 
| |         |  |  |                                                                  |  |      | 
| | A       |  |  | Operating results                                                |  | 33   | 
| |         |  |  |                                                                  |  |      | 
| | B       |  |  | Liquidity and
      capital resources                            |  | 50   | 
| |         |  |  |                                                                  |  |      | 
| | C       |  |  | Research and development,
      patents and licenses             |  | 54   | 
| |         |  |  |                                                                  |  |      | 
| | D       |  |  | Trend information                                                |  | 56   | 
| |         |  |  |                                                                  |  |      | 
| | Item 6  |  |  | Directors,
      Senior Management and Employees                 |  | 65   | 
| |         |  |  |                                                                  |  |      | 
| | A       |  |  | Directors and
      senior management                            |  | 65   | 
| |         |  |  |                                                                  |  |      | 
| | B       |  |  | Compensation                                                     |  | 68   | 
| |         |  |  |                                                                  |  |      | 
| | C       |  |  | Board practices                                                  |  | 70   | 
| |         |  |  |                                                                  |  |      | 
| | D       |  |  | Employees                                                        |  | 73   | 
| |         |  |  |                                                                  |  |      | 
| | E       |  |  | Share ownership                                                  |  | 74   | 
| |         |  |  |                                                                  |  |      | 
| | Item 7  |  |  | Major Shareholders
      and Related Party Transactions          |  | 75   | 
| |         |  |  |                                                                  |  |      | 
| | A       |  |  | Major shareholders                                               |  | 75   | 
| |         |  |  |                                                                  |  |      | 
| | B       |  |  | Related party
      transactions                                 |  | 77   | 
| |         |  |  |                                                                  |  |      | 
| | C       |  |  | Interests of
      experts and counsel                           |  | 78   | 
| |         |  |  |                                                                  |  |      | 
| | Item 8  |  |  | Financial
      Information                                      |  | 78   | 
| |         |  |  |                                                                  |  |      | 
| | A       |  |  | Consolidated
      statements and other financial information    |  | 78   | 
| |         |  |  |                                                                  |  |      | 
| | B       |  |  | Significant changes                                              |  | 78   | 
| |         |  |  |                                                                  |  |      | 
| | Item 9  |  |  | The Offer
      and Listing                                      |  | 78   | 
| |         |  |  |                                                                  |  |      | 
| | A       |  |  | Offer and listing
      details                                  |  | 78   | 
| |         |  |  |                                                                  |  |      | 
| | B       |  |  | Plan of distribution                                             |  | 79   | 
| |         |  |  |                                                                  |  |      | 
| | C       |  |  | Markets                                                          |  | 79   | 
| |         |  |  |                                                                  |  |      | 
| | D       |  |  | Selling shareholders                                             |  | 79   | 
| |         |  |  |                                                                  |  |      | 
| | E       |  |  | Dilution                                                         |  | 80   | 
| |         |  |  |                                                                  |  |      | 
| | F       |  |  | Expenses of the
      issue                                      |  | 80   | 
| |         |  |  |                                                                  |  |      | 
| | Item 10 |  |  | Additional
      Information                                     |  | 80   | 
| |         |  |  |                                                                  |  |      | 
| | A       |  |  | Share capital                                                    |  | 80   | 
| |         |  |  |                                                                  |  |      | 
| | B       |  |  | Memorandum and
      articles of association                     |  | 80   | 
| |         |  |  |                                                                  |  |      | 
| | C       |  |  | Material contracts                                               |  | 85   | 
| |         |  |  |                                                                  |  |      | 
| | D       |  |  | Exchange controls                                                |  | 85   | 
| |         |  |  |                                                                  |  |      | 
| | E       |  |  | Taxation                                                         |  | 85   | 
| |         |  |  |                                                                  |  |      | 
| | F       |  |  | Dividends and
      paying agents                                |  | 92   | 
| |         |  |  |                                                                  |  |      | 
| | G       |  |  | Statement by
      experts                                       |  | 92   | 
| |         |  |  |                                                                  |  |      | 
| | H       |  |  | Documents on
      display                                       |  | 92   | 
| |         |  |  |                                                                  |  |      | 
| | I       |  |  | Subsidiary information                                           |  | 92   | 
| |         |  |  |                                                                  |  |      | 
| | Item 11 |  |  | Quantitative
      and Qualitative Disclosures about Market Risk |  | 92   | 
| |         |  |  |                                                                  |  |      | 
| | Item 12 |  |  | Description
      of Securities Other than Equity Securities     |  | 92   | 
| |         |  |  |                                                                  |  |      | 
| |         |  |  |                                                                  |  |      | 

i

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|               |  |    |                                                                                    |  |    | 
|-------------- |  | -- | ---------------------------------------------------------------------------------- |  | -- | 
|               |  |    | Part II                                                                            |  |    | 
|Item 13        |  |    | Defaults,
      Dividend Arrearages and Delinquencies                              |  | 93 | 
|               |  |    |                                                                                    |  |    | 
|Item 14        |  |    | Material Modifications
      to the Rights of Security Holders and Use of Proceeds |  | 93 | 
|               |  |    |                                                                                    |  |    | 
|Item 15        |  |    | Controls and
      Procedures                                                      |  | 93 | 
|               |  |    |                                                                                    |  |    | 
|Item 16        |  |    | [Reserved]                                                                         |  | 93 | 
|               |  |    |                                                                                    |  |    | 
|               |  |    |                                                                                    |  |    | 
|               |  |    | Part III                                                                           |  |    | 
|Item 17        |  |    | Financial
      Statements                                                         |  | 93 | 
|               |  |    |                                                                                    |  |    | 
|Item 18        |  |    | Financial
      Statements                                                         |  | 93 | 
|               |  |    |                                                                                    |  |    | 
|Item 19        |  |    | Exhibits                                                                           |  | 94 | 
|               |  |    |                                                                                    |  |    | 
|SIGNATURES     |  | 95 |                                                                                   
|               |  |    |                                                                                   
|CERTIFICATIONS |  | 96 |                                                                                   
|               |  |    |                                                                                   

ii

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NOTE

SAES Getters S.p.A. (“SAES” or the “Company” and, together with its consolidated subsidiaries, the “Group”) publishes its Consolidated Financial Statements in Euro. Financial data relating to periods prior to March 31, 2001 and to years before 2001, which were originally published in Lire, have been translated into Euro using the fixed exchange rate of Euro 1.00 = Lit. 1,936.27. In this annual report, references to “Dollars” or “$” are to currency of the United States and references to “Euro” or “€” are to the common European currency adopted by 12 of the 15 member countries of the European Union (including Italy) which are participating in the European Monetary Union (1), and references to “Lira”, “Lire” or “Lit.” are to the former currency of Italy which, as of February 28, 2002, is no longer legal tender in Italy. See Item 3.A, “Selected financial data  Exchange Rates”. For the convenience of the reader, this annual report contains translations of certain Euro amounts into Dollars at specified rates. These translations should not be construed as representations that the Euro amounts actually represent such Dollar amounts or could be converted into Dollars at the rate indicated or at any other rate. Unless otherwise indicated, the translations of Euro into Dollars have been made at the rate of €1.00 = $1.0485, the noon buying rate in the City of New York for cable transfers in Euro as certified for customs purposes by the Federal Reserve Bank of New York (the “Noon Buying Rate”) on December 31, 2002. Such rate may differ from the actual rates used in the preparation of SAES’s Consolidated Financial Statements included in Item 19.A of this annual report, and Dollar amounts used in this annual report may differ from the actual Dollar amounts that were translated into Euro in the preparation of such financial statements. The Noon Buying Rate on March 31, 2003 was €1.00 = $1.0900. For information regarding rates of exchange between Euro and Dollars, see Item 3.A, “Selected financial data  Exchange Rates”.

The Consolidated Financial Statements contained herein were prepared in accordance with generally accepted accounting principles in Italy (“Italian GAAP”), which differs in certain respects from generally accepted accounting principles in the United States (“U.S. GAAP”). For a discussion of the principal differences between Italian GAAP and U.S. GAAP as they relate to the Company’s consolidated net income and shareholders’ equity, see Item 5.A, “Operating results  Differences between Italian GAAP and U.S. GAAP” and Note 23 of Notes to the Consolidated Financial Statements included in Item 19.A of this annual report.

Cautionary Statement Regarding Forward-Looking Statements

Some of the statements in this document may constitute forward-looking statements. These “forward-looking statements”, as defined in the Private Securities Litigation Reform Act 1995 (as amended), include, without being limited to, statements in Item 3, “Key Information” relating to competition, trends and anticipated developments in the industry and the market; in Item 4, “Information on the Company”, Item 5, “Operating and Financial Review and Prospects” and Item 11 “Quantitative and Qualitative Disclosures about Market Risk”.

Statements that are not historical facts, including statements regarding the intent, belief or current expectations of the Company or its officers (including statements preceded by, followed by or that include forward-looking terminology such as “believes”, “estimates”, “expects”, “could”, “likely”, “anticipates”, “will”, “intends”, “may”, or similar expressions or comparable terminology) with respect to various matters, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to economic and political changes in international markets where the Group competes, such as changes related to: currency exchange rates, inflation rates, recession, foreign ownership restrictions and other external factors over which the Company has no control; domestic and foreign government spending, budgetary and trade policies; demand for and market acceptance of new and existing products; successful development of advanced technologies; competitive product and pricing pressures.

Those forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statement, whether as a results of new information, future events or otherwise.

(1)      Since January 1, 2001, the 12 currencies that have participated in the Euro are the German Deutsche Mark, the French Franc, the Italian Lira, the Belgian Franc, the Luxembourg Franc, the Austrian Shelling, the Dutch Guilder, the Spanish Peseta, the Portuguese Escudo, the Irish Punt, the Finnish Markka and the Greek Drachma.

2

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PART I

Item 1. Identity
  of Directors, Senior Management and Advisers

Not applicable.

Item 2.   Offer Statistics and Expected Timetable

Not applicable.

Item 3.   Key Information

|A. | Selected financial data
|-- | -----------------------

The following table sets forth selected consolidated financial data of Saes Getters S.p.A. (the “Company”) for the years indicated and should be read in conjunction with the Company’s Consolidated Financial Statements and the Notes thereto included in Item 19.A of this annual report and “Operating results” included in Item 5.A of this annual report. The income statement and balance sheet data presented below have been derived from the Company’s Consolidated Financial Statements.

The Consolidated Financial Statements from which the selected consolidated financial data set forth below have been derived were prepared in accordance with Italian GAAP, which differs in certain respects from U.S. GAAP. For a discussion of the principal differences between Italian GAAP and U.S. GAAP as they relate to the Company’s consolidated net income and shareholders’ equity, see Item 5.A, “Operating results  Differences between Italian GAAP and U.S. GAAP” and Note 23 of Notes to Consolidated Financial Statements included in Item 19.A of this annual report.

The Company began to publish its consolidated financial statements in Euro beginning in the second quarter of 2001. The consolidated financial statements for the years ended December 31, 2001 and 2002 were published in Euro. Selected consolidated financial data relating to prior years, which were originally published in Lire, have been translated into Euro using the fixed exchange rate of €1.00 = Lit. 1,936.27. The selected financial data for 1998 reported in Euro depicts the same trends as would have been presented if the Company had continued to present selected financial data in Lire. The Company’s consolidated financial statements for periods prior to January 1, 1999 may not be comparable to those of other companies reporting in Euro if those companies had restated from a reporting currency other than Italian Lire.

|                                               |  |  | Year
      Ended December 31,                        | 
|---------------------------------------------- |  |  | ---------------------------------------------------- | 
|                                               |  |  |                                                      | 
|                                               |  |  | 1998                                                 | 
|                                               |  |  |                                                     
|                                               |  |  | (thousands
      of Euro, except share and ADS data) | 
|INCOME STATEMENT DATA                          |  |  |                                                      | 
|Amounts in accordance with
      Italian GAAP: |  |  |                                                      | 
|Net sales                                      |  |  | 95,241                                               | 
|Cost of sales                                  |  |  | 49,989                                               | 
|                                               |  |  |                                                      | 
|Gross profit                                   |  |  | 45,252                                               | 
|Operating expenses:                            |  |  |                                                      | 
|Research and development                       |  |  | 8,396                                                | 
|Selling                                        |  |  | 15,076                                               | 
|General and administrative                     |  |  | 13,373                                               | 
|                                               |  |  |                                                      | 
|Total operating
      expenses                 |  |  | 36,845                                               | 
|                                               |  |  |                                                      | 
|Operating income                               |  |  | 8,407                                                | 
|Interest and other financial
      income, net |  |  | 2,450                                                | 
|Foreign exchange gains (losses),
      net     |  |  | 1,151                                                | 
|Equity in earnings (losses) of
      investee  |  |  | 48                                                   | 
|Other income (expenses), net
      (2)         |  |  | 1,209                                                | 
|                                               |  |  |                                                      | 
|Income before taxes                            |  |  | 13,265                                               | 
|Income taxes (3)                               |  |  | 4,494                                                | 
|                                               |  |  |                                                      | 
|Net income                                     |  |  | 8,771                                                | 
|                                               |  |  |                                                      | 
|Net income per Ordinary Share
      (4)        |  |  | 0.3668                                               | 
|Net income per Preference Share
      (4)(5)   |  |  | 0.3771                                               | 
|Net income per Savings Share
      (4)         |  |  | 0.3823                                               | 
|Dividends per Ordinary Share
      (6)         |  |  | 0.1704                                               | 
|Dividends per Preference Share
      (6)       |  |  | 0.1808                                               | 
|Dividends per Savings Share (6)                |  |  | 0.1859                                               | 

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|                                                        |  |  | Year
      Ended December 31,                        | 
|------------------------------------------------------- |  |  | ---------------------------------------------------- | 
|                                                        |  |  |                                                      | 
|                                                        |  |  | 1998                                                 | 
|                                                        |  |  |                                                     
|                                                        |  |  | (thousands
      of Euro, except share and ADS data) | 
|Approximate amounts in accordance
      with U.S. GAAP: |  |  |                                                      | 
|Operating income (7)                                    |  |  | 10,757                                               | 
|Net income                                              |  |  | 7,715                                                | 
|Net income per Ordinary Share
      (4)                 |  |  | 0.35                                                 | 
|Net income per Preference Share
      (4)(5)            |  |  | 0.36                                                 | 
|Net income per Savings Share
      (4)                  |  |  | 0.36                                                 | 
|Net income per ADS (8)                                  |  |  | 0.36                                                 | 

|                                                                           |  |  | At
      December 31,     | 
|-------------------------------------------------------------------------- |  |  | ------------------------- | 
|                                                                           |  |  |                           | 
|                                                                           |  |  | 1998                      | 
|                                                                           |  |  |                          
|                                                                           |  |  | (thousands
      of Euro) | 
|BALANCE SHEET DATAAmounts in accordance with Italian GAAP:                 |  |  |                           | 
|Cash and cash equivalents and
      marketable securities                  |  |  | 68,040                    | 
|Net working capital (9)                                                    |  |  | 83,112                    | 
|Total assets                                                               |  |  | 181,716                   | 
|Long-term debt, net of current
      portion                               |  |  | 6,047                     | 
|Capital stock                                                              |  |  | 12,137                    | 
|Total shareholders’ equity                                                 |  |  | 130,190                   | 
|Approximate amounts in accordance
      with U.S. GAAP:                    |  |  |                           | 
|Total assets                                                               |  |  | 184,912                   | 
|Long-term debt and capital lease
      obligations, net of current portion |  |  | 11,107                    | 
|Total shareholders’ equity                                                 |  |  | 127,778                   | 

_______________(1)      Translated
  solely for the convenience of the reader from Euro into Dollars at the Noon
  Buying Rate on December 31, 2002 of €1.00 = $1.0485.(2)      In
  2001, the line item “Other income (expenses), net” included primarily:
  (i) non-recurring restructuring costs (totaling €2,417 thousand) and (ii)
  the partial impairment of goodwill attributable to two of its subsidiaries,
  Molecular Analytics, Inc. (totaling €2,512 thousand) and Getters Corporation
  of America (totaling €391 thousand). For a discussion of the reorganization
  plans relating to non-recurring restructuring costs, see Item 4.A, “History
  and development of the Company” of this annual report. See also Item 5.A,
  “Operating results  Year
  Ended December 31, 2001 compared to Year Ended December 31, 2000 
  Other Income (Expenses), Net”.(3)      In
  2002, the Company recorded an increase in the effective Italian tax rate which
  was mainly due to a valuation allowance against net deferred tax assets.(4)      There
  are no authoritative pronouncements relative to the calculation of earnings
  per share in accordance with Italian GAAP. For comparative purposes, the approximate
  earnings per share amounts under both Italian GAAP and U.S. GAAP have been calculated
  using the Two Class Method because the Company has authorized and issued Savings
  Shares, Ordinary Shares and Preference Shares (exchanged into Ordinary Shares
  in accordance with note 5 below). The Savings Shares and the Preference Shares
  are participating shares. Under this method, set forth in Statement of Financial
  Accounting Standards No. 128 “Earnings per Share”, net income remaining
  after dividends paid for the current year required to be allocated to Savings
  Shares and Preference Shares is divided by the weighted average number of Savings
  Shares, Ordinary Shares and Preference Shares authorized and issued (net of
  the Company’s own shares), and the amount of the dividend paid for the
  current year on each Savings Share, Ordinary Share and Preference Share is added,
  as applicable. For purposes of these calculations, the weighted average number
  of shares was 23,500,000 as of December 31, 1998, 1999, 2000 and 2001 and was
  23,135,566 as of December 31, 2002.(5)      At
  a special meeting on May 11, 2000, holders of Preference Shares approved the
  resolution of the extraordinary shareholders meeting held on April 28, 2000
  to exchange Preference Shares into Ordinary Shares at an exchange rate ratio
  of one Ordinary Share for one Preference Share. After such exchange, the Company’s
  stock consisted of 13,874,930 Ordinary Shares and 9,625,070 Savings Shares.(6)      Amounts
  reported represent subsequent dividends declared for the applicable year.(7)      In
  2001, operating income in accordance with U.S. GAAP included non-recurring restructuring
  costs and the partial impairment of goodwill attributable to Molecular Analytics,
  Inc. and Getters Corporation of America as described in note (2). These costs
  were included in the line item “Other income (expenses), net” under
  Italian GAAP.(8)      Prepared
  solely for the convenience of the reader. ADSs representing Savings Shares were
  issued in connection with the offering of Savings Shares in 1996. Each ADS represents
  one Savings Share.(9)      Net
  working capital represents total current assets minus total current liabilities
  and includes cash and cash equivalents and marketable securities. Following
  the adoption of a different presentation for deferred income taxes in 2001 as
  compared to prior years, the amount of net working capital for 2000 was restated
  on a comparable basis. No restatement was applied to prior years.

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Exchange Rates

In accordance with the provisions of the Treaty on European Union (the “Maastricht Treaty”), on January 1, 1999, eleven of the fifteen member countries of the European Union, including Italy, established fixed conversion rates between their existing sovereign currencies and the new common currency of such countries, the Euro. The participating countries adopted the Euro as their common legal currency on that date. Starting from January 2001, Greece also joined the other participating countries. As of January 1, 2001, the following countries were participating members of European Monetary Union: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. The Euro traded on currency exchanges and was available for non-cash transactions during a transitional period between January 1, 1999 and December 31, 2001. Beginning on January 1, 2002, the Euro was introduced as legal tender in each of the participating member states, and each of the participating countries began issuing Euro-denominated bills and coins for use in cash transactions. Each of the pre-existing national currencies continued to be legal tender for temporary periods ending no later than March 1, 2002. The Italian Lira ceased to be legal tender on March 1, 2002 and has been removed from circulation and replaced by the Euro.

Since January 1, 1999 (January 1, 2001 for Greece), the sovereign debt of the participating member states has been issued exclusively in Euro and as of such dates all outstanding sovereign debt of such countries has been re-denominated in Euro.

As of January 1, 1999 (January 1, 2001 for Greece), the countries participating in the Euro were no longer in control of their own monetary policies, which is instead exercised by the new European Central Bank (the “ECB”).

The following table sets forth, for the periods indicated, the month’s highest and lowest Noon Buying Rates expressed in $ per €1.00 (rounded to the nearest fourth decimal point of Euro). The Noon Buying Rate on March 31, 2003 was €1.00 = $1.0900.

|Month         |  |  | Month’s
      HighestExchange Rate |  |  | Month’s
      LowestExchange Rate | 
|------------- |  |  | ---------------------------------- |  |  | --------------------------------- | 
|              |  |  |                                    |  |  |                                   | 
|March 2003    |  |  | 1.1062                             |  |  | 1.0545                            | 
|February 2003 |  |  | 1.0875                             |  |  | 1.0708                            | 
|January 2003  |  |  | 1.0861                             |  |  | 1.0361                            | 
|December 2002 |  |  | 1.0485                             |  |  | 0.9927                            | 
|November 2002 |  |  | 1.0139                             |  |  | 0.9913                            | 
|October 2002  |  |  | 0.9881                             |  |  | 0.9708                            | 
|              |  |  |                                    |  |  |                                   | 

|The
      following table sets forth, for the periods indicated, the month’s
      highest and lowest ECB buying rates expressed in Japanese Yen per €1.00
      (rounded to the nearest second decimal point of Euro). The ECB buying rate
      on March 31, 2003 was €1.00 = Japanese Yen 129.18.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                    

|Month         |  |  | Month’s
      HighestExchange Rate |  |  | Month’s
      LowestExchange Rate | 
|------------- |  |  | ---------------------------------- |  |  | --------------------------------- | 
|              |  |  |                                    |  |  |                                   | 
|March 2003    |  |  | 129.34                             |  |  | 126.06                            | 
|February 2003 |  |  | 130.38                             |  |  | 126,21                            | 
|January 2003  |  |  | 129.17                             |  |  | 124.40                            | 
|December 2002 |  |  | 125.18                             |  |  | 123.14                            | 
|November 2002 |  |  | 122.88                             |  |  | 120.57                            | 
|October 2002  |  |  | 122.57                             |  |  | 120.65                            | 

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The following table sets forth, for the periods indicated, the high, low, average and end of period Noon Buying Rates expressed in $ per €1.00 (rounded to the nearest fourth decimal point of Euro):

|                    |  |  |  |  |  |        |  |  |  |  |  |        |  |  |  |  |  |                   |  |  |  |  |  |                     | 
|------------------- |  |  |  |  |  | ------ |  |  |  |  |  | ------ |  |  |  |  |  | ----------------- |  |  |  |  |  | ------------------- | 
|Calendar
      Year |  |  |  |  |  | High   |  |  |  |  |  | Low    |  |  |  |  |  | Average
      (1) |  |  |  |  |  | End
      of Period | 
|                    |  |  |  |  |  |        |  |  |  |  |  |        |  |  |  |  |  |                   |  |  |  |  |  |                     | 
|2002                |  |  |  |  |  | 1.0485 |  |  |  |  |  | 0.8594 |  |  |  |  |  | 0.9495            |  |  |  |  |  | 1.0485              | 
|2001                |  |  |  |  |  | 0.9535 |  |  |  |  |  | 0.8370 |  |  |  |  |  | 0.8909            |  |  |  |  |  | 0.8901              | 
|2000                |  |  |  |  |  | 1.0332 |  |  |  |  |  | 0.8271 |  |  |  |  |  | 0.9207            |  |  |  |  |  | 0.9390              | 
|1999                |  |  |  |  |  | 1.1814 |  |  |  |  |  | 1.0017 |  |  |  |  |  | 1.0586            |  |  |  |  |  | 1.0069              | 
|1998                |  |  |  |  |  | 1.2163 |  |  |  |  |  | 1.0592 |  |  |  |  |  | 1.1147            |  |  |  |  |  | 1.1707              | 

(1)      The average of the Noon Buying Rates on the last business day of each month during the year indicated.

The following table sets forth, for the periods indicated, the high, low, average and end of period ECB buying rates expressed in Japanese Yen per €1.00 (rounded to the nearest second decimal point of Euro):

|                    |  |  |  |  |  |        |  |  |  |  |  |        |  |  |  |  |  |                   |  |  |  |  |  |                     | 
|------------------- |  |  |  |  |  | ------ |  |  |  |  |  | ------ |  |  |  |  |  | ----------------- |  |  |  |  |  | ------------------- | 
|Calendar
      Year |  |  |  |  |  | High   |  |  |  |  |  | Low    |  |  |  |  |  | Average
      (1) |  |  |  |  |  | End
      of Period | 
|                    |  |  |  |  |  |        |  |  |  |  |  |        |  |  |  |  |  |                   |  |  |  |  |  |                     | 
|2002                |  |  |  |  |  | 125.18 |  |  |  |  |  | 112.40 |  |  |  |  |  | 118.06            |  |  |  |  |  | 124.39              | 
|2001                |  |  |  |  |  | 115.90 |  |  |  |  |  | 100.62 |  |  |  |  |  | 108.68            |  |  |  |  |  | 115.33              | 
|2000                |  |  |  |  |  | 111.86 |  |  |  |  |  | 89.31  |  |  |  |  |  | 99.24             |  |  |  |  |  | 106.92              | 
|1999                |  |  |  |  |  | 134.37 |  |  |  |  |  | 102.50 |  |  |  |  |  | 120.56            |  |  |  |  |  | 102.72              | 
|1998                |  |  |  |  |  | 162.03 |  |  |  |  |  | 132.80 |  |  |  |  |  | 145.47            |  |  |  |  |  | 134.74              | 

(1)      Amounts reported for 1998 represent the average of the Bank of Italy buying rates on the last business day of each month during the year.

Fluctuations in exchange rates between the Euro and the Dollar will affect the Dollar amounts received by owners of ADSs on conversion by the Depositary of dividends, if any, paid on the Savings Shares represented by the ADSs. Moreover, such fluctuations may also affect the Dollar equivalent of the Euro price of the Savings Shares traded on the Mercato Telematico Azionario (“MTA”) of Borsa Italiana S.p.A. (the Italian regulatory body which manages the Italian regulated financial markets)and, as a result, may affect the Dollar price of the ADSs on The Nasdaq Stock Market. In addition, fluctuations in the exchange rates of certain foreign currencies relative to the Euro may affect the Company’s results of operations. See Item 5.A, “Operating results  Impact of Changes in Exchange Rates”.

Dividends

The following table sets forth the amount of dividends paid or to be paid by the Company on its authorized and issued Ordinary Shares, Preference Shares and Savings Shares, together with a translation of the dividends per Savings Share into dividends per ADS in Dollars. Dividends paid in each year indicated are in respect of the prior year.

|Year |  |  |  |  |  | Dividends
      per OrdinaryShare |  |  |  |  |  | Dividends
      perPreferenceShare
      (1) |  |  |  |  |  | Dividends
      perSavingsShare |  |  |  |  |  | Dividends
      perADS
      (2) |  |  |  |  |  | Total
      Dividends Paid (3)  | 
|---- |  |  |  |  |  | --------------------------------- |  |  |  |  |  | -------------------------------------------- |  |  |  |  |  | ------------------------------- |  |  |  |  |  | -------------------------------- |  |  |  |  |  | ------------------------------- | 
|     |  |  |  |  |  |                                   |  |  |  |  |  |                                              |  |  |  |  |  |                                 |  |  |  |  |  |                                  |  |  |  |  |  |                                 | 
|     |  |  |  |  |  | (Euro)                            |  |  |  |  |  | (Euro)                                       |  |  |  |  |  | (Euro)                          |  |  |  |  |  | (Dollars)                        |  |  |  |  |  | (thousands
      of
      Euro) | 
|2003 |  |  |  |  |  | 0.1500                            |  |  |  |  |  |                                             |  |  |  |  |  | 0.1656                          |  |  |  |  |  | 0.1736                           |  |  |  |  |  | 3,675                           | 
|2002 |  |  |  |  |  | 0.2500                            |  |  |  |  |  |                                             |  |  |  |  |  | 0.2656                          |  |  |  |  |  | 0.2364                           |  |  |  |  |  | 5,980                           | 
|2001 |  |  |  |  |  | 0.4132                            |  |  |  |  |  |                                             |  |  |  |  |  | 0.4287                          |  |  |  |  |  | 0.4000                           |  |  |  |  |  | 9,860                           | 
|2000 |  |  |  |  |  | 0.1963                            |  |  |  |  |  | 0.2066                                       |  |  |  |  |  | 0.2117                          |  |  |  |  |  | 0.2100                           |  |  |  |  |  | 4,763                           | 
|1999 |  |  |  |  |  | 0.1704                            |  |  |  |  |  | 0.1808                                       |  |  |  |  |  | 0.1859                          |  |  |  |  |  | 0.2200                           |  |  |  |  |  | 4,156                           | 
|1998 |  |  |  |  |  | 0.1704                            |  |  |  |  |  | 0.1808                                       |  |  |  |  |  | 0.1859                          |  |  |  |  |  | 0.2000                           |  |  |  |  |  | 4,156                           | 
|     |  |  |  |  |  |                                   |  |  |  |  |  |                                              |  |  |  |  |  |                                 |  |  |  |  |  |                                  |  |  |  |  |  |                                 | 

|(1)At a special meeting on May 11, 2000, holders of Preference Shares approved
      the resolution of the extraordinary shareholders meeting held on April 28,
      2000 to exchange all outstanding Preference Shares into Ordinary Shares
      at an exchange rate ratio of one Ordinary Share for one Preference Share.
      After such exchange, the Company’s stock consisted of 13,874,930 Ordinary
      Shares and 9,625,070 Savings Shares.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2)Prepared solely for the convenience of the reader. ADSs representing Savings
      Shares were issued in connection with the offering of Savings Shares on
      The Nasdaq Stock Market in 1996. Each ADS represents one Savings Share.
      Dividends per ADS paid in each year were translated from Euro into Dollars
      at the Noon Buying Rate on December 31 of the previous year.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3)In 2003 this amount represents the maximum amount of dividends to be paid
      to the holders of Ordinary Shares and Savings Shares, excluding shares owned
      by the Company, as of May 5, 2003.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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The Company’s By-laws provide that the holders of the Savings Shares (including those represented by ADSs) have the right to receive an annual preferential dividend equal to 25% of the nominal value of their Savings Shares. Such right accumulates for a maximum of two successive years and must be fully paid to holders of Savings Shares during such period before the Company pays any other dividends. In the event that amounts remain and dividends are paid on Ordinary Shares, holders of Savings Shares have a preferential right to receive an aggregate dividend per share that is 3% greater (based on nominal value) than that received by holders of Ordinary Shares.

All dividends payable on the ADSs and the Savings Shares to non-residents of Italy are subject to deduction of Italian withholding tax. See Item 10.E, “Italian Taxation  Income Tax”.

Any determination to pay dividends in the future will be at the discretion of the Company’s Board of Directors, subject to the approval of the Company’s Ordinary Shareholders Meeting, and will depend upon the Group’s results of operations, financial condition, capital expenditures, working capital requirements, any contractual restrictions and other factors deemed relevant by the Company’s Board of Directors.

|B. | Capitalization and indebtedness
|-- | -------------------------------

Not applicable.

|C. | Reasons for the offer and use of proceeds
|-- | -----------------------------------------

Not applicable.

|D. | Risk factors
|-- | ------------

Nature of the Business in which the Group is Engaged and Uncertainty of Demand Trends

The Company and its consolidated subsidiaries (the “Group”) manufactures products used in the market for advanced technical products, which includes semi-conductors, opto-electronic products, lamps and displays. The market for some of these products is highly cyclical or subject to the eventual success of a few among several competing or alternative technologies, not all of them requiring the use of Company’s newly developed products. The demand for the Group’s products tends to reflect the demand for products in the advanced technical products market. Customers’ requirements for the Group’s products fluctuate as a result of changes in general economic activity and other factors that affect the demand for their products. Demand for certain of the Group’s products is further affected by geography, as business cycles vary somewhat in different regions. While the Group sells its products to the Group’s customers operating in different industries in several geographic regions, a prolonged recession in the general economy or uncertainties regarding future economic prospects could affect demand for the Group’s products, which could have an adverse effect on the Group’s results of operations.

Further,
  the Group’s customers are primarily involved in industries that manufacture
  high-technology products or require high-technology products in their manufacturing
  processes. The introduction of products or processes utilizing new technologies
  often has a severe impact on the demand for these customers’ products.
  The Group’s customers also include research and development facilities,
  which depend upon the political and industrial policies of governments and companies.
  These policies are also subject to sudden change. As a result, demand trends
  for the Group’s products and those of its customers are not subject to
  accurate determination and the Group’s performance is influenced by the
  ability of the Company to predict the future demand for new and existing products
  manufactured by third parties requiring components or processing that use the
  Group’s technological expertise. See Item 5.D, “Trend information”.

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Exposure of Results and Share Price to Changes in Exchange Rates

The Group’s sales and operating results are and will continue to be affected by the impact of fluctuations in foreign currency exchange rates on product prices and certain operating expenses. Fluctuations in the exchange rates of certain foreign currencies (principally the Dollar and to a lesser degree the Japanese Yen) relative to the Euro may have an adverse effect on the Group’s sales and operating income and on the international competitiveness of its Italian-based operations. The appreciation of the Euro has had and could continue to have an adverse effect on the Group’s sales and operating income. In 2002, approximately 84% and 49% of the Group’s total net sales and expenses, respectively, were denominated in currencies other than those participating to the Euro. In particular, approximately 65% and 32% of the Group’s total net sales and expenses included in cost of sales and operating expenses were denominated in Dollars. See Item 3.A for a description of exchange rates. In order to manage and limit exposure to foreign currency exchange risks, the Company continued its hedging of foreign exchange between the Euro and the Dollar in 2002 and in the first months of 2003. However, since the Group does not hedge against all foreign exchange exposure, fluctuations in the value of the Euro on the currency markets could have an adverse effect on the Group’s financial position, particularly if there is a sudden or dramatic change in the value of the Euro or fluctuations in its value persist. Fluctuations in the Euro to Dollar exchange rate may also affect the Dollar equivalent of the Euro price on the “MTA” and, as a result, are likely to affect the market price of the ADSs in the United States. See Item 3.A, “Selected financial data  Exchange Rates” and Item 5.A, “Operating results  Impact of Changes in Exchange Rates”.

| | Technological Obsolescence and Dependence on Timely Development of New Products
| | -------------------------------------------------------------------------------

The
  technology underlying certain of the products of the Group’s customers,
  including products related to the electronic and opto-electronic industry, is
  subject to significant and rapid technological changes. Such changes could lead
  to the obsolescence of products that utilize the Group’s technology, thereby
  reducing the Group’s sales. Currently, the Company believes that black
  and white Cathode Ray Tubes, which are manufactured by using evaporable getters,
  will become completely obsolete in the next few years. The Group’s sales
  of evaporable getters used in the manufacture of black and white Cathode Ray
  Tubes amounted to approximately €600 thousand, or 0.4% of total revenue
  in 2002. The Group believes that over the next few years, the average production
  rate for both consumer and monitor applications of Cathode Ray Tubes will remain
  flat or grow slightly despite the expected growth of Liquid Crystal Display
  (“LCD”) monitors for desktop computers and the commercial availability
  of Plasma Display Panels (“PDPs”) for larger screens. In addition,
  because of the significant technological changes that have taken place in the
  industries in which the Group’s customers operate and those that may occur
  in the future, and the possible introduction of new advanced products by the
  Group’s competitors, the Group’s business is dependent upon expenditures
  on research and development and upon the time necessary to develop, industrialize
  and commercialize new products. Any prolonged delays or substantial cost over-runs
  in the Group’s research and development effort could impair the Group’s
  ability to successfully introduce new products, which could adversely affect
  the Group’s results of operations. See Item 4.B, “Business overview
   Trademarks, Patents and Proprietary Rights” and Item 5.C, “Research
  and development, patents and licenses”.

Economic and Political Conditions

In 2002, the Group’s sales and manufacturing activity in Asia accounted for approximately 57% and 22% of total sales and total manufacturing activity, respectively. In addition, about 59% of the worldwide production for the semiconductor industry takes place in Asia Pacific region. As a result, economic and political conditions in Asia generally, and Japan, Korea, Taiwan and China in particular, can have a significant impact on the financial condition and results of operations of the Group. An adverse change in economic or political conditions in Asia or uncertainty regarding the financial stability of the economy, currency and the financial markets of Asia, and in particular in Japan, Korea and Taiwan, could have a material adverse effect on the Group’s sales in Asia. This, in turn, could have an adverse effect on the Group’s financial condition and results of operations. In addition, the negative economic and business impact on certain sectors of the industry, resulting from economic stagnation affecting world markets generally or increased oil prices related to military conflicts in the Middle East may affect the Company’s sales, thus having a material adverse effect on the Group’s business and results of operations.

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Competition

The Group’s Components Aggregate (one of its two business divisions) faces limited competition from other producers and has obtained substantial market share for certain of its products, in particular for evaporable getters used in Cathode Ray Tubes and non-evaporable getters used in high-pressure discharge lamps. The Group has only one major competitor for evaporable getters used in color Cathode Ray Tubes, which, since 1997, has decreased its market share. The Company estimates this competitor presently has approximately 13% of the estimated worldwide market of getters for color Cathode Ray Tubes. In addition, the Group’s Components Aggregate faces competition from certain Chinese and Korean manufacturers of non-evaporable getters. In the area of mercury dosing or dispensing products, used in the manufacture and production of fluorescent lamps, the Group faces technological competition represented primarily by mechanical dosing technology, which remains the preferred technology due to minimal changes required for production lines and the very low cost associated with such technology. Some manufactures are using zinc-mercury pellets as part of the manufacturing process of fluorescent lamps, which are also relatively inexpensive. Metallic and glass vials are also considered competitors to the Group’s products. However, none of these alternative technologies offers the getter action.

The Group’s Equipment Aggregate is subject to extensive competition, in particular from certain Asian companies for large purifiers and from certain U.S. companies for small purifiers.

Moreover, certain of the Group’s products, such as metal dispensers, getter pumps and modules and gas purifiers and analyzers, are also subject to competition from alternative products using competing technologies or in-house made products. There can be no assurance that the Group’s operating results will not be adversely affected by existing competitors increasing their production and marketing efforts or increasing the supply of and decreasing the price at which they offer getters or other competing products.

In addition, there are limited barriers to entry with respect to certain standard products manufactured by the Group due to the low cost of commencing production of such products and the expiration of certain patents relating to such products. See Item 4.B, “Business overview  Competition.” As a result, the Group may also face competition from new entrants or from customers of the Group commencing production of getters or other competing products for either internal use or for sale to third parties. Moreover, there can be no assurance that, as the market for getters used in monochrome Cathode Ray Tubes disappears, the Group’s competitors producing such getters will not attempt to enter the market for getters used in color Cathode Ray Tubes.

Reliance on Main Manufacturing Facilities

Substantially all of the Group’s manufacturing of its gas purifiers takes place in a single production facility located in San Luis Obispo, California. The manufacturing of stand-alone instruments (such as the “Air Sentry”) and integrated analytical systems is carried out at the production facility located in Sparks, Maryland. All of the Group’s processing of barium alloy, the primary material used in the production of evaporable getters, and the production of all alloys used for the manufacturing of non-evaporable getters take place in a single production facility located in Avezzano, Italy. A significant interruption of production at any of these facilities could have a material adverse effect on the Group’s business and operating results. See Item 4.B, “Business overview  Manufacturing and raw materials”.

Dependence on a Limited Number of Customers and Strategic Relationships

The Group’s customer base is concentrated, in part owing to the Group’s strategy of developing long-term and strategic relationships, with a limited group of customers. Sales to the Group’s top three and top ten customers accounted for approximately 26% and 50%, respectively, of the Group’s sales in 2002. The Company expects that sales to a relatively small number of customers on a global scale will continue to account for a significant portion of the Group’s sales for the foreseeable future. The loss of one or more of the Group’s key customers, or reduced orders by its key customers, could adversely affect the Group’s operating results.

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Furthermore, certain of the Group’s key customers have entered into cooperation agreements or other strategic alliances with the Group. The unsuccessful operation or termination of one or more of these relationships could adversely affect the Group’s operating results.

Some of the industries in which the Group operates are undergoing consolidation, and some of the Group’s customers and their competitors have merged to form new and larger companies. For example, in July 2001, two of the main customers in the Group’s Display Devices Business Area (Philips and LG Electronics) began operating a newly formed company (“LG.Philips Displays”) resulting from the merger of their Cathode Ray Tubes businesses. In addition, in April 2003, Toshiba Corporation and Matsushita Electric Industrial Co., Ltd, both of which are Group customers for barium getters, began operating a joint venture (“Matsushita Toshiba Picture Display Co, Ltd.”) resulting from the merger of both companies’ Cathode Ray Tubes operations (which includes R&D, manufacturing and sales). If such consolidation among the Group’s customers continues, the Group’s overall client base may decline, thereby increasing the Group’s reliance on a limited number of generally larger customers. As a result these larger customers will have increased negotiating power with respect to purchase prices for the Group’s products.

Reliance on Availability of Raw Materials

The principal raw materials the Group uses in the production of its products are barium minerals, nickel powder, titanium, mercury and stainless steel ribbon. These materials are considered commodities and are subject to price volatility. The Group does not enter into long-term contracts for the supply of these raw materials, but purchases such materials on an “as needed” basis. While the Group reacts to prospective market conditions by purchasing certain materials on a forward delivery basis, sudden fluctuations in the price of key raw materials could have an adverse impact on the Group’s operations.

Due to the exacting nature of these commodities, only a limited number of suppliers are capable of delivering the quality and quantity of raw materials required by the Group. Generally, the Group has more than one supplier for each of these materials. However, for certain key materials, including nickel powder, the Group relies exclusively on one, although very reliable, supplier. In this respect, in order to reduce its exposure to price volatility and related risks for supplies of nickel, the Company has entered into yearly agreements governing volatility of prices, deliveries and consignment of stocks. With respect to the supply of stainless steel, the Company generally benefits from strong price competition among international suppliers. If the Group needs to use other companies as suppliers, such suppliers must go through a qualification process. Interruption in the supply of raw materials could seriously harm the Group’s business, financial condition and results of operations.

Variability of Customer Requirements and Absence of Customer Order Commitments

The quantity and timing of a majority of orders placed by customers of the Equipment Aggregate vary due to a number of factors, including changes in their manufacturing strategies and variations relating to demand for their products. For both the Equipment and Components Aggregates the Group typically does not obtain long-term purchase orders or commitments. It relies primarily on ongoing communication with its customers and on its own market assessments and product planning to anticipate the future volume of purchase orders. While management believes that it will continue to retain its current principal customer base, it cannot ensure that the volume of revenue generated from these entities will be sustained from year to year, and there is a risk that these entities may not retain the Group in the future. Reductions or delays in orders by any significant customer could have an adverse effect on the Group’s business, financial condition and results of operations.

Dependence on Significant International Operations

Sales to customers outside of Italy represented approximately 98% of the Group’s sales in 2002 with a substantial portion of sales made to customers in the United States, Japan, Korea and other industrialized nations in Asia and Europe. Part of the Group’s strategy is to increase its sales and presence in developing markets, including China, the Southeast Asia region, India, Latin America and Russia. International operations expose the Group to certain risks, including the expense of maintaining foreign sales distribution channels and product servicing, political instability and changes in laws and policies affecting trade, investment and taxation, economic and financial instability of foreign economies and currency fluctuations. See “ Exposure of Results and Share Price to Changes in Exchange Rates”. In addition, the Group’s international operations may experience difficulties in worldwide administration and communication because certain functions are centralized in one location. Further, a worsening of economic conditions affecting worldwide markets generally or the financial crisis either in Asia or in Latin America in particular could result in additional risks, causing instability in exchange rates or interest rates. If the Group fails to manage these risks adequately, the continued supply of the Group’s products could suffer and the Group’s customers would be less likely to purchase products from the Group. This could have a material adverse effect on the Group’s business, financial condition and results of operation.

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Intellectual Property and Expiration of Material Patents

The Group’s success depends in part on its ability to obtain and protect its intellectual property through patents, licenses and other intellectual property rights as well as trade secrecy agreements and other contractual provisions. To that end, the Group has been granted or acquired certain patents and patent licenses and intends to continue to seek patents on certain of its inventions and manufacturing processes. Certain of these patents are, and in the future other patents may be, material to the success and competitiveness of certain of the Group’s products. The expiration of any such patent could adversely affect the Group’s results of operations or financial condition.  See Item 4.B, “Business overview  Trademarks, Patents and Proprietary Rights.”

The process of seeking patent protection can be long and expensive, and there can be no assurance that patents will be issued from currently pending or future applications or that, if patents are issued, they will be of sufficient scope or strength to provide meaningful protection or any commercial advantage to the Group. In addition, effective copyright and trade secret protection may be unavailable or limited in certain countries. From time to time, management determines that the public dissemination of competitively useful information through the patenting procedure outweighs the benefits of patent protection and, consequently, in such cases does not seek to patent certain inventions or manufacturing processes. In addition the Company could face difficulties in further expanding its commercial activities with the introduction of new products due to the existence of competitors’ patents. Although there has not been any material intellectual property litigation brought against the Group in the past, during 2002 the Company initiated litigation against Aeronex Inc, to enforce an existing patent covering purification of ammonia. See Item 8.A, “Consolidated statements and other financial information  Legal Proceedings.” Moreover, there can be no assurance that intellectual property litigation will not be commenced against the Group in the future.  In general, litigation, which could demand financial and management resources, may be necessary to enforce patents or other intellectual property rights belonging to the Group. The expenses related to, or the outcome of any such litigations as well as the failure to obtain necessary patents, licenses or other intellectual property rights from third-parties on acceptable terms or the expiration of material patents could adversely affect the Group’s results of operations of financial operations or financial condition. See Item 5.C, “Research and development, patents and licenses”.

Risks Related to the Expansion of Operations

One of the Group’s strategic objectives is to continue to expand its operations in certain areas related to vacuum applications, analytical trace gas monitoring and the semiconductor industries. This expansion may require the Group to implement a variety of additional systems, procedures, controls and integration strategies to manage higher inventory levels and working capital requirements and may place significant strain on management, financial and other resources. Expansion may also lead to increases in fixed costs and operating expenses. There can be no assurance that such expansion will be successfully completed or that the Group’s systems, procedures, controls, strategies or resources will be adequate to support expanded operations. If the Group is unable to manage its expansion effectively, its business and results of operations could be adversely affected.

Reliance on Expertise of Management and Key Personnel

The Group depends on the efforts and abilities of certain key management and technical personnel. Its future success depends, in part, upon the Group’s ability to retain such personnel, and to attract and retain other highly qualified personnel, particularly sales, product and process engineers. The Group competes for these individuals with other companies, academic institutions, government entities and other organizations. Competition for such personnel is intense and the Group may not be successful in hiring or retaining new or existing qualified personnel. If the Group loses existing qualified personnel or is unable to hire new qualified personnel as needed, its business, financial condition and results of operations could be adversely affected.

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Growth through Acquisitions, Joint Ventures and Investments Involve Risks and Uncertainties

The Company intends to continue to grow its business partly through acquisitions, joint ventures and investments. See also Item 4.B, “Business overview  Strategy”. Such acquisitions and investments, whether conducted nationally or internationally, involve a number of risks and uncertainties, including the following:

|- | integrating different company cultures, personnel, technologies, products and facilities;
|- | -----------------------------------------------------------------------------------------

|- | increasing leverage and debt service requirements;
|- | --------------------------------------------------

|- | entering geographic or business markets in which the Group has no or limited experience;
|- | ----------------------------------------------------------------------------------------

|- | diverting management’s attention from other business concerns;
|- | --------------------------------------------------------------

|- | potentially losing key employees of acquired companies;
|- | -------------------------------------------------------

|- | identifying suitable investment and diversification opportunities; and
|- | ----------------------------------------------------------------------

|- | consummating future acquisitions, joint ventures or investments on satisfactory terms, if at all.
|- | -------------------------------------------------------------------------------------------------

Failure to successfully address these risks or other unexpected risks could adversely effect the Group’s business, financial condition and results of operation.

Environmental Regulations

The Group is subject to a variety of governmental regulations relating to the use, storage, discharge and disposal of minerals, alloys and gases used in its manufacturing processes. Although the Group has not been subject to material environment claims in the past and the Company believes that the Group’s activities conform in all material respects to presently applicable environmental regulations, environmental claims or the failure to comply with present or future regulations could result in the assessment of damages or imposition of fines against the Group and require the Group to acquire costly equipment or incur other significant expenses. Accordingly, any failure of the Group to control the use of, or adequately restrict the discharge of, hazardous substances could adversely affect the Group’s business, financial condition and results of operation.

No Right to Participate in Compulsory Tender Offers

Under current Italian legislation governing tender offers, holders of the ADSs or the Savings Shares do not have the right to tender Savings Shares to a bidder in connection with a tender offer for all or part of the Ordinary Shares. A change in control of the Group could result in the Group having a materially different financial position. Furthermore, while Italian legislation requires the launch of a tender offer following the acquisition by a person of certain specified percentages of Ordinary Shares, no such requirement exists with respect to Savings Shares, regardless of the amount purchased. Therefore, there can be no assurance that a bidder will not purchase an amount of Savings Shares that materially decreases the active trading market for the Savings Shares. See Item 7, “Major Shareholders and Related Party Transactions”.

Control by Major Shareholders

As of the date of this annual report, the Company is controlled by members of three families, the Baldi, Canale and della Porta families, who together with Berger Trust S.p.A. and Desis S.A. (collectively, the “Major Shareholders”) are parties to a Shareholders’ Agreement which currently covers 7,946,776 of the Ordinary Shares, representing approximately 57.3% of the authorized and issued voting securities of the Company. The Shareholders’ Agreement generally limits the ability of the Major Shareholders to transfer their shares. See Item 7.A, “Major Shareholders.” While individually the Major Shareholders cannot exercise majority control over the Company, collectively, the Major Shareholders represent a majority of the authorized and issued voting securities and are able to pass resolutions at the ordinary shareholders’ meeting and extraordinary shareholders’ meeting, elect and appoint the board of directors and otherwise generally direct the Company’s affairs.

Dependence on Information Technology Integration

Most of the management, commercial, technical and financial information relating to the Group’s operations is exchanged, processed, filed and retrieved through an integrated database information system supported by suitable software. Any major failure of such system could jeopardize the management and information sharing capabilities of Group’s operations.

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Item 4.   Information on the Company

|A. | History and development of the Company
|-- | --------------------------------------

Introduction

SAES Getters S.p.A. is the world leader in getter technology used to create and maintain vacuum and purified gas environments. High vacuum and purified gas environments are required in the production of a wide range of products in several high to medium technology industries, as well as in scientific applications, such as traditional electronics, semiconductors, lighting, telecommunications, aerospace and appliances and laboratory physics experiments. The Company is also a leader in the production of analytical devices for the detection of trace impurities in semiconductor manufacturing bulk process gases and in “clean room” environments. The Group has developed long-term relationships with several major customers and end users in these industries, including, in alphabetical order: Air Liquide, Air Products, BOC, Chunghwa, General Electric, Harison, Hitachi, Intel, LG.Philips Displays, Matsushita Electronics, Motorola, NEC, Orion, Osram, Philips, Praxair, Rainbow, Samsung, Sanken, Siemens, Sony, Thomson and Toshiba. The Group’s primary products are: “getters”, which are used to improve and maintain a vacuum, gas purifiers, which are used to remove trace impurities from process gases, and gas analyzers apparatuses, which are used to detect residual trace impurities in such gases and in “clean room” environments. A getter is a device composed of metal or a metal alloy which exhibits a chemical affinity for specific gases and, when introduced into an evacuated device, absorbs the targeted gaseous molecules present, creating and maintaining an appropriate vacuum or, when used for gas purification purposes, creating a highly purified gas.

SAES Getters S.p.A. is a joint stock company (a Società per Azioni under the Italian Civil Code) incorporated in Italy, and registered in and operating under, the laws of Italy. The legal and commercial name of the Company is SAES Getters S.p.A. The duration of the Company is set until December 31, 2050.

The Company is organized into two divisions called “Aggregates”, one covering components (the “Components Aggregate”) and one covering equipment (the “Equipment Aggregate”) and has nine manufacturing facilities located in Italy, the United States, Korea and China.  See Item 4B, “Business Overview.”

The registered offices of the Company and the Headquarters of the Group are in Italy and the registered address SAES Getters S.p.A., Viale Italia 77, 20020 Lainate, Milan, Italy, Tel: +39 02931781. The agent for service of process is Citibank N.A., 111 Wall Street, New York, N.Y. 10005, Tel: +1 2126579522. Citibank N.A. operates as depositary, registrar and agent for the Company’s ADSs, pursuant to the Deposit Agreement dated May 22, 1996.

History and development

The Company was founded in Florence in 1940 as S.A.E.S. (Società Apparecchi Elettrici e Scientifici) for the production of electric and scientific apparels, and moved to Milan in 1943. Following the acquisition of the Company by the families of certain of the Major Shareholders (as defined in Item 7.A “Major shareholders”) in 1947, the Company pioneered the field of getters.

During the 1960s and 1970s, the Company established sales subsidiaries in Europe and Asia and a sales and manufacturing subsidiary in the United States. During the 1980s, the Company acquired King Laboratories, which produced evaporable getters in the United States, and the getter business of the Kemet Division of Union Carbide, which was the main producer of evaporable getters in the United States. Also in the 1980s, the Company acquired Saes Pure Gas, Inc. (formerly Cryolab, Inc.), which permitted the Group to establish an important presence in the gas purification field. This presence was enlarged to encompass trace gas analysis with the acquisitions of Trace Analytical, Inc. (“Trace Analytical”) and FST Consulting Group, Inc. (“FST”) in 1998; PCP, Inc. (“PCP”), which later merged with Trace Analytical, in 1999; and Molecular Analytics, Inc. (“Molecular Analytics”) in 2000. In addition, during the 1990’s, the Group further expanded its business in Asia. This expansion included the formation in 1996 of Nanjing Saes Huadong Getters Co. Ltd. (“NSHG Joint Venture”), a joint venture with Huadong Electron Tube Factory  Nanjing for the development and sale of getters for Cathode Ray Tubes.

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Reorganizations

In October 2001, the Company announced a restructuring plan relating to its Equipment Aggregate and particularly in the Analytical Technologies Business Area. Pursuant to the plan, the business activities of Trace Analytical, located in Menlo Park, California, together with its laboratory in West Palm Beach, Florida, were merged by incorporation into a new company (“Trace Analytical, Inc.”), with its principal place of business in Sparks, Maryland, which is also the headquarters of Molecular Analytics. In April 2002, Molecular Analytics was merged into Trace Analytical. The surviving entity changed its name to Molecular Analytics, Inc. This merger had the aim of producing a more effective and efficient management of the activities based in Sparks, Maryland (USA). The restructuring process relating to the Equipment Aggregate resulted in a net reduction of approximately 20 employees during 2002. The Company estimates that cost savings from this restructuring plan amount to approximately $3 million per year, with effect from 2002.

In November 2001, the Company announced a restructuring plan relating to the Components Aggregate and particularly the Display Devices Business Area. Pursuant to the plan, during the early part of 2002 the Group transferred the production of getters for color Cathode Ray Tubes made by Getters Corporation of America, Inc. (“GCA”) in Cleveland, Ohio, to Saes Getters S.p.A. in Lainate (Italy). The restructuring was due to a general economic slowdown in the first half of 2001 which, in addition to the tragic events of September 11, resulted in a strong economic slowdown in some industrial markets in which the Group operates. This slowdown has particularly affected the Color Picture Tube market in North America, which was already characterized by plant relocations and closing. The Group continues to produce getters for lamps in the Cleveland, Ohio facility. In addition, in 2002, the Ohio facility was equipped for producing Vacuum Insulated Panels (“VIP”) for the North American markets, and production of VIPs began during the first quarter of 2003. As part of the restructuring plan, GCA was merged into Saes Getters USA, Inc, in June 2002. The restructuring process relating to the Components Aggregate resulted in a reduction of approximately 60 employees during 2002. The Company estimates that cost savings from this restructuring plan amount to approximately $2 million per year, with effect from 2002.

In July 2002, the Company announced a reorganization plan relating to the Equipment Aggregate and particularly in the Pure Gas Technologies Business Area. The program involved the reduction by approximately one third of the workforce, equal to approximately 30 people, from Saes Pure Gas, Inc. in San Luis Obispo, California. The decision, dictated by continued weak performance and indicators in the semiconductor equipment market throughout 2002, was aimed at reducing costs and recovering profitability. The Company estimates that this reorganization will result in cost savings of about $2 million per year, of which approximately $1 million was already recognized in 2002. Following the reorganization, in October 2002, the Company announced a further streamlining of the international sales force and customer service operations of the Equipment Aggregate. The program resulted in the reduction of approximately 20 personnel, enabling further cost savings estimated at approximately $1.4 million per year, with effect from 2003. The one-time costs relating to the 2002 reorganization of the Equipment Aggregate, which were estimated at approximately $1 million, were reflected in the Company’s financial statements for the year ending December 31, 2002.

In addition, as part of the reorganization process aimed at improving efficiency, two Group subsidiaries located in Avezzano, Italy (Saes Metallurgia S.p.A. and Saes Advanced Technologies S.p.A.) were merged into Saes Advanced Technologies S.p.A. with effect on January 1, 2002.

On August 2, 2002, a new subsidiary, Saes Getters Ireland Ltd, based in Dublin, Ireland was incorporated. The primary purpose of this subsidiary is to optimize the management of the Group’s liquidity.

The Company's joint venture Japan Getters Inc. (“JGI”) was liquidated with effect on October 31, 2002. The Company  through its subsidiary Saes Getters Japan Co. Ltd. (“Saes Japan”)  had entered into JGI in May 1993 with a 50% equity interest, partnering up with the Japanese companies Mitsui & Co. Ltd. (25%) and Japan Metals & Chemicals (“JM&C”) (25%), in the field of non evaporable getters. In March 2002, the three partners mutually agreed to liquidate JGI, terminating all the agreements in place. Concurrently, Saes Japan agreed to succeed in the JGI's business. Immediately thereafter, Saes Japan and JM&C entered into a production agreement whereby JM&C agreed to continue manufacturing exclusively for Saes Japan certain non evaporable getters, which are protected by some patents owned by the Company and which previously were marketed by JGI.

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Capital Expenditures

The Group’s capital expenditures totaled €15,446 thousand in 2002, as compared to €23,887 thousand in 2001 and €14,372 thousand in 2000. In 2002, the Group’s capital expenditures were primarily made for improvements at its production facilities to increase manufacturing capacity and for new laboratory instrumentation and, to a lesser extent, for the completion of the construction of a new office building in Lainate (Italy), used as the Group’s corporate headquarters, for the completion of new buildings in Avezzano and in Shanghai, for the expansion of the production facility in South Korea, and for hardware upgrading related to the Group’s information system. The reduction in Group’s capital expenditures is due primarily to certain non-recurring investments in buildings that were completed in 2002 but which were mainly incurred during the previous year.

The following table sets forth, for the periods indicated, the net amount of Group’s capital expenditures, expressed in thousands of Euro, for land and buildings, machinery and industrial equipment, laboratory instruments and other assets, including office equipment and information systems hardware:

|                                   |  |  | 2000                      |  |  | 2001                      |  |  | 2002                      | 
|---------------------------------- |  |  | ------------------------- |  |  | ------------------------- |  |  | ------------------------- | 
|                                   |  |  |                           |  |  |                           |  |  |                           | 
|                                   |  |  | (thousands
      of Euro) |  |  | (thousands
      of Euro) |  |  | (thousands
      of Euro) | 
|Land and buildings                 |  |  | 386                       |  |  | 1,213                     |  |  | 1,155                     | 
|Machinery and industrial equipment |  |  | 4,962                     |  |  | 8,511                     |  |  | 5,146                     | 
|Laboratory instruments and other   |  |  | 1,611                     |  |  | 3,120                     |  |  | 2,605                     | 
|Construction in progress           |  |  | 7,413                     |  |  | 11,043                    |  |  | 6,540                     | 
|                                   |  |  |                           |  |  |                           |  |  |                           | 
|Total                              |  |  | 14,372                    |  |  | 23,887                    |  |  | 15,446                    | 
|                                   |  |  |                           |  |  |                           |  |  |                           | 

In 2002, approximately 49% of the Group’s total capital expenditures were made to purchase new machinery, industrial equipment and laboratory instrument for R&D activity and new projects conducted in Lainate, Italy.

Approximately 26% of the Group’s total capital expenditures in 2002 were made in connection with themanufacturing facility in Avezzano (Italy) to complete a new building and to enhance and improve its machinery and industrial equipment. Approximately 7% of total capital expenditures in 2002 were made for the expansion of a production facility and new equipment in Jincheon (South Korea).

The newly constructed buildings in Lainate, Avezzano and Shanghai will not require any substantial further capital expenditures in 2003. The Group’s total investment in the new buildings located in Lainate, Avezzano and Shanghai were approximately €6.9 million, €5.3 million and $5.4 million respectively including investments in previous years.

Substantially all of the Group’s capital expenditures were financed with available cash flow.

|B. | Business overview
|-- | -----------------

Introduction

The Group is organized in two divisions, or “Aggregates”: the “Components Aggregate” and the “Equipment Aggregate”. Each Aggregate is in turn organized into “Business Areas”. The Components Aggregate is made up of the following Business Areas: (i) Display Devices; (ii) Light Sources; (iii) Electronic Devices & Flat Panels; and (iv) Vacuum Systems and Thermal Insulation. The Equipment Aggregate is made up of the following Business Areas: (i) Pure Gas Technologies; (ii) Analytical Technologies; and (iii) Facilities Technologies. The rationale behind this approach is to reflect the deep dual nature of the Group’s business, one oriented toward components and one toward capital equipment, and to focus the strategies in these two different environments. At the same time, within each Aggregate, the Business Areas are defined by specific market needs and strategies as well as by clearly identified technological or manufacturing characteristics. Each Business Area is granted considerable autonomy. The Business Areas encompass products and applications having a common market base. Each Business Area manager concentrates not only on sales but also on growth, monitoring the market needs and developments, identifying new areas for R&D, needs of technological innovation and new product development. Each Business Area pursues its specific target of growth and market shares in a manner consistent with the Group’s overall strategy. See “ Strategy”.

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The products of the Barium Getters Division Components Aggregate include a variety of evaporable getters primarily used in Cathode Ray Tubes found in television sets and computer monitors, and non-evaporable getters, which are used in lamps for street and other high efficiency industrial lighting, in evacuated electron tubes, electronic and opto-electronic packages other than cathode ray tubes, high-pressure discharge lamps used for street and high quality lighting (stadiums, shop windows, monuments and certain industrial applications) and in vacuum insulation devices such as vacuum bottles and vacuum insulated panels.

The Components Aggregate is also responsible for  including metal vacuum bottles (thermoses); (ii) special metal dispensers, including mercury dispensers used in fluorescent lamps and alkali metal dispensers used for the formation of photo-sensitive surfaces of x-ray image intensifiers and night vision devices. In addition, the Components Aggregate includes (iii) getter pumps thatand modules  are used in the manufacture of evacuated electron tubes, in particle accelerators and laboratory vacuum systems.

The Equipment Aggregate encompasses products used for pure gas handling and impurity monitoring as well as related quality control/quality assurance and maintenance services. The principal application of products and services of the Equipment Aggregate is in the silicon based and compound semiconductor industry, where it is necessary to maintain a clean environment for the production of semiconductor chips.

A “getter” is a component used during the manufacture of devices that require a vacuum for operation, such as Cathode Ray Tubes. In the manufacturing process a getter is activated in the device after evacuation with external pumps. The getter creates and maintains the necessary vacuum. Without use of a getter, the vacuum would quickly degrade due to remaining gas molecules released from the internal surfaces and other components of the device. Getters can also act as internal chemical pumps during manufacturing processes, reducing the need for external evacuation pumps and resulting in improved production yields.

An evaporable getter is a small ring-shaped device, generally one-inch or less in diameter, filled with fine compressed powders of barium-aluminum alloy and nickel. By heating the getter ring at a high enough temperature, barium vapor condenses onto the surface of the device and the resulting barium film acts as a sponge for remaining gas molecules, maintaining a suitable vacuum level without the need for an external pump to discharge the gases. In the typical cases, the evaporable getter helps to increase the quality and performance of the Cathode Ray Tube and has become an essential component in its manufacture and in the extension of its useful life. A Cathode Ray Rube without an evaporable getter would last fewer than 100 hours, but with one, the tube’s life can extend to over 10,000 hours. Getters have also increased the efficiency and productivity of certain manufacturing processes. For example, the development of the “frittable” getter, a form of evaporable getter that may be heated in air to high temperatures, permits, in contrast to non-frittable getters, to be mounted in any fixed position prior to heating a Cathode Ray Tube. This improves the Cathode Ray Tube features, such as better resolution, definition, color purity and brightness.

Non-evaporable getters have been developed for devices in which condensation of a barium film for gettering through the heating of an evaporable getter is not possible. Such non-evaporable getters are special alloys, based on metals such as zirconium, vanadium or titanium, which are made from fine powders of these alloys either compressed into the form of pills, granules, pellets or strips, or coated and deposited with proprietary techniques onto suitable surfaces and which act as metal “sponges” for the remaining gas molecules present within an evacuated device. Depending upon their application, non-evaporable getters are available in different shapes and sizes.

The
  Group has obtained a substantial market share for some of its main products.
  The Company estimates that in 2002, the sales of the the Display Devices Business
  Area accounted for approximately 87% of the estimated worldwide market for evaporable
  getters used in the manufacture of color Cathode Ray Tubes. With respect to
  the other Business Areas of the Components Aggregate, the Company is a leader
  in the world-wide market for non-evaporable getters, such as those used in high-pressure
  discharge lamps for street and high-quality lighting, alkali metal dispensers
  and for non-evaporable getters used in metal vacuum bottles. In the Light Sources
  Business Area, the Company believes that it is the worldwide leader in mercury
  dispensers for Cold Cathode Fluorescent Lamps. In the Business Areas of the
  Equipment Aggregate the Company is a strong provider in the market for all sizes
  of gas purification systems, and it is a leading provider in trace impurity
  analytical systems used in the semiconductor industry and in the quality control/quality
  assurance services to this industry.

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The Group has maintained technological leadership through a continuing commitment to internal research and development combined with co-operation agreements with a select group of customers, corporations, research institutes and universities. About 315 basic international patents relating to different technologies have been granted to or acquired by the Group since its formation. The vast majority of these patents stem from internal research and development. The Group regularly introduces new products, such as new types of evaporable and non-evaporable getters, getter pumps, mercury dispensers and gas purifiers and analyzers. A key aspect of the Group’s business is the capacity to anticipate customers’ needs and seek customized and advanced solutions based on its scientific and technological expertise. Thus, the development of long-term relationships with selected customers is essential.

The Group is vertically integrated in the manufacture of a majority of its products.

As of March 31, 2003 the Group had nine factories, two of which are located in Italy, four in the United States, one in South Korea and two in China. The factory in Nanjing, China is owned by the NSHG Joint Venture, in which the Company owns a 65% equity interest.

| | Total Revenues by Aggregate and by Geographic Location of Customer
| | ------------------------------------------------------------------

The following tables set forth the Group’s net sales by Aggregate and geographic location in thousands of Euro for the periods indicated:

|                        |  |  | Year
      Ended December 31, | 
|----------------------- |  |  | ----------------------------- | 
|                        |  |  |                               | 
|                        |  |  | 2000                          | 
|                        |  |  |                               | 
|                        |  |  | (thousands
      of Euro)     | 
|Net Sales by Aggregate: |  |  |                               | 
|Components Aggregate    |  |  | 112,114                       | 
|Equipment Aggregate     |  |  | 60,152                        | 
|Other (1)               |  |  | 286                           | 
|                        |  |  |                               | 
|Total                   |  |  | 172,552                       | 
|                        |  |  |                               | 

(1)Includes sale of supply machinery and other miscellaneous products.

|                                                    |  |  | Year
      Ended December 31, | 
|--------------------------------------------------- |  |  | ----------------------------- | 
|                                                    |  |  |                               | 
|                                                    |  |  | 2000                          | 
|                                                    |  |  |                               | 
|                                                    |  |  | (thousands
      of Euro)     | 
|Net Sales by Geographic Location
      of Customer: |  |  |                               | 
|Italy                                               |  |  | 5,433                         | 
|Europe (excluding Italy)                            |  |  | 25,640                        | 
|North America                                       |  |  | 49,438                        | 
|Japan                                               |  |  | 25,369                        | 
|Asia (excluding Japan                               |  |  | 64,297                        | 
|Rest of the world                                   |  |  | 2,375                         | 
|                                                    |  |  |                               | 
|Total                                               |  |  | 172,552                       | 
|                                                    |  |  |                               | 

Strategy

The Group’s strategic objectives are: (i) to extend its technological leadership and develop new products, with added value, within its core areas of competence; (ii) to further enhance its long-term relationships with a growing base of key customers; (iii) to maintain and, if necessary, extend the globalization of its businesses; (iv) to continue pursuing growth through select acquisitions, joint ventures and other alliances and investments; and (v) to maximize product quality, customer satisfaction and production efficiency.

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(i) Extend Technological Leadership and New Product Development within Core Areas of Competence

The Company believes that a constant commitment to internal research and development is critical in maintaining its technological leadership. The Group intends to exploit its research and development capability and expand into new niche applications, including certain areas of the vacuum applications, lamp industry, special alloys, semiconductor and opto-electronic industries and impurity monitoring in gases. The Group believes its scientific expertise, use of internal synergies and its worldwide presence will help it accomplish this goal. The Company’s strategy is to increase the Group’s leadership in highly specialized business niches within its core areas of competence, namely the reactivity of gases with surfaces and metals, sophisticated alloy metallurgy, vacuum and ultra-high vacuum technologies, gas purification and impurity monitoring and by entering into new, but related, markets and fields. The Company aims at accomplishing this through technological innovation and by responding to market needs and developments in the business areas of the customers that use its products. The Company believes that its getter technologies may extend into new areas of application in the future, such as vacuum thermal insulation (including refrigeration for households), vacuum systems and vacuum-sealed micro electronics devices for industrial products, new types of flat displays and devices to improve the efficiency of certain vacuum manufacturing equipment. The Company believes that its mercury dispensing technologies may be further extended to fluorescent lighting. The Company also believes that its gas purification, trace analysis technologies and quality control, quality assurance and analytical services can be further exploited in the semiconductor and other industrial fields. The Company also plans to develop new products and applications aimed at new markets which are less affected by cyclicity which characterizes those market in which it currently operates, such as the semiconductor industry. See Item 5.C, “Research and development, patents and licenses”.

(ii) Enhance Long-Term Relationships with Growing Base of Key Customers

Technical cooperation with customers, from the initial development stage of a device or project for which a getter or other products will be used, is an essential part of the Group’s strategy and frequently leads to the development of new applications for its technology. This happens as old and new customers approach the Group to assist in developing products which require the Group’s technologies. See Item 5.C, “Research and development, patents and licenses”. The Group strives to build upon its many collaborative projects and long-term relationships in order to fully understand and satisfy the needs of each of its existing customers. In addition, the Group continually seeks to establish relationships with potential new customers through cooperation among its research and development, marketing and sales departments. Several of the Group’s managers and executives have been trained in the Group’s central research and development laboratory which, the Company believes, enables them to understand and anticipate the needs of its customers.

(iii) Maintain and, if Necessary, Extend Globalization of Business

The Company believes that a direct local presence in its existing and potential customers’ markets is of strategic importance for the Group. The Group aims at maintaining and, if necessary, extending its global network of subsidiaries, branches and representative offices and to utilize a local manufacturing, sales and technical support presence to attract new customers and better serve existing ones. The Group intends to solidify its position in industrialized countries, while also focusing on the expansion of its operations in developing markets when opportunities arise.

(iv) Pursue Growth Through Select Acquisitions, Joint Ventures and Other Alliances and Investments

The Company believes that select acquisitions, joint ventures and other alliances and investments are important to its growth. In the last five years, the Company has acquired four companies (Trace Analytical, FST, PCP and Molecular Analytics) for a total of approximately $23 million. Molecular Analytics, Inc., as a result of its merger with Trace Analytical in 2002 (which, in turn, had already merged with PCP), is now a leader in a specific niche of gas analyzers that are used primarily in the semiconductor and other industries to qualify and monitor processes that depend on a contaminationfree environment or materials. Molecular Analytics also sells products for chemical and environmental applications. FST, which was acquired by the Group in 1998, provides quality control/quality assurance and other related services to major semiconductor manufacturers in the United States. See Item 4.A, “History Development of the Company  History and Development”.

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The Company is currently considering further acquisitions, joint ventures and other strategic investments, although it currently has no arrangements, understandings or agreements with respect to these considerations. Any such transaction should be in both existing and new (but related) product lines and markets with a greater focus on technological  as opposed to commercial  synergies. Further, the Company must believe it will strengthen the Group’s international sales, distribution, marketing and manufacturing activities.

(v) Maximize Product Quality and Production Efficiency

The Group strives to perfect the quality of its products and enhance its production efficiency through careful quality control at its manufacturing plants and by training employees. Vertical integration of the manufacturing process permits the Group to control the quality and efficiency of nearly all manufacturing steps. During 2002, the Group continued to upgrade most of its manufacturing facilities to meet the new ISO 9001 certification requirements (“Vision 2000”) and has also continued to implement the Environment Management Standards (ISO 14001) to be integrated with the existing ISO 9000 certification of the International Standardization Organization. See Item 4.B, “Business Overview  Manufacturing and raw materials”.

Manufacturing and raw materials

The Group employs a vertically integrated manufacturing process for nearly all of its products. The Company believes that vertical integration allows the Group to optimize the quality of its products, permits closer control of costs and facilitates the development of innovative processes while maintaining the confidentiality of proprietary information. Vertical integration also minimizes the Group’s dependence on external suppliers and allows the Group to optimize inventories and supply times.

For its Components Aggregate products, the Group purchases raw materials from third parties and processes them to produce metal from minerals. The Group also uses them to manufacture basic metal alloys, apply powderizing, sintering and coating technologies to alloy ingots and manufacture getters, getter pumps and metal dispensers. As of March 31, 2003 the Components Aggregate products are manufactured in six different locations, three of which are devoted to barium getters sold by the Display Devices Business Area (Lainate in Italy, Jincheon in Korea and Nanjing in China) and three to the other business areas (one in Avezzano in Italy, one in Cleveland, Ohio and one in Colorado Springs, Colorado). The Group’s Components Aggregate purchases some partially-finished materials from third parties. The Equipment Aggregate is also vertically integrated and uses the Group’s materials such as getters and catalysts manufactured by the Group as well as components partially acquired from third parties for the assembly of its gas purifiers and analyzers. The Group designs all electronics and controls of the products sold by the Equipment Aggregate, often including the relative software, and of getter pumps, sold by the Components Aggregate, and outsources the production of them or parts which are then assembled in house. The Group manufactures its gas purification systems in a single production facility in San Luis Obispo, California. In December 2001, all production and business activities related to analyzers were moved from Menlo Park, California, to Sparks, Maryland, the headquarters of Molecular Analytics, Inc. In addition, the manufacturing of integrated analytical systems were moved to the same location from San Luis Obispo, California in the second half of 2002. The production of “Ion Trace” spectrometers (advanced analytical systems, based on Ion Mobility Spectrometry, capable of sensing the quality of gases with very low sensitivity levels) is currently carried out in Lainate, Italy.  However, the manufacturing of these spectrometers are expected to be moved to Molecular Analytics, Inc. in Sparks, Maryland sometime in the first half of 2004. As a result, all single trace impurity analyzers and integrated analytical systems will be manufactured in Sparks, Maryland.

The Group processes all of the alloys at its facility in Avezzano, Italy. Barium minerals, important components of the Group’s products, are widely available in Italy. Titanium bulk used in the manufacture of the Group’s products is widely available in commodity markets. For Nickel powder, the Group relies exclusively on one, although very reliable, supplier. Other suppliers are also available, but adoption of their product would require an extensive qualification process. The Group purchases significant quantities of Stainless Steel in the form of high quality ribbon from several qualified international sources for manufacturing barium getters and other products. The Group also purchases limited quantities of Palladium and Palladium compounds. Most of the Group’s manufacturing processes are highly complex, require advanced equipment and are continuously modified to improve yields and product performance. The international prices of some raw materials purchased by the Group, such as Nickel, Stainless Steel ribbon and Palladium, have been historically affected by a modest degree of volatility; however in 2000 the international prices of certain metallic raw materials (including Nickel and Stainless Steel) increased by 15% to 25%, which is well above the historical average. In 2001 and 2002 the prices for raw materials generally decreased (although by margins that were less than the increases recorded in the prior years). With respect to Nickel, the Company has entered into yearly agreements governing volatility of prices, deliveries and consignment of stocks. As for Stainless Steel, the Company benefited from strong price competition among international suppliers.

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The
  Group also continuously monitors and, when necessary, takes measures to minimize
  the costs associated with poor quality products, such as rejects and re-processing,
  and believes to have reached near optimum results for the type of products which
  the Company manufactures.

Excluding
  Molecular Analytics in Sparks, Maryland and Saes Getters Technical Service in
  Shanghai, China, all of the Group’s manufacturing plants are certified
  ISO 9001 or ISO 9002, the International Standardization Organization’s
  certification for successfully implementing quality control systems for production,
  installation and service and, where relevant, design and development. During
  2002, the Group has continued the upgrading of the ISO 9000 certification to
  the new standard ISO 9001 (“Vision 2000”) of its manufacturing companies.
  The manufacturing facilities in Avezzano (Italy) received the new ISO 9001 “Vision
  2000” certification in November 2002, while the facilities in Lainate
  (Milan), in Korea and the joint venture factory in China, NSHG Joint Venture,
  received the same certification in December 2002. The manufacturing facilities
  of Saes Getters USA Inc. (Colorado Springs, CO and Independence, OH) and Saes
  Pure Gas, Inc. (San Louis Obispo, CA) received the new ISO 9001 “Vision
  2000” certification in the first quarter of 2003. The process for ISO
  9001 “Vision 2000” certification of Molecular Analytics Inc. (Sparks,
  MD) is expected to begin sometime during 2003.

Sales
  and Marketing

The
  Group promotes, markets and sells its products through its subsidiaries in many
  industrialized countries, including Italy, the United States, Germany, France,
  the United Kingdom, Japan, Korea and Singapore, as well as through its branch
  office in Taiwan and representative offices in Shanghai, China, and in Moscow,
  Russia. The Equipment Aggregate and certain Components Aggregate products are
  also marketed by approximately 70 specialized distributors or agents, about
  35 of which are in the United States. The rest are located in Europe and Asia.

The
  Group’s communication activities are supported by a professional public
  relations and marketing communication staff. Advertisements and attendance at
  trade shows are particularly important for certain Business Areas of the Components
  Aggregate and for all aspects of the Equipment Aggregate.

The
  management of the Group’s international operations is supported by an
  integrated operation function called Group Integrated Supply Chain. The goal
  of this function is to increase the effectiveness and efficiency of the chain
  of activities from supplier to customer, in terms of better service and costs
  management. The Group aims at achieving this through better production planning
  and product allocation, materials management, purchasing, inventory logistics,
  distribution and shipping. In addition, the Group has implemented a function
  called Group Customer Relations, with the aim of achieving and measuring customer
  satisfaction with respect to timely deliveries, response to complaints, and
  customer assistance. The Group wants to achieve a collaboration based on mutual
  trust with its customers and which will directly link the internal synergies
  of product and service with the customers’ expectations.

Customers

Sales
  to the Group’s top three and top ten customers accounted for approximately
  26% and 50% respectively, of the Group’s total net sales in 2002. LG.Philips
  Displays, the Group’s largest customer, accounted for 11% and 9.6% of
  the Group’s total net sales in 2002 and 2001, respectively. In 2000, the
  largest customer was Philips (prior to the creation of the joint venture “LG.Philips
  Displays” by LG Electronics and Philips), which accounted for 7.5% of
  the Group’s total net sales.

---

|1 | Notwithstanding the creation
        of the joint venture “LG.Philips Displays” for the Cathode
        Ray Tubes business, Philips Group continues to be a customer for other
        products of the Group.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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In
  the Components Aggregate, the customers for evaporable getters in the Display
  Devices Business Area are the major manufacturers of Cathode Ray Tubes. The
  Business Area’s 10 largest customers in 2002 were, in alphabetical order,
  Chunghwa, Guandong Fortune, Hitachi, LG.Philips Displays, Matsushita Electronics,
  Orion, Rainbow, Samsung, Sony and Thomson, collectively accounting for approximately
  38% of the Group’s total net sales.

The
  other markets for non-evaporable getters in the Components Aggregate are characterized
  by a limited number of large manufacturers. Of these large manufacturers, Elevam,
  General Electric, Harison, Kumho, NEC, Osram, Philips, Sanken, SLI and Stanley
  were the 10 largest customers in 2002, collectively accounting for approximately
  18% of the Group’s total net sales. The market for getter pumps and modules
  is more varied but still consists of few industrial companies and some scientific
  research laboratories that build large particle accelerators. The market for
  metal vacuum bottles (thermoses) consists of several producers (of which about
  ten manufacture products in large quantities).

The
  Equipment Aggregate customers include silicon based and compound semiconductor
  manufacturers, the principal pure gas suppliers and a few companies in the fiber
  optics, environmental and petrochemical industries. The 10 largest customers
  in 2002 were Air Liquide, Air Products, Aixtron, BOC, Fulcrum, Intel, Meridionale
  Impianti, Motorola, Praxair and TSMC Taiwan, collectively accounting for approximately
  13% of the Group’s total net sales.

Seasonality

The
  Group typically obtains purchase orders or commitments with an average advance
  notice of three months for Cathode Ray Tube sales and the majority of the other
  sales in Components Aggregate. It also relies on its own market assessments
  and ongoing communication with its customers to anticipate the future volume
  of purchase orders. The Group receives estimated annual sales forecasts from
  its major customers, but because of the limited number of manufacturers in the
  industries which use the Components Aggregate products, demand for the Group’s
  products tends to be concentrated. As a result, however, the Group has developed
  long-term relationships with many of its customers.

The
  primary industry that uses the Equipment Aggregate products is semiconductor
  manufacturing, which has historically been highly cyclical due to unexpected
  demand shifts. The level and timing of the customers’ orders depend, to
  a certain extent, on how long it takes to build and furbish new semiconductor
  factories. Changes in manufacturing strategies and variations in demand for
  their products can also affect this. Excluding small size purifiers for point
  of use applications, the Group typically obtains purchase orders or commitments
  with an average advance notice of four months.

Trademarks,
  Patents, Proprietary Rights and Related Agreements

Since
  the Company’s formation, the Group has received about 315 basic international
  patents for different technologies. Of these, approximately 155 basic patents
  are valid, or applied, as of December 31, 2002. In 2002, the Group applied for
  18 new patents, with the majority of its patents in the fields of getter technologies,
  vacuum thermal insulation, purification and analytical technologies. The Group
  currently holds (or has filed for examination) 24 patents for alloys and gettering
  materials, 33 patents related to Cathode Ray Tubes and Flat Panel Display technology,
  38 patents related to gas purification and impurity analysis, 28 patents related
  to vacuum thermal insulation, 10 patents related to lamp technology, 8 patents
  related to getter pumps for vacuum systems and 15 patents in other related fields.
  A majority of the Group’s patents are the result of internal research
  and development.

Some
  of the Group’s patents protect fundamental inventions or manufacturing
  processes used in a large number of its products. Often, however, the Group’s
  products incorporate more than one of the Group’s inventions or manufacturing
  processes and are thus protected by more than one patent. In certain circumstances,
  when a technology is unlikely to be discovered by potential competitors and
  could advance the research of potential competitors to the future detriment
  of the Group, the Company determines that public dissemination of such competitively
  useful information through the patenting procedure outweighs the benefits of
  patent protection. In such cases, the Company does not seek to patent such inventions
  or manufacturing processes but keeps them as proprietary know-how. Some of the
  Group’s basic technologies, such as the standard manufacturing processes
  for evaporable getters, do not have any patent protection because they were
  not suitable for being patented, or possibly because their patents have expired.
  In the meantime, when possible or deemed appropriate, the Group has filed new
  patents for the same applications, which offer substantial advantages with respect
  to the expired ones. A key patent for manufacturing barium getters for large
  Cathode Ray Tubes is due to expire in 2004. This patent covers a method to produce
  barium getters for large-sized picture tubes. It should be noted that no other
  key patents are about to expire in the next three or four years.

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In
  order to defend and preserve its intellectual property rights, the Group has
  consistently turned to patent protection, through broad international patent
  registration in strategic industrialized countries and by defending the Group’s
  patent rights against infringement.

The
  Group also considers its various trademarks to be valuable in the marketing
  of its products. The Company has about 25 trademark registrations, each of which
  is filed in all countries in which the Company operates.

The
  Group’s products are in general based on in-house developed know-how and
  proprietary manufacturing, which is often based on patents granted to the Company,
  patent rights purchased by the Company or owned by the companies the Group has
  acquired. The only exceptions to this are patents for the TQS mercury dispenser,
  a special oxygen dispenser product, respectively granted to two lamp customers,
  and patents related to a special method for operating an ion mobility spectrometer
  to detect trace atmospheric impurities in gases granted to a large gas company.
  The sale of products covered by these patents is subject to limited royalties.

In
  November 2000, the Company signed a 5 year technical cooperation contract for
  certain lamps with a major lamp manufacturer in the Components Aggregate. In
  March 2002 a partnership agreement was signed with the same manufacturer, which
  expires in 2005, with the aim of establishing a framework for cooperation and
  scheduling periodic meetings for updates on development needs for new products.
  A technical cooperation contract with another major lamp manufacturer has been
  in place since 1996 and was renewed in 2001, with minor modifications, until
  2006. In January 2001, the Company signed a purchase agreement with a major
  lamp manufacturer, which was recently renewed, with minor modifications until
  2005.

On
  February 8, 2001, the Company signed a License Agreement with CERN Laboratory
  in Geneva, the European Organization for Nuclear Research. The agreement concerns
  a technology, developed and patented by CERN, for the deposition of non-evaporable
  thin film getters on the surface of the vacuum chambers in particle accelerators.

During
  2002, the Company signed two Research and Development agreements, with European
  industrial partners, for diversification projects in the catalytic and electronic
  fields respectively. In August 2002 the Company also signed a technology license
  and supply agreement with a Japanese industrial company for the manufacture
  and distribution outside Japan of certain chemicals used in tools for semiconductor
  and other industrial manufacturing. In September 2002, the Company signed a
  patent license agreement with a major North American company for the manufacture
  of special getters to be used in sealed industrial and military electronic devices.
  In January 2003, the Company signed a technology and know-how transfer agreement
  with a major international manufacturer of Gallium Arsenide devices for the
  supply of such getters.

Competition

For
  some of the Group’s products, such as mercury dispensers, getter pumps,
  modules and certain non evaporable getters, the Group does not necessarily compete
  against similar products but rather it competes against a different technological
  approach to solve final applications requirements. For example, getter pumps
  compete with getter-ion pumps, or titanium sublimation pumps and mercury dispensers
  compete with mercury glass phials, or mercury amalgam pellets. In a few cases,
  the competition comes from the end-users in-house gettering products, gas purifiers
  or analytical apparatuses. There are currently no competing technologies for
  evaporable getters in the manufacture of Cathode Ray Tubes.

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The
  Group competes with other producers on the basis of, among other factors, product
  quality, product and service reliability, technological innovation, timely delivery
  and price. The Company believes that it compares favorably to its competitors
  with respect to each of these factors, although certain competitors in the past
  have tried to reduce prices and/or capitalize on opportunities created by expired
  patents in order to increase their market share. The Company estimates that
  in 2002 the Group supplied approximately 87% of the evaporable getters to the
  estimated worldwide market for color Cathode Ray Tubes. The Group has only one
  major competitor, Toshiba, for evaporable getters used in color Cathode Ray
  Tubes and, to a much lesser extent, in monochrome tubes for projection television.
  Toshiba has decreased its market share for getters used in color Cathode Ray
  Tubes since 1997. In addition, during 2002 the Company increased its share in
  the worldwide market for evaporable getters used in monochrome Cathode Ray Tubes
  for projection television. The Group primarily competes with Toshiba also in
  the market for evaporable getters used in fluorescent displays.

In
  2001, the Company suffered some erosion of its share of the market for non-evaporable
  getters used in metal vacuum bottles due to competitive prices applied by Chinese
  and Korean getter pills manufactures following a general shift in production
  from Japan to China that occurred in recent years. This shift increased the
  share in sales of Chinese and Korean competitors’ getters. During 2002,
  the Company was able to slightly reverse this trend due to the quality of its
  products and the introduction of a new getter alloy which resulted in cost savings
  to customers in the manufacturing process. In addition, the Group is facing
  increased price competition from Chinese and Korean manufacturers of non-evaporable
  getters in certain lamp applications. For these applications, the main competitive
  factor considered by customers is price. The Company is responding by offering
  new products with added technical premium value, such as a new type of non-evaporable
  getter (the “St787 series”) capable of withstanding more critical
  conditions during lamp manufacturing, or getters that combine different alloys
  and by establishing long-term technical and developmental collaborations with
  key customers. The Group is a leading producer of getter pumps and modules but
  faces competition from titanium sublimation and getter ion pumps, which are
  produced by a number of competing companies. In 1999, the Company introduced
  its Dryer Capsule Assemblies, which are used inside the hermetic packages of
  certain types of laser pump modules for telecommunication optical fiber applications
  (the 980nm type). In general, the customers’ alternative to adopt internal
  production capabilities has forced the Company to sell its products for a reduced
  profit.

In
  the last two years the Company has developed special chemical absorbers aimed
  at organic light-emitting diode displays (“OLED”), called Getter
  Dryer for OLED (“GDO”). The Company is a new entrant in this field
  where a number of other companies, traditionally selling desiccants to the industry,
  in shapes and configurations suitable for the OLED application, are operating.

In the field of Vacuum Insulated Panels, the Company faces competition from
  a number of similar panel products manufacturers. These manufacturers are adopting
  a single technological approach with limited flexibility to supply different
  customers’ needs. In addition, the getters used inside some of such panels
  with higher performances, the CombogetterTM,
  and the Company’s special dryers, all have cheaper, though much less efficient,
  alternatives, which are represented by commercially available desiccants.



The
  Group also has a strong position in the gas purification market and is the leader
  in the market for gas purifiers using getters. The Group’s major competitors
  in the gas purifiers and quality control/quality assurance services market are
  either Asian companies, such as Atto, Taiyo Toyo, Japan Pionics and Nippon Sanso,
  or U.S. companies, such as Aeronex, Johnson Mattey, Matheson, Mykrolis, Pall,
  NuPure, Applied Mechanical, Purity Systems and QAM (the first ten of which produce
  mainly purifiers and the last three of which supply quality control/quality
  assurance services).

The
  Group’s major competitors in the analytical single instruments are Extraction
  Systems, Horiba, Osaka Oxygen, Meeco, Teledyne and Valco. Its major competitors
  in the area of multi-gas analytical systems are SCH and A-Tech, both in Taiwan,
  Process Tube Systems and gas companies with in-house productions. In addition,
  multi-gas analytical systems and Ion Trace (a newly introduced product based
  on IMS technology) have technological alternatives with more complex multi-gas
  single instruments such as atmospheric pressure ionization mobility spectrometers
  (“APIMS”). A major manufacturer of such instruments is Thermo Onix.

Communication
  Network

One
  of the Group’s strategic objectives is to continue its globalization.
  To meet this expansion, the Group has implemented a variety of additional systems,
  procedures and controls to coordinate all global communication and information
  related activities. The Group effectively integrated its physical information
  systems, with the result of creating a worldwide company information system
  network, based on the Group’s companies’ Intranet connections. By
  means of the application system and software tools, currently shared by all
  the Group’s companies, this information system allows the Group to more
  efficiently cover all aspects of information office and remote filing, retrieval
  and exchanges, including such areas as scientific, technical, commercial, financial,
  administration and operations. In addition, the Company is currently implementing
  a system to operate key processes relating to operational, commercial, administrative
  and financial matters via a world-wide network where information and data can
  be collected, processed, exchanged and stored in a homogeneous manner.

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Governmental
  Regulation  Environmental Matters

The
  Group’s manufacturing operations use minerals, alloys and gases, and the
  Group is subject to various laws governing the protection of the environment.
  The Group has established pro-active environmental policies with respect to
  handling of minerals, alloys and gases; minimizing water consumption; optimizing
  energy use; scrap recovery and reutilization; and waste disposal from its manufacturing
  operations. In addition, the Group complies with the specific requirements mandated
  by certain customers concerning the absence of dangerous materials in manufactured
  products and packaging.

Products

The
  Components Aggregate

The
  Components Aggregate products include a variety of evaporable getters primarily
  used in Cathode Ray Tubes found in television sets and computer monitors, non-evaporable
  getters, which are used in street lamps and other high efficiency industrial
  lighting, in evacuated electron tubes, electronic and opto-electronic packages
  and in vacuum thermally insulated devices such as vacuum bottles and Vacuum
  Insulated Panels and getter pumps which are used in portable instruments, in
  the manufacture of evacuated electron tubes, in particle accelerators and in
  laboratory vacuum systems. The Components Aggregate is also responsible for
  special metal dispensers, including mercury dispensers, which are used in standard
  and miniature fluorescent lamps and fluorescent displays, and alkali metal dispensers
  which are used for the formation of the photo-sensitive surfaces of x-ray image
  intensifiers and night vision devices.

|Products                          | Main
      Applications                                                                                          | Principal
      Customers of theDisplay
      Devices Business Areain
      the Components Aggregate
|--------------------------------- | ---------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------
|                                  |                                                                                                                  |                                                                                                     
|Evaporable Getter                 | Color Cathode Ray TubesProjection Tubes                                                                          | ChunghwaGuandong
      Fortune                                                                      
|                                  | Monochrome Cathode Ray Tubes                                                                                     | Hitachi                                                                                             
|                                  | Low-Pressure Discharge Lamps                                                                                     | LG.Philips Displays                                                                                 
|                                  | Vacuum Fluorescent DisplaysSurge Arresters                                                                       | Matsushita ElectronicsMistubishiNovelOrion                                                          
|                                  |                                                                                                                  | Rainbow                                                                                             
|                                  |                                                                                                                  | SamsungSEG                                                                                          
|                                  |                                                                                                                  | Sony                                                                                                
|                                  |                                                                                                                  | Thomson                                                                                             
|                                  |                                                                                                                  | Toshiba                                                                                             
|                                  |                                                                                                                  |                                                                                                     
|Non-evaporable
      Getters      |                                                                                                                  | Principal Customers of
      theOther Business Areas in theComponents Aggregate                     
|                                  |                                                                                                                  |                                                                                                     
|Getter
        Pills and Granules | Metal Vacuum Bottles (thermoses)Evacuated Electron TubesVacuum
      PipesIndustrial DewarsPlasma Display Panels | ElevamFutabaGeneral ElectricHarisonKumboLittonNEC                                                   

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|Getter Pellets                       | High-Pressure Discharge
      LampsElectronic PackagesEnergy Storage Devices                                                                        | OsramPhilipsPhotonis         
|------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------
|                                     |                                                                                                                                                     | RaytheonSamsungSanken        
|Getter Strips                        | Particle Accelerators                                                                                                                               | Siemens                      
|                                     | High-Pressure Discharge LampsVacuum InterruptersEvacuated Electron Tubes                                                                            | SLIStanleyThomsonTigerToshiba
|Porous Getters                       | X-Ray Tubes                                                                                                                                         | Zojirushi                    
|                                     | Infrared Detectors                                                                                                                                  |                              
|                                     | Traveling Wave Tubes                                                                                                                                |                              
|                                     | Capacitance Manometers                                                                                                                              |                              
|                                     |                                                                                                                                                     |                              
|High Porosity Thick Films (HPTF)     | Field Emission Displays                                                                                                                             |                              
|                                     | Microelectronic DevicesPlasma Display Panels                                                                                                        |                              
|                                     |                                                                                                                                                     |                              
|Special
        Chemical Absorbers   | Organic Light-Emitting Diodes                                                                                                                       |                              
|                                     |                                                                                                                                                     |                              
|Dryer
        Capsule Assemblies     | Laser Pump Modules                                                                                                                                  |                              
|                                     |                                                                                                                                                     |                              
|Patterned Getter Wafers              | Micro Electro Mechanical Systems                                                                                                                    |                              
|                                     |                                                                                                                                                     |                              
|Mercury Dispensers                   | Standard Fluorescent Lamps                                                                                                                          |                              
|                                     | Cold Cathode Fluorescent Lamps                                                                                                                      |                              
|                                     | Gas Discharge Displays                                                                                                                              |                              
|                                     |                                                                                                                                                     |                              
|Alkali Metal Dispensers              | Image Intensifiers                                                                                                                                  |                              
|                                     | X-Ray Image Intensifiers                                                                                                                            |                              
|                                     | Photo Multipliers                                                                                                                                   |                              
|Getter Pumps and Modules             |                                                                                                                                                     |                              
|Wafer Modules, Getter Pumps, In Situ | Particle Accelerators                                                                                                                               |                              
|Getter Pumps and WaferGetterTM       | Physics Experiment MachinesPortable GC/MS                                                                                                           |                              
|                                     | Semiconductor Production MachinesHard Disks Production MachinesIndustrial
      Vacuum System                                                       |                              
|                                     |                                                                                                                                                     |                              
|Combogetters                         |                                                                                                                                                     |                              
|CombogetterTM                        | Vacuum Insulated Panels                                                                                                                             |                              
|                                     |                                                                                                                                                     |                              
|Vacuum Insulated Panels              | Domestic and industrial refrigerators/freezers
      Bio-medical freezersThermally insulated
      appliancesInsulated pipesInsulated sport bottles |                              

Evaporable
  Getters. Alkali metals and alkaline earth metals have a strong chemical
  affinity for all active gases and are used for absorbing, or “gettering”,
  the gaseous molecules within evacuated devices, which are the residue from the
  exhaust process and the outgassing during operation. It is generally accepted
  by experts in the electronics industry that barium exhibits the highest gettering
  performance among these metals when large barium films evaporate; however, because
  of its high reactivity, elemental barium cannot be manipulated in open air.
  Instead, it is used in a more stable inter-metallic compound form, such as a
  barium-aluminum alloy. An evaporable getter’s principal purpose is to
  create and maintain a high vacuum in the Cathode Ray Tubes used in television
  sets and computer monitors. The evaporable getter is also commonly used in low-pressure
  discharge lamps and vacuum fluorescent displays. Certain high-pressure discharge
  lamps also use evaporable getters.

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The
  Group manufactures a wide range of barium-releasing getters in a ring-shaped
  container. These rings, which are the Group’s original invention, are
  filled with barium-aluminum and fine nickel-compressed powders produced in the
  Company’s own highly technical process. The Group also invented nitrogen-doped
  getters that allowed manufacturers to more practically produce small, portable
  monochrome television sets and total-yield getters, which spawned the introduction
  of rectangular color Cathode Ray Tubes. More recent developments include the
  high-walled, closed-center getter, used to manufacture soft arc tubes, and the
  frittable getter, which is used for high-definition, high-quality Cathode Ray
  Tubes and can withstand treatment at high air temperatures. More recent products
  are the low argon getters, which are essential in Cathode Ray Tubes using high
  current density impregnated cathodes, and high-yield getters, which can dispense
  up to 400 milligrams of barium from a 20-millimeter ring getter. The simpler
  types of ring getters, used in the past in radio receiving tubes, are now also
  found in vacuum fluorescent displays and low-pressure discharge lamps.

Non-evaporable
  Getters. Some metals, such as titanium, zirconium and vanadium, when heated,
  absorb the gaseous impurities evacuated or inert gas volumes without evaporating.
  These are known as “non-evaporable getters” and are used when the
  barium film in an evaporable getter cannot evaporate due to lack of space or
  the physical properties and operating temperature of the device requiring the
  getter. The Company discovered that alloying these metals with select metals
  significantly improves their original gettering performances. In particular,
  there are certain zirconium-based alloys that meet a different selectivity,
  operating temperature and other requirements requested by customers. The alloys’
  gettering properties differ, with some having a wide spectrum of uses and others
  more specific, but as a whole, they cover the complete range of applications.
  The Group produces alloys designed for low-temperature activation and room-temperature
  use. The low-temperature efficiency of non-evaporable getters has also been
  greatly improved by increasing the exposed area of the getter alloy. The Group
  uses compact non-evaporable getter bodies with a high porosity to do this. These
  porous getters have larger surface areas that make this successful. Non-evaporable
  getters are available in various shapes (pills, granules, pellets and strips),
  and some of the alloy compositions can be directly coated in form of thin films
  onto both metal strips and custom parts. The Group is the world’s leading
  producer of such non-evaporable getters.

Non-evaporable
  getters are used for high-pressure discharge lamps, including high-pressure
  sodium lamps and the metal halide lamps used to light streets, stadiums, shop
  windows, monuments, television studios, as well as other industrial uses. High-pressure
  sodium lamps produce good color quality but are slightly less cost-efficient
  to illuminate than low-pressure discharge lamps. High-pressure sodium lamps,
  which emit a gold-colored light, are used primarily to light streets and are
  increasingly replacing both low-pressure discharge lamps and high-pressure mercury
  lamps, some of which do not require a getter. Metal halide lamps produce a high
  color quality and are very cost-efficient to illuminate. These lamps are primarily
  used where the quality of the color of a light is important. Though certain
  high-pressure sodium lamps use evaporable getters, non-evaporable getters are
  generally used in high-pressure discharge lamps. Non-evaporable getters are
  also found in evacuated electron and image tubes, such as X-ray tubes, Travelling
  Wave Tubes, Infrared Detectors, Pressure Transducers, Vacuum Interrupters, Vacuum
  Pipes and in metal Vacuum Bottles (thermoses). The Group’s getter pumps
  and modules are used in a wide variety of vacuum tubes, in portable instruments
  and for experimental physics research; the Group is the leading producer of
  such products.

Non-evaporable
  getters are also now including capsule assemblies with special chemical absorbers.
  These capsules are placed inside the hermetically sealed packages of optical
  amplifiers’ laser pump modules (“LPM”) for use in submarine
  optical fibers transmission lines. In order to reach destinations a hundred
  or thousand kilometers away, as in submarine transcontinental cables, the optical
  power level of the signal must periodically be reinforced using Optical Amplifiers
  (“OA”), which are mounted every 50 to 100 km on the fiber cable.
  The LPM is sealed in a hermetic dry nitrogen package, which also requires a
  special dryer to remove the residual moisture from a photochemical reaction.
  Two types of lasers are deployed in the terrestrial systems: the 980nm and the
  1480nm. In submarine systems, only the 980nm type is adopted. Currently only
  the 980nm type requires a gettering device inside its hermetically sealed package.
  However, recently some end users began to indicate to LPM manufacturers a desire
  to have a dryer also in the 1480nm models.

In
  2000, the Company began selling another special chemical absorber aimed at organic
  light-emitting diode displays (“OLED”), called Getter Dryer for
  OLED (“GDO”). OLEDs constitute a developing technology for cellular
  telephones, cars, and other emerging applications. An OLED consists of a light-emitting
  junction layer sandwiched between two electrodes, one of which is transparent.
  When an electrical current is passed through the OLED, the electrical energy
  is converted into light, which passes out of the device through the transparent
  electrode. This conceptually simple design paves the way for thin, potentially
  flexible displays on plastic substrates. While currently only few companies
  have commercial products on the market, several companies have announced their
  intention to develop or are in the process of developing products. The properties
  of the light-emitting layer are critical to the performance of the OLED. Improvements
  in efficiency, lifetime and ease of manufacturing will be necessary for realizing
  a low-cost, high-volume solution for flat panel displays. Moisture causes degradation
  of the displays. To maintain an adequately low concentration of moisture during
  the operational life of OLED, a proper getter, or a chemical dryer, is needed.
  The Company is addressing this application with its GDO, a special chemical
  absorber.

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The
  Company has developed a special thin, flat getter (High Porosity Thick Films,
  “HPTF”), which is obtained by coating getter material on metallic
  substrates. This product is used in microelectronic vacuum sealed devices, also
  called Micro Electro Mechanical Systems (“MEMS”), Field Emission
  Displays (“FEDs”) and can be adopted for use in Plasma Displays
  Panels (“PDPs”).

According
  to several market surveys, MEMS represent one of the fastest growing technologies
  with massive potential applications in the automotive, telecommunication, opto-electronic
  and other industries. Certain families of MEMS, such as, for example, angular
  motion sensors, radio frequency devices for cellular phones, infrared detectors,
  and optical switches require vacuum or protective gas sealing. Most of these
  devices also need a getter to work properly for long periods of time. In order
  to reduce manufacturing costs and increase productivity, the MEMS industry is
  continuing to adopt well proven semiconductor manufacturing processes, such
  as photolithography masking, etching, and patterning, as well as the use of
  silicon wafers as base materials for manufacturing the active part of the devices.
  In order to comply with the gettering needs of this new industry, the Company
  has developed a method consisting of a silicon or glass wafer with a getter
  deposited into specific recesses. This “patterned getter wafer”
  is used as the cap of the MEMS package. Currently, the Company is sampling this
  new product with a number of customers.

Getters
  for vacuum insulation are most commonly found in metal vacuum bottles (e.g.
  thermoses), which are used for storing hot and cold beverages. A non-evaporable
  getter pill maintains the vacuum for the expected life of the bottle, which
  is usually between five and 10 years. These are also used in the vacuum insulated
  jacket of oil transportation pipes from deep wells or off-shore platforms.

Non-evaporable
  getters, particularly getter strips, are also used by large scientific research
  laboratories in particle accelerators, and in other physics projects, such as
  synchrotron light machines, which also require highly efficient getter systems.

Mercury
  Dispensers. Standard Fluorescent lamps, Cold Cathode Fluorescent Lamps,
  gas discharge displays, and many other devices require mercury to operate. Traditional
  production techniques require liquid mercury to be introduced during special
  manufacturing processes in order to prevent pollution. To minimize pollution
  risks and other disadvantages of using liquid mercury, the Group invented a
  titanium-mercury alloy. This alloy facilitates the manipulation of titanium-mercury
  in the open air and the processing of devices that use mercury at high temperatures
  with diminished risks of pollution. This alloy will not release mercury even
  if heated to 400° centigrade. In addition, this alloy allows the release
  of more precise amounts of mercury with several types of mercury dispensing
  getter rings, pills or wires, which yield from 0.5 to 60 milligrams of mercury.
  The Group has invented a special strip for standard fluorescent lamps, which
  dispenses the exact amount of mercury needed to sustain the life of the lamp.
  The Total Quality Shield (“TQS”), which was introduced to the market
  in 1997, is a substantially improved version of this product and is intended
  to comply with more stringent lamp manufacturing and environmental disposal
  regulations. The Company also developed and sells special wire-shaped versions
  of mercury dispensing products, which yield from 1 to 3 milligrams of mercury
  for the small Cold Cathode Fluorescent Lamps (“CCFL”) used to retro-illuminate
  laptop computers, scanners, arcade games, photocopiers, desktop computers with
  Liquid Crystal Displays (“LCD”) and LCD television screens, that
  made their debut in the consumer market during 2002. More recently, LCD desktop
  computers and LCD television screens are being manufactured and sold in sizes
  above 15 inches, thus requiring the use of two or more retro illumination lamps.
  This, in turn, has the beneficial effect of a larger amount of Company’s
  products being used in these LCD based displays.

Alkali
  Metal Dispensers. Alkali metal dispensers are small sources of alkali metal
  vapors used to produce alkali photocathodes, the photosensitive surfaces that
  convert low-level light signals into electronic signals. Alkali photocathodes
  are produced by depositing precise amounts of high-purity alkali vapors on suitable
  substrates, typically either antimony or gallium arsenide. Because the amount
  of each alkali metal must be accurately dosed, the alkali vapors released from
  the dispensers must occur in a controlled and reproducible manner. The Group
  has developed a series of alkali metal dispensers that allow the controlled
  release of cesium, sodium, potassium, lithium or rubidium. These dispensers
  use high-purity anhydrous alkali metal chromates, including a getter alloy.
  X-ray image intensifiers, night vision devices, photo-multipliers and other
  similar devices are all based on these alkali photo-cathodes. X-ray image intensifiers
  convert and intensify x-ray radiation into visible spectrum radiation to produce
  a visible detailed image; these are commonly used for medical purposes. Night
  vision devices are generally used by police forces or the military. Photo-multipliers
  are mainly used in the scientific and medical fields and convert radiation into
  electrons that are intensified to generate a signal. Recently, the Company has
  also introduced a new generation of “eco-friendly” high yield alkali
  metal dispensers which are aimed at the market for manufacturing OLEDs.

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Getter
  Pumps and Modules. Large scientific research laboratories mainly use getter
  pumps and modules for physics experiments and in surface analyses vacuum systems.
  Special custom made getter pumps are also used in portable instruments combining
  gas chromatographs and mass spectrometers used for early hazardous gas detection
  systems and other surveillance purposes. The Group produces wafer modules and
  volume getter pumps for vacuum systems and laboratory equipment. These getter
  configurations are also used in particle accelerators.

In
  past years, the Company introduced the InsiTorr® Fast Pump, for use in Physical
  Vapor Deposition (“PVD”) machines and, more recently the “WaferGetterTM
  Pump which can be inserted into a manufacturing tool in order to provide additional
  pumping inside the process chamber.

CombogetterTM
  for Vacuum Insulated Panels. The Company developed and began marketing getters
  for Vacuum Insulated Panels in the home refrigeration market. Vacuum Insulated
  Panels may replace traditional foam insulation in today’s household and
  industrial refrigerators and freezers and are emerging in other thermal vacuum
  insulation applications, such as home water heaters, vending machines for cold
  and hot beverages, bio-medical freezers, advanced insulated shipping containers
  and thermally insulated sport bottles. The Company envisions future applications
  in refrigerated trails and reefers for transporting food. Vacuum Insulated Panels
  provide the refrigerator with better insulation and greater efficiency (thus
  requiring less energy for operation) and are more environmentally friendly (no
  chlorofluorocarbons or hydro-chlorofluorocarbons) than traditional technologies.

In
  1999, the Company began a pilot production of Vacuum Insulated Panels initially
  aimed at demonstrating their advantages to pilot customers, as well as to satisfy
  these customers’ needs in limited industrial trial series. Since then,
  however, the Company has widened the scope of its production to satisfy the
  needs of specialized markets that require products with maximized insulating
  characteristics. During 2002, the Company signed exclusive agreements with two
  European producers for the supply of special insulating materials to be used
  in Vacuum Insulated Panels.

The
  following table sets forth information on the Group’s net sales of the
  Components Aggregate by business area (Display Devices, Light Sources, Electronic
  Devices & Flat Panels, Vacuum Systems and Thermal Insulation), expressed
  in thousands of Euro for the periods indicated:

|                                       |  |  | Year
      Ended December 31, | 
|-------------------------------------- |  |  | ----------------------------- | 
|                                       |  |  |                               | 
|                                       |  |  | 2000                          | 
|                                       |  |  |                               | 
|                                       |  |  | (thousands
      of Euro)     | 
|Net Sales by Business Area             |  |  |                               | 
|Display Devices                        |  |  | 67,688                        | 
|Light Sources                          |  |  | 21,392                        | 
|Electronic Devices & Flat
      Panels |  |  | 16,802                        | 
|Vacuum Systems and Thermal Insulation  |  |  | 6,232                         | 
|                                       |  |  |                               | 
|Total Components                       |  |  | 112,114                       | 
|                                       |  |  |                               | 

(1) Percentage
  of total is referred to total consolidated net sales.

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The
  Equipment Aggregate

The
  Equipment Aggregate encompasses products used for pure gas handling and impurity
  monitoring, as well as any related analytical quality control/quality assurance
  and maintenance services. The Group produces a wide variety of gas purification
  and analytical devices and is a world leader in engineering ultra-clean components
  for gas purification systems. Most products and services in the Equipment Aggregate
  are used by the semiconductor industry, where it is necessary to maintain a
  clean environment for producing semiconductor chips, and in some sectors of
  optical fiber manufacturing and other environmental applications.. The Group
  entered the gas purification market in 1988 and has since achieved a strong
  position in the gas super-purification niche and a leading position in the market
  for trace impurity monitoring and quality control/quality assurance services.

The
  Equipment Aggregate final customers primarily manufacture silicon based and
  compound semiconductors. They tend to purchase gas purification systems and
  analytical systems for new fabrication facilities and as upgrades to existing
  fabrication facilities. Sales of gas purification systems average $700,000 to
  $2 million for new fabrication facilities and $100,000 to $200,000 to upgrade
  existing fabrication facilities. Sales of analytical systems average $150,000
  to $700,000. Depending upon the process gas to be purified, the Group’s
  purifiers remove impurities to the parts-per-billion level and below.

The
  replacement market for gas purification machinery components and after-sales
  services also make up the Equipment Aggregate. The gettering materials in many
  of the Group’s gas purification systems have an average life of five years,
  depending upon how often the gas purification system is used and the level of
  inlet impurities in the gas. After this period, the materials require service
  or replacement. By the end of 2002, about 990 medium and large gas purification
  systems that the Group manufactured had been installed, with a large portion
  of them still in service. The Group also covers the replacement market for gas
  purification machinery components (replacement columns) and the demand for after-sales
  services, although this remains a small percentage of the revenues from the
  Equipment Aggregate.

|Products                                                                                                                                                                                   |  | Main
      Applications                                                                                                                                                                                                                                        |  | Principal
      Customers and End Users of the Equipment Aggregate                                                                                                             
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Gas Purifiers                                                                                                                                                                              |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                
|Mini-PurifiersGas cabinet purifiersAmbient Temperature PurifiersPoint-of-Use PurifiersArea Gas PurifiersLarge Gas Purifiers                                                                |  | Gas Cabinets in Semiconductor ProductionsWelding and purgingSemiconductor
      Production Machines(PVD, CVD)Silicon based and Compound Semiconductor Production
      FacilitiesOptical fibers manufacturingAir purification for automotive pollution testing |  | Air LiquideAir ProductsAixtronAlcatelApplied MaterialsBOCFulcrumInfineonIntelIwataniMeridionale ImpiantiMA OxygenMesser GriesheimMotorolaPraxairSan Fu ChemicalSapioTSMC Taiwan
|                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                
|Valve Manifold Boxes, Valve Manifold Panels,
      Gas Cabinets                                                                                                                            |  | Semiconductor Production Facilities                                                                                                                                                                                                                            |  | STMicroelectronics                                                                                                                                                             
|                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                
|                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                
|Analyzers                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                
|Multi-Gas Monitoring
        SystemsBulk-Gases Ion Mobility SpectrometersMoisture AnalyzersHydrogen, Carbon Monoxide andMethane GC DetectorsAmmonia, Amines, Hydrogen HalidesIMS Detectors |  | Semiconductor Production FacilitiesGas Companies                                                                                                                                                                                                               |  |                                                                                                                                                                                
|                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                
|Quality
        Control/Quality Assuranceand Analytical Services                                                                                                                           |  | Semiconductor Production FacilitiesBio-tech/Pharmaceutical Production Facilities                                                                                                                                                                               |  |                                                                                                                                                                                
|                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                
|Contingency staffing supplying                                                                                                                                                             |  | Semiconductor Production Facilities                                                                                                                                                                                                                            |  |                                                                                                                                                                                
|                                                                                                                                                                                           |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                
|Telecommunication Towers Erection                                                                                                                                                          |  | Telecommunications Companies                                                                                                                                                                                                                                   |  |                                                                                                                                                                                

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Gas
  Purifiers. The Group’s gas purification systems consist of a standard
  line of purifiers and products that may be customized for clients. Gas purification
  may be based on differing technologies, such as cryogenic, catalytic, getter,
  palladium diffusion, resin or zeolite technologies. The Company has become a
  leader in the advanced technologies of getter, catalytic and zeolite technologies,
  or combinations thereof. The Group entered the gas purification field by studying
  ways to eliminate gaseous impurities in gettering. Putting micro-contaminants
  into process gas systems results in a significant yield loss in the semiconductor
  industry. The Group is also finding contamination control increasingly necessary
  in other fields, such as production of light emitting diodes, liquid crystals
  manufacturing, magnetic recording, media manufacturing, fiber optics and in
  scientific research laboratories. As a result, the Group has developed a wide
  variety of gas purification devices, ranging from large purification systems
  (currently priced between $200,000 and $700,000), medium-sized systems (currently
  priced between $50,000 and $200,000) that serve plant areas, point-of-use systems
  which are attached to a single machine, to simpler and smaller gas cabinet and
  welding purifiers (currently priced between $1,000 and $15,000). A major program
  launched in 2000 to improve the design of its medium- and large-sized purifiers
  was completed in 2001. Its goal was to offer products with a more competitive
  performance/price ratio. In addition, during 2002, the Company launched a new
  project aimed at further optimizing the engineering, manufacturing and material
  costs of these purifiers.

Valve
  Manifold Boxes  Valve Manifold Panels  Gas Cabinets. In 2002,
  the Company introduced valves stacked in a single assembly, as well as valves
  and flow controllers compacted in a single panel assembly or into a purged enclosure,
  in each case used to distribute gas to various tools and locations.

Analyzers.In addition to gas purification systems, the Equipment Aggregate also sells
  gas impurity monitoring instruments to the semiconductor industry, industrial
  process monitoring and environmental applications. The Group manufactures single
  analyzers, used in semiconductor factories, for in-line monitoring of process
  bulk gases and impurity control in clean rooms. These instruments are designed
  to detect hydrocarbons, carbon monoxide, ammonia, amines and hydrogen halides
  to the parts-per-billion level. The Group also manufactures multi-gas analytical
  systems for in-line monitoring of moisture, oxygen, carbon monoxide and hydrocarbons
  in large gas plants in semiconductor factories consisting of several cabinets
  where single analyzers, manufactured by the Company and/or produced by third
  parties, are inter-linked by a data control system. In addition, during 2002,
  the Company introduced special analytical systems devoted to the parts-per-billion
  level detection of air borne molecular contaminants (“AMC”) and
  volatile organic contaminants (“VOC”) such as ammonia, amines and
  hydrogen halides, inside the clean rooms of the semiconductor plants. During
  2002 the Company also announced and introduced to the market a new advanced
  instrument (“Ion Trace”), developed at the corporate R&D laboratories,
  based on Ion Mobility Spectrometry for real time, on-line monitoring of traces
  of impurities in bulk gases. The Company believes that this new instrument offers
  advantages in terms of performance, ease of use and price as compared to competitive,
  more complex, multi-gas single instruments. In addition to its own products,
  the Equipment Aggregate distributes stand-alone instruments for oxygen and moisture
  detection, manufactured by Delta F Corporation in Woburn, Massachusetts. The
  Company distributes, in mainland China only, toxic gases multipoint detectors
  manufactured by another third party manufacturer, Zellweger Inc. based in Lincolnshire,
  Illinois.

Quality
  Control/Quality Assurance and Analytical Services. The Company’s subsidiary
  FST provides quality control/quality assurance and other related services, such
  as contingency staffing to major U.S. semiconductor manufacturers. FST integrates
  well with the Equipment Aggregate’ existing activities by providing consultation,
  gas purity certification and maintenance services in the semiconductor facilities’
  process gas lines. During 2002 FST began to diversify its business to supply
  and coordinate specialized manpower in connection with telecommunication towers
  erection for wireless and cellular phones applications.

The
  following table sets forth information on the Group’s net sales of the
  Equipment Aggregate by business area (Pure Gas Technologies, Analytical Technologies
  and Facilities Technologies), expressed in thousands of Euro for the periods
  indicated:

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|                           |  | Year
      Ended December 31, | 
|-------------------------- |  | ----------------------------- | 
|                           |  |                               | 
|                           |  | 2000                          | 
|                           |  |                               | 
|                           |  | (thousands
      of Euro)     | 
|Net Sales by Business Area |  |                               | 
|Pure Gas Technologies      |  | 30,926                        | 
|Analytical Technologies    |  | 13,355                        | 
|Facilities Technologies    |  | 15,871                        | 
|                           |  |                               | 
|Total Equipment            |  | 60,152                        | 
|                           |  |                               | 

(1) Percentage
  of total is referred to total consolidated net sales.

|C. | Organizational structure
|-- | ------------------------

See
  Exhibit “List of Subsidiaries of the Company” included in Item 19.B
  “Index to Exhibits” of this annual report.

|D. | Property, plants and equipment
|-- | ------------------------------

The
  following table sets forth the location and general character of the principal
  properties that are owned or leased by the Group as of March 31, 2003:

|Location                    |  |  |  |  |  | Use                                                                                                                                                                                           |  |  |  |  |  | Title
      ofInterest(1)       |  |  |  |  |  | Facility
      Total Area(square
      meters) |  |  |  |  |  | Year
      ofConstruction       | 
|--------------------------- |  |  |  |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | ------------------------------- |  |  |  |  |  | ---------------------------------------------- |  |  |  |  |  | ------------------------------- | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|Lainate (Milan), Italy      |  |  |  |  |  | Group Headquarters, Research
      and Development Laboratories,Manufacturing
      Facility for the Display Devices Business Area and other Business Areas
      of the Components Aggregate |  |  |  |  |  | FreeholdLeasehold(2)Freehold(3) |  |  |  |  |  | 8,7536,5854,840                                |  |  |  |  |  | 198819952001                    | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|Avezzano (L’Aquila), Italy  |  |  |  |  |  | Manufacturing Facility for Alloys and Parts
      for Getter manufacturing.Manufacturing
      Facility for some Business Areas of the Components Aggregate                                   |  |  |  |  |  | Freehold (4)Leasehold(5)        |  |  |  |  |  | 5,4232,647                                     |  |  |  |  |  | 1984/19961985                   | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|                            |  |  |  |  |  | Administrative and head offices.Manufacturing Facility for some Business Areas
      of the Components Aggregate                                                                              |  |  |  |  |  | Freehold(6)                     |  |  |  |  |  | 14,450                                         |  |  |  |  |  | 2000/2001                       | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|San Luis Obispo, California |  |  |  |  |  | Manufacturing Facility for the
      Equipment Aggregate                                                                                                                                      |  |  |  |  |  | Freehold                        |  |  |  |  |  | 2,9201,1901,116                                |  |  |  |  |  | 19801985/1997(7)1995            | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|Cleveland, Ohio             |  |  |  |  |  | Manufacturing Facility for the
      Light Sources and Vacuum Thermal Insulation Business Areas (8)                                                                                           |  |  |  |  |  | Freehold(9)                     |  |  |  |  |  | 5,297                                          |  |  |  |  |  | 1966/1973(10)                   | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|Colorado Springs, Colorado  |  |  |  |  |  | Manufacturing Facility for some
      Business Areas of the Components Aggregate                                                                                                              |  |  |  |  |  | Freehold                        |  |  |  |  |  | 869                                            |  |  |  |  |  | 1978                            | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|Jincheon, South Korea (11)  |  |  |  |  |  | Manufacturing Facility for the
      Display Devices Business Area and for the Equipment Aggregate                                                                                            |  |  |  |  |  | Freehold                        |  |  |  |  |  | 3,829181                                       |  |  |  |  |  | 1989/1994/1998/2002(12)1999(13) | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|Nanjing, China(14)          |  |  |  |  |  | Manufacturing Facility for the
      Display Devices Business Area                                                                                                                            |  |  |  |  |  | Land use right                  |  |  |  |  |  | 10,939                                         |  |  |  |  |  | 1997/2001                       | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|Pudong (Shanghai), China    |  |  |  |  |  | Technical Service Gas Laboratory
      and manufacturing of products for the Equipment Aggregate                                                                                              |  |  |  |  |  | Land use right                  |  |  |  |  |  | 6,600                                          |  |  |  |  |  | 2002(15)                        | 
|                            |  |  |  |  |  |                                                                                                                                                                                               |  |  |  |  |  |                                 |  |  |  |  |  |                                                |  |  |  |  |  |                                 | 
|Sparks, Maryland            |  |  |  |  |  | Manufacturing Facility for the
      Analytical Technologies Business Area                                                                                                                    |  |  |  |  |  | Leasehold (16)                  |  |  |  |  |  | 2,700                                          |  |  |  |  |  | 2001                            | 

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| | (1)  | In addition to
      the listed production facilities, the Group has entered into different rent
      agreements for its commercial and service activities located in Europe,
      the United States and Asia. The rental areas are mainly utilized as offices
      (approximately 70%) and warehouses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2)  | In November 1994,
      the Company entered into a sale and leaseback arrangement with Intesa Leasing
      S.p.A. (formerly Leasindustria S.p.A.) with respect to this property. The
      Company has an option to repurchase the property in November 2003. In the
      first half of 2003, the Company plans to implement a minor expansion of
      55 square meters with respect to this property, which is expected to require
      total expenditures of approximately €190 thousand and which will be
      fully financed by the Company’s ordinary cash flow.                                                                                                                                                                                                                                                                                                                                              
| | (3)  | In December 2000,
      the Company began the construction of a new building of 4,840 square meters
      (inside the Lainate facility) in order to provide new offices for increasing
      staff. This building was completed in June 2002. The related total expenditure
      was approximately €6,850 thousand and was fully financed by the Company’s
      ordinary cash flow.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (4)  | In 1996, these
      facilities were substantially expanded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (5)  | In December 1991
      and in November 1995, Saes Advanced Technologies S.p.A. entered into two
      sale and leaseback arrangements with FIME Leasing S.p.A. with respect to
      two separate portions of the property. Saes Advanced Technologies S.p.A.
      repurchased the first part of the property (Machinery and Equipment) in
      March 2002 and the remaining part (the building) in March 2003. The total
      expenditures for the repurchases in March 2002 and March 2003 were approximately
      €17 thousand and €36 thousand, respectively and were fully financed
      by the Company’s ordinary cash flow. During 1997, Saes Metallurgia
      S.p.A. bought 453 square meters from FIME Leasing S.p.A. to further expand
      its plants. As a consequence the leasehold properties in Avezzano decreased
      by the same area.                                                        
| | (6)  | In January 2000,
      SAES Advanced Technologies S.p.A. purchased land comprising 14,450 square
      meters together with a building comprising 6,368 square meters. During 2000,
      some manufacturing facilities were moved into this building, and certain
      structural changes were made accordingly. The plant was completed in May
      2001, when all the administrative and head offices were moved to the new
      plant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (7)  | An additional
      446 square meters was built in 1997.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (8)  | Until March 2002,
      this production facility was also dedicated to manufacturing of products
      for the Display Devices Business Area. Since the Group restructuring process
      was completed, this production facility has been dedicated to the manufacturing
      of products relating to the Vacuum Thermal Insulation Business Area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (9)  | The property
      was subject to a mortgage, which was paid in full in February 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (10) | An addition to
      the existing facility was built in 1973.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (11) | Since 2002, following
      the “Romanization” process in Korea, the spelling of the plant
      location changed from “Chin Chon” to “Jincheon.”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (12) | In 1994, this
      facility was substantially expanded and an additional 290 square meters
      was built in 1998. In 2002, this manufacturing facility was expanded by
      672 square meters, which was allocated to production and warehouses. The
      total investment, amounting to approximately €460 thousand was financed
      by the Company’s ordinary cash flow.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (13) | This portion
      of the building, dedicated to the manufacturing of the Components Aggregate
      products, starting from July 2003 will be dedicated to the manufacturing
      of a new product. Estimated investments for the new production line are
      approximately €800 thousand. The Company expects that this investment
      will be completed in June 2003, and will be financed by the Company’s
      ordinary cash flow.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (14) | The NSHG Joint
      Venture, owned 65% by the Company, constructed a facility in China for the
      manufacturing of Barium getters. The land on which the facility has been
      constructed has been leased to the NSHG Joint Venture through a land use
      right valid until 2046. Effective June 2001, NSHG acquired an additional
      land use right relating to 6,134 square meters valid until 2046 and which
      were financed by the Company’s ordinary cash flow. In mid 2002, the
      company initiated a project on the production facility building aiming at
      further increasing the safety levels. This project, expected to be completed
      in 2003, amounts to an estimated total investment equal to €166 thousand
      of which € 21 thousand was spent in year 2002. The balance of the expenditure
      is expected to be fully financed by the Company’s ordinary cash flow.
| | (15) | SAES Getters
      Technical Service (Shanghai) Co. Ltd. began the construction of a Technical
      Service Gas Laboratory in 1998. The land (6,600 square meters in Pudong)
      on which the Technical Service Gas Laboratory is being constructed has been
      leased to Saes Getters Technical Service Co. Ltd. through a land use right
      valid until 2048. The construction was completed in the first quarter of
      2002. The new building will provide a Chinese headquarters for the provision
      of analytical and technical services and will also be the manufacturing
      site of ultra high purity products to the semiconductor industry. The total
      investment of $5.4 million was financed by a capital injection from SAES
      Getters International Luxembourg S.A. for $4.1 million, and by a local line
      of credit. The total building size is 2,109 square meters.    
| | (16) | Molecular Analytics
      Inc. entered into a lease agreement for a five year period starting on October
      1, 2001. The contract has a renewal option for an additional period of five
      years and does not include any purchase option.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

The
  Display Devices Business Area manufactures its products in Lainate (Milan),
  Italy, Jincheon, South Korea, and Nanjing, China, at the NSHG Joint Venture.
  This Business Area’s current utilization of manufacturing capacity is
  estimated at 80% based on a two-shift schedule.

The
  other Business Areas of the Components Aggregate manufacture their products
  in Lainate (Milan) and Avezzano, Italy, Colorado Springs, Colorado and Cleveland,
  Ohio. These Business Areas’ current utilization of manufacturing capacity
  is estimated at 60% based on a two-shift schedule.

The
  Equipment Aggregate manufactures its products in San Luis Obispo, California,
  in Sparks, Maryland and, to a minor extent, in Pudong (Shanghai), China. This
  Aggregate’s current utilization of manufacturing capacity is estimated
  at approximately 50% based on a single shift schedule.

The
  Company believes that its facilities are well maintained and are sufficient
  for its current manufacturing needs.

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Item 5. Operating and Financial
  Review and Prospects

The
  following discussion of the Group’s financial condition, results of operations
  and liquidity and capital resources is based on, and should be read in conjunction
  with, the Company’s audited Consolidated Financial Statements and the
  notes thereto included in Item 19.A “Index to Financial Statements and
  Schedules” of this annual report. These financial statements have been
  prepared in accordance with Italian GAAP, which differs in certain respects
  from U.S. GAAP. For a discussion of the principal differences between Italian
  GAAP and U.S. GAAP, as they relate to the Company’s consolidated net income
  and shareholders’ equity, see “Differences between Italian GAAP
  and U.S. GAAP” below and Note 23 of the Notes to Consolidated Financial
  Statements. You should also see Item 3.D, “Risk factors”, for trends
  and uncertainties known to the Group that could cause future results to differ
  materially from historical financial information. In the information discussed
  below, the effect of fluctuations in foreign currency has been included where
  the Company has deemed it relevant. The Company has calculated this effect by
  recalculating the relevant line items based on the average exchange rates from
  the previous year.

|A. | Operating results
|-- | -----------------

During
  2002, the Group experienced a decrease in net sales (i.e. gross sales minus
  returns, allowances and discounts). Net sales decreased to €141,208 thousand
  in 2002 from €160,169 thousand in 2001, representing a decrease of 11.8%.
  Net sales in 2001 decreased by 7.2% from €172,552 thousand in 2000. Operating
  income was €10,029 thousand in 2002, a 40.9% decrease from €16,958
  thousand in 2001. Operating income in 2001 decreased by 49.9% from €33,843
  thousand in 2000. Net income decreased to €6,464 thousand in 2002 from
  €14,086 thousand in 2001, representing a decrease of 54.1%. Net income
  in 2001 decreased by 48.3% from €27,241 thousand in 2000.

In
  2002, the decrease in the Group’s net sales was due primarily to (i) a
  decrease in sales by the Equipment Aggregate largely as a result of the persisting
  recession in the semiconductor industry and (ii) the negative foreign exchange
  impact caused by the strengthening of the Euro against other currencies in which
  the Group sales are denominated (especially the U.S. Dollar). These effects
  were partially offset by an increase in sales by the Components Aggregate. The
  decrease in operating income was mainly due to the decrease in net sales, which
  was partially offset by a decrease in general, administrative and selling expenses
  as a result of the restructuring processes implemented in the Components and
  Equipment Aggregates. See Item 4.A, “History and development of the Company
   Reorganizations”. The decrease in the Group’s net income
  in 2002 was mainly attributable to (i) a decrease in operating income, (ii)
  a decrease in foreign exchange net gains and (iii) an increase in income taxes
  primarily as a result of a valuation allowance against deferred tax assets.
  These effects were partially offset by lower non-operating expenses compared
  to the previous year. In 2001, non-operating expenses primarily included expenses
  related to the Group’s restructuring plans and a writedown of goodwill
  for impairment.

In
  2001, the decrease in the Group’s net sales, as compared to the previous
  year, was due to a decrease in sales by the Components Aggregate, which was
  in turn offset by an increase in sales by the Equipment Aggregate. The decrease
  in operating income was mainly due to (i) decreased sales revenues and a less
  favorable product mix, including higher sales volumes of Equipment Aggregate
  products which are characterized by lower margins and (ii) an increase in operating
  expenses, primarily due to higher personnel expenses, as well as the acquisition
  and consolidation of Molecular Analytics, Inc. into the Group beginning in July
  2000. The decrease in the Group’s net income in 2001 was mainly attributable
  to a decrease in operating income and to an increase in non operating expenses
  due to the Group’s restructuring plans and a writedown of goodwill for
  impairment relating to Molecular Analytics, Inc. and Getters Corporation of
  America. These effects were partially offset by higher foreign exchange gains
  and by a decrease in the Group’s average tax rate.

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The
  following table sets forth certain consolidated income statement data expressed
  as a percentage of net sales for the years indicated:

|                                               |  |  | Year
      Ended December 31, | 
|---------------------------------------------- |  |  | ----------------------------- | 
|                                               |  |  |                               | 
|                                               |  |  | 2000                          | 
|                                               |  |  |                               | 
|                                               |  |  | ( % of net sales)             | 
|                                               |  |  |                               | 
|Net sales                                      |  |  | 100.0                         | 
|Cost of sales                                  |  |  | 51.2                          | 
|Gross profit                                   |  |  | 48.8                          | 
|Operating expenses:                            |  |  |                               | 
|Research and development                       |  |  | 6.1                           | 
|Selling                                        |  |  | 11.7                          | 
|General and administrative                     |  |  | 11.4                          | 
|Total operating expenses                       |  |  | 29.2                          | 
|Operating income                               |  |  | 19.6                          | 
|Interest and other financial
      income, net |  |  | 0.7                           | 
|Foreign exchange gains (losses),
      net     |  |  | 0.6                           | 
|Other income (expenses), net                   |  |  | 0.6                           | 
|Income before taxes                            |  |  | 21.5                          | 
|Income taxes                                   |  |  | 5.7                           | 
|Net income                                     |  |  | 15.8                          | 

The
  following table sets forth certain financial information relating to the Group’s
  Aggregates (including as a percentage of net sales) for the years indicated:

---

|                        |  |  | Components
      Aggregate |  |  |                        |  |  | Equipment
      Aggregate |  |  |                    |   |  | Other                  |   |  |  |  |  | Total              | 
|----------------------- |  |  | -------------------------- |  |  | ---------------------- |  |  | ------------------------- |  |  | ------------------ | - |  | ---------------------- | - |  |  |  |  | ------------------ | 
|                        |  |  |                            |  |  |                        |  |  |                           |  |  |                    |   |  |                        |  
|                        |  |  | (thousandsof Euro)         |  |  | (%
      of net sales) |  |  |                           |  |  | (thousandsof Euro) |   |  | (%
      of net sales) |   |  |  |  |  | (thousandsof Euro) | 
|                        |  |  |                            |  |  |                        |  |  |                           |  |  |                    |   |  |                        |   |  |  |  |  |                    | 
|                        |  |  |                            |  |  |                        |  |  |                           |  |  |                    |   |  |                        |   |  |  |  |  |                    | 
|2000                    |  |  |                            |  |  |                        |  |  |                           |  |  |                    |   |  |                        |   |  |  |  |  |                    | 
|Net sales               |  |  | 112,114                    |  |  | 100.0                  |  |  |                           |  |  | 60,152             |   |  | 100.0                  |   |  |  |  |  | 286                | 
|Gross Profit            |  |  | 61,061                     |  |  | 54.5                   |  |  |                           |  |  | 23,024             |   |  | 38.3                   |   |  |  |  |  | 111                | 
|Operating income (loss) |  |  | 34,745                     |  |  | 31.0                   |  |  |                           |  |  | (965               | ) |  | (1.6                   | ) |  |  |  |  | 63                 | 
|                        |  |  |                            |  |  |                        |  |  |                           |  |  |                    |   |  |                        |   |  |  |  |  |                    | 
|2001                    |  |  |                            |  |  |                        |  |  |                           |  |  |                    |   |  |                        |   |  |  |  |  |                    | 
|Net sales               |  |  | 94,696                     |  |  | 100.0                  |  |  |                           |  |  | 65,209             |   |  | 100.0                  |   |  |  |  |  | 264                | 
|Gross profit            |  |  | 49,176                     |  |  | 51.9                   |  |  |                           |  |  | 25,304             |   |  | 38.8                   |   |  |  |  |  | 95                 | 
|Operating income (loss) |  |  | 22,110                     |  |  | 23.3                   |  |  |                           |  |  | (5,210             | ) |  | (8.0                   | ) |  |  |  |  | 58                 | 
|                        |  |  |                            |  |  |                        |  |  |                           |  |  |                    |   |  |                        |   |  |  |  |  |                    | 
|2002                    |  |  |                            |  |  |                        |  |  |                           |  |  |                    |   |  |                        |   |  |  |  |  |                    | 
|Net sales               |  |  | 106,401                    |  |  | 100.0                  |  |  |                           |  |  | 34,583             |   |  | 100.0                  |   |  |  |  |  | 224                | 
|Gross profit            |  |  | 55,862                     |  |  | 52.5                   |  |  |                           |  |  | 5,530              |   |  | 16.0                   |   |  |  |  |  | 64                 | 
|Operating income (loss) |  |  | 27,489                     |  |  | 25.8                   |  |  |                           |  |  | (17,486            | ) |  | (50.6                  | ) |  |  |  |  | 26                 | 
|                        |  |  |                            |  |  |                        |  |  |                           |  |  |                    |   |  |                        |   |  |  |  |  |                    | 

The
  following tables set forth certain information relating to net sales by Business
  Area and by geographic location of customers (including as a percentage of total
  net sales) for the periods indicated:

|                                               |  |  |  |  |  | Year
      Ended December 31, | 
|---------------------------------------------- |  |  |  |  |  | ----------------------------- | 
|                                               |  |  |  |  |  |                               | 
|                                               |  |  |  |  |  | 2000                          | 
|                                               |  |  |  |  |  |                               | 
|                                               |  |  |  |  |  | (thousandsof Euro)            | 
|Net Sales by Business Area
      andAggregate: |  |  |  |  |  |                               | 
|Display Devices                                |  |  |  |  |  | 67,688                        | 
|Light Sources                                  |  |  |  |  |  | 21,392                        | 
|Electronic Devices & Flat
      Panels         |  |  |  |  |  | 16,802                        | 
|Vacuum Systems and Thermal Insulation          |  |  |  |  |  | 6,232                         | 
|Components Aggregate                           |  |  |  |  |  | 112,114                       | 
|Pure Gas Technologies*                         |  |  |  |  |  | 30,926                        | 
|Analytical Technologies*                       |  |  |  |  |  | 13,355                        | 
|Facilities Technologies*                       |  |  |  |  |  | 15,871                        | 
|Equipment Aggregate                            |  |  |  |  |  | 60,152                        | 
|Other                                          |  |  |  |  |  | 286                           | 
|                                               |  |  |  |  |  |                               | 
|Total                                          |  |  |  |  |  | 172,552                       | 
|                                               |  |  |  |  |  |                               | 

* On
  January 1, 2001, the names of the Group’s Business Areas, which previously
  were referred to as “Purifiers”, “Analyzers” and “Analytical
  Services” were changed to “Pure Gas Technologies”, “Analytical
  Technologies” and “Facilities Technologies”, respectively.

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|                                             |  |  |  |  |  | Year
      Ended December 31, | 
|-------------------------------------------- |  |  |  |  |  | ----------------------------- | 
|                                             |  |  |  |  |  |                               | 
|                                             |  |  |  |  |  | 2000                          | 
|                                             |  |  |  |  |  |                               | 
|                                             |  |  |  |  |  | (thousandsof
      Euro)      | 
|Net Sales by GeographicLocation of Customer: |  |  |  |  |  |                               | 
|Italy                                        |  |  |  |  |  | 5,433                         | 
|Europe (excluding Italy)                     |  |  |  |  |  | 25,640                        | 
|North America                                |  |  |  |  |  | 49,438                        | 
|Japan                                        |  |  |  |  |  | 25,369                        | 
|Asia (excluding Japan)                       |  |  |  |  |  | 64,297                        | 
|Rest of the world                            |  |  |  |  |  | 2,375                         | 
|                                             |  |  |  |  |  |                               | 
|Total                                        |  |  |  |  |  | 172,552                       | 
|                                             |  |  |  |  |  |                               | 

In
  2002, the Group’s net sales decreased in the Equipment Aggregate mainly
  due to the persistence of the market downturn in the semiconductor industry,
  resulting primarily from production capacity excesses and weakness in market
  demand, which had a negative impact on the investment activity of the sector
  and consequently on the Group’s sales. This was offset, in part, by an
  increase in sales attributable to the Components Aggregate, as a result of an
  increased demand for getters in the color Cathode Ray Tube market and increased
  sales of mercury dispensers for cold cathode lamps used as back-lighting in
  liquid crystal displays.

In
  2001, the Group’s net sales decreased in the Components Aggregate mainly
  as a result of decreased demand for getters in the color Cathode Ray Tube market,
  and, to a lesser extent, as a result of lower demand for non evaporable getters
  relating to Dryer Capsule Assemblies for the laser pump module market. Notwithstanding
  the general economic slowdown in the semiconductor industry, the Group recorded
  an increase in sales attributable to the Equipment Aggregate in the first half
  of 2001, as a result of large orders placed by customers at the end of 2000
  as well as to sales attributable to Molecular Analytics, Inc., which was acquired
  and consolidated into the Group in July 2000.

For
  a more detailed description of demand trends in the markets relating to the
  Group’s products, see Item 5.D, “Trend information”, and Item
  4.A, “History and development of the Company”.

Year
  Ended December 31, 2002 Compared to Year Ended December 31, 2001

| | 
| | 

Net
  Sales

Net
  sales are primarily derived directly from the Group’s network of international
  subsidiaries. The vast majority of the Group’s sales are made through
  its direct sales structure and the remainder is made through distributors or
  agents, acting within the Equipment Aggregate. The Group’s plants in the
  United States, Korea, Italy, and China sell both to the local markets in which
  they are located as well as to markets in other countries. The Group’s
  principal production facilities, which account for about 60% of the Group’s
  worldwide production, are in Italy (Avezzano and Lainate, each accounting for
  approximately the same percentage of sales). Such production includes products
  that are sold to other Group companies prior to sale and distribution to the
  Group’s customers. Approximately 99% of the finished products manufactured
  in Italy are exported to foreign markets.

Total
  net sales decreased by 11.8% from €160,169 thousand in 2001 to €141,208
  thousand in 2002 primarily due to a reduction in the volume of products sold
  in the Equipment Aggregate and, to a lesser extent, by an unfavorable impact
  of exchange rates, which resulted in a decrease in the Group’s total net
  sales of 4.8%. The decrease was partially offset by an increase in sales in
  the Components Aggregate.

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The
  following table sets forth net sales and related information by Business Area
  for the years ended December 31, 2001 and 2002.

|Business
      Area                    |  |  |  |  |  | Net
      Sales2001       |  |  |  |  |  | Net
      Sales2002       |  |  |  |  |  | Total
      Difference |   |  |  |  |  | Price
      / Quantity Effect |   |  |  |  |  | Exchange
      Rate Effect |  
|-------------------------------------- |  |  |  |  |  | ------------------------- |  |  |  |  |  | ------------------------- |  |  |  |  |  | ---------------------- | - |  |  |  |  | ----------------------------- | - |  |  |  |  | -------------------------- | -
|                                       |  |  |  |  |  | (thousands
      of Euro) |  |  |  |  |  | (thousands
      of Euro) |  |  |  |  |  | (%)                    |   |  |  |  |  | (%)(1)                        |   |  |  |  |  | (%)(2)                     |  
|                                       |  |  |  |  |  |                           |  |  |  |  |  |                           |  |  |  |  |  |                        |   |  |  |  |  |                               |   |  |  |  |  |                            |  
|Display Devices                        |  |  |  |  |  | 54,951                    |  |  |  |  |  | 60,090                    |  |  |  |  |  | 9.4                    |   |  |  |  |  | 13.8                          |   |  |  |  |  | (4.4                       | )
|Light Sources                          |  |  |  |  |  | 20,598                    |  |  |  |  |  | 28,081                    |  |  |  |  |  | 36.3                   |   |  |  |  |  | 41.7                          |   |  |  |  |  | (5.4                       | )
|Electronic Devices & Flat
      Panels |  |  |  |  |  | 13,854                    |  |  |  |  |  | 12,165                    |  |  |  |  |  | (12.2                  | ) |  |  |  |  | (8.3                          | ) |  |  |  |  | (3.9                       | )
|Vacuum Systems and Thermal Insulation  |  |  |  |  |  | 5,293                     |  |  |  |  |  | 6,065                     |  |  |  |  |  | 14.6                   |   |  |  |  |  | 20.4                          |   |  |  |  |  | (5.8                       | )
|Components Aggregate                   |  |  |  |  |  | 94,696                    |  |  |  |  |  | 106,401                   |  |  |  |  |  | 12.4                   |   |  |  |  |  | 17.1                          |   |  |  |  |  | (4.7                       | )
|Pure Gas Technologies                  |  |  |  |  |  | 32,852                    |  |  |  |  |  | 14,737                    |  |  |  |  |  | (55.1                  | ) |  |  |  |  | (49.8                         | ) |  |  |  |  | (5.3                       | )
|Analytical Technologies                |  |  |  |  |  | 15,981                    |  |  |  |  |  | 10,151                    |  |  |  |  |  | (36.5                  | ) |  |  |  |  | (31.3                         | ) |  |  |  |  | (5.2                       | )
|Facilities Technologies                |  |  |  |  |  | 16,376                    |  |  |  |  |  | 9,695                     |  |  |  |  |  | (40.8                  | ) |  |  |  |  | (35.6                         | ) |  |  |  |  | (5.2                       | )
|Equipment Aggregate                    |  |  |  |  |  | 65,209                    |  |  |  |  |  | 34,583                    |  |  |  |  |  | (47.0                  | ) |  |  |  |  | (41.8                         | ) |  |  |  |  | (5.2                       | )
|Other                                  |  |  |  |  |  | 264                       |  |  |  |  |  | 224                       |  |  |  |  |  | (15.2                  | ) |  |  |  |  | (14.8                         | ) |  |  |  |  | (0.4                       | )
|Total                                  |  |  |  |  |  | 160,169                   |  |  |  |  |  | 141,208                   |  |  |  |  |  | (11.8                  | ) |  |  |  |  | (7.0                          | ) |  |  |  |  | (4.8                       | )

|(1) | Price/Quantity Effect is calculated as the
      difference between “Total Difference (%)” and “Exchange
      Rate Effect (%)”.
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(2) | Exchange Rate Effect is calculated on the
      basis of 2002 net sales by Business Area using the average exchange rates
      for 2001.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

Components
  Aggregate

Net
  Sales of the Components Aggregate increased to €106,401 thousand in 2002
  from €94,696 thousand in 2001, representing a growth of 12.4%. This increase
  resulted primarily from higher demand for getters in the Cathode Ray Tube Market
  and for mercury dispensers for cold cathode lamps used as back-lighting for
  liquid crystal displays. The increase in sales was partially offset by the unfavorable
  impact of exchange rates which caused a 4.7% reduction of revenues attributable
  to the Components Aggregate as compared to 2001.

Net
  sales of the Display Devices Business Area increased by 9.4% to €60,090
  thousand in 2002 from €54,951 thousand in 2001. This was due primarily
  to an increase in the volume of the products sold as a result of an increase
  in demand which generally characterized the worldwide Cathode Ray Tube Market.
  This growth was partially offset by downward price adjustments made with respect
  to certain products as well as by the effect of exchange rates. The latter resulted
  in a decrease of 4.4% in net sales of the Display Devices Business Area.

Net
  sales of the Light Sources Business Area increased by 36.3% to €28,081
  thousand in 2002 from €20,598 thousand in 2001. Net of exchange rate effects,
  which caused a decrease of 5.4% in net sales in the Light Sources Business Area,
  net sales experienced a substantial increase of 41.7% in 2002. This was primarily
  due to the strong increase in demand of mercury dispensers for cold cathode
  lamps used as back-lighting for liquid crystal displays.

Net
  Sales from the Electronic Devices & Flat Panels Business Area decreased
  by 12.2% to €12,165 thousand in 2002 from €13,854 thousand in 2001
  mainly as a result of a reduction in sales of getter assemblies for optical
  amplifiers which, in turn, was largely due to a general economic downturn in
  the telecommunications market. The impact of exchange rates also contributed
  to a decrease of 3.9% in net sales attributable to the Electronic Devices &
  Flat Panels Business Area.

Net
  sales of the Vacuum Systems and Thermal Insulation Business Area increased by
  14.6% to €6,065 thousand in 2002 from €5,293 thousand in 2001. The
  increase in sales was mainly due to a rise in sales of both getter pills for
  metal vacuum bottles and vacuum pumps for industrial and portable instruments
  applications. The increase was partially offset by a negative exchange rate
  effect (which resulted in a decrease in net sales of the Vacuum Systems and
  Thermal Insulation Business Area of 5.8%).

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Equipment
  Aggregate

Net
  sales of the Equipment Aggregate were €34,583 thousand in 2002, compared
  to €65,209 thousand in 2001, representing a decrease of 47.0%. The reduction
  was primarily due to lower sales resulting from the persistence of the market
  downturn in the semiconductor industry and the consequent shrinkage in investment
  activity, particularly in the construction of new factories, which negatively
  affected the Group’s sales. The unfavorable impact of exchange rates in
  2002 (which caused a decrease of 5.2% in revenues as compared to 2001) also
  contributed to the decrease in sales of the Equipment Aggregate.

Net
  sales of the Pure Gas Technologies Business Area decreased by 55.1% to €14,737
  thousand in 2002, compared to €32,852 thousand in 2001. This was primarily
  due to a strong decrease in the volume of products sold and, to a lesser extent,
  to an unfavorable exchange rate effect (which resulted in a reduction in net
  sales of the Pure Gas Technologies Business Area of 5.3% as compared to 2001).
  Fewer products were sold from Pure Gas Technologies Business Area in 2002 largely
  due to the recession in the semiconductor business.

Net
  sales of the Analytical Technologies Business Area decreased by 36.5% to €10,151
  thousand in 2002 from €15,981 thousand in 2001. This was primarily due
  to a decline in the volume of products sold resulting from the semiconductor
  market downturn. The decrease was also caused by the unfavorable impact of exchange
  rates, which resulted in a reduction of 5.2% in revenue attributable to the
  Analytical Technologies Business Area as compared to the prior year.

Net
  Sales of the Facilities Technologies Business Area declined by 40.8% to €9,695
  thousand in 2002 from €16,376 thousand in 2001 primarily attributable to
  a decrease in services sold by the Group to clients in the semiconductor industry
  and to a negative exchange rate effect (which resulted in a decrease of 5.2%
  in the revenues attributable to the Facilities Technologies Business Area).

Cost
  of Sales

Cost
  of sales was €79,752 thousand in 2002 as compared to €85,594 thousand
  in 2001, representing a decrease of 6.8%. This decrease was mainly due to reduced
  consumption of raw materials by the Group, and to lower direct labor and manufacturing
  overhead costs. These decreases were mainly due to lower sales and decreased
  volume of production. As a percentage of net sales, cost of sales increased
  from 53.4% in 2001 to 56.5% in 2002, mainly as a result of fixed overhead costs
  relating to the manufacture of the Group’s products (despite lower net
  sales), a less favorable product mix and downward price adjustments with respect
  to certain products.

In
  the Components Aggregate, cost of sales as a percentage of net sales slightly
  decreased from 48.1% in 2001 to 47.5% in 2002. This decrease was mainly due
  to the absorption of fixed overhead costs relating to the manufacture of the
  Group’s products by higher net sales and to cost savings realized by the
  consolidation of the Group’s barium getter manufacturing activities previously
  conducted in part at the Cleveland, Ohio (USA) facility, at the Lainate, Milan
  (Italy) manufacturing plant.

In
  the Equipment Aggregate, cost of sales as a percentage of net sales increased
  from 61.2% in 2001 to 84.0% in 2002. This was mainly due to the absorption of
  labor and other fixed overhead costs by reduced sales and to price decreases
  with respect to certain products. In 2002 the Group also incurred some additional
  non-recurring expenses associated with the Group’s reorganization plan
  with respect to the Analytical Technologies Business Area. These expenses were
  related to the integration and consolidation of business activities previously
  conducted by Trace Analytical in Menlo Park, California (USA), certain research
  and development activities conducted by the laboratory in West Palm Beach, Florida
  (USA), the assembly activities of multigas monitoring systems previously operated
  by Saes Pure Gas, Inc. in San Luis Obispo, California (USA), and the activities
  of Molecular Analytics in Sparks, Maryland (USA) (the “Restructurings”).

Research
  and Development Expenses

Research
  and development expenses increased to €13,612 thousand in 2002, compared
  to €12,302 thousand in 2001, representing an increase of 10.6%. This increase
  was primarily due to an increase in legal expenses relating to a litigation
  against Aeronex, a manufacturer of purification solutions (See Item 8.A, “Legal
  Proceedings”), and to increased depreciation, licenses and patent expenses.
  Research and development expenses as a percentage of net sales increased from
  7.7% in 2001 to 9.6% in 2002 due to increased research and development expenses
  and lower net sales. During 2002, the Group continued its research and development
  activities aimed at diversifying its products and applications in both the Components
  and Equipment Aggregates as well as in new but related fields. See Item 5.C,
  “Research and development, patents and licenses”.

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In
  all the fields in which it is, or may be, involved, the Group is working in
  order to develop new products and to further enhance the performance of existing
  products. All research and development expenses are charged as expenses in the
  period incurred.

Selling
  Expenses

Selling
  expenses were €20,590 thousand in 2002 as compared to €23,088 thousand
  in 2001, representing a decrease of 10.8%. This was primarily due to reduced
  personnel costs and travel expenses, mainly as a result of the Restructurings
  and to lower sales commissions attributable to decreased sales in the Equipment
  Aggregate. Savings from the Restructurings were partially offset by an increase
  in consultant and advisory fees related thereto. The weakness of the U.S. Dollar
  and of certain other of the Group’s currencies also contributed to the
  decrease in selling expenses because a portion of these expenses was denominated
  in non-Euro currencies (principally U.S. Dollars).

As
  a percentage of net sales, selling expenses increased slightly from 14.4% in
  2001 to 14.6% in 2002. This increase was mainly due to lower net sales.

General
  and Administrative Expenses

General
  and administrative expenses decreased to €17,225 thousand in 2002 compared
  to €22,227 thousand in 2001, representing a decrease of 22.5%. This decrease
  was primarily due to a reduction in personnel costs and travel expenses as well
  as amortization of goodwill in connection with the acquisition and consolidation
  in July 2000 of Molecular Analytics (resulting, in turn, from a partial write-down
  recorded as of December 31, 2001). The decrease was also caused by the favorable
  exchange rate impact resulting from the weakness of the U.S. Dollar and of certain
  other currencies against the Euro.

The
  following table presents the amortization of goodwill relating to the acquisitions
  effected by the Group for the years ended December 31, 2001 and 2002 respectively,
  in thousands of Euro:

|                                                                                                   |  |  | 2001  |  |  | 2002  | 
|-------------------------------------------------------------------------------------------------- |  |  | ----- |  |  | ----- | 
|FST Consulting International,
      Inc.                                                           |  |  | 519   |  |  | 491   | 
|Molecular Analytics, Inc.                                                                          |  |  | 668   |  |  | 380   | 
|Trace Analytical, Inc. (including
      PCP, Inc., merged into Trace Analytical, Inc. in 2000) (1) |  |  | 635   |  |  | 601   | 
|Other                                                                                              |  |  | 114   |  |  | 2     | 
|Total                                                                                              |  |  | 1,936 |  |  | 1,474 | 

(1)Included
  in Molecular Analytics financial statements following the merger of Trace Analytical
  and Molecular Analytics effective for accounting purposes on January 1, 2002.

The
  amortization of goodwill relating to the acquisitions of FST, Molecular Analytics,
  and Trace Analytical is accounted for as a general and administrative expense
  in the Equipment Aggregate.

As
  a percentage of net sales, general and administrative expenses decreased from
  13.9% in 2001 to 12.2% in 2002. This decline was due primarily to lower general
  and administrative expenses, which offset and was greater in proportion to,
  a corresponding reduction in net sales.



Operating
  Income

Operating
  income decreased from €16,958 thousand in 2001 to €10,029 thousand
  in 2002, representing a decrease of 40.9%. As a percentage of net sales, operating
  income decreased from 10.6% in 2001 to 7.1% in 2002. This was mainly due to
  decreased net sales in the Equipment Aggregate and, to a lesser extent, to increased
  legal expenses for licenses and patents and depreciation expenses. These effects
  were partially offset by a decrease in general, administrative and selling expenses
  in 2002, primarily resulting from a decrease in personnel costs and travel expenses,
  mainly due to the implementation of the reorganization plans related to the
  Components and Equipment Aggregates. See Item 4A, “History and development
  of the Company  Reorganizations”.

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Operating
  income attributable to the Components Aggregate increased by 24.3% from €22,110
  thousand in 2001 to €27,489 thousand in 2002. As a percentage of net sales,
  operating income of the Components Aggregate increased from 23.3% in 2001 to
  25.8% in 2002, mainly as a result of increased sales and lower operating expenses,
  which were slightly offset by the negative effect of exchange rates.

Operating
  losses attributable to the Equipment Aggregate increased from €5,210 thousand
  in 2001 to €17,486 thousand in 2002. This increase in operating losses
  was mainly due to a reduction in net sales caused by the persistence of the
  market downturn in the semiconductor industry and lower gross margins, which
  were due to downward price adjustments with respect to certain products resulting
  from increased market competition. As a percentage of net sales, operating losses
  attributable to the Equipment Aggregate increased from 8.0% in 2001 to 50.6%
  in 2002.

Interest
  and Other Financial Income, Net

Interest
  and other financial income, net, decreased from €1,653 thousand in 2001
  to €1,425 thousand in 2002. Interest and other financial income decreased
  from €3,625 thousand in 2001 to €2,381 thousand in 2002 mainly due
  to lower interest rates. Interest and other financial expenses decreased from
  €1,972 thousand in 2001 to €956 thousand in 2002, primarily due to
  lower interest rates and to the weakness of the U.S. Dollar against the Euro.
  Approximately 95% and 5% of the Group’s outstanding indebtedness as of
  December 31, 2002 was denominated in Dollars and Euro, respectively.

Foreign
  Exchange Gains (Losses), Net

Foreign
  exchange gains, net, were €292 thousand in 2002 compared to €2,683
  thousand in 2001. This decrease was primarily due to the strengthening of the
  Euro against the U.S. Dollar in 2002 as compared to 2001.

Other
  Income (Expenses), Net



The
  following table sets forth certain items included in other income (expenses),
  net, for the years ended December 31, 2001 and 2002, respectively, in thousands
  of Euro:

|                                                                               |  |  | 2001   |   |  | 2002 |  
|------------------------------------------------------------------------------ |  |  | ------ | - |  | ---- | -
|Impairment of Molecular Analytics,
      Inc. goodwill                         |  |  | (2,512 | ) |  |     |  
|Impairment of Getters Corporation
      of America goodwill                    |  |  | (391   | ) |  |     |  
|Non-recurring restructuring costs
      associated with reduction of personnel |  |  | (1,479 | ) |  |     |  
|Non-recurring restructuring costs
      associated with inventory writedown    |  |  | (368   | ) |  |     |  
|Non-recurring restructuring costs
      associated with fixed assets writedown |  |  | (570   | ) |  |     |  
|Other, net                                                                     |  |  | 351    |   |  | (637 | )
|Other income (expenses), net                                                   |  |  | (4,969 | ) |  | (637 | )

In
  2001, impairment charges of €2,512 thousand and €391 thousand, respectively,
  were recorded to write-down a portion of the goodwill attributable to Molecular
  Analytics, Inc. and Getters Corporation of America. During 2001, the restructuring
  plans realized by the Company in both the Equipment Aggregate and the Components
  Aggregate resulted in (i) non-recurring restructuring costs associated with
  a reduction in personnel equal to €1,479 thousand, (ii) an inventory writedown
  of €368 thousand and (iii) a writedown of fixed assets for an amount equal
  to €570 thousand. For a discussion of the reorganization plans, see Item
  4.A, “History and development of the Company  Reorganizations”.

In
  2002, in connection with the implementation of the cost reduction plan for the
  Pure Gas Technologies Business Area and the reorganizations implemented with
  respect to the international sales force and customer service operations of
  the Equipment Aggregate, the Company recorded non-recurring costs associated
  with reduction of personnel amounting to €980 thousand, which were accounted
  for in operating expenses (€796 thousand) and cost of sales (€184
  thousand). These personnel reduction costs were considered to be within the
  normal course of business.

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Income Taxes

Income taxes increased from €2,278 thousand in 2001 to €4,631 thousand in 2002. As a percentage of income before taxes, income taxes increased from 13.9% in 2001 to 41.7% in 2002. The increase in the effective tax rate in 2002 was mainly due to a full valuation allowance against net deferred tax assets recorded by the Company’s indirectly controlled subsidiary Molecular Analytics, Inc. amounting to €3,993 thousand. This full valuation allowance was deemed necessary in 2002, under the relevant accounting principles, as a result of the negative operating results in recent years attributable to Molecular Analytics. However, the Company believes that, based on expected future profitability as sets forth in its business plan and the availability of net operating loss carry forwards, deferred tax assets may be fully utilized in the future.

Another reason for the increased effective tax rate in 2002 was the expiration of the partial tax exemptions of the Company’s subsidiaries located in Avezzano, Italy, in 2001. The Company’s subsidiaries located in Avezzano, Italy, (Saes Metallurgia S.p.A. and Saes Advanced Technologies S.p.A.) benefited from partial tax exemptions in accordance with the Italian government’s incentive program for under-industrialized regions in Southern Italy (the “Mezzogiorno Program”) in 2001 and in previous years. The total benefits for the Group in 2001 with respect to its income taxes related to the Mezzogiorno Program were €2,041 thousand. If the Group had not received the benefits of the Mezzogiorno Program, income taxes would have been €4,319 thousand in 2001.

On the other hand the Company recorded in 2002 the effects of certain tax benefits amounting to €1,118 thousand (to which the Company was entitled in accordance with Italian Law No. 383/2001 “Tremonti-bis” and Legislative Decree No. 466/1997 “Dual Income Tax”) related to investments in property, plant and equipment and reinvestment of earnings made by the Company and its Italian subsidiary. In 2001, the Company recorded tax benefits amounting to €906 thousand (to which the Company was entitled in accordance with Italian Law No. 383/2001 “Tremonti-bis” and No. 133/1999 “Visco”).

Net Income

Net income decreased by 54.1% from €14,086 thousand in 2001 to €6,464 thousand in 2002. As a percentage of net sales, net income decreased from 8.8% in 2001 to 4.6% in 2002.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Net Sales

The following table sets forth net sales and related information by Business Area for the years ended December 31, 2000 and 2001.

|Business
      Area                    |  |  |  |  |  | Net
      Sales2000       |  |  |  |  |  | Net
      Sales2001       |  |  |  |  |  | Total
      Difference |    |  |  |  |  | Price
      / Quantity Effect |    |  |  |  |  | Exchange
      Rate Effect |   
|-------------------------------------- |  |  |  |  |  | ------------------------- |  |  |  |  |  | ------------------------- |  |  |  |  |  | ---------------------- | -- |  |  |  |  | ----------------------------- | -- |  |  |  |  | -------------------------- | --
|                                       |  |  |  |  |  | (thousands
      of Euro) |  |  |  |  |  | (thousands
      of Euro) |  |  |  |  |  | (%)                    |    |  |  |  |  | (%)(1)                        |    |  |  |  |  | (%)(2)                     |   
|                                       |  |  |  |  |  |                           |  |  |  |  |  |                           |  |  |  |  |  |                        |    |  |  |  |  |                               |    |  |  |  |  |                            |   
|Display Devices                        |  |  |  |  |  | 67,688                    |  |  |  |  |  | 54,951                    |  |  |  |  |  | (18.8                  | %) |  |  |  |  | (20.4                         | %) |  |  |  |  | 1.6                        | % 
|Light Sources                          |  |  |  |  |  | 21,392                    |  |  |  |  |  | 20,598                    |  |  |  |  |  | (3.7                   | %) |  |  |  |  | 0.7                           | %  |  |  |  |  | (4.4                       | %)
|Electronic Devices & Flat
      Panels |  |  |  |  |  | 16,802                    |  |  |  |  |  | 13,854                    |  |  |  |  |  | (17.5                  | %) |  |  |  |  | (17.3                         | %) |  |  |  |  | (0.2                       | %)
|Vacuum Systems and Thermal Insulation  |  |  |  |  |  | 6,232                     |  |  |  |  |  | 5,293                     |  |  |  |  |  | (15.1                  | %) |  |  |  |  | (12.9                         | %) |  |  |  |  | (2.2                       | %)
|Components Aggregate                   |  |  |  |  |  | 112,114                   |  |  |  |  |  | 94,696                    |  |  |  |  |  | (15.5                  | %) |  |  |  |  | (15.3                         | %) |  |  |  |  | (0.2                       | %)
|Pure Gas Technologies                  |  |  |  |  |  | 30,926                    |  |  |  |  |  | 32,852                    |  |  |  |  |  | 6.2                    | %  |  |  |  |  | 4.6                           | %  |  |  |  |  | 1.6                        | % 
|Analytical Technologies                |  |  |  |  |  | 13,355                    |  |  |  |  |  | 15,981                    |  |  |  |  |  | 19.7                   | %  |  |  |  |  | 17.4                          | %  |  |  |  |  | 2.3                        | % 
|Facilities Technologies                |  |  |  |  |  | 15,871                    |  |  |  |  |  | 16,376                    |  |  |  |  |  | 3.2                    | %  |  |  |  |  | 0.4                           | %  |  |  |  |  | 2.8                        | % 
|Equipment Aggregate                    |  |  |  |  |  | 60,152                    |  |  |  |  |  | 65,209                    |  |  |  |  |  | 8.4                    | %  |  |  |  |  | 6.3                           | %  |  |  |  |  | 2.1                        | % 
|Other                                  |  |  |  |  |  | 286                       |  |  |  |  |  | 264                       |  |  |  |  |  | (7.7                   | %) |  |  |  |  | (6.9                          | %) |  |  |  |  | (0.8                       | %)
|Total                                  |  |  |  |  |  | 172,552                   |  |  |  |  |  | 160,169                   |  |  |  |  |  | (7.2                   | %) |  |  |  |  | (7.9                          | %) |  |  |  |  | 0.7                        | % 

(1)   Price/Quantity Effect is calculated as the difference between “Total Difference (%)” and “Exchange Rate Effect (%)”.(2)   Exchange Rate Effect is calculated on the basis of 2001 net sales by Business Area using the average exchange rates for 2000.

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Total net sales decreased by 7.2% from €172,552 thousand in 2000 to €160,169 thousand in 2001 primarily due to a reduction in the volume of products sold in the Components Aggregate. The decrease was partially offset by an increase in sales in the Equipment Aggregate and, to a lesser extent, by a favorable impact of exchange rates, which resulted in an increase in the Group’s total net sales of 0.7%.

Revenues of the Components Aggregate decreased to €94,696 thousand in 2001 from €112,114 thousand in 2000, representing a reduction of 15.5%. This decrease was mainly due to lower demand for getters in the cathode ray tube market, and, to a lesser extent, to lower demand for dryers in the Laser Pump Module market. The impact of exchange rates also resulted in a slight reduction in revenues attributable to the Components Aggregate.

In particular, net sales of the Display Devices Business Area declined by 18.8% to €54,951 thousand in 2001 from €67,688 thousand in 2000. This was due primarily to a decrease in the volume of products sold and, to a lesser extent, price adjustments made with respect to certain products. The reduction in quantities sold was primarily due to a strong reduction in demand which generally characterized the worldwide Cathode Ray Tube market. This drop was partially offset by the effect of exchange rates, which resulted in an increase of 1.6% in net sales of the Display Devices Business Area.

Net sales of the Light Sources Business Area decreased by 3.7% to €20,598 thousand in 2001 from €21,392 thousand in 2000. This was primarily due to the impact of exchange rates, which caused a reduction of 4.4% in revenues as compared to the prior year, resulting from the strengthening of the Euro against the Japanese Yen. Net sales of the Light Sources Business Area marginally increased by 0.7% in 2001, net of exchange rate effects, with respect to the previous year, due to an increase in the quantities sold of mercury dispensers for fluorescent lamps and for Liquid Crystal Displays (“LCD”) used as back-lighting in laptop computers. The increase in demand for mercury dispensers for LCD back-lighting was offset by an effect of a transfer of sales to a different mercury dispensing model characterized by a lower sales price and lower production costs. The Light Sources Business Area also registered a slight reduction in sales in the discharge lamp market as a result of the economic slowdown generally affecting the industry.

Net sales from the Electronic Devices & Flat Panels Business Area decreased by 17.5% to €13,854 thousand in 2001 from €16,802 thousand in 2000 mainly due to a reduction in sales of Dryer Capsule Assemblies for the Laser Pump Module used in optical amplifiers for submarine transmissions via fiber cables. The reduction in sales, in turn, was primarily due to an economic downturn generally characterizing the telecommunications market. The impact of exchange rates also caused a slight decrease of 0.2% in revenues attributable to the Electronic Devices & Flat Panels Business Area.

Net sales of the Vacuum Systems and Thermal Insulation Business Area decreased by 15.1% to €5,293 thousand in 2001 from €6,232 thousand in 2000. This was mainly due to a decrease in sales of getter pills for metal vacuum bottles sold in Japan and China and, to a lesser extent, to negative exchange rate effects (which resulted in a decrease in net sales of the Vacuum Systems and Thermal Insulation Business Area of 2.2%).

Net sales of the Equipment Aggregate were €65,209 thousand in 2001, compared to €60,152 thousand in 2000, representing an increase of 8.4%. The increase was primarily due to higher sales in the first half of 2001 resulting from large orders placed by customers at the end of 2000, as well as to sales attributable to Molecular Analytics, which was acquired and consolidated into the Group in July 2000. The favorable impact of exchange rates (which caused an increase of 2.1% in revenues) also contributed to the growth of sales of the Equipment Aggregate.

Net sales of the Pure Gas Technologies Business Area increased by 6.2% to €32,852 thousand in 2001, compared to €30,926 thousand in 2000. This was primarily due to an increase in the volume of products sold and, to a lesser extent, to a favorable exchange rate effect (which resulted in an increase in net sales of the Pure Gas Technologies Business Area of 1.6%). The growth in revenues recorded by the Pure Gas Technologies Business Area was largely due to sales in the first part of the year, despite a recession generally characterizing the semiconductor business.

Net sales of the Analytical Technologies Business Area increased by 19.7% to €15,981 thousand in 2001 from €13,355 thousand in 2000. This was primarily due to an increase in the volume of products sold in the first half of the year and to the inclusion of sales attributable to Molecular Analytics, which was consolidated into the Group beginning in July 2000. To a lesser extent, the increase was also caused by the favorable impact of exchange rates (which resulted in an increase of 2.3% in revenue attributable to the Analytical Technologies Business Area).

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Net sales of the Facilities Technologies Business Area increased by 3.2% to €16,376 thousand in 2001 from €15,871 thousand in 2000 primarily due to a positive exchange rate effect (which resulted in an increase of 2.8% in the revenues attributable to the Facilities Technologies Business Area) and, to a lesser extent, to an increase of services sold by the Group.

Cost of Sales

Cost of sales was €85,594 thousand in 2001 as compared to €88,356 thousand in 2000, representing a decrease of 3.1%. This decrease was mainly due to the reduced consumption of raw materials by the Group, which was caused by lower sales and decreased volume of production. The lower consumption of raw materials was partially offset by higher labor costs and, to a lesser extent, by the strengthening of the U.S. Dollar against the Euro. As a percentage of net sales, cost of sales increased from 51.2% in 2000 to 53.4% in 2001, mainly as a result of fixed overhead costs relating to the manufacture of the Group’s products (despite lower net sales) and a less favorable product mix, including an increase in sales of Equipment Aggregate products which were characterized by higher overhead costs as compared to other Group products.

In the Components Aggregate, cost of sales as a percentage of net sales increased from 45.5% in 2000 to 48.1% in 2001. This increase was mainly due to fixed overhead costs relating to the manufacture of the Group’s products despite lower net sales.

In the Equipment Aggregate, cost of sales as a percentage of net sales decreased slightly from 61.7% in 2000 to 61.2% in 2001. This was mainly due to the absorption of fixed overhead costs on an increased amount of sales and to a favorable exchange rate effect, partially offset by higher labor and production costs. The increase in labor and production costs was also due to the inclusion of Molecular Analytics, which was consolidated in the Group beginning in July 2000.

Research and Development Expenses

Research and development expenses were €12,302 thousand in 2001, compared to €10,561 thousand in 2000. This increase was primarily due to a higher average number of personnel in 2001 and to an increase in wages for existing personnel. Research and development expenses as a percentage of net sales increased from 6.1% in 2000 to 7.7% in 2001. This was mainly due to an increase in expenses relating to research and development activities as well as to lower net sales. During 2001, the Group continued its research and development activities for products and applications diversification in both the Components and Equipment Aggregates.

In all the fields in which it is, or may be, involved, the Group is working in order to develop new products and to further enhance the performances of existing products. All research and development expenses were charged as expenses in the period incurred.

Selling Expenses

Selling expenses were €23,088 thousand in 2001 as compared to €20,155 thousand in 2000, representing an increase of 14.6%. This was mainly due to increased personnel costs and to higher sales commissions in the Equipment Aggregate. The strengthening of the U.S. Dollar and of certain other Group’s currencies also contributed to the increase in selling expenses because a portion of these expenses was denominated in non-Euro currencies.

As a percentage of net sales, selling expenses increased from 11.7% in 2000 to 14.4% in 2001. This increase was mainly due to higher selling expenses and lower net sales.

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General and Administrative Expenses

General and administrative expenses were €22,227 thousand in 2001 compared to €19,637 thousand in 2000, representing an increase of 13.2%. This increase was primarily due to an increase in personnel costs resulting from a higher average number of personnel and an increase in wages for existing personnel. The increase was also caused by (i) the unfavorable exchange rate impact resulting from the strengthening of the U.S. Dollar and of certain other Group’s currencies against the Euro, (ii) higher consulting fees as compared to the prior year and (iii) increased amortization of goodwill connected with the acquisition of Molecular Analytics, which was only partially included in 2000 as a result of its acquisition and consolidation into the Group in July 2000. The increase was partially offset by the completion, in the year 2000, of the amortization of costs capitalized for The Nasdaq Stock Market listing in 1996.

The following table presents the amortization of goodwill relating to the acquisitions effected by the Group for the years ended December 31, 2000 and 2001 respectively, in thousands of Euro:

|                                                                                               |  |  | 2000  |  |  | 2001  | 
|---------------------------------------------------------------------------------------------- |  |  | ----- |  |  | ----- | 
|                                                                                               |  |  |       |  |  |       | 
|Trace Analytical, Inc. (including
      PCP, Inc., merged into Trace Analytical, Inc. in 2000) |  |  | 617   |  |  | 635   | 
|FST Consulting International,
      Inc.                                                       |  |  | 504   |  |  | 519   | 
|Molecular Analytics, Inc.                                                                      |  |  | 304   |  |  | 668   | 
|Other                                                                                          |  |  | 69    |  |  | 114   | 
|                                                                                               |  |  |       |  |  |       | 
|Total                                                                                          |  |  | 1,494 |  |  | 1,936 | 
|                                                                                               |  |  |       |  |  |       | 

The amortization of goodwill relating
  to the acquisitions of Trace Analytical, FST and Molecular Analytics was accounted
  for as a general and administrative expense in the Equipment Aggregate. The
  other amortization of goodwill was accounted for as a general and administrative
  expense in the Components Aggregate.

As a percentage of net sales, general and administrative expenses increased from 11.4% in 2000 to 13.9% in 2001. This increase was due to higher general and administrative expenses and to lower net sales.

Operating Income

Operating income decreased from €33,843 thousand in 2000 to €16,958 thousand in 2001, representing a decrease of 49.9%. As a percentage of net sales, operating income decreased from 19.6% in 2000 to 10.6% in 2001. This was mainly due to decreased net sales and, to a lesser extent, to increased operating expenses.

Operating income attributable to the Components Aggregate decreased by 36.4% from €34,745 thousand in 2000 to €22,110 thousand in 2001. As a percentage of net sales, operating income of the Components Aggregate decreased from 31.0% in 2000 to 23.3% in 2001, mainly as a result of decreased sales, slightly offset by the positive effect of exchange rates.

Operating losses attributable to the Equipment Aggregate increased from €965 thousand in 2000 to €5,210 thousand in 2001. This increase was mainly due to increased operating expenses, including higher personnel costs and, to a lesser extent, higher amortization costs, partially offset by positive rate effects. As a percentage of net sales, operating losses attributable to the Equipment Aggregate increased from 1.6% in 2000 to 8.0% in 2001.

Interest and Other Financial Income, Net

Interest and other financial income, net, increased from €1,240 thousand in 2000 to €1,653 thousand in 2001. Interest and other financial income decreased from €4,033 thousand in 2000 to €3,625 thousand in 2001 due to lower interest rates and to lower average cash balances for investment. Interest and other financial expenses decreased from €2,793 thousand in 2000 to €1,972 thousand in 2001, principally due to lower interest rates, partially offset by the strengthening of the U.S. Dollar against the Euro. Substantially all of the Group’s financial debt, and consequently interest expenses, was denominated in U.S. Dollars.

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Foreign
  Exchange Gains (Losses), Net

Foreign exchange gains, net, were €2,683 thousand in 2001 compared to €917 thousand in 2000. This increase was primarily due to the strengthening of the U.S. Dollar against the Euro in 2001 as compared to 2000.

Other Income (Expenses), Net

The following table sets forth certain items included in other income (expenses), net, for the years ended December 31, 2000 and 2001, respectively, in thousands of Euro:

|                                                                               |  |  | 2000  |   |  | 2001   |  
|------------------------------------------------------------------------------ |  |  | ----- | - |  | ------ | -
|                                                                               |  |  |       |   |  |        |  
|Capital gain on the sale of a
      building located in Milan                  |  |  | 1,276 |   |  |       |  
|Impairment of Molecular Analytics,
      Inc. goodwill                         |  |  |      |   |  | (2,512 | )
|Impairment of Getters Corporation
      of America goodwill                    |  |  |      |   |  | (391   | )
|Non-recurring restructuring costs
      associated with reduction of personnel |  |  |      |   |  | (1,479 | )
|Non-recurring restructuring costs
      associated with inventory writedown    |  |  |      |   |  | (368   | )
|Non-recurring restructuring costs
      associated with fixed assets writedown |  |  |      |   |  | (570   | )
|Other, net                                                                     |  |  | (208  | ) |  | 351    |  
|                                                                               |  |  |       |   |  |        |  
|Other income (expenses), net                                                   |  |  | 1,068 |   |  | (4,969 | )
|                                                                               |  |  |       |   |  |        |  

In 2001, impairment charges of €2,512 thousand and €391 thousand, respectively, were recorded to write-down a portion of the goodwill attributable to Molecular Analytics and Getters Corporation of America. During 2001, the restructuring plans realized by the Company in both the Equipment Aggregate and the Components Aggregate resulted in (i) non-recurring restructuring costs associated with a reduction in personnel equal to €1,479 thousand, (ii) an inventory writedown of €368 thousand and (iii) a writedown of fixed assets for an amount equal to €570 thousand. For a discussion of the reorganization plans, see Item 4.A, “History and development of the Company”.

Income Taxes

Income taxes decreased from €9,841 thousand in 2000 to €2,278 thousand in 2001. As a percentage of income before taxes, income taxes decreased from 26.5% in 2000 to 13.9% in 2001. The decrease in the effective tax rate in 2001 was mainly due to an increase in the proportion of profits from the Group’s companies subject to lower rates of taxation and, to a lesser extent, to the introduction of certain tax benefits amounting to €906 thousand (to which the Company was entitled in accordance with Italian Law No. 383/2001 “Tremonti-bis” and Law No. 133/1999 “Visco”) related to investments in property, plant and equipment made by the Group’s Italian companies.

In addition, certain U.S. subsidiaries of the Group suffered significant pre-tax losses in 2001. This was primarily due to (i) unfavorable market conditions, (ii) the effect of the Group’s restructuring plans implemented in the Display Devices Business Area and in the Analytical Technologies Business Area, and (iii) the writedown for impairment of goodwill relating to Molecular Analytics and Getters Corporation of America. These pre-tax losses generated a tax benefit (recorded as a deferred tax asset) at a rate of approximately 40%, which was higher than the average tax rate of the Group. This, in turn, contributed to a reduction of the Group’s tax rate in 2001.

The Company’s subsidiaries located in Avezzano, Italy, benefited in both 2001 and 2000 from partial tax exemptions in accordance with the Mezzogiorno Program. The total benefits for the Group on 2001 and 2000 income taxes related to the Mezzogiorno Program were €2,041 thousand and €3,980 thousand, respectively. This decreased benefit in 2001 was due to the decreased profit realized by the subsidiary Saes Advanced Technologies S.p.A. If the Group had not received the benefits of the Mezzogiorno Program, income taxes would have been €4,319 thousand and €13,821 thousand in 2001 and 2000, respectively.

Net Income

Net income decreased by 48.3% from €27,241 thousand in 2000 to €14,086 thousand in 2001. As a percentage of net sales, net income decreased from 15.8% in 2000 to 8.8% in 2001.

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Differences between Italian GAAP and U.S. GAAP

The Company’s Consolidated Financial Statements have been prepared in accordance with Italian GAAP, which differs in certain respects from U.S. GAAP. The principal differences between Italian GAAP and U.S. GAAP, as applied to the Company’s Consolidated Financial Statements, are the treatment of the following items: (i) income taxes; (ii) revaluation of fixed assets; (iii) intangible assets and goodwill; (iv) foreign currency translation; (v) investments; (vi) capital leases; (vii) revenue recognition; and (viii) income statement classification.

The Company’s net income and shareholders’ equity under Italian GAAP were €6,464 thousand and €170,462 thousand, respectively, in 2002. Under U.S. GAAP, the Company would have reported net income and shareholders’ equity of €7,806 thousand and €170,530 thousand, respectively, in 2002. The Company’s net income and shareholders’ equity under Italian GAAP were €14,086 thousand and €177,460 thousand, respectively, in 2001. Under U.S. GAAP, the Company would have reported net income and shareholders’ equity of €17,095 thousand and €177,556 thousand, respectively, in 2001. See Note 23 of the Notes to the Consolidated Financial Statements included in Item 19.A “Index to Financial Statements and Schedules” of this annual report for a more detailed discussion of the principal differences between Italian GAAP and U.S. GAAP.

The Company’s operating income under Italian GAAP was €33,843 thousand, €16,958 thousand and €10,029 thousand in 2000, 2001 and 2002, respectively. Under U.S. GAAP, the Company would have reported operating income of €38,216 thousand, €13,441 thousand and €13,558 thousand in 2000, 2001 and 2002, respectively. In 2000, Italian GAAP operating income included higher amortization of intangible assets and revalued fixed assets, as well as higher leasing costs, which mainly accounted for the difference between Italian GAAP and U.S. GAAP operating income. In 2001, Italian GAAP operating income excluded non-recurring restructuring costs but included higher leasing expenses, and, in 2002, Italian GAAP operating income included higher leasing expenses and the amortization of goodwill, which mainly account for the differences between Italian GAAP and U.S. GAAP operating income in each of the respective years.

The Company’s research and development expenses under Italian GAAP were €10,561 thousand, €12,302 thousand and €13,612 thousand in 2000, 2001 and 2002, respectively. Under U.S. GAAP, the Company would have reported research and development expenses of €9,633 thousand, €11,213 thousand and €11,163 thousand, in 2000, 2001 and 2002, respectively. Certain licenses, patents and legal cost cannot be included as research and development expenses pursuant to U.S. GAAP rules.

Critical Accounting Policies

Accounting principles generally accepted in Italy and in the United States of America require estimates and assumptions to be made that affect the reported amounts in the Company’s consolidated financial statements and accompanying notes. Some of these estimates require difficult, subjective and/or complex judgments about matters that are inherently uncertain and, as a consequence, actual results could differ from those estimates. Due to the estimation processes involved, the following summarized accounting policies and their application are considered to be critical to understanding the business operations, financial condition and results of operations of the Company and its subsidiaries.

Goodwill

Goodwill is periodically reviewed for impairment. Until December 31, 2001, the carrying value of goodwill would have been deemed to be impaired if the best estimate of future undiscounted cash flows over their remaining amortization period had been less than their carrying value. If goodwill had been deemed to be impaired, the impairment charge loss would have been measured using the goodwill’s estimated fair value. The fair value of goodwill was calculated using a discounted cash flow analysis.

In the fourth quarter of 2001, an impairment was identified on goodwill held by two of the Company’s subsidiaries, Molecular Analytics and Getters Corporation of America, based on their estimated undiscounted net future cash flows. Accordingly, the Company recorded impairment charges of €2,512 thousand and €391 thousand, respectively, based on the excess of the goodwill’s carrying value over their fair value. The impairment related to Molecular Analytics was identified as a result of the slowdown that occurred in the semiconductor industry as well as the resultant negative operating performance of the subsidiary. The impairment related to Getters Corporation of America was due to negative market conditions which caused the Company to close its subsidiary’s manufacturing product line in Cleveland (Ohio) and transfer the production of getters for color Cathode Ray Tubes to Saes Getters S.p.A. in Lainate (Italy).

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Effective January 1, 2002, under the Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”), goodwill and indefinite lived intangible assets are no longer amortized under U.S. GAAP but are reviewed annually, or more frequently if impairment indicators arise, for impairment using a two-step process that begins with an estimation of the fair value of a reporting unit. The first step screens for potential impairment and requires a comparison of the fair value of a reporting unit with its carrying amount, including goodwill. A present value technique based on discounted cash flows is often the best available technique with which to estimate the fair value of a reporting unit. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, thus the second step of the impairment test is unnecessary. The second step of the goodwill impairment test, used to measure the amount of impairment loss, compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill.

In the fourth quarter of 2002, the remaining goodwill relating to the acquisition of Getters Corporation of America, held by Saes Getters USA, Inc. as a result of its merger with Getters Corporation of America, was entirely written down, due to the low production value of the Cleveland (Ohio) manufacturing plant. Accordingly, the Company recorded an impairment charge of €9 thousand.

Factors that may impact the valuation of goodwill include, among other things, technical know-how and market demand. While the Company believes that its estimates of future cash flows related to the valuation are reasonable, different assumptions regarding such cash flows could materially affect the Company’s evaluations. At December 31, 2002, there were no factors that indicated that the book value of goodwill might not be recoverable.

Deferred Income Taxes

Deferred income taxes are provided to reflect the net tax effects of temporary differences between the financial reporting and the tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws in each of the relevant jurisdictions. Deferred income taxes reflect the Company’s assessment of actual future taxes to be paid on items reflected in the financial statements, giving consideration to both timing and probability of realization.

Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is reasonably certain that some portion or all of the deferred tax assets will not be realized. Actual income taxes could vary from these estimates due to future changes in income tax law or results from final review of the Company’s and its subsidiaries’ tax returns by taxing authorities.

The Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. However, in the event the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.

In the fourth quarter of 2002, a full valuation allowance amounting to €3,993 thousand was established against the deferred tax assets of the Company’s indirectly controlled subsidiary, Molecular Analytics, Inc. The Company believes that, based on its future profitability, as sets forth in its business plan, and the availability of net operating loss carry forwards, deferred tax assets may be fully utilized in the future. However, due to the weight of negative evidence, primarily the continuing trend of negative operating results of Molecular Analytics, the Company determined that it was reasonably certain that the deferred tax assets amounting to €3,993 thousand would not be realized. Accordingly a full valuation allowance has been deemed to be necessary. The amount of the deferred tax assets considered realizable could be increased if Molecular Analytics, Inc. returns to profitability and estimates of future taxable income increase significantly.

Impairment of property, plant and equipment and other non-current assets

Property, plant and equipment and other non-current assets, including other intangibles that have finite useful lives, are reviewed using economic valuations to calculate impairment losses whenever events or a change in circumstance indicate that the carrying amount may not be recoverable. In carrying out the economic valuations, an assessment is made of the future cash flows expected to be generated by these assets, taking into account current market conditions and the expected lives of the Group’s assets. The actual outcome can vary significantly from the Company’s forecasts, thereby affecting its assessment of future cash flows.

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Both Italian and U.S. GAAP require that assets which are impaired be written down to their fair value. However, under Italian GAAP, in order to determine whether an impairment exists the book value of an asset in question is compared to the sum of the discounted cash flows expected to be generated by such asset. If the sum of such discounted cash flows is less than the carrying value of the asset, an impairment exists. Under US GAAP, assets whose carrying values exceed their estimated recoverable amount, determined on an undiscounted basis, are written down to their fair value.

In addition, under Italian GAAP impairment charges are reversed when the situation giving rise to an impairment ceases to exist. Under US GAAP, reversals of impairment charges are not permitted.

Revenue Recognition

Net sales in the consolidated statements of income are represented by gross sales from operations, net of sales returns, allowances and discounts. Revenue from sales is recognized upon delivery of the related goods. Revenues from professional services activities related to quality assurance, quality control and material inspection of gas distribution systems in the semiconductor and other industries, and revenues from services consisting of supplying and coordinating specialized manpower in connection with the construction of telecommunication towers are recorded as work is performed and expenses are incurred.

Sales returns and other allowances are accrued at the time of delivery based upon past experience. If actual future returns and allowances differ from past experience, additional allowances may be required.

Inventory Obsolescence Reserve

Provision for potentially obsolete or slow-moving inventory is made based on management’s analysis of inventory levels and future sales forecasts. If market conditions are less favorable than those projected by management, additional inventory reserves may be required.

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of the Group’s customers to make required payments. The Company bases its estimates on the aging of the Group’s accounts receivable balances and the Group’s historical write-off experience, customer credit-worthiness and changes in the Group’s customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. If the financial condition of the Group’s customers were to deteriorate, actual write-offs may be higher than expected.

Recent Accounting Pronouncements

In July 2001, the FASB issued Statement of Financial Accounting Standards No. 143, “Accounting for Obligations Associated with the Retirement of Long-Lived Assets” (“SFAS 143”). This standard will be effective for fiscal years beginning after June 15, 2002; however early adoption is permitted. This standard provides the accounting requirements for retirement obligations associated with tangible long-lived assets. This standard requires that the obligation associated with the retirement of the tangible long-lived assets is capitalized into the asset cost at the time of initial recognition. The liability is then discounted to its fair value at the time of recognition using the guidance provided by the standard. The Company believes that the adoption of SFAS 143 is not expected to have a significant impact on its financial position and results of operations.

In April 2002, the FASB issued Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”).  This standard rescinds SFAS 4, “Reporting Gains and Losses from Extinguishment of Debt-an amendment of APB Opinion No. 30”, which required all gains and losses from the extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effects. As a result, the criteria set forth by APB Opinion 30 will now be used to classify those gains and losses. SFAS 145 also amends SFAS 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. In addition, SFAS 145 amends other existing authoritative pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions. The standard is generally effective for transactions occurring after May 15, 2002. The adoption of SFAS 145 did not have and is not expected to have a significant impact on the Company’s financial position or results of operations.

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In July 2002, the FASB issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”). This standard will require Companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. The standard replaces the existing guidance provided by EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. The standard is effective for fiscal years beginning after December 31, 2002. The Company believes that the adoption of SFAS 146 is not expected to have a significant impact on its financial position or results of operations.

In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). FIN 45 requires a liability to be recognized at the time a company issues a guarantee for the fair value of the obligations assumed under certain guarantee agreements. The provisions for initial recognition and measurement of guarantee agreements are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002. The Company has complied with the disclosure requirements of FIN 45, as shown in Note 19 of the Consolidated Financial Statements, and the Company believes that the adoption of FIN 45 is not expected to have a significant impact on its financial position or results of operations.

In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation  Transition and Disclosure” (“SFAS 148”). This Statement amends SFAS 123 to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS 123 to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, SFAS 148 amends APB Opinion No. 28, Interim Financial Reporting, to require disclosure about those effects in interim financial information. SFAS 148 is effective for fiscal years beginning after December 15, 2002. The Company currently has no stock based compensation plans. The adoption of SFAS 148 therefore is not expected to have a significant impact on the Company’s financial position or results of operations.

In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”), an interpretation of ARB 51. FIN 46 addresses the consolidation of entities for which control is achieved through means other than through voting rights (“variable interest entities” or “VIE”) by clarifying the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.  FIN 46 provides guidance on how to determine when and which business enterprise (the “primary beneficiary”) should consolidate the VIE.  In addition, FIN 46 requires that both the primary beneficiary and all other enterprises with a significant variable interest in a VIE make additional disclosures. The disclosure provisions of FIN 46 are effective in all financial statements initially issued after January 31, 2003.  FIN 46 is required to be immediately applied by all entities with a variable interest in a VIE created after January 31, 2003.  A public entity with a variable interest in a VIE created before February 1, 2003 is required to apply FIN 46 to that entity no later than the beginning of the first interim or annual reporting period beginning after June 15, 2003. The Company currently has no control in entities which are achieved through means other than voting rights. The adoption of FIN 46 therefore is not expected to have a significant impact on the Company’s financial position or results of operations.

Impact of Changes in Exchange Rates

Until the end of 1998, the financial results of the Group were significantly affected by changes in exchange rates between the Italian Lira and other currencies, particularly the Dollar, the Japanese Yen, the French Franc, the German Deutsche Mark, the British Pound, the Korean Won, the Chinese Renminbi, the Singapore Dollar and the Taiwan Dollar. Beginning January 1, 1999, since Germany and France, along with Italy, began participating in the Euro, the impact on Group’s results due to the fluctuation of the Lira relative to French Franc and German Mark disappeared. The exchange rate fluctuations between the Euro and the Dollar, the Japanese Yen, the British Pound, the Korean Won, the Chinese Renminbi, the Singapore Dollar and the Taiwan Dollar affected the results for 2000, 2001 and 2002 and could affect the Group’s future results.



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In general terms, the Group believes that the currency stability among the countries participating in the Euro zone is advantageous, eliminating currency fluctuations among the participating countries and creating a wider, single currency and more transparent market environment.

The Company’s net income is exposed to foreign exchange rate movements because it publishes its financial statements in Euro, while a substantial part of its revenues and certain of its expenses are denominated in foreign currencies. Sales of most of the Group’s products are invoiced in non-Euro currencies and revenues are directly affected by the fluctuation of the Euro relative to such currencies. Certain significant costs, such as raw material costs, direct labor costs, manufacturing overhead, research and development expenses, selling expenses, general and administrative expenses are incurred in the currencies of the countries in which the Group’s operations are located. Fluctuations in the exchange rates of these currencies, particularly the Dollar and the Japanese Yen against the Euro, can affect the Group’s revenues and costs and, therefore, its profitability. Because a substantial majority of the Group’s revenues have been, and are expected to continue to be, denominated in non-Euro currencies, the Group’s overall performance benefits from the relative weakness of the Euro and is adversely affected by a strengthening of the Euro.

During 2000, the Group’s operating results were significantly improved by the depreciation of the Italian Lira against the Dollar, the Japanese Yen, the British Pound, the Korean Won and the Chinese Renminbi. This depreciation generated a significant benefit to the Group’s operating income. In the last two months of 2000, there was a moderate strengthening of the Italian Lira against all the major currencies. However, this strengthening did not result in a material impact on the Group’s operating income.

During 2001, the Group’s operating results were not significantly affected by changes in exchange rates. Although there was a favorable impact due to the depreciation of the Euro against the Dollar and the Chinese Renminbi, most of this benefit was offset by the strengthening of the Euro against the Japanese Yen and the Korean Won during the same period.

During 2002, the Group’s operating results were adversely affected by the strengthening of the Euro against all the major currencies in which the Group operates, and particularly the Dollar and the Japanese Yen.

In 2002, 51% of the Group’s expenses were incurred in Euro, while 84% of net sales was derived in currencies outside the so-called Euro zone (i.e. the twelve countries participating in the Euro since December 31, 2001). In particular, approximately 65% and 32% of the Group’s total net sales and expenses included in cost of sales and operating expenses were denominated in Dollars.

The effects of fluctuations in the exchange rates of the Euro against the Dollar and the other currencies in which the Group generates sales, in the period between sales invoicing and the actual receipt of cash from sales, are reflected in the line item “Foreign exchange gains (losses), net”.

The Group’s strategy is to reduce exchange rate risk, but not to completely eliminate the effects of exchange rate fluctuations. The Group’s policy is not to take speculative positions through forward currency contracts. The Group has not experienced significant gains or losses arising from its hedging activities. The Group considers that a currency exposure exists, and aims to hedge such currency exposure, where there is a material difference in the relative proportion of costs incurred and sales in such currency. Accordingly, the Group enters into hedging contracts pursuant to which it sells foreign currencies for Euro at negotiated exchange rates. Since 1995, the Group has been applying such specific policy to hedge the Group’s estimated sales denominated in foreign currencies, in particular sales in Dollars and Japanese Yen.

The Company defers unrealized gains and losses on foreign exchange contracts until the future sales are recognized. Gains and losses relating to foreign exchange contracts are recognized in the line item “Foreign exchange gains (losses), net”.

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In December 1999 the Group’s Italian companies entered into foreign exchange contracts to hedge current accounts receivables and a portion of 2000 sales denominated in Japanese Yen and in Dollars. The total amount hedged was Japanese Yen 1,185 million (€11,565 thousand) and $15 million (€14,529 thousand). In September 2000, the Group’s Italian companies entered into foreign exchange contracts to hedge current accounts receivable and a portion of 2000 and 2001 sales denominated in Japanese Yen and in Dollars. The total amount hedged was Japanese Yen 884 million (€9,767 thousand) and $14.4 million (€16,430 thousand). In the first four months of 2001, the Group entered in foreign exchange contracts to hedge 7.5 million of sales in Dollars (€8,367 thousand). In addition, in the last quarter of 2001, the Group’s companies entered into foreign exchange contracts to hedge current accounts receivable and a portion of 2001 and 2002 sales denominated in Dollars. The total amount hedged was $25 million (€28,426 thousand). In the first quarter of 2002, the Group entered in foreign exchange contracts to hedge 5.5 million of 2002 sales in Dollars (€6,433 thousand), in order to cover an additional portion of 2002 sales denominated in Dollars. In the first quarter of 2003, the Group entered into foreign exchange contracts to hedge current accounts receivable and a portion of 2003 sales denominated in Dollars and Japanese Yen. The total amount hedged was $12.5 million (€11,866 thousand), related to a portion of the Group’s estimated sales in Dollars for the first six months of 2003, and Japanese Yen 1,572 million (€12,730 thousand), related to a portion of the Group’s estimated 2003 sales in Japanese Yen.

Assets, shareholders’ equity and liabilities of the Company’s non-Italian subsidiaries are translated, for consolidation purposes, into Euro at the year-end exchange rate. See Note 2 of “Notes to the Consolidated Financial Statements” included in this annual report. Income and expenses are translated at the average exchange rate for the period. Adjustments resulting from translation are recorded directly in shareholders’ equity and are shown as “cumulative translation adjustments” in the consolidated statements of shareholders’ equity. The balance sheet impact of such translation adjustments has been, and may be expected to continue to be, material from period to period.

Approximately 95% and 5% of the Group’s outstanding indebtedness as of December 31, 2002 was denominated in Dollars and Euro, respectively.

Inflation

The Company believes that the impact of inflation was not material to the Group’s net sales or operating income in the three years ended December 31, 2002. The inflation rates in the countries where the Group’s customers are located have generally been similar to the inflation rate in Italy, which is the country in which slightly more than 50% of the Group’s costs are incurred. The annual inflation rate in Italy was 2.6%, 2.7% and 2.4% in 2000, 2001, and 2002, respectively.

Subsequent Events

In January 2003, the Italian companies of the Group entered into foreign exchange contracts to hedge current accounts receivable and a portion of 2003 sales denominated in Dollars and Japanese Yen. In particular, these foreign exchange contracts covered a portion ($12.5 million) of estimated sales in Dollars for the first six months of 2003 and a portion (Japanese Yen 1,572 million) of the estimated sales in Japanese Yen for the entire year 2003.

The Company is currently considering further acquisitions, joint ventures or other strategic investments, although the Company currently has no arrangements, understandings or agreements with respect to any such acquisitions, joint ventures or investments. See Item 4.B, “Business overview — Strategy”.

|B. | Liquidity and capital resources
|-- | -------------------------------

The following table sets forth, at the end of the periods indicated, the amounts of the Group’s net cash position expressed in thousands of Euro or thousands of Dollars:

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|                                             |  |  | 2000    |   |  | 2001    |   |  | 2002    |   |  | 2002    |  
|-------------------------------------------- |  |  | ------- | - |  | ------- | - |  | ------- | - |  | ------- | -
|                                             |  |  |         |   |  |         |   |  |         |   |  |         |  
|                                             |  |  | Euro    |   |  | Euro    |   |  | Euro    |   |  | Dollars |  
|Cash and cash equivalents                    |  |  | 77,994  |   |  | 70,546  |   |  | 78,759  |   |  | 82,579  |  
|Marketable securities                        |  |  | 12,451  |   |  | 10,457  |   |  | 5,261   |   |  | 5,516   |  
|Bank overdrafts                              |  |  | (25,422 | ) |  | (30,617 | ) |  | (26,176 | ) |  | (27,446 | )
|Current portion of long-term
      debt      |  |  | (1,162  | ) |  | (914    | ) |  | (1,218  | ) |  | (1,277  | )
|Long-term debt, net of current
      portion |  |  | (2,916  | ) |  | (2,666  | ) |  | (1,336  | ) |  | (1,401  | )
|                                             |  |  |         |   |  |         |   |  |         |   |  |         |  
|Net cash position                            |  |  | 60,945  |   |  | 46,806  |   |  | 55,290  |   |  | 57,971  |  
|                                             |  |  |         |   |  |         |   |  |         |   |  |         |  

The net cash provided by operating activities amounted to €32,726 thousand in 2002 (23.2% of net sales), as compared to €22,728 thousand in 2001 (14.2% of net sales) and €35,424 thousand in 2000 (20.5% of net sales).

In 2002, the decrease in net income compared with 2001 included non-cash items such as (i) a valuation allowance against Molecular Analytics, Inc. deferred tax assets and (ii) increased depreciation mainly due to increased investments in property, plant and equipment, which did not have negative impacts on net cash from operating activities. The Group’s net cash provided by operating activities increased by 44% to €32,726 thousand in 2002, mainly due to a decrease in inventory as compared to the prior year resulting from lower production volumes in the Equipment Aggregates, increased efficiencies from restructurings and the implementation of improved inventory controls. During 2002, net cash provided by operating activities also benefited from the Group’s more effective collection of overdue accounts receivable.

In 2001, the Group’s net cash provided by operating activities decreased by 35.8% to €22,728 thousand, mainly due to (i) a decrease in net income as compared to the prior year, (ii) an increase in other receivables and prepaid expenses primarily due to tax credits on dividends collected from the Group’s subsidiaries and prepayments of income taxes, (iii) a decrease in other payables and in trade accounts payable primarily due to a reduction in goods and services purchased and (iv) increased inventories due to the weakness in market demand. The decrease in net cash was partially offset by (A) a decrease in accounts receivable primarily due to a reduction in net sales as compared to the prior year, particularly in the second half of the year, (B) an increase in writedowns of assets due to restructuring plans relating to the Display Devices Business Area and the Analytical Technologies Business Area and (C) a writedown for impairment of a portion of the goodwill relating to Molecular Analytics and Getters Corporation of America.

In 2002, the net cash used by investing activities amounted to €10,575 thousand as compared to €23,934 thousand in 2001. The decrease in net cash used by investing activities was mainly due to (i) a reduction in purchases of property, plant and equipment and (ii) a reduction (to zero) of acquisitions of companies paid for in cash, which was offset by an increase in proceeds from sales of marketable securities. In 2001, the net cash used by investing activities amounted to €23,934 thousand as compared to €15,209 thousand in 2000. The increase was mainly due to an increase of purchases of property, plant and equipment. In 2000, the increase in net cash used by investing activities was mainly due to an increase in the purchase of property, plant and equipment and to the acquisition of Molecular Analytics for €5,879 thousand.

In 2002, the net cash used by financing activities amounted to €12,330 thousand as compared to €6,472 thousand in 2001. The increase was mainly due to a decrease in bank overdrafts, resulting primarily from higher cash flow provided by operating activities, partially offset by lower dividends paid. In 2001, the net cash used by financing activities amounted to €6,472 thousand as compared to €2,293 thousand in 2000. The increase was mainly due to an increase in dividends paid and to the purchase of the Company’s own shares. This increase was partially offset by an increase in bank overdrafts.

There have been no significant changes to the Group’s policy with respect to the level of financing provided by suppliers or to customers in the past three years.

The level of cash flows allows the Group to finance all of its investments, while maintaining a positive net cash position. The equity to tangible fixed assets ratios for 2000, 2001 and 2002 were 3.2, 2.6 and 2.5, respectively.



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The Group’s capital expenditures totaled €15,446 thousand in 2002, as compared to €23,887 thousand in 2001 and €14,221 thousand in 2000. In 2002, capital expenditures were primarily made for improvements at the Group’s  production facilities to increase manufacturing capacity and for new laboratory instrumentation. To a lesser extent, capital expenditures were also incurred in 2002 for the completion of the construction of a new office building in Lainate (Italy) used as the Group’s corporate headquarters, for the completion of new buildings in Avezzano and in Shanghai, for the expansion of the production facility in South Korea, and for hardware replacement related to the Group’s information system. The reduction in Group’s capital expenditures is due primarily to certain non-recurring investments in buildings that were completed in 2002 but which were mainly incurred during the previous year. In 2001 and 2000, capital expenditures were mainly made for the construction of a new office building in Lainate (Milan, Italy), the completion of the manufacturing facility at Avezzano (Italy) and the construction, which was completed in 2002, of a new manufacturing facility in Shanghai (People’s Republic of China).

The Company expects significant capital requirements over the next several years and plans to fund such requirements with cash derived from operations and available funds. In addition, to support further innovation, the Company intends to continue to allocate a substantial portion of its net sales to research and development activity. The Company is currently considering acquisitions, joint ventures or other strategic investments, although the Company currently has no arrangements, understandings or agreements with respect to any such acquisitions, joint ventures or investments.

The Company believes that its cash position, funds generated from operations and funds available from its existing borrowing arrangements, will be sufficient to meet the Company’s requirements for working capital and capital expenditures for the foreseeable future.

The liquidity index (current assets less cash and liquid securities, divided by current liabilities less bank overdrafts and current portion of long-term debt) was 2.3, 3.0 and 2.7 in 2000, 2001 and 2002, respectively.

Income taxes paid during the year increased from €6,382 thousand in 2000 to €10,570 thousand in 2001, and decreased to €6,315 thousand in 2002. The decrease in income taxes paid in 2002 was mainly due to lower income before taxes and to lower payment of balances relating to income taxes for fiscal year 2001 attributable to some of the Group’s companies. The increase in income taxes paid in 2001 was mainly due to the payment of balances relating to income taxes for fiscal year 2000 attributable to some of the Group’s companies.

Contractual Obligations and Other Commercial Commitments

The following tables set forth the amounts of contractual obligations and other commercial commitments of the Group as of December 31, 2002, in thousands of Euro:

|Contractual
      Obligations      |       |  | Payments
      Due by Period | 
|---------------------------------- | ----- |  | ---------------------------- | 
|                                   |       | 
|                                   | Total |  |                              | 
|                                   |       |  |                              | 
|Long-Term Debt                     |       |  | 2,554                        | 
|Capital Lease Obligations          |       |  | 1,180                        | 
|Operating Leases                   |       |  | 3,255                        | 
|                                   |       |  |                              | 
|Total Contractual Cash Obligations |       |  | 6,989                        | 
|                                   |       |  |                              | 

|Other
      Commercial Commitments |  |  | Total                   |  |  |  |  |  | Amount
      of Commitment Expiration per Period | 
|---------------------------------- |  |  | ----------------------- |  |  |  |  |  | ------------------------------------------------ | 
|                                   |  |  |                        
|                                   |  |  | Amounts
      Committed |  |  |  |  |  | Less
        than 1 year                         | 
|                                   |  |  |                         |  |  |  |  |  |                                                  | 
|Lines of Credit                    |  |  | 26,176                  |  |  |  |  |  | 26,176                                           | 
|Stand-by Letters of Credit         |  |  | 583                     |  |  |  |  |  | 567                                              | 
|Guarantees                         |  |  | 20,030                  |  |  |  |  |  | 9,550                                            | 
|                                   |  |  |                         |  |  |  |  |  |                                                  | 
|Total Commercial
      Commitments |  |  | 46,789                  |  |  |  |  |  | 36,293                                           | 
|                                   |  |  |                         |  |  |  |  |  |                                                  | 

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The following table sets forth the amounts of guarantees provided by the Group as of December 31, 2002, in thousands of Euro:

|Guarantees                                   |  |  |  |  |  | 2002   | 
|-------------------------------------------- |  |  |  |  |  | ------ | 
|                                             |  |  |  |  |  |        | 
|Lease guarantees                             |  |  |  |  |  | 6,192  | 
|Bank guarantees                              |  |  |  |  |  | 12,511 | 
|Bank loan guarantee                          |  |  |  |  |  | 534    | 
|Other                                        |  |  |  |  |  | 793    | 
|                                             |  |  |  |  |  |        | 
|Total guarantees provided by
      the Group |  |  |  |  |  | 20,030 | 
|                                             |  |  |  |  |  |        | 

“Lease guarantees” includes guarantees issued by the Company for the benefit of the Company’s subsidiary located in Avezzano (Italy). These guarantees represent commitments by the Company that future lease payments will be made by Saes Advanced Technologies S.p.A. to a third party. In the event that Saes Advanced Technologies S.p.A. defaults on such lease payments, Saes Getters S.p.A. is responsible for the lease obligation. The lease guarantees expired in March 2003.

“Bank guarantees” includes guarantees issued by banks to the Italian tax authorities on behalf of the Group’s Italian companies for VAT reimbursements. In the event that the banks are required to honor the guarantees and make payments to the Italian tax authorities on the Group’s behalf, the Group is required to reimburse the banks for such guaranteed amounts. These bank guarantees generally have terms of five years.

The Company has guaranteed 100% of the outstanding bank loan amount ($1,600 thousand) of its proportionally consolidated subsidiary, Nanjing Saes Huadong Getters Co. Ltd. In the event that the subsidiary defaults on the repayment of this loan, Saes Getters S.p.A. is responsible for paying the outstanding loan amount, of which 65% is already reflected as a liability in the Group’s financial statements and 35% of which would be paid on behalf of third parties without recourse. The “Bank loan guarantee” amount of €534 thousand reflected in the above table therefore represents the portion of this guarantee made by the Company on behalf of third parties as of December 31, 2002. This bank guarantee expired on the loan due date of April 22, 2003.

Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to financial risk resulting from fluctuations in interest rates and currency rates. The Company seeks to minimize these risks through regular operating and financing activities and, where appropriate, through use of derivative financial instruments. During the year ended December 31, 2002, the Company’s use of derivative financial instruments was limited and related solely to hedges of certain currency positions.

Currency Rate Risk

The Group’s operations are denominated in various foreign currencies and consequently the Company is exposed to exchange rate fluctuations that may have an impact on its cash flows and financing activities. In particular, the Company is exposed to foreign exchange movements, primarily in Dollars, Japanese Yen, British Pounds, Korean Won, Chinese Renminbi, Singapore Dollars and Taiwan Dollars. Consequently, it enters into various contracts, which change in value as foreign exchange rates change, to preserve the value of commitments and anticipated transactions. The Company uses forward contracts to hedge certain anticipated foreign currency cash flows. The Company’s exposure to foreign currency rates exists primarily with Dollars versus the Euro. The Company does not enter into derivative instrument transactions for trading or speculative purposes. See Item 5.A “Operating results — Impact of Changes in Exchange Rates”.

In 2002, 51% of the Group’s total expenses were incurred in Euro, while 84% of net sales were denominated in non-Euro currencies. In particular, approximately 65% of the Group’s total net sales and 32% of the Group’s total expenses were denominated in Dollars.

Since a large portion of the Group’s assets and liabilities are denominated in Dollars, the Company’s sensitivity to foreign currency exchange rates is mainly due to changes in the value of the Dollar against the Euro. As of December 31, 2002, approximately 60% of the Group’s total assets and 41% of the Group’s total liabilities were denominated in Euro, while approximately 21% of the Group’s total assets and 50% of the Group’s total liabilities were denominated in Dollars. Approximately 95% and 5% of the Group’s total outstanding indebtedness as of December 31, 2002 was denominated in Dollars and Euro, respectively. Because a vast majority of the Dollar outstanding indebtedness is held by the Group’s subsidiaries whose functional currency is the Dollar, the Group’s outstanding indebtedness is not materially exposed in the event of a devaluation of the Euro against the Dollar. The Company's long term debt, net of current portion, as of December 31, 2002 was entirely denominated in Euro and is not therefore exposed to fluctuations in foreign exchange rates.

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The following table summarizes the forward exchange contracts in effect as of December 31, 2001, none of which exceeded one year. The table below presents the notional amounts of such contracts (in thousands of Dollars) along with the weighted average contractual forward rates under such contracts. The notional amounts of such contracts were used to calculate the contractual payments to be exchanged under these contracts. The Company had not foreign exchange contracts open as of December 31, 2002.

|                                                                             |  |  | 2001   |  |  | 2002 | 
|---------------------------------------------------------------------------- |  |  | ------ |  |  | ---- | 
|                                                                             |  |  |        |  |  |      | 
|Forward exchange contracts to
      sell Dollars in exchange for Euro:       |  |  |        |  |  |      | 
|Contractual amounts (Thousands
      of Dollars)                             |  |  | 17,750 |  |  |     | 
|                                                                             |  |  |        |  |  |      | 
|Weighted average contractual
      exchange rates (Dollars per €1.00)        |  |  | 0.8819 |  |  |     | 
|                                                                             |  |  |        |  |  |      | 
|Forward exchange contracts to
      sell Dollars in exchange for Korean Won: |  |  |        |  |  |      | 
|Contractual amounts (Thousands
      of Dollars)                             |  |  | 7,200  |  |  |     | 
|Weighted average contractual
      exchange rates (Korean Won per $1.00)     |  |  | 1.338  |  |  |     | 

See
  additional description of the Group’s hedging strategy and forward exchange
  contracts in Item 5.A “Operating results — Impact of Changes in
  Exchange Rates”.

Interest Rate Risk

The Company is exposed to risks associated with changes in interest rates on its floating rate indebtedness. At December 31, 2002, 39%, or €992 thousand, of the Company’s long-term debt (including the current portion) was subject to variable interest rates. The Company does not have any interest rate swaps or hedges in place that would mitigate its exposure to fluctuations in the interest rate on this indebtedness. Each 1.0% increase in interest rates on the unhedged variable rate debt would impact pretax earnings by approximately €10 thousand.

The table below provides information about Group’s financial instruments at December 31, 2002 that are sensitive to changes in interest rates. The table presents principal cash flows by expected maturity dates and weighted average interest rates for debt obligations.

|                                  |  |  | 2003 |   |  | 2004 |   |  | 2005 |   |  | 2006 |   |  | Thereafter |   |  | Total |  
|--------------------------------- |  |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | - |  | ---------- | - |  | ----- | -
|                                  |  |  |      |   |  |      |   |  |      |   |  |      |   |  |            |   |  |       |  
|Long-term debt:                   |  |  |      |   |  |      |   |  |      |   |  |      |   |  |            |   |  |       |  
|                                  |  |  |      |   |  |      |   |  |      |   |  |      |   |  |            |   |  |       |  
|Fixed rate (Thousands of Euro)    |  |  | 226  |   |  | 223  |   |  | 200  |   |  | 204  |   |  | 709        |   |  | 1,562 |  
|Average interest rate             |  |  | 2.4  | % |  | 2.0  | % |  | 2.0  | % |  | 2.0  | % |  | 2.0        | % |  | 2.0   | %
|                                  |  |  |      |   |  |      |   |  |      |   |  |      |   |  |            |   |  |       |  
|Variable rate (Thousands of Euro) |  |  | 992  |   |  |     |   |  |     |   |  |     |   |  |           |   |  | 992   |  
|Average interest rate             |  |  | 2.1  | % |  |     |   |  |     |   |  |     |   |  |           |   |  | 2.1   | %
|                                  |  |  |      |   |  |      |   |  |      |   |  |      |   |  |            |   |  |       |  

|C. | Research and development, patents and licenses
|-- | ----------------------------------------------

Research, Development and Technology

The
  Group is known for its expertise in the scientific fields of the reaction of
  gases with surfaces and metals, sophisticated alloy metallurgy and vacuum and
  ultra-high vacuum technologies. See Item 4.B, “Business overview —
  Trademarks, Patents and Proprietary Rights.” The Group also has substantial
  scientific expertise in the field of gas purification and impurities analysis
  for application in the semiconductor industry. In 2000, 2001 and 2002, the Group
  invested €10,561 thousand, or 6.1% of net sales, €12,302 thousand,
  or 7.7% of net sales, and €13,612 thousand, or 9.6% of net sales, respectively,
  in research and development, including, among other things, personnel costs,
  materials purchases, depreciation, licenses and patents expenses, and legal
  expenses. The above amounts do not include costs associated with the development
  of prototypes, the research on production processes and studies in electronic
  engineering to upgrade manufacturing equipment, which are otherwise accounted
  for in the costs of sales.

The Company’s research and development expenses under U.S. GAAP would have amounted to €9,633 thousand, €11,213 thousand and €11,163 thousand, in 2000, 2001 and 2002, respectively. Certain licenses, patents and legal cost cannot be included as research and development pursuant to US GAAP rules.

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Approximately 80 employees work in the Group’s research and development laboratories and in technical innovation functions. The Group’s central research and development laboratory is based in Lainate (Milan) Italy, and each manufacturing facility maintains local development and engineering functions and expertise. The research and development laboratories in Lainate are also responsible for the initial manufacturing stages of some technically advanced products and for specific quality control tests and other studies for both customer service and joint development contracts. Advanced development activities are also carried out in the Avezzano, Italy, manufacturing facility, at Saes Pure Gas, Inc, in San Luis Obispo, California (USA) and at Molecular Analytics, Inc., Sparks, Maryland (USA). Most laboratory employees are senior scientists or high level technicians.

In March 2003, the Group implemented a restructuring of its research, development and innovation activities by creating the Research & Innovation Department, headed by a Chief Technology & Innovation Officer (“CTIO”) encompassing the Group’s Research, Development, Engineering, and Technology Transfer activities. Under the above organization each new project, coordinated by a project leader, will focus on market needs from the early stages of the research process to the industrialization phases. The overall innovation process will be managed following a “stage-and-gate” approach. Stages-and-gates processes break up work into sequential phases by restricting investment in the next stage until management is comfortable with the outcome of the current stage. The gate can be effective in controlling product quality and development expense. The Company believes that this approach, together with the synergies it creates among the scientific, technological and engineering functions, will reduce the time required for the innovation to result in new business.  In his duties the CTIO will be assisted by a team of scientific and technology experts forming the Technology Scientific Panel (“TSP”). The role of TSP will be particularly important in the screening of ideas and opportunities for new projects. In order to guarantee that the innovation process, and in particular each major project, is in conformance to the Group’s strategies, the functions and the responsibilities of the Committee for Technical Innovation (“CTI”) have been expanded and the committee has been renamed the Innovation Project Planning Committee (“IPPC”). This committee will include, in addition to the Group CEO, the CTIO and the TSP members and key managers from the Operation, Financial, Marketing and Commercial departments. The IPPC will also be in charge of making final decisions concerning the implementation of new projects.

The
  Group’s expertise has allowed it to expand into other areas. In the Components
  Aggregate these include getter-based product applications in vacuum devices
  and special alloys for lamps. Present areas of research and development activities
  include a new generation of getters and other products for the lamp industry,
  MEMS devices, opto-electronic devices, and new generations of “eco-friendly”
  high yield alkali metal dispensers addressed to manufacturing of OLEDs. Research
  in recent years has also focused on developing a new generation of non-evaporable,
  highly porous getters, new types of thin film getters for Plasma Display Panels,
  Field Emission Displays and special chemical absorbers for OLEDs. The Group
  also made significant progress in researching and developing a new generation
  of mercury dispensing products for both standard and cold cathode fluorescent
  lamps applications. In the Equipment Aggregate, research and development activities
  are aimed at special alloys and catalytic methods for purifying process gases
  for semiconductor manufacturing and are focused as well on innovative trace
  gas analysis techniques for these gases. During 2002 the Company announced and
  introduced into the market a new advanced instrument (“Ion Trace”)
  that had been developed in the previous two years at the corporate research
  and development laboratories, based on Ion Mobility Spectrometry and addressed
  to real time, on line monitoring traces of impurities in bulk gases at part-per-trillion
  levels. The Company also currently carries out a number of research and development
  activities, including diversification of the business, on projects whose nature
  cannot be disclosed because of non-disclosure agreements, intellectual property
  reasons and as a result of the price sensitive information procedures in place
  within the Company (see exhibit “Price Sensitive Information Procedures”).
  Present areas of research and development activities include special alloys
  for novel applications, innovative gas monitoring technologies and new materials
  for gas purification.

The central research and development laboratory at Lainate is a training ground for many of the Group’s managers and executives who can apply the expertise they have gained to the production, sales and marketing areas of the Group.

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Customers often approach the Group with specific research and development needs and the Group cooperates with clients to resolve technical problems and develop new products or new applications for existing products and technologies. These activities form an important component of the Group’s research and development work. Agreements are entered into with regard to the scope of the activities and the use of any resulting inventions or manufacturing processes. In addition, the Group seeks to combine its internal expertise with that of outside entities through standard or specifically negotiated cooperation agreements. In 2002, the Group entered or continued cooperation agreements with corporations and advanced public and private research institutes and universities, such as the University of Trieste, the Polytechnic of Milan, the Italian Research Council (“CNR”), and the Italian National Agency for New Technologies (“ENEA”). The Group also cooperates in a joint collaboration with other important European industries in various projects funded by the European Community concerning advanced types of MEMS, FEDs and OLEDs. The Group believes these relationships will lead to new applications for its existing products, as well as the discovery of new products. During 2002 the Company signed two research and development agreements with European industrial partners for diversification projects in the catalytic and electronic fields, respectively.

|D. | Trend information
|-- | -----------------

The Components Aggregate

Display Devices Business Area

In 2002, the Group’s net sales of getters for color Cathode Ray Tubes in the Display Devices Business Area increased approximately 14%, net of exchange rate effects, with respect to the previous year. This increase was mainly due to stronger market demand following a recession in the market during 2001. This increase took place in spite of the continued penetration of LCD monitors for computer displays, and can also be attributed to a decline in prices of such LCD displays by almost 50%. As a result, the Company devoted strong attention to the Chinese market, which is already the Group’s largest world market for evaporable getters. In addition, in 2002 monochrome getters used for tubes mounted in projection TV sets experienced an appreciable increase in sales.

The Color Cathode Ray Tube (“CCRT”) price/performance ratio is a strength for standard displays. Although CCRT technology is a mature technology, further minor improvements are still possible. Current flat panel technologies do not have the same favorable price/performance ratios as those of the CCRT configurations. Certain developing flat display technologies obviate the need for getters. However, the Group has been involved in research and technical cooperation with manufacturers of other alternative display technologies being developed or marketed in limited volumes during recent years to create an image through very thin flat display electron tubes, such as PDPs, OLEDs and FEDs. FED devices need advanced getters while OLEDs require getter dryers. In addition, some PDPs manufacturers have elected to use getters. Finally, LCD uses special backlights for retro-illumination that require the Company’s products. The Company believes that these display technologies are likely to use sophisticated evaporable or non-evaporable getters.

The CCRT technology is entering a phase where cost of labor is a key parameter to maintain profits. Japan has not been the leading market producer in years, and only few companies still manufacture Cathode Ray Tubes in Japan. Most Japanese production has been transferred to China and South East Asia. Korean domestic production has also started to show signs of slowdown, largely due to the steady increase in Chinese production capacity of Cathode Ray Tubes for computers and large size tubes for general television applications. However, Chinese factories are mostly joint ventures between Chinese partners and well known companies such as LG.Philips Displays, Samsung, Matsushita, Sony and Toshiba. In addition, during 2002 two new factories owned by the largest CCRT manufacturers were established in Hungary and the Czech Republic. A certain reduction of Mexican production (both in terms of relocation to Asia and shut downs) is currently taking place. These changes follow the closure or relocation of important U.S. plants occurred in previous years. China is now by far the leading CCRT producer worldwide. Plans for introduction of High Definition Television (“HDTV”) are in progress and demographic changes, including rural population moving to cities has lead to increased demands for technology products: ten million computers were sold in China in 2002. While the market for televisions is not expected to continue to grow as in the past few years, the computer display tubes production is increasing. In addition, now that China is a member of the World Trade Organization, Chinese exports are expected to become more and more aggressive. The Company is optimistic about the potential for growth in the Chinese market, where it believes to achieve an approximately 95% market share with a major contribution of the production output from the factory in Nanjing, China, pursuant to the NSHG Joint Venture, a joint venture in which the Company owns a 65% equity interest.

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Demand for evaporable getters for Cathode Ray Tubes depends upon the demand for televisions in developed countries, which is contingent on the creation of new households, replacement purchases for more advanced models, television sets adopting screens with “true flat” geometry, household purchases of multiple television sets and the introduction of new technologies like high-definition television. In developing countries, demand for television sets is instead driven mainly by economic development, which leads to higher purchasing power. Demand for computer monitors is driven by many of these same factors. These typically involve replacement purchases to upgrade existing computer systems and associated technologies.

Industry sources and Company information estimate that approximately 270 million Cathode Ray Tubes were sold globally in 2002, an increase from the approximately 250 million units sold in 2001. With the exception of 2001, the demand for CCRT has increased in the past years, partially as a result of the decrease in the price of all sizes of television sets, the improvement in picture quality and the growth of emerging market economies, including China, India, many Southeast Asian countries and Latin America. This growth rate also stemmed from an increased demand for personal computers that require color monitors. Even if it is still generally recognized that Cathode Ray Tubes technology will continue for quite a long time, clear signs of alternative technologies’ penetration cannot be neglected, particularly in the computer monitors segment. Averaging the market projections of different specialized market studies, combined with the historical trends of this market and information collected directly by the Company, the Group believes that for the next four years, the average production rate for both consumer and monitor applications of Cathode Ray Tubes, is expected to remain stable or at least grow slightly. The Company projects that until 2005 the decrease in sales of tubes for computer monitors should be outweighed by an increase in sales of tubes for TV applications. This is projected despite the expected growth of LCD monitors for desktop computers, expected to increase in 2005 to about 60 million units from 30 million units in 2002, and the further commercial penetration of Plasma Display Panels for larger screens. Sales in the Display Devices Business Area are expected to remain stable or slightly increase in value but at a slower rate than in the past due to the flattening of the product upgrading process and requests of price reductions by large customers. However, there can be no assurance that emerging alternative display technologies will not more negatively impact demand.

In July 2001, two of the principal customers in the Group’s Display Devices Business Area (Philips and LG Electronics) began operating a newly formed company (“LG.Philips Displays”) established as a result of the merger of their Cathode Ray Tubes businesses. In addition, in January 2003, Toshiba Corporation and Matsushita Electric Industrial Co., Ltd, both of whom are Group customers for barium getters, following a joint venture established in October 2001 to procure parts and materials for their respective manufacturing operations of color Cathode Ray Tubes and projection tubes for video projectors, agreed to further integrate their business by forming a joint venture (“Matsushita Toshiba Picture Display Co, Ltd.”) that merges both companies’ entire Cathode Ray Tubes operations, from research and development to manufacturing and sales, making it the world’s third largest Cathode Ray Tube company. The new company started operations on April 1, 2003. There can be no assurance that other mergers will not occur in the future. This might, in turn, increase the dependence and concentration of the business of the Group on a limited number of customers with increased negotiating power.

During 2002 the Company significantly increased its share in the worldwide market for evaporable getters used in monochrome Cathode Ray Tubes used for projection television. These projectors, used for projecting enlarged picture images onto a screen, make use of three tubes per unit, in order to combine the three base colors in a single color picture image. The market in monochrome Cathode Ray Tubes for projectors increased during 2002 and the Company estimates to produce the majority of getters required by this application.

Light Sources Business Area

The Group’s net sales of Light Sources increased by 42% in 2002, net of exchange rate effects, with respect to the previous year. This increase is mainly due to the significant increase of sales of mercury dispensers for Cold Cathode Fluorescent Lamps (“CCFL”), the increase of mercury dispensers for standard fluorescent lamps and stable sales of getters for discharge lamps.

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The Company expects growth for the next few years in the order of 10-13% per year based primarily on sales of mercury dispensers for fluorescent lamps. During 2002 the Company increased sales of products for Cold Cathode Lamps, in particular of mercury dispensing models (“wire”). The demand for these products is driven by the great expansion of the LCD market, where the Cold Cathode Lamps are used for backlighting, and by the increasing interest of the market for conventional fluorescent lamps using low doses of mercury (“green” lamps).

Discharge lamps. The Company believes that market trends support a long-term growth in discharge lamps of approximately 4% per year, subject to the effects of short period cycles related to the general economic conditions. The faster growing segments will likely remain the sodium high pressure and the metal halide lamps. These lamps benefit from performance characteristics such as good color rendition, long life and high energy efficiency, as required by the large installed base in nonresidential buildings. These lamps are also increasingly employed in emerging applications: compact ceramic metal halide lamps to be used in low power applications such as illumination of shop windows and commercial areas. Demand for metal halide lamps is driven by the replacement of old lamps, which are changed typically every three years, and lighting for stadiums, shop windows and monuments for which illumination is provided for the first time. From a technical point of view, no new types of discharge lamps are appearing on the market, except the compact ceramic metal halide lamps, which are gaining momentum despite being introduced only recently.

The market for general illumination lamps is dominated by the “Big Three” of Osram, General Electric and Philips. The lamps industry is stable and mature and development tends to be incremental, characterized by work intended to improve performances, extend the product range and cut manufacturing costs. Among other things, these developments generally involve the relocation of plants to developing countries, to be more competitive by manufacturing at lower costs. The other manufacturers are strong in their local markets (Japan, Far East and Europe) but these companies might have local connections with the “Big Three,” as is the case of the joint ventures formed during 2000 in Japan for discharge lamps between Osram Melco and Toshiba. Moreover, some of the larger companies are diversifying through the development and manufacture of solid-state light sources, such as Light Emitting Diodes (“LEDs”) and LED arrays. These new products are mainly aimed at traffic signals and the automotive market, as well as some household applications. The industrial applications of such new light sources are still under development since their performances do not yet meet acceptable market requirements. Lamp makers are moving the production of low technology lamps to low labor costs areas, such as China and India. The local factories in these countries are traditionally more sensitive to the availability of cheaper products.

The Company is now facing growing competition from Korean and Chinese getter manufacturers that offer cheaper versions of the Company’s getters based on alloys with expired patents. The Company was able to develop and patent new products that offer the lamp manufacturers substantial advantages over the previous ones. In 2000, the Company introduced to major manufacturers a new type of non-evaporable getter (the “St787 series”) capable of withstanding more critical conditions during lamp manufacturing. The customer can now skip the time-consuming step of “getter activation” and improve safety and ecological content. During 2002 the Company continued the consolidation of the use of St787 series based materials which are now widely adopted by major lamp manufacturers, and has started the promotion of getter products made up by mixtures of two alloys (“St 101” and “St 198” series), that have found acceptance by the lamp manufacturers as they allow more flexibility in the mounting position inside the lamp and simplification of the lamp processing, by reduction or elimination of the step of getter activation. The Group’s customers are introducing new upgraded models, developing low power lamps to enlarge the applications base and working to cut manufacturing costs so as to limit the penetration of lamps imported from low labor cost areas. About one third of discharge lamps manufactured in the world still use evaporable barium getters. During 2002 the trend toward adopting non evaporable getters, offering more flexibility in mounting position and not requiring the processing step of getter evaporation, has also continued. In order to maintain, and possibly further expand its current share in the market during 2002 the Company has devoted particular efforts to its customer support, and has continued the policy of developing partnership relations and long terms contracts. Continuous efforts are also devoted to improving the quality of products. In a limited number of cases a careful policy of price reductions was also implemented.

Low-pressure discharge lamps.The demand for this type of lamp, which uses evaporable barium getters, is driven by customers replacing old lamps and lighting new or previously unlit roads. The demand for low-pressure discharge lamps is increasingly being substituted by demand for high-pressure discharge lamps because the high quality light from high-pressure lamps is often believed to outweigh their relatively high cost; however, a replacement market will continue to exist in the countries where these lamps are generally adopted due to the low cost and high efficiency for lighting streets and tunnels. Thus, despite the substitution of low-pressure discharge lamps in most countries, the Company expects that the aggregate demand for low-pressure discharge lamps will progressively decrease, albeit with a slow rate, in the future.

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Cold Cathode Lamps.Cold Cathode Lamps (“CCL”) are used for retro-illuminating LCDs of laptop computers (often also called “notebook displays”), desktop computers with liquid crystal displays, scanners, arcade games, photocopiers, still cameras, and other LCD-based devices where space is a premium and efficiency is high. The Company sold to CCL manufacturers special wire-shaped versions of mercury-dispensing cathodes yielding from one to three milligrams of mercury, and it estimates, based on industrial statistics compared with the Group’s net sales, that its current market share of mercury dispensers for fluorescent CCLs is about 90%. The production of CCLs is concentrated in the Far East. The biggest manufacturers (such as Harison) are based in Japan, and new players are emerging in Korea and Taiwan. The Japanese CCL companies are independent; although, they are controlled by and have close technical relations with well-known Japanese lamp companies. Only small companies are active in the rest of the world.

LCD are also available in sizes up to 30 inches for desktop monitors and flat TV sets. During 2002 the LCD market for notebook displays increased by about 20% in units, while that of desktop monitors increased by 90% in units with respect to the previous year. The Company believes that the trend for the future is for a further expansion of the notebook market and further marked expansion of desktop monitors. According to specialized industrial market sources, LCD monitors are expected to grow at a 49% compound annual growth rate up to 2006. LCD monitors overtook Cathode Ray Tube monitors in 2002 on revenue basis and are expected to overtake them on a units basis in 2004. In addition, during 2002 television sets with LCD screens made their appearance into the consumer market with sales in the range of two million pieces. This market sector is also showing a trend toward expansion. In terms of units the LCD displays, for all applications, are expected to exceed 125 million pieces in 2005 as compared to about 65 million units in 2002. This trend is also a result of attempts to reduce the production costs of LCD displays. LCD screens above 15 inches which are used in desktop computers and in emerging TV applications, adopt more than one retro illumination lamp; thus, the trend towards larger screens will require more of the Company’s products.

Standard Fluorescent Lamps.In 1997 the Company introduced the TQS in order to comply with the stringent manufacturing and environmental disposal regulations for standard fluorescent lamps. The TQS is a special strip that dispenses virtually the exact quantity of mercury to sustain the life of the lamp. The market penetration of TQS has continued through 2002 and includes an important customer in Japan. Although still limited to a small fraction of the standard fluorescent lamps manufactured in the world (the so called “green lamps”), the adoption of TQS is expected to increase as compliance by manufacturers with more stringent regulations, approved by the European Parliament in November 2002 for implementation by the middle of 2006, becomes necessary.  The regulations govern the maximum quantity of mercury allowed in the lamps and the residual mercury content allowed for safely disposing of the lamps at the end of their life. Further expansion of the TQS market is also likely as lamp manufacturers implement voluntary mercury content limits because of increasing concern about pollution problems.

Electronic Devices & Flat Panels Business Area

During 2002 the Group’s net sales in theElectronic Devices & Flat Panels Business Area decreased by approximately 8%, net of the exchange rate effects, with respect to the previous year. This result is mainly due to the lower sales of Dryer Capsule Assemblies for the Laser Pump Module (“LPM”) used in optical amplifiers for submarine transmissions via fiber cables.

Dryer Capsule Assemblies. The Group’s lower sales results in the Electronic Devices & Flat Panels Business Area in 2002 are mainly due to the continued recession during 2002 in the telecommunications industry, following the strong downward trend of the previous year, as well as the parallel recession in the semiconductor industry. Capital spending constraints and significant delays in deployment of higher speed communication technologies caused considerable decreases in opto-electronic components, including LPMs. According to specialized industrial sources the opto-electronic component industry experienced a decline in revenues of 67% between 2000 and 2002. Most of the major telecommunication companies have severely slowed down new investments, largely as result of difficult financial conditions. As a consequence of business restructurings and repositioning, during 2002, two of the most important manufacturers of opto-electronic components, Agere Systems and Northel Networks sold substantial portions of their opto-electronics component business, including LPMs, to TriQuint Semiconductor Inc. (US) and Bookham (UK), respectively. Following the severe downturn during 2001 and the continued stagnation during 2002, market specialists for optical components predictions for the near future growth vary from a flat market during 2003 to a slight growth market, commencing during the second part of 2003 as inventories are finally depleted and as the market begins to see new system orders. A modest increase with single-digit rates is foreseen for 2004 through 2006, which is more conservative than the double digit predictions of a year ago. The Company expects that its sales of the Dryer Capsule Assemblies in this market could accordingly increase in the future, mainly in the less sophisticated but much larger terrestrial sector, where the Company is currently sampling and qualifying its products to major industrial producers.

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Porous Getters and Alkali Metal Dispensers. Sales of porous getters and alkali metal dispensers increased during 2002 by about 8% and 11%, respectively. Demand for these products should further increase at a rate of about three to four percent per year as a result of Company’s customers entering into important military contracts. X-ray image intensifiers are used for medical applications, and demand is primarily driven by new technology, with new purchases and replacement purchases of existing technology forming a stable market. Current demand for X-ray image intensifiers is stable, and the Company expects this stability to continue in the next several years. Overall demand for night vision devices is driven by military demand and commercial applications of the so-called “uncooled” new versions. The United States is the largest market for the alkali metal dispensers used in night vision devices, extensively used in military applications and in emerging automotive market applications. Demand for photo-multipliers is primarily driven by new technology, with new purchases and replacement purchases forming a stable market. The Company expects the sales of getters and alkaline dispensers for traditional applications (such as X-ray image intensifiers, photomultipliers, pressure transducers, X-ray tubes) to increase with an average compound growth rate of 4% in the next few years.

New
  applications for non-evaporable getters are expected during the next four years
  including, for example, in vacuum sealed Micro Electron Mechanical Systems (“MEMS”)
  and in new types of opto-electronic devices. According to several market surveys
  and the unanimous consensus of experts, MEMS represent one of the fastest growing
  technologies, with massive applications in automotive, telecommunication, opto-electronic
  and other industries. In order to reduce the manufacturing costs and increase
  the productivity, the MEMS industry is increasingly adopting well proven semiconductor
  manufacturing processes, such as photolithography masking, etching and patterning,
  as well as the use of silicon wafers as base materials for manufacturing the
  active part of the MEMS. This technology is often referred as “wafer level
  MEMS.” In order to comply with the gettering needs of this new industry
  the Company has developed a method consisting of a silicon or glass wafer with
  a getter deposited into specific recesses. Currently the Company is providing
  samples of this new product to a number of customers, including large industries
  active in the automotive, opto-electronic and electronic fields. The Company
  estimates that, with sales starting in 2004, this market could eventually bring
  additional getter business worth a few million dollars per year.

Flat Display Devices.During 2002 the Company experienced increasing but still marginal getters sales for Plasma Display Panels (“PDPs”). PDPs are commercially available but still quite expensive; however, they seem to be in line as the future choice for large-screen (above 42 inches) television and commercial displays. In 2002 approximately 600,000 PDP units were sold worldwide. Industry sources estimate this market in 2005 to 2006 to be between five and eight million units. In terms of gettering products this might represent a market of approximately five to 10 million dollars per year. Despite the Company’s products and limited sales for these applications, the overall benefits of adopting a getter in these displays are currently under scrutiny by some potential customers. An important advantage of adopting the getter would be the possibility of reducing the duration of the manufacturing process of the device by using the getter as an “in-situ pump.” The Company is currently testing/providing samples of advanced types of thin film getters, capable to withstand treatments at high air temperatures.

There
  are also doubts about the future of Field Emission Displays, which are another
  type of vacuum based flat display device, because their life is uncertain and
  their complex cathodic structure is not conducive to mass production. Currently
  some industries are studying new approaches to the cathodic structure of these
  devices based on “carbon nanotubes” which are promising from both
  the technical and manufacturing cost point of view. These Field Emission Displays,
  which need advanced getters, are geared at portable computers and industrial
  instrumentation, but, if their technical problems are solved, they could eventually
  find a home in the screen sizes segment of the television market (from 27 inches
  to 40 inches), where high costs make it difficult to adopt LCDs or PDPs.

In
  addition, during 2002, the Company further promoted the initial sale of a special
  chemical absorber, called GDO, for the Organic Light-Emitting Diodes (“OLED”),
  a new family of flat displays that is expected to find massive use in cellular
  phones and automotive displays. The market of OLED is now forecasted to reach
  between 30 and 40 million units by the end of 2005, which is substantially less
  than what was foreseen by the market surveys of previous two years. The reason
  for the lowered expectations is that this technology is maturing with a slower
  than expected pace, due to the not yet satisfactory long term reliability in
  color aging, operational lifetime and less than expected decrease scaling in
  manufacturing costs. As a result, most OLED manufactures decided to postpone
  until the second half of 2003 or until 2004 the mass production of these new
  displays. The Company is in contact with, and has provided getter samples to
  most major producers and has sufficiently invested so as to be able to meet
  the expected growth in demand. However the Company is a new entrant into this
  market in which competitive products already exist.

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Vacuum Systems and Thermal Insulation Business Area

In
  2002, the Group’s net sales in the Vacuum Systems and Thermal Insulation
  Business Area increased by about 20%, net of exchange rate effects, with respect
  to the previous year. This was due to increased sales of getters pills for metal
  vacuum bottles in Japan and China.

Despite increased customer contacts, sales in the Vacuum Insulated Panel segment were still marginal.  The Company believes this may be due in part to delays in the release of new European energy standards for refrigerators and boilers. Future expectations are moderately positive due to the progressive increase of vacuum insulated panels applications in areas outside traditional applications (domestic refrigerators), such as in domestic boilers, oil transportation lines, the expansion of UHV vacuum process applications, an increase in special pumps for portable instrumentation, getter applications in oil recovery industry (which normally expands when the international price of oil rises), and other types of devices such as energy storage vacuum insulation devices.

Getter Pumps and Modules.Growth in the market for getter pumps and modules is tied to the overall scientific research market which, for large physics projects, depends upon whether the political, industrial and scientific communities in the major industrial countries decide to invest additional resources to study elementary particles, the use of X-ray light for diagnostic or industrial application, new sources of energy and storage methods. During 2002 funding for both small scale and large scale physics projects was drastically reduced, and this is likely to negatively influence sales for these applications during 2003. During 2002, the Company increased the selling of its porous disk pump, tailor-made for portable instruments by combining mass spectrometers and gas chromatographs. These portable Gas Chromatograph Mass Spectrometers (“GCMS”) are used by “Emergency Response” teams, including, after September 11, 2001, homeland security applications. Sales for the pumps developed for these GCMS are expected to grow as a result of sales of new units and of the sales of replacement pumps.

In
  Situ Getter PumpsandWaferGetterTM.
  In the mid-1990s the Company introduced the InsiTorr® Fast Pump, for use
  in Physical Vapor Deposition (“PVD”) machines and, more recently
  an evolution to the InsiTorr® Fast Pump concept, called “WaferGetterTM
  Pump”. The function of these pumps is to provide an additional pumping
  device inside the process chamber, which helps create a lower base pressure
  in a shorter time, as well as a cleaner environment. Since these products are
  not universally required by the industrial vacuum manufacturing equipment but,
  rather, serve specific needs of a limited number of customers, the Company expects
  that in the next few years the sales of these products will be quite limited.

Metal Vacuum Bottles (Thermoses). In addition to an increase in sales of getters for vacuum bottles during 2002, getter products were also sold for other thermally insulated evacuated devices such as rice boilers and evacuated pipes. Moreover, the Company was able to re-conquer a slight share of business from the Chinese and Korean competition thanks to the good quality of its products, and the introduction of a new getter alloy, which reduced manufacturing costs. Demand for metal vacuum bottles (thermoses) depends upon how vacuum insulation technology can be applied to new but related products and to the emergence of new markets such as rice boilers and containers for hot and cold food. The primary market for metal vacuum bottles is Asia, and the Company believes that new markets offer potential for modest growth primarily due to price competition by Chinese getter suppliers, the possibility of using less sophisticated getters or materials with expired intellectual property protection, and a decrease in acceptable quality standards whereby customers are accepting cheaper products with reduced insulation lifetime and the saturation of Japan’s domestic market.

Vacuum
  Insulations. Starting in 1997 the Company began marketing getters for Vacuum
  Insulated Panels for the home refrigeration market. Vacuum Insulated Panels
  may replace traditional foam insulation in today’s household and industrial
  refrigerators and freezers. Vacuum Insulated Panels have started to be adopted
  in other applications requiring efficient thermal vacuum insulation, such as
  vending machines for cold and hot beverages, sport bottles, bio-medical freezers
  and advanced insulated shipping containers. Possible future applications can
  be developed in domestic water heaters, refrigerated trails and reefers for
  food transportation, and the construction industry. In addition, during 1999,
  the Company began capitalizing on the extensive know how accumulated in several
  years of dealing with the vacuum insulation technology, processing procedures
  and state-of-the-art materials by starting a pilot production of Vacuum Insulated
  Panels. The Company materialized sales of industrial quantities of CombogetterTMin 2000 and introduced new models with characteristics segmented to
  the main applications. During 2001, the Company has also materialized initial
  sales of Vacuum Insulated Panels. However, in spite of emerging new applications
  of the Vacuum Insulated Panels concept, market adoption during 2001 and 2002
  was slower than expected, due to time consuming qualification tests and lack
  of familiarization with a new technology by potential customers, the high cost
  of this technology when compared with less efficient but cheaper traditional
  insulations, and the delay in releasing new energy standards for refrigerators
  and boilers.

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Over the last few years, the Company identified a market opportunity and commenced selling industrial quantities of non-evaporable getters for the oil industry. These non-evaporable getters are used for vacuum insulation pipes in oil recovery from partially exploited deep wells. Sales in this field are limited in value and strongly dependent upon oil prices. The current level of such prices allows the Company to expect an increase in sales of getters for the next two or three years.

New applications for non-evaporable getters are also expected during the next four years as, for example, in energy storage devices and in hermetic packages for electronic devices.

The Equipment Aggregate

Pure Gas Technologies Business Area

The Group’s net sales in the Pure Gas Technologies Business Area decreased by approximately 50% in 2002, net of exchange rate effects, with respect to the previous year.

The semiconductor industry is cyclical and subject to gross unbalances in supply and demand, amplified by wafer size transitions, as is the case of the current transition from 200mm to 300mm wafer size, and new processing technologies. During 2001 the semiconductor industry experienced the worst recession in its 30-year history. The semiconductor capital equipment market was more affected and decreased by about 41%. Several factors explain the severity of this recession. First the growth rates reported in 2000 reflected widespread double ordering, which resulted in excess inventories. At the same time, the sheer amount of investments made by chipmakers led to a significant build-up of excess capacity, which started to materialize just at the time when chip producers realized that they could safely rely on their existing component inventories. Second, the recession coincided with a general macroeconomic slowdown, exacerbated by the tragic events of September 11, 2001. The two largest end markets, PCs and telecommunications, accounting together for 52% of total chip consumption, have been dramatically affected. The PC market contracted for the very first time in history. This situation persisted during the first part of 2002, with big companies delaying investments in new factories. Cellular handset manufacturers have reduced orders for components by 38% in volume compared with 2000.

Global
  semiconductor revenues for 2002 were approximately $141 billion, a modest 1.3%
  increase from 2001 level. In 2002, the global capital equipment business sector
   the sector most related to the Company’s Pure Gas Technologies
  and Analytical Technologies Business Areas  experienced a 32% decline
  over 2001. Capital spending is characterized by a delay of several months with
  respect to the trends of the global semiconductor industry, both in economic
  upturns and downturns. There is a general consensus that during 2002 the semiconductor
  industry hit the bottom and that the environment is ready for recovery during
  2003. In December 2002 the Semiconductor Industry Association (“SIA”)
  was predicting that semiconductor revenues would have risen about 20% during
  2003, with Asia Pacific being the world’s fastest growing market. According
  to the Semiconductor Equipment and Material International (“SEMI”)
  industry statistics, released in December 2002, the equipment market was forecasted
  to grow by about 15% percent in 2003 as compared to 2002. Asia should be the
  region with the highest growth (approximately 16%), followed by North America
  (approximately 11%) and Europe (approximately 11%). A further expansion of the
  equipment market of approximately 22% was forecasted for 2004, however, a flattening
  of the market, with a modest growth of 4% was expected for 2005. Based on semiconductor
  industry statistics available at the end of February 2003, other industry sources
  now take a more conservative approach, predicting that the slowdown in the market
  will continue into the first half of 2003. Recent predictions are forecasting
  an increase of the semiconductor revenues by about 9% during 2003, as compared
  with the previous year. In particular, capital expenditures are not expected
  to increase until late 2003, resulting in a growth of approximately 7% in 2003
  as compared to 2002. Specialized marketing sources predict that the industry
  will build about 15 new factories by 2004. Other sources predict a less conservative
  figure, with about 65 new factories built by 2005, 55% of them in Asia. Most
  of these new factories will process 300 mm wafers.

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The
  mobile phone handset application industry should continue to be the major driver
  of the semiconductor market, with business spending on information technology
  products returning in the second half of 2003 to fuel chip demand and help a
  return to strong growth. Although high value-based growth is gone for the semiconductor
  market due to semiconductor content saturation in electronics equipment, consumption
  will continue to increase. Personal computers will likely continue to drive
  demand for semiconductors. The replacement PC market in advanced economies is
  three to four years, and the last cycle occurred in 1999. Information technology
  investment has historically taken nine to twelve months to recover after cash
  flows are depleted. Therefore, a recovery in information technology spending
  is predicted for the second half of 2003. Digital home appliances and automotive
  applications will also help to spur demand moving forward. In particular, semiconductor
  content in automobiles will increase as a result of improved safety, environmental
  performance and entertainment applications in the next few years. It remains
  that the average growth rate of the semiconductor industry in the last 20 years
  was about 16% and there is no reason to believe that an average double digit
  trend will not continue in the foreseeable future.

Growth in the Pure Gas Technologies Business Area is largely dependent upon growth and product development in the semiconductor industry. In the newer higher density manufacturing processes, more complex semiconductors require greater gas purity and cleaner conditions inside semiconductor production machines in order to achieve anticipated yields. The Group’s Pure Gas Technologies Business Area products are designed to function in such environments. As geometries have decreased to below 0.25 microns, impurity specifications have generally dropped from 10 parts per billion in 1994 to one part per billion in 1997. This decreasing trend has slowed and further reduction of impurity specification in bulk gases is not expected to occur in the near future. However, the Company’s products comply with even more stringent residual impurity specifications, below one part per billion. In addition, the Company believes further possibilities exist for expanding its gas purification business, as advanced gas purification technologies can be adopted for carbon dioxide used in liquid form for wafer cleaning purposes and for specialty gases. Also, advanced purification technologies are becoming increasingly necessary in other fields related to semiconductor applications, such as the production of Light Emitting Diodes (“LED”), liquid crystals manufacturing, magnetic recording media manufacturing and fiber optics.

Analytical Technologies Business Area

The Group’s net sales of the Analytical Technologies Business Area decreased by about 31% in 2002, net of exchange rate effects, with respect to the previous year.

The reasons for the sales contraction with respect to the previous year were primarily the result of persistent strong recession in the semiconductor industry. In addition, the slowdown in the world economy also negatively impacted sales of Analytical Technologies products in other industrial sectors.

The Analytical Technologies Business Area products are designed to function in newer manufacturing processes for higher density and more complex semiconductors that require greater gas purity and cleaner conditions inside semiconductor production machines and in the clean rooms were such machines are located, in order to achieve anticipated yields. The Analytical Technologies Business Area manufactures single analyzers for in-line monitoring of large gas plants in semiconductor factories and other industries aimed at hydrocarbons and carbon monoxide, ammonia, amines and hydrogen halides detection to the parts-per-billion level. It also manufactures multi-gas analytical system, for in-line monitoring of moisture, oxygen, carbon monoxide and hydrocarbons in large gas plants in semiconductor factories consisting of several cabinets where single analyzers, manufactured by the Company and/or produced by third parties under OEM agreements, are inter-linked by a data control system. In addition to its own products, the Equipment Aggregate distributes stand-alone instruments for oxygen and moisture detection, manufactured by a leading third-party (Delta F Corporation of Woburn, Massachusetts) as well as, in mainland China only, toxic gases multipoint detectors manufactured by another leading third party (Zellweger Inc. of Lincolnshire, Illinois).

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During 2002, the Company announced and introduced into the market a new advanced instrument (“Ion Trace”) developed at its corporate research and development laboratories, based on Ion Mobility Spectrometry and addressed to real time, on line monitoring traces of impurities in bulk gases. The Company believes that this new instrument offers advantages in terms of performances, ease of use, competitive price, when compared with more complex, multi-gas single instruments. During 2002, the Company also introduced special analytical systems devoted to the parts-per-billion level detection of air borne molecular contaminants (“AMC”) and volatile organic contaminants (“VOC”) such as ammonia, amines and hydrogen halides, inside the clean rooms of the semiconductor plants. The Company believes that these new products are likely to significantly contribute to the improvement of the revenues of the Business Area during the next two to three years.

The Company’s advanced analytical technologies can be also adopted in specialty gases, for monitoring trace impurities found in photolithography apparatuses used in semiconductor manufacturing as well as for detecting traces of corrosive gases in pollution monitoring applications.

Besides
  semiconductor applications, low detection limits monitoring capabilities are
  becoming increasingly necessary in other industrial fields, such as fiber optics
  and in scientific research laboratories. The Company believes that diversification
  of analytical business in other areas, besides semiconductor application, will
  result in an increase of sales in the medium period and will reduce the Equipment
  Aggregate’s dependence on the cyclical nature of the semiconductor business.

Facilities Technologies Business Area

During
  2002, the Group’s net sales attributable to the Facilities Technologies
  Business Area, primarily conducted through the Company’s subsidiary, FST,
  decreased by approximately 36%, net of exchange rate effects, with respect to
  the previous year.

At the beginning of 2002 FST was heavily concentrated in its traditional business, i.e., providing QA/QC services to the semiconductor industry. When it became clear that end user companies such as the FST’s major customer, Intel, planned strong cuts in capital spending from 2001 levels, as a consequence of overcapacity and lack of recovery in the world demand for chips, FST modified its market strategy by implementing a concentrated effort to secure business in the bio-pharmaceutical market for QA/QC services, and started to offer specialized temporary employment “staff augmentation” services. In addition, during 2002, FST started a diversification business, linked to its experience in supplying and coordinating specialized manpower for construction management, in telecommunication towers erection for wireless and cellular applications. These measures did lessen, to some extent, the impact of stagnation in the traditional QA/QC business in the semiconductor industry. For the next few years FST plans to continue to play a leading role in the quality control, quality assurance and maintenance services offered to semiconductor facilities, including increasing its market share in the bio-pharmaceutical industry. The Company also plans to expand its new business in staffing augmentation services and telecommunication towers erection.

Production, Selling Prices and Inventory

The
  total production of goods during 2002, when compared with the previous year,
  was in line with the dynamic of sales. In 2002, the selling prices of the products
  belonging to the Components Aggregate were stable, with minor price reductions
  in certain products of the Display Devices and Light Sources Business Areas.
  In the Equipment Aggregate, a major program launched in 2000 to improve the
  design of its medium- and large-sized purifiers was completed in 2001. Its goal
  was to offer its products with a more competitive performance/price ratio. During
  2002, the Company started a new project aimed at further optimizing the engineering,
  manufacturing and material costs of these purifiers. The Company has pursued
  this effort in an attempt to enable it to maintain profitability while granting
  special discounts in some large bids, mainly in Asia, where competitive prices
  by local companies were extremely low.

During 2002, the Group maintained inventory of semi-finished and finished products for approximately six weeks of average sales, without substantial variations with respect to the previous year.

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Item 6.   Directors, Senior Management and Employees

|A. | Directors and senior management
|-- | -------------------------------

Pursuant to the Company’s By-laws, the Board of Directors must be composed of three to fifteen members. On April 23, 2003 the annual ordinary shareholders meeting was convened to elect the new Board of Directors. The shareholders resolved upon the number of directors, confirming 14 members. The term of appointment of the current directors expires upon approval by the Company’s shareholders of the financial statements for the year ending December 31, 2005.

On April 23, 2003 Mr. Paolo della Porta was appointed as Chairman of the Board of Directors and President, Mr. Massimo della Porta as Vice President, Managing Director and Group Chief Executive Officer, Giulio Canale as Managing Director and Group Deputy Chief Executive Officer. On April 23, 2003 Mr. Giuseppe Rolando was confirmed as Group Chief Financial Officer.

The following table sets forth the names of the members of the Board of Directors of the Company and the principal executive officers of the Group as of April 23, 2003.

|Name                                 |  |  | Position
      withinCompany or Group                                                                                                  |  |  | Years
      withThe
      Group |  |  | Age  | 
|------------------------------------ |  |  | -------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------------------------------- |  |  | ---- | 
|                                     |  |  |                                                                                                                                        |  |  |                                 |  |  |      | 
|Board of Directors                   |  |  |                                                                                                                                        |  |  |                                 |  |  |      | 
|Emilio ChristillinPaolo della Porta* |  |  | Honorary PresidentChairman of the Board of Directors and President                                                                     |  |  | 4954                            |  |  | 8279 | 
|Massimo della Porta*                 |  |  | Vice President, Managing Director,
      Group Chief Executive Officer andGroup
      Chief Technology & Innovation Officer ^          |  |  | 14                              |  |  | 42   | 
|Giulio Canale*                       |  |  | Managing Director, Group Deputy
      Chief Executive Officer,Group Subsidiaries
      Director and Equipment Aggregate Group Director |  |  | 13                              |  |  | 42   | 
|Giuseppe Rolando*                    |  |  | Director and Group Chief Financial
      Officer                                                                                       |  |  | 33                              |  |  | 62   | 
|Stefano Baldi**                      |  |  | Director                                                                                                                               |  |  | 16                              |  |  | 52   | 
|Roberto Berger***                    |  |  | Director                                                                                                                               |  |  | 9                               |  |  | 42   | 
|Guido Canale**                       |  |  | Director                                                                                                                               |  |  | 51                              |  |  | 73   | 
|Evelina Christillin                  |  |  | Director                                                                                                                               |  |  | 7                               |  |  | 47   | 
|Umberto Colombo                      |  |  | Director °                                                                                                                             |  |  | 6                               |  |  | 75   | 
|Giuseppe della Porta**               |  |  | Director                                                                                                                               |  |  | 38                              |  |  | 76   | 
|Adriano De Maio***◊                  |  |  | Director °                                                                                                                             |  |  | 2                               |  |  | 62   | 
|Andrea Gilardoni ◊                   |  |  | Director                                                                                                                               |  |  | 25                              |  |  | 47   | 
|Gianluca Spinola                     |  |  | Director                                                                                                                               |  |  | 9                               |  |  | 70   | 
|Renato Ugo***                        |  |  | Director °                                                                                                                             |  |  | 3                               |  |  | 64   | 
|Officers                             |  |  |                                                                                                                                        |  |  |                                 |  |  |      | 
|Bruno Ferrario*                      |  |  | Group R&D Director                                                                                                                     |  |  | 36                              |  |  | 62   | 
|Maurizio Alberini*                   |  |  | Group Chief Operation Officer                                                                                                          |  |  | 14                              |  |  | 60   | 
|Giancamillo Mazzeri*                 |  |  | Group Business Area Director
       Components Aggregate                                                                              |  |  | 22                              |  |  | 47   | 
|Livio Rosai*                         |  |  | Group Strategic Marketing Director                                                                                                     |  |  | 34                              |  |  | 62   | 
|Luca Coccioli*†                      |  |  | Group Legal General Counsel                                                                                                            |  |  | 10                              |  |  | 41   | 
|Filippo Cutillo*                     |  |  | Group Human Resources Director                                                                                                         |  |  | 1                               |  |  | 40   | 

|    |                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Member
      of the Corporate Management Committee.                                                                                                                                                                                                                                                                                                                
|**  | Member
      of the Compensation Committee.                                                                                                                                                                                                                                                                                                                        
|*** | Member
      of the Audit Committee.                                                                                                                                                                                                                                                                                                                               
|°   | Independent
      Director                                                                                                                                                                                                                                                                                                                                         
|◊   | Andrea
      Gilardoni was a member of the Audit Committee until July 12, 2002 when he
      resigned from the Audit Committee, although he continued to be a member
      of the Board of Directors. He was replaced on the Audit Committee by Adriano
      De Maio, who was appointed on July 26, 2002. See Item 4.C, “Board
      Practices  Audit Committee”.
|†   | Resigned
      effective as of February 28, 2003.                                                                                                                                                                                                                                                                                                                  
|^   | Title
      changed effective March 2003.                                                                                                                                                                                                                                                                                                                          



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Mr.
  Emilio Christillin has served as chairman of the Board of Directors and President
  since 1954, when he joined the Group. He graduated in mechanical engineering
  in 1944. He became honorary President in 1997. Mr. Emilio Christillin is the
  father of Evelina Christillin, the brother-in-law of Guido Canale and the uncle
  of Giulio Canale.

Mr. Paolo della Porta joined the Group in 1949, after graduating in engineering from Milan Polytechnic. He served as Vice Chairman, Managing Director and Chief Executive Officer since 1954. He served as President since 1997 and as Chief Executive Officer from 1997 to 2002. He is the father of Massimo della Porta, the brother of Giuseppe della Porta, the uncle of Andrea Gilardoni and the brother-in-law of Stefano Baldi (See Item 7.A, “Major shareholders”).

Mr. Massimo della Porta has served as Director since 1994 and Vice President and Managing Director since 1997. Beginning in March 2003, he was appointed as Group Chief Technology & Innovation Officer. In addition, on April 23, 2003 he was appointed as Group Chief Executive Officer. He joined the Group in 1989, after graduating from Rome Polytechnic with a degree in engineering. He is the son of Paolo della Porta, the nephew of Giuseppe della Porta and the cousin of Andrea Gilardoni (See Item 7.A, “Major shareholders”).

Mr. Giulio Canale has served as Director since 1994 and Managing Director since 1997. On April 23, 2003 he was appointed Group Deputy Chief Executive Officer. He joined the Group in 1990. He graduated from Genoa University in 1991 with a degree in economics. He is the nephew of Emilio Christillin and Guido Canale and the cousin of Evelina Christillin (See Item 7.A, “Major shareholders”).

Mr. Giuseppe Rolando has served as Director since 2000. He joined the Group in 1971 and became Chief Financial Manager in 1975. He served as General Manager from 1992 until September 30, 2001, and he has been Group Chief Financial Officer since 1992. Mr. Rolando is a Certified Public Accountant in Italy.

Mr. Stefano Baldi has served as Director since 1987. He received a law degree from Università di Trieste in 1973. He is brother-in-law of Paolo della Porta (See Item 7.A, “Major shareholders”).

Mr. Roberto Berger has served as Director since 1994. He graduated from Boston University in 1983 with a B.A. in economics and earned his MBA from INSEAD, Paris in 1986. He is President of Berger Trust S.p.A., one of the Company’s Major Shareholders (See Item 7.A, “Major shareholders”). He is member of the Board of Directors of Mater Bi S.p.A. He is Director of Airport Key Corporation (Florida, U.S.) and of 123 Jump Com. Inc. (Florida, U.S.).

Mr. Guido Canale has served as Director since 1952, when he joined the Group. He is the brother-in-law of Emilio Christillin and the uncle of Giulio Canale and Evelina Christillin (See Item 7.A, “Major shareholders”).

Ms. Evelina Christillin has served as Director since 1996. She received a degree in literature from the University of Turin, where she is an associate professor, and a Doctorate degree from Bari University. She is the Vice President of the Italian Foundation Committee for the organization of the XX Olympic Winter Games. She is the daughter of Emilio Christillin, the niece of Guido Canale and the cousin of Giulio Canale (See Item 7.A, “Major shareholders”).

Prof. Umberto Colombo served as Director since 1997. He received his Doctorate degree in Physical Chemistry, summa cum laude, from Pavia University, and earned his Fulbright Fellowship at MIT (Massachussets Institute of  Technology), Department of Chemical Engineering. Prof. Colombo is chairman of Novamont S.p.A. and of Alcantara S.p.A. He is member of the Board of Directors of Telecom Italia S.p.A., ACEA S.p.A., Kenyx S.p.A., SNIA S.p.A. and Energy Conversion Devices (Michigan, U.S.). He is an Independent Director.

Prof. Giuseppe della Porta has served as Director since 1965. He received his M.D. in 1950. He is member of the Board of Istituto Superiore della Sanità. He is the brother of Paolo della Porta and the uncle of Andrea Gilardoni and Massimo della Porta (See Item 7.A, “Major shareholders”).

Prof. Adriano De Maio has served as Director since 2001. He received his degree in Electronic Engineering, from Milan Polytechnic in 1964. He served as Dean of Milan Polytechnic from 1994 to 2002. He is member of the Board of Directors of CESAER (Conference of European Schools for Advanced Engineering Education and Research) and President of IReR (Istituto Regionale di Ricerca della Lombardia). He is an Independent Director.

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Prof. Andrea Gilardoni has served as Director since 1994. He is professor of business, economics and management at Bocconi University in Milan. Prof. Gilardoni graduated from Bocconi University in 1978 with a degree in business administration and he studied at Harvard University and Sussex University. He is the nephew of Paolo della Porta and Giuseppe della Porta and the cousin of Massimo della Porta (See Item 7.A, “Major shareholders”).

Mr. Gianluca Spinola has served as Director since 1994. He received his technical certificate in 1952. He is Director of Desis S.A. (Luxembourg), one of the Company’s Major Shareholders (See Item 7.A, "Major shareholders") and of Invicta S.p.A.

Prof. Renato Ugo has served as Director since 2000. He received his Degree in Industrial Chemistry from Milan University and received his degree honoris causafrom Potsdam University (New Jersey, U.S.). He is professor of inorganic chemistry at University of Milan. He is member of Accademia Nazionale dei Linceiand a member of the Technical Scientific Committee (CTS) at Minister of Universities, Science and Technology. He has served as chairman of the Italian Association for Industrial Research since 1983. He is an Independent Director.

Mr. Bruno Ferrario has served as Group Research and Development Manager since 1992 and he has also served as Group Research and Development Director since 1997. He also served as Deputy General Manager from 1992 to 2001. He joined the Group in 1967. Mr. Ferrario has authored or co-authored several patents and scientific and technical publications. He received a degree in physics from the University of Milan.

Mr. Maurizio Alberini has served as Group Production Manager and as Group Chief Operation Officer since 1997. He also served as Deputy General Manager from 1992 to 2001. He received a degree in electrotechnical engineering in 1972 from Padua University.

Mr. Giancamillo Mazzeri has served as Group Business Area Director, Components Aggregate, since 1999. He has also served as Display Devices Business Area Manager since 1997. He joined the Group in 1982. He received a degree in physics from the University of Milan.

Mr. Livio Rosai has served as Group Marketing Manager since 1992 and as Group Strategic Marketing Director since 1997. He joined the Group in 1970. He received a degree in physics from the University of Milan.

Mr. Luca Coccioli has served as Group Legal General Counsel since 1992 when he joined the Company. He received a law degree from Milan University and worked at the law firm of Pavia & Ansaldo in Milan. In 1999 he attended an Executive Management Program at Pennsylvania State University (Pennsylvania, U.S.). Mr. Coccioli resigned effective February 28, 2003.

Mr. Filippo Cutillo has served as Group Human Resources Director since September 2002 when he joined the Company. He received a law degree from Catholic University in Milan and he attended several Executive Management Programs.

No officer of the Company was selected pursuant to any arrangement or understanding between him and any person other than the Company.

Statutory Auditors

Pursuant
  to Italian law and the Company’s By-laws, in addition to appointing the
  Board of Directors, shareholders also appoint the Company’s Board of Statutory
  Auditors, which is composed of three independent experts in accounting matters
  and two alternates. The Board of Statutory Auditors appoints a chairman among
  its members. In accordance with Italian law, each member of the Board must provide
  evidence that he or she is in good standing and meet certain professional requirements.
  The Board of Directors acknowledged on March 19, 2003 that each member of the
  Board of Statutory Auditors met the professional requirements established by
  law.

As of April 23, 2003 the Board of Statutory Auditors is comprised of Pierluigi Martinelli, Vincenzo Donnamaria and Antonio Rossetti de Scander, with Piero Angelo Bottino and Alessandro Martinelli as alternates. The Board’s term of appointment will expire upon approval by the Company’s shareholders of its Consolidated Financial Statements and Annual Report for the year ended December 31, 2005.

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The Board of Statutory Auditors is responsible for management oversight and
  verification that the Company complies with applicable Italian law and its By-laws.
  The Board of Statutory Auditors must also verify the accounting and administration
  structure and organization of the Company and control its appropriateness for
  the business of the Company. The members of the Board of Statutory Auditors
  are jointly and severally liable with the Board of Directors of the Company
  for any acts or omissions of the directors if the damage resulting from such
  act or omission could have been avoided by the Board of Statutory Auditors’
  supervision. The Board of Statutory Auditors may carry out inspections and verifications
  at the Company at any time.

The members of the Board of Statutory Auditors must be present at the meetings of the Board of Directors and at the shareholders’ meetings and must also attend the meetings of the Company’s executive committee, if any. They remain in office for a three-year term and may be re-elected for consecutive terms. They may be removed only for cause and with court approval. The Board of Statutory Auditors meets at least every three months.

The Board of Statutory Auditors may report serious breaches of the duties of the Directors to competent Italian courts and is required to notify CONSOB (the Italian Securities Exchange Commission that regulates security markets, public offering transactions and the information required from listed companies in Italy) without delay of any irregularities found in the course of performing its duties.

External Auditors

Italian Legislative Decree No. 58 of February 24, 1998 (“Law 58/98”) requires companies whose shares are listed on regular markets of EU Member States to appoint a firm of external auditors to verify that (i) during fiscal year, the Company’s accounting records are correctly kept and accurately reflect the Company’s activities and (ii) the financial statements correspond to the accounting records and the verifications conducted by the external auditors and comply with applicable rules. The external auditors express their opinion on the financial statements in a report that may be consulted by the shareholders prior to the annual shareholders’ meeting.

The external auditors are appointed by the ordinary shareholders’ meeting for a three year term (which may not be renewed more than twice). Such appointment must be notified to CONSOB.

On May 4, 2001, PricewaterhouseCoopers S.p.A. was appointed for the third and last consecutive term as the Company’s external auditors for the three-year period 2001-2003.

At the shareholders’ meeting to approve the financial statements for the year ending December 31, 2003, the Company’s shareholders will appoint a new firm of external auditors.

|B. | Compensation
|-- | ------------

The
  Company’s By-laws provide that the Company’s shareholders must determine
  the annual compensation of the Board of Directors and the Board of Statutory
  Auditors at the annual ordinary shareholders’ meeting. The Board of Directors
  then determines the distribution of compensation among the individual members
  of the Board of Directors and the Board of Statutory Auditors. Such distribution
  remains unaltered until the next annual ordinary shareholders’ meeting.

Law 58/98 and subsequent instructions promulgated relating to such law require the Company to report in the Company’s Annual Report the total compensation paid by the Group to its Directors, Statutory Auditors and General Managers in the relevant fiscal year. The Company must also report any and all interests by Directors, Statutory Auditors and General Managers in the Company’s securities. Such information for the Group’s 2002 fiscal year was as follows (thousands of Euro):

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|Name                        |  |  | Position
      within Company or Group                                                                                                 |  |  | Global
      Gross Compensation for Fiscal Year 2002(*) | 
|--------------------------- |  |  | -------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------------------------------------------------------- | 
|                            |  |  |                                                                                                                                        |  |  |                                                         | 
|                            |  |  |                                                                                                                                        |  |  | (thousands
      of Euro)                               | 
|Paolo della Porta           |  |  | Chairman of the Board of Directors
      and President                                                                                 |  |  | 572                                                     | 
|Massimo della Porta         |  |  | Vice President, Managing Director,
      Group Chief Executive Officer andGroup Chief Technology & Innovation Officer                  |  |  | 357                                                     | 
|Giulio Canale               |  |  | Managing Director, Group Deputy
      Chief Executive Officer,Group Subsidiaries Director and Equipment Aggregate
      Group Director |  |  | 340                                                     | 
|Giuseppe Rolando            |  |  | Director and Group Chief Financial
      Officer                                                                                       |  |  | 242                                                     | 
|Stefano Baldi               |  |  | Director                                                                                                                               |  |  | 6                                                       | 
|Roberto Berger (**)         |  |  | Director                                                                                                                               |  |  |                                                        | 
|Guido Canale                |  |  | Director                                                                                                                               |  |  | 6                                                       | 
|Evelina Christillin         |  |  | Director                                                                                                                               |  |  | 6                                                       | 
|Umberto Colombo             |  |  | Director                                                                                                                               |  |  | 6                                                       | 
|Giuseppe della Porta        |  |  | Director                                                                                                                               |  |  | 6                                                       | 
|Adriano De Maio             |  |  | Director                                                                                                                               |  |  | 8                                                       | 
|Andrea Gilardoni            |  |  | Director                                                                                                                               |  |  | 8                                                       | 
|Gianluca Spinola            |  |  | Director                                                                                                                               |  |  | 6                                                       | 
|Renato Ugo                  |  |  | Director                                                                                                                               |  |  | 11                                                      | 
|Pierluigi Martinelli        |  |  | Statutory Auditor                                                                                                                      |  |  | 39                                                      | 
|Vincenzo Donnamaria         |  |  | Statutory Auditor                                                                                                                      |  |  | 29                                                      | 
|Antonio Rossetti De Scander |  |  | Statutory Auditor                                                                                                                      |  |  | 19                                                      | 

______________(*)    Including
  Directors’ fees from the Company and its subsidiaries, salaries and any
  other form of compensation.(**) Compensation was
  not paid to the individual but to the Company employing him.

Aggregate
  compensation paid by the Group to its executive officers, excluding Directors,
  Statutory Auditors and General Managers, as a group was €984 thousand in
  2002, excluding the accrual for termination indemnities required by Italian
  law only with respect to executive officers. The executive officers are beneficiaries
  of an incentive profit sharing plan, which extends to “strategic employees”.
  See Item 6.D, “Employees”.

Members of the Board of Directors, in their capacity as Directors, and Statutory Auditors do not have the right to pension benefits or termination indemnities.

In
  2000, Mr. Paolo della Porta, Mr. Massimo della Porta and Mr. Giulio Canale entered
  into service agreements with the Company for the terms of their positions within
  the Company. Pursuant to such service agreements, each of Mssrs. Massimo della
  Porta and Giulio Canale are entitled to a fixed sum as liquidated damages in
  the event of termination of their engagement prior to the expiry date of their
  respective agreement.

On September 30, 2001, Mr. Giuseppe Rolando resigned as General Manager of the Company. On the same date, Mr. Rolando entered into a service agreement with the Company for the duration of his position as Group Chief Financial Officer. Pursuant to the service agreement, Mr. Rolando is entitled to a fixed sum as liquidated damages in the event of termination of his engagement prior to the expiry date of the agreement.

Mr. Maurizio Alberini, Mr. Bruno Ferrario and Mr. Livio Rosai entered into fixed term employment agreements on October 1, 2001, November 1, 2001, and January 1, 2002, respectively. Under the respective employment agreements, each of Mssrs. Alberini, Ferrario and Rosai is eligible to receive certain pension benefits and termination indemnities upon retirement or upon the termination of their employment, in each case in accordance with Italian law and with the terms of the national collective labor agreement for managers of industrial companies.

The aggregate amount accrued by the Company during 2002 to provide termination indemnities for executive officers was €143 thousand.

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|C. | Board practices
|-- | ---------------

According
  to the By-laws of the Company, the Board of Directors must be composed of between
  three and fifteen members. On April 23, 2003 the annual ordinary shareholders
  meeting was convened to elect the new Board of Directors. The shareholders resolved
  upon the number of directors, confirming 14 members, comprising executive directors
  and non executive directors, among whom three are “Independent”,
  as required by Borsa Italiana S.p.A. (the Italian regulatory body
  which manages the Italian regulated financial markets) for companies listed
  on the market segment called Segmento Titoli con Alti Requisiti (“STAR”).
  Beginning in 2003, Directors’ independence is annually assessed by the
  Board of Directors on the basis of the information provided by each interested
  party, and the results of such assessments are promptly made public to the market.

Directors
  are elected at the ordinary meeting of the shareholders to serve terms not exceeding
  three years. The term of appointment of the current Board of Directors, elected
  on April 23, 2003, expires upon approval by the Company’s shareholders
  of the financial statements for the year ending December 31, 2005. Directors
  may be re-elected for consecutive terms.

The executive officers of the Company and its subsidiaries are appointed by the Board of Directors of the respective company and serve at the discretion thereof.

The Board of Directors has the power to approve related party transactions, as established by Italian law. The Company’s Code of Conduct sets general criteria for identifying transactions which require the approval of the Board of Directors. In particular, any decision to approve significant transactions (including, in particular, those with related parties), falls within the exclusive jurisdiction of the Board of Directors, which must provide sufficiently detailed information about such transactions at the shareholders’meeting, so as to allow a full understanding of the advantages and costs to the Company of entering such transactions. “Significant transactions” are defined by the Company’s code of conduct as any transactions that can have an impact of a strategic nature on the Company’s business trends or affect it significantly (higher than the 10% of the consolidated shareholders equity).

The Board of Directors is required to approve in advance any transactions with related parties, including inter-company transactions, other than transactions conducted in the normal course of business or transactions concluded under standard conditions. “Transactions conducted in the normal course of business” are deemed to be those that, with respect to their nature or object, are not extraneous to the normal business trends of the Company and those transactions that do not have particular critical characteristics or risks inherent to the nature of the counterpart, or timing of the transaction. “Transactions concluded under standard conditions” are those concluded under the same conditions as applied by the Company to any party. See Item 7.B, “Related party transactions”.

Corporate Governance

Code of Conduct.In 1999 Borsa Italiana S.p.A. issued a Report prepared by the “Committee for the Corporate Governance of Listed Companies”, including a Code of Conduct for listed companies (the “Preda Code”) taking into account international principles of best practice. The Preda Code is voluntary, not mandatory and is characterized by a high degree of built-in flexibility, allowing it to be adapted to companies’ different needs. In July 2002, Borsa Italiana S.p.A. approved revisions to the Preda Code and issued a revised version.

---

|1According
        to the Company Code of Conduct, as revised in 2003 to incorporate the
        changes made by Borsa Italiana S.p.A. to its “Code of Conduct for
        listed companies” in 2002 and according to the relevant regulation,
        independent directors are members of the Board who:i) do not
        have and have not recently entertained (in the periods below specified)
        significant business relationships (i.e. of a significance able to influence
        their autonomous judgment) either directly or indirectly or on behalf
        of third parties, with the Company, its subsidiaries, the executive directors
        or the shareholder or group of shareholders who controls the Company.
        “Significant business relationships” mean: a) commercial relationships
        entertained, in the current or previous year including through controlled
        companies and/or in which the director holds executive positions; b) professional
        services rendered, in the current or previous year, even provided in associated
        form; c) any employment relationship or a position of executive director
        held in the previous three years. Relationships described in a) and b)
        above are not deemed relevant if effected pursuant to prevailing market
        conditions and if not able to influence the autonomous judgment of the
        concerned directors.ii)
        neither own, directly or indirectly or on behalf of third parties, a quantity
        of shares enabling him or her to control the Company or exercise a significant
        influence over it nor participate in shareholders’ agreements to
        control the Company.iii) are not
        spouses, cohabitants, relatives or kinsmen, within the second degree,
        of an executive director of the Company or shareholder controlling the
        Company or of persons referred to in i) or ii) above.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Moreover, in order to be listed on Borsa Italiana S.p.A.’s market segment called Segmento Titoli con Alti Requisiti (“STAR”), to which the Company was admitted on April 2, 2001, the Company issued its own Code of Conduct in early March 2001 to comply with regulations promulgated by Borsa Italiana S.p.A. and with Corporate Governance standards. The Code was revised in February and March 2003 to take into account the revisions made by Borsa Italiana S.p.A. to the Preda Code in 2002.

In the Company’s Code of Conduct, the Company confirmed that its business and affairs are managed under the direction of its Board of Directors, whose balanced composition, through the participation of executive directors and non-executive directors, some of which are independent, promotes the fair governance of the Company. The Code requires that the Company monitor its performance and prevent conflicts of interest. The Company also confirmed the existence of an internal structure committed to investor relations, which is responsible for establishing and keeping a dialogue with shareholders and institutional investors generally.

Internal Control System. The internal control system is the set of processes serving to monitor the efficiency of the Company’s operations, the reliability of financial information, compliance with laws and regulations, and the safeguarding of the Company’s assets.

The Board of Directors is responsible for the Company’s internal control system and is required to establish the guidelines for the system, to periodically check that it is adequate and working properly, and to verify that the main risks the Company may face are identified and managed appropriately.

The Chairman and the Managing Directors are required to identify the main risks the Company is exposed to and to submit them to the Board of Directors for its examination. They are also required to implement the guidelines laid down by the Board of Directors through the planning, operation and monitoring of the internal control system, of which they set the relative procedures, and must appoint one or more persons in charge of the internal control system, providing them with appropriate resources.

The individuals appointed to run the internal control system shall not hierarchically report to an operating director, and shall inform the Managing Directors, the Audit Committee (see below) and the Board of Statutory Auditors of their activities.

The internal control system of the Company encompasses an independent auditing function charged with the task of checking the efficacy of the Group’s operational and administrative internal procedures, of verifying that such procedures are followed, of guaranteeing the correctness and reliability of financial records, and of identifying, forestalling and limiting, as far as possible, financial and operational risks and fraud at the Company’s expense. See Item 15 “Control and Procedures”.

Audit
  Committee. The Board of Directors established an Audit Committee made up
  of the following non-executive directors: Roberto Berger, Adriano De Maio and
  Renato Ugo. Adriano De Maio was appointed to the Committee on July 26, 2002
  to replace Andrea Gilardoni, formerly a member of the Committee, who resigned
  on July 12, 2002. As of July 26, 2002, the majority of the Audit Committee was
  independent (as defined and in accordance with applicable Italian regulations).
  On April 23, 2003 the Board of Directors confirmed Roberto Berger, Adriano De
  Maio and Renato Ugo as members of the Audit Committee. The task of the Audit
  Committee is to assist the Board in performing its supervisory duties, with
  respect to the Company’s internal control system, giving advice and making
  proposals on such matters. In particular, the Audit Committee is required to
  assess the work program prepared by individuals in charge of internal control
  system and to receive their periodic reports and, together with the heads of
  administration and the Company’s external auditors, to assess the appropriateness
  of the adopted accounting standards with a view to the preparation of the consolidated
  financial accounts of the Company. The Audit Committee also assesses remarks,
  if any, contained in periodic reports issued by the individuals in charge of
  the internal control system, in the reports of the Board of Statutory Auditors
  or raised by any one of them. The Committee is required to report to the Board
  of Directors on its activity and the adequacy of the internal control system
  at least once every six months, when the annual and semi-annual statements are
  approved. The Audit Committee is also required to assess the work done by the
  external auditing firm also with reference to the independence of its judgment,
  including the work program set forth for the audit and the results and recommendations
  thereof as set out in the auditors’ report and their letter of suggestions.
  The Audit Committee must assess the proposals put forward by auditing firms
  to obtain the audit engagement. In addition, the Audit Committee is in charge
  of monitoring the correct implementation of corporate governance procedures
  and monitoring any changes in the Italian regulations which might have an impact
  on the Company’s corporate governance.

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The
  Audit Committee is presided and convened by its eldest (in age) member who regularly
  reports to the Board of Directors. The eldest (in age) member convenes the meeting
  without formalities (even orally) and without prior notice. The Chairman of
  the Board of Statutory Auditors or any other auditor appointed by the Chairman
  participates in the Audit Committee meetings. The Chairman of the Board of Directors,
  the Managing Directors and the individual(s) appointed to run the internal control
  system of the Company may be invited by the Audit Committee to attend meetings.
  At the shareholders’ meeting on April 23, 2003, the shareholders of the
  Company resolved to fix the compensation for the members of the Audit Committee,
  at an annual sum of €4,150 for each member and of €6,000 for the eldest
  member presiding on the Committee.

Compensation
  Committee. The Board of Directors appointed a Compensation Committee made
  up of the following three non-executive directors: Guido Canale, Giuseppe della
  Porta and Stefano Baldi. On April 23, 2003 the members of the Compensation Committee
  were confirmed. The task of the Compensation Committee is to submit proposals
  to the Board of Directors regarding compensation and other terms of employment
  for managing directors and executive employees based on performance reviews.
  In proposing compensation policies, the Compensation Committee considers a number
  of factors, including the basic salaries and benefits available to managing
  directors and executive employees of other similar companies and the need to
  ensure managing directors’ commitment to the continued success of the
  Company by means of incentive schemes.

The Compensation Committee is convened and presided by the eldest member who regularly reports to the Board of Directors. The eldest member convenes the meeting without formalities (even orally) and without prior notice.

Price Sensitive Information Procedures. The Chairman of the Board of Directors and Managing Directors are required to ensure the correct handling of confidential or proprietary information, as defined by Law Decree 58/98. To this end, on December 19, 2002, the Board of Directors adopted procedures for internal handling and disclosure to third parties of information concerning the Company, with special reference to price-sensitive information, as defined by the aforementioned Law Decree.

Internal Dealing. Rules of the Markets Organized and Managed promulgated by Borsa Italiana S.p.A., which became  effective in July, 2002 established an obligation for listed companies to adopt a binding code of conduct addressing duties and restrictions for transactions effected by individuals that by virtue of their position have access to material information. On December 19, 2002, the Company adopted an Internal Dealing Code of Conduct, which became effective on January 1, 2003 to govern reporting and other notification obligations with respect to transactions involving financial instruments carried out by individuals that, by virtue of the position they held, have access to relevant information. Under the Code, such individuals have to report any and all relevant transactions relating to financial instruments of the Company on a quarterly basis, or immediately upon reaching certain thresholds. The Code also sets some black-out periods during which the individuals subject to the Code are not allowed to effect transactions with respect to Company’s securities. Information will be provided by the Company every quarter or, in case of significant-value transactions, without delay, in compliance with the terms and as set by regulations promulgated by Borsa Italiana.

Code of Ethics. The Company has not yet adopted a written Code of Ethics, applicable to its principle executive officers, but it is working on written standards that are reasonably necessary to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; compliance with applicable governmental laws, rules, and regulations; the prompt internal reporting of code violations to an appropriate person or persons identified in the code; and accountability for adherence to the code.

Disclosure Committee. The Company has formed a Disclosure Committee to ensure (i) that the information required to be disclosed in this Annual Report is accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure and (ii) that information required to be disclosed in this Annual Report is recorded, processed, summarized and reported within the time periods specified by the SEC. The Disclosure Committee is made of the following individuals: the Group Chief Financial Officer, the Group Controller, the Group Treasurer, the Group Legal Counsel, the Investor Relations Manager, the Internal Auditor, and the Group Strategic Marketing Director. The Committee has the following duties and powers:

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| | soliciting, gathering and evaluating information related to the Company and its subsidiaries in order to capture all of the disclosure information required to be disclosed under the Exchange Act;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | determining the reliability of the information gathered and materiality of such information in light of the Company’s disclosure obligations;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------

| | checking that the disclosure is consistent with the Company’s financial statements and that the financial information contained is informative and reasonably reflects the underlying transactions and events;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | discussing and including any additional disclosure necessary to provide investors with a materially accurate and complete picture of the Company’s financial condition, results of operations and cash flows;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | drafting the Annual Report and presenting it for review to the CEO and CFO;
|- | ---------------------------------------------------------------------------

| | consulting, if and when needed, with external consultants or law firms;
|- | -----------------------------------------------------------------------

| | consulting with the CEO and CFO as needed to assist such officers with complying with their certification obligations;
|- | ----------------------------------------------------------------------------------------------------------------------

| | preparing, updating and managing a detailed time and responsibility schedule for the Annual Report that identifies dates and deadlines that are important to the process of gathering and evaluating information and that provides for detailed assignments to be given to the members of the Disclosure Committee and/or other employees;
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | evaluating, under the direction of the CEO and CFO, whether the Company’s system of disclosure controls and procedures within 90 days prior to the filing of the Annual Report is effective to ensure that information required to be disclosed in Exchange Act filings is recorded, processed, summarized and disclosed on a timely basis; and
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | in general, do all acts needed to complete, in a timely manner, the Annual Report.
|- | ----------------------------------------------------------------------------------

D.      Employees

As of December 31, 2002, the Group had 1,093 total employees (including 65% of the employees of the NSHG Joint Venture, which had 98 employees as of December 31, 2002). The Group employed an average of 1,083 employees for the year ended December 31, 2002. Approximately 67% of the Group’s workforce is devoted to manufacturing activities, approximately 8% to research and development and approximately 25% to selling, administration and other activities.

The breakdown of the Group’s employees by professional category at the end of the three last fiscal years is as follows:

|          |  |  |  |  |  | Year
      Ended December 31, | 
|--------- |  |  |  |  |  | ----------------------------- | 
|          |  |  |  |  |  |                               | 
|          |  |  |  |  |  | 2000                          | 
|          |  |  |  |  |  |                               | 
|Managers  |  |  |  |  |  | 63                            | 
|Employees |  |  |  |  |  | 618                           | 
|Workers   |  |  |  |  |  | 519                           | 
|          |  |  |  |  |  |                               | 
|Total     |  |  |  |  |  | 1,200                         | 
|          |  |  |  |  |  |                               | 

The breakdown of the Group’s employees by geographic area at the end of the three last fiscal years is as follows:

|              |  |  |  |  |  | Year
      Ended December 31, | 
|------------- |  |  |  |  |  | ----------------------------- | 
|              |  |  |  |  |  |                               | 
|              |  |  |  |  |  | 2000                          | 
|              |  |  |  |  |  |                               | 
|Italy         |  |  |  |  |  | 543                           | 
|Other Europe  |  |  |  |  |  | 19                            | 
|North America |  |  |  |  |  | 423                           | 
|Asia          |  |  |  |  |  | 215                           | 
|              |  |  |  |  |  |                               | 
|Total         |  |  |  |  |  | 1,200                         | 
|              |  |  |  |  |  |                               | 

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The
  decrease in employee number in 2002 is mainly due to the restructuring processes
  implemented by the Group. The implementation of the restructuring process, particularly
  with respect to the Components Aggregate, led to the merger of Getters Corporation
  of America into Saes Getters USA and to a reduction of approximately 60 employees
  in the first half of 2002. In addition, the persisting downward trend characterizing
  the semiconductor market in 2002 impacted negatively on the Equipment Aggregate
  work force, mainly on Saes Pure Gas, Inc., while FST Consulting International,
  Inc. increased its employee numbers to cope with investments necessary to enter
  a new market segment.

The Group’s manufacturing workers and employees located in Italy are covered by collective bargaining agreements. None of the Group’s employees outside of Italy are covered by collective bargaining agreements. The Company believes that the Group has excellent relations with its employees and has not experienced any significant work stoppages during the past five years. Employment agreements in Italy are generally collectively negotiated between the national association of companies within a particular industry and the representative national union. Individual companies must enter into contracts with their employees based on the relevant collective agreement. The most recent national collective bargaining agreement covering all of the Group’s manufacturing employees in Italy was entered on June 8, 1999 and its provisions expired on December 31, 2002. The Company believes that the renewal of the national collective contract will not affect the consolidated good relations with its employees.

In
  order to maintain quality, the Group invests in the continuous training and
  qualification of its employees. Many of the Group’s employees are required
  to attend conferences, symposia and specialized courses, as well as to travel
  extensively abroad in order to meet the Group’s customers.

Italian,
  Japanese and Korean law provides that, upon termination of employment, employees
  are entitled to receive certain severance indemnity payments based on their
  length of employment. As of December 31, 2002, the Group had accrued reserves
  of €7,969 thousand in respect of such termination indemnity liabilities,
  such reserves being equal to the amounts required by Italian, Japanese and Korean
  law.

The
  Group has created a “strategic employee” category that consists
  of approximately 150 key employees from the different countries in which the
  Group operates. These employees are divided into professionals, managers, senior
  managers and executives, and are awarded an incentive bonus. The incentive plan
  is based on two elements: the ratio of the Group’s operating income to
  sales and the achievement of individual goals established at the beginning of
  the year. This incentive program enables strategic employees to receive a bonus
  of up to a maximum of 40% of their base salary.

E. Share ownership

The following tables set forth the names of the members of the Board of Directors of the Company and their share ownership in the Company:

|                                                                                                                                                        |  |  | Ordinary
      Shares owned at December 31, 2002*    | 
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---------------------------------------------------- | 
|                                                                                                                                                        |  |  |                                                      | 
|Name
      and Position                                                                                                                                 |  |  | Full
      Ownership of Ordinary
      Voting Shares | 
|Paolo della Porta(Chairman of the Board of Directors
      and President)                                                                               |  |  | 264,589                                              | 
|                                                                                                                                                        |  |  |                                                      | 
|Massimo
      della Porta(Vice President, Managing
      Director, Group Chief Executive Officer and Group Chief Technology &
      Innovation Officer) |  |  | 387,000                                              | 
|                                                                                                                                                        |  |  |                                                      | 
|Giulio Canale(Managing Director, Group
      Deputy Chief Executive Officer, Group Subsidiaries Director and Equipment
      Aggregate Group Director)  |  |  | 333,834                                              | 
|Giuseppe
      Rolando(Director and Group Chief
      Financial Officer)                                                                                |  |  | 11,000                                               | 
|Stefano Baldi
      (Director)                                                                                                                          |  |  | 236,500                                              | 
|Guido
      Canale (Director)                                                                                                                           |  |  | 169,534                                              | 
|Evelina Christillin
      (Director)                                                                                                                    |  |  | 535,000                                              | 
|Giuseppe
      della Porta (Director)                                                                                                                   |  |  | 31,000                                               | 
|Andrea Gilardoni
      (Director)                                                                                                                       |  |  | 28,924                                               | 
|Gianluca
      Spinola (Director)                                                                                                                       |  |  | 643,083                                              | 
|Renato Ugo (Director)                                                                                                                                   |  |  | 3,350                                                | 

*owned personally or by the spouse.

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|                                                                                                                                            |  |  | Savings
      Shares at December 31, 2002 | 
|------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------------------------------------- | 
|                                                                                                                                            |  |  |                                           | 
|Name
      and Position                                                                                                                     |  |  | Ownership
      of Savings Shares         | 
|Paolo della Porta(Chairman of the Board of Directors and President)                                                                         |  |  | 100,000                                   | 
|Massimo della
      Porta(Vice President, Managing Director, Group Chief Executive Officer and Group Chief Technology & Innovation Officer) |  |  | 500                                       | 
|Giuseppe Rolando(Director and Group Chief Financial Officer)                                                                                |  |  | 18,000                                    | 
|Stefano Baldi
      (Director)                                                                                                              |  |  | 1,000                                     | 
|Giuseppe della
      Porta (Director)                                                                                                       |  |  | 10,000                                    | 

There are no options to purchase securities from Company or subsidiaries.

Item 7.   Major Shareholders and Related Party Transactions

Items 7 “Major Shareholders and Related Party Transactions” contains a brief summary of the main issues of Italian law applicable to listed companies. If required, holders of, and prospective investors in, the Savings Shares and the ADS should seek independent and full advice from their own legal counsel.

|A. | Major shareholders
|-- | ------------------

As of April 23, 2003, the Company’s stock consists of 13,874,930 Ordinary Shares and 9,625,070 Savings Shares.

Each
  Share has a nominal value of €0.52 and the aggregate nominal value of the
  Company’s stock is equal to €12,220,000, always consisting of a total
  of 23,500,000 shares. See also Item 10.B, “Memorandum and articles of
  association”.

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The
  Company is controlled by a group of Major Shareholders which consists primarily
  of the members of three families, the Baldi, Canale and della Porta families,
  who have been instrumental to the operation and development of the Company since
  1947, and who have maintained their controlling interest since that time. The
  three families, together with Berger Trust S.p.A. and Desis S.A. (collectively,
  the “Major Shareholders”) are parties to a Shareholders’ Agreement
  (the “Shareholders’ Agreement”) which currently covers 7,946,776
  of the Ordinary Shares, representing approximately 57.3% of the authorized and
  issued voting securities of the Company. The Shareholders’ Agreement limits
  the ability of each participant to transfer his or her or its Ordinary Shares
  subject to the restrictions of the Shareholders’ Agreement by granting
  rights of first refusal with respect to such shares, first to members of the
  same family as the selling shareholder and second, for any remaining shares,
  to the other participants in proportion to their respective ownership of Ordinary
  Shares subject to the restrictions of the Shareholders’ Agreement. The
  Shareholders’ Agreement also requires the Major Shareholders to act in
  concert with respect to certain limited actions taken at shareholders’
  meetings in the event of a hostile public tender offer. The Shareholders’
  Agreement was signed in December 1999, superseding a previous agreement, and
  was automatically renewed on December 15, 2002, for all subject parties for
  a single three year term, until December 15, 2005.

Under Italian securities law and the regulations promulgated by Commissione Nazionale per le Società e la Borsa(“CONSOB”)  the Italian Securities Exchange Commission that regulates security markets, public offering transactions and the information required from listed companies in Italy  any direct or indirect holding in excess of 2%, 5%, 7.5%, 10%, and subsequent multiples of five, of the voting shares of a listed company must be notified to such company and to CONSOB within five days of the effectiveness of the transaction triggering such obligation to notify. In addition, any reduction under the above mentioned thresholds must be notified within the same time period.

For purposes of the disclosure requirements referred to above: (i) a person’s holding must include both the shares owned by such person, even if the voting rights belong or are assigned to third parties, and the shares whose voting rights belong or are assigned to such person; (ii) a person’s holding shall also include both the shares owned by nominees, trustees or subsidiary companies and the shares of which the voting rights belong or are assigned to such persons; (iii) shares registered in the names of or endorsed to trustees and those whose voting rights are assigned to an intermediary in connection with collective or individual portfolio management services are not to be attributed to the persons controlling the trustee or the intermediary. For the purposes of the disclosure requirements for 5%, 10%, 25%, 50% and 75% thresholds, the calculation of holdings shall also include issued and subscribed shares that a person may buy or sell on his own initiative, either directly or through nominees, trustees or subsidiary companies. Shares that may be acquired by exercising conversion rights or warrants shall be included in the calculation only if the acquisition can be made within sixty days.

The
  following table sets forth, to the extent determinable, certain information
  regarding those persons, groups and corporations holding more than 2% of the
  Company’s Ordinary Shares, as of December 31, 2002. The Savings Shares
  are held in bearer form and consequently the identity of the holders of the
  Savings Shares and their addresses are unknown, except for directors of the
  Company who are required to hold Savings Shares in registered form.

|                                                |  |  | Owned
      at December 31, 2002(including
      shares outside the Shareholders’ Agreement) | 
|----------------------------------------------- |  |  | -------------------------------------------------------------------------------------------- | 
|                                                |  |  |                                                                                              | 
|Shareholder                                     |  |  | Total
      of voting rights*
      Ordinary Shares                                          | 
|della Porta Family:                             |  |  |                                                                                              | 
|della Porta Paolo                               |  |  | 1,828,602                                                                                    | 
|della Porta Luigi Lorenzo**                     |  |  | 387,000                                                                                      | 
|della Porta Massimo**                           |  |  | 387,000                                                                                      | 
|della Porta Carola Rita***                      |  |  | 395,000                                                                                      | 
|della Porta Alessandra****                      |  |  | 395,000                                                                                      | 
|Others (individually less than
      2%)        |  |  | 432,590                                                                                      | 
|Total                                           |  |  | 3,825,192                                                                                    | 
|                                                |  |  |                                                                                              | 
|Canale Family:                                  |  |  |                                                                                              | 
|Canale Guido                                    |  |  | 440,534                                                                                      | 
|Canale Orietta                                  |  |  | 420,532                                                                                      | 
|Canale Giulio                                   |  |  | 659,168                                                                                      | 
|Christillin Maria Francesca                     |  |  | 535,000                                                                                      | 
|Christillin Evelina                             |  |  | 535,000                                                                                      | 
|Others (individually less than
      2%)        |  |  | 260,266                                                                                      | 
|Total                                           |  |  | 2,850,500                                                                                    | 
|                                                |  |  |                                                                                              | 
|Baldi Family (individually less
      than 2%): |  |  |                                                                                              | 
|Total                                           |  |  | 854,925                                                                                      | 
|                                                |  |  |                                                                                              | 
|Berger Trust S.p.A.                             |  |  | 1,062,800                                                                                    | 
|                                                |  |  |                                                                                              | 
|Desis S.A.                                      |  |  | 643,083                                                                                      | 
|                                                |  |  |                                                                                              | 

* This
  amount includes both the shares owned by the shareholder and the shares whose
  voting rights belong or are assigned to such shareholder.** Also owns 875,001
  Ordinary Shares, the voting rights of which are assigned to Paolo della Porta.*** Also owns 100,000
  Ordinary Shares, the voting rights of which are assigned to Patrizia Strambio
  de Castillia.**** Also owns 100,000
  Ordinary Shares, the voting rights of which are assigned to Giuseppe della Porta.

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As
  of December 31, 2002, the ADSs represented approximately 15% of the total number
  of the Savings Shares and the number of registered shareholders in the U.S.
  was nine. Moreover, on the basis of the available information, as of the same
  period there were 152 U.S. shareholders of which there were 143 shareholders
  holding shares in street name in the United States.

Italian law  Shareholders Agreements

In accordance with Law 58/98, certain agreements among shareholders of a listed company or of its parent company must be reported to CONSOB within five days of entry into force of such agreements, must be made known to the public through the publication of an abstract in Italian newspapers within ten days and must be filed with the Registro delle Imprese(the registry held by the Italian Chamber of Commerce where all companies must be registered) within fifteen days of entry into such agreements. Failure to comply with the above provisions will render such agreements null and void, and the shares covered by such agreements cannot vote.

The shareholders agreements covered by Law 58/98 are defined as those which: (i) regulate prior consultation for the exercise of voting rights in a listed company or its parent company; (ii) contain limitations on the transfer of shares or securities which grant the right to purchase or subscribe shares; (iii) provide for the purchase of shares or securities that contain limitations on the transfer of shares or securities which grant the right to purchase or subscribe shares; or (iv) have as their object or effect the exercise (including joint exercise) of a dominant influence over the company.

Any shareholders’ agreement of the nature described above may have a maximum term of three years or, if executed for an unlimited term, can be terminated by a party upon six months’ prior notice. In case of a public tender offer, a party to these agreements is free to withdraw from them without notice.

Law
  58/98 provides that in the event of a tender offer, participants of a shareholders’
  agreement may elect to sell their interests even if the shareholders’
  agreement forbids or limits their right to sell.

|B. | Related party transactions
|-- | --------------------------

No member of the Board of Directors or Board of Statutory Auditors, 10% shareholder or senior officer (including any relative or spouse of any such person’s families), nor any enterprise over which any such person is able to exercise a significant influence, has had any interest in, or was a party to, any material transactions with any company in the Group involving goods, services or assets during the last fiscal year other than: (i) a consultancy agreement for corporate and tax issues entered into with a consulting firm of which a Statutory Auditor is a partner, for a total amount of €94 thousand and (ii) the service agreements entered into between the Company and each of Paolo della Porta, Massimo della Porta, Giulio Canale and Giuseppe Rolando, as more fully described in Item 6.B, “Compensation.”

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|C. | Interests of experts and counsel
|-- | --------------------------------

Not applicable

Item 8.   Financial Information

|A. | Consolidated statements and other financial information
|-- | -------------------------------------------------------

Financial Statements

See Item 18, “Financial Statements.”

Legal Proceedings

On December 28, 2001 the Company filed a complaint in San Jose, California, against Aeronex, Inc. a manufacturer of purification solutions, alleging that Aeronex infringed upon the Company’s U.S. patent No. 5,716,588 which broadly relates to ammonia purification systems and processes utilizing iron-manganese getter materials. In April 2002, the Company amended the complaint to include claims that Aeronex also engaged in unfair competition and false advertising with respect to its marketing practices in connection with the infringing products and processes. In July 2002, Aeronex counterclaimed that the Company’s ammonia purifiers were an infringement of an Aeronex patent. The Company believes that the ongoing litigation will not have any material adverse affect on its business or prospects.

Other than as disclosed in this annual report, there are no other current or pending legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their assets or properties is subject which, either individually or in the aggregate, are expected by the Company to have a material adverse effect on its consolidated financial position, liquidity or results of operations.

Dividends

| | See Item 3.A, “Selected Financial Data  Dividends”.
| | ----------------------------------------------------

|B. | Significant changes
|-- | -------------------

None

Item 9.   The Offer and Listing

|A. | Offer and listing details
|-- | -------------------------

The table below sets forth the high and low official prices (published by Borsa Italiana S.p.A. and representing the weighted average of the trading prices for all trades effected on a trading day) for the Savings Shares, the Ordinary Shares and the Preference Shares on the Mercato Telematico Azionario (“MTA”) and the high and low closing prices of the ADSs on The Nasdaq Stock Market.

|               |  |  | ADSs      |  |  | Savings
      Share |  |  | Ordinary
      Share |  |  | Preference
      Share | 
|-------------- |  |  | --------- |  |  | ------------------- |  |  | -------------------- |  |  | ---------------------- | 
|               |  |  |          
|Period         |  |  | High      |  |  | Low                 |  |  | High                 |  |  | Low                    | 
|               |  |  | (Dollars) |  |  | (Euro)              |  |  | (Euro)               |  |  | (Euro)                 | 
|               |  |  |          
|March 2003     |  |  | 5.510     |  |  | 5.000               |  |  | 5.127                |  |  | 4.674                  | 
|February 2003  |  |  | 5.260     |  |  | 5.000               |  |  | 5.486                |  |  | 4.972                  | 
|January 2003   |  |  | 5.501     |  |  | 5.260               |  |  | 5.848                |  |  | 5.105                  | 
|December 2002  |  |  | 6.200     |  |  | 5.250               |  |  | 5.960                |  |  | 5.104                  | 
|November 2002  |  |  | 6.200     |  |  | 5.420               |  |  | 5.895                |  |  | 5.176                  | 
|October 2002   |  |  | 5.420     |  |  | 3.932               |  |  | 5.634                |  |  | 4.375                  | 
|               |  |  |           |  |  |                     |  |  |                      |  |  |                        | 
|2003           |  |  |           |  |  |                     |  |  |                      |  |  |                        | 
|First Quarter  |  |  | 5.510     |  |  | 5.000               |  |  | 5.848                |  |  | 4.674                  | 
|2002           |  |  |           |  |  |                     |  |  |                      |  |  |                        | 
|Fourth Quarter |  |  | 6.200     |  |  | 3.932               |  |  | 5.960                |  |  | 4.375                  | 
|Third Quarter  |  |  | 6.890     |  |  | 3.932               |  |  | 6.840                |  |  | 4.540                  | 
|Second Quarter |  |  | 7.740     |  |  | 6.700               |  |  | 8.652                |  |  | 6.528                  | 
|First Quarter  |  |  | 7.521     |  |  | 6.220               |  |  | 8.694                |  |  | 7.503                  | 
|2001           |  |  |           |  |  |                     |  |  |                      |  |  |                        | 
|Fourth Quarter |  |  | 7.500     |  |  | 5.000               |  |  | 8.297                |  |  | 5.394                  | 
|Third Quarter  |  |  | 7.650     |  |  | 4.750               |  |  | 8.903                |  |  | 5.106                  | 
|Second Quarter |  |  | 9.100     |  |  | 7.260               |  |  | 10.127               |  |  | 8.635                  | 
|First Quarter  |  |  | 9.625     |  |  | 7.000               |  |  | 10.645               |  |  | 7.709                  | 
|               |  |  |           |  |  |                     |  |  |                      |  |  |                        | 
|2002           |  |  | 7.740     |  |  | 3.932               |  |  | 8.694                |  |  | 4.375                  | 
|2001           |  |  | 9.625     |  |  | 4.750               |  |  | 10.645               |  |  | 5.106                  | 
|2000           |  |  | 10.750    |  |  | 5.250               |  |  | 12.738               |  |  | 5.026                  | 
|1999           |  |  | 6.125     |  |  | 3.750               |  |  | 5.684                |  |  | 3.806                  | 
|1998(1)        |  |  | 13.875    |  |  | 4.750               |  |  | 12.800               |  |  | 3.800                  | 

(1) Starting
  January 1, 1999, official prices of Savings Shares, Ordinary Shares and Preference
  Shares are published by Borsa Italiana S.p.A. (the Italian regulatory body which
  manages the Italian regulated financial markets) exclusively in Euro. In order
  to compare prices quoted in Italian Lira during 1998, prices for such period
  have been converted into Euro at the official exchange rate of €1 = Lit.
  1,936.27.

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During 1997, holders of Preference Shares were granted an option to convert Preference Shares into Savings Shares at a ratio of one Preference Share for each Savings Share. Elected conversions were completed in November 30, 1997 and resulted in 260,650 shares converted.

The extraordinary shareholders meeting held on April 28, 2000 resolved to exchange Preference Shares into Ordinary Shares at an exchange ratio of one Ordinary Share for one Preference Share. A special meeting of holders of Preference Shares on May 10, 2000 approved such exchange. As of April 23, 2003, the Company’s stock consists of 13,874,930 Ordinary Shares and 9,625,070 Savings Shares.

|B. | Plan of distribution
|-- | --------------------

Not applicable

|C. | Markets
|-- | -------

The
  Ordinary Shares and the Savings Shares have been listed and traded on the Mercato
  Telematico Azionario (“MTA”) of the Borsa Italiana S.p.A. since
  1994 and 1995, respectively. Since June 5, 2000 the Preference Shares, which
  were traded on the same Stock Market since 1986, are no longer traded. On April
  2, 2001 the Company joined the new segment of the Mercato Telematico Azionario
  (“MTA”) of the Borsa Italiana S.p.A., called STAR (Segmento Titoli
  con Alti Requisiti). The new market segment is reserved for small and medium
  capitalization companies operating successfully in the traditional sectors of
  the economy and meeting stricter and more specific requirements with respect
  to transparency, liquidity and corporate governance.

Currently there is no public trading market for the Ordinary Shares or the Preference Shares in the United States. In May 1996, the Company listed its Savings Shares on The Nasdaq Stock Market in connection with the offering of 3,500,000 Savings Shares. The Savings Shares are traded in the form of American Depositary Shares and are listed on The Nasdaq Stock Market under the symbol of “SAESY”. Each ADS represents one Savings Share. Citibank N.A. is the Company’s Depositary for the purposes of issuing American Depositary Receipts evidencing American Depositary Shares.

|D. | Selling shareholders
|-- | --------------------

Not applicable

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|E. | Dilution
|-- | --------

Not
  applicable

|F. | Expenses of the issue
|-- | ---------------------

Not
  applicable

Item 10. Additional Information

Item
  10 “Additional Information” contains a brief summary of the main
  issues of Italian law applicable to listed companies. If required, holders of,
  and prospective investors in, the Savings Shares and the ADS should seek independent
  and full advice from their own legal counsel.

|A. | Share capital
|-- | -------------

Not
  applicable

|B. | Memorandum and articles of association
|-- | --------------------------------------

The
  Company is incorporated under Italian law and under the name of SAES Getters
  S.p.A. and is registered with the Registro delle Imprese(the registry
  held by the Italian Chamber of Commerce where all companies must be registered)
  of Milan (Italy) under the VAT number 00774910152.

Pursuant
  to article 7 of the Company By-laws, the Company’s purpose is the manufacturing
  of getters, any equipment for the creation of high vacuum, material based on
  special metals and alloys, as such and as components of products for the electronic,
  electrotechnical and chemical businesses. The Company may project, build and
  sell machinery, equipment and plants within the scope of its activity as above
  defined. The Company may conduct experimental research, provide technical and
  scientific advice, acquire and sell licenses and market any kind of product
  mentioned above. The Company may also perform any activity deemed necessary
  or useful by the Board of Directors in order to fulfill the Company’s
  purpose and objects, as well as acquiring directly or indirectly interests in
  third parties’ companies or organizations.

Conflicts
  of Interests

Under
  Italian law, a director is forbidden from pursuing his or her own interests
  or third parties’ interests conflicting with company’s interests.
  In case of conflicts of interests, the director must inform the Board of Directors
  and the Board of Statutory Auditors and, according to the Company’s Code
  of Conduct, as revised in February 2003, directors who have an interest, even
  if only potential or indirect, in a transaction with related parties shall promptly
  inform the Board in detail of the existence of the interest and of the related
  circumstances, so that the other directors can be fully informed about the extent
  and importance of such interests. Moreover the director informing the Board
  must abandon the Board meeting when the proposal, contract, or other arrangement
  in which the director is materially interested is discussed.

Pursuant
  to Italian law, a resolution taken by one or more directors with a conflict
  of interest is voidable upon action of directors who voted against the resolution,
  directors who were not present at the meeting and statutory auditors, in the
  event the resolution may harm the company and subject to the fact that there
  was no majority required to pass the resolution without the vote of the director(s)
  with a conflict of interest.

Shares

As
  of April 23, 2003, the Company’s stock consisted of 13,874,930 Ordinary
  Shares and 9,625,070 Savings Shares, each with a nominal value of €0.52.

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Ordinary
  Shares grant the right to vote in every shareholders meeting, both ordinary
  and extraordinary, to their holders.

Savings
  Shares or ADSs are held in bearer form and consequently the identity of the
  holders of Savings Shares and their addresses are unknown, except for directors
  and officers of the Company who are required to hold Savings Shares in registered
  form. Under Italian law and in accordance with the By-laws of the Company, the
  holders of the Savings Shares or ADSs do not have the right to attend or vote
  at ordinary or extraordinary shareholders’ meetings but only have voting
  rights at special meetings of holders of the Savings Shares. Special meetings
  must be called within two months from the issuance of Savings Shares and may
  be called by the Board of Directors of the Company or by the representative
  of the holders of the Savings Shares at their discretion or upon the request
  of the holders of 1% of the authorized and issued Savings Shares. Special meetings
  must be called to approve settlements of disputes between holders of Savings
  Shares and the Company and in the event the rights of the holders of the Savings
  Shares may be adversely affected by a resolution approved at a meeting of shareholders.
  Resolutions for the appointment of the representative of the holders of the
  Savings Shares and to protect in general their interests with the Company may
  be adopted by favorable vote of the holders of at least 20% of issued Savings
  Share upon first notice or 10% of issued Savings Share upon second notice. In
  the event a resolution is not taken after such second notice, Italian law provides
  for a third notice, in which case resolutions require the favorable vote of
  the majority of holders of issued Savings Share present at the meeting. Resolutions
  for settlements of disputes between holders of Savings Shares and the Company
  and resolutions which may adversely affect the rights of the holders of the
  Savings Shares, must always be adopted by favorable vote of the holders of at
  least 20% of issued Savings Share.

At
  a special meeting on April 23, 2002, holders of Savings Shares authorized the
  appointment of Mr. Giovanni Cova Minotti as representative of holders of Savings
  Shares for the period 2002-2004. Mr. Cova Minotti had already been representative
  of holders of Savings Shares for the period 1999-2001. His address in such capacity
  is c/o SAES Getters S.p.A., Viale Italia 77, 20020 Lainate (MI), Italy.

Holders
  of Savings Shares or ADSs do not have the right to tender Savings Shares to
  a bidder in connection with a tender offer for all or part of the Ordinary Shares.
  See Item 3.D, “Risk factors — No Right to Participate in Compulsory
  Tender Offers”.

According
  to the By-laws, Savings Shares or ADSs are entitled to a preferred dividend
  equal to 25% of their face value. If a lesser amount is paid in any year, holders
  are entitled to the unpaid amount for a period of two years. In the event that
  dividends are paid to holders of Ordinary Shares, as to the remaining available
  profits, holders of Savings Shares or the ADSs have a preferential right to
  receive a dividend per Share equal to 3% of their face value greater than that
  received by holders of the Shares.

Public
  Tender Offers

Under
  Italian law, a public tender offer must be made by any person that, by reason
  of purchase of shares, holds more than 30% of the voting stock of a listed company;
  the public tender offer must cover the whole voting stock of the company. The
  offer must be launched within thirty days from the date on which the 30% threshold
  was exceeded, and must be launched at a price equal to the greater of the average
  of the weighted average of the market price for the shares in the previous twelve
  months or the highest price paid for the shares by the offeror in the same period.
  CONSOB enacted regulations that govern these provisions in greater detail by
  establishing, in particular, a number of exemptions from the duty to launch
  a tender offer. Such regulation expressly provides that the exemption shall
  be granted (i) when another person holds a controlling stake in the company;
  (ii) in respect of transfers of shares among related persons; and (iii) in cases
  of acquisitions and break-ups and in other instances. Italian law provides,
  however, that the acquisition of an interest above 30% of the voting stock of
  a company does not trigger the obligation to launch a 100% tender offer if the
  person concerned has exceeded the threshold as a result of a public tender offer
  launched to acquire (i) all of the Ordinary Shares; or (ii) 60% or more of the
  voting stock of the company. The provision under (ii) in the preceding sentence,
  however, is available only if (i) the tender offer has been approved by the
  majority of the shareholders of the company (excluding the current majority
  shareholder); and (ii) the offeror (its subsidiaries, controlling persons, related
  companies and other persons connected to it by virtue, inter alia, of shareholders’
  agreements) has not acquired more than 1% of the voting stock of the company
  in the preceding 12 months; CONSOB is authorized to ensure compliance with these
  conditions before allowing the offer to be launched. However, such provision
  expressly states that after the offer has been completed, the offeror nevertheless
  will become subject to the duty to launch an offer of 100% of the voting stock
  if, in the course of the subsequent 12 months, (i) it (or its affiliates) has
  purchased more than 1% of the voting stock of the company; or (ii) the company
  has passed a resolution to effect a combination or break-up. Finally, any person
  or entity holding 90% or more of the voting stock of a company must launch an
  offer on the remaining shares unless, within four months, certain minimum free
  float requirements are met. Shares held in breach of these rules cannot vote
  and must be sold within 12 months.

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Proxies

Proxy
  solicitation is possible. Solicitation can be engaged in by certain professional
  investment and financial intermediaries, as well as certain companies whose
  sole purpose is to carry out proxy solicitation, on behalf of a qualified soliciting
  shareholder (generally, one or more shareholders who own and have owned at least
  1%, or such lesser percentage determined by CONSOB, of the company for more
  than six months).

Proxies
  may be collected by a shareholders’ association provided that such association
  has been formed by notarized private agreement, does not carry out business
  activities and is made up of at least 50 individuals each of whom owns not more
  than 0.1% of the company’s voting capital. Members of the shareholders’
  association may, but are not obliged to, grant proxies to the legal representative
  of the association and proxies may also be granted in respect of only certain
  of the matters to be discussed at the relevant shareholders’ meeting.
  The association may vote in different manners in compliance with the instructions
  expressed by each member who has granted a proxy to the association. CONSOB
  has established provisions that govern the transparency and the proper performance
  of the solicitation and the collection of proxies.

Shareholders’
  Ordinary and Extraordinary Meetings

Meetings
  of shareholders may be either ordinary meetings or extraordinary meetings. Shareholders’
  meetings may be called by the Board of Directors or by the Board of Statutory
  Auditors. Shareholders’ meetings must be called upon the request of holders
  of 10% of the issued Ordinary Shares. Following the receipt of such request,
  the Board of Directors may, however, resolve, in the interest of the company,
  not to convene a meeting. In this case, the chief judge of the relevant court,
  on appeal by the shareholders who have asked for such meeting, can order by
  decree, having conferred with the Board of Directors and the Statutory Auditors,
  that such meeting be convened. All holders of Ordinary Shares and Preference
  Shares that are duly registered in the shareholders’ register are entitled
  to attend and vote at ordinary and extraordinary shareholders’ meetings.
  Each holder will be entitled to cast one vote for each share held. Votes may
  be cast personally or by proxy.

Ordinary
  shareholders meetings must be convened at least once a year to approve the annual
  financial statement of the Company, which meeting must be convened within four
  months after the end of the financial year to which such statements relate or,
  when particular reasons allow, within six months after the end of such financial
  year. At ordinary shareholders’ meetings, the shareholders resolve upon
  dividend distributions, if any, appoint Directors and Statutory Auditors; determine
  their remuneration and vote on the liability of Directors and Statutory Auditors
  and any business matters submitted by the Directors, although the appointment
  of Directors and Statutory Auditors and the determination of their remuneration
  need not take place at every annual meeting. The attendance quorum required,
  in person or by proxy, for an ordinary meeting upon first call is 50% of the
  total number of issued Ordinary Shares, while on second call there is no quorum
  requirement. Resolutions at the ordinary meetings may be adopted, in both first
  and second calls, by the affirmative vote of the holders of a majority of the
  Ordinary Shares represented at such meeting.

Extraordinary
  meetings of shareholders may be called to pass upon, among other things, proposed
  amendments to the by-laws, capital increases, mergers, demergers, issuance of
  debentures, appointment of liquidators and similar extraordinary actions. Attendance
  quorums for extraordinary shareholders’ meetings are shareholders’
  representing more than 50% of the issued and outstanding Ordinary Shares and
  Preference Shares, on first call, more than one third, on second call, and more
  than 20% on third call. As to voting majorities, on any call, the affirmative
  vote of at least two thirds of the shares represented at the meeting is required
  to pass a resolution of an extraordinary shareholders’ meeting.

Shareholders
  are informed of all meetings to be held by publication of a notice in the Gazzetta
  Ufficiale, the official gazette of the Republic of Italy, at least 30 days
  before the date fixed for the meeting. As mentioned above, such notice may specify
  a date for a second meeting in the event that a quorum is not obtained at the
  first meeting. Notice of any meeting on third call, which must be held within
  30 days of the previously adjourned meeting, if not already made, must be published
  at least eight days prior to the date of the meeting.

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Resolutions
  adopted at a shareholders’ meeting are binding on all shareholders. However,
  each absent or dissenting shareholder has the right, under Italian law, to ask
  a court to annul resolutions taken in violation of applicable laws or the By-laws.
  In addition, in a limited number of cases (including the merger of a listed
  company with an unlisted company in which the shareholders of the listed company
  will receive shares of the unlisted company in exchange for their listed shares)
  applicable law grants dissenting and absent shareholders the right to obtain
  the redemption of their shares by the company at the average market price of
  the shares during the previous six month period.

Limitation
  on Voting and Shareholding

There
  are no limitations imposed by Italian law or the Company’s By-laws on
  the rights of non-residents or foreign persons to hold or vote the Company’s
  Ordinary Shares or Savings Shares, other than the limitations that would generally
  apply to all of the Company’s shareholders.

Minority
  Shareholders’ Rights

Each
  shareholder may, within three months, challenge any resolution on which he,
  she or it did not vote (except in the case in which he, she or it abstained)
  or in respect of which he, she or it dissented on the basis that it was not
  adopted in conformity with applicable law or the By-laws. Directors and statutory
  auditors may also challenge shareholders’ resolutions on this basis. In
  a limited number of cases (including a resolution approving a merger or demerger
  which involves distribution of unlisted shares), applicable Italian laws grant
  dissenting and absent shareholders the right of redemption of their shares from
  the issuer at a price equal to the average market price during the six months
  prior to the exercise of such redemption. In addition, under Italian law a single
  shareholder may bring action against members of a Board of Directors in respect
  of damages directly suffered for negligence or wilful misconduct.

Each
  shareholder may bring to the attention of the Board of Statutory Auditors facts
  or acts that are deemed wrongful. If such shareholders represent more than 2%
  of the share capital, the Board of Statutory Auditors must investigate without
  delay and report its findings and recommendations at the next shareholders’
  meeting. Shareholders representing more than 5% of the share capital have the
  right to report major irregularities to the relevant court. In addition, pursuant
  to Law 58/98, in respect of listed companies, holders of at least 5% of the
  shares who have been registered in the shareholder’s register for at least
  six months may commence derivative suits before the competent court against
  members of Board of Directors, Board of Statutory Auditors and general managers.
  The Company may waive or settle the suit unless shareholders holding at least
  5% of the shares vote against such waiver or settlement.

Pursuant
  to the slate voting system, introduced in the By-laws in accordance with Law
  58/98, if the Board of Statutory Auditors has up to three members, minority
  shareholders may appoint one member; and if the Board of Statutory Auditors
  has more than three members, minority shareholders may appoint up to two members.

Shareholders
  may examine certain documents made available at Company’s registered office
  in connection with a Shareholders’ meeting, which has already been convened,
  and obtain the relevant copies of such documents at their own expense.

Purchase
  by the Company of its Own Shares

The
  Company may purchase its own shares, subject to certain conditions and limitations
  provided by Italian law. Shares may be purchased out of profits available for
  dividends or out of distributable reserves, in each case, as appearing on the
  latest shareholder approved financial statements. Further, the Company may only
  repurchase fully paid shares. Such purchases must be authorized by shareholders
  at an ordinary meeting. The number of shares to be acquired, together with any
  shares previously acquired by the Company or any subsidiaries it may have, may
  not (except in limited circumstances) exceed in aggregate 10% of the total number
  of shares then issued and outstanding and the aggregate purchase of such shares
  may not exceed the earnings reserve specifically approved by shareholders. Shares
  held in excess of such 10% limit must be resold within one year of the date
  of purchase. Similar limitations apply with respect to purchases of the shares
  of the Company or any subsidiaries it may have.

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A
  corresponding reserve equal to the purchase price of such shares must be created
  in the balance sheet and such reserve is not available for distribution unless
  such shares are sold or cancelled. Shares purchased and held by the Company
  may be resold only pursuant to a resolution of the shareholders adopted at an
  ordinary meeting. Shares owned by the Company are not entitled to voting, but
  they can be counted for quorum purposes in shareholder meetings. Dividends and
  other rights, including pre-emption rights, attaching to the shares will accrue
  to the benefit of other shareholders.

Law
  58/98 provides that the purchase of its own shares and the purchase of shares
  of a listed company by its subsidiaries must take place by way of a public tender
  offer or on the market, in a manner agreed with Borsa Italiana S.p.A. (the Italian
  regulatory body which manages the Italian regulated financial markets) which
  must ensure the equality of treatment among shareholders. Subject to certain
  limitations, the foregoing does not apply to shares being purchased by a company
  from its employees or from the employee of its controlling company or subsidiaries.

At
  the shareholders’ meeting on April 23, 2003 the shareholders of the Company
  authorized, in accordance with Articles 2357 and 2357-ter of the Italian Civil
  Code, the purchase by the Company of its own shares over a period of 18 months
  at a price per share which is not less than €0.52 and not greater than
  €30 provided that the aggregate number of shares acquired shall not exceed
  2,000,000 and the net amount for the acquisition does not exceed €10,500,000.
  The shareholders’ meeting also authorized the disposal by the Company
  of shares acquired by the Company.

During
  2002, the Company purchased 114,478 Ordinary Shares and 75,356 Savings Shares
  in accordance with shareholders’ resolutions adopted at the ordinary shareholders’
  meeting on April 23, 2002. As of March 31, 2003, the Company held 191,128 Ordinary
  Shares and 173,306 Savings Shares in its treasury. The cost of such shares was
  €2,505 thousand in the aggregate.

Subscription
  Rights

New
  shares may be issued pursuant to a resolution of shareholders at an extraordinary
  meeting. Under Italian law shareholders have a preferential right to subscribe
  for (i) a new issue of shares and (ii) debentures convertible into shares (iii)
  any other warrants or rights entitling holders to acquire shares in proportion
  to their respective shareholdings. Subject to certain conditions, in order to
  avoid capital dilution, such right may be waived or limited by a resolution
  taken by shareholders at an extraordinary meeting by the affirmative vote of
  more than 50% of the outstanding shares entitled to vote at such extraordinary
  meeting. Such percentage applies to all calls of the meeting.

Liquidation
  Rights

Under
  Italian law, subject to the satisfaction of the claims of all other creditors,
  shareholders are entitled upon liquidation to a distribution of all the remaining
  liquidated assets of the Company, in proportion of the nominal value of their
  shares. According to the By-laws, holders of Savings Shares or ADSs are entitled
  to a priority right to distribution upon liquidation up to the nominal value
  of their Shares. Thereafter, if there are surplus assets all shareholders rank
  equally in the distribution of such surplus assets.

Form
  and Transfer of Shares

Pursuant
  to Legislative Decree No 213 of June 24, 1998 (Law “213/98”) and
  CONSOB regulations, it is no longer possible for a shareholder to obtain the
  physical delivery of share certificates representing shares of Italian listed
  companies. Shares of Italian listed companies are no longer represented by paper
  certificates and the transfer and exchange of shares takes place exclusively
  through a book-entry system. All shares must, accordingly, be deposited by their
  owners with an intermediary (each an “Intermediary”), which is defined
  by CONSOB regulations as: (i) an Italian or EU based bank; (ii) a non-EU bank
  authorized by the Bank of Italy to operate in the Italian market; (iii) a SIM
  (securities dealing firm); (iv) an EU investment company; (v) a non-EU based
  investment company authorized by CONSOB to operate on the Italian market; (vi)
  an Italian fund management company; (vii) a stock broker; (viii) the company
  which has issued the shares; (ix) the controlling shareholder of the company
  which has issued the shares; (x) the Bank of Italy; (xi) an EU or non-EU entity
  operating a centralized clearing system; (xii) a financial intermediary operating
  a clearing system governed by art. 69 (2) and 70 of Law 58/98; (xiii) a financial
  intermediary registered on the list kept by the Bank of Italy under art. 107
  of Legislative Decree of 1 September 1993; (xiv) the Italian Postal Company
  (Poste Italiane S.p.A.); or (xv) Cassa Depositi e Prestiti (a state-owned entity
  mainly responsible for extending loans to public administration bodies). The
  Intermediary will in turn deposit the shares with Monte Titoli (a centralized
  securities clearing system owned by the Bank of Italy and certain of the major
  Italian banks and financial institutions) or with another company authorized
  by CONSOB to operate a centralized clearing system. To transfer shares under
  the system introduced by Law 213/98, the owners of Shares are required to give
  instructions to their Intermediaries. If the transferee is a client of the transferor’s
  Intermediary, the Intermediary will simply transfer the shares from the transferor’s
  account to the account of the transferee. If, however, the transferee is a client
  of another Intermediary, the transferor’s Intermediary will instruct the
  company operating a centralized clearing system to transfer the shares to the
  account of the transferee’s Intermediary, which will then register the
  shares on the transferee’s account.

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If
  a shareholder needs to provide ownership of his/her/its shares, he/she/it can
  ask the Intermediary for a certificate stating that the Intermediary is holding
  the shares on deposit in the shareholder’s account. The Intermediary must
  issue the certificate within five days of the request and will not be allowed
  to transfer the corresponding shares until the certificate loses its validity
  or is returned.

Shareholders
  are allowed to exercise their rights only after they have deposited their share
  certificates with an Intermediary and authorized it to deposit the shares with
  a company operating a centralized clearing system.

|C. | Material contracts
|-- | ------------------

The
  Company and its subsidiaries have had transactions in the normal course of business
  with various other corporations. The amount of business involved in these transactions
  has not been material in relation to the businesses of the Company or its subsidiaries.
  See Item 7.A, “Major shareholders”, for the description of the Shareholders’
  Agreement.

|D. | Exchange controls
|-- | -----------------

There
  are currently no exchange controls in Italy. Residents of Italy may hold foreign
  currency and foreign securities of any kind, within and outside Italy. Non-residents
  may invest in Italian securities without restriction and may export cash, instruments
  of credit and securities, in foreign currency and in Euro, representing interest,
  dividends, other asset distributions and the proceeds of dispositions.

Residents
  and non-residents of Italy may effect any investments, disinvestments and other
  transactions entailing any transfer of assets to and from Italy, subject to
  the following provisions. Investments, disinvestments and any transfer of cash
  or bearer securities to and from Italy for amounts exceeding €12,500 must
  be made through a banking or other authorized intermediary, including banks
  located outside Italy. Certain procedural requirements are, however, imposed
  by law. Non-corporate residents of Italy effecting transfers to and from Italy
  in excess of €12,500 in one year without using domestic authorized banks
  and other financial intermediaries must disclose them in their annual tax declarations.
  Non-corporate residents must also give details in their tax declarations of
  financial assets held outside Italy at the end of the financial year and of
  transfers in excess of €12,500 to, from, within and between foreign countries
  in connection with such assets during the financial year. No declaration is
  required in respect of foreign investments and foreign income-earning assets
  that are exempt from income tax or subject to withholding tax in Italy. For
  corporate residents, there is no requirement for such declaration because such
  information is contained in their financial statements.

Authorized
  banks, financial and trust companies and other professional intermediaries are
  required to maintain records of transfers of cash and bearer securities in excess
  of €12,500 into and out of Italy made on behalf of individuals, non-profit
  entities and business enterprises. Such records must be kept for five years
  and may be inspected at any time by Italian tax and judicial authorities.

There
  can be no assurance that the present regulatory environment in or outside Italy
  will endure or that particular policies presently in effect will be maintained,
  although Italy is required to maintain certain regulations and policies by virtue
  of its membership in the EU and other international organizations and its adherence
  to various bilateral and multilateral international agreements.

|E. | Taxation
|-- | --------

Item
  10 “Additional Information” contains a brief summary of certain
  statutory and other information that is not covered elsewhere in the document,
  including, among other things, certain tax law issues under Italian and U.S.
  law applicable to listed companies. If required, holders of, and prospective
  investors in, the Savings Shares and the ADS should seek independent and full
  advice from their own legal counsel.

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The
  following is a summary of certain U.S. federal income and Italian tax matters.
  The summary does not purport to be a comprehensive description of all tax considerations
  that may be relevant to a decision to purchase or hold Savings Shares or ADSs.
  In particular, the summary deals only with beneficial owners who will hold Savings
  Shares or ADSs as capital assets and does not address the tax treatment of a
  beneficial owner who owns 10% or more of the voting shares of the Company. The
  summary does not discuss the treatment of Savings Shares or ADSs that are held
  in connection with a permanent establishment or fixed base through which a beneficial
  owner carries on business or performs personal services in Italy.

The
  summary is based upon tax laws and practice of the United States and Italy as
  in effect on the date of this annual report, which are subject to change. Investors
  and prospective investors in Savings Shares or ADSs should consult their own
  advisors as to the U.S., Italian or other tax consequences of the purchase,
  beneficial ownership and disposition of Savings Shares or ADSs, including, in
  particular, the effect of any state, local or other national tax laws.

For
  purposes of the summary, beneficial owners of Savings Shares or ADSs who are
  considered residents of the United States for purposes of the current income
  tax convention between the United States and Italy (the “Income Tax Convention”),
  and are not subject to an anti-treaty shopping provision that applies in limited
  circumstances, are referred to as “U.S. owners”. Beneficial owners
  who are citizens or residents of the United States, corporations organized under
  U.S. law, and U.S. partnerships, estates or trusts (to the extent their income
  is subject to U.S. tax either directly or in the hands of partners or beneficiaries)
  generally will be considered to be residents of the United States under the
  Income Tax Convention. Special rules apply to U.S. owners that are also residents
  of Italy.

For
  purposes of the Income Tax Convention, the current estate tax convention between
  the United States and Italy (the “Estate Tax Convention”) and the
  United States Internal Revenue Code of 1986, as amended, beneficial owners of
  ADRs evidencing ADSs will be treated as the beneficial owners of the Savings
  Shares represented by those ADSs.

For
  purposes of Italian taxation, the term “resident” means tax-resident
  individuals, corporations, partnerships or other commercial entities under Italian
  domestic law and any “double taxation treaty” provisions, if applicable.
  Special tax rules apply to investment funds in Italy.

Italian
  Taxation

Income
  Tax

Dividends
  paid to shareholders who are not residents of Italy are subject to withholding
  tax of 27% where they do not relate to permanent establishments of foreign bodies.
  Such a rate is reduced to 12.5% in case the underlying shares are savings shares.
  Up to four-ninths of the tax withheld may be recovered by a non-resident shareholder
  different from savings shares holder from the Italian treasury upon provision
  of evidence of full payment of income tax on such dividends in his or her country
  of residence in an amount at least equal to the total refund claimed. As an
  alternative, the possibility of applying the double taxation treaty regime providing
  for a lower withholding tax rate is available (see further). In connection with
  the abolition of the equalization tax, starting from January 1, 2001, shareholders
  resident in Italy are entitled to a tax credit equal to 56.25% of the gross
  amount of the dividend received to the extent that the dividend has been fully
  subject to regular taxation, with some exemptions provided by applicable law.
  Due to the reduction of the corporate tax rate to 34%, the above mentioned tax
  credit will be then reduced to 51.51%. The new rate will be applicable where
  the resolution concerning the dividend distribution occurs in the financial
  periods following the one in course at January 1, 2003.

The
  equalization tax ensures that the tax credit provided to an Italian resident
  shareholder is matched to the actual tax paid by the company on profits distributed.
  As a result of this abolition, the shareholder will have a full tax credit to
  the extent that the distributing company has paid tax on the distributed profit.
  The dividend and the tax credit are included in taxable income of the Italian
  resident shareholder, and the tax credit is deductible from relative tax due.
  In order to transfer to resident shareholders particular tax relief granted
  to the company, dividends, even not fully taxed, may be entitled to a tax credit,
  subject to certain limitations. The nature of the dividend attributed to the
  shareholder, together with the dividend distributed, is certified by the Company.

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Individuals
  who are resident of Italy and who are holders of insignificant shareholdings
  may elect, upon formal request, for the application of a substitute tax of 12.5%,
  thereby excluding the dividend from taxable income. See Item 10.E, “—
  Capital Gains Tax”. With the exception of bearer savings shares, Italian
  resident shareholders may elect to avoid the withholding tax and to include
  the dividend in their taxable income.

The
  27% withholding tax on dividends received by a non-resident shareholder may
  be reduced by virtue of an applicable double taxation treaty in force between
  Italy and the country of residence of the recipient. In order to obtain a reduced
  rate of withholding under an applicable tax treaty, a holder will generally
  have to file an application with the Company requesting the reduced rate of
  withholding under the specified treaty, together with a certification by the
  tax authorities of the holder’s country of residence that the holder is
  a resident of that country, is taxed on such income in that country and that,
  as far as is known to such tax authority, the holder has no permanent establishment
  of fixed base in Italy. Certain tax treaties may alternatively provide for the
  filing of specified forms with the Italian tax authorities in order to obtain
  a refund of taxes withheld in excess of the applicable treaty rate. Italy has
  concluded income tax conventions with over 50 foreign countries, including all
  members of the EU, Argentina, Australia, Brazil, Canada, Japan, New Zealand,
  Norway, Switzerland, the United States and some countries in Africa, the Middle
  East and the Far East. It should be noted, however, that treaties are not applicable
  if the holder is a tax-exempt entity or a transparent entity such as, with a
  few exceptions, a partnership or investment funds.

Under
  the income tax convention between the United States and Italy, dividends derived
  and beneficially owned by a U.S. resident who holds less than 10% of the Company’s
  shares are subject to an Italian withholding tax at a reduced rate of 15%, provided
  that the dividends are not effectively connected with a permanent establishment
  in Italy through which such resident carries on a business or a fixed base in
  Italy through which such resident performs independent personal services. In
  the case of ADSs, eligible ADS holders who are U.S. residents and comply with
  the certification procedures described below will, depending on when such certification
  is provided, either receive dividends reflecting withholding at the reduced
  rate of 15% or receive dividends reflecting withholding at the rate of 27%.
  In the latter instance, those holders will then be entitled to claim an additional
  payment of 12% of the dividend (representing the difference between the 27%
  rate and the 15% rate, and referred to herein as a “treaty payment”).
  The certification procedure will require the ADS holder to obtain from the U.S.
  Internal Revenue Service a form of certificate (Form 6166) with respect to each
  dividend payment. Certification requests are generally processed by the U.S.
  Internal Revenue Service within 30 days from the date of receipt; however, there
  may be delays. Accordingly, in order to be eligible for the procedure described
  below, eligible ADS holders should begin the process of obtaining Form 6166
  as soon as possible after receiving instructions from the Depositary on how
  to receive the reduced rate of withholding or claim a treaty payment.

The
  Depositary’s instructions, which will be sent to all eligible ADS holders
  on or about March 1 of each year, will specify certain deadlines for delivering
  to the Depositary any documentation required to obtain a treaty payment or a
  reduced rate of withholding, including the certification that the eligible ADS
  holders must obtain from the U.S. Internal Revenue Service. In the case of ADSs
  held through a broker or other financial intermediary, the required documentation
  should be delivered to such financial intermediary for transmission to the Depositary.
  In all other cases, the eligible ADS holders should deliver the required documentation
  directly to the Depositary. The Company and the Depositary have agreed that
  if the required documentation is received by the Company through the Depositary
  at least five business days prior to the date set for the payment of dividends
  on the ADSs and such documentation satisfies the requirements for a reduced
  rate of withholding, the Company will pay the dividend amounts in respect of
  all ADSs owned by such beneficial owner reflecting such reduced withholding
  rate (i.e., 15.0% for U.S. beneficial owners). With regard to those beneficial
  owners of ADSs as to whom the required documentation has not been received by
  the Company within such term, the amount initially made available to the Depositary
  for payment to such beneficial owner will reflect withholding at the 27% rate.
  In such case, the eligible beneficial owner of ADSs will be entitled to claim
  an additional payment (i.e., for U.S. beneficial owners, a payment equal to
  12% of the dividends). The Company and the Depositary have agreed that, if the
  required documentation is received by the Company up to 30 days prior to the
  date upon which the Company is required to forward to the Italian tax authorities
  the withheld amounts (which is currently each February 5 of the succeeding year
  in which the dividend was paid) and such documentation satisfies the requirements
  for a treaty payment, the Company will as soon as practicable after receipt
  of such certification by the Company pay such treaty payment to the Depositary
  for the benefit of the eligible beneficial owners of ADSs. After such deadline,
  the treaty payment must be claimed directly from the Italian tax authorities
  rather than through the Depositary. Expenses and extensive delays have been
  encountered by non-Italian residents seeking refunds from the Italian tax authorities.

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Transfer
  Tax

The
  stamp tax relief for the transfer of shares and ADSs, where at least one party
  of the transfer contract was a non-Italian resident, is no longer in force.
  With few exceptions, the transfer tax is currently payable at the following
  rates:

| | 1.40  (€0.072 per €51.65
      or fraction thereof) of the price at which the Savings Shares or ADSs are
      transferred when the transfer is made between private individuals or through
      the intervention of intermediaries other than banks or other investment
      services companies or stock brokers or SIMs;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 0.50  (€0.025 per €51.65
      or fraction thereof) of the price at which the Savings Shares or ADSs are
      transferred when the transfer is made either (i) between private persons
      and banks or other investment companies or stock brokers or SIMs or (ii)
      between private persons through the intervention of such professional intermediaries;
      and
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 0.12  (€0.0061 per €51.65
      or fraction thereof) of the price at which the Savings Shares or ADSs are
      transferred when the transfer is made between banks or other investment
      companies or stock brokers or SIMs.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
  mere change of the depositary (i.e., Monte Titoli or DTC) not involving a transfer
  of the ownership of the transferred Savings Shares or ADSs will not trigger
  the Italian transfer tax.

As
  of January 1, 1998, an exception to the transfer tax on securities was introduced
  and applies inter alia, to the following:

| | contracts concluded in regulated markets
      regarding the transfer of securities, shares, quotas and participations
      in corporations of any kind, including contracts between a qualified intermediary
      and his principal and between qualified intermediaries;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | off-market transactions regarding securities
      listed on a stock exchange, provided that such transactions occurred:
|- | ------------------------------------------------------------------------------------------------------------------------

| | a) | between banks or other investment companies
      or stock brokers or SIMs;                                                                                                             
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | between the subjects mentioned in (a) above,
      on the one hand, and non-resident persons or entities on the other hand;
      and                                                   
| | c) | between the subjects mentioned in (a) above,
      even if non-resident, on the one hand and undertakings for collective investment
      in transferable securities, on the other hand;

| | contracts related to sales of securities
      occurring to the context of a public offer (“offerta pubblica di
      vendita”) aimed at listing the securities on a stock exchange,
      or involving financial instruments already listed on a stock exchange; and
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | contracts regarding unlisted securities concluded
      between non-residents and banks or other authorized investment services
      companies or stock brokers or SIMs.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Capital
  Gains Tax

The
  tax treatment for disposals of securities made by Italian resident individuals
  and non-Italian resident individuals and companies, who do not carry on any
  trade or business in Italy throughout a permanent establishment or fixed base
  to which the ADSs or Savings Shares are attributable, depends on the relevant
  categories as follows:

      disposal
  of significant shareholdings  taxation at the rate of 27% of the gain;

      disposal
  by Italian resident of insignificant shareholdings of shares listed on regulated
  markets  taxation at the rate of 12.5% of the gain;

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      disposal
  by non-Italian resident owners of non significant shareholdings listed on regular
  markets are not taxable.

The
  criteria in order to distinguish significant and non-significant shareholdings
  have been amended. A significant shareholding is defined as the sale in any
  twelve month period of a participating interest representing more than:

      2%
  of the voting rights (or 5% of the capital) of companies listed on the regulated
  markets; or

      20%
  of the voting rights (or 25% of the capital) of other Italian companies and
  entities, i.e. non-listed companies. Savings Shares, which do not give the right
  to vote, are always considered as non-significant shareholding.

A
  shareholding is defined as “non-significant shareholding” where
  it does not exceed the threshold as set forth in the preceding sentence.

The
  above-mentioned gain on the disposal of shareholdings is determined as the difference
  between the disposal price and the cost or purchase value of the assets, increased
  by costs related to their production, including inheritance and gift tax, but
  excluding interest payable. Special rules for the calculation of the cost basis
  are applicable where the assets have been acquired by gift or inheritance or
  within an employment relationship.

With
  respect to disposals of securities made by Italian resident companies and commercial
  bodies, the capital gain may:

      increase
  taxable income which is subject to a tax rate equal to 34%;

      be
  subject to separate taxation at a rate equal to 19% if the shareholding has
  been held by the shareholder and registered as long term investments in the
  last three balance sheets relating to the last three preceding financial periods.
  In order to apply separate taxation, additional conditions, however, are required.

Different
  regimes for the actual taxation of the capital gain realized by resident individuals
  exist when the shareholdings are held through an Italian intermediary. The main
  features vary depending on the timing of taxation (cash-based versus accrued-based
  taxation); the election of an intermediary as withholding agent; and the possibility
  of compensating capital losses with gains, to the extent that two main separate
  aggregates are kept: gains and losses deriving from significant shareholdings
  and those deriving from non-significant interests.

Double
  taxation treaties may reduce or eliminate CGT. Pursuant to the income tax convention
  between the United States and Italy, a U.S. resident will not be subject to
  CGT unless the Savings Shares or ADSs form part of the business property of
  a permanent establishment of the holder in Italy or pertain to a fixed base
  available to a holder in Italy for the purpose of performing independent personal
  services. U.S. residents who sell Savings Shares may be required to produce
  appropriate documentation establishing that the above-mentioned conditions of
  non-taxability pursuant to the convention have been satisfied.

Inheritance
  and Gift Tax

Inheritance
  tax is no longer applicable in Italy on transfers of Savings Shares and ADSs
  occurring after October 25, 2001.

Italian
  gift tax is no longer applicable on transfers of Savings Shares and ADSs in
  favor of a spouse, direct descendants and relatives and other relatives up to
  the fourth degree.

Italian
  gift tax is payable on transfers of Savings Shares and ADSs by reason of a donation
  in favor of subjects that are different from those mentioned ones, even if the
  Savings Shares or the ADSs are held outside Italy, where the donors are Italian
  residents at the time of the taxable event. However, the tax is applicable only
  for the part of the gross value of the transferred good exceeding €180,760
  at a rate equal to the tax rates provided for the registration tax.

Where
  an Italian tax resident is beneficiary of the transfer deed, such deed, even
  if stipulated abroad, must be duly registered within 60 days at the Registry
  Office.

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Double taxation treaties may reduce Italian gift tax. Under the estate tax convention between the United States and Italy, a credit for the amount of any estate tax imposed by Italy and attributable to the Savings Shares or ADSs will, subject to certain limitations, be allowed against the tax imposed in respect of the Savings Shares or ADSs by the United States on the estate of a deceased person who, at the time of death, was a national of or domiciled in the United States. There is currently no gift tax convention between Italy and the United States.

United States Taxation

This discussion is intended only as a descriptive summary and does not purport to be a complete analysis or listing of all possible tax considerations. The discussion deals only with Savings Shares and ADSs held as capital assets and does not address any special United States tax consequences that may be applicable to U.S. Holders that are subject to special treatment under the United States Internal Revenue Code of 1986, as amended (the “Code”), such as dealers in securities, financial institutions, life insurance companies, persons holding Savings Shares or ADSs as part of a hedging or conversion transaction or a straddle or whose functional currency is not the United States Dollar. The summary is based in part on representations of the Depositary and assumes that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms. The discussion below is based on the provisions of the Code, and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified, possibly with retroactive effect, so as to result in federal income tax consequences different from those discussed below.

As used in this section, the term “U.S. Taxpayer” means a beneficial owner of Savings Shares or ADSs who or that is (i) a citizen or resident of the United States; (ii) a United States domestic corporation; or (iii) otherwise subject to U.S. federal income taxation on a net income basis in respect of such owner’s world wide income.

For the purposes of the Code, U.S. Taxpayers who own ADSs will be treated as owners of the underlying Savings Shares.

Dividends

Distributions (including treaty payments) paid on the Savings Shares or ADSs representing such Savings Shares generally will be treated as dividends for U.S. federal income tax purposes to the extent paid out of the Company’s current or accumulated earnings and profits as determined for U.S. federal income tax purposes, but will not be eligible for the dividends received deduction generally allowed to corporations. To the extent that a distribution exceeds the Company’s earnings and profits, it will be treated, first, as a non-taxable return of capital to the extent of the U.S. Taxpayer’s tax basis in the Savings Shares or ADSs (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by the U.S. Taxpayer on a subsequent disposition of the Savings Shares or ADSs), and thereafter as a capital gain. A U.S. Taxpayer must include in gross income, on the date of receipt by the U.S. Taxpayer (in the case of Savings Shares) or by the Depositary (in the case of ADSs) the gross amount of such dividends, including any Italian tax withheld therefrom, without regard to whether any portion of such tax may be refunded to the U.S. Taxpayer by the Italian tax authorities. The amount of any dividend (or treaty payment) paid in Euro will equal the Dollar value of the Euro received, calculated by references to the exchange rate in effect on the date the distribution is received regardless of whether the Euro are converted into Dollars and U.S. Taxpayers may recognize foreign currency gain or loss (generally treated as U.S. source ordinary gain or loss) upon the disposition of such Euro measured by the differences between such Dollar value and the amount realized on such disposition.

Subject
  to certain conditions and limitations, Italian tax withheld from dividends will
  be treated as a foreign income tax eligible for credit against the U.S. Taxpayer’s
  U.S. federal income tax liability. However, a U.S. Taxpayer will not be entitled
  to a deduction or foreign tax credit with respect to Italian tax that may be
  refunded to a U.S. Taxpayer pursuant to the income tax convention between the
  United States and Italy or Italian law. Accordingly, a U.S. Taxpayer who is
  eligible for, but does not apply to receive, a treaty payment will not be able
  to claim a deduction or foreign tax credit for that portion of Italian taxes
  withheld in excess of 15% of the dividend (i.e., 12% of the dividend), and the
  deduction or credit may be further limited to the extent that the U.S. Taxpayer
  is entitled to, but fails to apply for and to exhaust all effective and all
  practical remedies for, any additional refund of Italian tax withheld under
  the provisions of Italian law (as discussed above under “— Italian
  Taxation — Income Tax”). For the purposes of computing the foreign
  tax credit, dividends paid on the Savings Shares or ADSs will be treated as
  income from sources outside the United States, but generally will be grouped
  separately, together with other items of “passive” or, in the case
  of certain U.S. Taxpayers, “financial services” income.

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Passive Foreign Investment Company

A foreign corporation is a Passive Foreign Investment Corporation (a “PFIC”) in any taxable year in which, after taking into account the income and assets of certain subsidiaries pursuant to the applicable look-through rules, either (i) at least 75% of its gross income is passive income or (ii) at least 50% of the average value of its assets is attributable to assets that produce passive income or are held for the production of passive income. The Company believes that it is not a PFIC and does not expect to become a PFIC in the future for United States federal income tax purposes. This conclusion is a factual determination made annually and thus subject to change.

If the Company were a PFIC in any year during which a U.S. Taxpayer owned Savings Shares or ADSs, the U.S. Taxpayer would be subject to additional taxes and interest on any excess distributions received from the Company and any gain realized from the sale or other disposition of Savings Shares or ADSs (regardless of whether the Company continued to be a PFIC).

A
  U.S. Taxpayer has an excess distribution to the extent that distributions on
  Savings Shares or ADSs during a taxable year exceed 125% of the average amount
  received during the three preceding taxable years (or, if shorter, the U.S.
  Taxpayer’s holding period for the Savings Shares or ADSs). To compute
  the tax on an excess distribution or any gain, (i) the excess distribution or
  the gain is allocated rateably to each day in the U.S. Holder’s holding
  period for the Savings Shares or ADSs; (ii) amounts allocated to the period
  before the first day of the taxable year in which a foreign corporation becomes
  a PFIC, as well as amounts allocated to the current taxable year, are taxed
  as ordinary income; and (iii) amounts allocated to the foreign corporation’s
  prior taxable years, during which the foreign corporation was a PFIC, are taxed
  at the highest applicable marginal rate in effect for each year, and an interest
  charge is imposed to recover the deemed benefit from the deferred payment of
  the tax attributable to each year.

If the Company were a PFIC, U.S. holders of interests in a holder of Savings Shares or ADSs may be treated as indirect holders of their proportionate share of the Savings Shares or ADSs and may be taxed on their proportionate share of any excess distribution or gain attributable to the Savings Shares or ADSs. An indirect holder also must treat an appropriate portion of its gain on the sale or disposition of its interest in the actual holder as gain on the sale of Savings Shares or ADSs.

As an alternative to the excess distribution regime described above, United States shareholders of a foreign corporation that qualifies as a PFIC may elect to treat their interest in the PFIC under the Qualified Electing Fund (“QEF”) rules. A shareholder who has made a QEF election must annually include in income a pro rata share of the PFIC’s earnings and profits. The income recognized by the shareholder is categorized as ordinary income or capital gains in accordance with the character of the income as generated by the PFIC. Income recognised by a shareholder with respect to a QEF election also serves to increase the shareholder’s basis in the PFIC stock. Further, U.S. investors having made a QEF election may receive capital gain treatment upon any gain received in disposing of their PFIC stock.

Additionally, if stock in a PFIC which is owned by a U.S. Taxpayer is “marketable stock” at the close of the taxable year, an election may be made to include as ordinary income (or loss, not to exceed ordinary income previously recognized) the excess of the fair market value of such stock over the adjusted basis of such stock (or the excess of such basis over the fair market value of such stock). Income (or loss) recognized as the result of such an election increases (or decreases) the U.S. Taxpayer’s basis in the PFIC stock. The election will apply to the tax year for which it is made and all subsequent tax years unless the stock ceases to be marketable or the IRS allows the election to be revoked. In general, the tax and interest charge rules for PFIC’s that are not QEF’s generally do not apply to a U.S. Taxpayer for tax years for which this election is in effect.

Sale or Exchange of Shares

In general, a U.S. Taxpayer will recognize capital gain or loss for U.S. federal income tax purposes on the sale or exchange of Savings Shares or ADSs equal to the difference between the amount realized on the sale or exchange (or its dollar equivalent, determined at the spot rate on the date of disposition, if the amount realized is denominated in a foreign currency) and the U.S. Taxpayer’s adjusted basis in the Savings Shares or ADSs, as the case may be. In the case of individual, estate or trust Taxpayers, long-term capital gain tax rates (which are lower than the regular tax rates) will generally apply if the Taxpayer holds the capital asset more than one year. U.S. corporate Taxpayers are taxed on net capital gains at the regular corporate tax rates. Any such gain realized by a U.S. Taxpayer generally will be treated as U.S. source income for U.S. foreign tax credit purposes. The deductibility of capital losses is subject to limitations.

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Deposits and withdrawals of Savings Shares in exchange for ADSs will not result in taxable gain or loss for U.S. federal income tax purposes.

Information Reporting and Backup Withholding

In general, information reporting requirements will apply to dividends paid in respect of the Savings Shares or ADSs or the proceeds received on the sale or exchange of the Savings Shares or ADSs within the United States by non-corporate U.S. Taxpayers. Backup withholding may apply to payments to a U.S. Taxpayer of dividends or the proceeds of a sale or other disposition of Savings Shares or ADSs, if such holder fails to provide an accurate taxpayer identification number upon request, to certify that such holder is not subject to backup withholding, or otherwise to comply with the applicable requirements of backup withholding. The amount of any backup withholding from a payment to a U.S. taxpayer will be allowed as a credit against the U.S. Taxpayer’s United States federal income tax liability.

|F. | Dividends and paying agents
|-- | ---------------------------

Not applicable

|G. | Statement by experts
|-- | --------------------

Not applicable

|H. | Documents on display
|-- | --------------------



The documents concerning the Company referred to in the present annual report may be inspected at the registered offices of the Company, at Viale Italia 77, Lainate (Milan), Italy.

The Company is subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers. In accordance therewith, the Company is required to file reports, including annual reports on Form 20F and periodic reports on Form 6K, and other information with the U.S. Securities and Exchange Commission. These materials, including Form 20F, are available for inspection and copying at the Commission’s public reference facilities in Washington D.C., New York, New York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further information on the public reference rooms.

|I. | Subsidiary information
|-- | ----------------------



Not applicable

Item 11.   Quantitative and Qualitative Disclosures about Market Risk

See
  Item 5.B, “Operating results — Quantitative and Qualitative Disclosures
  about Market Risk”.



Item 12.   Description of Securities Other than Equity Securities

Not applicable

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PART II

Item 13.   Defaults, Dividend Arrearages and Delinquencies

Not applicable

Item 14.   Material Modifications to the Rights of Security Holders and Use of Proceeds

A.      Not applicable.

B.      Not applicable.

C.      Not applicable.

D.      Not applicable.

E.      Use of Proceeds

As of December 31, 2002, the offering under File No. 333-4398 has terminated and all of the offering proceeds registered thereunder (totaling $54,308,810 after deducting expenses) have been applied.

Item 15.   Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Within 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation.

Item 16.   [Reserved]

PART III

Item 17.   Financial Statements

Not applicable

Item 18.   Financial Statements

Reference is made to Item 19.A for a list of all financial statements filed as part of this annual report.

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Item 19. Exhibits

|Index to Financial Statements and Schedules                                                                     |  |  | Pages | 
|--------------------------------------------------------------------------------------------------------------- |  |  | ----- | 
|                                                                                                                |  |  |       | 
|Independent Accountants’ Report on the 2001 and 2002 Consolidated Financial Statements                          |  |  | F-2   | 
|Consolidated Balance Sheets as of December 31, 2001 and 2002                                                    |  |  | F-3   | 
|Consolidated Statements of Income for the Years Ended December 31, 2000, 2001 and 2002                          |  |  | F-4   | 
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 2001 and 2002                      |  |  | F-5   | 
|Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2000, 2001 and 2002 |  |  | F-7   | 
|Notes to the Consolidated Financial Statements                                                                  |  |  | F-9   | 

Index to Exhibits

|99.1 |  | List
      of Subsidiaries of the Company (attached to printed document)                                                                                                                                                                                                                                                           | 
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|99.2 |  | By-laws
      of the Company, as amended on April 28, 2000 (Italian and English), incorporated
      by reference to the exhibits filed with the Company’s Annual Report
      on Form 20F, filed with SEC on May 4, 2001                                                                                                          | 
|99.3 |  | Shareholders
      Agreement dated December 28, 1999 (Italian and English), incorporated by
      reference to the exhibits filed with the Company’s Annual Report on
      Form 20F, filed with SEC on May 4, 2001                                                                                                                | 
|99.4 |  | Deposit
      Agreement dated as of May 22, 1996 between SAES Getters S.p.A. and Citibank
      N.A. as Depositary and Holders and Beneficial Owners of American Depositary
      Receipts incorporated by reference to the exhibits filed with the Company’s
      Registration Statement Form F-1, filed with SEC on May 4, 1996 | 
|99.5 |  | Company’s
      Code of Conduct, incorporated by reference to the exhibits filed with the
      Company’s Form 6Kk filed with SEC on February 18, 2003                                                                                                                                                                             | 
|99.6 |  | Company’s
      Internal Dealing Code of Conduct, incorporated by reference to the exhibits
      filed with the Company’s Form 6K filed with SEC on February 18, 2003                                                                                                                                                             | 
|99.7 |  | Price
      Sensitive Information Procedures, incorporated by reference to the exhibits
      filed with the Company’s Form 6K filed with SEC on April 23, 2003                                                                                                                                                                    | 

The Company agrees to provide the Securities and Exchange Commission, upon request, with a list showing the number and a brief identification of each material foreign patent for an invention not covered by a United States patent.

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | SAES Getters S.p.A.
| | -------------------
| |                    
| |                    

|By: | /s/ Paolo della Porta            
|--- | ---------------------------------
|    |                                  
|    | Paolo della Porta                
|    | Chairman of the Board, President 
|    | and Group Chief Executive Officer

Date: April 23, 2003

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|Index
      to Financial Statements and Schedules                                                                           |  |  | Pages | 
|--------------------------------------------------------------------------------------------------------------------------- |  |  | ----- | 
|                                                                                                                            |  |  |       | 
|Independent Accountants’
      Report on the 2001 and 2002 Consolidated Financial Statements                                |  |  | F-2   | 
|Consolidated Balance
      Sheets as of December 31, 2001 and 2002                                                          |  |  | F-3   | 
|Consolidated Statements
      of Income for the Years Ended December 31, 2000, 2001 and 2002                                |  |  | F-4   | 
|Consolidated Statements
      of Cash Flows for the Years Ended December 31, 2000, 2001 and 2002                            |  |  | F-5   | 
|Consolidated Statements
      of Changes in Shareholders’ Equity for the Years Ended December 31,
      2000, 2001 and 2002 |  |  | F-7   | 
|Notes to the Consolidated
      Financial Statements                                                                        |  |  | F-9   | 

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholdersof SAES Getters S.p.A.

We have audited the accompanying consolidated balance sheets of SAES Getters S.p.A. (an Italian corporation) and its subsidiaries (the “Company”) as of December 31, 2002 and 2001, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2002. 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 international standards on auditing and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SAES Getters S.p.A. and its subsidiaries at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in Italy.

The accounting practices of the Company used in preparing the accompanying consolidated financial statements conform with accounting principles generally accepted in Italy, which vary in certain respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”). A description of these differences and adjustments required to conform consolidated net income for each of the three years in the period ended December 31, 2002 and consolidated shareholders’ equity as of December 31, 2002 and 2001 to U.S. GAAP are set forth in Note 23 to the consolidated financial statements.

| | PricewaterhouseCoopers S.p.A.
| | -----------------------------

Milan, Italy,April 4, 2003

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SAES GETTERS S.p.A. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAs of December 31, 2001 and 2002(Thousands of Euro or thousands of Dollars,
  except per share data)

|                                                                                                                                                          |  |  | 2001    |  |  |  |  |  | 2002    |  |  |  |  |  | 2002                                | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------- |  |  |  |  |  | ------- |  |  |  |  |  | ----------------------------------- | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|ASSETS                                                                                                                                                    |  |  | Euro    |  |  |  |  |  | Euro    |  |  |  |  |  | Dollars                             | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  | (translation
      for convenience) | 
|Current assets:                                                                                                                                           |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Cash and cash equivalents                                                                                                                                 |  |  | 70,546  |  |  |  |  |  | 78,759  |  |  |  |  |  | 82,579                              | 
|Marketable securities (Note
      5)                                                                                                                      |  |  | 10,457  |  |  |  |  |  | 5,261   |  |  |  |  |  | 5,516                               | 
|Accounts receivable (Note 6)                                                                                                                              |  |  | 28,588  |  |  |  |  |  | 25,568  |  |  |  |  |  | 26,808                              | 
|Other receivables and prepaid
      expenses (Note 7)                                                                                                     |  |  | 12,471  |  |  |  |  |  | 12,606  |  |  |  |  |  | 13,217                              | 
|Deferred income taxes (Note
      8)                                                                                                                      |  |  | 4,593   |  |  |  |  |  | 5,579   |  |  |  |  |  | 5,850                               | 
|Inventories (Note 9)                                                                                                                                      |  |  | 31,093  |  |  |  |  |  | 24,709  |  |  |  |  |  | 25,907                              | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Total current assets                                                                                                                                      |  |  | 157,748 |  |  |  |  |  | 152,482 |  |  |  |  |  | 159,877                             | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Property, plant and equipment,
      net (Note 10)                                                                                                        |  |  | 67,756  |  |  |  |  |  | 67,141  |  |  |  |  |  | 70,397                              | 
|Other investments (Note 11)                                                                                                                               |  |  | 432     |  |  |  |  |  |        |  |  |  |  |  |                                    | 
|Intangible assets, net (Note
      12)                                                                                                                    |  |  | 17,114  |  |  |  |  |  | 13,325  |  |  |  |  |  | 13,971                              | 
|Deferred income taxes (Note 8)                                                                                                                            |  |  | 3,937   |  |  |  |  |  | 1,236   |  |  |  |  |  | 1,296                               | 
|Other assets                                                                                                                                              |  |  | 1,155   |  |  |  |  |  | 1,104   |  |  |  |  |  | 1,158                               | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Total assets                                                                                                                                              |  |  | 248,142 |  |  |  |  |  | 235,288 |  |  |  |  |  | 246,699                             | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|LIABILITIES AND SHAREHOLDERS’
      EQUITY                                                                                                                |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Current liabilities:                                                                                                                                      |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Bank overdrafts (Note 13)                                                                                                                                 |  |  | 30,617  |  |  |  |  |  | 26,176  |  |  |  |  |  | 27,446                              | 
|Current portion of long-term
      debt (Note 16)                                                                                                         |  |  | 914     |  |  |  |  |  | 1,218   |  |  |  |  |  | 1,277                               | 
|Trade accounts payable                                                                                                                                    |  |  | 9,459   |  |  |  |  |  | 10,176  |  |  |  |  |  | 10,670                              | 
|Other payables (Note 14)                                                                                                                                  |  |  | 11,426  |  |  |  |  |  | 9,717   |  |  |  |  |  | 10,188                              | 
|Accrued liabilities and deferred
      income                                                                                                             |  |  | 2,793   |  |  |  |  |  | 2,521   |  |  |  |  |  | 2,643                               | 
|Income taxes payable (Note 15)                                                                                                                            |  |  | 3,180   |  |  |  |  |  | 3,653   |  |  |  |  |  | 3,830                               | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Total current liabilities                                                                                                                                 |  |  | 58,389  |  |  |  |  |  | 53,461  |  |  |  |  |  | 56,054                              | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Long-term liabilities:                                                                                                                                    |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Long-term debt, net of current
      portion (Note 16)                                                                                                    |  |  | 2,666   |  |  |  |  |  | 1,336   |  |  |  |  |  | 1,401                               | 
|Accrual for termination indemnities
      (Note 17)                                                                                                       |  |  | 9,488   |  |  |  |  |  | 9,932   |  |  |  |  |  | 10,414                              | 
|Other                                                                                                                                                     |  |  | 139     |  |  |  |  |  | 97      |  |  |  |  |  | 101                                 | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Total long-term liabilities                                                                                                                               |  |  | 12,293  |  |  |  |  |  | 11,365  |  |  |  |  |  | 11,916                              | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Total liabilities                                                                                                                                         |  |  | 70,682  |  |  |  |  |  | 64,826  |  |  |  |  |  | 67,970                              | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Commitments and contingencies
      (Note 19)                                                                                                             |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Shareholders’ equity (Note
      21):                                                                                                                     |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Capital stock, represented by
      13,874,930 Ordinary Shares and 9,625,070 Savings Shares, nominal value €0.52
      each at December 31, 2001 and 2002 |  |  | 12,220  |  |  |  |  |  | 12,220  |  |  |  |  |  | 12,813                              | 
|Legal reserve                                                                                                                                             |  |  | 2,444   |  |  |  |  |  | 2,444   |  |  |  |  |  | 2,563                               | 
|Paid-in capital in excess of
      nominal value                                                                                                          |  |  | 40,797  |  |  |  |  |  | 39,567  |  |  |  |  |  | 41,486                              | 
|Reserves from revaluation of
      assets                                                                                                                 |  |  | 3,026   |  |  |  |  |  | 3,026   |  |  |  |  |  | 3,173                               | 
|Reserve for treasury stock on
      hand                                                                                                                  |  |  | 1,230   |  |  |  |  |  | 2,505   |  |  |  |  |  | 2,626                               | 
|Other reserves and retained
      earnings                                                                                                                |  |  | 105,765 |  |  |  |  |  | 106,135 |  |  |  |  |  | 111,283                             | 
|Cumulative translation adjustments                                                                                                                        |  |  | 11,978  |  |  |  |  |  | 4,565   |  |  |  |  |  | 4,785                               | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Total shareholders’ equity                                                                                                                                |  |  | 177,460 |  |  |  |  |  | 170,462 |  |  |  |  |  | 178,729                             | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 
|Total liabilities and shareholders’
      equity                                                                                                          |  |  | 248,142 |  |  |  |  |  | 235,288 |  |  |  |  |  | 246,699                             | 
|                                                                                                                                                          |  |  |         |  |  |  |  |  |         |  |  |  |  |  |                                     | 

The accompanying notes are an integral part of the consolidated financial statements

F-3

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SAES GETTERS S.p.A. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEFor the years ended December 31, 2000,
  2001 and 2002(Thousands of Euro or thousands of Dollars)

|                                                              |  |  | 2000    |  |  |  |  |  | 2001    |   |  |  |  |  | 2002    |   |  |  |  |  | 2002                                |  
|------------------------------------------------------------- |  |  | ------- |  |  |  |  |  | ------- | - |  |  |  |  | ------- | - |  |  |  |  | ----------------------------------- | -
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|                                                              |  |  | Euro    |  |  |  |  |  | Euro    |   |  |  |  |  | Euro    |   |  |  |  |  | Dollars                             |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  | (translation
      for convenience) |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Net sales                                                     |  |  | 172,552 |  |  |  |  |  | 160,169 |   |  |  |  |  | 141,208 |   |  |  |  |  | 148,057                             |  
|Cost of sales                                                 |  |  | 88,356  |  |  |  |  |  | 85,594  |   |  |  |  |  | 79,752  |   |  |  |  |  | 83,620                              |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Gross
        profit                                          |  |  | 84,196  |  |  |  |  |  | 74,575  |   |  |  |  |  | 61,456  |   |  |  |  |  | 64,437                              |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Operating expenses:                                           |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Research
        and development                              |  |  | 10,561  |  |  |  |  |  | 12,302  |   |  |  |  |  | 13,612  |   |  |  |  |  | 14,272                              |  
|Selling                                                       |  |  | 20,155  |  |  |  |  |  | 23,088  |   |  |  |  |  | 20,590  |   |  |  |  |  | 21,589                              |  
|General
        and administrative                            |  |  | 19,637  |  |  |  |  |  | 22,227  |   |  |  |  |  | 17,225  |   |  |  |  |  | 18,061                              |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Total
        operating expenses                              |  |  | 50,353  |  |  |  |  |  | 57,617  |   |  |  |  |  | 51,427  |   |  |  |  |  | 53,922                              |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Operating
        income                                      |  |  | 33,843  |  |  |  |  |  | 16,958  |   |  |  |  |  | 10,029  |   |  |  |  |  | 10,515                              |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Non-operating
        income (expenses):                      |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Interest
        and other financial income, net (Note 22)    |  |  | 1,240   |  |  |  |  |  | 1,653   |   |  |  |  |  | 1,425   |   |  |  |  |  | 1,494                               |  
|Foreign
        exchange gains, net (Note 22)                 |  |  | 917     |  |  |  |  |  | 2,683   |   |  |  |  |  | 292     |   |  |  |  |  | 306                                 |  
|Equity
        in earnings (losses) of equity method investee |  |  | 14      |  |  |  |  |  | 39      |   |  |  |  |  | (14     | ) |  |  |  |  | (15                                 | )
|Other
        income (expenses), net (Note 22)                |  |  | 1,068   |  |  |  |  |  | (4,969  | ) |  |  |  |  | (637    | ) |  |  |  |  | (667                                | )
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Total
        non-operating income (expenses)                 |  |  | 3,239   |  |  |  |  |  | (594    | ) |  |  |  |  | 1,066   |   |  |  |  |  | 1,118                               |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Income before taxes                                           |  |  | 37,082  |  |  |  |  |  | 16,364  |   |  |  |  |  | 11,095  |   |  |  |  |  | 11,633                              |  
|Income taxes (Note 22)                                        |  |  | 9,841   |  |  |  |  |  | 2,278   |   |  |  |  |  | 4,631   |   |  |  |  |  | 4,856                               |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Net
        income                                            |  |  | 27,241  |  |  |  |  |  | 14,086  |   |  |  |  |  | 6,464   |   |  |  |  |  | 6,777                               |  
|                                                              |  |  |         |  |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  

The accompanying notes are an integral part of the consolidated financial statements

F-4

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Back to Contents

SAES GETTERS S.p.A. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the years ended December 31, 2000,
  2001 and 2002(Thousands of Euro or thousands of Dollars)

|                                                                                          |  |  | 2000    |   |  |  |  |  | 2001    |   |  |  |  |  | 2002    |   |  |  |  |  | 2002                                |  
|----------------------------------------------------------------------------------------- |  |  | ------- | - |  |  |  |  | ------- | - |  |  |  |  | ------- | - |  |  |  |  | ----------------------------------- | -
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|                                                                                          |  |  | Euro    |   |  |  |  |  | Euro    |   |  |  |  |  | Euro    |   |  |  |  |  | Dollars                             |  
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  | (translation
      for convenience) |  
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Cash flows
      from operating activities:                                               |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Net income                                                                                |  |  | 27,241  |   |  |  |  |  | 14,086  |   |  |  |  |  | 6,464   |   |  |  |  |  | 6,777                               |  
|Adjustments to reconcile net income to net cash provided by operating
        activities: |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Depreciation and amortization                                                             |  |  | 12,992  |   |  |  |  |  | 13,883  |   |  |  |  |  | 15,013  |   |  |  |  |  | 15,741                              |  
|Write down of assets                                                                      |  |  | 15      |   |  |  |  |  | 3,472   |   |  |  |  |  | 313     |   |  |  |  |  | 328                                 |  
|Provision for inventory obsolescence                                                      |  |  | 387     |   |  |  |  |  | 1,072   |   |  |  |  |  | 837     |   |  |  |  |  | 878                                 |  
|Provision for bad debts                                                                   |  |  | 281     |   |  |  |  |  | 809     |   |  |  |  |  | 359     |   |  |  |  |  | 377                                 |  
|Unrealized loss on marketable securities                                                  |  |  |        |   |  |  |  |  | 49      |   |  |  |  |  | 26      |   |  |  |  |  | 27                                  |  
|Accrual for termination indemnities                                                       |  |  | 1,848   |   |  |  |  |  | 2,095   |   |  |  |  |  | 2,951   |   |  |  |  |  | 3,094                               |  
|Equity in losses (earnings) of equity method investee                                     |  |  | (14     | ) |  |  |  |  | (39     | ) |  |  |  |  | 14      |   |  |  |  |  | 15                                  |  
|Net losses (gains) on disposal of property, plant and equipment                           |  |  | (1,329  | ) |  |  |  |  | 22      |   |  |  |  |  | 88      |   |  |  |  |  | 92                                  |  
|Deferred income tax expense (benefit)                                                     |  |  | (1,082  | ) |  |  |  |  | (3,673  | ) |  |  |  |  | 1,714   |   |  |  |  |  | 1,797                               |  
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|                                                                                          |  |  | 40,339  |   |  |  |  |  | 31,776  |   |  |  |  |  | 27,779  |   |  |  |  |  | 29,126                              |  
|Changes in operating assets and liabilities:                                              |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Decrease (increase) in accounts receivable                                                |  |  | (8,289  | ) |  |  |  |  | 8,169   |   |  |  |  |  | 2,661   |   |  |  |  |  | 2,790                               |  
|Decrease (increase) in other receivables and prepaid expense                              |  |  | 571     |   |  |  |  |  | (5,330  | ) |  |  |  |  | (134    | ) |  |  |  |  | (140                                | )
|Decrease (increase) in inventories)                                                       |  |  | (5,038  | ) |  |  |  |  | (3,895  | ) |  |  |  |  | 5,547   |   |  |  |  |  | 5,816                               |  
|Increase (decrease) in trade accounts payable                                             |  |  | 2,420   |   |  |  |  |  | (2,897  | ) |  |  |  |  | 614     |   |  |  |  |  | 644                                 |  
|Increase (decrease) in other payables                                                     |  |  | 3,899   |   |  |  |  |  | (3,182  | ) |  |  |  |  | (1,709  | ) |  |  |  |  | (1,792                              | )
|Increase (decrease) in accrued liabilities and deferred income                            |  |  | 268     |   |  |  |  |  | 937     |   |  |  |  |  | (272    | ) |  |  |  |  | (285                                | )
|Increase (decrease) in income taxes payable                                               |  |  | 2,012   |   |  |  |  |  | (969    | ) |  |  |  |  | 473     |   |  |  |  |  | 495                                 |  
|Payments of termination indemnities                                                       |  |  | (758    | ) |  |  |  |  | (1,881  | ) |  |  |  |  | (2,233  | ) |  |  |  |  | (2,341                              | )
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Net cash provided by operating activities                                                 |  |  | 35,424  |   |  |  |  |  | 22,728  |   |  |  |  |  | 32,726  |   |  |  |  |  | 34,313                              |  
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Cash flows
      from investing activities:                                               |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Purchases of property, plant and equipment                                                |  |  | (14,221 | ) |  |  |  |  | (23,887 | ) |  |  |  |  | (15,446 | ) |  |  |  |  | (16,195                             | )
|Proceeds from sales of property, plant and equipment                                      |  |  | 3,007   |   |  |  |  |  | 510     |   |  |  |  |  | 248     |   |  |  |  |  | 260                                 |  
|Purchases of marketable securities                                                        |  |  |        |   |  |  |  |  |        |   |  |  |  |  |        |   |  |  |  |  |                                    |  
|Proceeds from sales of marketable securities                                              |  |  | 2,819   |   |  |  |  |  | 3,175   |   |  |  |  |  | 6,445   |   |  |  |  |  | 6,757                               |  
|Purchases of intangible assets                                                            |  |  | (945    | ) |  |  |  |  | (1,391  | ) |  |  |  |  | (2,291  | ) |  |  |  |  | (2,402                              | )
|Decrease (increase) in other assets                                                       |  |  | 10      |   |  |  |  |  | 176     |   |  |  |  |  | 469     |   |  |  |  |  | 492                                 |  
|Cash paid on investments net of cash acquired                                             |  |  | (5,879  | ) |  |  |  |  | (2,517  | ) |  |  |  |  |        |   |  |  |  |  |                                    |  
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Net cash used by investing activities                                                     |  |  | (15,209 | ) |  |  |  |  | (23,934 | ) |  |  |  |  | (10,575 | ) |  |  |  |  | (11,088                             | )
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Cash flows
      from financing activities:                                               |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Dividends paid                                                                            |  |  | (4,763  | ) |  |  |  |  | (9,860  | ) |  |  |  |  | (5,980  | ) |  |  |  |  | (6,270                              | )
|Share buyback                                                                             |  |  |        |   |  |  |  |  | (1,230  | ) |  |  |  |  | (1,274  | ) |  |  |  |  | (1,336                              | )
|Increase (decrease) in bank overdrafts                                                    |  |  | 3,137   |   |  |  |  |  | 5,195   |   |  |  |  |  | (4,441  | ) |  |  |  |  | (4,656                              | )
|Proceeds from long-term debt                                                              |  |  |        |   |  |  |  |  |        |   |  |  |  |  | 1,057   |   |  |  |  |  | 1,108                               |  
|Repayments of long-term debt                                                              |  |  | (1,191  | ) |  |  |  |  | (716    | ) |  |  |  |  | (1,777  | ) |  |  |  |  | (1,863                              | )
|Other                                                                                     |  |  | 524     |   |  |  |  |  | 139     |   |  |  |  |  | 85      |   |  |  |  |  | 89                                  |  
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Net cash used by financing activities                                                     |  |  | (2,293  | ) |  |  |  |  | (6,472  | ) |  |  |  |  | (12,330 | ) |  |  |  |  | (12,928                             | )
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Effect of exchange rate differences                                                       |  |  | (1,014  | ) |  |  |  |  | 230     |   |  |  |  |  | (1,608  | ) |  |  |  |  | (1,685                              | )
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Increase (decrease) in cash and
      cash equivalents                                    |  |  | 16,908  |   |  |  |  |  | (7,448  | ) |  |  |  |  | 8,213   |   |  |  |  |  | 8,612                               |  
|Cash and cash
      equivalents at beginning of the year                                  |  |  | 61,086  |   |  |  |  |  | 77,994  |   |  |  |  |  | 70,546  |   |  |  |  |  | 73,967                              |  
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Cash and cash equivalents at
      end of the year                                        |  |  | 77,994  |   |  |  |  |  | 70,546  |   |  |  |  |  | 78,759  |   |  |  |  |  | 82,579                              |  
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Supplemental
      disclosure of cash flow data:                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Cash paid during the year for:                                                            |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  
|Interest                                                                                  |  |  | 1,637   |   |  |  |  |  | 1,511   |   |  |  |  |  | 668     |   |  |  |  |  | 700                                 |  
|Income taxes                                                                              |  |  | 6,382   |   |  |  |  |  | 10,570  |   |  |  |  |  | 6,315   |   |  |  |  |  | 6,621                               |  
|                                                                                          |  |  |         |   |  |  |  |  |         |   |  |  |  |  |         |   |  |  |  |  |                                     |  

The accompanying notes are an integral part of the consolidated financial statements

F-5

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|                                                                       | 2000   |   | 2001  |  | 2002 |  | 2002    | 
|---------------------------------------------------------------------- | ------ | - | ----- |  | ---- |  | ------- | 
|                                                                       |        |   |       |  |      |  |         | 
|                                                                       | Euro   |   | Euro  |  | Euro |  | Dollars | 
|Details of acquisitions and other
      changes in consolidation area: |        |   |       |  |      |  |         | 
|Assets                                                                 | 9,243  |   |      |  |     |  |        | 
|Liabilities (1)                                                        | (3,364 | ) | 2,517 |  |     |  |        | 
|                                                                       |        |   |       |  |      |  |         | 
|Cash paid                                                              | 5,879  |   | 2,517 |  |     |  |        | 
|Less cash acquired                                                     |       |   |      |  |     |  |        | 
|Cash paid on investments net
      of cash acquired                    | 5,879  |   | 2,517 |  |     |  |        | 
|                                                                       |        |   |       |  |      |  |         | 

(1) In 2000 this item included notes
  to sellers of €3,046 thousand. The balance of €2,517 thousand was
  paid to sellers in 2001. The difference between cash paid in 2001 and notes
  to sellers as of December 31, 2000 was primarily due to a reduction of the purchase
  price subsequent to the date of the acquisition.

The accompanying notes are an
  integral part of the consolidated financial statements

F-6

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SAES GETTERS S.p.A. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES
  IN SHAREHOLDERS’ EQUITYFor the years ended December 31, 2000,
  2001 and 2002(Thousands of Euro, except per share data)

|                                                                                                                                                                                | Capital
        Stock |            | Legal
      Reserve |         | Paid-in
      Capital in
      Excess of
      Nominal
      Value |        | Reserves
      from
      Revaluation
      of Assets |      | Reserve
      for Treasury
      Stock on hand |  | Other
      Reserves
      and
      Retained
      Earnings |  | Cumulative
      Translation
      Adjustments |  | Total   |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ---------- | ------------------- | ------- | ------------------------------------------------------------------ | ------ | ----------------------------------------------------- | ---- | ---------------------------------------------- |  | ------------------------------------------------------------ |  | ---------------------------------------------- |  | ------- | -
|                                                                                                                                                                               
|Ordinary                                                                                                                                                                        |                       | Preference |                     | Savings
|                                                                                                                                                                                |                       |           
|Shares                                                                                                                                                                          |                       | Euro       | Shares              |         | Euro                                                               | Shares |                                                       | Euro
|                                                                                                                                                                                |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Balance, December 31, 1999                                                                                                                                                      | 13,656,180            |            | 7,053               |         | 218,750                                                            |        | 113                                                   |      | 9,625,070                                      |  | 4,971                                                        |  | 2,427                                          |  | 51,297  |  
|                                                                                                                                                                                |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Appropriation of 1999 income:                                                                                                                                                   |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Dividends (€0.196 for each
      of the 13,656,180 Ordinary Shares, €0.207 for each of the 218,750 Preference
      Shares and €0.212 for each of the 9,625,070 Savings Shares) |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Conversion of Preference Shares
      into Ordinary Shares at the ratio of one Ordinary Share for one Preference
      Share                                                    | 218,750               |            | 113                 |         | (218,750                                                           | )      | (113                                                  | )    |                                                |  |                                                              |  |                                                |  |         |  
|Right issue following conversion
      of share capital into Euro                                                                                                               |                       |            | 49                  |         |                                                                    |        |                                                       |      |                                                |  | 34                                                           |  |                                                |  |         |  
|Reserves from revaluation of
      assets                                                                                                                                       |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Transfer to reserve for purchase
      of treasury stock                                                                                                                        |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  | (10,500 | )
|Unrealized gain from translation
      of foreign subsidiaries’
      financial statements                                                                                      |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Net income for the year                                                                                                                                                         |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|                                                                                                                                                                                |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Balance, December 31, 2000                                                                                                                                                      | 13,874,930            |            | 7,215               |         |                                                                   |        |                                                      |      | 9,625,070                                      |  | 5,005                                                        |  | 2,427                                          |  | 40,797  |  
|                                                                                                                                                                                |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|                                                                                                                                                                                |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Appropriation of 2000 income:                                                                                                                                                   |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Dividends (€0.413 for each
      of the 13,874,930 Ordinary Shares and €0.429 for each of the 9,625,070
      Savings Shares)                                                   |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Legal reserve                                                                                                                                                                   |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  | 17                                             |  |         |  
|Transfer to reserve for treasury
      stock on hand                                                                                                                            |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Unrealized gain from translation
      of foreign subsidiaries’ financial statements                                                                                            |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Net income for the year                                                                                                                                                         |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|                                                                                                                                                                                |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  
|Balance, December 31, 2001                                                                                                                                                      | 13,874,930            |            | 7,215               |         |                                                                   |        |                                                      |      | 9,625,070                                      |  | 5,005                                                        |  | 2,444                                          |  | 40,797  |  
|                                                                                                                                                                                |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |         |  

F-7

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SAES GETTERS S.p.A. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES
  IN SHAREHOLDERS’ EQUITYFor the years ended December 31, 2000, 2001 and 2002, Continued(Thousands of Euro, except per share data)

|                                                                                                                  | Capital
        Stock |            | Legal
      Reserve |         | Paid-in
      Capital in
      Excess of
      Nominal
      Value |        | Reserves
      from
      Revaluation
      of Assets |      | Reserve
      for Treasury
      Stock on hand |  | Other
      Reserves
      and
      Retained
      Earnings |  | Cumulative
      Translation
      Adjustments |  | Total  |  
|----------------------------------------------------------------------------------------------------------------- | --------------------- | ---------- | ------------------- | ------- | ------------------------------------------------------------------ | ------ | ----------------------------------------------------- | ---- | ---------------------------------------------- |  | ------------------------------------------------------------ |  | ---------------------------------------------- |  | ------ | -
|                                                                                                                 
|Ordinary                                                                                                          |                       | Preference |                     | Savings
|                                                                                                                  |                       |           
|Shares                                                                                                            |                       | Euro       | Shares              |         | Euro                                                               | Shares |                                                       | Euro
|                                                                                                                  |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |        |  
|Balance, December
      31, 2001                                                                                  | 13,874,930            |            | 7,215               |         |                                                                   |        |                                                      |      | 9,625,070                                      |  | 5,005                                                        |  | 2,444                                          |  | 40,797 |  
|Appropriation
      of 2001 income:                                                                               |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |        |  
|Dividends:
      
      €0.25 for each of the 13,874,930 Ordinary Shares (of which treasury
      stock n.76,650) |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |        |  
|€0.2656 for each of the
      9,625,070 Savings Shares (of which treasury stock n.97,950)                         |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |        |  
|Transfer to
      reserve of treasury stock on hand                                                               |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |        |  
|Transfer to reserve for purchase
      treasury stock                                                             |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  | (1,230 | )
|Unrealized
      gain from translation of foreign subsidiaries’
      financial statements                        |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |        |  
|Other movements                                                                                                   |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |        |  
|Net income
      for the year                                                                                     |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |        |  
|                                                                                                                  |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |        |  
|Balance, December 31, 2002                                                                                        | 13,874,930            |            | 7,215               |         |                                                                   |        |                                                      |      | 9,625,070                                      |  | 5,005                                                        |  | 2,444                                          |  | 39,567 |  
|                                                                                                                  |                       |            |                     |         |                                                                    |        |                                                       |      |                                                |  |                                                              |  |                                                |  |        |  

F-8

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SAES GETTERS S.p.A. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Operations

SAES
  Getters S.p.A. (the “Company”) headquartered in Lainate, Milan,
  Italy, is an Italian public company listed on the Mercato Telematico Azionario
  (“MTA”) of the Borsa Italiana S.p.A.

In
  May 1996, the Company issued 3,500,000 Savings Shares in the United States and
  Canada in the form of American Depositary Shares (“ADS”). Each ADS
  represents one Savings Share. Since May 1996, the ADSs of the Company have been
  listed on The Nasdaq Stock Market.

The
  Company is the world leader in getter technology used to create and maintain
  vacuum and purified gas environments. High vacuum and purified gas environments
  are required in the production of a wide range of products in several high to
  medium technology industries, as well as in scientific applications, such as
  traditional electronics, semiconductors, lighting, telecommunications, aerospace
  and appliances and laboratory physics experiments.

The
  Group’s primary products are: “getters”, which are used to
  improve and maintain a vacuum, gas purifiers, which are used to remove trace
  impurities from process gases, and gas analyzers apparatuses, which are used
  to detect residual trace impurities in such gases. A getter is a device composed
  of metal or a metal alloy which exhibits a chemical affinity for specific gases
  and, when introduced into an evacuated device, absorbs the targeted gaseous
  molecules present, creating and maintaining an appropriate vacuum or, when used
  for gas purification purposes, creating a highly purified gas.

The
  Company is organized into two “Aggregates”: the Components Aggregate
  and the Equipment Aggregate.

Substantially
  all of the Group’s manufacturing of its gas purifiers currently takes
  place in a single production facility located in San Luis Obispo, California.
  Substantially all of the Group’s manufacturing of stand-alone instruments
  and integrated analytical systems is carried out in a single production facility
  located in Sparks, Maryland. All of the Group’s processing of barium alloy,
  the primary material used in the production of evaporable getters, takes place
  in a single production facility located in Avezzano, Italy.

2. Summary of Significant Accounting
  and Reporting Policies

Basis
  of Presentation

The
  consolidated financial statements of the Company have been prepared in accordance
  with accounting principles prescribed by Italian law and supplemented by the
  accounting principles issued by the Consiglio Nazionale dei Dottori Commercialisti
  e dei Ragionieri,the Italian National Professional Accounting Board, (collectively,
  “Italian GAAP”). Italian GAAP differs in certain respects from generally
  accepted accounting principles in the United States of America (“U.S.
  GAAP”). A description of these differences and their effects on net income
  and shareholders’ equity is set forth in Note 23.

The
  preparation of the financial statements in conformity with Italian GAAP requires
  management to make certain estimates and assumptions, which affect the reported
  earnings, financial position and various disclosures. Actual results could differ
  from those estimates.

The
  financial statements have been reformatted from the original Italian statutory
  financial statement presentation and include certain additional disclosures
  in order to conform more closely to the form and content of financial statements
  required by Regulation S-X of the United States Securities and Exchange Commission
  (the “SEC”).

Following
  the adoption of a different presentation for some items in 2002, the corresponding
  amounts for the previous years have been reclassified to conform to the current
  year’s presentation.

A
  statement of cash flows is not required under Italian law. The statement of
  cash flows has been prepared in accordance with U.S. GAAP using the indirect
  method. The Company began to publish its consolidated financial statements in
  Euro beginning in the second quarter of 2001. The consolidated financial statements
  for the years ended December 31, 2001 and 2002 are published in Euro.

F-9

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Consolidated
  financial data relating to prior years, which were originally published in Lire,
  have been translated into Euro using the fixed exchange rate of €1.00 =
  Lit. 1,936.27. In this annual report, references to "Dollars" or "$" are to
  the currency of the United States, references to "Euro" or “€”
  are to the common European currency and references to “Lira”, “Lire”
  or “Lit.” are to the former currency of Italy which, as of February
  28, 2002, is no longer legal tender in Italy.

Principles
  of Consolidation

The
  consolidated financial statements include the accounts of SAES Getters S.p.A.,
  and its wholly-owned subsidiaries (collectively, the “Group”): Saes
  Advanced Technologies S.p.A., Saes Getters USA, Inc. (and its wholly-owned subsidiary
  Saes Pure Gas, Inc.), Saes Getters Japan Co. Ltd., Saes Getters Korea Corporation
  (37.48% directly owned and 62.52% indirectly through Saes Getters International
  Luxembourg S.A.), Saes Getters Singapore Pte Ltd., Saes Getters (Deutschland)
  GmbH, Saes Getters (GB) Ltd., Saes Getters France S.a.r.l., Saes Getters International
  Luxembourg S.A. (99.92% directly owned and 0.08% indirectly through Saes Advanced
  Technologies S.p.A.) and its wholly-owned subsidiaries (FST Consulting International,
  Inc., Molecular Analytics, Inc., Saes Getters Technical Service (Shanghai) Co.,
  Ltd. and Saes Getters Ireland Limited).

Investments
  in which the Company has significant restrictions in its ability to control
  (due to the fact that, notwithstanding the majority ownership, the subsidiary
  Bylaws grant the minority shareholder substantive participating rights which
  allow them to perform corporate actions and require unanimity of consent for
  certain resolutions that are significant to directing and carrying on activities
  in the ordinary course of business) are accounted for under line by line proportional
  method (Nanjing Saes Huadong Getters Company Limited, the “NSHG Joint
  Venture”, 65% owned).

The
  financial statements of each of the foreign subsidiaries have been converted
  to Italian GAAP.

Unrealized
  intercompany profits, losses, and related tax affects are eliminated, together
  with all intercompany receivables, payables, revenues, and expenses arising
  on transactions between consolidated companies which have not been realized
  with third parties.

The
  financial statements of foreign subsidiaries have been translated into Euro
  by applying the exchange rates prevailing at December 31, 2001 and 2002 to the
  respective balance sheet items and the average exchange rates for 2000, 2001
  and 2002 to the corresponding income statement accounts. The translation effect
  has been reflected in the shareholders’ equity caption “Cumulative
  translation adjustments”.

Cash
  and Cash Equivalents

Cash
  and cash equivalents consist of cash on hand and short-term deposits with banks,
  with original maturities of less than 90 days.

Marketable
  Securities

Marketable
  securities are stated at the lower of cost or market value. For the Italian
  companies of the Group, market value is determined by the average market price
  during the last month of the period presented. For all other subsidiaries, market
  value is determined as the price on the last day of the year. If a market price
  is not available, market value is determined by references to securities with
  similar characteristics or management’s best estimate.

Marketable
  securities include investments with original maturities of less than 90 days.
  In addition, securities with maturities greater than one year are classified
  as current assets since it is not the Company’s intent to hold these securities
  to maturity. The Company considers these investments to be highly liquid.

Marketable securities also include
  the Group’s repurchases of shares of its own common stock, which are reflected
  as treasury stock and are recorded at cost.

F-10

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Inventories

Inventories
  are stated at the lower of cost or net realizable value. Cost is determined
  on a first-in, first-out (FIFO) basis, and inventories include the direct costs
  of materials and labor and variable and fixed indirect costs. Provision for
  potentially obsolete or slow-moving inventory is made based on management’s
  analysis of inventory levels and future sales forecasts. If market conditions
  are less favourable than those projected by management, additional inventory
  reserves may be required.

Property,
  Plant and Equipment

Property,
  plant and equipment are stated at cost, except for certain fixed assets (mainly
  buildings, machinery and equipment) of the Group which were revalued in accordance
  with applicable Italian monetary revaluation laws in 1975, 1983, 1991 and 2000.
  Revaluations have been reflected in the shareholders’ equity caption “Reserves
  from revaluation of assets”.

Depreciation
  is provided on a straight-line basis using annual rates that approximate the
  estimated useful economic lives of the related assets. The rates applied are
  as follows:

|Buildings                     |  |  | 2.5-3 | %
|----------------------------- |  |  | ----- | -
|Machinery and equipment       |  |  | 10-25 | %
|Furniture, fixtures and other |  |  | 7-25  | %

Major
  renewals and improvements are capitalized. Ordinary maintenance and repairs
  and minor improvements that do not extend asset lives are expensed as incurred.

Gains
  and losses recognized on sales of fixed assets are recorded in the period in
  which the asset is sold.

At
  December 31, 2001 and 2002, no property, plant and equipment were pledged as
  collateral.

As
  permitted by Italian law, leased property, plant and equipment are considered
  operating leases and the payments are charged to operations when incurred.

Accounts
  Receivable and Payable

Accounts
  receivable are recorded at their net realizable value. Accounts payable are
  recorded at their nominal value.

Foreign
  Currency Transactions and Translations

Receivables
  and payables in foreign currency, as well as all bank accounts, securities and
  other financial items in foreign currency are recorded in local currency at
  the historical rate of exchange existing at the date of the related operations.

Exchange
  gains and losses realized at collection of receivables in foreign currency,
  payment of payables in foreign currency, bank accounts operations in foreign
  currency, loan payments in foreign currency and selling of securities in foreign
  currency are reflected in the income statement caption “Foreign exchange
  gains (losses), net”.

Accounts
  receivable and payable denominated in foreign currencies are reflected at the
  year-end exchange rates. The resulting gains and losses are recorded in the
  statement of income. An exception exists for long-term accounts receivable and
  payable. At period end, when the translation of all existing long-term accounts
  receivable and payable in foreign currency to local currency using rates of
  exchange existing at the financial statements date results in a net gain, such
  gain is included in the caption “Accrued liabilities and deferred income”.

F-11

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Intangible
  Assets

The
  excess of the cost over the fair value of net assets of purchased businesses
  is recorded as goodwill and is amortized on a straight-line basis over periods
  of 10 years or less. The cost of other acquired intangibles is amortized on
  a straight-line basis over their estimated useful lives, generally from three
  to five years. Goodwill is periodically reviewed for impairment. The carrying
  value of goodwill would be deemed to be impaired if the carrying amount of a
  reporting unit (including goodwill) exceeds its fair value. If goodwill is deemed
  to be impaired, the impairment charge is measured using the goodwill’s
  estimated fair value.

Accrual
  for Termination Indemnities

The
  accrual for termination indemnities has been computed according to the provisions
  of law, national collective labor contracts and local labor contracts.

Under
  Italian law, deferred compensation accrues in favor of employees which they
  (or in the event of their death, their heirs) are entitled to collect upon termination
  of employment. The amount payable related to each year’s service is calculated
  (approximately 1/13th of total remuneration) on the basis of the employee’s
  remuneration for that year and is subject to annual revaluations based on increases
  in the Italian cost-of-living index (“ISTAT”). Accordingly, the
  amount accrued represents the benefits to which each employee is entitled if
  the employee were to separate from the Company immediately.

The
  Group has additional termination indemnity plans for employees of certain Group
  companies. The annual accrual is based upon specific criteria contained within
  the employees’ contracts.

Net
  Sales and Revenue Recognition

Net
  sales in the consolidated statements of income are represented by gross sales
  from operations, net of sales returns, allowances and discounts. Sales returns
  and discounts are recorded as a reduction of revenue in the period in which
  the related sales are recognized. Revenues from other sources are recorded as
  “other income”. Revenue from sales is recognized upon delivery of
  the related goods or completion of the services or the contract work in progress.

Professional
  Service Activities

Revenues
  from professional service activities related to quality assurance, quality control
  and material inspection of the gas distribution systems in the semiconductor
  and other industries, and revenues from service consisting in supplying and
  coordinating specialized manpower in connection with the construction of telecommunication
  towers are recorded as gross sales from operations, net of sales allowances
  and discount, as work is performed and expenses are incurred. Revenues recognized
  but not yet billed to clients have been recorded in line “accounts receivable,
  trade” in the balance sheet.

Research
  and Development Costs

Research
  and development costs are expensed in the period in which they are incurred.
  Investment grants from government agencies are deferred and recognized as income
  in the period in which the research expenditure is incurred.

Advertising
  Costs

All
  advertising costs are expensed in the period in which they are incurred.

Income
  Taxes

Income
  taxes currently payable are provided for on the basis of reasonable estimates
  of the liability for the year, in accordance with the existing legislation of
  the countries in which the Group operates.

F-12

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Deferred
  tax assets and liabilities are recognized for the future tax consequences attributable
  to temporary differences between the financial statement carrying amounts of
  existing assets and liabilities and their respective tax bases. Deferred tax
  assets and liabilities are measured using the enacted tax rates expected to
  be applicable in the fiscal years in which these temporary differences are expected
  to be recovered or settled.

As
  a result of the introduction of accounting principle No. 25 issued by the Italian
  National Professional Accounting Board, as from January 1, 1999 deferred tax
  assets and advance taxes relating to tax loss carry-forwards and temporary differences
  are also recognized to the extent that a “reasonable certainty”
  exists that future taxable income will be available against which they can be
  utilized.

Certain
  fixed assets were revalued by the Company to amounts in excess of historical
  cost with a corresponding amount included in “Reserves from revaluation
  of assets”. In accordance with Italian tax legislation, a substitute tax
  was paid on certain of the reserves depending on the year of revaluation, at
  the time the fixed assets were revalued. This substitute tax paid entitles the
  Company to deduct for tax purposes the depreciation on the revalued assets.
  Should such reserves be distributed in the future, Italian national tax (IRPEG)
  would be payable at the rate in force at the moment of distribution. Pursuant
  to Italian GAAP rules, no deferred taxes have been provided for in relation
  to such domestic subsidiary revaluation reserves, since it is not foreseen that
  the reserves will be distributed in the foreseeable future.

Foreign
  Exchange Contracts

The
  Company enters into foreign exchange contracts to reduce the risk that the eventual
  net cash inflows in foreign currency resulting from sales to foreign customers
  will be adversely affected by changes in exchange rates. Deferred gainsand losses
  are recognized when the future sales are recognized. The Company does not enter
  into foreign exchange contracts for speculative purposes.

Investment
  Tax Credits

Investment
  tax credits are reflected as a reduction of income tax expense in the year the
  Group’s income taxes payable are reduced.

3. Translation of Euro Amounts
  into Dollars Amounts

The
  financial statements are stated in Euro. Translations of Euro amounts into Dollars
  are included solely for the convenience of the reader, using the Noon Buying
  Rate certified for customs purposes by the Federal Reserve Bank of New York
  as of December 31, 2002, which was €1.00 = $1.0485. The convenience translations
  should not be construed as a representation that the Euro amounts have been,
  could have been, or could in the future be, converted into Dollars at this or
  any other rate of exchange.

4. Restricted Bank Deposits

As
  of December 31, 2001 and 2002, the following bank deposits were subject to withdrawal
  restrictions (in thousands of Euro).

|                           |  | 2001 |  | 2002 |  | Remarks                          | 
|-------------------------- |  | ---- |  | ---- |  | -------------------------------- | 
|                           |  |      |  |      |  |                                  | 
|Cash and cash equivalents: |  |      |  |      |  |                                  | 
|KorAm
        Bank         |  | 21   |  | 15   |  | Guarantee for loans for employee | 

Restricted
  bank deposits are classified as cash and cash equivalents in the balance sheet.

F-13

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

5. Marketable Securities

As
  of December 31, 2001 and 2002, the carrying amount of marketable securities
  was €10,457 thousand and €5,261 thousand, respectively. As of December
  31, 2002, marketable securities primarily include quotas of investment funds
  denominated in Euro. They also include an amount of €2,505 thousand of
  treasury stock repurchased during the years 2001 and 2002 to increase liquidity
  and to maintain the trend of trading activity traditionally achieved by the
  Company’s share.

The following table sets forth the
  number of shares of treasury stock and their cost as of December 31, 2001 and
  2002:

|                                                 |  | 2001                    |  | 2002                    | 
|------------------------------------------------ |  | ----------------------- |  | ----------------------- | 
|                                                 |  |                         |  |                         | 
|                                                 |  | Number of Shares(units) |  | Cost(Thousands of Euro) | 
|                                                 |  |                         |  |                         | 
|Treasury stock held by SAES Getters
      S.p.A. |  |                         |  |                         | 
|– Ordinary Shares                                |  | 76,650                  |  | 692                     | 
|– Savings Shares                                 |  | 97,950                  |  | 538                     | 
|                                                 |  |                         |  |                         | 
|Total treasury stock                             |  | 174,600                 |  | 1,230                   | 
|                                                 |  |                         |  |                         | 

The
  Company considers this investment to be highly liquid.

6. Accounts Receivable

Accounts
  receivable amounted to €28,588 thousand and €25,568 thousand as of
  December 31, 2001 and 2002, respectively, net of the allowance for doubtful
  accounts of €1,527 thousand €819 thousand as of December 31, 2001
  and 2002, respectively. Included in accounts receivable, are unbilled revenues
  which amounted to €1,194 thousand and €1,168 thousand as of December
  31, 2001 and 2002, respectively.

7. Other Receivables and Prepaid
  Expenses

Other
  receivables and prepaid expenses at December 31, 2001 and 2002, consisted of
  the following (in thousands of Euro):

|                                             |  | 2001   |  | 2002   | 
|-------------------------------------------- |  | ------ |  | ------ | 
|                                             |  |        |  |        | 
|Receivables from tax authorities             |  | 3,568  |  | 4,885  | 
|VAT receivables                              |  | 5,090  |  | 4,863  | 
|Deposits                                     |  | 72     |  | 56     | 
|Prepaid expenses                             |  | 1,079  |  | 1,074  | 
|Accrued income                               |  | 116    |  | 110    | 
|Other items                                  |  | 2,546  |  | 1,618  | 
|                                             |  |        |  |        | 
|Total other receivables and prepaid expenses |  | 12,471 |  | 12,606 | 
|                                             |  |        |  |        | 

As
  of December 31, 2002, receivables from tax authorities were primarily related
  to tax credits on dividends collected from the Group’s subsidiaries and
  prepayments of income taxes. These receivables will be partially utilized against
  the payment of 2002 income taxes.

8. Deferred Income Taxes

During
  1997, significant tax reforms have been introduced by the Italian Government.
  These changes include the introduction of a regional production tax (“IRAP”),
  a dual income tax, abolition of the equalization tax and reform of the stock
  transfer tax.

F-14

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

On December 24, 1997, the Italian
  parliament approved IRAP to be effective January 1, 1998. The effect was that
  the local tax of 16.2% (“ILOR”), as well as other taxes (i.e. tax
  on equity), were abolished and replaced by IRAP at a rate of 4.25%. Effective
  January 1, 2001, the national tax (“IRPEG”) was reduced from 37%
  to 36%, resulting in a tax rate of approximately 40.25% for 2001 and 2002. The
  largest impact of this legislation was that it changed the basis upon which
  certain items are taxed or deemed non-deductible. The calculation of taxable
  income for IRPEG purposes remained unchanged. However, in order to calculate
  income for IRAP purposes, certain adjustments are necessary for items that are
  now non-tax deductible (generally all employee costs, interest and certain accruals).
  Consequently, the Company’s effective tax rate may differ from the cumulative
  statutory tax rate of approximately 40.25% in 2001 and 2002.

Effective
  January 1, 2003 IRPEG has been reduced from 36% to 34%, resulting in a new tax
  rate of approximately 38.25%. Deferred tax assets and liabilities as of December
  31, 2002 were adjusted to take into consideration the new tax rate.

The
  total amount of the deferred income taxes amounted to €8,530 thousand and
  €6,815 thousand as of December 31, 2001 and 2002, respectively, and primarily
  represented the tax effects of temporary differences between the financial statement
  carrying amounts of existing assets and liabilities and their respective tax
  bases. The non-current portions of the deferred income taxes are €3,937
  thousand and €1,236 thousand as of December 31, 2001 and 2002 respectively.

9. Inventories

Inventories
  as of December 31, 2001 and 2002 consisted of the following (in thousands of
  Euro):

|                              |  | 2001   |   | 2002   |  
|----------------------------- |  | ------ | - | ------ | -
|                              |  |        |   |        |  
|Raw materials and others      |  | 13,008 |   | 10,576 |  
|Work in progress              |  | 6,981  |   | 5,809  |  
|Finished goods                |  | 13,235 |   | 10,764 |  
|                              |  |        |   |        |  
|                              |  | 33,224 |   | 27,149 |  
|Inventory valuation allowance |  | (2,131 | ) | (2,440 | )
|                              |  |        |   |        |  
|Total
        inventories     |  | 31,093 |   | 24,709 |  
|                              |  |        |   |        |  

The
  Company’s inventory valuation allowance for obsolete or slow-moving inventory
  is made based on management’s analysis of inventory levels and future
  sales forecasts.

F-15

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

10.   Property, Plant and Equipment

Property, plant and equipment as of December 31, 2001 and 2002 consisted of the following (in thousands of Euro):

|                               |  |  | 2001    |  |  |  |  | 2002    | 
|------------------------------ |  |  | ------- |  |  |  |  | ------- | 
|                               |  |  |         |  |  |  |  |         | 
|Property, plant and equipment: |  |  |         |  |  |  |  |         | 
|Land and buildings             |  |  | 27,195  |  |  |  |  | 33,825  | 
|Machinery and equipment        |  |  | 95,728  |  |  |  |  | 97,127  | 
|                               |  |  |         |  |  |  |  |         | 
|                               |  |  | 122,923 |  |  |  |  | 130,952 | 
|                               |  |  |         |  |  |  |  |         | 

|Less: Accumulated depreciation                   |  |  |         |   |  |  |  |         |  
|------------------------------------------------ |  |  | ------- | - |  |  |  | ------- | -
|Buildings                                        |  |  | (7,330  | ) |  |  |  | (7,747  | )
|Machinery
        and equipment                  |  |  | (57,635 | ) |  |  |  | (58,046 | )
|                                                 |  |  |         |   |  |  |  |         |  
|                                                 |  |  | (64,965 | ) |  |  |  | (65,793 | )
|                                                 |  |  |         |   |  |  |  |         |  
|Property, plant and equipment,
      net:        |  |  |         |   |  |  |  |         |  
|Land
        and buildings                       |  |  | 19,865  |   |  |  |  | 26,078  |  
|Machinery
        and equipment                  |  |  | 38,093  |   |  |  |  | 39,081  |  
|                                                 |  |  |         |   |  |  |  |         |  
|                                                 |  |  | 57,958  |   |  |  |  | 65,159  |  
|                                                 |  |  |         |   |  |  |  |         |  
|Construction-in-progress                         |  |  | 9,798   |   |  |  |  | 1,982   |  
|                                                 |  |  |         |   |  |  |  |         |  
|Total
        property, plant and equipment, net |  |  | 67,756  |   |  |  |  | 67,141  |  
|                                                 |  |  |         |   |  |  |  |         |  



F-16

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Property, plant and equipment includes the revaluation of certain assets pursuant to Italian law. The gross amount of such revaluations at December 31, 2001 and 2002 amounted to €3,697 thousand and €3,637 thousand, respectively. The net book value of revalued fixed assets at December 31, 2001 and 2002 amounted to €1,736 thousand and €1,405 thousand, respectively.

11.   Other Investments

Other investments amounted to €432 thousand as of December 31, 2001. This value was related to the Group’s investment in Japan Getters Inc. joint venture, which was owned 50% by Saes Getters Japan Co. Ltd. and 50% in the aggregate by Japan Metals & Chemicals Co. Ltd. and Mitsui & Co. Ltd. and was accounted for using the equity method. Japan Getters Inc. sold non-evaporable getters and provided related services to its customers. In 2002, Japan Getters Inc. was liquidated.

12.   Intangible Assets

The balances for intangibles as of December 31, 2001 and 2002 were comprised of the following (in thousands of Euro):

|                                     |  |  | 2001    |   |  |  |  | 2002    |  
|------------------------------------ |  |  | ------- | - |  |  |  | ------- | -
|                                     |  |  |         |   |  |  |  |         |  
|Goodwill                             |  |  | 17,304  |   |  |  |  | 15,587  |  
|Trademarks and licenses              |  |  | 2,470   |   |  |  |  | 2,579   |  
|Patents                              |  |  | 1,307   |   |  |  |  | 1,374   |  
|Other costs                          |  |  | 3,966   |   |  |  |  | 7,811   |  
|Deferred charges                     |  |  | 9,321   |   |  |  |  | 10,986  |  
|                                     |  |  |         |   |  |  |  |         |  
|                                     |  |  | 34,368  |   |  |  |  | 38,377  |  
|Less: Accumulated amortization       |  |  | (17,254 | ) |  |  |  | (25,012 | )
|                                     |  |  |         |   |  |  |  |         |  
|Total
        intangible assets, net |  |  | 17,114  |   |  |  |  | 13,325  |  
|                                     |  |  |         |   |  |  |  |         |  

The
  line item “goodwill” primarily relates to the acquisitions of Trace
  Analytical, Inc. (merged into Molecular Analytics, Inc. in 2002) and FST Consulting
  International, Inc. in 1998, PCP, Inc. (subsequently merged into Trace Analytical,
  Inc.) in 1999, and Molecular Analytics, Inc., in 2000. Goodwill generated in
  these acquisitions is amortized over ten years. The decrease in goodwill is
  due to currency translation differences resulting from the strenghtening of
  the Euro against the U.S. Dollar.

Other costs consist primarily of start up costs and, to a lesser extent, personnel and training costs. Deferred charges consist primarily of purchased computer software and leasehold improvements.

13.   Bank Overdrafts

As of December 31, 2001, the Group had uncollateralized overdrafts of €30,617 thousand. At December 31, 2002 the Group had uncollateralized overdrafts denominated in Dollars amounting to $27.5 million (€26,176 thousand). The total uncollateralized credit line facilities available at December 31, 2001 and 2002 amounted to €58,429 thousand and €46,444 thousand, respectively, of which €27,812 thousand and €20,269 thousand, respectively, were available for further borrowing. The weighted average interest rates as of December 31, 2001 and 2002 were 4.34% and 2.27%, respectively.

F-17

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

14.   Other Payables

Other payables as of December 31, 2001 and 2002 consisted of (in thousands of Euro):

|                                               | 2001   |  | 2002  | 
|---------------------------------------------- | ------ |  | ----- | 
|                                               |        |  |       | 
|Vacation and other employee entitlements       | 5,911  |  | 4,176 | 
|Withholding taxes and equity
      tax payable | 1,423  |  | 1,413 | 
|Social security payables                       | 1,867  |  | 1,868 | 
|Advances from customers                        | 123    |  | 134   | 
|Other items                                    | 2,102  |  | 2,126 | 
|                                               |        |  |       | 
|Total
        other payables                   | 11,426 |  | 9,717 | 
|                                               |        |  |       | 

The decrease in the line “vacation and other employee entitlements” is mainly due to the payment of employees severance related to the restructuring plans. Total accrued severance as of December 31, 2001 was €1,319 thousand, and the remaining severance accrual was €156 thousand as of December 31, 2002. The difference between the balance as of December 31, 2001 and December 31, 2002 was paid to the Company’s employees included in the restructuring plan.

15. Income Taxes Payable

Income taxes payable of €3,180 thousand and €3,653 thousand at December 31, 2001 and 2002, respectively, represents corporate and other taxes on income due within the next operating year.

16.   Long-Term Debt

Long-term debt, as of December 31, 2001 and 2002, consisted of the following borrowings (in thousands of Euro):

|                                            |       |   |        |   | FairValue | 
|------------------------------------------- | ----- | - | ------ | - | --------- | 
|                                            |       |   |        |   |           | 
|                                            | 2001  |   | 2002   |   | 2002      | 
|                                            |       |   |        |   |           | 
|Banca Commerciale Italiana 
      Shanghai | 2,912 |   | 992    |   | 992       | 
|Other loans                                 | 668   |   | 1,562  |   | 1,562     | 
|                                            |       |   |        |   |           | 
|Total                                       | 3,580 |   | 2,554  |   | 2,554     | 
|                                            |       |   |        |   |           | 
|Less: current portion                       | (914  | ) | (1,218 | ) |           | 
|                                            |       |   |        |   |           | 
|Non-current portion                         | 2,666 |   | 1,336  |   |           | 
|                                            |       |   |        |   |           | 

The “Banca Commerciale Italiana  Shanghai” loan represents a five year long term loan with the Group’s subsidiary Nanjing Huadong Getters Co. Ltd. The total loan facility is up to a maximum of $7,400 thousand bearing interest at Libor plus 0.15%. At December 31, 2002, borrowings outstanding amounted to $1,600 thousand, denominated in Dollars bearing interest at 2.125%. Maturity date of the loan agreement is April 22, 2003. The amounts included in the table above are based on 65% of the borrowing outstanding at the end of period due to the fact that Nanjing Huadong Getters Co. Ltd. is consolidated on a proportional basis.

The “Other loans” are denominated in Euro and include at December 2002 outstanding amounts for long-term loans for €1,345 thousand with San Paolo IMI (six-month interest rate 1%), €177 thousand with IBM Italia Servizi Finanziari (interest rate 0%) and €40 thousand with Interbanca (interest rate 4%).

Maturities of debt are as follows:

|                               | Amount | 
|------------------------------ | ------ | 
|                               |        | 
|Year ending
      December 31: |        | 
|2003                           | 1,218  | 
|2004                           | 223    | 
|2005                           | 200    | 
|2006                           | 204    | 
|Thereafter                     | 709    | 
|                               |        | 
|                               | 2,554  | 
|                               |        | 

At December 31, 2001 and 2002 no long-term debt was collateralized.

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

17. Accrual for Termination Indemnities

The balances for termination and other indemnities as of December 31, 2001 and 2002 consisted of the following (in thousands of Euro):

|                                                    | 2001  |  | 2002  | 
|--------------------------------------------------- | ----- |  | ----- | 
|                                                    |       |  |       | 
|Obligatory employees’ termination
      indemnities | 7,874 |  | 7,970 | 
|Other termination indemnities                       | 1,614 |  | 1,962 | 
|                                                    |       |  |       | 
|                                                    | 9,488 |  | 9,932 | 
|                                                    |       |  |       | 

18. Defined Contribution Plans

Saes Getters USA, Inc. (“Saes USA”) has established the Saes Getters 401(k) Plan (the “Plan”) which has been adopted also by its wholly owned subsidiary Saes Pure Gas, Inc. and by its sister companies FST Consulting International, Inc. and Molecular Analytics, Inc.

Under the Plan provisions, eligible employees may contribute an amount up the maximum IRS allowed limit on compensation on a pre-tax basis. The Company makes matching contributions up to 4.0% of an employee’s compensation. The Companies can also make discretionary contributions to the 401K Plan, which are allocated based on the employee's level of compensation. During 2001 and 2002, Saes USA and its subsidiary for the above contribution plans expensed approximately €418 thousand and €397 thousand, respectively.

FST Consulting International, Inc. has adopted the Saes Getters 401(k) plan. The expense related to the Plan for the years ended December 31, 2001 and 2002 was €508 thousand and €256 thousand, respectively. The contribution payable is included in accrued expenses in the Balance Sheet.

Molecular Analytics, Inc. has adopted the Saes Getters 401(k) Plan. The expense related to the Plan for the year ended December 31, 2001 and 2002 was €93 thousand and €103 thousand, respectively. The amount related to 2001 included the expense incurred by Trace Analytical, Inc., which was merged with Molecular Analytics, Inc. in 2002.

Effective August 1, 2001, Saes USA approved a non-qualified deferred compensation plan to provide specified benefits to a select group of management and highly compensated employees who contribute materially to the continued growth, development and future business success of the Company and its affiliated entities that sponsor this deferred compensation plan. This plan was subsequently adopted by its wholly owned subsidiary and also its sister companies FST Consulting International, Inc. and Molecular Analytics, Inc. For each year, a participant may elect to defer a minimum annual deferral amount of $2,500. Participants are permitted to defer up to a maximum of 50% of their base annual salary and up to a maximum of 100% of their bonus, commissions and severance pay. Participants of this deferred compensation plan are 100% vested in their deferral amount. SAES USA, its subsidiary, and its sister companies have all elected to fund the liabilities associated with the non qualified plan into a Trust account.

19.   Commitments and Contingencies

Commitments and contingencies as of December 31, 2001 and 2002 included guarantees made by the Group to third parties as well as commitments made to third parties (in thousands of Euro):

|                                               | 2001   |  | 2002   | 
|---------------------------------------------- | ------ |  | ------ | 
|                                               |        |  |        | 
|Lease guarantees                               | 6,192  |  | 6,192  | 
|Bank guarantees                                | 10,752 |  | 12,511 | 
|Bank loan guarantee                            | 1,568  |  | 534    | 
|Other                                          | 1,477  |  | 793    | 
|                                               |        |  |        | 
|Total
        guarantees provided by the Group | 19,989 |  | 20,030 | 
|                                               |        |  |        | 
|Other off balance sheet items:                 |        |  |        | 
|Leased
        assets                          | 9,745  |  | 8,264  | 
|Leasing
        obligations                    | 2,544  |  | 1,180  | 
|Foreign
        exchange contracts             | 28,426 |  |       | 

F-19

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

“Lease guarantees” includes guarantees issued by the Company for the benefit of the Company’s subsidiary located in Avezzano (Italy). These guarantees represent commitments by the Company that future lease payments will be made by Saes Advanced Technologies S.p.A. to a third party. In the event that Saes Advanced Technologies S.p.A. defaults on such lease payments, Saes Getters S.p.A. is responsible for the lease obligation. The lease guarantees expire in March 2003.

“Bank guarantees” includes guarantees issued by banks to the Italian tax authorities on behalf of the Group’s Italian companies for VAT reimbursements. In the event that the banks are required to honor the guarantees and make payments to the Italian tax authorities on the Group’s behalf, the Group is required to reimburse the banks for such guaranteed amounts. These bank guarantees generally have terms of five years.

The Company has guaranteed 100% of the outstanding bank loan amount ($1,600 thousand) of its proportionally consolidated subsidiary, Nanjing Saes Huadong Getters Co. Ltd. In the event that the subsidiary defaults on the repayment of this loan, Saes Getters S.p.A. is responsible to pay the outstanding loan amount, of which 65% is already reflected as a liability in the Group’s financial statements and 35% of which would be paid on the behalf of third parties without recourse. The “Bank loan guarantee” amounts of €1,568 thousand and €534 thousand therefore represent the portion of this guarantee made by the Company on the behalf of third parties as of December 31, 2001 and 2002, respectively. This bank guarantee expires on the loan due date of April 22, 2003.

“Leasing obligations” represent the total, inclusive of interest and the value of the final redemption, of finance leasing instalments to be paid to the leasing companies (Intesa Leasing S.p.A. €2,165 thousand and €1,069 thousand as of December 31, 2001 and 2002, respectively; Fime Leasing S.p.A. €313 thousand and €75 thousand as of December 31, 2001 and 2002, respectively). The remaining portion of €36 thousand as of December 31, 2002 is related to leasing agreements signed by Saes Getters Japan Co. Ltd. The leasing agreement made by the Company with Intesa Leasing S.p.A. has duration of 8 years and relates to the office building and manufacturing plant in Lainate (Milan). The leasing contract with Fime Leasing S.p.A. mainly relates to the building of Saes Advanced Technologies S.p.A. in Avezzano (Italy) and has duration of 8 years.

“Foreign exchange contracts” as of December 31, 2001reflect the value of currency hedging operations entered into by Group companies to hedge sales from exchange risk of currencies fluctuation. Due to the short-term maturities of these instruments, the fair value of forward exchange contracts as of December 31, 2001, based on the prevailing exchange rates at that date, approximated the contractual value of €28,426 thousand. The Company had not foreign exchange contracts open as of December 31, 2002.

20. Lease Commitments

The Group leases certain assets under long-term capital leases and has the option to purchase the facilities for a nominal cost at the termination of the leases. As permitted by Italian law, the costs of leased property, plant and equipment have not been capitalized at December 31, 2001 and 2002.

Future minimum payments for leases were as follows (in thousands of Euro):

|                                     |       |  
|------------------------------------ | ----- | -
|Years ending December 31, 2003       | 1,163 |  
|Thereafter                           | 17    |  
|                                     |       |  
|Total
        minimum lease payments | 1,180 |  
|Less: Amount representing interest   | (90   | )
|                                     |       |  
|                                     | 1,090 |  
|                                     |       |  

F-20

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

In
  addition, the Group leases a manufacturing plant, offices, office equipment
  and vehicles under non-cancelable operating lease agreements which expire at
  various dates through fiscal year 2007. The approximate future lease payments
  under these leases for the five years immediately subsequent to December 31,
  2002 and in aggregate are:

|Years ending December 31,         |       | 
|--------------------------------- | ----- | 
|Less than one year                | 1,322 | 
|1-3 years                         | 1,535 | 
|4-5 years                         | 398   | 
|After 5 years                     |      | 
|                                  |       | 
|Total operating lease obligations | 3,255 | 
|                                  |       | 

21. Shareholders' Equity

Capital
  Stock

On
  April 28, 2000, the Company’s extraordinary meeting resolved to exchange
  its capital stock from Lire to Euro, in accordance with Italian Legislative
  Decree No. 213/1998. As a consequence of such resolution and of a capital increase
  to fix some rounding differences deriving from such exchange, the aggregate
  nominal value of the Company’s stock is equal to €12,220,000 represented
  by a total of 23,500,000 shares, nominal value €0.52 each.

On
  May 11, 2000, holders of Preference Shares approved the resolution of the extraordinary
  shareholders meeting held on April 28, 2000 to exchange Preference Shares into
  Ordinary Shares at an exchange rate ratio of one Ordinary Share for one Preference
  Share. After such exchange, the Company’s stock consists of 13,874,930
  Ordinary Shares and 9,625,070 Savings Shares.

Savings
  Shares have voting rights at special meetings of holders of Savings Shares,
  and have no voting rights at ordinary or extraordinary meetings of shareholders.
  Holders of Savings Shares have the right to receive an annual preferential dividend
  of 25% of the nominal value of their Savings Shares. Such dividend right accumulates
  for a maximum of two successive years and must be paid in full to holders of
  the Savings Shares during such period to the extent that the Company pays any
  dividends. In the event that dividends are paid on Ordinary Shares, holders
  of Savings Shares have a preferential right to receive a dividend 3% greater
  (based on nominal value) than that received by holders of Ordinary Shares.

Italian
  law and the Company’s by-laws provide that the holders of Savings Shares
  have priority over holders of Ordinary Shares to distributions upon liquidation,
  up to the nominal value of their Savings Shares.

Shareholders’
  Equity Reserves

“Other
  reserves and retained earnings”, in conformity with Italian law on consolidated
  accounts, comprise all components of shareholders’ equity of the consolidated
  subsidiaries.

The
  “legal reserve” of the Company represents earnings restricted as
  to the payment of dividends pursuant to the Civil Code. Under the Civil Code,
  5% of the Company’s net income must be retained as a legal reserve until
  the reserve equals 20% of capital stock. The legal reserve amounted to €2,444
  thousand at December 31, 2001 and 2002.

Under
  Italian law, “paid in capital in excess of nominal value” amounts
  cannot be paid as a dividend if the legal reserve is not equal to 20% of the
  aggregate nominal value of the Company's issued capital stock.

The
  “reserve for treasury stock on hand”, amounting to €1,230 thousand
  and €2,505 thousand at December 31, 2001 and 2002, respectively, represents
  the cost of the treasury stock purchased during 2001 and 2002.

F-21

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Pursuant
  to Italian law, the purchase of the Company’s treasury stock is authorized
  by the shareholders meeting, which establishes the terms and conditions of issue.
  A separate reserve within shareholders’ equity (“Other reserves
  and retained earnings”) is established for the total amount approved in
  the shareholders’ meeting. The par value of treasury stock purchased must
  not exceed one tenth of share capital.

In
  accordance with Italian GAAP, purchased treasury stock is recorded as an asset
  within the caption “Marketable securities”. In addition, a specific
  reserve for treasury stock “Reserves for treasury stock on hand’
  is recorded for the same amount. Such specific reserve is established by means
  of a reclassification from the reserve created in “other reserves and
  retained earnings” following its approval during the shareholders’
  meeting.

22. Consolidated Statements of
  Income

Cost
  of Sales and Operating Expenses

The
  following items have been expensed in cost of sales and operating expenses during
  the years ended December 31, 2000, 2001 and 2002 (in thousands of Euro):

|                                  | 2000  |  | 2001  |  | 2002   | 
|--------------------------------- | ----- |  | ----- |  | ------ | 
|                                  |       |  |       |  |        | 
|Amortization of intangible assets | 4,209 |  | 4,188 |  | 3,613  | 
|Depreciation of tangible assets   | 8,783 |  | 9,695 |  | 11,400 | 
|Provision for doubtful accounts   | 281   |  | 809   |  | 359    | 
|Leasing and rental expenses       | 3,595 |  | 3,928 |  | 3,476  | 

Non
   Operating Income and Expenses

Financial
  income/expense in the consolidated statements of income for the years ended
  December 31, 2000, 2001 and 2002, consisted of the following (in thousands of
  Euro):

|                                                       | 2000   |   | 2001   |   | 2002   |  
|------------------------------------------------------ | ------ | - | ------ | - | ------ | -
|                                                       |        |   |        |   |        |  
|Interest and other financial
      income, net:        |        |   |        |   |        |  
|Interest income                                        | 3,742  |   | 3,413  |   | 2,232  |  
|Other financial income                                 | 291    |   | 212    |   | 149    |  
|Interest expenses                                      | (2,073 | ) | (1,498 | ) | (684   | )
|Other financial expenses                               | (720   | ) | (474   | ) | (272   | )
|                                                       |        |   |        |   |        |  
|Total interest and other financial
        income, net | 1,240  |   | 1,653  |   | 1,425  |  
|                                                       |        |   |        |   |        |  
|Foreign exchange losses, net:                          |        |   |        |   |        |  
|Exchange gains                                         | 4,996  |   | 7,075  |   | 4,040  |  
|Exchange losses                                        | (4,079 | ) | (4,392 | ) | (3,748 | )
|                                                       |        |   |        |   |        |  
|Total foreign exchange losses,
        net             | 917    |   | 2,683  |   | 292    |  
|                                                       |        |   |        |   |        |  

Other
  Income (Expenses), Net

The
  following table sets forth the main items included in “Other income (expenses),
  net” for the years ended December 31, 2000, 2001 and 2002 (in thousands
  of Euro):

|                                                                  | 2000  |   | 2001   |   | 2002 |  
|----------------------------------------------------------------- | ----- | - | ------ | - | ---- | -
|                                                                  |       |   |        |   |      |  
|Capital gain on the sale of a
      building located in Milan     | 1,276 |   |       |   |     |  
|Impairment of Molecular Analytics,
      Inc. goodwill            |      |   | (2,512 | ) |     |  
|Impairment of Getters Corporation
      of America goodwill       |      |   | (391   | ) |     |  
|Non-recurring costs associated
      with reduction of personnel  |      |   | (1,479 | ) |     |  
|Non-recurring costs associated
      with inventory write-down    |      |   | (368   | ) |     |  
|Non-recurring costs associated
      with fixed assets write-down |      |   | (570   | ) |     |  
|Other, net                                                        | (208  | ) | 351    |   | (637 | )
|                                                                  |       |   |        |   |      |  
|Other income (expenses), net                                      | 1,068 |   | (4,969 | ) | (637 | )
|                                                                  |       |   |        |   |      |  

F-22

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

In
  December 2000 the Company sold a building of 6,514 square meters located in
  Milan, Italy, which was unutilized since 1996, generating a capital gain of
  €1,276 thousand.

In
  2001, impairment charges of €2,512 thousand and €391 thousand, were
  recorded to write-down a portion of the goodwill attributable to Molecular Analytics,
  Inc. and Getters Corporation of America, respectively. During 2001, the restructuring
  plans realized by the Company, in both the Equipment Aggregate and the Components
  Aggregate, resulted in (i) non-recurring restructuring costs associated with
  reduction of personnel for an amount of €1,479 thousand, (ii) an inventory
  writedown of €368 thousand and (iii) a writedown of fixed assets for an
  amount equal to €570 thousand.

Income
  Taxes

Details
  of the income taxes for the years ended December 31, 2000, 2001 and 2002 are
  as follows (in thousands of Euro):

|                          | 2000   |  | 2001   |  | 2002    |  
|------------------------- | ------ |  | ------ |  | ------- | -
|                          |        |  |        |  |         |  
|Income before taxes:      |        |  |        |  |         |  
|Domestic                  | 23,925 |  | 16,108 |  | 13,136  |  
|Foreign                   | 13,157 |  | 256    |  | ( 2,041 | )
|Total income before taxes | 37,082 |  | 16,364 |  | 11,095  |  
|                          |        |  |        |  |         |  

|                                 | 2000   |   | 2001   |   | 2002  | 
|-------------------------------- | ------ | - | ------ | - | ----- | 
|                                 |        |   |        |   |       | 
|Provision for income taxes:      |        |   |        |   |       | 
|Current                          | 10,922 |   | 6,363  |   | 3,514 | 
|Deferred                         | (1,081 | ) | (4,085 | ) | 1,117 | 
|Total provision for income taxes | 9,841  |   | 2,278  |   | 4,631 | 
|                                 |        |   |        |   |       | 

23. Reconciliation To Accounting
  Principles Generally Accepted in the United States of America

The
  Company’s financial statements have been prepared in accordance with Italian
  GAAP, which differs in certain respects from U.S. GAAP. Differences that have
  an effect on consolidated net income and shareholders’ equity are as follows:

Income
  Taxes

Current
  tax expense (benefit) is based on the amount estimated to be payable calculated
  on the basis of the tax legislation currently in force.

The
  effect of deferred taxation on temporary differences in reporting of income
  and expense items for financial accounting and tax purposes is accounted for
  using the full liability method.

As
  a result of the introduction of accounting principle No. 25 issued by the Italian
  National Professional Accounting Board, as from January 1, 1999, deferred tax
  assets and advance taxes relating to tax loss carry-forwards and temporary differences
  are also recognised to the extent that a reasonable certainty exists that future
  taxable income will be available against which they can be utilised. No taxes
  are provided in relation to the distribution of certain reserves within shareholder’s
  equity.

Under
  U.S. GAAP, income taxes are required to be accounted for in accordance with
  Statement of Financial Accounting Standards No. 109 (“SFAS 109”).
  Deferred income taxes reflect the impact of temporary differences between the
  carrying values of assets and liabilities recognized for U.S. GAAP financial
  reporting purposes and the tax bases of assets and liabilities and are measured
  using the currently enacted tax rates and laws in each of the relevant jurisdictions.
  Deferred tax assets are reduced by a valuation allowance, if based on the weight
  of available evidence, it is more likely than not that some portion or all of
  the deferred tax assets will not be realized.

F-23

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Revaluation
  of Fixed Assets

Under
  Italian GAAP, certain fixed assets were revalued by the Company to amounts in
  excess of historical cost. These revaluations, which were either authorized
  or required by Italian law, are permissible under Italian GAAP. Assets revalued
  under Italian GAAP are depreciated over their remaining useful lives based on
  their revalued cost. U.S.

F-24

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

GAAP
  does not permit the revaluation of such assets. Accordingly, the increases in
  shareholders’ equity and the related increase in depreciation expense
  resulting from such revaluation have been reversed in the income statement reconciliation
  as well as any differences in gain/losses recognized on disposal.

Valuation
  Allowance for Deferred Tax Assets

During
  2001, under Italian GAAP, a valuation allowance was recognized against a deferred
  tax asset as it was not considered reasonably certain that it would have been
  recovered in future years. This valuation allowance was reversed in 2002 as,
  based on available evidence, it was considered reasonable that the asset would
  be recovered in future years.

Under
  U.S. GAAP, a valuation allowance was not deemed necessary neither in 2001 nor
  in 2002 as it was more likely than not that the asset will be fully recovered
  in future years. This difference has been included in the reconciliation below
  as a part of the adjustment for deferred income taxes calculated on U.S. GAAP
  adjustments in 2001 and reversed in 2002.

Intangible
  Assets

Some
  of the Group Companies have capitalized and deferred various costs which are
  not permitted to be capitalized under U.S. GAAP. These amounts include costs
  incurred for recruiting and personnel training, start up activities, indirect
  and general expenses related to the increase in capital stock and software costs.
  Accordingly, the effect of these differences and the related increase in amortization
  has been included in the reconciliation.

Revenue
  Recognition

Under
  Italian GAAP, sales revenues are recognized upon transfer of physical ownership
  which usually takes place upon shipment of goods. Under U.S. GAAP, revenue is
  recognized when four characteristics of a sale are present. In general, (i)
  persuasive evidence of an arrangement must exist, (ii) delivery must occur or
  services must have been rendered, (iii) the seller’s price must be fixed
  or determinable, and (iv) collectibility must be reasonably assured. The four
  criteria define at what point the earnings process is complete and, therefore,
  revenue can be recognized. For the Company, risk of loss, in some subsidiaries,
  passes upon delivery. As a result, for certain of the Company’s sales,
  recognition of revenue under U.S. GAAP would be deferred until customer acceptance
  has occurred.

Income
  Statement Classification

During
  2001, the Company accounted for non-recurring restructuring costs and the partial
  impairment of goodwill attributable to Molecular Analytics, Inc. and Getters
  Corporation of America in the line item “Other Income (Expenses), Net”.
  Under U.S. GAAP, these items should be included in “Operating Income”.

Under
  Italian GAAP, the Company accounted for the gain on the sale of its building
  in Milan in “Other Income” during 2000 (Note 22). Under U.S. GAAP,
  this item should be included in “Operating Income”.

Leasing

The
  Italian companies of the Group have entered into financing lease contracts.
  In accordance with Italian law, lease payments are charged to operations when
  incurred. Under U.S. GAAP, these leases qualify as capital leases under the
  provisions of Statement of Financial Accounting Standards No. 13 (“SFAS
  13”). Accordingly, the effect of capitalizing leases has been included
  in the reconciliation.

Investments

Under
  Italian GAAP, marketable securities are stated at the lower of cost or market
  value. Under U.S. GAAP, investments are required to be accounted for in accordance
  with Statement of Financial Accounting Standards No. 115 (“SFAS 115”).
  This standard requires that investments be classified in one of three categories
  and accounted for as follows:

F-25

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

      “Held-to-Maturity”,
  which are defined as debt securities that a company has the positive intent
  and ability to hold to maturity, are reported at amortized cost.

      “Trading”,
  which are defined as those securities that are bought and held principally for
  the purpose of selling them in the near term, are reported at fair value with
  unrealized gains and losses included in earnings.

      “Available-for-Sale”,
  which include securities not classified in either of the above categories, are
  reported at fair value with unrealized gains and losses excluded from earnings
  and included as a separate component of shareholders’ equity.

The
  Company has classified its investments in marketable securities as Available-for-Sale.
  The Company does not have any trading securities. Accordingly, the effect of
  this treatment is included in the reconciliation.

Goodwill
  and Other Intangible Assets

In
  July 2001, the Financial Accounting Standards Board (the “FASB”)
  issued Statement of Financial Accounting Standards No. 142 “Goodwill and
  Other Intangible Assets” (“SFAS 142”). As required by SFAS
  142, purchased goodwill will no longer be amortized and will be subject to impairment
  tests annually. The Company adopted SFAS 142 effective January 1, 2002 and stopped
  the amortization of purchased goodwill for US GAAP purposes. The company completed
  its impairment test of goodwill as of January 1, 2002 and December 31, 2002
  and in doing so determined that the goodwill balances were not impaired.

Under
  Italian GAAP, goodwill continues to be amortized and accordingly is reversed
  in the reconciliation.

Foreign
  Currency Transactions and Translations

Under
  Italian GAAP, accounts receivable and payable denominated in foreign currencies
  are reflected at the year-end exchange rates. The resulting gains and losses
  are recorded in the statement of income. An exception exists for long-term accounts
  receivable and payable. At period end, when the translation of all existing
  long-term accounts receivable and payable in foreign currency to local currency
  using rates of exchange existing at the financial statements date discloses
  a net gain, this is prudentially deferred by a provision booked in item “Accrued
  liabilities and deferred income”.

Under
  U.S. GAAP, all exchange gains or losses arising from the restatement of foreign
  currency accounts receivable and payable are included in the determination of
  net income for the period. Accordingly, the reconciliation includes an adjustment
  to recognize unrealized gains in 2000. The reconciliation does not include an
  adjustment for this item in 2001 and 2002 because the Company did not have gains
  resulting from long term accounts receivable or payable in foreign currencies
  as of December 31, 2001 and 2002.

Capitalized
  Interest

Under
  Italian GAAP, interest is capitalized only if certain conditions are met in
  the self-construction of assets. Under U.S. GAAP, interest costs incurred to
  bring qualified assets to their intended use are capitalized. The reconciliation
  with U.S. GAAP does not include an adjustment because the amount of the capitalized
  interest computed in accordance with Statement of Financial Accounting Standards
  No. 34 (“SFAS 34”) is immaterial.

Foreign
  Exchange Contracts

Under
  Italian GAAP, unrealized gains and losses on foreign exchange contracts are
  deferred and recognized in the income statement when the future sales and purchases
  are recognized. Under U.S. GAAP, SFAS No. 133, “Accounting for Derivative
  Instruments and Hedging Activities” establishes accounting and reporting
  standards requiring that every derivative instrument (including certain derivative
  instruments embedded in other contracts) be recorded in the balance sheet as
  either an asset or liability measured at its fair value. SFAS No. 133 requires
  that changes in the derivative’s fair value be recognized currently in
  earnings unless specific hedge accounting criteria are met. Special accounting
  for qualifying hedges allows a derivative’s gains and losses to offset
  related results on hedged item in the income statement, and requires that a
  company must formally document, designate and assess the effectiveness of transactions
  that receive hedge accounting. In conjunction with SFAS 133, the Company would
  have to recognize all of the contracts at fair market value, with gains and
  losses recognized in current earnings as the documentation, designation and
  assessment of hedge effectiveness required by SFAS 133 was not deemed to be
  present. The reconciliation with U.S. GAAP does not include an adjustment because
  the amount to mark the contracts to market through the income statement is immaterial.

F-26

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Sale-Leaseback

During
  1994, the Company entered into a sale-leaseback agreement whereby it sold certain
  land and agreed to lease the land and building that was being constructed on
  it by the buyer, for a period of eight years.

The
  Company has an option to purchase the land and building at the end of the lease
  term at a price equal to one percent of the cost of both the land and building.
  The gain on the sale was immaterial. As of December 31, 2002, remaining payments
  under the lease amounted to €1,069 thousand. The Company had made an original
  advance payment of €516 thousands which has been classified within prepaid
  expenses and is being amortized over the lease term. As described above, under
  Italian GAAP, finance lease payments are charged to operations when incurred.
  Under U.S. GAAP this transaction did not qualify for sale-leaseback accounting.
  Therefore it has been accounted for as a financing and included in the reconciliation
  below as a part of the capital lease adjustment.

Proportional
  Consolidation

Under
  Italian GAAP, the Company is allowed to proportionally consolidate a subsidiary
  based upon its percentage of ownership within that company. Under U.S. GAAP,
  the Company would show the net assets of the percentage of the company it owns
  as one line item within the balance sheet. There would be no difference in the
  profit and loss or equity positions.

The
  following table sets forth summarized pro rata (65%) information related to
  Nanjing Saes Huadong Getters Co. Ltd. (in thousands of Euro):

|                      | 2000   |  | 2001   |  | 2002   | 
|--------------------- | ------ |  | ------ |  | ------ | 
|                      |        |  |        |  |        | 
|Balance Sheets:       |        |  |        |  |        | 
|Current assets        | 4,209  |  | 4,537  |  | 5,736  | 
|Non current assets    | 10,385 |  | 10,020 |  | 7,278  | 
|Current liabilities   | 1,753  |  | 1,362  |  | 1,598  | 
|Long term liabilities | 2,794  |  | 2,065  |  |       | 
|Shareholders’ equity  | 10,047 |  | 11,130 |  | 11,416 | 
|                      |        |  |        |  |        | 
|                      | 2000   |  | 2001   |  | 2002   | 
|                      |        |  |        |  |        | 
|Income Statements:    |        |  |        |  |        | 
|Net sales             | 6,988  |  | 5,675  |  | 8,178  | 
|Gross profit          | 2,798  |  | 2,160  |  | 3,976  | 
|Operating income      | 1,686  |  | 1,064  |  | 2,902  | 
|Net income            | 1,321  |  | 863    |  | 2,676  | 

|                                                |        |   |        |   |        |  
|----------------------------------------------- | ------ | - | ------ | - | ------ | -
|                                                | 2000   |   | 2001   |   | 2002   |  
|                                                |        |   |        |   |        |  
|Cash Flows:                                     |        |   |        |   |        |  
|Cash flow from operating activities             | 2,550  |   | 2,661  |   | 2,490  |  
|Cash flow from investing activities             | (531   | ) | (471   | ) | (90    | )
|Cash flow from financing activities             | (1,494 | ) | (1,782 | ) | (1,819 | )
|Net increase in cash and cash
      equivalents | 525    |   | 408    |   | 581    |  

Treasury
  Stock

The
  Group has accounted for treasury stock as an investment in accordance with Italian
  GAAP. This treatment differs from U.S. GAAP, which requires that the par value
  of the stock be deducted from the capital stock account. Also, the excess of
  the cost over par value must be charged entirely to retained earnings, allocated
  between retained earnings and paid-in capital or entirely to additional paid
  in capital.

F-27

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Earnings
  per Share

Under
  Italian GAAP, earnings per share is not a required disclosure. In February 1997,
  the Financial Accounting Standards Board issued Statement of Financial Accounting
  Standards No. 128, “Earnings per Share” (“SFAS 128”),
  which is required to be adopted for all financial statements issued for periods
  ending after December 15, 1997. SFAS 128 redefines the principles for calculating
  earnings per share (“EPS”) and requires presentation of Basic EPS
  and Diluted EPS for those entities with complex capital structures. SFAS 128
  also requires that all prior period earnings per share data presented with the
  current year’s data are restated in accordance with the new provisions.
  Considering the non-complex capital structure of the Company, the adoption of
  SFAS 128 had no effect upon the current year's or the prior year’s earnings
  per share data.

Adjustments
  to Net Income and Shareholders’ Equity

The
  following table summarizes the aforementioned adjustments to net income for
  the years ended December 31, 2000, 2001 and 2002 and to shareholders’
  equity as of December 31, 2000, 2001 and 2002 that would be required under U.S.
  GAAP.

NET INCOME

|(In thousands of Euro, except
      share data)                                 | Year ended December
      31, |  
|------------------------------------------------------------------------------- | ----------------------------- | -
|                                                                                |                               |  
|                                                                                | 2000                          |  
|                                                                                |                               |  
|Net income under Italian GAAP                                                   | 27,241                        |  
|Adjustments
        required under U.S. GAAP:                                   |                               |  
|Revaluation
        of certain assets                                           | 983                           |  
|Intangible
        assets, net of the related amortization expense              | 1,246                         |  
|Capital
        leases                                                          | 877                           |  
|Foreign
        exchange gains (losses)                                         | (482                          | )
|Revenue recognition                                                             | (409                          | )
|FAS 142 amortization goodwill                                                   |                              |  
|Deferred
        income taxes:                                                  |                               |  
|Calculated
        on U.S. GAAP adjustments                                     | (804                          | )
|SFAS
        109 application                                                    | (283                          | )
|                                                                                |                               |  
|Net
        adjustments                                                         | 1,128                         |  
|                                                                                |                               |  
|Net income under U.S. GAAP before cumulative effect of accounting change        | 28,369                        |  
|Cumulative
        effect of accounting change due to SAB 101                   | 287                           |  
|                                                                                |                               |  
|Net
        income under U.S. GAAP after cumulative effect of accounting change | 28,656                        |  
|                                                                                |                               |  

|                                                                                                                |      |  |      |  |      | 
|--------------------------------------------------------------------------------------------------------------- | ---- |  | ---- |  | ---- | 
|Basic
        earnings per share amounts under U.S. GAAP before cumulative effect of
        accounting change: |      |  |      |  |      | 
|Per
        Ordinary Share                                                                                      | 1.20 |  | 0.72 |  | 0.33 | 
|Per
        Savings Share                                                                                       | 1.22 |  | 0.74 |  | 0.34 | 
|Per
        ADS (1)                                                                                             | 1.22 |  | 0.74 |  | 0.34 | 

|                                                        |      |  |      |  |      | 
|------------------------------------------------------- | ---- |  | ---- |  | ---- | 
|Basic earnings per share amounts
      under U.S. GAAP: |      |  |      |  |      | 
|Per
        Ordinary Share                              | 1.21 |  | 0.72 |  | 0.33 | 
|Per
        Savings Share                               | 1.23 |  | 0.74 |  | 0.34 | 
|Per
        ADS (1)                                     | 1.23 |  | 0.74 |  | 0.34 | 

|    |                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Prepared solely for the convenience of the
      reader. ADSs representing Savings Shares were issued in connection with
      the offering of Savings Shares in 1996. Each ADS represents one Savings
      Share.

F-28

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

The
  approximate earnings per share amounts have been calculated using the two-class
  method due to Ordinary and Savings Shares being outstanding. Under this method,
  net income remaining after dividends required to be allocated to Ordinary and
  Savings Shares is divided by the weighted average number of Ordinary and Savings
  Shares outstanding. For the purposes of these calculations the weighted average
  number of shares was 23,500,000 as of December 31, 2000 and 2001 and 23,135,566
  as of December 31, 2002. The Savings Shares are participating shares.

Effective
  January 1, 2000, the Company adopted the provisions of the Securities and Exchange
  Commissions’ Staff Accounting Bulletin No. 101, “Revenue Recognition
  in Financial Statements” (“SAB 101”) for its U.S. GAAP reporting.
  SAB 101 provides guidance on the financial reporting of revenue recognition
  and requires that revenue can only be recognized when four criteria are met.
  These criteria, in general, are (i) persuasive evidence of an arrangement must
  exist, (ii) delivery must occur or services must have been rendered, (iii) the
  seller’s price must be fixed or determinable, and (iv) collectibility
  must be reasonably assured. As of December 31, 2000 the total amount of revenue
  reported as a cumulative effect of a change in accounting principle was €287
  thousand, net of tax benefits of €112 thousand.

OTHER COMPREHENSIVE INCOME

Other
  comprehensive income items under U.S. GAAP for the years ended December 31,
  2000, 2001 and 2002 consisted of the following (in thousands of Euro):

|                                                                           | Year ended December
      31, |  
|-------------------------------------------------------------------------- | ----------------------------- | -
|                                                                           |                               |  
|                                                                           | 2000                          |  
|                                                                           |                               |  
|Net income under U.S. GAAP                                                 | 28,656                        |  
|Other comprehensive income (loss):                                         |                               |  
|Currency translation adjustment                                            | 1,113                         |  
|Marketable securities                                                      | (88                           | )
|Income tax benefit (expense) related to item of other comprehensive income | (58)                          |  
|                                                                           |                               |  
|Total other comprehensive income
      (loss)                              | 967                           |  
|                                                                           |                               |  
|Comprehensive income under U.S.
      GAAP                                 | 29,623                        |  
|                                                                           |                               |  

|                                                                                                                                                                                     |                    |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------ | -
|SHAREHOLDERS’
      EQUITY                                                                                                                                                           |                    |  
|(In thousands
      of Euro)                                                                                                                                                         | December
      31, |  
|                                                                                                                                                                                     |                    |  
|                                                                                                                                                                                     | 2000               |  
|                                                                                                                                                                                     |                    |  
|Shareholders’
      equity under Italian GAAP                                                                                                                                        | 171,028            |  
|Adjustments
        required under U.S. GAAP:                                                                                                                                        |                    |  
|Revaluations
        of certain assets, net of accumulated depreciation of €1,611 thousand,
        €1,961 thousand and €2,232 thousand in 2000, 2001 and 2002,
        respectively | (2,106             | )
|Intangible
        assets, net of related accumulated amortization of €6,340 thousand,
        €6,575 thousand and €6,843 thousand in 2000, 2001 and 2002,
        respectively      | (558               | )
|Capital
        leases                                                                                                                                                               | 3,186              |  
|Unrealized
        gains on marketable securities                                                                                                                                    | 296                |  
|Revenue recognition                                                                                                                                                                  | (409               | )
|SFAS 142 amortization of goodwill                                                                                                                                                    |                   |  
|Treasury stock recorded as an asset                                                                                                                                                  |                   |  
|Deferred
        income taxes:                                                                                                                                                       |                    |  
|Calculated on U.S. GAAP adjustments                                                                                                                                                  | (753               | )
|SFAS 109 application                                                                                                                                                                 | (1,230             | )
|                                                                                                                                                                                     |                    |  
|Net adjustments                                                                                                                                                                      | (1,574             | )
|                                                                                                                                                                                     |                    |  
|Shareholders’ equity under
      U.S. GAAP                                                                                                                                           | 169,454            |  
|                                                                                                                                                                                     |                    |  

F-29

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Use
  of estimates

The
  preparation of financial statements in accordance with U.S. GAAP requires management
  to make estimates and assumptions that affect the reported amounts of assets
  and liabilities, disclosure of contingent assets and liabilities at the date
  of the financial statements and the reported amounts of revenues and expenses
  during the reporting period. The most significant estimates relate to realizability
  and depreciable lives of fixed assets and intangible assets, allowance for doubtful
  accounts, inventory obsolescence and deferred taxes. Actual results could differ
  from these estimates.

Fair
  Value of Financial Instruments

Carrying
  amounts for cash and cash equivalents, accounts receivable and other financial
  instruments approximate fair value due to their short maturities. Based upon
  borrowing rates currently available to the Group for loans with similar terms,
  the carrying value of capital lease obligations and long-term debt approximate
  fair value.

Marketable
  securities

Maturities
  of the marketable securities held as of December 31, 2001 and 2002 (in thousands
  of Euro):

|                      | 2001  |  | 2002  | 
|--------------------- | ----- |  | ----- | 
|                      |       |  |       | 
|Less than 1 year      | 3,161 |  | 2,937 | 
|Between 1 and 2 years |      |  |      | 
|Between 2 and 3 years |      |  |      | 
|Between 3 and 4 years | 6,209 |  |      | 
|More than 4 years     |      |  |      | 
|                      |       |  |       | 
|Total                 | 9,370 |  | 2,937 | 
|                      |       |  |       | 

Marketable
  securities Available-for-Sale as of December 31, 2001 included the following
  (in thousands of Euro):

|                                                                                                                              | Cost  |  | UnrealizedGains |  | FairValue | 
|----------------------------------------------------------------------------------------------------------------------------- | ----- |  | --------------- |  | --------- | 
|                                                                                                                              |       |  |                 |  |           | 
|BAT
        International, Euro bond, face value Euro 1,035,000, interest at 4.25%,
        due April 14, 2004                | 987   |  | 45              |  | 1,032     | 
|BNL,
        Euro Bond, face value Euro 2,580,000, interest rate at 3 months Eurolibor
        + 0.19%, due March 31, 2004    | 2,574 |  | 2               |  | 2,576     | 
|FLI,
        San Paolo Investment Fund, number of quotas: 86,855.364, total acquisition
        value Euro 516,457            | 516   |  | 42              |  | 558       | 
|OBT,
        San Paolo Investment Fund, number of quotas: 349,162.92, total acquisition
        value Euro 2,065,829          | 2,167 |  | 54              |  | 2,221     | 
|OLIVETTI
        FIN, Euro bond, face value Euro 2,580,000, interest at 3 months Eurolibor
        + 1.85%, due June 23, 2004 | 2,601 |  |                |  | 2,601     | 
|Other                                                                                                                         | 382   |  |                |  | 382       | 
|                                                                                                                              |       |  |                 |  |           | 
|Total                                                                                                                         | 9,227 |  | 143             |  | 9,370     | 
|                                                                                                                              |       |  |                 |  |           | 

F-30

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Back to Contents

SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

Marketable
  securities Available-for-Sale as of December 31, 2002 included the following
  (in thousands of Euro):

|                                                                                                           | Cost  |  | UnrealizedGains |  | FairValue | 
|---------------------------------------------------------------------------------------------------------- | ----- |  | --------------- |  | --------- | 
|                                                                                                           |       |  |                 |  |           | 
|FLI, San Paolo Investment Fund,
      number of quotas: 86,855.364, total acquisition value Euro 516,457   | 516   |  | 66              |  | 582       | 
|OBT, San Paolo Investment Fund,
      number of quotas: 349,162.92, total acquisition value Euro 2,065,829 | 2,167 |  | 115             |  | 2,282     | 
|Other                                                                                                      | 73    |  |                |  | 73        | 
|                                                                                                           |       |  |                 |  |           | 
|Total                                                                                                      | 2,756 |  | 181             |  | 2,937     | 
|                                                                                                           |       |  |                 |  |           | 

Income
  taxes

The
  deferred tax balances under U.S. GAAP as of December 31, 2001 and 2002 are as
  follows (in thousands of Euro):

|                                  | 2001   |   | 2002   |  
|--------------------------------- | ------ | - | ------ | -
|                                  |        |   |        |  
|Italian GAAP financial statements | 8,530  |   | 6,815  |  
|U.S. GAAP adjustments             | 911    |   | (1,832 | )
|SFAS 109 adjustments              | (1,230 | ) | (1,185 | )
|                                  |        |   |        |  
|Net deferred tax assets           | 8,211  |   | 3,798  |  
|                                  |        |   |        |  

The
  deferred tax balances under U.S. GAAP as of December 31, 2001 and 2002 are as
  follows (in thousands of Euro):

|                                                              |  | 2001   |   | 2002   |  
|------------------------------------------------------------- |  | ------ | - | ------ | -
|                                                              |  |        |   |        |  
|Current deferred tax assets (liabilities):                    |  |        |   |        |  
|Intercompany profit on inventory
        and fixed assets     |  | 1,830  |   | 2,062  |  
|Inventory reserve                                             |  | 684    |   | 810    |  
|Bad debt reserve                                              |  | 291    |   | 119    |  
|Exchange differences                                          |  | 5      |   | 49     |  
|Revenue recognition                                           |  | 213    |   | 55     |  
|Other                                                         |  | 200    |   | 280    |  
|                                                              |  |        |   |        |  
|Total net current deferred
        tax assets                 |  | 3,223  |   | 3,375  |  
|                                                              |  |        |   |        |  
|Non-current deferred tax assets
      (liabilities):          |  |        |   |        |  
|Net operating losses                                          |  | 3,397  |   | 6,157  |  
|Revaluation of fixed assets                                   |  | 891    |   | 568    |  
|Accelerated depreciation                                      |  | 1,651  |   | 1,188  |  
|Undistributed earnings                                        |  | (1,230 | ) | (1,185 | )
|Amortization of intangible
        assets                     |  | 1,330  |   | 827    |  
|Capital leases                                                |  | (1,386 | ) | (2,140 | )
|Employee compensation                                         |  | 1,362  |   | 1,140  |  
|Other                                                         |  | (233   | ) | 148    |  
|                                                              |  |        |   |        |  
|Total net non-current deferred
      tax assets (liabilities) |  | 5,782  |   | 6,703  |  
|                                                              |  |        |   |        |  
|Net deferred tax assets                                       |  | 9,005  |   | 10,078 |  
|Valuation allowance                                           |  | (794   | ) | (6,280 | )
|                                                              |  |        |   |        |  
|Total net deferred tax assets                                 |  | 8,211  |   | 3,798  |  
|                                                              |  |        |   |        |  

Based
  on an evaluation of current profitability, expectations of future market conditions
  and operating performance and tax planning strategies, management determined
  that a partial valuation allowance was required

As
  of December 31, 2001 and 2002, the Group had estimated tax loss carryforwards
  amounting to €9,526 thousand and €21,767 thousand, respectively. As
  of December 31, 2002 net operating loss (“NOL’s”) carryforwards
  relate to Saes Getters USA, Inc., Molecular Analytics, Inc., Saes Getters International
  Luxembourg S.A., Saes Getters Singapore Pte Ltd. and FST Consulting International,
  Inc. NOL’s amounting to €354 thousand are subject to examination
  by tax authorities and may be used only to the extent of approximately €106
  thousand per year and expire in 2006. The major portion of the remaining NOL’s
  does not begin to expire until the year 2018

F-31

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

|                                                  | 2000   |  | 2001   |  | 2002   | 
|------------------------------------------------- | ------ |  | ------ |  | ------ | 
|                                                  |        |  |        |  |        | 
|Income before taxes under U.S.
      GAAP:        |        |  |        |  |        | 
|Domestic                                          | 26,446 |  | 17,487 |  | 14,991 | 
|Foreign                                           | 13,136 |  | 268    |  | 143    | 
|                                                  |        |  |        |  |        | 
|Total income before taxes under
        U.S. GAAP | 39,582 |  | 17,755 |  | 15,134 | 
|                                                  |        |  |        |  |        | 

The
  2000, 2001, and 2002 provision for income taxes under U.S. GAAP consists of
  the following (in thousands of Euro):

|                                       | 2000   |   | 2001   |   | 2002  |  
|-------------------------------------- | ------ | - | ------ | - | ----- | -
|                                       |        |   |        |   |       |  
|Current tax expense (benefit):         |        |   |        |   |       |  
|Domestic                               | 7,181  |   | 3,172  |   | 3,519 |  
|Foreign                                | 3,741  |   | 3,191  |   | (5    | )
|                                       |        |   |        |   |       |  
|Total current                          | 10,922 |   | 6,363  |   | 3,514 |  
|                                       |        |   |        |   |       |  
|Deferred income tax expense (benefit): |        |   |        |   |       |  
|Domestic                               | 459    |   | (1,385 | ) | 2,095 |  
|Foreign                                | (455   | ) | (4,318 | ) | 1,719 |  
|                                       |        |   |        |   |       |  
|Total deferred                         | 4      |   | (5,703 | ) | 3,814 |  
|                                       |        |   |        |   |       |  
|Total income tax expense               | 10,926 |   | 660    |   | 7,328 |  
|                                       |        |   |        |   |       |  

The
  following table sets out the reconciliation between the effective tax rate for
  U.S. GAAP purposes and the statutory tax rate in Italy:

|                                                                                 |  | 2001  |   | 2002  |  
|-------------------------------------------------------------------------------- |  | ----- | - | ----- | -
|                                                                                 |  |       |   |       |  
|Statutory tax rate in Italy                                                      |  | 40.2  | % | 40.2  | %
|Effect of different statutory
        rates applicable to operating subsidiaries |  | (7.4  | ) | (8.1  | )
|Investment tax credits                                                           |  | (12.5 | ) | (15.6 | )
|Non-deductible expenses / non-taxable
        income                             |  | 3.9   |   | (1.1  | )
|Valuation allowance                                                              |  | (4.0  | ) | 26.5  |  
|Taxes on dividends                                                               |  | 3.8   |   | 12.5  |  
|Tax exemptions                                                                   |  | (9.2  | ) |      |  
|Other                                                                            |  | (11.1 | ) | (6.0  | )
|                                                                                 |  |       |   |       |  
|Effective tax rate for U.S. GAAP                                                 |  | 3.7   | % | 48.4  | %
|                                                                                 |  |       |   |       |  

Goodwill
  and Other IntangibleAssets

In
  July 2001, the Financial Accounting Standards Board (the “FASB”)
  issued Statement of Financial Accounting Standards No. 142 “Goodwill and
  Other Intangible Assets” (“SFAS 142”), As required by SFAS
  142, purchased goodwill is no longer amortized under U.S. GAAP and is subject
  to impairment tests annually. The Company adopted SFAS 142 effective January
  1, 2002 and ceased the amortization of purchased goodwill. At December 31, 2001,
  the Company’s unamortized purchased goodwill balance was €11,412
  thousand. Upon its adoption of SFAS 142, the Company completed its impairment
  test of goodwill calculated as of January 1, 2002, as required by SFAS 142.
  In doing so, the Company determined that its goodwill balances were not impaired;
  therefore no transitional impairment charge was recorded. Moreover, in addition
  to the transitional goodwill impairment test performed as of January 1, 2002,
  the Company completed its required annual impairment test of goodwill as of
  December 31, 2002 and in doing so determined that the goodwill balances were
  not impaired

F-32

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

The
  following table presents the Company’s net income and earnings per share
  under U.S. GAAP for the periods prior to adoption of SFAS 142 adjusted to exclude
  amortization of goodwill:

|                                                                                               | 2000   |   | 2001   |   | 2002  |    
|---------------------------------------------------------------------------------------------- | ------ | - | ------ | - | ----- | ---
|                                                                                               |        |   |        |   |       |    
|Net income under U.S. GAAP:                                                                    |        |   |        |   |       |    
|As reported                                                                                    | 28,656 |   | 17,095 |   | 7,806 | (1)
|Add back: Goodwill amortization                                                                | 1,494  |   | 1,936  |   |      |    
|Tax effect on goodwill amortization                                                            | (351   | ) | (520   | ) |      |    
|                                                                                               |        |   |        |   |       |    
|Adjusted net income                                                                            | 29,799 |   | 18,511 |   | 7,806 |    
|                                                                                               |        |   |        |   |       |    
|Earnings per share as reported
      under U.S. GAAP:                                          |        |   |        |   |       |    
|Per Ordinary Share                                                                             | 1.21   |   | 0.72   |   | 0.33  |    
|Per Savings Share                                                                              | 1.23   |   | 0.74   |   | 0.34  |    
|Per ADS                                                                                        | 1.23   |   | 0.74   |   | 0.34  |    
|                                                                                               |        |   |        |   |       |    
|Earnings per share as adjusted
      for goodwill amortization and tax effect under U.S. GAAP: |        |   |        |   |       |    
|Per Ordinary Share                                                                             | 1.26   |   | 0.78   |   | 0.33  |    
|Per Savings Share                                                                              | 1.28   |   | 0.80   |   | 0.34  |    
|Per ADS                                                                                        | 1.28   |   | 0.80   |   | 0.34  |    

|(1) | Goodwill amortization amounted to €1,440
      thousand in 2002 which has already been excluded from reported net income
|--- | ------------------------------------------------------------------------------------------------------------------------

Upon
  adoption of SFAS 142 on January 1, 2002, the Company re-evaluated its depreciable
  intangible assets and determined that their remaining useful lives were appropriate

Recent
  Accounting Pronouncements

In
  July 2001, the FASB issued Statement of Financial Accounting Standards No. 143,
  “Accounting for Obligations Associated with the Retirement of Long-Lived
  Assets” (“SFAS 143”). This standard will be effective for
  fiscal years beginning after June 15, 2002, however early adoption is permitted.
  This standard provides the accounting requirements for retirement obligations
  associated with tangible long-lived assets. This standard requires that the
  obligation associated with the retirement of the tangible long-lived assets
  is capitalized into the asset cost at the time of initial recognition. The liability
  is then discounted to its fair value at the time of recognition using the guidance
  provided by the standard. The Company believes that the adoption of SFAS 143
  is not expected to have a significant impact on its financial position and results
  of operations

In
  April 2002, the FASB issued Statement of Financial Accounting Standards No.
  145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
  Statement No. 13, and Technical Corrections” (“SFAS 145”).
  This standard rescinds SFAS 4, “Reporting Gains and Losses from Extinguishment
  of Debt-an amendment of APB Opinion No. 30”, which required all gains
  and losses from the extinguishment of debt to be aggregated and, if material,
  classified as an extraordinary item, net of related income tax effects. As a
  result, the criteria set forth by APB Opinion 30 will now be used to classify
  those gains and losses. SFAS 145 also amends SFAS 13 to require that certain
  lease modifications that have economic effects similar to sale-leaseback transactions
  be accounted for in the same manner as sale-leaseback transactions. In addition,
  SFAS 145 amends other existing authoritative pronouncements to make various
  technical corrections, clarify meanings or describe their applicability under
  changed conditions. The standard is generally effective for transactions occurring
  after May 15, 2002. The adoption of SFAS 145 did not have and is not expected
  to have a significant impact on the Company’s financial position or results
  of operations

In
  July 2002, the FASB issued Statement of Financial Accounting Standards No. 146,
  “Accounting for Costs Associated with Exit or Disposal Activities”
  (“SFAS 146”). This standard will require Companies to recognize
  costs associated with exit or disposal activities when they are incurred rather
  than at the date of a commitment to an exit or disposal plan. The standard replaces
  the existing guidance provided by EITF Issue No. 94-3, “Liability Recognition
  for Certain Employee Termination Benefits and Other Costs to Exit an Activity
  (including Certain Costs Incurred in a Restructuring)”. The standard is
  effective for fiscal years beginning after December 31, 2002. The Company believes
  that the adoption of SFAS 146 is not expected to have a significant impact on
  its financial position and results of operations

F-33

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

In
  November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s
  Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees
  of Indebtedness of Others” (“FIN 45”). FIN 45 requires a liability
  to be recognized at the time a company issues a guarantee for the fair value
  of the obligations assumed under certain guarantee agreements. The provisions
  for initial recognition and measurement of guarantee agreements are effective
  on a prospective basis for guarantees that are issued or modified after December
  31, 2002. The Company has complied with the disclosure requirements of FIN 45,
  as shown in Note 19 of the consolidated financial statements, and the Company
  believes that the adoption of FIN 45 is not expected to have a significant impact
  on its financial position or results of operations

In
  December 2002, the FASB issued Statement of Financial Accounting Standards No.
  148, “Accounting for Stock-Based Compensation  Transition and Disclosure”
  (“SFAS 148”). This Statement amends SFAS 123 to provide alternative
  methods of transition for an entity that voluntarily changes to the fair value
  based method of accounting for stock-based employee compensation. It also amends
  the disclosure provisions of SFAS 123 to require prominent disclosure about
  the effects on reported net income of an entity’s accounting policy decisions
  with respect to stock-based employee compensation. Finally, SFAS 148 amends
  APB Opinion No. 28, Interim Financial Reporting, to require disclosure about
  those effects in interim financial information. SFAS 148 is effective for fiscal
  years beginning after December 15, 2002. The Company currently has no stock
  based compensation plans. The adoption of SFAS 148 therefore is not expected
  to have a significant impact on the Company’s financial position or results
  of operations

In
  January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation
  of Variable Interest Entities” (“FIN 46”), an interpretation
  of ARB 51. FIN 46 addresses the consolidation of entities for which control
  is achieved through means other than through voting rights (“variable
  interest entities” or “VIE”) by clarifying the application
  of Accounting Research Bulletin No. 51, Consolidated Financial Statements to
  certain entities in which equity investors do not have the characteristics of
  a controlling financial interest or do not have sufficient equity at risk for
  the entity to finance its activities without additional subordinated financial
  support from other parties. FIN 46 provides guidance on how to determine when
  and which business enterprise (the “primary beneficiary”) should
  consolidate the VIE. In addition, FIN 46 requires that both the primary beneficiary
  and all other enterprises with a significant variable interest in a VIE make
  additional disclosures. The disclosure provisions of FIN 46 are effective in
  all financial statements initially issued after January 31, 2003. FIN 46 is
  required to be immediately applied by all entities with a variable interest
  in a VIE created after January 31, 2003. A public entity with a variable interest
  in a VIE created before February 1, 2003 is required to apply FIN 46 to that
  entity no later than the beginning of the first interim or annual reporting
  period beginning after June 15, 2003. The Company currently has no control in
  entities which are achieved through means other than voting rights. The adoption
  of FIN 46 therefore is not expected to have a significant impact on the Company’s
  financial position or results of operations

24. Concentrations of credit risk

The
  Company performs ongoing credit evaluations of its customers’ financial
  condition and, generally, does not require collateral from its customers. Sales
  to the Company’s top ten customers accounted for approximately 43%, 49%
  and 50% of the Company’s sales at December 31, 2000, 2001 and 2002, respectively

LG.Philips
  Displays, the Group’s largest customer, accounted for 11% and 9.6% of
  the Group’s total net sales in 2002 and 2001, respectively. In 2000, the
  largest customer was Philips (prior to the creation of the joint venture LG.Philips
  Displays by LG Electronics and Philips) accounting for 7.5% of the Group’s
  total net sales

25. Segment Information

The
  following tables summarize the divisional and geographic financial information
  (on an Italian GAAP basis) as presented to and used by the Company’s management
  in the decision making process (in thousands of Euro). During analysis of the
  business segments, asset information is not considered

|                                    |  | ComponentsAggregate |  | EquipmentAggregate |   | Other |  | Total   | 
|----------------------------------- |  | ------------------- |  | ------------------ | - | ----- |  | ------- | 
|                                    |  |                     |  |                    |   |       |  |         | 
|2000                                |  |                     |  |                    |   |       |  |         | 
|Net sales                           |  | 112,114             |  | 60,152             |   | 286   |  | 172,552 | 
|Gross profit
        (1)            |  | 61,061              |  | 23,024             |   | 111   |  | 84,196  | 
|Operating income
        (loss) (1) |  | 34,745              |  | (965               | ) | 63    |  | 33,843  | 
|                                    |  |                     |  |                    |   |       |  |         | 
|2001                                |  |                     |  |                    |   |       |  |         | 
|Net sales                           |  | 94,696              |  | 65,209             |   | 264   |  | 160,169 | 
|Gross profit
        (1)            |  | 49,176              |  | 25,304             |   | 95    |  | 74,575  | 
|Operating income
        (loss) (1) |  | 22,110              |  | (5,210             | ) | 58    |  | 16,958  | 
|                                    |  |                     |  |                    |   |       |  |         | 
|2002                                |  |                     |  |                    |   |       |  |         | 
|Net sales                           |  | 106,401             |  | 34,583             |   | 224   |  | 141,208 | 
|Gross profit
        (1)            |  | 55,862              |  | 5,530              |   | 64    |  | 61,456  | 
|Operating income
        (loss) (1) |  | 27,489              |  | (17,486            | ) | 26    |  | 10,029  | 

|(1) | The total gross profit and operating income
      for each year, as reported above, tie directly to the face of the consolidated
      statements of income. As a consequence no reconciliation of the reported
      gross profit and operating income to net earnings has been included in this
      section
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-34

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

|                                            |  | Europe  |  |                       |   | Asia                                  |   |        |  |                       | 
|------------------------------------------- |  | ------- |  | --------------------- | - | ------------------------------------- | - | ------ |  | --------------------- | 
|                                            |  |         |  |                       |   |                                       |   |        |  |                       | 
|                                            |  | Italy   |  | Other
      countries |   | United
      States 
      of America |   | Japan  |  | Other
      countries | 
|                                            |  |         |  |                       |   |                                       |   |        |  |                       | 
|2000                                        |  |         |  |                       |   |                                       |   |        |  |                       | 
|Sales to unaffiliated
        customers (1) |  | 18,926  |  | 16,412                |   | 59,660                                |   | 31,067 |  | 46,487                | 
|Intersegment
        sales (2)              |  | 56,177  |  | 751                   |   | 21,389                                |   | 482    |  | 4,737                 | 
|                                            |  |         |  |                       |   |                                       |   |        |  |                       | 
|Total sales                                 |  | 75,103  |  | 17,163                |   | 81,049                                |   | 31,549 |  | 51,224                | 
|Operating
        income (loss)             |  | 16,373  |  | 528                   |   | 5,667                                 |   | 1,139  |  | 10,669                | 
|Total
        assets                        |  | 167,773 |  | 73,542                |   | 71,820                                |   | 11,771 |  | 44,281                | 
|                                            |  |         |  |                       |   |                                       |   |        |  |                       | 
|2001                                        |  |         |  |                       |   |                                       |   |        |  |                       | 
|Sales
        to unaffiliated customers (1) |  | 14,429  |  | 21,159                |   | 54,706                                |   | 23,749 |  | 46,126                | 
|Intersegment
        sales (2)              |  | 46,063  |  | 1,368                 |   | 27,755                                |   | 463    |  | 2,696                 | 
|                                            |  |         |  |                       |   |                                       |   |        |  |                       | 
|Total sales                                 |  | 60,492  |  | 22,527                |   | 82,461                                |   | 24,212 |  | 48,822                | 
|Operating
        income (loss)             |  | 2,543   |  | 807                   |   | 2,949                                 |   | 125    |  | 9,528                 | 
|Total
        assets                        |  | 168,792 |  | 76,416                |   | 65,083                                |   | 9,598  |  | 50,161                | 
|                                            |  |         |  |                       |   |                                       |   |        |  |                       | 
|2002                                        |  |         |  |                       |   |                                       |   |        |  |                       | 
|Sales
        to unaffiliated customers (1) |  | 16,443  |  | 15,364                |   | 41,461                                |   | 30,106 |  | 37,834                | 
|Intersegment
        sales (2)              |  | 51,936  |  | 807                   |   | 6,455                                 |   | 420    |  | 3,240                 | 
|                                            |  |         |  |                       |   |                                       |   |        |  |                       | 
|Total sales                                 |  | 68,379  |  | 16,171                |   | 47,916                                |   | 30,526 |  | 41,074                | 
|Operating
        income (loss)             |  | 4,603   |  | (124                  | ) | (7,039                                | ) | 1,281  |  | 9,349                 | 
|Total
        assets                        |  | 174,998 |  | 65,265                |   | 45,350                                |   | 9,795  |  | 64,618                | 

|(1) | Sales to unaffiliated customers comprise sales
      by Group companies from that geographic segment                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Intersegment sales include sales to Group
      companies located in other geographic areas. Intersegment sales are generally
      priced at cost plus an appropriate mark-up for profit

Export
  sales to unaffiliated customers from the Company’s domestic operations
  in Italy amounted to 8%, 8% and 11% of consolidated sales in 2000, 2001 and
  2002 as follows (in thousands of Euro):

|                                               | Europe |  | UnitedStates
      ofAmerica |  | Asia  |  | Othercountries |  | Consolidation | 
|---------------------------------------------- | ------ |  | ---------------------------- |  | ----- |  | -------------- |  | ------------- | 
|                                               |        |  |                              |  |       |  |                |  |               | 
|2000                                           |        |  |                              |  |       |  |                |  |               | 
|Export sales
        to unaffiliated customers | 7,142  |  | 55                           |  | 5,153 |  | 1,399          |  | 13,749        | 
|                                               |        |  |                              |  |       |  |                |  |               | 
|2001                                           |        |  |                              |  |       |  |                |  |               | 
|Export sales
        to unaffiliated customers | 5,896  |  | 22                           |  | 5,370 |  | 1,280          |  | 12,568        | 
|                                               |        |  |                              |  |       |  |                |  |               | 
|2002                                           |        |  |                              |  |       |  |                |  |               | 
|Export sales
        to unaffiliated customers | 6,876  |  | 149                          |  | 7,660 |  | 1,175          |  | 15,860        | 

F-35

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SAES GETTERS S.p.A. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL
  STATEMENTS, Continued

26.   Legal Proceedings

In December 2001, the Company filed a complaint in San Jose, California, against Aeronex, Inc., a manufacturer of purification solutions, alleging that Aeronex infringed upon the Company’s U.S. patent No. 5,716,588 which broadly claims ammonia purification systems and processes utilizing iron-manganese getter materials. In April 2002, the Company amended the complaint to include claims that Aeronex also engaged in unfair competition and false advertising with respect to its marketing practices in connection with the infringing products and processes. The Company believes that the ongoing litigation will not have any material adverse affect on its business or prospects.

Other than as disclosed in this annual report, there are no other current or pending legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their assets or properties is subject which, either individually or in the aggregate, are expected by the Company to have a material adverse effect on its consolidated financial position, liquidity or results of operations.

27.   Subsequent Events

In January 2003, the Italian Companies of the Group entered into foreign exchange contracts to hedge current amounts receivable and a portion of 2003 sales denominated in Dollars and Japanese Yen. In particular, these foreign exchange contracts covered a portion ($12,5 million) of the estimated sales in Dollars for the first six months of 2003 and a portion (Japanese Yen 1,572 million) of the estimated sales in Japanese Yen for the entire year 2003.

The Company is currently considering further acquisitions, joint ventures or other strategic investments, although the Company currently has no arrangements, understandings or agreements with respect to any such acquisitions, joint ventures or investments.

F-36

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  CERTIFICATIONS
  I,
    Paolo della Porta, certify that:
  1.      I
    have reviewed this annual report on Form 20-F of Saes Getters S.p.A.;
  2.      Based
    on my knowledge, this annual report does not contain any untrue statement
    of a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this annual
    report;
  3.      Based
    on my knowledge, the financial statements, and other financial information
    included in this annual report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the registrant
    as of, and for, the periods presented in this annual report;
  4.      The
    registrant’s other certifying officers and I are responsible for establishing
    and maintaining disclosure controls and procedures (as defined in Exchange
    Act Rules 13a-14 and 15d-14) for the registrant and we have:(a)      designed
    such disclosure controls and procedures to ensure that material information
    relating to the registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during the period
    in which this annual report is being prepared;(b)      evaluated
    the effectiveness of the registrant’s disclosure controls and procedures
    as of a date within 90 days prior to the filing date of this annual report
    (the “Evaluation Date”); and(c)      presented
    in this annual report our conclusions about the effectiveness of the disclosure
    controls and procedures based on our evaluation as of the Evaluation Date;
  5.      The
    registrant’s other certifying officers and I have disclosed, based on
    our most recent evaluation, to the registrant’s auditors, statutory
    auditors and the audit committee of the registrant’s board of directors
    (or persons performing the equivalent function):(a)      all
    significant deficiencies in the design or operation of internal controls which
    could adversely affect the registrant’s ability to record, process,
    summarize and report financial data and have identified for the registrant’s
    auditors any material weaknesses in internal controls; and(b)      any
    fraud, whether or not material, that involves management or other employees
    who have a significant role in the registrant’s internal controls; and
  6.      The
    registrant’s other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal controls
    or in other factors that could significantly affect internal controls subsequent
    to the date of our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.
  SAES
    Getters S.p.A.
  By:
      /s/ Paolo della PortaPaolo della PortaChairman of the Board, Presidentand Group Chief Executive
        OfficerDate:
    April 23, 2003
  
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  I,
    Giuseppe Rolando, certify that:
  1.      I
    have reviewed this annual report on Form 20-F of Saes Getters S.p.A.;
  2.      Based
    on my knowledge, this annual report does not contain any untrue statement
    of a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this annual
    report;
  3.      Based
    on my knowledge, the financial statements, and other financial information
    included in this annual report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the registrant
    as of, and for, the periods presented in this annual report;
  4.      The
    registrant’s other certifying officers and I are responsible for establishing
    and maintaining disclosure controls and procedures (as defined in Exchange
    Act Rules 13a-14 and 15d-14) for the registrant and we have:(a)      designed
    such disclosure controls and procedures to ensure that material information
    relating to the registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during the period
    in which this annual report is being prepared;(b)      evaluated
    the effectiveness of the registrant’s disclosure controls and procedures
    as of a date within 90 days prior to the filing date of this annual report
    (the “Evaluation Date”); and(c)      presented
    in this annual report our conclusions about the effectiveness of the disclosure
    controls and procedures based on our evaluation as of the Evaluation Date;
  5.      The
    registrant’s other certifying officers and I have disclosed, based on
    our most recent evaluation, to the registrant’s auditors, statutory
    auditors and the audit committee of the registrant’s board of directors
    (or persons performing the equivalent function):(a)      all
    significant deficiencies in the design or operation of internal controls which
    could adversely affect the registrant’s ability to record, process,
    summarize and report financial data and have identified for the registrant’s
    auditors any material weaknesses in internal controls; and(b)      any
    fraud, whether or not material, that involves management or other employees
    who have a significant role in the registrant’s internal controls; and
  6.      The
    registrant’s other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal controls
    or in other factors that could significantly affect internal controls subsequent
    to the date of our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.
  SAES
    Getters S.p.A.
  By:
      /s/ Giuseppe RolandoGiuseppe RolandoGroup Chief Financial OfficerDate:
    April 23, 2003