20-F 1 l42227e20vf.htm FORM 20-F e20vf
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As filed with the Securities and Exchange Commission on April 7, 2011
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
     
o   REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) F THE SECURITIES EXCHANGE ACT OF 1934
OR
     
þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
OR
     
o   SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number: 000-50991
 
TELVENT GIT, S.A.
(Exact name of Registrant as specified in its charter)
 
N/A
(Translation of Registrant’s name into English)
 
KINGDOM OF SPAIN
(Jurisdiction of incorporation of organization)
 
Valgrande, 6
28108, Alcobendas, Madrid, Spain
(Address of principal executive offices)
Lidia García
(34) 902 335 599
(34) 917 147 001 - Fax
Telvent GIT, S.A.
Valgrande, 6
28108, Alcobendas, Madrid, Spain
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:
     
Title of each class   Name of each exchange on which registered
     
Ordinary shares, € 3.00505 nominal value per share   NASDAQ Global Select Market
 
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
     Ordinary shares, € 3.00505 nominal value per share: 34,094,159 (as of December 31, 2010)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o No þ
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those sections.
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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definitions of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer o   Accelerated filer þ  Non-accelerated filer o
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
         
U.S. GAAP þ   International Financial Reporting Standards as
issued by the International Accounting Standards
Board o
  Other o
If “other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 o Item 18 o
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
 
 

 


 

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INTRODUCTION
Presentation
     We have prepared the audited consolidated financial statements included in this annual report (the “Consolidated Financial Statements”) in accordance with accounting principles generally accepted in the United States of America, which we refer to as U.S. GAAP.
References
Unless otherwise indicated,
  (1)   “Abengoa Group” refers to Abengoa, S.A. and its subsidiaries, including Telvent GIT, S.A. and its subsidiaries;
  (2)   “Abengoa” refers to Abengoa, S.A. and its subsidiaries (including Telvent Corporation, S.L., Telvent Investments, S.L. and Siema AG) except for Telvent GIT, S.A. and its subsidiaries, unless the context otherwise requires;
  (3)   “Abengoa Mexico” refers to Abengoa Mexico S.A. de C.V.;
  (4)   All references to “U.S. Dollars”, “dollars”, “$” and “U.S. $” are to the legal currency of the United States and all references to “Euros” and “€” are to the legal currency of the European Union;
  (5)   “Almos” refers to our subsidiary Telvent Australia Pty. Ltd. (formerly Almos Systems, Pty Ltd.) (Australia) and our subsidiary Telvent Netherlands B.V (formerly Almos Systems B.V.) (Netherlands), which we acquired on July 5, 2005;
  (6)   “Asia Pacific” includes Australia;
  (7)   “Beijing Blue Shield” or “Telvent Blueshield” refers to our subsidiary Telvent-BBS High & New Tech. (Beijing) Co, Ltd., which we acquired on April 26, 2006;
  (8)   “Convertible Notes”, the “Notes”, or “Senior Subordinated Convertible Notes” refers to the sale on April 19, 2010 of U.S. $200 million in aggregate principal amount of 5.50% Senior Subordinated Convertible Notes due 2015;
  (9)   “DTN” refers to DTN Holding Company, Inc., which we acquired on October 28, 2008;
  (10)   “ICX” refers to our subsidiary ICX Sistemas S.A., which we acquired on May 21, 2004;
  (11)   “Latin America” includes Mexico;
  (12)   “Maexbic” refers to our subsidiary Maexbic, S.A., which we acquired on November 13, 2006;
  (13)   “Matchmind” refers to our subsidiary Matchmind Holding, S.L. and its subsidiaries Matchmind, S.L. and Matchmind Ingenieria de Software, S.L., which we acquired effective October 1, 2007 and which have been merged into Telvent Global Services, S.A.;
  (14)   “North America” refers to the United States and Canada;
  (15)   “NLDC” refers to Northern Lakes Data Corp., from which we acquired certain assets on February 3, 2009;
  (16)   “S21 Sec” refers to Grupo S21 Sec Gestion, S.A.;
  (17)   “SEC” refers to the United States Securities and Exchange Commission;
  (18)   “shares” and “ordinary shares” refer to our ordinary shares, nominal value € 3.00505 per share;
  (19)   “Telvent Brasil” refers to our subsidiary Telvent Brasil, S.A.;
  (20)   “Telvent Canada” refers to our subsidiary Telvent Canada Ltd.;

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  (21)   “Telvent Caseta” or “Caseta” refers to our subsidiary Telvent Caseta, Inc. (formerly known as Caseta Technologies Inc.), which we acquired on April 27, 2007, and which was merged into Telvent Farradyne (now known as Telvent USA Corporation) on April 1, 2010;
  (22)   “Telvent China” refers to our subsidiary Telvent Control System (Beijing) Co., Ltd.;
  (23)   “Telvent DMS” refers to Telvent DMS LLC Novi Sad, a joint venture formed in Serbia with the DMS Group LLC., on May 8, 2008;
  (24)   “Telvent DTN” refers to Telvent DTN, Inc., which is the surviving legal entity that resulted from a corporate reorganization completed on October 26, 2009 under which the name DTN Holding Company, Inc., was changed to Telvent DTN, Inc., and all of the subsidiaries of DTN Holding Company, Inc. were merged into Telvent DTN, Inc.;
  (25)   “Telvent Energía” refers to our subsidiary Telvent Energía, S.A.;
  (26)   “Telvent Export” refers to our subsidiary Telvent Export, S.L.;
  (27)   “Telvent Farradyne” or “Farradyne” refers to our subsidiary Telvent Farradyne Inc., formerly called PB Farradyne, Inc. which we acquired on July 1, 2006 (now known as Telvent USA Corporation as a result of the merger of Telvent U.S.A, Telvent Traffic, Telvent Caseta and Telvent Miner & Miner into Telvent Farradyne and the change of the name of Telvent Farradyne Inc. to Telvent USA Corporation effective July 1, 2010);
  (28)   “Telvent Global Services” refers to Telvent Global Services, S.A., entity resulting from the merger effective July 1, 2010, of Telvent Outsourcing, S.A., Telvent Housing, S.A., Telvent Interactiva, S.A., GD 21, S.L., Galian 2020 S. L., Matchmind Holding, S.L., Matchmind, S.L. and Matchmind Ingeniería de Software, S.L.);
  (29)   “Telvent Housing” refers to our subsidiary Telvent Housing S.A. (now known as Telvent Global Services, S.A., as a result of the merger of Telvent Outsourcing, S.A., Telvent Housing, S.A., Telvent Interactiva, S.A., GD 21, S.L., Galian 2020 S. L., Matchmind Holding, S.L., Matchmind, S.L. and Matchmind Ingeniería de Software, S.L.);
  (30)   “Telvent Mexico” refers to our subsidiary Telvent Mexico, S.A. de C.V.;
  (31)   “Telvent Miner & Miner” refers to our subsidiary Telvent Miner & Miner Inc. in which we acquired a 70% interest on December, 10, 2004 and the remaining 30% on February 22, 2006 (now known as Telvent USA Corporation, as a result of the merger of Telvent Miner & Miner, Inc. into Telvent Farradyne Inc. and the change of the name of Telvent Farradyne Inc., to Telvent USA Corporation effective July 1, 2010);
  (32)   “Telvent North America” refers collectively to our subsidiaries Telvent Canada, Telvent USA, Telvent Miner & Miner and Telvent Farradyne);
  (33)   “Telvent Outsourcing” refers to our subsidiary Telvent Outsourcing, S.A. (now known as Telvent Global Services, S.A., as a result of the merger of Telvent Outsourcing, S.A., Telvent Housing, S.A., Telvent Interactiva, S.A., GD 21, S.L., Galian 2020 S. L., Matchmind Holding, S.L., Matchmind, S.L. and Matchmind Ingeniería de Software, S.L.);
  (34)   “Telvent Portugal” refers to our subsidiary Telvent Portugal, S.L.;
  (35)   “Telvent Traffic” refers to our subsidiary Telvent Traffic North America Inc. (now known as Telvent USA Corporation, as a result of the merger of Telvent Traffic North America Inc. into Telvent Farradyne and the change of the name of Telvent Farradyne Inc. to Telvent USA Corporation effective July 1, 2010);
  (36)   “Telvent Tráfico” refers to our subsidiary Telvent Tráfico y Transporte, S.A.;
  (37)   “Telvent USA” refers to our subsidiary Telvent USA, Inc. (now known as Telvent USA Corporation, as a result of the merger of Telvent U.S.A., Inc. into Telvent Farradyne and the change of the name of Telvent Farradyne Inc. to Telvent USA Corporation effective July 1, 2010);
  (38)   “Telvent USA Corporation” refers to our subsidiary Telvent USA Corporation, a Maryland corporation, the result of the merger of Telvent U.S.A., Inc., Telvent Traffic North America, Inc., Telvent Farradyne Inc., Telvent Caseta Inc. and Telvent Miner & Miner, Inc.;

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  (39)   the terms “we”, “us”, “our Company”, “the Company” “our” and “Telvent” refer to Telvent GIT, S.A. and includes Telvent GIT, S.A. and its subsidiaries unless the context otherwise requires;
  (40)   “WBU-Xwave” refers to the western business unit of Xwave Solutions Inc., which we acquired on July 31, 2004; and
  (41)   “U.S. GAAP” is the abbreviation for United States Generally Accepted Accounting Principles;
Initial Public Offering
     We undertook an initial public offering of our shares pursuant to a Registration Statement on Form F-1 dated October 21, 2004 (our “Registration Statement” and our “initial public offering” or “IPO”). Our ordinary shares are quoted on the NASDAQ Global Select Market under the symbol “TLVT”; they are not listed on any other exchange or otherwise quoted for trading in Spain.
Cautionary Statement Regarding Forward-Looking Statements
     Many statements in this Form 20-F contain forward-looking statements that reflect our current expectations and views of future events. These forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, among other things:
    our anticipated growth strategies in each of the sectors in which we operate;
    the levels of growth we anticipate in our targeted geographies;
    our future business development, results of operations and financial condition;
    the success of our research and development activities;
    our ability to grow based upon our relationship with our largest shareholder Abengoa;
    Abengoa’s future activities with respect to us;
    our ability to continue to control costs and maintain the quality of our services and solutions;
    our ability to develop technologically advanced solutions and to execute successfully our real-time process outsourcing programs;
    our ability to provide integrated IT solutions;
    our ability to sell additional services and solutions to our existing customer base;
    our expectations regarding information technology expenditures by our customers;
    our ability to increase our margins through increased sales of higher value-added advanced applications;
    our ability to identify, acquire and integrate complementary businesses;
    the trend of our customers to outsource more of their mission-critical activities;
    our expectations regarding the payment of dividends and our future effective tax rate;
    our ability to retain senior management and other highly-skilled personnel;
    our ability to increase revenues and operating margins by shifting our services and solutions mix;

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    the importance of our alliances, joint ventures and investments; and
    the expectations regarding general economic conditions.
     We operate in an emerging and evolving environment. New risk factors emerge from time to time, and it is not possible for our management to predict all possible risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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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 selected consolidated statement of operations data for fiscal years 2010, 2009, 2008, 2007 and 2006 and the consolidated balance sheet data as of December 31, 2010, 2009, 2008, 2007 and 2006 are derived from our audited consolidated financial statements and should be read in conjunction with, and are qualified in their entirety by reference to, our consolidated financial statements and related notes that were prepared in accordance with U.S. GAAP. You should read the selected consolidated financial data set forth below in conjunction with the “Operating and Financial Review and Prospects” section included elsewhere in this Annual Report.

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    Year Ended December 31,  
    2010(1) (2)     2010(2)     2009     2008(2)     2007(2)     2006(2)  
    (In thousands, except per share data)  
Consolidated Statement of Operations:
                                               
Revenues
  $ 960,485     723,856     791,053     724,613     624,317     503,844  
Cost of revenues
    609,561       459,387       526,029       538,632       485,612       393,219  
 
                                   
Gross profit
    350,924       264,469       265,024       185,981       138,705       110,625  
 
                                   
General and administrative
    159,532       120,229       118,443       67,439       53,900       39,850  
Sales and marketing
    31,653       23,855       25,261       21,677       13,668       13,730  
Research and development
    13,767       10,375       14,079       19,067       19,106       16,465  
Depreciation and amortization
    46,993       35,416       29,981       14,561       10,623       9,562  
Other allowances
    23,931       18,035                          
 
                                   
Total operating expenses
    275,876       207,910       187,764       122,744       97,297       79,607  
 
                                   
Income (loss) from operations
    75,048       56,559       77,260       63,237       41,408       31,018  
Financial income (expense), net
    (29,632 )     (22,332 )     (37,897 )     (23,344 )     (9,882 )     (6,643 )
Income from companies carried under the equity method
    5,277       3,977       (71 )     270       324        
Other income (expense), net
                (1,128 )     (1,919 )     (2,025 )     (387 )
 
                                   
Total other income (expense)
    (24,355 )     (18,355 )     (39,096 )     (24,993 )     (11,583 )     (7,030 )
 
                                   
Income before income taxes
    50,693       38,204       38,164       38,244       29,825       23,988  
Income tax expense (benefit)
    (11,609 )     (8,749 )     (1,087 )     6,890       4,680       2,080  
 
                                   
Net income
    62,302       46,953       39,251       31,354       25,145       21,908  
Loss/(profit) attributable to non-controlling interests
    (771 )     (581 )     (175 )     (1,144 )     (268 )     (70 )
 
                                   
Net income attributable to the parent company
  $ 61,531     46,372     39,076     30,210     24,877     21,838  
 
                                   
Add back
                                               
Convertible debt interest expense, net of tax (*)
    10,258       7,731                          
Change in fair value of embedded call option, net of tax (*)
    (17,962 )     (13,537 )                        
 
                                   
Adjusted net income attributable to the parent company for diluted EPS
  $ 53,827     40,566     39,076     30,210     24,877     21,838  
 
                                   
 
(*)   Add back amounts include exchange rate differences.
 
Dividends per share (3)
  $         0.36     0.34     0.30      
Basic net income per share
attributable to the parent company (4)
  $ 1.83     1.38     1.15     1.00     0.85     0.75  
Diluted net income per share
attributable to the parent company (5)
  $ 1.41     1.06     1.15     1.00     0.85     0.75  
Weighted average number of shares outstanding, basic (4)
    33,723,197       33,723,197       33,985,411       30,096,995       29,247,100       29,247,100  
Weighted average number of shares outstanding, diluted (5)
    38,198,437       38,198,437       34,094,159       30,096,995       29,247,100       29,247,100  
 
    As of December 31,  
    2010(1)     2010     2009     2008     2007     2006  
    (In thousands)  
Consolidated Balance Sheet Data:
                                               
Cash and cash equivalents
  $ 93,361     70,360     92,893     67,723     73,755     69,232  
Restricted cash(6)
                      18,085       8,590       8,045  
Total assets
    1,661,681       1,252,303       1,139,851       1,051,223       673,519       555,631  
Net related-party credit line receivable (payable) balance(7)
    (28,949 )     (21,817 )     (51,741 )     4,812       22,240       18,377  
Short-term debt
    63,982       48,219       97,335       56,728       63,998       32,295  
Redeemable non-controlling interest (8)
                      20,020       19,967        
Common Stock
    135,948       102,455       102,455       102,455       87,889       87,889  
Long-term debt(9)
    292,255       220,254       188,823       221,027       15,718       16,702  
Total equity (8)
    467,877       352,609       279,984       252,597       174,042       177,515  

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(1)   Data presented in U.S. Dollars was translated from Euros to U.S. Dollars at the December 30, 2010 noon buying rate of U.S. $1.3269 to € 1.00.
 
(2)   Financial results for the year ended December 31, 2006 include approximately eight, six and two months of results of operations of Beijing Blue Shield, Farradyne and Maexbic, respectively. Financial results for the year ended December 31, 2007 include eight and three months of results of operations of Telvent Caseta and Matchmind, respectively. Financial results for the year ended December 31, 2008 include two months of results of operations of Telvent DTN. Financial results for the year ended December 31, 2010 do not include the results of operations of the assets used in providing IT services to Abengoa and its other business groups, that were included in the previous years’ financial results and that were sold to Simosa IT, S.A., a wholly-owned subsidiary of Abengoa, effective January 1, 2010.
 
(3)   Prior to our initial public offering, as a subsidiary of Abengoa, we distributed our net income, calculated in accordance with Spanish GAAP, to our shareholders to the extent permitted by Spanish law. On May 12, 2009 we paid a dividend on our ordinary shares in the amount of € 0.36 per share to our shareholders of record on April 28, 2009, on June 24, 2008, we paid a dividend on our ordinary shares in the amount of € 0.34 per share to our shareholders of record on June 10, 2008 and on June 20, 2007 we paid a dividend on our ordinary shares in the amount of € 0.30 per share to our shareholders of record on June 8, 2007.
 
(4)   For purposes of the basic earnings per share (“EPS”) calculation, we used a weighted average number of shares outstanding of 29,247,100 for the years ended December 31, 2007 and 2006, 30,096,995 for the year ended December 31, 2008, 33,985,411 for the year ended December 31, 2009 and 33,723,197 for the year ended December 31, 2010. As explained in Note 25 to our Consolidated Financial Statements, on September 15, 2009, we acquired 370,962 of our ordinary shares in connection with the amendment of our Extraordinary Variable Compensation Plan. These shares are held as treasury shares and are treated as issued but not outstanding. For purposes of the basic earnings per share in 2010 and 2009, we did not take these shares into consideration. The increase in the weighted average number of shares outstanding for purposes of basic earnings per share in 2008 and 2009 was due to our 4,847,059 ordinary shares capital increase in connection with the private placement offering of our ordinary shares which occurred in 2008.
 
(5)   For purposes of the diluted earnings per share (“EPS”) calculation, we used a weighted average number of shares outstanding identical to the number of shares used for purpose of the calculation of basic net income per share for the years 2008, 2007 and 2006, and of 38,198,437 and 34,094,159 in 2010 and 2009, respectively. These amounts include the 370,962 own ordinary shares acquired in connection with the amendment of our Extraordinary Variable Compensation Plan mentioned above. In addition, in 2010 we issued our Convertible Notes (see Note 21 to our Consolidated Financial Statements) and as a result, diluted net income attributable to the parent company per share was computed by the application of the if-converted method. Under this method, the convertible debt is assumed to have been converted at the beginning of the period or at the time of issuance, if later, and the resulting shares are included in the denominator. Interest charges applicable to the convertible debt, net of taxes, are added back to the numerator. Similarly, the earnings effect of the change in fair value of the liability component of the convertible debt, net of tax, has been added back to the numerator. The effect of this computation in the twelve-month period ended December 31, 2010, is not anti-dilutive, so conversion is assumed.
 
(6)   At December 31, 2008, 2007 and 2006, there were deposits amounting to € 18,085, €  8,590 and € 8,045 respectively, which constituted a counter-guarantee of certain obligations we assumed during the normal course of business. These deposits are restricted for use until the cash is received by the third-party which thereby releases our obligation.
 
(7)   Net related-party credit line receivable (payable) balance consists of the net amount of our loans to Abengoa and our borrowings from Abengoa. See “Item 7.B. Related-Party Transactions” and Note 27 “Related Party Transactions” to our consolidated financial statements.
 
(8)   We retrospectively adopted Emerging Issues Task Force Topic No. D-98, Classification and Measurement of Redeemable Securities (“EITF D-98”), in conjunction with its adoption of ASC 810-10. This standard is applicable for all non-controlling interests where we are subject to a put option under which it may be required to repurchase an interest in a consolidated subsidiary from the non-controlling interest holder. We were subject to a redeemable put option for the purchase of the remaining 42% of Matchmind in 2007 and 2008. The redemption value of the put (including dividends payable) was €  20.0 million for the years ended December 31, 2007 and 2008 respectively, and is reflected in the consolidated balance sheets as “Redeemable non-controlling interest”. The amount includes any portion of the applicable dividend payable. In addition, the retrospective impact to Stockholder’s Equity of applying EITF D-98 was a reduction to opening “Additional Paid in Capital” of €  16.1 million and €  16.5. million for the years ended December 31, 2007 and December 31, 2008 respectively. As of December 31, 2009, the Matchmind purchase agreement has been fully performed and thus, no balance remains in “Redeemable non-controlling interest” in our consolidated balance sheets as of this date.
 
(9)   Long-term debt consists of long-term debt plus the current portion of long-term debt as presented in our consolidated balance sheets.

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Exchange Rate Information
     We report our results of operations in Euros. The following table provides, for the periods and dates indicated, information concerning the noon buying rate for the Euro as certified by the Federal Reserve Bank. Average figures reflect the average of the noon buying rates on the last day of each month during the relevant period.
                                   
    U.S. Dollars per Euro     Euros per U.S. Dollar  
    Rate at             Rate at        
Year Ended December 31,   Period End     Average     Period End     Average  
2006
  $ 1.3197     $ 1.2563     0.7577     0.7960  
2007
    1.4607       1.3705       0.6846       0.7297  
2008
    1.3919       1.4726       0.7184       0.6826  
2009
    1.4332       1.3946       0.6977       0.7192  
2010
    1.3269       1.3261       0.7536       0.7541  
     For the six full months preceding the date of this annual report, the high and low exchange rates were as follows:
                                 
    U.S. Dollars per Euro     Euros per U.S. Dollar  
Month   High     Low     High     Low  
September 2010
  $ 1.3638     $ 1.2708     0.7869     0.7332  
October 2010
    1.4066       1.3688       0.7306       0,7109  
November 2010
    1.4205       1.3243       0.7551       0.7040  
December 2010
    1.3395       1.3089       0.7640       0.7465  
January 2011
    1.3715       1.2944       0.7726       0.7291  
February 2011
    1.3794       1.3474       0.7422       0.7250  
     On March 25, 2011, the most recent practicable date for this purpose, the exchange rate for the conversion of U.S. Dollars into Euros was U.S. $1.4144 and the exchange rate for the conversion of Euros into U.S. Dollars was €  0.7070.
     Unless otherwise noted or the context otherwise requires, all convenience translations from Euros to U.S. Dollars and from U.S. Dollars to Euros in this annual report were made at a rate of U.S. $1.3269 to €  1.00 and U.S. $1.00 to €  0.7536, respectively, both calculated using the noon buying rate in effect as of December 30, 2010. We make no representation that any Euro or U.S. Dollar amounts could have been, or could be, converted into U.S. Dollars or Euros, as the case may be, at any particular rate, the rates stated above, or at all.
B. CAPITALIZATION AND INDEBTEDNESS
     Not applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
     Not applicable.
D. RISK FACTORS
     Many factors could affect our business, financial condition or results of operations. We are subject to various risks resulting from changing economic, political, social, industry, business and financial conditions. The principal risks are described below.
Risks Relating To Our Business
Our business is exposed to the risk that adverse economic conditions in our geographical areas will reduce the demand for information technology services and solutions.
     Demand for information technology services is dependent on customers’ operations, budgets and overall financial condition. Therefore, demand for our services is highly sensitive to changes in general economic conditions, including availability of credit to us, and consolidation among our target customers in our core sectors. In particular, we are sensitive to economic conditions in our Energy and Transportation segments, which constituted 61.0% of our 2010 revenues. Generalized or localized downturns or inflationary

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pressures in our key geographical areas could also have an adverse effect on our business and financial condition. This is particularly true in Europe, where, in 2010, 39.8% of our revenues were generated, and in North America where, in 2010, 36.2% of our revenues were generated. As much of our business activity is highly concentrated in Spain (with 35.3% of our 2010 revenues generated there), our business and financial condition also is largely dependent upon the general economic conditions in Spain. Spain has recently experienced negative economic conditions, including high unemployment and government debt which we believe could adversely affect our operations in the near future. In addition, if worldwide adverse economic conditions continue or worsen, our expected growth will be adversely affected and revenues could decline.
Difficult conditions in the global capital markets and the economy generally may materially adversely affect our business and results of operations and we do not expect these conditions to improve in the near future.
     Our results of operations are materially affected by conditions in the global capital markets and the economy generally, both in the United States and elsewhere around the world. The global capital markets experienced unprecedented disruptions during 2007 and 2008, and while they improved in 2009 and 2010, that improvement has not been uniform. Recently, concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the United States mortgage market and a declining real estate market in the United States have contributed to increased volatility and diminished expectations for the economy and the global capital markets going forward. These factors, combined with volatile oil prices, declining business and consumer confidence and increased unemployment, have precipitated an economic slowdown and have led to a recession which is only now beginning to show signs of abating. The economic instability and uncertainty are affecting the willingness of companies to make capital spending and investment in our information technology services and solutions, therefore, these events and the continuing market upheavals may have an adverse effect on our revenues. Even in the absence of a market downturn, we are exposed to substantial risk of loss due to market volatility. Factors such as consumer spending, business investment, government spending, the volatility and strength of the capital markets, and inflation all affect the business and economic environment and, ultimately, the amount and profitability of our business.
     The capital and credit markets have been experiencing extreme volatility and disruption since the last half of 2007. Continued disruptions, uncertainty or volatility in the capital and credit markets may limit our access to additional capital required to operate our business. Such market conditions may limit our ability to replace, in a timely manner, maturing liabilities and access the capital necessary to grow our business. As a result, we may be forced to delay raising capital, issue shorter-term securities than we prefer, or bear an unattractive cost of capital which could decrease our profitability and significantly reduce our financial flexibility. In addition, these disruptions may limit the ability of potential purchasers of our services and solutions to obtain financing to purchase our services and solutions resulting in reduction or cancellations of their spending budgets and decreased revenues for Telvent. Our results of operations, financial condition, and cash flows could be materially adversely affected by continued disruptions in the financial markets.
We are particularly sensitive to risks relating to the uncertainties inherent in government and state-owned company contracts, especially in Spain and the United States.
     A substantial percentage of our revenue is derived from services we provide as a contractor or subcontractor on various projects with governmental entities, including state-owned companies. Although a number of government projects for which we serve as a contractor or subcontractor are planned as multi-year projects, governments normally reconsider the funding of these projects on an annual (or more frequent) basis, particularly in the United States. Generally, these governmental entities may change the scope of, terminate or delay these projects at their convenience. The termination of, or a major reduction in the scope of, a major government project could have a material adverse effect on our results of operations and financial condition. In addition, adverse economic changes or slowdowns, changes in government, or political instability in any of the countries and regions in which we operate, particularly in the United States, Spain, Latin America, Asia-Pacific, the Middle-East and Africa, can impact government expenditures on infrastructure projects and, accordingly, could have a material adverse effect on our ability to achieve growth in those geographic areas.
We may not be able to manage effectively our expanding operations or integrate our acquired businesses successfully, which may impede our growth or negatively impact our performance.
     We grew significantly in 2006 and 2007 and completed the acquisition of DTN on October 28, 2008. Such growth has placed and will continue to place a significant strain on our managerial and operational resources. To accommodate our growth and future acquisitions and also to fulfill our obligations as a United States reporting company, we must implement new or upgraded operating and financial systems, procedures and controls throughout many different locations, including processes to address internal controls, trade barriers, foreign corrupt practices and receivables collection. The success of any acquisition we make also will depend on our ability to integrate personnel and acquired assets. These efforts may not be successful. Our failure to expand and integrate these systems and procedures efficiently could cause our expenses to grow and our revenues to decline or grow more slowly than expected. Our inability to integrate successfully any businesses we acquire could cause us not to realize the degree or timing of benefits we

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expect and would impair our ability to achieve our growth strategy.
We may not be able successfully to extend sales of our solutions into other geographic areas, which may impede our growth.
     Part of our growth strategy is predicated on extending sales in our segments to all of the geographic areas in which we currently operate. There are unique challenges in each geographic location in which we operate and extending the geographical reach of our segments may be more difficult than we anticipate. In addition, in certain of our segments (particularly Transportation), customers are local in nature and thus, to extend our segments into new geographic areas, we will need to develop relationships with new customers. To the extent that we are unable to do so, we may not be able to implement our growth strategy.
We may need additional capital, which, if obtained, could cause us to take steps that could dilute the value of our shareholders’ investments, increase our indebtedness, or both.
     As discussed below under “Risks Relating to Being Part of the Abengoa Group,” our credit arrangements with Abengoa are one of our primary sources of borrowed capital for our working capital or other needs. Under the credit facility agreement dated March 31, 2010 between Abengoa and the Company (described in Item 7B “Related Party Transactions), Abengoa does not have discretion to decide not to advance funds requested by the Company in accordance with the terms of the credit facility agreement. However, under the credit agreement between Abengoa Mexico and Telvent Mexico and the credit agreement between Abengoa Mexico and Telvent Energía, Abengoa may, at its option, elect not to lend us funds. In addition, Abengoa currently provides us with credit support in connection with some of our performance bonds and some of our lending arrangements and also periodically guarantees our lines of credit and our trade letters of credit with respect to some of our projects. Any refusal or inability of Abengoa to provide us with funding under the credit arrangement or to provide us with guarantees or credit support, because of financial constraints on Abengoa or otherwise, could significantly curtail our ability to access capital and bonding facilities and could have a material adverse effect on us. As discussed below under “Risks Relating to the Public Market for Our Shares — A decision by Abengoa, our current largest individual shareholder, regarding the disposition of the balance of its holdings in our shares, could adversely affect our operations and the price of and market for our shares.” Abengoa currently holds, indirectly, 40% of our outstanding shares. If we were to cease to be a member of the Abengoa Group, we cannot assure you that we would be able to replace the credit arrangements we currently have in place with Abengoa with other arrangements on terms equally favorable to us, if at all and our failure to be able to do so could have a material adverse effect on our operations.
Our ability to obtain new credit facilities for working capital, capital expenditures, acquisitions, factoring, bonds and bank guarantees for our projects and other needs depends on many factors beyond our control.
     It is possible that as a result of circumstances outside of our control, such as recessions in the key geographies or markets in which we do business or instability in the financial markets, such as rapid changes in exchange rates, we may require new external financing in order to fund all of our operating, capital expenditure and investment requirements. Our ability to arrange for such financing and the cost of such financing will be dependent on numerous factors outside of our control, including:
    general economic and capital market conditions, including exchange rates;
    the availability of credit from banks or other lenders;
    investor confidence in us;
 
    investor views about the information technology business and the key countries in which we do business; and
    provisions of tax and securities laws that may be applicable to our efforts to raise capital.
Restrictive covenants in the agreements governing our indebtedness and other financial obligations may reduce our operating flexibility.
     The agreements governing indebtedness and other financial obligations applicable to us and certain of our subsidiaries contain various negative and affirmative covenants, including the requirement to maintain certain specified financial ratios. These covenants reduce our operating flexibility as they limit our and certain of our subsidiaries’ ability to, among other things: incur additional indebtedness; create or incur liens; sell assets; make restricted payments, loans and investments; make capital expenditures; liquidate or dissolve the applicable companies; enter into any spin-off, transformation, merger, or acquisition, subject to certain exceptions set forth in the applicable agreements; and change the nature or scope of the lines of business. If we or any of our applicable subsidiaries violate any of these covenants or requirements, a default may result and the ability of our subsidiaries to make distributions to us would be limited. As discussed below under “Risks Relating to the Public Market for Our Shares — A decision by Abengoa, our current largest shareholder, regarding the disposition of the balance of its holdings in our shares, could adversely affect our operations and the price of and market for our shares,” Abengoa currently holds, indirectly, 40% of our outstanding shares. We cannot assure you

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that, if we were to cease to be a member of the Abengoa Group, we would be able to replace these agreements on terms as favorable to us, if at all, and our failure to be able to do so could have a material adverse effect on our operations.
We may not be able to implement appropriate hedging strategies to protect against future movements in currency rates between the Euro and the U.S. Dollar and other currencies, which may adversely affect our results of operations.
     We are exposed to foreign exchange risk arising from various currency exposures. In 2010, approximately 48.4% of our revenues were recorded in Euros, approximately 34.0% of our revenues were recorded in U.S. Dollars and the remainder was recorded in other currencies. If we fail adequately to hedge any of our foreign currency risk, we could be exposed to adverse foreign exchange rate changes, which could have a material adverse effect on our results of operations and financial condition.
Our relationships with our alliance partners may not be successful, which could adversely affect our business and the implementation of our growth strategy.
     In certain market sectors, we depend on alliances and value-added reseller relationships to generate sales and manage existing projects. We have an agreement with Echelon for the smart metering management market. We also have an agreement with Larson & Tubro in India in the Energy segment. In the United States and Canada, we have alliances or reseller agreements with the Environmental Systems Research Institute for geographic information systems, OSISoft for data warehousing solutions, Symantec for security-related solutions, Sybase for database and other software, and Microsoft and Open Access Technology International, Inc. (OATI) for software solutions. In the Transportation segment we have agreements with IBM, Peek Traffic Limited and IVU Traffic Technologies. These agreements are for short terms (often renewable one-year terms) and are terminable by either party upon notice. If these relationships are not successful or if the agreements are not renewed under favorable terms, our business and growth in those countries could be negatively affected.
Problems with our third-party technology suppliers could create delays in our delivery of services, solutions and systems to our customers.
     Some of our software, solutions and systems use other items supplied by third-party technology companies such as operating systems, databases, protocols, interfaces, middleware and graphics engines. In these cases we have long-term agreements, usually including royalty payments, to embed these third-party solutions and functionalities in our solutions and systems. If we are not successful in maintaining these third-party technology supply agreements, we could encounter delays in our ability to deliver promised functionality to our customers while we investigate and install substitute technologies in our solutions and systems. These delays could adversely affect our business.
Problems caused by subcontractors to whom we have subcontracted parts of the scope of supply for a project could create delays in our delivery of services, solutions and systems to our customers and cause us to be in default under our contracts with our customers.
     The scope of supply of some of our project contracts includes services, equipment or software which we subcontract to subcontractors. If a subcontractor is late in delivering the goods and services to be supplied or delivers goods or services which are not in compliance with the requirements of the subcontract, that can cause us to be in default under the contract with the customer. To the extent that we cannot transfer all of the risk to the subcontractor or are not able to be fully indemnified by the subcontractor, we may be subject to a claim by the customer as a result of a problem caused by a subcontractor that could have a material adverse effect on our results of operations and financial condition.
The failure of our mission-critical information technology solutions or our customers’ systems could expose us to liability.
     We provide real-time information management services and solutions for our customers’ applications that monitor and control mission-critical operational and management functions. In some cases, these systems protect product inventories from problems such as theft, leakage or spills and protect the environment and public safety. Some of our solutions also minimize outage and waste issues. If a customer’s system were to experience a critical failure or outage as a direct result of a defect in one of our services or solutions, whether those solutions are our own or those portions of the services and solutions supplied through integrated third-party technology partners, we may be subject to claims for injuries or other damages. Our insurance may not be sufficient or may not apply to any exposure we have resulting from this type of solutions failure and we may not have adequate recourse against our third-party technology partners.
Our operations depend on our facilities located throughout the world and are subject to risks that could disrupt the services that we provide.
     In providing our services, we operate out of numerous facilities worldwide. Our facilities and operations could be damaged or

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disrupted by a natural disaster, war, political unrest, terrorist activity, computer viruses or public health concerns. A major catastrophe, such as an earthquake or other natural disaster at any of our sites, or significant political unrest, war or terrorist activity in any of the areas where we conduct operations, could result in a prolonged interruption of, or disruption to, the services we provide to our customers. We may not be able to provide our services in the manner required by our customers if any of the foregoing occur, which would damage our reputation, business and financial condition.
We have significant international operations that could be adversely affected by insurrections, war, political disruptions, civil disturbances, economic legal and trade sanctions or changes in trade policies.
     We have operations in certain geographical areas, including parts of the Middle East, Africa, Latin America, the Asia Pacific region and the former Soviet Union, that are subject to risks of insurrections, war, political disruptions, civil disturbances, economic legal and trade sanctions or changes in trade policies (such as restrictions on the export or re-export of U.S. origin products to countries that the U.S. government may deem to sponsor terrorism) and changes in trade policies. Our operations may be restricted or prohibited in any country in which the foregoing risks occur.
     In particular, the occurrence of any of these risks could result in the following events, which in turn, could have a material adverse effect on our results of operations:
    restriction of the movement and exchange of funds;
    inability to collect accounts receivable;
    forfeiture of performance bonds; and
    loss of property or equipment that are critical to the completion of projects in the affected area and difficulty in staffing and managing our operations in that area, which could reduce our revenues and net earnings.
     In addition, despite our high ethical standards and policies and our compliance procedures aimed at preventing and detecting unlawful conduct, given the scope of our international operations, we may not be able to prevent all potential unlawful conduct or corrupt practices by foreign employees or international partners.
     In early 2011, our operations in Libya were disrupted by the ongoing political uprising. Work on our Water SCADA and efficiency applications project in Libya for the Great Man-Made River Authority was suspended and we evacuated all of our non-Libyan employees and their families. Our operations in Libya have not resumed. At December 31, 2010, we had cash, accounts receivable and prepaid expenses of approximately U.S. $21.2 million in Libya. We currently have outstanding approximately U.S. $8.3 million of bid, performance and advance payment bank guarantees related to our operation in Libya. We could suffer material losses with respect to these assets.
     If political violence were to curtail our activities in other countries in the region from which we derive business, and particularly if political activities were to result in prolonged violence or civil war, these political activities could have a material adverse effect on our business in the region.
We depend substantially on a limited number of key personnel who would be difficult to replace. If we lose the services of any of these individuals, our business may be adversely affected.
     Our continued growth and success depend in large part on the managerial and technical skills of the members of our senior management, particularly Ignacio González Domínguez, Larry Stack, Manuel Losada Friend, David Jardine, José Montoya Pérez, Alfredo Escribá Gallego, José Ignacio del Barrio Gómez, Cristóbal Ramos Carranza, Luis Rancé, Marcio Leonardo, Carlos Dai Yue, Javier Garoz Neira, Thomas Dilworth, Manuel Fernández Maza, Carmen Rodríguez, Lidia García Páez, Aránzazu Caja Chocarro, John Leiferman, Ronald Sznaider and Javier de la Cuerda and the success of our expansion efforts depends on significant management attention to integration and coordination. Any loss of services of any of our senior management may negatively affect our business.
We depend on the services of our technically-skilled employees and may not be able to attract or retain the employees we need.
     During periods in which demand for technically-skilled employees is great, we may experience significant employee turnover. These individuals are in high demand and we may not be able to attract or retain the staff we need, which could adversely affect our business.
We may not be able to compete effectively, which would harm our business.

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     We compete on our ability to provide innovative solutions to our customers. If we are unable to continue to develop innovative solutions for our customers at competitive prices, we will not be able to compete successfully. There are many companies that provide competing solutions in the business segments and in the geographic areas in which we operate. The competition we face is intense and we expect it to increase in the future. Increased competition could result in:
    price reductions and lower revenues;
    loss of customers;
    lower than anticipated growth; and/or
    loss of market share.
     In addition, our competitors may develop services and solutions that are better than ours, that are more appealing to customers or that achieve greater market acceptance. We compete with large engineering and industrial firms and small sector-driven specialized firms on a geographic and customer basis, including General Electric, Honeywell, Affiliated Computer Services Inc., Indra Sistemas, S.A., SICE (Sociedad Ibérica de Construcciones Eléctricas, S.A.), Transcore Inc. (a subsidiary of Roper Industries), Delcan Technologies, Siemens, ABB, Areva, Invensys, Toptech (refined fuels) and Schneider. Many of our competitors are larger than we are and have greater financial and marketing resources than we do. Many of our competitors have longer operating histories and greater name recognition than we do. Also, some of our competitors have established offshore operations in countries such as India and China in order to reduce the costs of research and development and engineering services for their projects. These advantages may allow our competitors to respond more quickly to new or emerging technologies, changes in customer requirements or acquisition opportunities than we can and also reduce their costs. It is also possible that new competitors may emerge and acquire significant market share. In addition, we often face significant competition from engineering, procurement and construction (EPC) companies that also provide solutions similar to ours. To the extent these EPC companies build an infrastructure project, they have an advantage relative to us in competing for the value-added information technology services and solutions accompanying the infrastructure project.
Our acquisitions and joint venture strategy involve risks and uncertainties that may harm our business or cause it not to perform as expected.
     As part of our business strategy, we continually review potential acquisitions, joint ventures, strategic alliances, or other investments that we expect will complement our existing business. In particular, we plan to continue to rely on potential acquisitions, joint ventures, strategic alliances or other investments to help us fuel our growth by enhancing the value-added services and solutions that we can offer to our installed customer base. However, we do not know for certain that we will be able to identify suitable joint ventures, acquisitions, alliances or other investments at particular times, or that we will be able to successfully close these transactions.
     In addition, any acquisitions, joint ventures, strategic alliances, or other investments we pursue may result in numerous risks and uncertainties, including:
    the risks associated with entering geographic or business markets in which we have no or only limited prior experience;
 
    the diversion of management attention from our other business concerns;
    the risk that an acquired business, joint venture, strategic alliance, or investment will not perform as expected or that it will expose us to unforeseen liabilities; and/or
    the risk that our due diligence reviews of the target business may fail to evaluate accurately the fair value of the assets and liabilities of the target business, which may create disputes with the sellers of the target business and/or require us to record an impairment loss.
     To the extent we recognize goodwill and intangible assets in any acquisition, joint venture or strategic alliance and we later deem that goodwill or intangible assets to be impaired, we will recognize losses that will adversely affect our results of operations and financial condition. In addition, our acquisitions give rise to deferred tax assets in our consolidated balance sheets. Recoverability of these assets depends on our ability to generate, in future years, sufficient taxable income to make use of these deferred tax assets before their expiration dates. If it is more likely than not that such assets won’t be recovered, we could be required to record a valuation allowance against them, which could adversely affect our results of operations and financial condition.
Changes in technology could adversely affect our business and negatively impact our competitive position.

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     The markets for services and solutions change rapidly because of changes in customer requirements, technological innovations, new solution introductions, prices, industry standards and domestic and international economic factors. New solutions and technologies may render existing information technologies, services or technology infrastructures obsolete, excessively costly or otherwise unmarketable. If we are unable to introduce and integrate new technologies into our services and solutions in a timely and cost-effective manner, our competitive position will suffer and our prospects for growth will be impaired. In addition, our strategy to increase our gross margins through increased sales of higher value-added, advanced applications would be impaired.
Our proprietary technology is difficult to protect and unauthorized use of our proprietary technology by third parties may reduce the value of our services, solutions and brand and may impair our ability to compete effectively.
     Our success and ability to compete depend in large part upon our ability to protect our proprietary technology. While we currently hold or have pending a large number of registered trademarks and solution names that we believe reduce the risk of third-party infringement, we currently hold few material patents or registered copyrights, and we rely primarily on a combination of trade secret, copyright and other intellectual property laws, nondisclosure and other contractual agreements, and technical measures to protect our rights in our proprietary technology. These measures may not be sufficient to protect our proprietary technology from third-party infringement and could subject us to increased competition or cause us to lose market share. In addition, these measures may not protect us from the claims of employees and other third parties. We also face risks to the protection of our proprietary technology because our solutions are sold in markets such as the Asia-Pacific region and Latin America that provide less protection for intellectual property than is provided under U.S. or Spanish laws. Unauthorized use of our intellectual property could weaken our competitive position, reduce the value of our services, solutions and brand, and harm our operating results.
Labor and employment laws in Spain and other geographic areas in which we operate may make it difficult for us to reduce our workforce if we deem it advisable.
     Approximately 55% of our workforce is located in Spain. With our acquisition of Matchmind in 2007, the number of our employees located in Spain increased significantly. Spanish law places significant limitations on and imposes a number of procedural requirements for an employer’s ability to reduce its workforce through layoffs or otherwise. These provisions of Spanish law could make it more difficult, expensive and time-consuming for us to reduce our workforce at a time when we consider it in our best interest to do so. In addition, approximately 10% of our workforce is located in Latin America and approximately 6% of our workforce is located in Canada, where labor and employment laws regarding workforce reductions are more restrictive than is typical in the United States. Approximately 21% of our workforce is located in the United States.
Our business may suffer if we are sued for infringing on the intellectual property rights of third parties.
     We are subject to the risk of adverse claims and litigation alleging infringement by us of the intellectual property rights of others. In the future, third parties may assert infringement claims alleging infringement by our current or future services or solutions. These claims may result in protracted and costly litigation, may subject us to liability if we are found to have infringed third parties’ intellectual property rights, and, regardless of the merits or ultimate outcome, may divert management’s attention from the operation of our business.
We may adopt an equity-based compensation plan that may be dilutive to current shareholders’ ownership interest in our shares or may adversely affect the prevailing market prices for our shares.
     In 2004 and prior years, under a plan established by Abengoa, certain of our employees, including members of our management team, entered into agreements with Abengoa to purchase our shares. In addition, in 2006, members of our senior management participated in a stock purchase plan involving Abengoa’s shares. In the future, we may adopt an equity-based compensation plan that may be dilutive to current shareholders’ ownership interest in our shares or may adversely affect the prevailing market prices for our shares. Our board of directors and our shareholders have approved an amendment to our Extraordinary Variable Compensation Plan to permit the plan’s participants to elect to receive certain of their awards in the form of our ordinary shares, rather than in cash. Cash awards were converted into the number of our shares determined by dividing the amount of the cash award by $18.50. An aggregate of 370,962 of our shares were made available for award under the plan. On September 15, 2009, we purchased those 370,962 shares from Telvent Corporation, S.L. at a purchase price of $18.50 per share. Until the shares are issued pursuant to the plan, under Spanish law they will be treated, and will count for purposes of determining a quorum for matters presented for a vote of shareholders, as issued but not outstanding.
Our future results could be adversely affected by an impairment of the value of certain intangible assets.
     The assets listed in our consolidated balance sheets as of December 31, 2010, include, among other things, goodwill valued at

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approximately €  256.9 million and other intangible assets valued at approximately €  201.8 million. The applicable accounting standards require that goodwill is not amortized, but rather is subject to impairment testing annually, or more frequently if impairment indicators are present. Intangible assets that are not considered to have an indefinite useful life are amortized using the straight-line basis over their estimated useful lives. The carrying amount of these assets is reviewed whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value (usually discounted cash flow) of the impaired asset. If our goodwill was deemed to be impaired in whole or in part due to our failure to achieve our goals, we could be required to reduce or write off such assets, which could have a material adverse effect on our operating results.
Risks Relating to Being Part of the Abengoa Group
Abengoa, our current largest individual shareholder, is in a position to significantly influence matters requiring a shareholder vote, and this ownership concentration may adversely affect the market price of our shares as well as the ability of our other shareholders to influence matters subject to a shareholder vote.
     Abengoa currently owns, indirectly, 40% voting interest in our outstanding shares and has significant influence over all matters submitted for shareholder vote, as well as the ability to call an extraordinary meeting of shareholders (which, under Spanish law, a holder of 5% or more of issued shares can do). At any such meeting, or at our ordinary general meeting of shareholders, as a result of Abengoa’s current ownership of our shares, Abengoa has “de facto” control over:
    election of our directors;
    any decision to effect certain amendments to our bylaws and other organizational documents;
    our decisions regarding debt incurrence, stock issuance (including the abolition of preemptive rights for specific stock issuances) and the declaration and payments of dividends;
    any decision to approve or reject any merger, consolidation or sale of substantially all of our assets; and
    any decision to increase our capital.
     This concentration of ownership of our shares could delay or prevent mergers, tender offers or other purchases of our shares. Therefore, this concentration of ownership may adversely affect our share price or the liquidity of our shares. Abengoa may choose to vote in a manner that is not consistent with the desires of the other owners of our shares or in a manner that the other owners of our shares do not consider to be in their best interest. In addition, any significant change in Abengoa’s ownership structure could have a material effect on the manner in which Abengoa exercises its voting power.
Our ability to implement our business strategy may be negatively affected by Abengoa’s financial condition, its other business opportunities and its agreements with its lenders.
     Although we are not directly responsible for the repayment of any loans made by third parties to Abengoa, Abengoa’s current credit facility contains and its credit facilities in the future may contain covenants between the Abengoa Group and its lenders that take into account our financial performance and financial condition as a consolidated entity. Certain kinds of transactions that we may wish to undertake might require the consent or approval of Abengoa’s lenders in order for Abengoa to avoid a default under its agreement with those lenders because of the indirect restrictions imposed on us by the terms of Abengoa’s credit facility. These indirect restrictions arise out of covenants made by Abengoa in its credit facility that require Abengoa to ensure that none of its subsidiaries, including us, grant security interests in or dispose of assets, make loans or otherwise extend credit, or enter into merger or combination transactions, other than in the ordinary course of their respective businesses. These covenants have the indirect effect of restricting our ability to take any of these actions or engage in any of these transactions, even if we consider them to be in our interest, because Abengoa has agreed with its lenders to ensure that we do not do so. In addition, Abengoa’s credit facility limits Abengoa’s ability to incur debt as calculated on a consolidated basis to include Abengoa and its subsidiaries, including us. These restrictions on Abengoa could have the indirect effect of limiting our ability to incur additional indebtedness when it might otherwise be in our interest to do so. Our ability to implement our business strategy could be affected adversely by Abengoa’s compliance with its obligations under its credit facilities.
As our contracts with Abengoa were negotiated between parties under common control, it is possible we may have been able to obtain better terms from third parties or may not be able to replace them with equally-favorable arrangements in the future.

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     Our contracts with Abengoa were negotiated between parties under common control. It is possible that we may have been able to obtain better terms from third parties, and that the terms we received under the contracts with Abengoa may increase our expenses and reduce our net income compared to the terms of contracts we might have obtained from third parties. The most important of these contracts are our credit arrangements and service agreements with Abengoa. Our credit arrangements with Abengoa are an important source of borrowings. In addition, we recognized revenues in 2010 of €  31.5 million from services that we and our subsidiaries provided to Abengoa; and we recognized expenses in 2010 of €  31.5 million related to services, supplies and leased facilities provided by Abengoa to us (including the provision of communications, IT and related services by Simosa IT S.A.) and €  8.0 million of interest expenses related to our credit agreements with Abengoa. We have not attempted to negotiate similar arrangements with unaffiliated parties and do not know whether third parties would enter into such arrangements with us on more or less favorable terms, if at all. Consequently, if these existing agreements were terminated for any reason, we cannot be certain that we would be able to enter into equally-favorable arrangements with third parties, if at all. Our inability to replace these arrangements on equally-favorable terms could reduce our net income, limit our available borrowings and adversely affect our ability to achieve our growth objectives.
     Effective January 1, 2010, we sold to Simosa IT S.A. (an Abengoa subsidiary) the part of the business of Telvent Outsourcing S.A. (merged into Telvent Global Services effective July 1, 2010) that used to provide IT and related services to Abengoa and its subsidiaries.
Abengoa is not required to provide any security for the funds we lend to it under our credit arrangements and any such loans will be treated as subordinated debt under Spanish law, which may limit our ability to be repaid and impair our financial condition in the event of Abengoa’s insolvency or bankruptcy.
     Under our bilateral credit arrangements between Telvent Mexico and Abengoa Mexico and between Telvent Energía and Abengoa Mexico, we may lend up to U.S. $40.0 million at any one time to Abengoa for a period not to exceed one year. These arrangements are unsecured and may provide Abengoa Mexico with funds on a more favorable basis than otherwise available to it from non-affiliated third parties. We may not be repaid or receive the interest we have earned on those funds. Abengoa has significant other indebtedness currently outstanding, some or all of which may be secured or otherwise senior to us upon Abengoa’s insolvency or bankruptcy, which would also make it more difficult for us to be repaid upon any insolvency or bankruptcy. According to Spanish insolvency law, any loan between an insolvent or bankrupt company that forms part of a group and any of its affiliated companies will be considered to be a subordinated loan for the purposes of the bankruptcy or insolvency proceedings. As a result of that subordination, payment of that affiliate loan shall be subject to the prior payment by the insolvent or bankrupt company of its other indebtedness and trade payables that are not expressly subordinated by law. Accordingly, under Spanish law, any money we loan to Abengoa may be considered to be subordinated debt of Abengoa in the event of Abengoa’s insolvency or bankruptcy.
Risks Relating To Our Organization Under Spanish Law
We are a Spanish corporation and it may be difficult to enforce judgments against us in U.S. domestic courts.
     We are a corporation organized under the laws of the Kingdom of Spain. In addition, most of the members of our board of directors and most of our senior management are residents of, and most of their assets are located in, jurisdictions outside of the United States. As a result, even though we have appointed CT Corporation System as our agent for service of process, investors may not be able to affect service of process within the United States upon us or these persons regarding matters arising under the U.S. securities laws, or to enforce judgments of U.S. courts based upon these laws.
     Our counsel has advised us that it is doubtful that a lawsuit based upon U.S. securities laws could be brought in an original action in Spain. Our counsel has also advised us that the courts of Madrid, Spain have exclusive jurisdiction for challenging corporate resolutions, while the general rules of jurisdiction and international treaties will apply to any other claims by shareholders against us.
Provisions of our bylaws and Spanish law significantly influence the timing and amount of any dividends that we may pay in the future.
     Our bylaws and Spanish law require shareholder approval in order for us to declare dividends. If we declare dividends in the future, we may not be able to pay them more frequently than annually due to certain provisions of Spanish law. Although we will declare any dividends in Euros as required under Spanish law, we intend to pay dividends in U.S. Dollars. Any holders of our shares outside of the United States may incur costs associated with receiving dividends in U.S. Dollars. Our ability to pay any dividends and the effect of any such dividends on our financial position will be affected by changes in exchange rates. The amount of the dividends we may pay will be based on a calculation of our net income in Euros in accordance with Spanish GAAP. Also, Abengoa can exercise

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significant influence over any decision relating to the declaration and payment of dividends.
The rights and responsibilities of our shareholders are governed by our bylaws and Spanish law and differ in some respects from the rights and responsibilities of shareholders under U.S. laws. In particular, our shareholders do not have appraisal rights in the case of a merger or consolidation.
     The rights and responsibilities of holders of our ordinary shares are governed by our bylaws and by Spanish law. These rights and responsibilities differ in some respects from the typical rights and responsibilities of shareholders in U.S. corporations. For example, under Spanish law, we are required to set aside 10% of our net income as a legal reserve until the balance of the reserve is equivalent to at least 20% of our issued share capital. In addition, Spanish law makes it more difficult for us to pay dividends more frequently than annually and Spanish law does not grant appraisal rights to a corporation’s shareholders who wish to challenge the consideration to be paid upon a merger or consolidation of the corporation.
     At our ordinary general meeting, shareholders are asked to approve the actions of our management, the financial statements of our previous fiscal year and the allocation of our net income and loss (and any other issues that may be presented by the Board). If our shareholders do not approve our Spanish GAAP financial statements, we cannot file our annual accounts with the Mercantile Registry of Madrid. In certain circumstances, if the annual accounts are not registered within one year from the end of the relevant fiscal year, we would be precluded from registering any other resolutions with the Mercantile Registry until we have filed our annual accounts.
     Additionally, pursuant to our bylaws and the Spanish Corporation Law, shareholders have preemptive rights to subscribe for any new securities issued by us, including the ordinary shares. These preemptive rights may be voluntarily waived by our shareholders or may be abolished in certain circumstances if our shareholders pass a resolution at a shareholders’ meeting in accordance with Article 159 of Spanish Corporation Law. Our ability to raise funds through the sale of ordinary shares or other securities in the future, our ability to use our ordinary shares or other securities to make acquisitions, and our ability to provide management with equity-based compensation, could be adversely affected by these preemptive rights and our ability to have these preemptive rights voluntarily waived or abolished by our shareholders.
Provisions of our bylaws and Spanish law may delay, prevent or make difficult an acquisition of us, which could prevent a change of control and therefore prevent payment of any expected acquisition premium on the price of our shares.
     Provisions of Spanish corporation and tax law may have the effect of delaying, preventing or making it more difficult for another entity to merge with or acquire us. Further, as is the case in civil law jurisdictions generally, a merger or takeover in Spain is subject to substantially more administrative process than would be the case in a typical U.S. jurisdiction. This additional administrative process could protract or make more expensive the process of effecting such a transaction. Under Spanish law, directors of a corporation may be elected to serve for terms of up to six years and we have adopted five-year terms for our directors, although actions taken at the general shareholders’ meeting may result in the directors being removed at any time. This may have the result of delaying or making more expensive an attempt to effect a change of control of our company. Third parties who are otherwise willing to pay a premium over prevailing market prices to gain control of us may be unable or unwilling to do so because of these provisions of Spanish law. This could cause our shares to trade at prices below the price for which third parties might be willing to pay to gain control of us.
Risks Relating to the Public Market for Our Shares
As a result of Abengoa’s sale of our shares in 2009, we could lose our foreign private issuer exemption in the future.
     As a result of the fact that as of November 2, 2009, Abengoa reduced the percentage of our ordinary shares owned directly or indirectly by Abengoa to 40%, we could cease to be eligible to report as a “foreign private issuer” for purposes of the U.S. securities laws if in the future more than 50% of our ordinary shares become owned by residents of the United States. If we cease to be eligible to report as a foreign private issuer, we would be subject to substantial additional disclosure, reporting, and governance requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the listing rules of The NASDAQ Global Select Market (the “NASDAQ Rules”), which would result in additional expense and the diversion of senior management attention from our business strategy.
     As a foreign private issuer, we are generally exempt from certain reporting requirements of the Exchange Act, as well as the provisions of the Exchange Act and the NASDAQ Rules governing the solicitation of proxies and the provision of proxy statements and other materials to shareholders prior to shareholder meetings. If we ceased to qualify as a foreign private issuer, we would be subject to the substantially more extensive proxy disclosure requirements imposed by the Exchange Act and the NASDAQ Rules, and would be required to file annual, quarterly, and periodic reports on Forms 10-K, 10-Q, and 8-K within the time periods required by the Exchange Act, which are significantly shorter than the time periods required of foreign private issuers for the less-extensive periodic reporting required of them. We would also be subject to Regulation FD of the Exchange Act, regulating the selective disclosure of non-public information, and our directors, executive officers and affiliates would be subject to the disclosure and other requirements

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of Section 16 of the Exchange Act in respect of their ownership of and transactions in our shares. The NASDAQ Rules also provide an exemption to foreign private issuers who follow their home country laws from the requirement that shareholders be given the opportunity to vote on equity compensation plans and material revisions thereto; should we fail to qualify as a foreign private issuer, we would be required to submit any equity compensation plans to a vote of our shareholders. Compliance with the foregoing additional disclosure and compliance requirements would involve substantial initial and on-going expense, and implementing our compliance with these requirements would require substantial senior management time and attention that otherwise would be spent implementing our business strategy.
Our shares may be affected by volume fluctuations, may fluctuate significantly in price and our liquidity may be affected by our current largest shareholder.
     Our shares are currently traded on The NASDAQ Global Select Market. The average daily trading volume of our shares during 2009 and 2010 was 75,483 and 171,881 shares. The high and low closing price for our shares for the fiscal year ended December 31, 2009 was U.S. $38.98 and U.S. $9.97, respectively, and for the fiscal year ended December 31, 2010 was U.S. $40.63 and U.S. $16.70, respectively. Our shares have experienced, and are likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our shares without regard to our operating performance. The price of our shares may fluctuate as a result of a variety of factors beyond our control, including changes in our business, operations and prospects, developments in patents and other proprietary rights and general market and economic conditions.
     Abengoa and our senior management currently own approximately 41.44% of our outstanding shares. Consequently, a significant portion of our shares may not be traded frequently, if at all. In addition to the recent continuing stress and volatility in the global capital markets generally, the public equity markets for the securities of information technology companies have from time to time experienced significant price and volume fluctuations that have affected the market prices of the securities of information technology companies, and which may be unrelated to operating performance or prospects. Furthermore, our operating results and prospects from time to time may be below the expectations of market analysts and investors. Any of these events could result in a material decline in the prevailing market prices of our shares, and could prevent our shareholders from recouping their investments in our shares or selling their shares at a profit.
Future sales by our shareholders of a substantial number of our shares in the public market or Conversion of our Convertible Notes into ordinary shares could adversely affect the price of our shares.
     If our shareholders sell substantial amounts of our shares, the market price of our shares could fall. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. The shares that we sold in our initial public offering are eligible for immediate resale in the public market without restrictions, and the shares our affiliated shareholders hold may also be sold in the public market in the future, subject to the restrictions contained in Rule 144 under the Securities Act and applicable lock-up agreements and provided that the circumstances in which they are offered or sold in Spain do not constitute an offer of securities under Spanish law. Of the 4,847,059 ordinary shares that we sold in our private placement transaction completed on October 28, 2008, Abengoa has previously sold, pursuant to a registration statement we filed with the United States Securities and Exchange Commission on December 4, 2008 and which became effective on February 15, 2009, all of the 3,576,470 shares that it so acquired. The remaining 1,270,589 ordinary shares that we sold in our private placement transaction are eligible for resale to the public. All 4,192,374 shares, including the 542,374 shares purchased by the underwriters pursuant to their exercise of their overallotment option, previously sold pursuant to a registration statement we filed with the United States Securities and Exchange Commission on October 2, 2009 and which became effective on October 27, 2009 are eligible for immediate resale in the public market without restrictions.
     In addition, on April 19, 2010, we settled the sale of $200 million in aggregate principal amount of 5.50% Senior Subordinated Convertible Notes due 2015 (the “Convertible Notes”). Under certain circumstances, the Convertible Notes will be convertible into cash, our ordinary shares or a combination of cash and our ordinary shares, at our election. Any conversion of the Convertible Notes into our ordinary shares could materially impact the market price of our ordinary shares.
A decision by Abengoa, our largest individual shareholder, regarding the disposition of the balance of its holdings in our shares, could adversely affect our operations and the price of and market for our shares.
     Abengoa holds, indirectly, 40% of our outstanding shares and is our largest individual shareholder. We cannot provide any assurance as to whether or not Abengoa will determine to sell any or all of the remainder of our shares, or the timing of any such sale by Abengoa. The process of evaluating a potential sale by Abengoa of the balance of its holdings in our shares, whether or not a sale ultimately is consummated, could divert significant management time and attention away from the operation of our business. The commencement of such a transaction, or the perception that such a transaction may occur, may have an adverse effect on the market price for our shares, the uncertainty that may result in our customers delaying or canceling the award of contracts, our employees leaving Telvent and/or our credit and bonding facilities becoming more difficult to arrange or renew.

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     If we cease to be treated as a member of the Abengoa Group, we cannot assure you that we would be able to replace the service agreements and credit agreements we currently have in place with Abengoa with other arrangements on terms equally favorable to us, if at all, which could have a material adverse effect on our operations. In the event that Abengoa sells all or a portion of its remaining holdings in our shares to another party, our other shareholders may not be eligible to participate in the sale, and any premium paid by the acquirer for the shares it purchases from Abengoa would not benefit our other shareholders.
As a result of dispositions of our shares by Abengoa, we ceased to be a “controlled company” for purposes of The NASDAQ Rules, and we need to comply with the corporate governance requirements of The NASDAQ Global Select Market.
     After giving effect to the sale by Abengoa’s wholly-owned subsidiary, Telvent Corporation, S.L., of 4,192,374 of our ordinary shares, including the 542,374 shares purchased by the underwriters pursuant to their exercise of their overallotment option, on November 2, 2009, Abengoa indirectly owns 40% of our outstanding shares and we therefore are no longer considered a “controlled company” under The NASDAQ Rules. Therefore, we must comply with the provisions of The NASDAQ Rules that require a majority of our board of directors to be independent and that we have nominating and compensation committees comprised entirely of independent directors, which we already voluntarily comply with. Failure to comply could result in our shares being delisted. Any delisting of our shares would likely have a material adverse effect on the liquidity and trading market for our shares.
You will not be able to trade our shares on any exchange outside the United States.
     Our shares are only listed in the United States on The NASDAQ Global Select Market and we have no plans to list any of our shares in Spain or any other jurisdiction. As a result, a holder of our shares outside of the United States may not be able to effect transactions in our shares as readily as it could if our shares were listed on an exchange in that holder’s home jurisdiction.
ITEM 4. INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Introduction
     We were incorporated in the Kingdom of Spain as Telvent Desarrollos, S.A. on April 4, 2000, pursuant to the Spanish Corporation Law of 1989, as amended. At a general shareholders’ meeting held on January 19, 2001, we changed our name to Telvent Sistemas y Redes, S.A. and at a general shareholders’ meeting held on January 23, 2003, we changed our name to Telvent GIT, S.A., which remains our legal and commercial name. Our registered office is located at Valgrande, 6, 28108 Alcobendas, Madrid, Spain and we can be contacted at (34) 902 335 599 or fax (34) 917 147 001. Our agent for service of process in the United States is CT Corporation System, 111 Eighth Avenue, New York, New York 10011.
     We were formed to serve as the holding company for the information technology business of the Abengoa Group, which is comprised of a set of diversified industrial and technology companies applying innovative solutions for sustainable development in the infrastructures, environment and energy sectors. The Abengoa Group provides these solutions through the following business units:
    Solar;
    Bioenergy;
    Environmental services;
    Industrial engineering and construction; and
    Information technologies.
     Our holding company structure was completed on January 1, 2001, upon Abengoa’s contribution of the shares of Telvent Energía S.A., formerly known as Sociedad Anónima de Instalaciones de Control (“Sainco”) and its subsidiaries to us. We now operate our business principally through three significant subsidiaries. (See a list of our significant subsidiaries under “Item 4.C. — Organizational Structure — Our Subsidiaries”).
     The principal events in our history have been:

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    1963: Incorporation of Sainco.
    1974: Entry into Traffic business market.
    1978: Entry into Environment business market.
    1986: Entry into Transport business market.
    1988: Start of our international expansion to Latin America with completion of Energy projects in Mexico.
    1990: Award of first Traffic business projects in China.
    1996: Start of our operations in Brazil.
    2001: Initial sale by Abengoa of our ordinary shares to management.
    2001: Disposition to Abengoa of Abentel Telecomunicaciones, S.A.
    2002: Acquisition from Abengoa of Telvent Factory Holding AG, Telvent Housing, S.A. and Telvent Portugal S.A.
    2002: Entry into the public administration and healthcare business market.
    2003: Acquisitions of Telvent Canada and Telvent USA from Metso Corporation.
    2003: Adoption of the Telvent brand name throughout our business operations.
    2004: Acquisitions of ICX, WBU-Xwave and a majority (70%) interest in Telvent Miner & Miner.
    2004: IPO and listing of our ordinary shares on The NASDAQ National Market.
    2005: Acquisition of Almos. Start of our operations in Australia and the Netherlands.
    2006: Acquisition of the remaining 30% of the shares of Telvent Miner & Miner not acquired by Telvent in 2004.
    2006: Acquisition of a majority (80%) interest in Telvent Blueshield in China.
    2006: Acquisition of the Farradyne traffic business in North America.
    2006: Acquisition of Maexbic, a supplier of public transportation ticketing technology in Spain.
    2007: Telvent shares upgraded to The NASDAQ Global Select Market.
    2007: Acquisition of Caseta.
    2007: Acquisition of a 58% interest in Matchmind.
    2007: Acquisition of a 15% interest in S21 Sec.
    2008: Formation of Telvent DMS LLC Novi Sad, a joint venture in Serbia with the DMS Group LLC.
    2008: Private placement of 4,847,059 of our ordinary shares.
    2008: Acquisition of DTN Holding Company, Inc.
    2009: Acquisition of certain of the assets of NLDC.
    2009: Acquisition of the remaining 42% interest in Matchmind.
    2009: Repurchase by us of 370,962 of our ordinary shares from Telvent Corporation.

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    2010: Disposition to Simosa, IT, a subsidiary of Abengoa, of certain assets from Telvent Outsourcing related to providing IT services to Abengoa.
    2010: Issuance of $200 million in aggregate principal amount of 5.50% Senior Subordinated Convertible Notes due 2015.
    2010: Corporate reorganization of Telvent subsidiaries in the United States completed effective July 1, 2010 in which Telvent Caseta Inc., Telvent Traffic North America, Inc., Telvent USA Inc. and Telvent Miner & Miner, Inc. merged into Telvent Farradyne Inc., and whose name was changed to Telvent USA Corporation.
    2010: Telvent Outsourcing, S.A., Telvent Housing, S.A., Telvent Interactiva, S.A., GD 21, S.L., Galian 2002, S.L., Matchmind Holding, S.L., Matchmind, S.L. and Matchmind Ingeniería de Software, S.L. merged into Telvent Global Services, S.A. effective July 1, 2010.
    2011: Acquisition by Telvent Energía of an additional 8% stake in Telvent DMS and the signing of amendments to the Joint Venture and Shareholders Agreement between Telvent Energía and DMS Group LLC in which Telvent Energía and DMS Group agreed to increase the capital of Telvent DMS by €  24.0 million.
     Our ordinary shares trade under the symbol “TLVT”. As of December 31, 2010, Abengoa owns, indirectly, 40% of our outstanding ordinary shares.
Capital Expenditures/Divestitures
     Euro amounts disclosed below for acquisitions of foreign entities have been translated using the historical exchange rate at the date of purchase.
Acquisition of Telvent Miner & Miner
     On December 10, 2004, we acquired a 70% equity stake in Miner & Miner, a company based in Fort Collins, Colorado, engaged in the development and implementation of geographical information systems software for utilities for a total purchase price of U.S. $8.2 million (€ 6.2 million). Effective January 1, 2006, we acquired the remaining 30% of the shares of Miner & Miner for a total purchase price of U.S. $6.8 million (€ 5.7 million) which was paid on February 22, 2006.
Acquisition of Almos
     On July 6, 2005, we acquired 100% of the shares of Almos for a total purchase price of € 5.8 million, and a deferred, contingent and variable payment based on Almos meeting certain income targets over a period ending June 30, 2006. On April 12, 2006, we made an additional payment of € 0.4 million as part of a cash adjustment payment stipulated in the purchase agreement. On December 4, 2006, we paid the contingent and variable “earn out” portion of the purchase price for a total amount of € 0.5 million.
Acquisition of Farradyne
     On July 1, 2006, our subsidiary, Telvent Traffic, completed the acquisition of 100% of Telvent Farradyne together with the assets of the sellers used in Farradyne’s business, a leading provider of traffic information technology consulting and integration services in the U.S. The total purchase price for the Farradyne business was U.S. $39.4 million (€ 31.0 million). This acquisition was financed in part through a mix of use of proceeds from our IPO and a loan in the amount of U.S. $20.0 million (€ 15.2 million), under a credit agreement with Bank of America (as successor to LaSalle Bank National Association). (See “Item 10.C. Additional Information — Material Contracts” for more details about this acquisition).
Acquisition of Maexbic
     On November 13, 2006, our subsidiary, Telvent Tráfico y Transporte, S.A., completed the acquisition of 100% of the shares of Maexbic, a supplier of public transportation ticketing technology in Spain, for a total purchase price consisting of a fixed cash payment on closing of € 1.9 million and deferred, contingent and variable payments of € 0.1 and € 0.2 million paid on March 29, 2007 and January 28, 2008, respectively.
Acquisition of Caseta
     On April 27, 2007, our subsidiary, Telvent Traffic, acquired 100% of the shares of Caseta, a supplier of electronic toll collection systems in North America. The total purchase price for the acquisition includes: (a) U.S. $9.0 million (€  6.9 million) paid on the closing date; (b) contingent and variable earn-out payments for the years 2007 and 2008, subject to Caseta meeting certain annual or accumulated income targets over the periods ending December 31, 2007 and 2008, and subject to a maximum aggregate amount of U.S. $4.4 million; (c) secondary earn-out payments subject to Caseta exceeding certain bookings targets during the four year period ending December 31, 2010; and (d) post-closing working capital adjustment payments of up to a maximum payment of U.S. $0.9 million.
     As of December 31, 2010, the total payments made for this acquisition amounted to U.S. $12.5 million and our best estimate of the potential remaining earn-out payments under this agreement amounts to U.S. $0.6 million as of this date. There is an overall limit of U.S $20.7 million on the aggregate purchase price. We are not required to make any future payments that would cause the aggregate purchase price to exceed that limit.
     This acquisition was financed in part through a loan in the amount of U.S. $5.0 million under a credit agreement with Bank of America N.A. (as successor to LaSalle Bank National Association) and the balance from the proceeds from our IPO. (See “Item 5. Operating and Financial Review and Prospects Operating Results. — Acquisitions” for more details about this acquisition).
Acquisition of Matchmind
     Effective October 1, 2007, our subsidiary, Telvent Outsourcing (merged into Telvent Global Services effective July 1, 2010), completed the acquisition of 58% of Matchmind, a company that specializes in system integration, consulting services and information technology outsourcing, for € 24.6 million. On May 21, 2009, Telvent Outsourcing entered into two definitive agreements to purchase the remaining 42% interests in Matchmind, and fully completed its purchase of all of Matchmind’s issued and outstanding equity. The first agreement provided for the purchase of 40% of the remaining Matchmind interest from its management shareholders for an aggregate purchase price of € 17.8 million. The second agreement provided for the purchase from José Luis Galí, Matchmind’s founder and former president, of the remaining 2% of Matchmind interests for a purchase price of € 0.9 million. (See “Item 10.C. Additional Information — Material Contracts” for more details about this acquisition).
Acquisition of S21 Sec
     On November 23, 2007, our subsidiary, Telvent Outsourcing (which merged into Telvent Global Services effective July 1, 2010),

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acquired an additional 10% interest in S21 Sec, increasing its total ownership stake to 15% with a carrying value of €  5.6 million (carried at cost). S21 Sec is a leading Spanish company specializing in computer security. Navarra de Gestión para la Administración S.A. (“NGA”) also has an option to sell an additional 10% of the shares of S21 Sec to the Company on or before a date which originally was October 31, 2010, conditional upon Telvent or any company of the Abengoa Group investing €  15.0 million in the territory of Navarra. By an addendum dated November 25, 2010, the agreement with NGA was amended to extend NGA’s option to sell the additional 10% of the shares of Grupo S21 Sec to the Company until May 25, 2012. Telvent does not have the obligation or intent to make such investment, but NGA could still have the option to sell the 10% stake of S21 Sec to Telvent at a price not to exceed €  3.9 million.
Joint Venture in Serbia
     On May 8, 2008, Telvent Energía signed a joint venture agreement pursuant to which it formed a new joint venture in Serbia with the DMS Group LLC under the name “Telvent DMS LLC Novi Sad” (“Telvent DMS”) which was owned 49% by Telvent Energía and 51% by DMS Group LLC. As a result of a transaction completed on February 9, 2011, Telvent DMS is now owned 57% by Telvent Energía and 43% by DMS Group LLC. The scope of the business of Telvent DMS includes the development, promotion, marketing and licensing of the software formerly owned by the DMS Group, known as the DMS software, and carrying out turnkey projects in the area of control and information systems and communications infrastructures primarily in the electric utility industry. Telvent’s total capital investment in Telvent DMS is €  6.1 million as of December 31, 2010.
     On January 24, 2011, Telvent Energía entered into a Stake Transfer Agreement (the “STA”) with DMS Group LLC (“DMS Group”) pursuant to which Telvent Energía acquired an additional 8% stake in Telvent DMS (the “Acquisition”). The closing of the Acquisition was February 9, 2011 (the “Closing”). This Acquisition increased Telvent Energía’s ownership interest in Telvent DMS from 49% to 57%. Telvent Energía paid DMS Group the fixed component of the purchase price in the amount of € 9.6 million on the Closing of the Acquisition. Under the STA, Telvent Energía will also pay a variable amount equal to 1.5% of certain bookings which: (a) are signed within 5 years of the Closing between one of our subsidiaries (other than Telvent DMS) and a client; and (b) include the supply of Smart Grid IT Solution Suite systems and/or services related thereto. Telvent Energía financed the Acquisition through cash on hand.
     On January 24, 2011, Telvent Energía and DMS Group entered into an amendment to the joint venture agreement between Telvent Energía and DMS Group dated May 8, 2008 under which the parties agreed to make additional capital contributions to Telvent DMS. The total amount to be contributed is €  24.0 million, payable over a 3-year period. It will be contributed by the parties in accordance with their respective ownership interests in Telvent DMS. Telvent Energía’s 57% share of the additional capital contributions is a total of €  13.7 million payable in quarterly installments. The additional capital contributions will be used by Telvent DMS for the sole purpose of funding a three-year research and development plan for DMS Software and Smart Grid Solutions Suite. On January 24, 2011, Telvent Energía and DMS Group entered into a loan agreement (the “Loan Agreement”) under which Telvent Energía will loan DMS Group an amount equal to €  10.3 million, which must be used by DMS Group to fund its required contribution pursuant to the Joint Venture Amendment (the “Loan”), (See “Item 10.C. Additional Information — Material Contracts” for a description of the material terms of the Loan Agreement).
     On January 24, 2011, Telvent Energía and DMS Group also entered into an amendment to the Shareholders Agreement between Telvent Energía and DMS Group dated May 8, 2008 (the “Shareholders Amendment”). The Shareholders Amendment specifies that, even though Telvent Energía owns a majority of the ownership interests in Telvent DMS, the Acquisition will not affect the Telvent DMS decision-making process in effect prior to the Acquisition unless certain specified events occur. (See “Item 10.C. Additional Information — Material Contracts” for more details about this acquisition and the agreements referred to above).
Acquisition of DTN Holding Company, Inc.
     On October 28, 2008, our subsidiary, Telvent Export, acquired 100% of the shares of DTN Holding Company, Inc., a business information service provider of critical data to key decision makers across the markets it serves, including agriculture, energy and environment in North America, for a purchase price of U.S. $252.8 million (€  189.1 million), including transaction costs and a post-closing payment, pursuant to a stock purchase agreement dated September 15, 2008. Telvent financed the acquisition partially through the proceeds of a private placement of 4,847,059 ordinary shares of Telvent to certain of its existing and new investors, including Telvent Corporation, S.L., a subsidiary of Abengoa S.A., at a negotiated purchase price of U.S. $21.25 per share, for an aggregate consideration of approximately U.S. $103.0 million; partially through the proceeds of an unsecured loan agreement with Caja de Ahorros y Monte de Piedad de Madrid and ING Belgium S.A., Sucursal en España, in the amount of €  57.5 million; and the balance from Telvent’s own resources and proceeds of our IPO. On December 28, 2010, Telvent Export entered into an Amendment to the stock purchase agreement with Telvent DTN, the stockholders named therein and GSC Recovery IIA, L.P, as sellers’ representative. Pursuant to the amendment, the employee Stockholders’ right to earn a premium, or earn out, on the amount of their deferred purchase price pursuant to the stipulated EBITDA Target with respect to the fiscal year ending December 31, 2011 was changed to U.S.

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$68.7 million from U.S. $73.6 million. (See “Item 10.C. Additional Information — Material Contracts” for more details about this acquisition).
Acquisition of certain assets of NLDC
     On February 3, 2009, our subsidiary, Telvent Farradyne signed an asset purchase agreement through which it acquired certain of the assets of NLDC, including NLDC’s proprietary back office/customer service center software solution called “TollPro” as well as NLDC’s interest in the license agreements and services contracts relating to NLDC’s back office systems delivered for the SR-91 toll collection system in Orange County, California. The purchase price for these assets was U.S. $1.5 million. In addition, Telvent Farradyne also entered into a consulting services agreement under which Telvent will pay a total of U.S. $2.0 million by installments payable every six months starting July 1, 2009 and additional contingent payments up to U.S. $0.5 million. In addition, Telvent will pay NLDC additional commission payments (up to a maximum not to exceed U.S. $5.0 million) in respect of contracts bookings signed by Telvent during the four years from 2009 through 2012 related to back-office and customer service center systems utilizing the TollPro Software. As of December 31, 2010, total payments made under these two agreements amounted to U.S. $2.5 million. As of December 31, 2010, the Company estimates the pending amount to be paid under these agreements, including contingent payments, to be approximately U.S. $2.2 million (€  1.7 million).
Disposition of certain assets of Telvent Outsourcing
     Effective January 1, 2010, our wholly-owned subsidiary, Telvent Outsourcing (merged into Telvent Global Services effective July 1, 2010), sold certain of its assets used in providing IT services to Abengoa and its other business groups, including the employees, equipment, applications, hardware, software, and intellectual property necessary to provide such IT services, to Simosa IT, S.A, a wholly-owned subsidiary of Abengoa, for a price of €  4.0 million. The sale also included Telvent Outsourcing’s stock ownership in Telvent Implantación y Sistemas, S.L. (See “Item 10.C. Additional Information — Material Contracts” for more details about this disposition).
Research and Development
     We believe the sustainability of the world requires efficient and secure infrastructures to connect resources with demand.
     Our mission is to contribute to the building of sustainable infrastructures and to provide efficiency through the use of Information Technology by:
    Managing the data in real time and turning it into actionable information.
 
    Connecting the resources with the demand in an automatic way creating efficient supply-chains.
 
    Providing added value Information Services through pervasive analytics.
    Prioritizing the Software as a Service (SaaS) commercialization model to leverage our strong position as an IT infrastructure provider and SaaS provider in the refined fuels, weather and agriculture sectors.
     To execute this mission we are devoting substantial resources to research and development initiatives, including the following.
    SCADA and Information Management. OASyS DNA (Dynamic Network of Applications) is our main real time IT infrastructure and is called to become the common component to build real time solutions in all industries. A new release is planned for this year to cover mainly two goals: integrate with our SmartGrid platform and growth to reach the power to manage systems with millions of data points.
    SmartGrid platform. The release of the v3.0 of DMS (Distribution Management System) is planed for 2011. DMS is integrated with another solutions for the electric industry covering SmartNetworks (Remote Terminal Units, Substation Automation Systems), SmartOperations (SCADA, DMS, FMS, OMS and GIS) and SmartMetering (AMI, Meter Data Management, Meter Operations Management, Titanium).
    New generation Remote Terminal Units. A new generation of RTUs are being designed to fulfill the requirements of the new SmartGrids: protection and control functions, multi-metering, quality of service, quality of supply, fault detection, fault registration, fault analysis, etc.

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    SmartCities. ICM (Integrate Corridor Management) is a research and development program focused in gathering real time data around traffic, transit, construction, incidents, special events, parking, weather, signal plan, scenarios and then providing the tools to manage the information effectively including: DSS, inter-agency communication and public dissemination. The initiative is divided in ICM/Core Services, ICM/Intelligent Infrastructure and ICM/SmartMobile Services. It is complemented with another transportation initiatives around Transaction Management Solutions: VideoTolling and Enforcement: Speed over Distance.
    Enterprise GIS. ArcFM Solution, a suite of integrated GIS applications for utilities worldwide, helps electric, gas, water and telecommunications service companies to manage their assets, tasks and operations, while improving customer service and lowering costs. ArcFM also facilitates the development and management of integrated network models, a capability increasingly acknowledged as the critical foundation for distribution automation in Smart Grid applications. A new release of the ArcFM Server is scheduled for the year 2011 and also is a new release of ArcFM Designer.
    Weather. Weather information systems are one of our most important assets, we are finishing their internationalization and working in completing them with helicopter alerting and turbulence alerting solutions for the aviation industry, energy load forecasting and outage management for the energy industry and wind farm safety for agriculture.
    Agriculture. Includes Producer (Ag Online, Ag Satellite, Grains Bid Database and mobile platforms) and Trading (ProphetX, Ticket/Quote Server, Order Routing) solutions.
    eHealth. TiCares is the complete and integrated solution to manage hospitals’ operations.
     We made investments of €  26.4 million, €  29.0 million and €  24.0 million in research and development in 2010, 2009 and 2008 respectively. Part of our software development effort is capitalized and gets amortized over the economic life of the development. In addition, developments for specific projects/clients, are paid for by the respective projects and thus included within cost of revenues. Finally, we incurred a total of €  13.6 million, €  9.8 million and €  7.5 million of capital expenditures related to the building of our facilities and data centers in 2010, 2009 and 2008, respectively.
B. BUSINESS OVERVIEW
Overview
     We are a leading real-time IT solutions and information provider for a sustainable world. We specialize in high value-added solutions for customers in critical infrastructure markets including Energy, Transportation, Environment and Agriculture. Our solutions and services are focused on industry segments where we believe increased efficiency can enable our customers to achieve benefits such as reduced energy consumption, carbon emissions, and waste of scarce resources such as water and increased reliability of electricity distribution. We leverage our core competencies across our targeted industry segments to develop and integrate software and IT solutions that manage complex systems such as utility grids, traffic networks and pipelines, and provide key decision-making information in real-time. In addition, we also provide consulting, outsourcing and IT management through our Global Services segment.
          We also deliver business-critical market intelligence, commercial weather, trading, and supply-chain services supporting the production, trading and distribution of agriculture and energy commodities. In addition, we leverage our proprietary weather technologies to serve weather-sensitive businesses in key sectors including electricity generation, renewable power generation, water resource management, aviation, transportation, and public safety. We believe more accurate and timely weather information can result in significant improvements in energy efficiency and management across a broad range of applications. Increasingly we are making proprietary information services a key part of the services we provide.
     Our customers include some of the largest energy and utility companies, transportation authorities, a number of government environmental agencies, and local and central governments in our core geographies. These core geographies include Europe, North America, Latin America (including Mexico), the Asia-Pacific region and the Middle-East and Africa region.
     Our business is organized in three primary ways: across segments, across geographic areas and across information technology solutions.

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          Segments
     We have five reportable operating segments consisting of Energy, Transportation, Environment, Agriculture and Global Services. Our segments are grouped with reference to the types of services provided and the types of clients that use those services. We assess each segment’s performance based on net revenues and gross profit.
     In our targeted industrial segments, we have developed distinctive skills that share the following characteristics:
     Mission-critical: Our solutions are specifically designed to address mission-critical functions in segments that require real-time data gathering, interpretation and immediate response and decision making.
      Extensive networks: From 5,000-mile pipelines to river basins to electricity transmission and distribution grids to interstate highways, our solutions monitor extensive networks where comprehensive data gathering and control is required to better control those networks, ensure their reliability and integrate the data on a secure basis.
      Flow-based: Whether related to fluids, energy or traffic, we have broad experience in information applications that facilitate the organization and management of continuous flow along defined paths.
The following chart provides a summary of the allocation of our revenues among our segments for the last three fiscal years.
                         
    2010   2009   2008
Energy
    34.1 %     30.3 %     27.4 %
Transportation
    26.9 %     30.9 %     40.7 %
Environment
    8.3 %     7.0 %     6.5 %
Agriculture
    11.4 %     9.8 %     2.1 %
Global Services
    19.3 %     22.0 %     23.3 %
 
                       
Total
    100.0 %     100.0 %     100.0 %
 
                       
     Geographies
     We currently focus on the following geographic regions: Europe, North America, Latin America, the Asia-Pacific region, the Middle-East and Africa. We started operations in Spain over 40 years ago. We have good business diversification by region; while we continue to solidify and grow our presence in Spain, we have increased our presence in North America and Latin America. We also expect to increase our presence in the Asia-Pacific region, the Middle-East and Africa and in the rest of Europe.
      Europe: Global Services represents our largest segment in the Spanish market. We also have significant revenues in our Transportation segment in Spain, where we provide intelligent transportation systems, including urban and interurban traffic management systems to numerous cities.
      North America: Energy represents our largest segment in North America, where we believe we are a leader in the supply of IT solutions for oil and gas pipelines and we also have significant business in our Electricity sub-segment. We also believe we are one of the most familiar and trusted sources of agricultural information in the U.S., and we are a leading provider of Intelligent Transportation Systems (ITS) and consulting services for the Transportation industry. Our North American revenues increased 5.5% in fiscal year 2010 compared to fiscal year 2009.
      Latin America: We have a strong presence in Mexico and Brazil. Energy is our largest segment in the Latin American market. Our Latin American revenues increased 20.9% in fiscal year 2010 compared to fiscal year 2009.
      Asia-Pacific: Our Energy and Transportation segments have been able to build a position in the Asia-Pacific region; we believe this will constitute a platform for future growth. Our Asia-Pacific revenues increased 8.4% in the fiscal year 2010 compared to fiscal year 2009.
      Middle-East and Africa: Our Transportation and Environment segments have established a position in this region, which we plan to build upon. However, continuing political unrest in this region could have an adverse impact on our ability to increase our business in the Middle-East.
     The following chart illustrates an approximate breakdown of our revenues by region for each of the last three fiscal years:

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    2010   2009   2008
Europe
    39.8 %     47.7 %     51.0 %
North America
    36.2 %     31.4 %     18.4 %
Latin America
    16.6 %     12.6 %     17.9 %
Asia-Pacific
    3.6 %     3.0 %     3.8 %
Middle-East and Africa
    3.8 %     5.3 %     8.9 %
 
                       
Total
    100.0 %     100.0 %     100.0 %
 
                       
     Real-time IT Solutions and Services
     Our mission-critical real-time services and solutions collect raw data at the field level, transform that data into operational information, and convert the operational information into business intelligence.
     Our services and solutions can be classified into three different complementary categories representing the three stages of our delivery business model, converting field data into decision-making mission-critical information. This is illustrated in the diagram below.
TELVENT’S PORTFOLIO OF SOLUTIONS AND SERVICES FOR THE
MANAGEMENT OF INFORMATION
(GRAPHIC)
     We started as a systems company focused on control and monitoring services. In the beginning of the 21st century, we moved towards providing more services and solutions and offering outsourcing and consulting services for our clients. As we move ahead into the next decade, we believe that value is not only in the systems we implement and the services we offer to our clients, but also in the information that can be generated through our systems that helps our customers make better operational decisions.
     We believe that there is a strong interest from some of our customers in obtaining just the information that the systems generate, and outsource the ownership of operations of such systems, as technology is becoming increasingly more complicated to maintain in-house. The acquisition of Telvent DTN has helped us to position our Company in the information services space, where we now are able to develop and deliver advanced information services that enable improved decision making in support of our customers’ operations and supply-chain systems. Telvent weather services, for example, provide premium, business-grade weather forecasts used to accurately predict energy demand and system load in electric grid operations. Telvent market data services provide proprietary cash commodity prices and futures prices that enable grain trading and risk management in the North American Agriculture supply-chain. Telvent information services are often provided via proprietary display portals tailored to the needs of specific industry users. In addition, we also deliver information via web services solutions that enable direct integration with key systems to support automated operations. We are also investing to expand coverage of key services to international markets, and introducing new information services in new markets, including traveler information systems among others.

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     In the future, we expect that interest in this business model will increase even more, so we are increasing our efforts to increase our information business capabilities or Software as a Service (SaaS) business model. SaaS allows us to quickly and efficiently deliver solutions to our customers while realizing high margins with attractive cash flows. Our SaaS solutions currently help optimize the supply chains within our Refined Fuels, Weather, and Agriculture businesses by providing information services that leverage the network.
     In summary, we are now able to provide to our customers higher valued added systems and advanced solutions to manage their critical infrastructures, consulting, outsourcing, IT infrastructure and data hosting services related to our systems and, we also provide information services in different delivery models (subscription, transaction, etc.).
     As an example of the mission-critical real-time services and solutions we provide, in our Energy segment, we can provide a complete suite of solutions that helps utilities to deliver electric power in a more efficient, secure, economic and reliable way through:
  Smart Metering Solutions, which include Titanium, Telvent’s Smart Metering System. These solutions provide benefits for consumers, operators, transmitters and generators of electrical energy by improving operations through reduced cost to acquire meter data, read in and out new customers, and cut on and off poor paying customers. They also provide real-time information on consumption patterns, outages, customer voltage and customers restored after outages.
 
  Smart Operations Suite of applications that bring intelligence to the network, which include our supervisory control and data acquisition (SCADA) system, distribution management system (DMS), outage management system (OMS), and geographical information system (GIS), among others. These applications monitor the state of substation, loads and generation sources in real-time through a geographic information system display, optimize loads using volt/VAR applications and reduce outage restoration times.
 
  Smart Network Solutions, which include remote terminal units (RTUs), substation automation systems (SAS), and intelligent feeder control devices (IEDs), with the ability to distribute intelligence down to the substation and feeder and that can provide improved fault identification service restoration schemes for critical areas of the network.
     In addition, we are also able to provide outsourcing and consulting services, for the evaluation and implementation of power optimization initiatives that will reduce operating costs. The customers understand that “information” as a service business model provides significant opportunities for them and having us as a consultant and outsource supplier also provides competitiveness.
Energy Segment
     Our Energy segment represented 34.1% of our total revenues in 2010. North America represented 44.6% of our total Energy revenues, while Latin America and Europe represented 26.1% and 21.5%, respectively, with the Asia-Pacific and the Middle-East and Africa regions representing the remainder. We report our Energy segment in two different sub-segments: Oil & Gas and Electricity.
Oil & Gas
     In our Oil & Gas sub-segment, we provide customers complete solutions for pipeline gathering, transmission, distribution and retail refined fuels terminal operations and marketing that manage the capture of field data, provide validation and operational control, advanced operational applications and real-time business and trading applications. These critical infrastructure real-time IT systems demand a level of security (cyber and enterprise), high availability and distributed functionality unique to the industry. The global support for this technology comes from our competency centers based in our Calgary, Canada location supported by specialty solutions and information services from our Omaha, Nebraska and Baltimore, Maryland locations in the U.S.
     Particularly in this sub-segment, we believe that value for our customer not only exists in the systems we implement and the services we provide, but also in the information generated from the raw data that our systems gather which enables our customers to make better and more timely operational decisions that affect the safety, security and efficiency of the operations of the critical infrastructure for which they are responsible. Within our refined fuels business area we further enable our customers in the downstream value chain to conduct business more efficiently and effectively by managing approximately 80% of the trading transactions in the U.S. every day.
     Strengths. Our offering of IT solutions and services in the Oil & Gas sub-segment reflect the following competitive strengths:

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    Market leadership: We believe we are a market leader in pipeline transport and distribution solutions in North America and Latin America based upon transmission pipeline mileage, where we compete directly with global players like ABB, Invensys, Honeywell International Inc., Emerson Electric Co, and Yokogawa.
    Distinctive customer base: Our solutions are used by our customers to control approximately 60% of the oil and gas transmission pipeline capacity in North America and Latin America. We maintain long-standing relationships with many of these customers and have developed or implemented new solutions to address customers’ operational, public and environmental safety needs.
    Integrated complete solution and highly differentiated services: We offer integrated IT solutions and services for the Oil & Gas sub-segment, including the OASyS® Oil & Gas management suites, which include SimSuite Pipeline leak detection/location, and POLARIS inventory management and revenue accounting. In addition, our RTUs enhance our offering in this unit. We believe that the growing concern for critical infrastructure security, public and environmental safety should enhance demand for our applications and real-time enterprise integration in this sub-segment. We believe our real-time IT infrastructure and advanced applications have comparatively strong security and enterprise integration functionality in a field-proven form that differentiates us in the market. Further, after our acquisition of Telvent DTN, we believe we have highly differentiated IT solutions and services able to compete in the refined fuels information services market, including, among other things, messaging service applications with back-office integration, price intelligence applications with intraday moves and alerts, and terminal data services with the best support for exchange terminals.
    Exceptional brand recognition and relationships in downstream oil market: We serve as a primary disseminator of information between suppliers, wholesale buyers, terminal operators and back-office vendors in the downstream oil supply chain in the United States, and play a role in hundreds of thousands of transactions every day. We believe we are a leading provider of information services and solution for the downstream petroleum supply-chain in the United States.
    Strong transaction processing platform and skills: We provide critical information and trading services to facilitate the exchange of refined fuels between sellers (refiners and suppliers) and buyers (wholesalers), serving approximately 10,000 direct subscribers and 20,000 related participants. The information that we provide includes rack price reporting, real-time NYMEX data feeds; market-shaping news analysis; data and price integration services; inventory, allocation and credit management and terminal automation software, among others.
    Leadership position in the risk management solutions market: We also provide real-time market data solutions to some of the largest energy trading floors in the world. These increasingly volatile markets have made trading in both the Futures and over-the-counter markets a necessity for managing risk and increasing profitability. With over 3,600 customer seats, we believe we are a leading provider of market data solutions for hedging and risk management in the energy market.
     IT Solutions and Services. Our main Oil & Gas IT solutions and services include:
    Liquids Management Suite (“LMS”). LMS is a real-time operations software suite for liquid pipelines that includes a number of flexible, high-performance modules that meet a variety of real-time operational needs. The modules include metering and ticketing, tank management, volumetric data, leak detection, pumping statistics and data validation in a highly integrated, loosely coupled configuration customizable for the customer’s specific, crude and services and solutions pipelines.
    SimSuite Pipeline. SimSuite is a technologically-advanced transient pipeline hydraulic modeling and simulation system for gas and liquids pipelines that can be used in concert with our liquids and gas suites to add a variety of high performance, on-line, real-time and off-line simulation applications. On-line, real-time applications include batch tracking and hi-fidelity leak detection and location and other hydraulic modeling functions which optimize and ensure safe operations of crude, product and gas pipeline networks. Off-line applications include engineering and design analysis, operational planning and control center operator training and certification.
    POLARIS. POLARIS Liquids and POLARIS Gas provide a comprehensive commercial accounting platform solution, which integrates ticketing, production volume accounting, revenue accounting, billing and customer or shipper reporting. This solution allows our customers to increase their business efficiency, in part by allowing them to conduct business in a web-based secure real-time environment, thus minimizing manual entry and manual processes and the resulting inherent delays. Solutions include specific applications that assist our customers with regulatory reporting and compliance challenges.
    Real Time Gas (“RTG”). Our RTG monitoring suite complements our OASyS® SCADA system with tools to operate a gas transmission or distribution pipeline network safely and efficiently through real-time calculation and monitoring of line pack, storage and compressor performance.

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    Gas Day Operations (“GDO”). Our GDO application enables operations and planning personnel to generate, monitor, and revise current and predicted load for gas pipeline distribution in real-time.
    Gas Measurement and Accounting Applications (“GMAS”). The GMAS modules of our Gas Suite provide a comprehensive gas measurement, data collection, aggregation, validation and processing solution and can integrate seamlessly with enterprise based invoicing processes.
    OASyS® Dynamic Network of Applications (“OASyS® DNA”). We believe our OASyS® DNA system is the industry leading supervisory control and real-time information system (“SCADA”) platform that is the underpinning of our solutions suites allowing the deployment of multiple applications that are linked through standard interfaces, such as those identified above. OASyS® on UNIX or Windows platforms offers a highly secure, enterprise friendly, mission critical infrastructure with certified ERP integration, historical information archive, retrieval, and analysis subsystems simplifying regulatory and Sarbanes-Oxley compliance and reporting requirements.
    ProphetX. Our ProphetX application is a real-time market data display solution. This application addresses commodities traders who need specialized display and charting of commodities market data and related fundamentals data, including local cash prices and specialty weather content, to support hedging and risk management operations. This application is configured with Telvent DTN proprietary content and is sold into both the energy and agriculture markets.
    FuelBuyer. FuelBuyer is a web-based subscription service that enables wholesale buyers of refined fuels to assess markets and supplier prices to determine the best source of product in local terminal markets based on a number of factors including price, product availability, and carrier rates.
    Messaging platform. This application is a business document messaging platform for the downstream petroleum supply-chain, used extensively by suppliers to rapidly deliver prices to wholesale customers. We are extending the role of this application to support the full spectrum of business documents involved in downstream fuel transactions. Ultimately, it is designed to help streamline the order-to-cash cycle for all downstream participants.
    TABS. It is a terminal data services solution that enables suppliers to control their business across all terminals where they conduct business, including third-party exchange terminals by interacting with remote terminal automation systems (“TAS”) enabling suppliers to authorize customer credit, control product allocations, and collect bills of lading (“BoLs”) used to support the billing process. We believe that increased volatility in the market is driving the need for TABS’ real-time capabilities and business controls. Next generation Terminal Automation System solutions are being introduced leveraging the synergies between pipeline and retail distribution and therefore OASyS and G3 terminal automation.
     Growth strategy. We have the following four primary Oil & Gas growth objectives:
    Maintain our current leadership position in North America and Latin America. We plan to maintain our current position by leveraging our large installed customer base to introduce new versions of enterprise infrastructure systems and solutions such as OASyS® DNA, GMAS, POLARIS and SimSuite Pipeline as platforms for new power optimization applications. We will introduce the next generation Terminal Automation System which further integrates the business value in pipeline and terminal operations. We have been successful in recent years by progressively introducing our full range of solutions and services to several of our long-standing customers including Shell, ConocoPhillips and Sunoco.
    Significantly increase our share of the Asia-Pacific region. The most attractive opportunities for us in this region are in China and Australia in both the transmission and distribution areas of the market. In China, approximately 5,600 miles of the transport pipeline network are planned to come on stream through 2011. To expand our presence in China, we plan to leverage our existing local resources and leverage our significant success with Petrochina in 2010. We continue to take advantage of our presence in Australia where we are capturing new opportunities in the oil and gas transmission and distribution operators in that country.
    Capture the market opportunity for higher value-added complete solutions and real-time process outsourcing and professional services. We intend to continue to enhance our solutions and services offerings in our Oil & Gas sub-segment by adding advanced applications and continuing to enhance the security features of our infrastructure framework that will enable the integration of real-time information with corporate IT systems. We expect to focus on developing and implementing value-added applications and services that enable real-time decision making, and integration of workflow and workforce management, geographical information and asset management, and customer information systems integration. We also intend to begin an aggressive campaign to offer some of these applications in a Software as a

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      Service (SaaS) or Information as a Service (IaaS) platform. Our first opportunities are appearing in the market now and proposals are beginning to flow. To achieve this, we plan to rely on internal research and development, customer funded development programs, and the development of strategic partnerships, including our alliances with OSIsoft, Microsoft, SAP, Idaho National Labs, Sandia National Labs and other industry technology leaders.
    Leverage our highly penetrated market position in the refined fuels market. This trading subscription based business continues to grow, driven by market volatility which is generating a move towards a real-time, integrated supply-chain management in the downstream petroleum market. In addition, we believe the increased market volatility, new proprietary content, and ongoing focus on data feeds and application integration are driving interest in trading and risk management solutions.
Electricity
     In our Electricity sub-segment we have been driving our Smart Grid Solutions Suite (“SGS”), a highly integrated and loosely coupled family of IT solutions. SGS provides complete solutions in the areas of Smart Metering, Smart Network, and Smart Operations for utilities. Timing of the stimulus incentives in the U.S. and elsewhere, combined with regulatory pressures, especially in Europe, has created an unprecedented market opportunity for us although developing slower than the industry expected. Our Smart Grid solutions from Telvent can be installed independently, or as an integrated suite of applications designed to bring energy efficiency and improved reliability to the utility’s grid. Our strategy is to differentiate our solutions by focusing on the “brain” of the smart grid. Our key advanced application in this space is DMS (Distribution Management System) which has been acknowledged in the market as the most advanced and feature rich solution available in the market today. We believe our SGS customers are able to enable a highly automated and interconnected intelligent electricity-delivery system, through which energy suppliers and consumers are interconnected through a network. This transitions the grid from a commodity broadcast delivery to a two-way information highway, leveraging information to reliably support the delivery of electricity at the lowest possible cost through use of actionable and real-time information.
     Our goal is to help utilities transform their current grid into one that distributes electricity more efficiently and securely, while meeting the demands of a changing society, diversifying energy source mix (such as renewables) and customer participation challenges in a sustainable way. This technology is developed in our Seville, Spain; Ft. Collins, Colorado, U.S.; and Novi Sad, Serbia, competency centers, and in our Houston, Texas delivery unit from which we currently conduct business globally.
     Strengths. Our offerings of IT solutions and services in our Electricity sub-segment reflect the following competitive strengths:
    Customer platforms in Europe, Latin America and North America. We have strong relationships with many of the largest electric utilities of Europe and Latin America, and we have a significant installed customer base in North America.
    Our strong portfolio of solutions provides a highly available and secure platform for developing business applications. Our Electricity sub-segment’s offering of IT solutions and services is especially strong in the areas of field data capture, control systems and operational applications for transmission and distribution. We believe further potential for expanding our offering of solutions exists in the area of business applications, substation automation, and distribution automation RTU subsystems.
     IT Solutions and Services. Our main IT solutions include the Smart Grid Solutions Suite. SGS is a complete portfolio of solutions that serve most of the requirements of an electric utility. Most of these solutions are completely developed in our services and solutions centers and are based in the following solutions:
     For Smart Operations:
    OASyS ®: Core SCADA, information management and advanced application functions.
    Responder: Integrated outage prediction and management.
    Conductor MDM: recently introduced to provide complete validation, estimation and editing functionality in our AMI solutions.
    DMS: Advanced distribution system management functionality providing distribution system demand response from which our customers can reduce capital cost, and “sweat” their assets to meet demand.
    ArcFM: ArcGIS extension for electric network spatial information management.

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    Network Adapter: Integration tools for third party network analysis.
    Conduit Manager: Major underground cable/conduit management.
    Designer: Network planning and design and Work Management System integration framework.
     Our Smart Grid Solutions Suite consists of completely integrated solutions that allow customers to choose the most appropriate applications and modules to create the final configuration that meets their immediate needs and provide a platform on which to expand their system functionality in the future.
     For Smart Networks:
    Data Acquisition Subsystems: We provide electric utility customers with master control station communication technologies, Remote Terminal Units (“RTU”) and Substation Automation Systems (“SAS”) to enable remote control of network facilities for every aspect of the Electricity business.
    Distribution: Substation and feeder networks.
    Transmission: Substations.
    Generation: All types of power plants: including hydraulic, thermal and the new renewable technologies.
    Traction Power: Offering the transportation customers with the appropriate applications to manage their energy network efficiently.
     For Smart Metering:
    Titanium: providing comprehensive functionality for Automatic Meter Reading (“AMR”) requirements, Automated Meter Management (“AMM”) and Smart Metering Management (“SMM”) in electric utilities.
    Conductor Meter Data Management: provided through integration with best in class third-party meters and meter data management systems.
    Meter Operations Management: provided by Telvent personnel through data center hosting, staffing, and operations of the utility’s automated metering infrastructure (“AMI”).
     Growth strategy. Our primary Electricity growth objectives are to:
    Continue growth in Europe and Latin America. We expect growth in Europe and continued growth in Latin America as a result of our customers’ continued investments in renovation and replacement of existing equipment, response to regulatory pressures and expected investments in new infrastructure development leveraging in many cases stimulus funding.
    Increase our presence in North America. We expect that there will be an increase in the number of opportunities in North America due to the aging infrastructure, continuing load growth and energy efficiency pressures. This, coupled with the incentives provided through the United States Stimulus Plan, is giving us a very strong pipeline of opportunities, some of which materialized in 2009 and 2010 as bookings in North America. We also have the opportunity to gain market share through our differentiated SGS strategy centered around the “brain” of the Smart Grid. Increasing interest in Smart Metering is being requested by many utilities beyond the pilot stages we initially saw. We anticipate increasing our presence by introducing our North American customers to new RTU and substation solutions tested in Spain and Latin America.
    Strengthen our position in the Asia-Pacific region. We have secured new distribution projects in China. We plan to extend our coverage of distribution systems in China through our commercial network of agents including newly established ones specific to the Electric industry. We also plan to leverage our current presence in Perth, Australia, for the development of our business strategy in Australia.
    Leverage our references in AMI projects. We have completed the rollout of one of the biggest AMI deployment projects in the world for Vattenfall, in Sweden, and we also have a new project in progress for Fortum in Finland. This provides us with a good position in the global metering market, which we anticipate will be one of the markets with a higher growth rate on a global basis.

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    Take part in the renewable energy generation challenge. Electric utilities are foreseeing big investments in generation from renewable sources, specially using wind and solar technology and playing to our advanced superior DMS solutions. We have experience and important references in supplying IT systems and services to these business areas, as well as the real-time network integration of these generation sources, and we are ready to continue delivering solutions for these facilities.
    Capture the market opportunity for higher value-added complete solutions and real-time process outsourcing. We intend to complete our offerings in our Electricity sub-segment by adding applications that establish a link with corporate IT systems. We will focus on developing or implementing applications such as enterprise integration platform, workflow and workforce management, geographical information systems, asset management, customer information systems and smart metering. To achieve this, we will rely on internal research and development capability and the development of strategic partnerships, including our alliance with Environment Systems Research Institute, Inc. (“ESRI”). Additionally, we will consider acquisitions of specialized companies with complementary portfolios of IT solutions. We will also evaluate options to enter the segment-specific managed services business, focusing on low capital-intensive data management processes, such as automatic meter reading, DMS operation management work and outage management with ArcFM Solutions and Responder.
     Finally, although slower to materialize than in the Oil & Gas sub-segment, we believe we will be in an excellent position to begin to capture Saas/IaaS solutions as they materialize from our datacenters in Madrid, Spain and Omaha, Nebraska.
Transportation Segment
     Along with energy, transportation is a major contributor to climate change and the lack of sustainable human development. The current economic model based on globalization, movement of people and goods and concentration of people in large cities, requires a solid transportation system. As cities and suburban areas are continuously growing, the use of vehicles is increasing and public transportation is unable to provide effective solutions. Considering that the situation already is critical while it is only affecting the developed countries, the consequences of extending this model to the rest of the world is unthinkable. Therefore, we believe that the current transportation model is not sustainable.
     The negative effects of transportation include congestion, greenhouse gas pollution, and other consequences such as traffic accidents, noise, vibrations, inefficient land usage, and visual intrusion. While progress has been made over the last ten years in reduction of vehicle emissions and noise, use of alternative fuel sources (e.g., bioethanol, natural gas, and hydrogen) and traffic safety improvements, these have been offset by the increase in population and global traffic. Therefore, we believe that the negative effects are still increasing.
     For the future, there is consensus within the industry on what has to be done — reduction of road congestion (through infrastructure improvement, increased use of transit and cleaner/higher capacity options, pay-per-use of transportation facilities and management of demand and mobility requirements); reduction of energy consumption and dependency on oil; reduction of pollution and CO2 emissions; reduction of noise in cities and airports; improvement of road safety; and a reduction in speeding through application of new technologies and intelligent systems.
     We are providing IT solutions and services to help and enable our customers (public agencies, municipalities and public-private- partnerships) to move in this direction. We help our customers:
    Reduce energy consumption and reduce emissions: advanced systems for traffic control (ITACA, MIST), free-flow tolling systems, parking systems to reduce spot-searching time, low power consumption traffic control equipment, road weather information systems, Information Traffic Systems (ITS) deployment and maintenance and air quality monitoring systems;
    Promote use of transit: priority systems for buses and trams, control systems for restricted urban areas, ticketing and fare integration systems, train and metro traffic control systems;
    Improve traffic safety: enforcement systems (e.g., radar, average speed on road sections, violation processing, red-light violation), incident simulation and management systems, traffic surveillance;
    Manage pay-per-use of transportation facilities: tolling systems (including field devices, violation processing and customer service center), managed lanes, urban congestion charging systems; and
    Provide information to travelers: web-based and phone (511) systems, SmartNet as information repository and agency sharing point.

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     In terms of security (e.g., all measures to prevent crime aimed at people, infrastructure or information systems), our solutions enable improved protection of people and infrastructures, as well as protection to computer systems and telecommunication networks. Those solutions include access control to ports, airports, train and metro systems, protection of critical or strategic infrastructures (e.g., roads, bridges, and tunnels) and IT security applications.
     Our Transportation segment is organized in five main geographical areas: Europe (including Spain), North America, Latin America, the Middle East and Africa and the Asia-Pacific sub-regions. Our Transportation segment includes two competency centers in Spain (Seville, for ITS and Enforcement applications, and Bilbao, for Ticketing and Parking) and two in the U.S. (Rockville, Maryland, for ITS and ATIS applications, and Austin, Texas, for free-flow tolling). Finally, a development center in Beijing, China has been created to adapt our Transportation solutions to the Chinese market. Our main competitors in this segment include Transcore Inc., Quixote group, Affiliated Computer Services Inc., Indra, Siemens, Peek, Sagem, Kapsch, Logica CMG, ERG, Thales, Cubic Corporation and GFI Genfare.
     During the past years we have been increasing our presence in the strategic U.S. market and reinforced our technological solution for canalized and free-flow toll management systems. We also reinforced our business in enforcement and transit business lines. Violation capture and management portfolio was completed through a complete road security solution that makes available new violation detection equipment (cinemometers and red-photo) based on new technology. This solution also includes the design and development of centralized services for receiving, validating, and processing violations. Our transit portfolio has been reviewed to strengthen our competitiveness and we believe that today we have a solid and innovative range of solutions for real-time control based on our common shared platform (OASyS) and for automatic fare management based on the e-trans platform which we believe will allow us to face competition from other investment plans such as from railway, metros and bus operators and authorities.
Strengths. Our IT solutions and services in our Transportation segment reflect the following strengths:
    Strong presence in Spain and the U.S. The transportation business is established in Spain and the United States, both for traffic and transit solutions, supporting new projects and operation and maintenance contracts. Technological aspects and specific solutions also are well defined in both areas and may be extended to other geographies depending on the local requirements.
    Strong portfolio of integrated IT solutions. We provide an integrated, complete solution to our traffic customers, with applications ranging from onsite equipment as traffic controllers to capture field data and control signals, to traffic systems like MIST (intelligent system for urban traffic control) to provide an advanced operational control application, to geographical information systems or, to enforcement processing systems at the advanced applications level. We also provide open road tolling systems and road weather information systems. Our automatic fare collection portfolio is also complete and effective, including an integrated multimodal solution for trains, subways and buses. Our maritime vessel control systems are also recognized in the market.
    Ability to transfer expertise to new regions. We believe we are leaders in this segment in Spain, the United States, Brazil, Argentina and China. We also have a significant presence in the rest of Latin America and the ability to transfer business to new geographies, demonstrated by the projects executed in places such as Mexico, Panama, Lebanon, and Saudi Arabia.
IT solutions. Our SmartMobility Suite includes all our Transportation solutions:
     SmartMobility Road. A wide set of solutions and products for Traffic Management and Enforcement including:
    MIST: Traffic management and control system
    ITACA: Customizable, centralized urban traffic control system
    RMY/CMY: controller to capture and process traffic data;
    OASyS: tunnel management and control SCADA system;
    Visitraf: LPR-based travel-time measurement system and routing decision support;
    SmartNET: software application that provides regional sharing of information about road construction, conditions and traffic accidents/incidents among public transportation, law enforcement and emergency response agencies; and
    MoviSmart: GIS-based data/control integration and mobility management system.

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    ICM: GIS-based data and information dissemination management system to improve mobility in cities and corridors
    TRace: Simulation tool to evaluate Air Quality based on traffic data.
     Highway fare collection and back office. Our proprietary toll system solutions include dynamic lanes toll systems, free flow systems, Road Side Equipment (RSE) and On Board Units (OBU) for highway tolling and urban charging systems;
    SmartTOLL: an intelligent system for toll management and control for concession motorways, tunnels and bridges;
    Freeflow/Open Road Tolling: non-stop toll system using combined high accuracy detection gantry, including third-party or own free flow tag and antenna;
    Flex Reader: tag reader which reads the tags in vehicles passing toll collection plazas;
    Lane control system: system to monitor and acquire data from the field devices, such as tag readers;
 
    Central Host system (TollPro): reporting system that provides centralized audit and security capabilities for all toll collection facilities;
    Remote Operations & Maintenance System (ROMS): this system provides real-time remote access, monitoring and diagnostics of the entire electronic toll collection system;
    Violation Enforcement System: system to record the images of violations form cameras on the lanes in the toll collection plazas; and
    Apex Toll Terminal (touch terminal): software application for use with touch screens used by operators at the toll collection plazas.
     Enforcement systems and violation processing back-office. Our proprietary enforcement IT solutions, including speed and red-light detection and fines processing, include:
    En4s solution family including En4Sys, En4Red, En4Spot, En4Speed, En4Speed, En4Hand and En4Access: Enforcement Management Systems, including field equipment and back office and Data processing center both red-light enforcement and speed enforcement with different configurations.
     SmartMobility Rail. Our set of solutions for Railway Information and Control Management and Fare Management including:
    TR3000-CTC: railway regulation and traffic management;
    TR300- STA: facilities management and traveler information; and
    SIVA: Real-Time Traveler Information System, via information panels, web terminals and loudspeaker system.
    Simul:A powerful simulation tool for railway operations training.
     Automatic Fare Collection Systems include:
    MobiFast: railway and subway fare collection solution;
    ValTick: fare collection management and control systems for buses and tramways;
    Web.Park: parking lot management systems; and
    Maexbic 3000: on-board fare collection equipment.
     SmartMobility Maritime. Our set of solutions for Port Management, Vessel Traffic Management and Maritime Simulation Training including:

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    NEPSYS-VTS: vessel traffic control system, including automated identification system (AIS);
 
    Port infrastructure management and control system;
    Civilian Ship simulators: includes training simulators for ship operation (e.g., navigation, management, communications, engines room, etc.);
    Naval simulators (navigation and fishing, maneuvers, communications, and others); and
    Military simulators (navigation and maneuvers, air-sea operations).
Growth strategy. We have five main growth objectives in our Transportation segment, as described below:
    Reinforce our position and growth in Spain. We believe the Spanish market will be affected by two key factor during next year: (1) the delay of transportation investment plans due to the poor financial state and; (2) local & regional elections occuring in May. However, we expect to keep existing revenues based on the renewal of many maintenance contracts in the largest Spanish cities, due to opportunities coming from concessionary companies in Portugal for tolling business, as well as new concessions (PPP programs) from the Spanish railway infrastructure regulatory authority, construction of new light railway lines in cities and the extension of subway networks in Barcelona, Bilbao, Madrid, Valencia and Andalucía.
    Execute growth strategy in North America. The North American market represents a key opportunity for the growth of our Transportation business, as we can offer a wide range of IT solutions and services, increasing market share and promoting our participation in free-flow tolling, automatic fare collection and traveler information. Growth will be driven by faster growing markets as Tolling that is moving from conventional tolling to Open Road Tolling or by new initiatives such as Integrated Corridors Management (ICM) or Transit Fare Management systems.
    Continue growth and capture opportunities in Latin America. We believe continued growth will require us to leverage our current position to develop the urban and interurban traffic management business in Mexico, Brazil and Chile. We believe that larger cities management systems, automatic fare collection and railway opportunities are also significant in Mexico and Brazil, especially in Brazil with a huge investment plan for Olympic Games in Rio de Janeiro and other several cities.
    Extend presence in the Asia-Pacific region; reinforce Chinese business. In order to execute our growth strategy in China, we have refocused our sales strategy in cities and we have opened new business plans to pursue projects funded by bilateral agreements (Nordic, US, and others) and international agencies such as the World Bank. Our plan is to capture new growing markets in cities with traffic and information solutions and Open Road Tolling transferring our skills and technologies to China and establishing alliances with local and regional partners.
    Extend presence in the Middle East. Our position in Lebanon and our subsidiary in Saudi Arabia have consolidated our presence in the area, leveraging new contracts and giving access to strong local customers, construction companies and traffic authorities. We believe we are coming to be the leader in Saudi Arabia and we believe our Saudi Arabia base will serve as a platform for bidding on many projects in the Gulf countries and other countries of the Middle East in 2011.
Environment Segment
     Our Environment segment provides technological solutions and services for two main business areas, Water Management and Operational Weather. The mission of our Environment segment is to help improve safety, enhance efficiencies, mitigate the effects of climate change and related challenges, as well as to protect biodiversity.
     We provide weather information, premium forecast services, and specialized weather solutions to help businesses make improved decisions. Our information services for weather management are delivered to more than 14,000 business clients in the energy, aviation, transportation, sports and recreation, construction, and public safety industries throughout the United States and Europe. We are widely regarded as the leading source of real-time weather information and decision support tools.
     We also provide innovative IT solutions and services integral to the Water Cycle Industry to enable improved decision making to support Water Sustainability. Our solutions and services help water utilities serve more than 45 million people in Europe, North America, Latin America, Africa and the Middle East, to optimize the quantity and quality of water served, and to manage efficiently their infrastructures and business operations.
     In 2010, the significant growth in our Water business in North America and a smooth and effective integration of the Telvent DTN weather services group, contributed to the growth in our Environment segment.

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     In 2010, we maintained our traditionally high retention rates in the Weather Information services, nearly 90 percent, which speaks to the strong return on investment we provide our clients. In addition, numerous new customers have been added to our portfolio. In our weather business, new clients like Enel North America, Suzlon Wind Energy Corporation, Oncor Electric, both the Atlantic Coast Conference (ACC) and the Southeastern Conference (SEC), the Minnesota Twins baseball team, United Airlines and Vancouver International Airport, are now using our commercial weather information, forecasting and alerting services.
     In 2010, we began the global expansion of our commercial-grade weather services with sales to Australian-based AEMO.
     In the Weather Systems space, we currently have projects with the DeutscherWetterdienst (DWD) and the National Meteorological Services in Germany for the modernization of the Airport Weather Observing Systems in the 15 major international airports of Germany.
     Some of our Water business success in 2010 include the Eastern Municipal Water District, Dallas Water Utility, Rio de Janeiro Water & Wastewater Company, the Cali (Colombia) Municipality, and the Qatar General Electricity and Water Corporation (Kahramaa).
     In 2010 North America became a strategic market for Environment. We enjoyed growth in North America through our advanced weather forecasts and water resource management solutions. As a result, the United States now accounts for 40 percent of all activity in this segment. Our position in Europe, where we stand a leading position in Weather Solutions for Airports and National Meteorological Services in Western Europe, was also renewed, and we gained ground through consolidation in our Water Management solutions in some countries in the Middle East region, such as Jordan and Qatar, as well in Latin America, specifically in Brazil.
     One of the strategic pillars for growth is the strengthening of our Value Proposition through R&D and technological innovation. Investment in R&D in 2010 resulted in several significant releases.
     We launched international editions of MxVisionWeatherSentry®, including online delivery of worldwide weather visualization and custom forecasts, such as our precision temperature predictions, which enable utilities to make better generation and trading decisions. Throughout the year, we also expanded our weather forecast platforms to achieve global coverage and to support our solutions in the Smart Grid, aviation, and transportation areas.
     We introduced our new Telvent Total View, which combines essential weather information with real-time road transportation, aviation or energy systems data to provide one point of reference that allows operators to make decisions in a fraction of the time, significantly increasing operational efficiencies and maximizing safety. We believe this solution is a perfect example of the synergies being developed after the acquisition of DTN. Total View combines our proven SCADA technology with cutting edge weather information as a service offering.
     In mid-2010, we began the release of improved mapping and related features for our MxVisionWeatherSentry solution. With its simplified, user-friendly navigation and new high-resolution, street-level mapping, users who work at golf courses, construction sites, stadiums, wind farms, and more, can zoom in to their location for unmatched monitoring of local conditions. We also introduced customizable, color-coded RotorWatch monitoring and alerting for in-flight helicopters and other moving assets, helping operators make better, safer decisions.
     Finally, in 2010, for the fourth consecutive year, our precipitation forecasts outperformed others in the industry in an independent study by forecastwatch.com. Our 24-hour and 48-hour temperature forecasts were also deemed the most accurate in a separate study by the same group.
     Also, 2010 saw the addition of a set of modular and scalable applications to our Water Management Suite, helping to manage water demand, optimize energy use, control leaks, and resource quality.
     Our Environment business is committed to deliver the world’s most advanced mission-critical weather decision support solutions and integral water management solutions, based on best in class proprietary technology anywhere in the world. We will continue to accelerate our innovation of new and valuable water and weather management solutions for growth.
     In the Water market, we will continue implementing our growth strategy around our Smart Water Network concept, a suite of modular, scalable, integrated solutions for monitoring, control and information management processes, for water authorities and municipalities.
     We also expect our newly-released international edition of our weather forecasting solutions to provide significant growth opportunities in the global aviation, energy, wind and transportation markets. Specifically in the Energy sector, we will continue adding value integrating our Weather technologies into our Smart Grid solutions.

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Agriculture Segment
     Telvent DTN has been an innovator in the creation and delivery of agricultural information services since 1984. We believe that we are one of the most familiar and trusted sources of agricultural information in North America.
     We serve over 557,000 subscribers across core corn, soybean and livestock markets, representing most of the largest businesses in agricultural production. Our services include critical business information and trading services supporting the agriculture supply chain, including producers, originators, traders, and food processors in the United States and Canada.
Strengths.
    Leadership position in North America. We believe that we have become one of the most familiar and trusted sources of agricultural information in North America. We are especially strong in the Midwest corn, soybean, and livestock markets, with penetration rates exceeding 60% in many areas.
    Exceptional brand recognition and solid customer base built during more than 20 years with a large share of producers and Agribusinesses. Many recurrent and new customers rely on our services and solutions. Nearly 90% of our subscribers use our systems at least five days a week, several times a day, and rate us the best source for market information, weather and news.
    Leadership position in commodities markets. With over 3,900 customer seats, we believe that we are a leading participant in the market for hedging and risk management of agriculture commodities. Industry leaders such as Cargill, ADM, CHS, Bunge, Louis Dreyfus, ConAgra, FCStone, Advance Trading, Tyson, General Mills and Pepsi all rely on our services to provide the core decision tools for this critical function.
    Limited competition. We believe we do not have a direct competitor that addresses the full scope and scale of solutions across the agriculture supply chain. However, we do have competition in specific segments of the agriculture business.
    Market conditions driving increased opportunities. Increasing volatility in commodity markets enhances our customers’ need for our proprietary content to help them make critical business decisions.
    Extensive proprietary content. Much of our content is exclusive to our company and is generated by our own in-house, award-winning editorial staff.
    Very strong sales and marketing channel. We have proven, successful marketing methods for reaching both new prospects and our existing customers with new offers supported by both in-house and external sales teams.
IT solutions and Information Services.
     We serve premium, media, and Internet subscribers through a range of related information services. We serve top producers and agribusinesses with premium subscription services, delivered via satellite and internet, through annual subscription contracts. We also serve our media subscribers via a major monthly farm print publication, The Progressive Farmer. The Progressive Farmer’s revenues are derived primarily from advertising and circulation. Finally, we serve Internet subscribers via our Telvent DTN ProgressiveFarmer.com website with revenues derived from advertising.
     We provide premium subscription business information services, including commodity market prices, specialized agriculture weather services, and farm industry news to approximately 35,000 of the largest farm producers who are paying for premium content, almost 14,200 originators including the top elevators, ethanol plants and feedlots, and almost 3,900 agribusiness customers using our risk management platform. National agribusinesses, such as John Deere, Pioneer and Syngenta, as well as large regional agribusinesses, such as Ohio Seed and Agrilliance, utilize our system for services and solutions advertising and promotion.
     We believe that our The Progressive Farmer publication is the largest farm publication in the industry with over 553,000 subscribers. The publication provides complete coverage of issues relevant to farm producers who are effectively CEOs of increasingly complex businesses. The publication provides award-winning coverage of markets, crop production, business management, and other topics aimed at making The Progressive Farmer the “must have” resource for top producers. Additionally, the publication also serves advertisers who are willing to pay a premium to access The Progressive Farmer’s base of top agriculture producers.
     In addition, we provide real-time market information to support pricing decisions and management of price volatility via hedging for thousands of local agribusinesses, including cooperatives, elevators, ethanol plants, distributors, commodity brokers and grain

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merchants. With almost 14,200 agribusiness subscribers, we are an accepted standard for real-time agricultural information across North American agriculture.
     We also provide hosted supply chain services for over 1,000 agribusinesses. These services enable agribusinesses to build and maintain relationships with their producer customers through branded websites, our proprietary content, e-commerce, and marketing tools. We have introduced an online grain trading application that enables agribusinesses to more efficiently buy grain from producers. These services are delivered on a premium subscription basis, but also include a transactional revenue component intended to support revenue streams that scale with the amount of grain purchased.
     We also provide real-time market data solutions to some of the largest agriculture trading floors in the world. The highly volatile and increasingly global commodities markets have made trading in both exchange traded futures and over-the-counter markets a necessity for managing risk and increasing profitability.
Key information services solutions in our Agriculture segment include:
    Producer series — A family of subscription services aimed at the needs of farm producers. These services provide market information, news, and business grade weather to meet the demands of grains and livestock producers. These services are delivered both online and via satellite.
    ProphetX — A real-time market data display solution. This solution addresses the needs of commodities traders who need specialized display and charting of commodities market data and related fundamentals data, including local cash prices and specialty weather content, to support hedging and risk management operations. This solution is configured with Telvent proprietary content.
Key supply chain applications include:
    AgHost — A hosted customer service solution for agribusinesses. This solution enables agribusiness customers to create branded websites to serve their producer customers. It includes our proprietary content, as well as marketing and e-commerce tools to help attract customers and maintain preferred relationships.
    Grains Portal — An extension to Telvent AgHost that enables agribusiness to efficiently buy and sell grains online. This is part of an initiative that is expected to enable us to move beyond subscription revenues to capture additional transactional revenue streams.
Growth Strategy
Our growth strategy for our Agriculture segment has several objectives:
    Maintaining our continuing growth in our subscription services business through solid execution and ongoing focus on important improvements supported by demand for our solutions and services generated by market volatility.
    Strengthening our The Progressive Farmer publication. We have worked to reposition the publication as a must have resource for farm producers as CEOs. Higher value content and a move back to core farm production and management content should result in increased interest from advertisers and readers alike.
    Continuing focus on deepening and further differentiating our solutions to broaden our role in the agriculture supply-chain.
    Establishing leadership position in emerging cap and trade market in Agriculture including editorial coverage, education and thought leadership, enrollment and management solutions.
    Extending strong growth trends in electronic grain trading by growing transaction volume to over 100 million bushels of grain per year.
    Evaluating and executing on opportunities to extend our agriculture business globally.
Global Services Segment
     In order to span the technological life cycle for our customers, Global Services adds value to our customers through four different activities: consulting, integration, outsourcing and IT infrastructure management and support. In addition, Global Services also help

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our customers from the initial stages of consulting and design for their business needs, deploying those projects, with the objective of later managing them through our outsourcing capabilities. We also facilitate the technological evolution of their businesses, allowing our customers to concentrate on their core business, rather than their technological evolution requirements.
     These services help our customers reduce their core business time-to-market, complementing the security and viability of their current and future business needs, and allowing for the adaptability of their technology requirements, thus permitting their own business focus. Our competency centers currently conduct all business for this segment globally.
     In 2010 we completed the integration of Telvent Housing, Telvent Interactiva and Matchmind into a single entity. We restructured all our business in consulting, IT infrastructure management, systems integration and applications, communications and outsourcing into a new business unit called Global Services, that also includes all capabilities of our former public administration and the healthcare units. In 2010, we laid the foundation for future growth. We believe we maintain the benefits of a local business while offering the resources and reliability of a multinational company, thus, in 2010, we have expanded our activity in Latin America and the United States.
     Global Services adds value to a variety of customers in different industries: energy, transportation, agriculture, environment, finance and insurance, telecommunications, media and technology, retail and consumers, public administration and healthcare, among others.
     Strengths
    Experience: We have over 20 years of experience in these technological business areas.
    Well-established customer relationships: Through our business and technology processes, we help our customers reduce their own time-to-market core businesses, adding value in their daily businesses and contributing with solutions and technology to the development of a more sustainable and secure world.
    Data Centers: We have five international data centers located in the Iberian Peninsula: two in Madrid, and one in each of Barcelona, Seville and Lisbon. In addition, we have two new data centers in the United States. The total capacity of all data centers exceeds 35,000 square meters of technical space.
    Communications: We host our data centers information for almost all of the existing telecommunication carriers in the Iberian Peninsula, giving us full access to almost any communication networks.
    Managed Services: We cover the complete IT service life-cycle from consultancy to integration to operation maintenance.
    Software Factories: We have seven software factories in Spain, one in Montevideo, Uruguay and another one in Sao Paulo, Brazil. We provide nearshore and offshore capabilities for many European and Latin-American corporations.
    Competency Centers: Our Global Services segment presents a competency center model with five different technological areas of expertise. The idea is to centralize knowledge evolution and retention; business and applications, technology and systems, security and contingency, communications and networks, and infrastructures and resources.
    Leadership in Data Centers: Telvent is a market leader in data center services in Spain and Portugal with more than 52% of all of its space dedicated to neutral data centers.
    Market leadership in the Spanish Public Administrations: We offer integrated IT services and solutions in e-Government, including a complete suite, TiWorks, developed based on years of experience (including a portfolio of high-value-added solutions), new technological foundations and an innovative model.
    Healthcare: More than 15 years of experience and a complete suite of IT solutions (TiCares) developed and installed in over 150 public and private healthcare institutions both in Spain and Latin America (Dominican Republic and Chile).
    Retail: We are a market leader in the retail industry in Spain with continuous presence in most of the relevant players in Spain, working both on local and international scope.
    Finance: We have a strong presence in the financial services industry working for the market leaders in Spain, helping them nationally and internationally in several countries including the United Kingdom, Brazil, Portugal and Germany.

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IT Solutions and Services
     We help our customers with IT services and solutions grouped by specialized families: consulting, integration and development, outsourcing and IT infrastructure management.
Services
     Consulting
    Business Consultancy: Solutions for the design, management, transformation and evolution of our customers’ business processes, including HR, Supply Chain, Sales and Marketing and Organization among others; and
    Technology Consultancy: Solutions for the design, sizing, transformation, and evolution of our customers’ technologies.
     Integration and development
    Applications Development: Solutions for the future business evolution needs;
    Applications Integration: Solutions for the starting-up and improvement of new services and processes;
    Systems and Technologies Integration: Solutions for the upgrading of business technologies and architectures; and
    Networks and Communications Integration: Solutions that cover the needs of business communications and networks.
     Outsourcing and IT infrastructure management
    Business Process Outsourcing: Solutions that help optimize business operating costs;
    Applications Outsourcing: Solutions that allow for a zero failure daily business operation;
    Software Factories: Solutions for cost-cutting and evolution of the development and integration of new software;
    Systems Outsourcing: Solutions that facilitate the daily technological business operation;
    Security and Contingency Outsourcing: Solutions that provide real-time security surveillance and prevention to avoid business interruptions;
    Communications and Networks Outsourcing: Solutions for the centralized management of current and future corporate networks;
    Data Center Services: Solutions for the neutral and redundant collocation of technological platforms;
    Asset Management: Solutions for the dynamic management of any corporate technological asset; and
    Resource Management: Solutions for the flexible and centralized management of technical and professional resources.
IT Solutions
     TiCares
     TiCares is a global solution for the full healthcare process cycle structured into three levels: TiCares-PAS, TiCares-CIS, and TiCares-DIS.
    TiCares-PAS: This solution is a patient administration system for basic management of patient services provided by healthcare professionals. It enables control of all administrative activities and functional processes and provides knowledge management through the incorporation of diverse solutions.

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    TiCares-CIS: This solution is our clinical information system for the management of clinical procedures provided to patients. It encompasses the full medical practice and is based on diagnosis and patient care.
    TiCares-DIS: This solution represents the third grouping of TiCares information systems. It was designed especially for departmental information systems, with special emphasis on central departments and providers of healthcare results. It includes solutions such as radiology imaging and electronic prescription.
     TiWorks
     TiWorks is a complete solution suite covering the full administrative process management cycle, although, each component is capable of functioning independently, the full power of the solution is leveraged by integrating multiple components within the suite.
    Document Manager: This IT solution is a basic tool for simple, efficient management of organizational paperwork.
    Knowledge Manager: This IT solution allows organizations and public institutions to innovate, foster and share knowledge among all of their stakeholders.
    E-Signature and Certificate Authentication Platform: This IT solution provides advanced authentication and e-signature functions. Moreover, we believe that it is currently the only platform able to authenticate the electronic version of the Spanish identification document.
    Process Engine and Systems and Messaging Integrator: This solution enables the development of a wide range of global solutions customized to individual clients needs.
Growth Strategy
     Our growth strategy for our Global Services segment has several objectives:
    Identifying new areas of potential growth. New areas of potential growth include increasing our software factory network both nationally and internationally and the “value-shore” concept, creating a consultancy approach to international companies, and developing new healthcare solutions and Online Channels solutions to simplify the connection of our customers business with the end users.
    Identifying new geographical areas. We will seek to expand our Global Services business to other geographies, especially those where we already have presence.
    Identifying new services. We will seek to identify new services such as the business consulting and applications functional development and those services related to the implementation of new data centers.
    Developing new solutions based on new technologies or business models. We will pursue the development of new solutions such as Cloud Computing, SaaS, SOA, virtualization, etc., that enable us to increase our sales capability and reduce the operating cost of our customers.
    Increasing synergies and partnership. We believe that with the integration of Matchmind, other Telvent verticals and partners, we will be able to provide more high value-added services to our customers.
Seasonality
     We do not believe there is inherent seasonality in our revenues as reported under U.S. GAAP. We historically have experienced fluctuations in the cash we receive throughout the year as we tend to receive greater payments in the fourth quarter due to the budgetary cycles of some of our customers.
Research and Development
     Constant Investment. We believe that our research and development planning process helps to ensure that our research and development investments are aligned with our long-term strategic and business objectives, respond to our customers’ needs and help to create a sustained competitive advantage. We made investments of €  26.4 million, € 29.0 million and € 24.0 million in research and

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development in 2010, 2009 and 2008 respectively. Part of our software development effort is capitalized and gets amortized over the economic life of the development. In addition, developments for specific projects/clients are paid for by the respective projects and thus included within cost of revenues.
     Product and Competency Centers. Our Product Centers provide infrastructure technologies that underpin our portfolio of solutions. These technologies are used by our Competency Centers to develop high value-added, advanced applications, specific to each of our segments. Our research and development activity, which is geographically distributed, is based in Calgary, Canada with respect to SCADA and Oil & Gas applications; Columbia, Maryland, U.S. for SimSuite Pipeline. Rockville, Maryland, U.S. with respect to traffic applications; Novi Sad, Serbia with respect to electricity applications; Madrid, Spain with respect to Traffic applications; Seville, Spain with respect to Environment, RTU and Electricity applications; Bilbao, Spain with respect to Transport systems applications; Fort Collins, Colorado, U.S. with respect to GIS based applications; Perth, Australia with respect to LLWAS and AWOS applications; Austin, Texas, U.S. with respect to Electronic Toll Collection applications; Omaha, Nebraska, U.S. with respect to Agriculture applications and Minneapolis, Minnesota, U.S. with respect to Weather applications.
     Successful Track Record. Our research and development function has successfully developed systems and solutions including OASyS® DNA, our multi-industry data acquisition and IT infrastructure solution, RTUs for electric distribution and, most recently, the MobiFast advanced payment system for our Transportation segment.
Sales and Marketing
     Our sales and marketing work force is located globally and is responsible for services and solutions management, account management, sales administration and corporate marketing communication. By working closely with our account management team, our services and solutions management team analyzes and identifies services, solutions and technology trends in our target markets and works closely with our research and development group to develop new services and solutions, enhancements and services and solutions capabilities as demanded by our customers.
     Our services are predominantly sold by our direct sales force. Our sales support group works closely with our direct sales force to provide it with sales tools, technical training and on-going logistical support to facilitate its sales and support efforts. Our corporate marketing communication group is responsible for our marketing programs, including corporate and product branding, trade shows, press releases and interviews, speaker engagements, training and technology seminars, print advertising and sales and marketing materials.
Intellectual Property and Proprietary Rights
     We rely on trademark and copyright law, trade secret protection and confidentiality and/or license agreements with our employees, customers, partners and others to protect our intellectual property rights. We generally pursue the registration of our trademarks in all of our geographic areas, where practicable, and we seek to protect our marks against similar and confusing marks of third parties. We possess few material patents or registered copyrights, but we do have registered marks and applications pending for registered marks in various jurisdictions in which we operate. “Telvent” is a registered community mark in the European Union. It is also registered in Mexico, Canada, the United States and Brazil.
C. ORGANIZATIONAL STRUCTURE
Our Largest Individual Shareholder
     The Abengoa Group is comprised of a set of diversified industrial and technology companies applying innovative solutions for sustainable development in the infrastructure, environment and energy sectors. The Abengoa Group provides these solutions through the following business units:
    Solar;
    Bioenergy;
    Environmental services;
    Industrial engineering and construction; and
    Information technology.

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     We and Abengoa’s subsidiary, Telvent Investments, S.L. (“Telvent Investments”) comprise Abengoa’s information technology business unit. Abengoa indirectly owns approximately 40% of our ordinary shares. We do not have an ownership interest in Telvent Investments. Since our inception, our results of operations have been fully consolidated by Abengoa. Abengoa is a public company headquartered in Seville, Spain, and its shares are listed on the Madrid Stock Exchange.
     We generally operate our business independently from Abengoa’s other businesses. For instance, we maintain our own sales force and lease our own premises and offices in all of our core geographic areas.
Our Subsidiaries
     The following chart shows the name and country of organization of, and our percentage ownership in, each of our significant subsidiaries pursuant to Rule 1-02(w) of Regulation S-X, as of December 31, 2010.
                 
    Country of   Percentage
Name of Subsidiary   Organization   Ownership
Telvent Tráfico y Transporte, S.A.
  Spain     100 %
Telvent Global Services, S.A.
  Spain     100 %
Telvent DTN, Inc.
    U.S.       100 %
D. PROPERTY, PLANT AND EQUIPMENT
     Facilities
     Our principal executive offices are located in Madrid, Spain under a lease that expires in 2020. We categorize our other facilities as delivery units, competency centers, product centers and data centers.
     Delivery Units. Our delivery units are customer centric and geographically oriented offices responsible for the sales, service and project execution of the work under our customer contracts and are located in Houston, Texas, U.S; Fort Collins, Colorado, U.S.; Omaha, Nebraska, U.S.; Minneapolis, Minnesota, U.S.; Calgary, Alberta, Canada; Madrid, Spain; Barcelona, Spain; Seville, Spain; Mexico City, Mexico; Beijing, China; Rio de Janeiro, Brazil; Perth, Australia; Culemborg, the Netherlands; Rockville, Maryland, U.S.; Austin, Texas, U.S., Baltimore, Maryland, U.S. and Novi Sad, Serbia.
     Competency Centers. Our competency centers are industry-vertical centers of excellence responsible for developing and enhancing industry-specific advanced applications and solutions for our targeted sectors. These competency centers deliver solutions embedding product, advanced applications, business-specific knowledge, integrated third-party product (if necessary) and deployment support to the delivery units around the world. They are located in Seville, Spain (Energy — Electricity, and Environment); Calgary, Canada (Energy — Oil & Gas); Madrid, Spain (Traffic); Bilbao, Spain (Transport); Novi Sad, Serbia (Distribution Management Systems); Austin, Texas, U.S. (Electronic Toll Collection); Rockville, Maryland, U.S. (Traffic Management-MIST, SMARTNET); Omaha, Nebraska, U.S. (Agriculture); and Minneapolis, Minnesota, U.S. (Weather).
     Product Centers. Our product centers are technology focused and develop, support and distribute specific infrastructure and other services and solutions. These products are used in our Competency Center solutions and/or our specific project implementations of the Delivery Units in meeting customer requirements of our projects. They are located in Calgary, Canada (IT Infrastructure-OASyS®); Baltimore, Maryland, U.S. (SimSuite Pipeline); Fort Collins, Colorado, U.S. (ArcFM Solutions Suite); Seville, Spain (Data Acquisition Subsystems-RTUs); Bilbao, Spain (Toll & Fare Collection Systems-Mobismart, Valtick, SATToll, WEBPark); and Perth, Australia (AWOS and LLWAS).
     Data Centers. Our data centers are buildings that we lease as a bare shell in which we install electrical facilities (including uninterruptible power supplies (“UPS”) and generators for power back up), air conditioning, fire protection and extinguisher systems, security (including 24x7 complete security control system and magnetic strip card controlled access, closed circuit TV’s and motion detectors), and a management system with 24x7 equipment monitoring and maintenance system (“SCADA”) as well as building out the interior. Our data centers are used for the hosting and housing of our customers’ IT systems.
     With the exception of a 1,303 square meter facility and a 1,267 square meter facility in Beijing, China that we have purchased, and with the exception of a 4,658.53 square meter facility in Minneapolis, Minnesota, U.S., which is the property of Telvent DTN, all of our facilities are leased. As of December 31, 2010 we had leased facilities in more than 40 locations in Europe, North America, Latin America, the Asia-Pacific region, the Middle-East and Africa. As detailed in the table below, our material leases of facilities cover approximately 132,311 square meters (1,423,236 square feet) of office space.

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Table of Facilities
                 
    Square Meters   Square Feet
Location   (approx.)   (approx.)
Europe
    93,692       1,008,490  
North America (U.S. and Canada)
    45,049       437,572  
Latin America (including Mexico)
    7,441       77,023  
Asia-Pacific
    4,772       51,366  
Middle-East and Africa
    760       8,182  
Totals
    151,714       1,582,633  
Table of Material Leased Facilities
                             
    Square   Square       Lease
    Meters   Feet.       Termination
Location   (approx.)   (approx.)   Type(1)   Date
Perth, Australia
    1,590       17,115     DU, PC   Jul. 2013
Río de Janeiro, Brazil
    750       8,073     DU   Sep. 2010
Calgary (Alberta), Canada
    12,236       131,708     DU, CC, PC   Jul. 2013
Culemborg, Holland
    840       9,042     DU   Oct. 2013
México DF, Mexico
    876       8,460     DU   Dec. 2011
Lisbon, Portugal
    5,355       57,641     DU, DC   Dec. 2011
Barcelona, Spain
    2,511       27,028     DC   Jan. 2012
Madrid, Spain
    44,819       482,438     DU, CC, DC   May 2024
Seville, Spain
    877       9,435     DC   Dec. 2015
Seville, Spain (Tamarguillo 29, floors 1a & 2a)
    7,820       84,178     DU, CC, PC   Oct 2010
Seville, Spain (Tamarguillo 29, floors 3a & 4a)
    6,127       65,947     DU, CC, PC   Oct. 2010
Seville, Spain (Palmas Altas Campus)
    10,296       110,825     DU, CC, PC   Mar. 2015
Austin (Texas), USA
    679       7,314     DU, CC   Feb. 2014
Columbia (Baltimore), USA
    1,206       12,985     DU, PC   Jan. 2012
Houston (Texas), USA
    4,871       52,432     DU   Nov. 2012
Omaha (Nebraska), USA
    2,642       28,436     DU, CC, DC   Dec 2013
Omaha (Nebraska), USA
    8,192       88,179     DU, CC, DC   May. 2017
Rockville (MD), USA
    3,368       36,255     DU, PC   Jan. 2021
Fort Collins (Colorado), USA
    3,066       33,005     DU, PC   See Note 3.
Novi Sad, Serbia
    14,190       152,740     DU, CC   See Note 4.
Total
    132,311       1,423,236              
 
Notes:
 
(1)   DU means Delivery Units; CC means Competency Centers; PC means Product Centers; DC means Data Centers;
 
(2)   Telvent Canada subleases 735.8 square meters (7,920 square feet) to Anthony Clark and subleases 6,601 square feet to the Mental Health Commission of Canada.
 
(3)   The landlord of the Telvent USA offices in Fort Collins is completing the construction of an addition to the building which will be included in the lease. The expiration date of the lease is 6.5 years from the date a certificate of occupancy is issued by the appropriate municipal government authority in Fort Collins.
 
(4)   The landlord of the Telvent DMS offices in Novi Sad is completing the construction of the building which will be occupied by Telvent DMS under the lease. The expiration date of the lease is 6 years from the date a certificate of occupancy is issued by the appropriate municipal government authority in Novi Sad.

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Material Tangible Fixed Assets
     Our material tangible fixed assets consist primarily of the property and plants in our Spanish Data Centers in Madrid, Barcelona, Seville, a Data Center in Lisbon, Portugal and two additional Data Centers in the U.S. (one in Omaha, Nebraska and a second facility in Minneapolis, Minnesota). These last two assets were acquired through the acquisition of Telvent DTN.
ITEM 4A. UNRESOLVED STAFF COMMENTS
     Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
A. OPERATING RESULTS
     The following discussion contains information about our results of operations, financial condition, liquidity and capital resources that we have prepared in accordance with U.S. GAAP. It also includes information about our revenues and gross profit by sectors and geographies.
Overview
     We are a leading real time IT solutions and information provider for a sustainable world. We specialize in high value-added solutions for customers in critical infrastructure markets including Energy, Transportation, Environment and Agriculture. Our solutions and services are focused on industry segments where we believe increased efficiency can enable our customers to achieve benefits such as reduced energy consumption, carbon emissions, and waste of scarce resources such as water and increased reliability of electricity distribution. We leverage our core competencies across our targeted industry segments to develop and integrate software and IT solutions that manage complex systems such as utility grids, traffic networks and gas pipelines, and provide key decision-making information in real-time. In addition, we also provide consulting, outsourcing and IT management through our Global Services segment.
     We also deliver business-critical market intelligence, commercial weather, trading, and supply-chain services supporting the production, trading and distribution of agriculture and energy commodities. In addition, we leverage our proprietary weather technologies to serve weather-sensitive businesses in key sectors including electricity generation, renewable power generation, water resource management, aviation, transportation, and public safety. We believe more accurate and timely weather information can result in significant improvements in energy efficiency and management across a broad range of applications. Increasingly we are making proprietary information services a key part of the services we provide.
     Our customers include some of the largest energy and utility companies, transportation authorities, a number of government environmental agencies, and local and central governments in our core geographies. These core geographies include Europe, North America, Latin America (including Mexico), the Asia-Pacific region and the Middle-East and Africa region.
     Our business is organized in three primary ways: across segments, across geographic areas and across information technology solutions.
     Our goal is to ensure continued growth, maximize profitability and provide added value to our investors and customers. In order to achieve this, we focus on several critical areas that we believe are the core of our business activities:
  1.   Margin performance, which we believe is a strong indicator of the efficiency and profitability of our main operations;
 
  2.   Bookings and backlog, which we believe is a strong indicator of the growth of our business and provides useful segment trend information and revenue visibility; and
 
  3.   Acquisitions integration, as the realization of synergies in all business areas from the integration of the businesses that we have acquired ensures improved efficiency and cost savings.
     On an on-going basis, we evaluate the risks and challenges facing our individual business segments to determine any necessary course of action.
     During 2009, our Transportation segment suffered from the general worldwide economic slowdown and crisis that disrupted the global markets during the third quarter of 2008. Specifically, government agency and municipality budgets continued to experience severe pressure, while private sector investments continued to slow down. This translated into significant delays in the project bidding and award processes in many regions, which impacted our bookings and our generation of new revenues. During the year 2010 we

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have observed a slow recovery trend in this segment, as evidenced by a positive fourth quarter. Although revenues in Transportation did not grow in 2010, we have noted signs of recovery such as a growth in bookings, which grew by 14% year over year, and in pipeline. This allowed us to start 2011 with a more optimistic position, especially in North America and Latin America. Spain continues to remain resilient, due to our strong presence in the region and to a revenue mix where recurrent operating and maintenance projects are significant, but we remain conservative for the near future, given the macro-economic situation in Spain.
     On the other hand, in 2010 Energy has consolidated as our major revenue contributor, significantly increasing its contribution with a 34.1% in 2010, compared to 32.0% in 2009 and 29.8% in 2008, if we had applied SFAS 167 retrospectively (see Notes 2 and 9 to our consolidated financial statements). In Oil & Gas we have maintained a leadership position, strengthening the relationships with our customers in which we have presence and entering new countries where we did not have presence before. We continue to see good opportunities in 2011 within the Smart Grid space as well, where we are experiencing positive momentum with our Smart Grid Solutions Suite, that should benefit us given the shift in the smart grid industry towards full utility systems integration.
     Finally, as much of our business activity is concentrated in Spain (with approximately 35% of 2010 revenues generated there), our business and financial condition is largely dependent upon the general economic conditions in Spain, in particular in our Transportation and Global Services segments. Spain continues to experience adverse economic conditions, including high unemployment and government spending cuts, which we believe could adversely affect results from our operations in the near future.
     In order to deal with these challenges, we are continuously developing new ideas, evaluating alternative courses of action, and investing in research and development.
     Our Energy and Transportation segments accounted for 34.1% and 26.9% of our revenues during the fiscal year ended December 31, 2010, 30.3% and 30.9% of our revenues during the fiscal year ended December 31, 2009 and 27.4% and 40.7% during the fiscal year ended December 31, 2008. If SFAS 167 had been applied retrospectively, the figures for Energy and Transportation would have been 32.0% and 27.7% in 2009 and 29.8% and 35.9% in 2008. Our three largest geographic regions are Europe, North America and Latin America, which accounted for 39.8%, 36.2% and 16.6%, respectively, of our 2010 revenues; 47.7%, 31.4% and 12.6%, respectively, of our 2009 revenues; and 51.0%, 18.4% and 17.9%, respectively, of our 2008 revenues.

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     The following table sets forth certain of our statements of operations data for the years ended December 31, 2010, 2009 and 2008.
                                                                 
    Year             Year             Year                    
    Ended     Percentage     Ended     Percentage     ended     Percentage     Percentage     Percentage  
    December     of 2010     December     of 2009     December     of 2008     Change     Change  
    31, 2010     Revenues     31, 2009     Revenues     31, 2008     Revenues     2009-2010     2008-2009  
    (Euros in thousands, except percentages and per share data)  
Revenues
  €  723,856       100 %   €  791,053       100 %   €  724,613       100 %     (8.5 )%     9.2 %
Cost of revenues
    459,387       63.5       526,029       66.5       538,632       74.3       (12.7 )%     (2.3 )%
 
                                                         
Gross profit
    264,469       36.5       265,024       33.5       185,981       25.7       (0,2 )%     42.5 %
General and administrative
    120,229       16.6       118,443       15.0       67,439       9.3                  
Sales and marketing
    23,855       3.3       25,261       3.2       21,677       3.0                  
Research and development
    10,375       1.4       14,079       1.8       19,067       2.6                  
Depreciation and amortization
    35,416       4.9       29,981       3.8       14,561       2.0                  
Other allowances
    18,035       2.5                                              
 
                                                         
Total operating expenses
  €  207,910       28.7     €  187,764       23.7     €  122,744       16.9                  
Income from operations
  €  56,559       7.8     €  77,260       9.8     €  63,237       8.7       (26.8 )%     22.2 %
Interest expense
    (29,901 )     (4.1 )     (31,327 )     (4.0 )     (18,160 )     (2.5 )                
Interest income
    422               307               28                          
Other financial income (expense), net
    7,147       1.0       (6,877 )     (0.9 )     (5,212 )     (0.7 )                
Income from companies carried under the equity method
    3,977       0.5       (71 )             270                          
Other income (expense), net
                  (1,128 )     (0.1 )     (1,919 )     (0.3 )                
 
                                                           
Total other income (expense)
    (18,355 )     (2.5 )     (39,096 )     (4.9 )     (24,993 )     (3.4 )                
 
                                                         
Income before income taxes
  €  38,204       5.3     €  38,164       4.8     €  38,244       5.3                  
Income tax expense (benefit)
    (8,749 )     (1.2 )     (1,087 )     (0.1 )     6,890       1.0                  
 
                                                         
Net income
    46,953       6.5       39,251       5.0       31,354       4.3                  
Loss/(profit) attributable to non-controlling interests
    (581 )             (175 )             (1,144 )                        
 
                                                         
Net income attributable to the parent company
  €  46,372       6.4     €  39,076       4.9     €  30,210       4.2       18.7 %     29.3 %
 
                                                         
 
                                                               
Add back
                                                               
Convertible debt interest expense, net of tax (*)
    7,731                                                      
Change in fair value of embedded call option, net of tax (*)
    (13,537 )                                                    
 
                                                         
Adjusted net income attributable to the parent company for diluted EPS
  €  40,566       5.6     €  39,076       4.9     €  30,210       4.2       3.8 %     29.3 %
 
                                                         
Basic net income attributable to the parent company per share
  €  1,38             €  1.15             €  1.00                          
 
                                                         
Diluted net income attributable to the parent company per share
  €  1,06             €  1.15             €  1.00                          
 
                                                         
Weighted average number of basic shares outstanding
    33,723,197               33,985,411               30,096,995                          
Weighted average number of diluted shares outstanding
    38,198,437               34,094,159               30,096,995                          

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     During the year ended December 31, 2010, our Consolidated Statements of Operations was affected by the following non-recurring or unusual items:
    Revenues in our Transportation and Global Services segments were significantly adversely affected from the application of SFAS 167 and the deconsolidation of most of the revenues from joint ventures which were consolidated during the years ended December 31, 2009 and 2008.
 
    Revenues in our Global Services segment also were adversely affected by the sale of the internal IT outsourcing business sold to Abengoa effective January 1, 2010. This business contributed € 40.3 and € 26.0 million to revenues during the years 2009 and 2008, respectively, with no corresponding contribution in the year 2010.
 
    Income from Operations in the year 2010, was adversely affected by the recognition of a one-time loss in the amount of € 18.0 million, recorded in “Other allowances” in the accompanying Consolidated Statement of Operations, related to a transportation project in Saudi Arabia. On August 28, 2010, we signed a settlement agreement with the customer pursuant to which the parties mutually agreed to exclude the violations enforcement system from Telvent Tráfico’s scope of work for the project. The parties mutually released all claims against each other relating to the enforcement portion of the project.
 
    Other financial income in the year ended December 31, 2010, was positively affected by the change in fair value of the conversion option embedded in the Convertible Notes, that resulted in a gain amounting to € 19.3 million recognized in the accompanying Consolidated Statements of Operations. This conversion option’s change in fair value will continue to affect financial income or expense.
 
    Income tax expense was positively affected by the reversal of a valuation allowance on tax credits for export activities in the amount of € 14,6 million, recognized in the accompanying Consolidated Statement of Operations for the year 2010, with no impact in 2009 (see Note 24 to our Consolidated Financial Statements).
Bookings and Backlog
     New contract bookings represent new signed contracts for the year, regardless of the stage of performance. New contract bookings in 2010 were € 790.6 million, a decrease of € 90.0 million, or (10.2)%, from new bookings of € 880.6 million in 2009. We provide information regarding our bookings because we believe doing so provides useful trend information regarding changes in the volume of our new business over time.
     The reasons for this decrease in bookings year-over-year are the sale of the internal IT outsourcing division to Abengoa, which contributed bookings amounting to € 30.9 million to the year 2009 with no corresponding contribution in 2010, and the fact that in the third quarter of 2009 we signed the € 125 million Fortum AMI deployment project. Without considering these two effects, new bookings year-to-date organically increased by 9.1% from the same period of last year.
     Backlog as of December 31, 2010 was € 741.7 million, an increase of € 2.4 million, or 0.3% from a backlog of € 739.3 million as of December 31, 2009. Our backlog represents the portion of our signed contracts for which performance is pending. In addition, soft backlog (representing pending performance on multi-year frame contracts for which there is no contractual obligation on the part of the client to fulfill the full contract amount) was € 175.7 million as of December, 31, 2010, versus € 228.5 million in soft backlog at the end of fiscal 2009. Backlog excludes our pipeline of projects that we are pursuing but as to which we have not yet signed binding agreements.
Acquisitions/Disposition
     In 2008, 2009 and 2010, acquisitions had an impact on our results of operations.
Acquisition of Matchmind
     Effective October 1, 2007, our subsidiary, Telvent Outsourcing, acquired a 58% interest in Matchmind Holding, S.L. and its subsidiaries Matchmind S.L., and Matchmind Ingenieria de Software, S.L. (collectively, “Matchmind”), a company that specializes in system integration, consulting services and information technology outsourcing.
     On May 21, 2009, our subsidiary, Telvent Outsourcing, entered into two definitive agreements to purchase the remaining 42% interest in Matchmind, and thus, fully completed its purchase of all of Matchmind’s issued and outstanding shares of capital stock. The first agreement with the 24 management sellers provided for the purchase of 40% of the remaining Matchmind interests from its

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management shareholders for an aggregate purchase price of € 17.8 million. The second agreement with José Luis Galí, Matchmind’s founder and former president, provided for the purchase by Telvent Outsourcing of the remaining 2% interest in Matchmind, for a purchase price of € 0.9 million. (See “Item 10.C. Additional Information — Material Contracts” for more details about this acquisition.)
Acquisition of DTN Holding Company, Inc.
     On October 28, 2008, our subsidiary, Telvent Export, acquired all of the issued and outstanding shares of the capital stock of DTN, in accordance with a stock purchase agreement, dated September 15, 2008 among Telvent Export, DTN, the stockholders of DTN and GSC Recovery IIA, L.P., as Sellers’ Representative. Telvent DTN is a business information service provider providing critical data to key decision makers across the markets it serves, including agriculture, energy and transportation. The results of operations of DTN Holding Company, Inc. are reflected in our results of operations for the full years 2010 and 2009 and for two months in 2008. (See “Item 10. Additional Information — Material Contracts” for more details about this acquisition).
Acquisition of certain assets of NDLC
     On February 3, 2009, our subsidiary, Telvent Farradyne signed an asset purchase agreement through which it acquired certain of the assets of NLDC, including NLDC’s proprietary back office/customer service center software solution called “TollPro” as well as NLDC’s interest in the license agreements and services contracts relating to NLDC’s back office systems delivered for the SR-91 toll collection system in Orange County, California. The purchase price for these assets was U.S. $1.5 million, of which U.S. $1.0 million was paid as of December 31, 2010. In addition, Telvent Farradyne also entered into a consulting services agreement under which Telvent will pay a total of U.S. $2.0 million by installments payable every six months starting July 1, 2009, of which U.S. $1.5 million was paid as of December 31, 2010, and an additional contingent payments of up to U.S. $0.5 million. In addition, Telvent will pay NLDC commission payments up to a maximum not to exceed U.S. $5.0 million in respect of contracts bookings signed by Telvent during the four years from 2009 through 2012 related to back-office and customer service center systems utilizing the TollPro Software. As of December 31, 2010, our best estimate of the potential payments under these agreements amounted to U.S. $2.2 million (€ 1.7 million). As of December 31, 2010, we have recorded a liability of U.S. $1.8 million (€ 1.4 million) corresponding to the present value of such obligation in our consolidated balance sheets. Amounts have been recorded taking into consideration, on each closing date, the probability of such payment. The results of operations of NDLC have been included in our Transportation segment for the full year 2010 and for eleven months in 2009.
Disposition of certain assets of Telvent Outsourcing
     Effective January 1, 2010, our wholly-owned subsidiary, Telvent Outsourcing, sold certain of its assets used in providing IT services to Abengoa and its other business groups, including the employees, equipment, applications, hardware, software, and intellectual property necessary to provide such IT services, to Simosa IT, S.A, a wholly-owned subsidiary of Abengoa. The sale also included Telvent Outsourcing’s stock ownership in Telvent Implantación y Sistemas, S.L. (See “Item 10.C. Additional Information — Material Contracts” for more details about this disposition). The results of operations of this business are reflected in our Global Services segment for the full years 2009 and 2008, but not for the year 2010.
Segments and Geographic Information
     We have five reportable operating segments consisting of Energy, Transportation, Environment, Agriculture and Global Services. Our segments are grouped with reference to the types of services provided and the types of clients that use those services. We assess each segment’s performance based on net revenues and gross margin. During the second quarter of 2010, we completed a cost allocation analysis on the segments contributed by Telvent DTN, and have, therefore, retroactively changed the margins reported in our Energy, Environment and Agriculture segments to more accurately reflect the profitability of each segment and to be consistent with current year reporting. Also, as described in Notes 2 and 9 to our Consolidated Financial Statements, effective January 1, 2010, we prospectively adopted ASC 810, Consolidations, formerly SFAS No. 167, Amendments to SFAS No. 46R. The result of the adoption of this statement has been to stop consolidating most of our joint ventures, since these are jointly controlled with other venture partners.
    Energy focuses on real-time IT solutions to better manage energy delivery efficiency. It offers measurement and control systems and services that help manage critical infrastructures and data through highly available and secure solutions in two primary areas: Electricity and Oil & Gas.
 
    Transportation provides solutions and services for traffic information and control systems, freeway information and management applications, and automatic fare collection solutions, which through enabling more efficient management of traffic, can reduce emissions of greenhouse gases.

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    Environment focuses on the observation and forecasting of the weather, the climate, air quality and hydrology and its impact on the different economic sectors, together with the provision of technology oriented to improve the use and management of water resources by water utilities.
 
    Agriculture provides information services, including critical business information and trading services, that support the agriculture supply chain, including producers, originators, traders, and food processors in the U.S. and Canada.
 
    Global Services offers an integral technology services model that spans the full life cycle of the client’s Information and Communications Technologies (“ICT”). It comprises consulting, integration, outsourcing and IT infrastructure management services to enable the evolution and control of our customers’ current and future technology needs.
                                                 
    Year Ended December 31, 2010  
    (Euros in thousands, except percentages)  
    Energy     Transportation     Environment     Global Services.     Agriculture     Total  
Revenues
  €  246,748     €  195,000     €  59,986     €  139,498     €  82,624     €  723,856  
Gross Profit
  €  93,015     €  47,570     €  24,469     €  39,443     €  59,972     €  264,469  
Gross Margin
    37.7 %     24.4 %     40.8 %     28.3 %     72.6 %     36.5 %
                                                 
    Year Ended December 31, 2009  
    (Euros in thousands, except percentages)  
    Energy     Transportation     Environment     Global Services.     Agriculture     Total  
Revenues
  €  239,892     €  244,430     €  55,535     €  173,715     €  77,481     €  791,053  
Gross Profit
  €  76,284     €  53,585     €  24,887     €  53,545     €  56,723     €  265,024  
Gross Margin
    31.8 %     21.9 %     44.8 %     30.8 %     73.2 %     33.5 %
                                                 
    Year Ended December 31, 2008  
    (Euros in thousands, except percentages)  
    Energy     Transportation     Environment     Global Services.     Agriculture     Total  
Revenues
  €  198,364     €  295,182     €  46,951     €  168,839     €  15,277     €  724,613  
Gross Profit
  €  54,520     €  59,132     €  12,569     €  48,799     €  10,961     €  185,981  
Gross Margin
    27.5 %     20.0 %     26.8 %     28.9 %     71.7 %     25.7 %
     As described in Note 2 to our Consolidated Financial Statements, effective January 1, 2010, the Company prospectively adopted ASC 810, Consolidations, formerly SFAS No. 167, Amendments to FASB Interpretation No. 46R. The result of the adoption of this Statement has been to stop consolidating most of the Company’s joint ventures, since these are jointly controlled with other venture partners. Had this statement been applied retrospectively, revenues and gross profit by segment for the periods ended December 31, 2009 and December 31, 2008 would have been as follows:
                                                 
    Year Ended December 31, 2009  
    (Euros in thousands, except percentages)  
    Energy     Transportation     Environment     Global Services.     Agriculture     Total  
Revenues
  €  238,397     €  206,762     €  55,590     €  167,039     €  77,481     €  745,269  
Gross Profit
  €  76,283     €  53,395     €  24,889     €  53,375     €  56,723     €  264,665  
Gross Margin
    32.0 %     25.8 %     44.8 %     32.0 %     73.2 %     35.5 %
                                                 
    Year Ended December 31, 2008  
    (Euros in thousands, except percentages)  
    Energy     Transportation     Environment     Global Services.     Agriculture     Total  
Revenues
  €  196,832     €  237,379     €  46,647     €  164,997     €  15,277     €  661,132  
Gross Profit
  €  54,520     €  58,666     €  12,568     €  48,830     €  10,961     €  185,545  
Gross Margin
    27.7 %     24.7 %     26.9 %     29.6 %     71.7 %     28.1 %
Energy
                         
    Year Ended December 31,  
    (Euros in thousands, except percentages)  
    2010     2009     2008  
Revenues
  €  246,748     €  239,892     €  198,364  
Gross Profit
  €  93,015     €  76,284     €  54,520  
Gross Margin
    37.7 %     31.8 %     27.5 %
Revenue growth rate over prior period
    2.9 %     20.9 %     (13.0 )%

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     Revenues for the Energy segment amounted to € 246.7 million in 2010, compared to € 239.9 million in 2009. This 2.9% increase was mainly due to the continued strength of our Oil & Gas real time IT infrastructure solutions as well as the increased push globally by electric utilities to increase smart grid spending. In particular, we experienced great strength in our North American distribution management system (DMS) business, ongoing success with our European automatic metering infrastructure (AMI) business, as well as our increased exposure in Asia and Latin America with regards to both our Oil & Gas and Smart Grid activities.
     Gross margins in our Energy segment increased from 31.8% in 2009 to 37.7% in 2010. These improvements are primarily due to the continued integration of our refined fuels higher margin Software as a Service (SaaS) solutions coupled with a positive performance of our advanced DMS applications in our Smart Grid solution suite. Additionally, the increased contribution from maintenance contract renewals and operations extensions from our installed base where higher than average margins exist also helped to improve the gross margin for 2010. Generally, our gross margins continue to increase, as we focus on higher margin advanced applications in both Smart Grid and Oil & Gas and increase revenues from professional services contracts around IT security and regulatory demands.
     Backlog as of December 31, 2010 for the Energy segment amounted to € 334.3 million, which includes € 19.7 million of soft backlog.
Oil & Gas
     Revenues in our Oil & Gas business for the fiscal year 2010 were € 122.2 million, representing an increase of 7.9% when compared to revenues in 2009. The increase was primarily attributable to good business performance in Europe and Asia-Pacific, where we have been able to sign projects in new countries, such as Germany and France, and also due to the leadership position that we have been able to maintain for our Oil & Gas activities in North America, Latin America and Asia.
     In addition, gross margin increased from 34.8% in 2009 to 44.7% in 2010, mainly due to the fact that the synergies between our North America Oil & Gas business and Telvent DTN’s refined fuels and weather businesses, which are contributing to the improved margins in our Oil & Gas business overall. We also saw improvements in some ongoing projects in Latin America.
     North America continues to be the largest revenue contributor in our Oil & Gas sub-segment, accounting for more than 59% of our Oil & Gas revenues. Revenues reported in this region increased by 4.3%, from € 69.1 million in 2009 to € 72.1 million in 2010. We continue to have a large market share in this region which allows us to further develop key relationships with our large customer base. Extending our reach in the value chain towards the downstream refined fuels area further deepens our relationship with our large customers. With backlog projects with the world’s largest oil and gas companies and our broader solutions and services offerings, we continue to develop recurring revenue streams in this market segment and geography.
     Our Energy’s refined fuels business continued to perform well, with an increase in revenues in 2010 versus 2009 revenues of approximately 7.0%. This increase is partly attributable to growth in sales performance and a strong and growing backlog. Our refined fuels business has a dominant market share and long-standing customer relationships resulting in retention rates over 93%. Key contract wins during the year include contracting with one of the largest international oil companies and a member of the Fortune 100 to provide lifting controls in the U.S. and a contract with one of the largest multinational oil companies and a repeat Fortune 100 member to implement Telvent DTN Guardian 3 Terminal Automation Systems and Guardian Host. In addition, Telvent was selected by BP to assist if in managing their U.S. credit and product allocations through the implementation of Telvent DTN TABS.
     In Latin America, revenues for the fiscal year 2010 were € 30.4 million, compared to € 31.7 million in 2009. This decrease in revenue is mostly related to a weak fourth quarter experienced by our Oil & Gas activities in Mexico, which was partially offset by the strong performance in Brazil, where we increased our revenues by 59.8%. Finally, we also have signed new contracts in countries such as Colombia, among others, that have boosted revenues in the rest of the region.
     In our Asia-Pacific region, revenues in 2010 amounted to € 13.6 million, compared to € 9.4 million in 2009. This 44.7% increase in our business activity is mostly related to the good performance in China, where we are encouraged by the new opportunities that we have identified.

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Electricity
     Our revenues for the Electric utility business for the twelve-month period ended December 31, 2010 were in line with those archived during the same period of 2009. The gross margin in this sub-segment in 2010 was 30.8%, compared to 27.2% in the 2009. The improvements in margins are related to our business in Spain and North America, where we have been able to increase our gross margins in 2010 as a result of deploying a higher percentage of our advanced solutions with higher value-added services.
     In Europe, our revenues for the electric utility sub-segment decreased from € 51.7 million in 2009 to € 47.2 million in 2010. This decrease in revenues was partially due to the prospective application of SFAS 167 in our financial statements for the period ended December 31, 2010 (see Note 28 of our Consolidated Financial Statements). As a result of this change, since January 1, 2010, we do not consolidate most of our joint ventures in the Energy segment that were consolidated until that date, which caused a decrease in our 2010 revenues. If SFAS 167 had been applied in 2009, revenues would have decreased by 6.0% from € 50.2 in 2009 to € 47.2 in 2010. This decrease in revenues was mainly due to delays in the contract awarding processes and lack of spending in the region. Finally, the end of the Vattenfall project had a strong influence on this decline in revenues in our electric sub-segment. However, for 2011, that decrease should be offset by increases in revenues from the Fortum project when we start the deployment phase next year.
     In North America, our Electric utility business revenues for the twelve-month period ended December 31, 2010 increased by 9.3%, from € 34.6 million in 2009 to € 37.8 million in 2010. The revenue increase was due in large part to the solid performance of our Smart Network (RTU) and Geographical Information System (GIS) business associated with Smart Grid projects. Additionally, we continued to gain traction as demand for our Distribution Management System (DMS) advanced application continued to grow. We believe that, as evidence by the higher pipeline of identified opportunities, the demand by utilities for the centralized control of the smart grid will lead to a greater demand of our DMS solution, which should provide for continued strength in this region.
     In Latin America, revenues in 2010 were € 33.9 million, compared to € 35.2 million reported in 2009. The main reason for the decrease in revenues was the lack of contracts from our smaller markets outside Brazil and Mexico. However, revenues from Brazil and Mexico significantly increased during 2010.
     In our Asia-Pacific region, where we have seen the expansion of the smart grid initiative in China and continue to believe that there is a strong growth potential, our Electric sub-segment revenues for our fiscal year 2010 amounted € 2.8 million.
     In our Middle East and Africa region, our Electric sub-segment revenues amounted to € 2.7 million, compared to € 5.9 million in 2009. We expect that large projects in this region will continue to cause year-over year fluctuations in revenues from this geography.
Transportation
                         
    Year Ended December 31,  
    2010     2009     2008  
    (Euros in thousands, except percentages)  
Revenues
  €  195,000     €  244,430     €  295,182  
Gross Profit
  €  47,570     €  53,585     €  59,132  
Gross Margin
    24.4 %     21.9 %     20.0 %
Revenue growth rate over prior period
    (20.2 )%     (17.2 )%     19.6 %
     Our Transportation segment revenues for the year 2010 decreased by 20.2% compared to the year 2009. Our gross margin for 2010 was 24.4%, compared to 21.9% in 2009. The significant decrease in revenues was mostly due to the prospective application of SFAS 167 in our financial statements for the period ended December 31, 2010 (see Note 28 of our Consolidated Financial Statements). As a result of this change, since January 1, 2010, we do not consolidate most of our joint ventures in the Transportation segment that were consolidated until that date, which caused a significant decrease in our revenues. If SFAS 167 had been applied in 2009, revenues would have decreased by 5.7% from € 206.8 in 2009 to € 195.0 in 2010. In 2010, our Transportation segment continued to be impacted by the pressure from government agency and municipality budget reductions accompanying the general worldwide economic slowdown. Additionally, as indicated in previous quarters, this decrease in revenues is a direct consequence of the reduction of the year-over-year revenue contribution from our Automatic Traffic Violation Administering and Monitoring (ATVAM) project in Saudi Arabia, from which we recognized a one-time loss amounting to approximately € 18.0 million during the second quarter of 2010 related to the termination of the enforcement portion of the project in light of technical disagreements; however we will continue with the urban traffic management part of the project.
     Gross margins in our Transportation segment increased from 21.9% in the fiscal year 2009 to 24.4% in 2010, mainly due to the prospective application of SFAS 167 on our financial statements for the twelve-month period ended December 31, 2010. If SFAS 167 had been applied in 2009, gross margin would have been 25.8% for the fiscal year, 2009.

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     In Europe, where the majority of our projects currently are being performed in Spain, revenues for the year 2010 decreased by 29.5% from € 132.9 million in 2009 to € 93.7 million in 2010. The adoption of SFAS 167 played a large part in this revenue decline, as a large portion of our revenues are derived from joint ventures in this segment. If SFAS 167 also had been applied in 2009, revenues in Europe in 2010 would have decreased by 1.7%. The slight decrease in revenues was mostly due to budget pressure that government agencies and municipalities budgets continue to experience and the slowdown in investments from the private sector. We continue to remain cautious with regard to our European transportation business given the budget pressure, as well as the cutbacks on non-essential public works projects.
     In North America, our 2010 revenues were € 43.8 million, compared to € 43.3 million in 2009. This slight increase in revenues was mainly due to the strong fourth quarter that our Transportation activities experienced in the region, which demonstrated that our business is improving gradually quarter-after-quarter. Additionally, new bookings in the region have grown significantly in 2010 in comparison to 2009, which provides a positive outlook for revenues going forward.
     In Latin America, our revenues increased by 31.6% from € 29.4 million in 2009 to € 38.7 million in 2010. The increase in revenues was mainly due to our strong performance and customer relationships in Brazil, where we have signed several strategic contracts throughout the year, such as the contract with Rodoanel Oeste to implement the monitoring and safety control system in tunnels in São Paulo, the contract with the Department of Infrastructure and Transportation of Brazil to supply and install a control system for the Morro Alto tunnels, a project awarded by the city of Rio de Janeiro to provide our a SCADA system for its water distribution network.
     In the Asia-Pacific region, our revenues for 2010 were € 8.3 million, compared to € 13.6 million in 2009. The decrease was mainly due to the slowdown of contract awards throughout the year. We expect bookings to materialize in this region throughout 2011 in countries like India and China, where we have already begun to experience an increased momentum with recent contract awards such as a new traffic control project in Beijing.
     In the Middle-East and Africa region, our revenues in 2010 were € 10.5 million, compared to € 25.3 million for the year 2009. The primary reason for this decline, as previously mentioned, was the technical disagreements encountered in our ATVAM project in Saudi Arabia. On August 28, 2010, we signed a settlement agreement with the customer pursuant to which the parties mutually agreed to exclude the violations enforcement system from Telvent Tráfico’s scope of work for the project. Apart from that, we were able to sign an additional contract in the region with our customer Saudi Orger, for an ITS project that includes the implementation of the Telvent SmartMobilityTM Road system to manage six kilometers of highway, including four tunnels in Riyadh.
     Backlog as of December 31, 2010 for the Transportation segment amounted to € 278.8 million, including € 45.3 million of soft backlog.
Environment
                         
    Year Ended December 31,  
    2010     2009     2008  
    (Euros in thousands, except percentages)  
Revenues
  €  59,986     €  55,535     €  46,951  
Gross Profit
  €  24,469     €  24,887     €  12,569  
Gross Margin
    40.8 %     44.8 %     26.8 %
Revenue growth rate over prior period
    8.0 %     18.3 %     22.5 %
     Revenues in our Environment segment increased by 8.0% in 2010, compared to the previous year. The increase in revenues was mostly due to the strong fourth quarter experienced by our environment business in North America, Latin America and Middle East and Africa regions. Gross margin for our Environment segment in 2010 was 40.8%, compared to 44.8% in gross margin in 2009.
     Revenues in Europe were € 17.0 million in 2010, compared to € 19.8 million in the previous year. This represents approximately 28% of our total Environment segment 2010 revenues. Most of the revenues in this region are generated in Spain. This percentage is gradually decreasing as we continue to grow in other geographic regions. The revenue decrease experienced in this region was mainly due to the economic slowdown experienced in Europe, and more intensely in Spain, during 2010, with governmental agencies reducing their investment budgets. However, recurring maintenance and operation contracts, which represent a significant portion of our revenues in Europe, have been renewed consistently and we have signed several major contracts, that should provide us with a stable revenue stream in the region for the near future. Finally, with regard to the expansion of our weather forecasting services, we currently are able to offer our solutions in Europe, which also should represent a growth driver for the future.

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     In North America, our revenues, which represent approximately 44% of the total Environment segment revenues in 2010, increased from € 23.5 million in 2009 to € 26.1 million in 2010. With regard to our water management activities, we continue to base our growth strategy around advanced water management solutions for water authorities and municipalities. We expect that the recent projects awarded to us relating to upgrading and replacing water systems in the U.S. should result in significant revenues in the coming quarters. On the other hand, in our weather information and forecasting services business, we have experienced a 2% growth period over period. In addition, our sales production, or the net annualized value of new contracts, during 2010 improved by 54% year over year, while our revenue retention rate improved from 85.6% in 2009 to a record level of 88.9% in 2010. Both our traditional markets segment and the premium segment grew in sales production and retention in 2010, but bigger improvement was experienced in our growing Energy, Transportation and Aviation subsegments. As a result of the increased performance in bookings and retention, the outlook for revenue growth in Weather Services in 2011 is positive.
     Our recurring commercial-grade weather information services represent now 77% of total revenues in the North America region, and a 35% of the total revenues in our Environment segment.
     In the Middle-East and Africa region, our revenues for the twelve-month period ended December 31, 2010 amounted to € 13.5 million, compared to € 9.7 million in the same period of 2009. Our Water SCADA and efficiency applications project in Libya for the Great Man-Made River Authority generated significant revenues in 2010 along with the water management systems for Kahramaa in Qatar. In early 2011, our operations in Libya were disrupted by the ongoing political uprising. Work on our Water SCADA and efficiency applications project in Libya for the Great Man-Made River Authority was suspended and we evacuated all of our non-Libyan employees and their families. On the other hand, the meteorological systems for civil aviation in Kuwait have provided us with a strong revenue stream.
     In Latin America, revenues significantly increased from € 0.8 million in 2009 to € 2.3 million in 2010, mainly due to the execution of our Water SCADA projects for the Cali (Colombia) Water utility and for the Rio de Janeiro Water & Wastewater Company (CEDAE) in Brazil. We believe the outlook in this region is positive for 2011, especially in Brazil, where the bigger cities are increasing the demand for automation and efficient management of water transmission pipelines and distribution networks.
     In 2010, approximately 52% of the total segment revenues were generated in our weather systems & services business, while approximately 48% was generated in water management systems and services for utilities and municipalities.
     Backlog in our Environment segment was € 66.0 million as of December 31, 2010, including € 10.5 million in soft backlog.
Agriculture
                         
    Year Ended December 31,  
    2010     2009     2008  
    (Euros in thousands, except percentages)  
Revenues
  €  82,624     €  77,481     €  15,277  
Gross Profit
  €  59,972     €  56,723     €  10,961  
Gross Margin
    72.6 %     73.2 %     71.7 %
Revenue growth rate over prior period
    6.6 %     407.2 %     100.0 %
     Almost 100% of the revenues in our Agriculture segment are generated in North America and principally arise from the sale of critical agricultural business information and real-time market data solutions to top farm producers and agribusinesses, along with a smaller portion of advertising revenue from our media segment, including The Progressive Farmer publication.
     Our Agriculture segment contributed revenues of € 82.6 million for the twelve-month period ended December, 2010, representing a 6.6% increase from the same period of 2009. This segment, which is over 90% subscription-based, has revenue subscription retention rates of approximately 89.2% resulting in lower costs of sale, and hence, higher gross margins than the rest of our segments. Overall results from our Agriculture segment during the twelve-month period of 2010 were solid, showing the stability and resilience of this business, with continued success in upgrading existing customers and sales to risk management customers.
     We have over 557,000 subscribers to our business information in our Agriculture segment, including approximately 35,000 of the largest farm producers who are paying for premium content, almost 14,200 originators including the top elevators, ethanol plants and feedlots, and almost 3,900 agribusiness customers using our risk management platform. Total number of subscribers decreased with respect to 2009, when we had 580,000 subscribers, due to the elimination of non-core subscribers to The Progressive Farmer publication. Originators decreased due to overall consolidation in the local agribusiness segment. Our largest customers include Bunge, FC Stone, John Deere, Con Agra and Cargill, along with the majority of the top corn and soybean producers in the United States. During 2010, transactions involving more than 113 million bushels of grain were transacted, compared to 63 million in 2009, through our grains trading portal between our 1,000 agribusiness portal locations and our over 29,000 registered portal producers.

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     Backlog in our Agriculture segment was € 68.4 million as of December 31, 2010, including € 29.7 million of soft backlog.
Global Services
                         
    Year Ended December 31,  
    2010     2009     2008  
    (Euros in thousands, except percentages)  
Revenues
  €  139,498     €  173,715     €  168,839  
Gross Profit
  €  39,443     €  53,545     €  48,799  
Gross Margin
    28.3 %     30.8 %     28.9 %
Revenue growth rate over prior period
    (19.7 )%     2.9 %     52.0 %
     Our Global Services revenues for the twelve-month period ended December 31, 2010 were € 139.5 million compared to € 173.7 in the same period of 2009. This decrease year-over-year was due to the sale of the internal IT outsourcing business, which was sold to Abengoa effective January 1, 2010, and also due to the prospective application of SFAS 167 in the financial statements of the twelve month period ended December 31, 2010 (see Note 28 to our Consolidated Financial Statements). As a result of this accounting change, since January 1, 2010 we do not consolidate most of our joint ventures in the Global Services segment that were consolidated until that date, which has contributed to the decrease in our revenues. If SFAS 167 had been applied in 2009 and without considering the contribution of the Abengoa internal IT outsourcing business that we sold, revenues in the twelve month period ending December 31, 2010 organically increased 10.1%, from € 126.7 million in 2009 to € 139.5 million in the same period of 2010. Gross margin in our Global Services segment decreased from 30.8% in the twelve month period ended December 31, 2009 to 28.3% in the same period of 2010.
     We have been able to achieve organic revenue growth during 2010 mainly due to our continued expansion in new markets in Latin America, as well as the resilience that our business is showing in Spain, despite the challenges that we are facing there, where we are being impacted by an ongoing slow-down in business activity coming from the public administrations while we also are facing a very competitive market situation in Spain, with local competitors being very aggressive on pricing.
     On the other hand, we are optimistic about our further expansion into Latin America and North America. We expect to have an increased contribution from these geographies in 2011. This should allow us to offset part of this risk in Spain and establish a base for further geographic diversification.
     Total backlog in our Global Services segment as of December 31, 2010 amounted to € 169.9 million, which includes € 70.5 million of soft backlog.
Geographic Information
     The following table identifies our revenues by region during 2010, 2009 and 2008, and the percentage change per selected region for the periods presented.
                                         
                            Percentage     Percentage  
    Year Ended December 31,     Change     Change  
    2010     2009     2008     2009 – 2010     2008 – 2009  
    (Euros in thousands, except percentages)  
Europe
  €  288,392     €  377,375     €  369,593       (23.6 )%     2.1 %
North America
    261,978       248,310       133,142       5.5 %     86.5 %
Latin America
    120,326       99,566       129,880       20.9 %     (23.3 )%
Asia-Pacific
    25,991       23,972       27,496       8.4 %     (12.8 )%
Middle East and Africa
    27,169       41,830       64,502       (35.0 )%     (35.2 )%
 
                                 
Total
  €  723,856     €  791,053     €  724,613                  
 
                                 
Results of Operations
Comparison of Year Ended December 31, 2010 to Year Ended December 31, 2009
Revenues
         
Year Ended   Year Ended    
December 31,   December 31,   Percentage Change
2010   2009   2009-2010
(Euros in thousands, except percentages)
€ 723,856
  € 791,053   (8.5)%

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     Our revenues in the year 2010 have been significantly affected by the adoption of SFAS 167 when compared to the revenues in 2009. As explained in Note 2 to our Consolidated Financial Statements, SFAS 167 became effective on January 1, 2010, and has resulted in the deconsolidation of most of the joint ventures that were consolidated until December 31, 2009. If SFAS 167 had been applied in 2009, our revenues for the year 2009 would have amounted to € 745.3 million.
     We achieved organic growth of 3.9% year over year, when excluding the revenues from the internal IT outsourcing business that we sold to Abengoa effective January 1, 2010. This IT services business contributed € 40.3 million to revenues during the year ended December 31, 2009, with no corresponding contribution 2010.
     The Energy segment has continued to be our growth driver and our largest revenue contributor. Oil & Gas is performing very well, while our Electric sub-segment continues to have solid momentum in the market, with software applications in our Smart Grid Suite, that should benefit us given the shift in the smart grid industry towards full utility systems integration. The solid performance in our Energy segment during 2010, has also been coupled with organic growth achieved in Global Services, Environment and Agriculture.
     On the other hand, our revenues were affected by the weak performance in our Transportation segment, where we are still suffering from a decrease in public spending in regions other than Spain and North America. However, we are seeing signs of recovery with North America experiencing significant growth in bookings in the fourth quarter and Brazil offering significant opportunities. In Spain, the Transportation segment has remained resilient in 2010, but we are cautious regarding its future, due to the economic situation in Spain.
Cost of Revenues
                 
Year Ended   Percentage of   Year Ended   Percentage of   Percentage
December 31,   2010   December 31,   2009   change
2010   Revenues   2009   Revenues   2009-2010
(Euros in thousands, except percentages)
€ 459,387   63.5%   € 526,029   66.5%   (12.7)%
     Cost of revenues decreased as a percentage of revenues period-to-period and, therefore, although gross margins decreased from 2009 to 2010, gross margin as a percentage of revenue increased in 2010.
     This increase in gross margin as a percentage of revenues was due in part to the deconsolidation of most of our joint ventures that were consolidated until December 31, 2009, after SFAS 167 became effective January 1, 2010. Joint ventures generally contribute with lower margins than the rest of our business. Had SFAS 167 been applied retrospectively, gross margin in 2009 would have represented a 35.5% of our revenues, and cost of revenues would have amounted to 64.5%.
     In addition, gross margins as a percentage of revenues in 2010 when compared to 2009 also increased due to the partial transition of our business model from systems to Software as a Service, increasing the volume of information services we provide now to our customers in Telvent’s traditional activities, and also, due to some improvements achieved in the gross margins of some projects in Latin America.
     In our Energy segment, margins continued to expand from 31.8% in 2009 to 37.7% in 2010 mainly due to a higher percentage of revenues from high value added solutions and services such as weather forecasting services that we are now able to provide in an integrated offering to our Energy customers. On the other hand, in Transportation, if SFAS 167 had been applied retrospectively, gross margins would have decreased from 25.8% to 24.4%, due to the market pressure we have been experiencing in this segment.
General and Administrative
                 
Year Ended   Percentage of   Year Ended   Percentage of   Percentage
December 31,   2010   December 31,   2009   change
2010   Revenues   2009   Revenues   2009-2010
(Euros in thousands, except percentages)
€ 120,229   16.6%   € 118,443   15.0%   1.5%

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     General and administrative expenses in the year 2010 were significantly affected by a restructuring of our Global Services and Transportation segments in the third quarter. The impact of non-recurrent expenses due to this restructuring amounted to approximately € 2.6 million. Although this had a negative impact on our operating margins in the third quarter, we have worked aggressively on solving efficiency issues in these two segments, which resulted in improvements in the fourth quarter of the year 2010.
Sales and Marketing
                 
Year Ended   Percentage of   Year Ended   Percentage of   Percentage
December 31,   2010   December 31,   2009   change
2010   Revenues   2009   Revenues   2009-2010
(Euros in thousands, except percentages)
€ 23,855   3.3%   € 25,261   3.2%   (5.6)%
     Our sales and marketing expenses remained stable as a percentage of revenues in the year 2010 when compared to the previous year. Marketing efforts were carried out in our Electric sub-segment to take advantage of the momentum in the Smart Grid space and commercial efforts are being made in Brazil, where we are seeing solid performance and opportunities. Additionally, we continue to carry out significant sales efforts in Transportation in North America to improve from the slowdown experienced in 2009, resulting in new bookings signed in the fourth quarter of the year, representing a 815.7% increase with respect to the three-month period ended December 31, 2009.
Research and Development
                 
Year Ended   Percentage of   Year Ended   Percentage of   Percentage
December 31,   2010   December 31,   2009   change
2010   Revenues   2009   Revenues   2009-2010
(Euros in thousands, except percentages)
€ 10,375   1.4%   € 14,079   1.8%   (26.3)%
     Our research and development expenses decreased as a percentage of revenues in the year 2010, compared to 2009 mainly due to the fact that certain of our Smart Grid R&D efforts are now carried out through Telvent DMS, an equity method investment where a large investment is being made on our Distribution Management System solution. This decrease was also due to the fact that we have capitalized certain of our software development efforts as a result of a change in business strategy, moving partially away from a “customized” software solution per customer to a “productized” software development that is expected to provide future economic benefits through many future projects. We expect to continue to optimize our research and development expenses as we increase our focus on high-growth, high-margin products and technology, in line with our strategy to expand solutions to include information services, including Software as a Service (SaaS) while leveraging our deep market knowledge and distinctive technology.
Depreciation and Amortization
                 
Year Ended   Percentage of   Year Ended   Percentage of   Percentage
December 31,   2010   December 31,   2009   change
2010   Revenues   2009   Revenues   2009-2010
(Euros in thousands, except percentages)
€ 35,416   4.9%   € 29,981   3.8%   18.1%
     Our depreciation and amortization expense increased from the twelve-month period ended December 31, 2009, to the same period of 2010 mainly due to an increase in the amortization of intangible assets, as a result of the amortization of capitalized software both for internal use and to be sold as part of our bundled service solutions, and to an increase in the amortization of property, plant and equipment mainly due to the acquisition of computer equipment by our subsidiary Telvent DTN. The amortization expense related to intangibles arising from the purchase price allocation of our acquired businesses, such as customer relationships, customer backlog, purchased software technology and trade names amounted to € 16.0 million in 2010 and € 15.4 million in 2009.
Other Allowances
                 
Year Ended   Percentage of   Year Ended   Percentage of   Percentage
December 31,   2010   December 31,   2009   change
2010   Revenues   2009   Revenues   2009-2010
(Euros in thousands, except percentages)
€ 18,035   2.5%   € —   —%   N.A.

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     The amount recorded in “Other allowances” corresponds to a one-time loss related to a Transportation project in Saudi Arabia. This was a project to provide the integration of a number of law enforcement, traffic management and security systems to improve traffic safety and mobility in three major areas in Saudi Arabia. At the end of 2009, a dispute arose with the customer regarding the enforcement part of the project, which involves equipment that was subcontracted by Telvent. On August 28, 2010, we signed a settlement agreement with the customer pursuant to which the parties mutually agreed to exclude the violations enforcement system from Telvent Tráfico’s scope of work for the project. As of June 30, 2010, our negotiations were close to their final outcome, so a one-time loss amounting to € 18.0 million was booked in “Other allowances” in the Consolidated Statements of Operations for the period ended June 30, 2010, affecting our year ended December 31, 2010.
Financial Income (Expense), Net
                                         
    Year Ended     Percentage of     Year Ended     Percentage     Percent  
    December 31,     2010     December 31,     of 2009     Change  
    2010     Revenues     2009     Revenues     2009-2010  
    (Euros in thousands, except percentages)  
Interest Expense
  €  (29,901 )     (4.1 )%   €  (31,327 )     (4.0 )%     (4.6 )%
Interest Income
  €  422       %   €  307       %     37.5 %
Other financial income (expense), net
  €  7,147       0.1 %   €  (6,877 )     (0.9 )%     (203.9 )%
     In 2010, we refinanced the majority of our debt, replacing the credit agreement with Goldman Sachs Credit Partners with the Convertible Notes issued in April 2010 and signing a new syndicated loan facility that replaced the original syndicated facility and other debt instruments.
     In the year 2010, interest expense decreased slightly when compared to year 2009, mainly due to the decrease in interest from advance payments and from our factoring agreements, as a result of the lower volume of both activities. Interest under our agreements with related parties increased in 2010 compared to 2009 due to a higher average amount borrowed under our credit agreements with Abengoa to finance our working capital during the year. However, the balance as of December 31, 2010, of € 21.8 million, is significantly lower than the balance as of December 31, 2009 which amounted to € 94.8 million when we exclude the balance corresponding to the IT outsourcing division sold to Abengoa. Interest expense with banks and bondholders in 2010, considered as a whole, remained stable when compared to interest expense with banks in 2009.
     Other financial expenses in the year 2010 were significantly affected by the change in fair value of the conversion option embedded in the convertible notes that resulted in a gain a of € 19.3 million, considering both the change in fair value (amounting to € 20.4 million income) and the exchange rate differences (amounting to € 0.9 million expense), with no contribution in the same period of 2009. Other financial expenses also include the amortization of the initial value of the mentioned call option, which amounted to € 4.9 million, realized and unrealized foreign exchange rate differences, the effect of the fair value of interest rate derivatives, financial guarantee expenses and other miscellaneous expenses.
Other income (expense)
                 
Year Ended   Percentage of   Year Ended   Percentage of   Percentage
December 31,   2010   December 31,   2009   change
2010   Revenues   2009   Revenues   2009-2010
(Euros in thousands, except percentages)
€  —
  —%   € (1,128)   —%   —%
     Other income (expense) for the year ended December 31, 2009 mainly includes one-time charges recognized by our subsidiary, Telvent Australia, in connection with certain projects, and payments made by our subsidiary, Telvent Brasil, for non-recurrent tax penalties.
Income tax expense (benefit)
                 
Year Ended   Percentage of   Year Ended   Percentage of   Percentage
December 31,   2010   December 31,   2009   change
2010   Revenues   2009   Revenues   2009-2010
(Euros in thousands, except percentages)
€  (8,749)   (1.20)%   € (1,087)   (0.1)%   704.9%

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     Income tax expense (benefit) for the year ended December 31, 2010 was positively affected by the reversal of a valuation allowance on tax credits for export activities in the amount of € 14.6 million, recognized in the accompanying Consolidated Statement of Operations for the year 2010. In 2009, income tax expense was also a benefit mainly due to the positive impact of export activities tax credits and research and development tax credits. This effect was partially offset by a valuation allowance recorded in 2009, as in that moment we considered more likely than not that some of these tax credits would not be recovered in the future. In the upcoming years, we expect our effective tax rate to be in significantly higher levels. See Note 24 to our consolidated financial statements for further details.
Comparison of Year Ended December 31, 2009 to Year Ended December 31, 2008
Revenues
         
Year Ended   Year Ended    
December 31,   December 31,   Percentage Change
2009   2008   2008-2009
(Euros in thousands, except percentages)
€ 791,053   € 724,613   9.2%
     The increase in our revenues for the year ended December 31, 2009 compared to the corresponding period in 2008 was primarily due to increases in our Energy, Environment and Global Services segments, and the full-year incorporation of our new segment, Agriculture, resulting from our acquisition of DTN. Telvent DTN contributed € 127.2 million in revenues for the year ended December 31, 2009, with a contribution of € 25.3 million in the same period of 2008. On the other hand, our Transportation segment suffered significantly in the year 2009, with revenues decreasing by 17.0%, caused by expected decreases in Latin America, a project dispute issue in Saudi Arabia, and a lower than expected contribution from North America, caused by delays suffered as a result of a change in contracting priorities from customers.
In the year ended December 31, 2009 we also consolidated additional revenues of € 23.5 million relating to other joint venture partners, and € 53.6 million in the corresponding period of the prior year.
Cost of Revenues
                 
Year Ended   Percentage of   Year Ended   Percentage of   Percentage
December 31,   2009   December 31,   2008   change
2009   Revenues   2008   Revenues   2008-2009
(Euros in thousands, except percentages)
€ 526,029   66.5%   € 538,632   74.3%   (2.3)%
     Cost of revenues decreased as a percentage of revenues for the year ended December 31, 2009, and gross margins as a percentage of sales increased over the corresponding period in 2008 in all of our five segments. This improvement in margins was due in part to the fact that that we incorporated a new business model in our company after the acquisition of Telvent DTN in October 2008. Approximately 16% of our revenues in 2009 were generated through a recurring subscription-based business model, which is more scalable than our traditional control and monitoring system implementation business. Information services, which contributes with significantly higher margins than systems sales, are being provided in our Energy, Environment and Agriculture segments since 2009. In addition, our continuous efforts to provide higher value-added services and solutions in all our segments, which contribute higher margins, have increased our gross margins.
     Cost of revenues for the year ended December 31, 2009 also included € 23.4 million due to the effect of the consolidation of cost of revenues from our temporary consortiums, which represents the cost of revenues attributable to other joint venture partners. Such consolidated costs reduced our reported gross margin. For the year ended December 31, 2008, such contribution represented € 53.6 million. Excluding the effect of the consolidation of our temporary joint-venture consortiums, our gross margins for the years ended December 31, 2009 and 2008 would have been 35.5% and 28.3%, respectively.

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General and Administrative
                                 
Year Ended   Percentage of     Year Ended     Percentage of     Percentage  
December 31,   2009     December 31,     2008     change  
2009   Revenues     2008     Revenues     2008-2009  
(Euros in thousands, except percentages)  
€                     118,443
    15.0 %   €  67,439       9.3 %     75.7 %
     Our general and administrative expenses increased significantly from 2008 to 2009, mainly as a result of the consolidation of general and administrative costs from Telvent DTN which contributed € 48.0 million in the year ended in December 31, 2009 with a contribution of € 8.9 million in 2008.
Sales and Marketing
                                 
Year Ended   Percentage of     Year Ended     Percentage of     Percentage  
December 31,   2009     December 31,     2008     change  
2009   Revenues     2008     Revenues     2008-2009  
(Euros in thousands, except percentages)  
€                     25,261
    3.2 %   €  21,677       3.0 %     16.5 %
     Our sales and marketing expenses increased as a percentage of revenues primarily due to the consolidation of sales and marketing expenses from Telvent DTN, which contributed € 7.0 million during the year ended 2009, with a contribution of € 1.6 million in the last two months of 2008. Without the contribution of Telvent DTN, our sales and marketing expenses would have decreased slightly as a percentage of revenues, to 2.7%.
Research and Development
                                 
Year Ended   Percentage of     Year Ended     Percentage of     Percentage  
December 31,   2009     December 31,     2008     change  
2009   Revenues     2008     Revenues     2008-2009  
(Euros in thousands, except percentages)  
€                     14,079
    1.8 %   €  19,067       2.6 %     (26.2 )%
     Our research and development expenses decreased as a percentage of revenues for the year ended December 31, 2009 due to the incorporation of revenues from Telvent DTN, with no corresponding research and development costs, and due to the capitalization of certain of our software development efforts.
Depreciation and Amortization
                                 
Year Ended   Percentage of     Year Ended     Percentage of     Percentage  
December 31,   2009     December 31,     2008     change  
2009   Revenues     2008     Revenues     2008-2009  
(Euros in thousands, except percentages)  
€                     29,981
    3.8 %   €  14,561       2.0 %     105.9 %
     Our depreciation and amortization expense significantly increased in the year ended December 31, 2009 compared to 2008, mainly due to the amortization of intangible assets identified in the purchase price allocation of Telvent DTN, which was finalized in the fourth quarter of 2009. The amortization expense related to intangibles arising from the purchase price allocation of our acquired businesses, such as customer relationships, customer backlog, purchased software technology and trade names amounted to € 7.2 million for the year ended December 31, 2009 and € 5.8 million for the prior year.

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Financial Income (Expense), Net
                                         
    Year Ended     Percentage of     Year Ended     Percentage of     Percent  
    December 31,     2009     December 31,     2008     Change  
    2009     Revenues     2008     Revenues     2008-2009  
    (Euros in thousands, except percentages)  
Interest Expense
  €  (31,327 )     (4.0 )%   €  (18,160 )     (2.5 )%     72.5 %
Interest Income
  €  307       %   €  28       %     996.4 %
Other financial income (expense), net
  €  (6,877 )     (0.9 )%   €  (5,212 )     0.7 %     31.9 %
     Financial Income (Expense), net, significantly increased in 2009 primarily due to the interest expense that Telvent DTN incurred under the credit agreement with Golman Sachs Credit Partners and General Electric, amounting to € 31.3 million in 2009 and € 18.2 million in 2008, and also due to the syndicated credit agreement with Caja Madrid, ING Belgium S.A. and La Caixa, signed on September 12, 2008 to partially finance our DTN Holding Company, Inc acquisition, generating interest expense of € 2.6 million in 2009. This effect was partially offset by a decrease in interest from our factoring arrangements and interest on advances from banks, which totaled € 6.7 million in 2009, compared to € 8.8 million in 2008. In addition, we incurred interest expense of € 4.8 million related to our reciprocal credit agreement with Abengoa, compared to € 3.7 million in 2008.
     Other financial income (expense) corresponded mainly to realized and unrealized foreign exchange rate differences, the effect of the fair value of interest rate derivatives and expenses corresponding to financial guarantees.
Other income (expense)
                                 
Year Ended   Percentage of     Year Ended     Percentage of     Percentage  
December 31,   2009     December 31,     2008     change  
2009   Revenues     2008     Revenues     2008-2009  
(Euros in thousands, except percentages)  
€                     (1,128)
    (0.1 )%   €  (1,919 )     (0.3 )%     (41.2 )%
     Other income (expense) for the year ended December 31, 2009 mainly included one-time charges recognized by our subsidiary, Telvent Australia in connection with certain projects and payments made by our subsidiary, Telvent Brasil, for non-recurrent tax penalties.
     Other income (expense) for the year ended December 31, 2008 corresponded to losses recognized by our subsidiary, Telvent Brasil, in connection with a project with the local government of the city of Salvador de Bahia.
Income tax expense (benefit)
                                 
Year Ended   Percentage of     Year Ended     Percentage of     Percentage  
December 31,   2009     December 31,     2008     change  
2009   Revenues     2008     Revenues     2008-2009  
(Euros in thousands, except percentages)  
€                     (1,087)
    (0.1 )%   €  6,890       1.0 %     (115.8 )%
     In 2009, income tax expense was a benefit mainly due to the positive impact of export activities tax credits and research and development tax credits. This effect was partially offset by a valuation allowance recorded in that year, as in that moment we considered more likely than not that some of these tax credits would not be recovered in the future. In 2008, income tax expense was only affected by research and development tax credits, that have remained stable during the last years. See Note 24 to our consolidated financial statements for further details.
Impact of Inflation
     We historically have not been affected materially by inflation in our core geographies.

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Impact of Foreign Currency Fluctuations
     We are exposed to exchange rate risk associated with contracts denominated in currencies other than the functional currency of the country in which our subsidiaries operate. As a general policy, we generally hedge our currency risk on a project specific basis. As a result, we have not been materially affected by foreign currency functions (“Item 11 — Quantitative and Qualitative Disclosures about Market Risk”).
B. LIQUIDITY AND CAPITAL RESOURCES
Liquidity
     Management believes that our available cash and cash equivalents and cash flow from our ongoing operations together with the credit arrangements referred to below under “Credit Arrangements and Loan Facilities” will be sufficient to finance our working capital needs for the foreseeable future. If we have a need in the future for additional liquidity, we will seek to obtain additional or increased lines of credit from Abengoa or third-party lenders.
Operating Activities
                                         
                            Percentage     Percentage  
    Year Ended December 31,     Change     Change  
    2010     2009     2008     2009 – 2010     2008 – 2009  
    (Euros in thousands)  
Net cash provided by (used in) operating activities
  €  9,987     €  21,038     €  43,138       (52.5 )%     (51.2 )%
     For the year ended December 31, 2010, net cash provided by operating activities was € 10.0 million, compared with € 21.0 million for the year ended December 31, 2009. We had € 7.3 million of non-cash adjustments to net income for the year ended December 31, 2010, including depreciation and amortization charges of € 35.5 million, compared with € 34.6 million of non-cash adjustments to net income, including € 32.1 million of depreciation and amortization charges, for the year ended December 31, 2009. We also included a non-cash adjustment of € (2.2) million related to net foreign currency exchange losses, compared with € 9.3 million of foreign currency exchange gains for year ended December 31, 2009. Additionally, we added back € 1.1 million and € 2.5 million to net income in 2010 and 2009, respectively, as a result of the stock and extraordinary variable compensation plans in 2010, adjusted € (27.0) million and € (17.0) million in 2010 and 2009 respectively, for deferred income taxes, adjusted € 3.1 million in 2010 and € 1.4 million in 2009 related to our allowance for doubtful accounts and adjusted € 17.3 and € 4.2 million for interest accrued and not paid under our credit facilities in 2010 and 2009, respectively, € (4.0) million and € 0.0 million, respectively, of income from investments carried under the equity method, € 2.2 million and € 1.9 million, respectively, of earn-out on acquisitions. Finally, we adjusted € (19.3) million related to the change in fair value of the call option embedded in convertible debt in 2010.
     Working capital and temporary joint ventures used € 43.7 million of our operating cash for the year ended December 31, 2010 compared with € 52.7 million used for the year ended December 31, 2009. In 2010, we had a decrease in our operating cash of € 5.7 million due to the deconsolidation of joint ventures as a result of the adoption of SFAS 167. Changes in operating assets and liabilities contributed to a decrease in operating cash-flow primarily due to the increase in our accounts and other long-term receivables of € 54.6 million, in other tax receivables of € 11.4 million, in our unbilled revenues of € 1.9 million, in our related parties receivables of € 14.5 million and in other assets of € 1.0 million, and to the decrease in our accounts payable of € 9.3 million, in our accrued and other liabilities of € 0.2 million and the decrease in the incorporation of our temporary consortium’s working capital of € 1.4 million. These changes were partially offset by the increase in our billing in excess of cost and estimated earnings on uncompleted contracts of € 16.2 million, in our income and other tax payable of € 17.0 million and in our related parties payable of € 15.6 million, as well as a decrease in our inventory of € 7.7 million.
     For the year ended December 31, 2009, net cash provided by operating activities was € 21.0 million, compared with € 43.1 million for the year ended December 31, 2008. We had € 34.6 million of non-cash adjustments to net income for the year ended December 31, 2009, including depreciation and amortization charges of € 32.1 million, compared with € 16.2 million of non-cash adjustments to net income, including € 14.9 million of depreciation and amortization charges, for the year ended December 31, 2008. We also included a non-cash adjustment of € 9.3 million related to net foreign currency exchange gains, compared with € (3.0) million of foreign currency exchange losses for year ended December 31, 2008. Additionally, we added back € 2.5 million and € 1.8 million to net income in 2009 and 2008, respectively, as a result of the stock and extraordinary variable compensation plans in 2009 and to the stock compensation plan in 2008, adjusted € (17.0) million and € (2.8) million in 2009 and 2008 respectively, for deferred income taxes, adjusted € 1.4 million in 2009 and € 2.3 million in 2008 related to our allowance for doubtful accounts and adjusted € 4.2 and € 2.0 million for

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interest accrued and not paid under our credit facilities in 2009 and 2008 respectively, and adjusted € 1.9 million of earn-out on acquisitions.
     Working capital and temporary joint ventures used € 52.7 million of our operating cash for the year ended December 31, 2009, compared with € 3.3 million used for the year ended December 31, 2008. Changes in operating assets and liabilities contributed to a decrease in operating cash flow primarily due to the increase in unbilled revenues of € 94.5 million, a € 14.0 million increase in related parties trade receivable, a € 7.3 million increase in other tax receivable, a € 3.2 million decrease in income and other tax payable, a € 2.8 million decrease in accrued and other liabilities, a € 0.5 million decrease in related parties payable and the incorporation of temporary consortium’s working capital of € 1.3 million. These changes were partially offset by the increase in our billing in excess of cost and estimated earnings on uncompleted contracts of € 15.3 million and in our accounts payable of € 13.8 million, the decrease in our inventory of € 0.6 million, and a € 41.2 million decrease in accounts and other long term receivables.
     For the year ended December 31, 2008, net cash provided by operating activities was € 43.1 million, compared with € 13.9 million for the year ended December 31, 2007. We had € 16.2 million of non-cash adjustments to net income for the year ended December 31, 2008, including depreciation and amortization charges of € 14.9 million, compared with € 9.0 million of non-cash adjustments to net income, including € 10.9 million of depreciation and amortization charges, for the year ended December 31, 2007. We also included a non-cash adjustment of € (3.0) million related to net foreign currency exchange gains, compared with € 1.3 million of foreign currency exchange losses for year ended December 31, 2007. Additionally, we added back € 1.8 million and € 1.7 million to net income in 2008 and 2007, respectively, as a result of the stock and extraordinary compensation plans in 2008 and to the stock compensation plan in 2007, adjusted € (2.8) million and € (4.8) million in 2008 and 2007, respectively, related to deferred income taxes, adjusted € 2.3 million in 2008 and € (0.4) million in 2007 related to our allowance for doubtful accounts, and adjusted € 2.0 million in 2008 related to interest accrued and not paid under our credit facilities. Working capital and temporary joint ventures used € 3.3 million of our operating cash for the year ended December 31, 2008, compared with € 20.0 million used for the year ended December 31, 2007. Changes in operating assets and liabilities contributed to a decrease in operating cash flow primarily due to the increase in unbilled revenues of € 27.6 million, a € 13.7 million increase in billings in excess of costs and estimated earnings and an € 11.2 million increase in accounts and other long term receivables. These changes were partially offset by the increase in our accounts payable, accrued and other liabilities and related parties trade payable of € 34.5 million, the € 8.9 million decrease in related party trade receivables and other assets, a decrease in inventory of € 4.9 million and the incorporation of temporary consortium’s working capital of € 0.9 million.
Investing Activities
                                         
                            Percentage     Percentage  
    Year Ended December 31,     Change     Change  
    2010     2009     2008     2009 – 2010     2008 – 2009  
    (Euros in thousands)                  
Net cash provided by (used in) Investing activities
  €  (44,846 )   €  (21,328 )   €  (153,500 )     110.3 %     86.1 %
     Net cash used by Investing activities totaled € 44.8 million in 2010. We used € 0.7 million as part of our scheduled payments in connection with the acquisition of NLDC and € 13.4 million to pay out the indemnity escrow, to pay a portion of the Employee Stockholder Deferred Proceeds to departed employees and to pay post-closing adjustments under the stock purchase agreement of Telvent DTN. We also used € 1.0 million related to the joint venture agreement signed with the DMS Group, € 13.6 million for the purchase of property, plant and equipment and € 19.5 million for investments in intangible assets. Our investment in intangible assets includes € 8.2 million of investment in software to be marketed or sold as part of our bundled service solutions, € 6.3 million of investment in our new ERP SAP and € 5.0 million of investment in other software developed for internal use.
     Investing activities used significantly less cash in 2009 than in 2008. We used € 19.0 million to complete our acquisition of the remaining 42% of Matchmind on May 21, 2009 and € 1.0 million in our acquisition of NLDC on February 2, 2009 and € 9.6 million to make deferred earn-out payments and post-closing adjustments under the DTN Holding Company, Inc. acquisition. We also used € 1.0 million related to the joint venture agreement signed with the DMS Group, € 9.8 million for the purchase of property, plant and equipment, € 16.4 million for investments in intangible assets (which includes € 10.6 million of investment in software to be marketed or sold as part of our bundled service solutions, and € 3.5 million of investment in software developed for internal-use). These effects were partially offset by an increase in cash of € 17.4 million due to the decrease in our related parties credit line receivable under our credit agreement with Abengoa and a decrease in our restricted cash of € 18.1.
     Net cash used in investing activities in 2008 was € 153.5 million. We used € 146.9 million to complete our acquisition of DTN Holding Company, Inc. in October 2008 and € 1.0 million to make deferred earn-out payments and post-closing adjustments under the

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Caseta acquisition. We also used € 4.2 million related to investment acquisitions, mainly related to the joint venture agreement signed with the DMS Group, € 7.5 million for the purchase of property, plant and equipment, € 1.9 million for investments in intangible assets and € 9.6 million in an increase in our restricted cash. These effects were partially offset by an increase in cash due to € 17.7 million received from related parties under our credit agreement with Abengoa.
Financing Activities
                                         
                            Percentage     Percentage  
    Year Ended December 31,     Change     Change  
    2010     2009     2008     2009 – 2010     2008 – 2009  
                    (Euros in thousands)          
Net cash provided by (used in) financing activities
  €  9,343     €  24,598     €  104,972       (62.0 )%     (76.6 )%
     Net cash provided by financing activities totaled € 9.3 million in 2010. During the year 2010 we closed three financing deals:
    the new syndicated facilities agreement that replaced several facilities;
 
    the issuance of our Senior Subordinate Convertibles Notes, the proceeds of which primarily were used to cancel the credit agreement with Goldman Sachs Credit Partners and General Electric;
 
    the credit agreement with JP Morgan Chase Bank, N.A. and Fifth Third Bank that replaces our credit agreement with Deutsche Bank, S.A.
     During 2010, we had proceeds of € 205.7 mainly from the new syndicated facility agreement signed by the Company with ING Bank N.V, ING Belgium, S.A., Caja de Ahorros y Monte de Piedad de Madrid, Caja de Ahorros y Pensiones de Barcelona, Barclays Bank, S.A. and the Royal Bank of Scotland N.V., amounting to € 176.0 million and from the credit agreement signed by Telvent USA Corporation and Telvent Canada with JP Morgan Chase Bank, N.A. amounting to € 29.6 million. We also had proceeds of € 14.2 million from short-term debt, which mainly included € 6.7 million borrowed under our agreement with Deutsche Bank in connection with financing general treasury needs in North America and Mexico, and € 5.4 million from the increase in credit facilities of our subsidiary, Matchmind (which was merged into Telvent Global Services) and € 2.0 million from the increase in the new credit facility signed by the Company with Banco Cooperativo Español, S.A. We repaid € 203.8 million of long-term debt consisting, mainly, of a repayment of € 138.0 million on Telvent DTN’s first lien credit agreement, of € 56.6 million on the Telvent GIT old syndicated loan agreement and of € 5.0 million on the Telvent GIT bilateral agreement with “La Caixa”. In addition, we repaid € 76.8 million of short-term debt, consisting mainly of € 26.3 million from advance payments of intercompany balances, a repayment of € 20.3 million on the Telvent Traffic credit agreement with Bank of America, a repayment of € 13.4 million on the T.USA Corporation credit agreement with Deutsche Bank, and € 16.7 million repaid on our leasing obligations (which is mainly a repayment under our agreement for the sale and leaseback of certain equipment signed in October 2007). We also received proceeds of € 142.1 million in connection with the offering and sale of senior subordinated convertible notes. Finally, we repaid € 73.0 million under our credit agreement with Abengoa for working capital financing purposes.
     Net cash provided by financing activities totaled € 24.6 million in 2009. During 2009, we had proceeds of € 20.0 million from the syndicated financing agreement with Caja de Ahorros y Monte de Piedad de Madrid (Caja Madrid), ING Belgium S.A. Sucursal en España (ING) and Caja de Ahorros y Pensiones de Barcelona (“La Caixa”), which was increased to finance the acquisition of the remaining interest in Matchmind. We also had proceeds of € 5.0 million of long-term debt under the credit facility with La Caixa, in connection with the repurchase of our ordinary shares from Telvent Corporation on September 15, 2009, where we used cash of € 4.7 million. We also had proceeds of € 41.0 million from short-term debt, which includes € 6.0 million borrowed under our agreement with Natixis, € 27.9 million from advance payments of inter-company balances and € 6.2 million borrowed under a new agreement with Deutsche Bank in connection with financing general treasury needs in North America and Mexico. We also received proceeds of € 0.9 million under several credit facilities of our subsidiary Matchmind. We repaid € 8.9 million of short-term debt, consisting of € 8.9 million repaid on our leasing obligation (which includes a repayment of € 4.8 million under our agreement for the sale and leaseback of certain equipment signed in October 2007). We also repaid € 52.7 million of long-term debt (primarily € 29.0 million repaid on the long-term debt with Goldman Sachs Credit Partners and General Electric and € 22.4 million repaid on the Syndicated credit agreement with Caja Madrid, ING and La Caixa). Additionally, we paid dividends of € 12.3 million to our shareholders and dividends of € 1.3 million to non controlling interest holders. Finally, we borrowed € 38.6 million from our bilateral credit agreement with Abengoa for working capital financing purposes.
     Net cash provided by financing activities totaled € 105.0 million in 2008. During 2008, we had proceeds of € 57.5 million from the agreement with Caja Madrid and ING to partially finance our acquisition of DTN Holding Company, Inc. We also had proceeds of € 4.7 million from short-term debt, which includes € 2.5 million borrowed under our agreement with Natixis and € 2.2 million from advance payments of inter-company balances. We repaid € 22.8 million of short-term debt, mainly € 7.7 million repaid from our

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leasing obligation (which includes a repayment of € 4.4 million under our agreement for the sale and leaseback of certain equipment signed in October 2007), € 7.7 million repaid of our recourse factoring agreements and € 5.9 million repaid from several credit facilities of our subsidiary Matchmind. We also repaid € 1.6 million of long-term debt (primarily € 0.8 million and € 0.6 million repaid of the long-term debt with Liscat and Caja Madrid, respectively). Additionally, we paid dividends of € 10.0 million to our shareholders and dividends of € 1.2 million to non controlling interest holders; we paid € 0.5 million for long term liabilities relating to government loans; we borrowed € 0.3 million from our credit arrangement with Abengoa, and we received € 78.5 million from the private placement of our ordinary shares in October 2008.
     Our cash and cash equivalents at December 31, 2010, 2009 and 2008 were € 70.4 million, € 92.9 million and € 67.7 million, respectively. We consider all highly liquid investments, including deposits, money market funds, and commercial paper with maturities of three months or less when purchased to be cash equivalents. See Note 2 to our consolidated financial statements.
     At December 31, 2010, there were no deposits or cash equivalents restricted for use.
     As a corporate policy, we try to optimize working capital so that our projects are cash-flow positive over their life cycles. We achieve this result by factoring our receivables under agreements that we have with various financial institutions. We sell, on a revolving and non-recourse basis, some of these trade account receivables, and account for these transactions as sales because we relinquish control over the pooled receivables. Accordingly, pooled receivables sold under these facilities are excluded from receivables on our consolidated balance sheets, as we do not retain any beneficial interest in the sold pooled receivables. The accounts receivable non-recourse factoring arrangements under which we recorded the accelerated receipt of cash amounted to € 318.9 million, € 304.3 million, and € 323.2 million for the years ended December 31, 2010, 2009 and 2008 respectively. In addition, we sometimes enter into some accounts receivable factoring arrangements pursuant to which we are not relinquishing control of the pooled receivables and, therefore, these transactions are not accounted for as sales. The cash received in these cases is classified within “Short-term debt” in our consolidated balance sheets. See Note 2 to our consolidated financial statements.
     Credit Arrangements and Loan Facilities
     The following discussion is a summary of the material credit arrangements and loan facilities that we or our subsidiaries were a party during 2010, and the total amounts outstanding as at December 31, 2010. A complete description of our material credit arrangements is provided in Item 10.C. “Additional Information — Material Contracts”.
     Credit agreements with Abengoa
     On April 20, 2004, we established a bilateral credit agreement with Abengoa which replaced all prior credit arrangements between the Company and Abengoa, S.A. Under this arrangement, we and Abengoa could borrow funds from or lend funds to each other, from time to time upon not less than 24 hours’ notice, up to a maximum of € 45.0 million (or the equivalent amount in any other currency quoted in the Spanish currency market). On August 1, 2007 we amended our bilateral credit agreement with Abengoa to increase the amount available under this agreement to € 60.0 million. Under this credit arrangement, if any of the parties request an advance that would cause the total amount owed by that party to exceed the established credit limit, the other party can decide to lend that amount, at its sole discretion. In such case, according to the terms of the credit agreement, the credit limit is automatically modified between both parties, with no need to sign a new agreement. On January 1, 2010 the agreement was amended to increase the maximum credit limit to € 135.0 million.
     On March 31, 2010 the Company signed a unilateral credit agreement with its largest shareholder, Abengoa, that terminated the prior bilateral credit agreement, signed on January 1, 2010. Under the new agreement, the Company, on a consolidated basis, has a borrowing limit of € 60.0 million. The daily balance in the account resulting thereof shall accrue interest at an annual interest rate of 8.35%. The settlement and payment of interest shall be made at the end of each financial year and at the time the credit facility terminates.
     The initial term of the agreement expires on March 23, 2012, however if the Company draws any funds six months prior to the end of the initial term, then the agreement automatically extends for an additional two-year term.
     On December 1, 2002, Telvent Mexico established reciprocal credit agreements with Abengoa Mexico. Under these agreements, Telvent Mexico and Abengoa Mexico may borrow funds or lend funds to each other up a maximum amount which originally was U.S. $10.0 million. The agreements have been amended twice, the first time, on January 1, 2006, to increase the maximum of the credit limit to U.S. $25.0 million and the last time, on June 1, 2007 to increase the maximum credit limit to U.S. $30.0 million. Borrowings under these credit arrangements bear interest at three-months LIBOR plus a variable margin from 0.0% to 6.0%. These agreements renew for annual one-year terms until terminated by either party.

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     On December 1, 2002, Telvent Energía established reciprocal credit agreements with Abengoa Mexico. Under these agreements, Telvent Energía and Abengoa Mexico may borrow funds or lend funds to each other up to a maximum amount of U.S. $10.0 million. Borrowings under these credit arrangements bear interest at three-months LIBOR plus a variable margin from 0.0% to 6.0%. These agreements renew for annual one-year terms unless either party gives notice in writing at least one week prior to the expiration date of of its intention to not renew the agreement.
     The net amount payable under the credit arrangements with Abengoa as of December 31, 2010 was € 21.8 million and. We incur no costs and receive no payments under these arrangements unless and until we borrow or loan funds thereunder.
     Sale and leaseback agreement
     See “Item 10.C — Material Contracts” for a description of this credit agreement.
     On April 7, 2010, this long-term leasing obligation was paid-off, as it was refinanced with the new syndicated facility agreement signed on March 23, 2010.
     Unicaja
     On February 11, 2010, we signed an amendment to our credit agreement with Unicaja to extend the grace period under the agreement to November 10, 2010, therefore extending the term of the credit agreement to 25 years, and as a result of the former, borrowings under this credit arrangement bear interest from the date on which the amendment was signed at one-year Euribor plus a margin of 2.00%. The amount outstanding under this agreement with Unicaja at December 31, 2010 was € 9.9 million. The credit agreement is payable monthly starting November 2010 and ending November 10, 2030.
     Natixis
     On December 4, 2007, Telvent Tráfico entered into a credit agreement with Natixis Sucursal en España (“Natixis”) under which Telvent may borrow U.S. $12.3 million to finance the complete investment of the design and implementation of the Panama City Traffic Control Project, a nine-year concession awarded to Telvent Tráfico by the Autoridad del Tránsito Transporte Terrestre (“ATTT”) of Panama that came into force on August 28, 2007. We have designed and implemented all systems and infrastructures and then we will operate and maintain the system during the following 84 months. ATTT will pay Telvent Tráfico a quarterly investment fee and a monthly operations and maintenance fee. This credit facility has a cost of LIBOR +0.90% during the investment phase and LIBOR + 2% during the operations and maintenance phase. On December 15, 2009, Telvent Tráfico signed an amendment to its credit agreement with Natixis to extend the grace period under the agreement to July 14, 2010. As a result of the amendment, this credit facility bears interest from the date on which the amendment was signed of LIBOR + 3.00%.
     As it was agreed between Natixis, our customer and us, after the acceptance of the system by the customer, which occurred on September 27, 2010, and effective June 1, 2010, Telvent has transferred to Natixis all its collection rights against the ATTT and thus, the obligations with Natixis correspond now to the ATTT. As a result, the financial asset corresponding to the unbilled revenues of the project and the financial liability corresponding to the credit agreement, both amounting to U.S. $12.3 million at the time of the acceptance, have been derecognized.
     The Royal Bank of Scotland, N.V. (formerly ABN AMRO Bank, N.V.) credit agreement with Telvent Canada
     See “Item 10.C — Material Contracts” for a description of this credit agreement.
     As of December 31, 2010, there was Canadian $3.0 million outstanding under Facility A, U.S. $1.2 million under Facility B and U.S. $5.0million in letters of credit issued under Facility C.
     Bank of America credit agreement with Telvent Traffic
     On April 7, 2010, this credit agreement was paid-off, as it was refinanced with the new syndicated facility agreement signed on March 23, 2010.
     Bank of Communications
     As of December 31, 2010, € 0.5 million was outstanding under the financing facility obtained by our subsidiary, Telvent China with Bank of Communications in connection with the purchases of our office buildings in Beijing China.

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     Citibank
     On April 12, 2010, our subsidiaries, Telvent China and Telvent Blueshield, renewed their revolving credit facility agreements with Citibank under which they may borrow up to U.S. $1.0 million (€ 0.7 million) and U.S. $0.7 million (€ 0.5 million), respectively. The revolving facilities mature on April 11, 2011 and bear interest at the prevailing base lending rates published by the People’s Bank of China. As of December 31, 2010, € 0.5 million was outstanding under these facilities.
     ING and Liscat
     As of December 31, 2010, these financings obtained by our subsidiary, Telvent Housing, merged into Telvent Global services effective July 1, 2010, from ING and Liscat for the equipment and fixtures installed in our two Madrid facilities and our Barcelona facility were paid-off.
     Syndicated Credit Agreement with Caja de Ahorros y Monte de Piedad Madrid, ING Belgium S.A., Sucursal en España and Caja de Ahorros y Pensiones de Barcelona
     On April 7, 2010, this syndicated credit agreement was paid-off, as it was refinanced with the new syndicated facility agreement signed on March 23, 2010.
     Caja de Ahorros y Pensiones de Barcelona (“La Caixa”)
     On April 7, 2010, this credit agreement was paid-off, as it was refinanced with the new syndicated facility agreement signed on March 23, 2010.
     Deutsche Bank, S.A. credit agreement with Telvent USA
     On November 15, 2010, this credit agreement was paid-off, as it was refinanced by the loan agreement with JPMorgan Chase Bank, N.A. and Fifth Third Bank.
     Telvent DTN credit agreement with Goldman Sachs Credit Partners and General Electric
     This credit agreement was repaid and replaced with the convertible notes on April 19, 2010.
     Syndicated Credit Agreement with Caja de Ahorros y Monte de Piedad Madrid, ING Belgium S.A., Sucursal en España and Caja de Ahorros y Pensiones de Barcelona, Barclays Bank, S.A. and the Royal Bank of Scotland N.V., sucursal en España.
     See “Item 10.C — Material Contracts” for a description of this credit agreement.
     As of December 31, 2010 the amount outstanding under this agreement was € 179.9 million.
     JP Morgan Chase Bank, N.A.
     See “Item 10.C — Material Contracts” for a description of this credit agreement.
     As of December 31, 2010 the amount outstanding under this agreement was $ 39.8 million, (€ 29.8 million).
     For a description of our exposure to market risk, see “Item 11 — Quantitative and Qualitative Disclosures About Market Risk.”
Capital Resources
     We expect that our principal uses of funds for the next several years will include acquisitions, joint ventures, new services and solutions development, interest and principal payments on our indebtedness, net working capital increases and capital expenditures. We intend to finance our growth objectives through cash generated by our business activities. Management believes available resources are sufficient to fund our business for the foreseeable future.
Critical Accounting Policies and Estimates
     Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements for fiscal years 2010, 2009 and 2008, which have been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the

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circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
     An understanding of our accounting policies for these items is critically important to understanding our consolidated financial statements. The following discussion provides more information regarding the estimates and assumptions used for these items in accordance with U.S. GAAP and should be read in conjunction with the notes to our consolidated financial statements.
     We believe the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements:
    revenue recognition;
 
    factoring of trade receivables and allowance for doubtful accounts;
 
    consolidation of variable interest entities;
 
    derivative instruments;
 
    accounting for uncertainty in income taxes and deferred taxes valuation allowance;
 
    stock-based compensation; and
 
    goodwill and other intangible assets.
Revenue Recognition
     Revenues consist primarily of three types of revenues streams: services and solutions (projects), managed services and information and electronic communication services.
- Services and Solutions (Projects)
     We are an engineering company providing real-time IT solutions and systems integration services for our clients, generally under long-term fixed-price contracts. As an example, we design, implement, build and install supervisory control and data acquisition (SCADA) systems comprised of computer software, hardware and electronic instrumentation to enable our customers to remotely monitor and control infrastructure of various kinds, including pipelines, electricity and water transmission and distribution facilities, freeways and toll roads. A typical project contract of the Company across all its business segments involves supplying a SCADA system consisting of computer hardware and software, engineering services for the design, configuration, installation, commissioning and testing of the system, documentation, including manuals, and training at Telvent facilities. We tailor the SCADA systems to the specific requirements of each customer on a project-by-project basis. Our systems gather real-time operational data at the field level (whether it be at a gas pipeline, an electric grid, a road, a river basin, etc.) through the use of remote terminal units, or other field devices, and process that data through the SCADA system located at the customer’s control center. Our project contracts often also include the development of specific applications for customers to help them make smarter operational business decisions (outage management applications, leak detection systems, etc.). These contracts generally range from one to two years in length. Income for these contracts is recognized following the percentage-of completion method, measured by the cost-to-cost method in accordance with ASC 605-35 (pre-codification SOP 81-1), Accounting for Performance of Construction-Type and Certain Services and Solutions-Type Contracts. The revenue earned in a period is based on total actual costs incurred plus estimated costs to completion.
     Billings in excess of recognized revenues are recorded in “Billings in excess of costs and estimated earnings” in the Company’s consolidated balance sheets. When billings are less than recognized revenues, the differences are recorded in “Unbilled revenues” in the Company’s consolidated balance sheets.
     Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. Selling costs directly attributable to a specific project are capitalized if it is expected that such costs will be recovered. General and administrative costs are charged to expense as they are incurred. In the event that a loss is anticipated on a contract, it is immediately recognized in income. Changes in job performance, job conditions, estimated profitability, or job scope may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

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     Additionally, part of our services and solutions revenue is derived from the sale of software, support contracts and services. Such revenue is recognized in accordance with ASC 985-605 (pre-codification SOP 97-2), Software Revenue Recognition and ASC 605-35 (pre-codification SOP 81-1). For software sales with no significant post-shipment obligations and no uncertainty about customer acceptance, revenue is recognized on delivery of software to the customer. Revenues on software sales with significant post-shipment obligations, including the elaboration, modification, or customization of software, are recognized by the percentage-of-completion method, with progress to completion measured on the basis of completion of milestones, labor costs incurred currently versus the total estimated labor cost of performing the contract over its term, or other factors appropriate to the individual contract of sale.
- Managed Services
     Managed services contracts include leasing arrangements, maintenance, monthly and hourly fixed-rate contracts. Our Company recognizes revenue earned on the leasing, maintenance, and monthly fixed-rate contracts on a straight-line basis over the term of the contract. For contract arrangements where there is a fixed-rate per hour charge, the income is recorded based on time incurred to date.
- Information and Electronic Communication Services
     Our Company also provides business-to-business information and communication services focused on the agriculture, energy and environment (weather business) markets. We deliver on-demand market information, commodity cash prices, industry news and in-depth analysis, and location-specific weather via satellite and over the Internet.
     In order for our customers to receive these information and communication services, we provide our subscribers with equipment and/or access through the Internet. We charge a recurring subscription fee and, in many instances, a one-time service initiation fee. The subscriptions are generally contracted for an initial period of between one and three years and are generally billed quarterly in advance. Payments received in advance of the service period are deferred and recognized as the services are provided. Professional services and equipment sales are recognized upon customer acceptance. Service initiation fees are deferred and recognized in income over the term of the contract. Communication services are generally billed monthly in arrears based on the number and length of the messages delivered to subscribers, but is recognized in revenue as the services are provided. Advertising revenues are recognized in the period or periods that the advertisement is served. Amounts received from customers that have not yet been earned are classified as “Billings in excess of costs and estimated earnings” in our Consolidated Balance Sheets.
Factoring of trade receivables and allowance for doubtful accounts
     We have entered into several accounts receivable factoring arrangements that provide for the accelerated receipt of cash on available trade accounts receivable. Under our factoring agreements, we sell on a revolving and non-recourse basis, certain of our trade accounts receivable (the “Pooled Receivables”) to various financial institutions. These transactions are accounted for as sales because we have relinquished control of the Pooled Receivables and we do not maintain any continuing involvement with the sold assets. Accordingly, the Pooled Receivables sold under these facilities are excluded from receivables in our consolidated balance sheets.
     In addition, from time to time, we have entered into some accounts receivable factoring arrangements under which we do not relinquish control of the pooled receivables and therefore these transactions are not accounted for as sales. The cash received is classified within short-term debt in the accompanying consolidated balance sheets.
Consolidation of variable interest entities
     We participate in special joint venture arrangements called “Union Temporal de Empresas” (“UTEs”) in connection with our share of certain long-term service contracts. These joint ventures are considered to be variable interest entities as they have no equity.
     Effective January 1, 2010, we adopted ASC 810, Consolidations, formerly SFAS No. 167, Amendments to FASB Interpretation No. 46R (SFAS 167). This Statement identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics: (a) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that potentially could be significant to the variable interest entity. SFAS 167 states that if an enterprise determines that power is, in fact, shared among multiple unrelated parties, such that no one party has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, then no party is the primary beneficiary.
     We have applied SFAS 167 prospectively. The application of this standard has resulted in the deconsolidation of all the joint ventures established with unrelated parties that were consolidated until December 31, 2009. Joint ventures in which we participate

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with unrelated parties are operated through a management committee comprised of equal representation from each of the joint venture partners, and such committee makes all the decisions about the joint venture’s activities that have a significant effect on its success. All the decisions require consent of each of the parties sharing power, so that all the parties together have the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance. As a result, we have concluded that in joint ventures established with unrelated parties, power is shared, and thus no party is the primary beneficiary. Such investments are carried, effective January 1, 2010, under the equity method.
     We also participate in joint venture arrangements with related parties, mostly with companies that are part of the Abengoa Group. These investments are considered to be variable interest entities with related parties, and thus are consolidated if we are the member most closely associated with the joint venture.
     Had this Standard been adopted retrospectively, revenues and cost of revenues for the years ended December 31, 2010, 2009 and 2008 would have been as follows:
                         
    Year Ended December 31,  
    2010     2009     2008  
Revenues
  €  723,856     €  745,269     €  661,132  
Cost of revenues
    459,387       480,604       475,587  
 
                 
Gross profit
  €  264,469     €  264,665     €  185,545  
 
                 
     Until December 31, 2009, we consolidated most of out joint venture arrangements where we were a partner. Transfer restrictions in the agreements establish a de facto agency relationship between all venture partners. In accordance with ASC 810-10 as it was as of December 31, 2009, we consolidated those joint ventures where we were the partner most closely associated with the joint venture.
     Determination of whether a de facto agency relationship existed between us and the other venture partners because of transfer restrictions was based upon the facts and circumstances of each agreement and required judgment to assess the substance of the restriction, and in particular whether or not the “restricted party” had the ability to realize or manage its economic interest in the UTE and the reasons and economic rationale behind the restrictions placed on that party. A different interpretation or assessment of the restriction may have lead to a conclusion that a de facto agency relationship did not exist and may have meant that certain UTEs would not have needed to be consolidated under ASC 810-10.
     Once we had determined that a de facto agency relationship existed, further judgment was required to identify which party was the primary beneficiary. Under ASC 810-10, as the venture partners in a UTE was exposed to a majority of the UTE’s expected losses and expected residual returns, one of the venture partners must be deemed to be the primary beneficiary and the party in the group that was most closely associated with the UTE is considered to be that beneficiary. This was based on an analysis of all relevant facts and circumstances, including the nature of the relationships between, and activities of, the parties involved. A different interpretation of these facts and circumstances or different assessment of who was most closely associated with the UTE could result in a conclusion that a different venture partner was the primary beneficiary and in that case we would not consolidate that UTE.
     Total assets coming from these consolidated entities amounted to € 13.5 million and € 38.4 million as of December 31, 2010 and 2009, respectively. Total revenue recognized with respect to these consolidated joint ventures was € 4.3 million, € 49.2 million and € 68.0 million, including € 1.9 million, € 23.5 million and € 53.6 million of revenues of other venture partners in these arrangements, during the twelve months ended December 31, 2010, 2009 and 2008, respectively. Total cost of revenues recognized with respect to these consolidated joint ventures was € 2.6 million, € 48.6 million and € 68.2 million, including € 1.2 million, € 23.4 million and € 53.6 million of cost of other venture partners in these arrangements, during the twelve months ended December 31, 2010, 2009 and 2008, respectively.
Derivative Instruments
     All derivative contracts are recognized in our consolidated financial statements and are measured at fair value regardless of the purpose or intent for holding them. We, as part of our foreign currency risk management program, have entered into numerous forward exchange contracts to protect against fluctuations in foreign currency exchange rates on long-term projects and anticipated future transactions. In addition, we have entered into interest rate caps and swaps in order to manage interest rate risk on certain long-term variable rate financing arrangements.

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     We apply hedge accounting based on ASC 815. As a result, forward exchange contracts and interest rate caps and swaps have been designated as cash flow hedges and are recorded at fair value within our consolidated balance sheets, with the effective portion of changes in fair value recorded temporarily in equity (other comprehensive income). Such unrealized gains and losses are recognized in earnings, along with the related effects of the hedged item, once the forecasted transaction occurs. Any ineffective portion of the hedged transaction is recorded in earnings as it occurs.
     We also enter into certain long-term binding contracts that are denominated in a currency that is neither the functional or local currency of either party. This feature of the contracts is analogous to an embedded derivative that is bifurcated from the underlying host contract at inception of the contract and similar to freestanding derivatives, is recorded at fair value within the consolidated balance sheets with related gains and losses recorded in earnings.
     The inputs used to calculate fair value of our derivatives are Level 2. These inputs are other than quoted prices (included in Level 1). The used inputs are observable for the asset or liability, either or indirectly through corroboration with observable market data. Our valuation technique to calculate fair value of our forward contracts is based on discounting estimated future cash flows. We estimate future cash-flows based on the forward rate, discounted to reflect the time value of money until the settlement date. The fair value of our interest rate caps and swaps is determined using inputs other than quoted prices in active markets (i.e. rate of 3 to 12 months both EURIBOR and LIBOR). The valuation of derivative assets and liabilities, and the identification and valuation of embedded derivatives requires the use of considerable professional judgment. These determinations were based on available market information and appropriate valuation methodologies. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
     In addition, due to the accounting treatment of the Convertible Notes under U.S. GAAP, we have an embedded call option separated from the Notes recorded as a derivative liability at fair value, with changes in fair value recorded as “Other financial income (expenses), net”.
     On April 19, 2010, we issued U.S. $200,000 aggregate principal amount of 5.50% senior subordinated convertible notes (the “Notes”) due 2015. Under certain circumstances the Notes will be convertible into cash, Telvent’s ordinary shares or a combination of cash and Telvent’s ordinary shares, at Telvent’s election. The Notes will be convertible at an initial conversion rate of 29.2590 ordinary shares per U.S. $1,000 (one thousand U.S. dollars) principal amount of notes, which is equivalent to an initial conversion price of approximately U.S. $34.18 per ordinary share.
     The Notes are a complex hybrid instrument bearing an embedded option according to which, if converted, we can elect to redeem the Notes either by providing the noteholder, in cash, the redemption amount of the security or the number of ordinary shares into which the security is convertible. The embedded option qualifies to be separated from the Note and accounted for as a derivative instrument in accordance with U.S. GAAP, with an offsetting debit that reduces the carrying amount of the Notes, due to the fact that the conversion strike price is denominated in a currency (U.S. $) other than the issuer’s functional currency (Euro). As a result, at the time of issuance, the option is separated from the Notes and recorded as a derivative liability at fair value, with future changes in fair value recorded in the Consolidated Statement of Operations as “Other financial income (expense), net”. The remaining proceeds of the Notes are classified as Debt and will be recorded following the effective interest method. Interest expense includes the amortization of the original value of the conversion option.
Accounting for Uncertainty in Income Taxes and Deferred Taxes Valuation Allowance
     During the year ended December 31, 2007, we adopted the provisions of ASC 740-10, (pre-codification FIN-48, Accounting for Uncertainty in Income Taxes), which clarifies the accounting for and disclosure of uncertainty in tax positions. ASC 740-10 provides guidance on the recognition, measurement, de-recognition, classification and disclosure of tax positions and on the accounting for related interest and penalties. Pre-codification FIN 48 changed the standard of recognition that a tax contingency is required to meet before being recognized in the financial statements. The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items. We establish reserves when, despite our belief that our tax return positions are fully supportable, we believe that certain positions may be challenged and that we may not succeed. Upon adoption of pre-codification FIN 48, we recorded, as a cumulative effect on retained earnings, reserves for uncertain tax positions and related accrued interest and penalties, if any. We will adjust these reserves in light of changing facts and circumstances. Our provision for income taxes includes the impact of these reserve changes.
     We also record deferred tax assets for tax loss carry-forwards and temporary differences that include allowances for research and development activities, employee training and export activities tax deductions. A valuation allowance is recorded against deferred tax assets when it is more likely than not that such assets will not be recovered in future periods.

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Stock-Based Compensation
     We apply ASC 718 to account for the share acquisition plan established by Abengoa in 2006 related to its shares. The plan is for members of the senior management of Abengoa and its subsidiaries, including members of the senior management of Telvent and its subsidiaries. This plan has been accounted for as an equity award plan under ASC 718, and is being treated similar to a stock option plan. A valuation of the plan was performed at the grant date (January 23, 2006), and the corresponding compensation cost is being recognized over the requisite service period of five years and six months (cliff vesting).
     In addition, as explained in Note 26 to our consolidated financial statements, on November 19, 2009 the Extraordinary Shareholder’s Meeting ratified the decision taken by the Board of Directors on June 25, 2009, to amend our Extraordinary Variable Compensation Plan (“the Plan”) in order to allow eligible participants to receive certain of their plan awards in the form of our ordinary shares rather than in cash. At the election of Plan participants, whom had to accept and agree to the amendment at the grant date of June 25, 2009, the amount vested during the first three years of the Plan will be converted, upon termination of the Plan, into such number of shares as is determined by dividing the amount of the original vested cash award by U.S. $18.50, the price paid by us for such shares on September 15, 2009. As a result of this amendment, the amount vested at December 31, 2010, and for which participants elected to receive shares instead of cash, has been accounted for as an equity award plan under ASC 718. Up to the date of the amendment, we had been recording a provision for such plan based on the vested amounts at each date. Upon amendment of the Plan, the provision recorded for that portion of the plan which will no longer be paid in cash has been reclassified to Additional Paid in Capital in the accompanying consolidated balance sheets. In addition, a valuation of the award was performed at the grant date according to the fair value of the shares on that date, and any difference with the amount previously provisioned for was recorded as additional compensation expense against Additional Paid in Capital. Any portion of the Plan expected to be settled in cash remains as a provision within “other long term obligations” in the accompanying consolidated balance sheets. Finally, the cash award to be vested during the last two years of the Plan is being recorded as compensation expense, against other long term liabilities, according to its vesting period.
Goodwill and Other Intangible Assets
     Goodwill is tested for impairment at least annually at a reporting unit level and written down when impaired. We test goodwill for impairment by comparing the fair value of the reporting unit with its carrying value. Fair value is generally determined using discounted cash flows and market multiples. Significant estimates used in the fair value methodologies include estimates of future cash flows, future short-term and long-term growth rates, weighted average cost of capital and estimates of market multiples of the reportable unit. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for our goodwill and intangible assets with an indefinite life (see Notes 13, 14 and 16 to our consolidated financial statements). In 2010, we have selected September 30 as the date on which we will perform our annual goodwill impairment tests for most of our reporting units from now on, as this date is more convenient, as it leaves more time to complete the test before the year end. Until December 31, 2009, we performed our goodwill impairment tests as of December 31. No impairments were recognized for the years ended December 31, 2010, 2009 or 2008.
     Other intangible assets represent the cost of developed software and the fair value of intangible assets identified in acquisitions.
     We capitalize the costs of computer software developed or obtained for internal use in accordance with ASC 350-40, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, and depreciate such software over its useful life using the straight line method, which ranges between two to five years. Software developed to be incorporated into a bundled service solution to be sold, including enhancements that extend or significantly improve the marketability of the original software product, is recorded in accordance with ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed. Under ASC 985-20, costs incurred in creating computer software are charged to expense until technological feasibility has been established and are capitalized thereafter. Capitalized costs are amortized based on current and anticipated future revenue for each software service or solution with an annual minimum equal to the straight-line amortization according to useful lives that range from three to five years.
     We have also recorded intangible assets with finite lives in relation to our acquisitions. These comprise customer contract (backlog), both contractual and non-contractual customer relationships, purchased software technology, trade names and in-process research and development. To determine the fair value of intangible assets as of the acquisition date, we rely, in part, upon a valuation report of a third-party expert. We are amortizing the intangible assets over their estimated useful lives which are one to five years for customer contract backlog, two to fifteen years for customer relationships, two to ten years for purchased software technology, five to nine years for favorable leases and five years for trade names subject to amortization. In-process research and development is amortized immediately after acquisition. If our estimates of useful lives were to change, we could be required to accelerate or defer the amortization charge recognized in earnings. We review the carrying value of our finite life intangibles for impairment loss whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The recoverability assessment involves

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considerable estimates of future cash flows in association with recorded finite life intangibles. If these estimates or related assumptions change in the future, we may be required to record impairment charges for our finite life intangible assets.
     Finally, we recorded indefinite-life intangible assets, or brand-names, in the purchase of Telvent Miner & Miner, Telvent Farradyne (both merged into Telvent USA Corporation effective July 1, 2010), Matchmind (merged into Telvent Global Services effective July 1, 2010) and Telvent DTN. These “brand name” intangibles are not amortized but are instead tested annually for impairment. See Note 13 to our consolidated financial statements.
Recent Accounting Pronouncements
Accounting Standards Codification
     In April 2010, the FASB issued ASU No. 2010-17, an accounting standards update that provides guidance on the milestone method of revenue recognition for research and development arrangements. This guidance allows an entity to make an accounting policy election to recognize a payment that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. This guidance will be effective for fiscal years beginning on or after June 15, 2010, which will be the Company’s fiscal year 2011, and may be applied prospectively to milestones achieved after the adoption date or retrospectively for all periods presented, with earlier application permitted. We do not expect the adoption of this statement to have any material effect on our financial position, results of operations or cash flows.
     In November 2010, the FASB issued ASU No. 2010-28, authoritative guidance on application of goodwill impairment model when a reporting unit has a zero or negative carrying amount. When a reporting unit has a zero or negative carrying value, Step 2 of the goodwill impairment test should be performed if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. The guidance is effective for the Company beginning in the first quarter of fiscal 2012. We do not expect the adoption of this Statement to have any effect on the Company’s financial position, results of operations or cash flows.
     In November 2010, the FASB issued ASU No. 2010-29, authoritative guidance on disclosure of supplementary pro forma information for business combinations. The new guidance requires that pro forma financial information should be prepared as if the business combination occurred as of the beginning of the prior annual period. The guidance is effective for the Company for business combinations with acquisition dates occurring in and from the first quarter of fiscal 2012. We do not expect the adoption of this statement to have any material effect on our financial position, results of operations or cash flows.
C.   RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
     We have made investments of € 26.4 million, € 29.0 million and € 24.0 million in research and development in 2010, 2009 and 2008, respectively. We invest in maintenance and enhancement of the existing services and solutions; in development of new services and solutions; and in new research programs to support our strategic position as a company providing IT for a sustainable and secure world in multiple industry segments.
     Part of our software development effort is capitalized and gets amortized over the economic life of the development. We have capitalized certain of our software development efforts as a result of a change in business strategy, moving partially away from a “customized” software solution per customer to a “productized” software development that is expected to provide future economic benefits through many future projects. In addition, developments for specific projects/clients are paid for by the respective projects and thus included within cost of revenues.
     Certain of our Smart Grid R&D efforts are now carried out through Telvent DMS, an equity method investment where a large investment is being made on our Distribution Management System solution. The expenses in research and development made through this company are not consolidated in our consolidated financial statements.
     We expect to continue to optimize our research and development expenses as we increase our focus on high growth, high margin “products” and technology, in line with our strategy to expand solutions to include information services, including Software as a Service (SaaS) while leveraging our deep market knowledge and distinctive technology.

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     Our research and development programs are carried out by our network of services, solutions and competency centers. Product centers provide infrastructure technologies and system architectures that underpin all of our solutions, while competency centers develop high value-added, industry-specific, advanced real-time and business process applications. The competency center applications can be deployed on a stand-alone basis or in concert with product center infrastructure products. As in past years, our product and competency centers continued to allocate substantial investment in pure research that typically utilizes a public funding component and collaborative research with universities, research centers and corporations to increase our know-how on advanced technological solutions to be implemented in future services and solutions.
D. TREND INFORMATION
Energy
Electricity
     We expect that a portion of our revenues and growth for 2011 will be driven by our smart grid solution (“SGS”) suite, a strategic initiative to integrate and deliver highly integrated metering infrastructure, operational and network automation applications for electric utilities worldwide. SGS at Telvent is more than a re-packaging of existing traditional offerings for electric utilities. SGS is a highly integrated, loosely coupled suite of solutions on an innovative, high performance and powerful framework that allows for cost-effective and incremental integration of SCADA, enterprise GIS, outage management (OMS), Meter Data Management (MDM), distribution management (DMS), substation automation, and a smart metering infrastructure. Telvent’s differentiators in this initiative are our common highly secure infrastructure and “backbone” applications leveraging the power of unprecedented integration. As a system integration platform, Telvent’s SGS suite allows for integration of third-party metering, RTU, Customer Information System (CIS), Mobile Workforce Management (MWFM) and other hardware and subsystems to maximize the utility customer’s existing investments. The solution suite responds to key market demands of the North America and Western Europe markets and is poised to help customers take advantage of significant industry regulatory and stimulus incentives. We have already won the majority of the first significant Distribution System Demand Response (DSDR) systems in North America to establish similar references to what we have in Europe. We see this experience generating specific interest in our SGS suite in Europe, and Latin America, where we are already well-established.
     An important focus for the year 2010 was to establish ourselves as an innovative and distinctive market player in Smart Grid technology by being awarded high profile projects against traditional competitors. In addition, we believe that in 2011 we can leverage our two world-class Vattenfall AMI and Fortum AMI project references to continue to win significant metering projects. These references should produce growth coming from this sub-segment. Fundamental to our strategy is the continuation of rapid expansion of our user base of key technologies in operations, metering and network automation. The trend of, on the average, one new account a week in one of these technologies has continued and the base is now over 500 electric utilities. This is well supported by the total pipeline of opportunities in our Electricity sub-segment.
     In addition, and particularly evident in the North American market, perhaps due to the slower than expected stimulus funding rollout, we foresee increasing interest in our advanced DMS technology by utilities. This interest is being driven by the need to embed more intelligence in the network. We expect that trend to be positive since our SGS offers a market-leading DMS technology, well integrated with all the possible Smart Grid initiatives. Likewise, over U.S. $4.0 billion of stimulus money, announced in the U.S. in 2009, has really yet to be effectively deployed in completed projects within the utilities in the U.S. Therefore, some utilities that were planning large rollouts of AMI took advantage in 2009 to make major IT improvements in preparation for their pending Smart Grid projects during 2010. However, in 2010 we did see a general shift of the focus from large metering projects to network optimization and efficiency projects, playing particularly to Telvent’s strengths. This led to growth in our bookings in 2010 for DMS and ADMS projects and we expect this trend to continue in 2011 as utilities continue to add intelligence to the grid and stimulus fund related projects start to be executed in force.
     Another area in which we are anticipating growth is the integration of “green” renewable energy either under construction or ready to “connect” to the grid. These initiatives are creating pilots and projects in the geographies we serve. We believe our relevant experience and references in this area are important differentiators and our investment in technology development in IT systems for solar power and wind plant projects, may position us favorably as such projects develop globally.
     Oil & Gas
     In North America, a strong fourth quarter in bookings in 2010 provides an optimistic revenue outlook entering 2011. Our 2010 results were better than expected in our liquids, simulation and advanced applications for gas business and we see a continuing focus in this area in the markets of North America and Latin America and developing growth in the Middle East. We are sensing a real interest in providing services to our customers under the new “software as a service” and “information as a service” business models

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in the near future, particularly in our portfolio of advanced applications such as power optimization, simulation, training and hydraulic modeling. This model should leverage our North American based world class data centers in Minneapolis, Minnesota and Omaha, Nebraska and our European data center network in Madrid, Spain.
     Our customers in this unit continue to drive toward implementation of new solutions fueled by increased industry and regulatory pressures around cyber-security, public and environmental safety and energy efficiency and conservation in operations. We expect revenues to show a strong start in the first half of the year as backlog from several projects booked late in 2010. Further, strong integration efforts of our pipeline solutions with our downstream retail refined fuels solutions should provide new opportunities in this region.
     In Mexico, our pipeline of opportunities is still strong; we therefore believe it may result in new project bookings in 2011. In the rest of Latin America, we also expect some pending projects to move ahead. We plan to expand our range of traditional midstream services and solutions to include upstream and downstream solutions to continue to grow in this region.
     We believe that prospects in China continue to be strong for 2011 especially with our key customers there such as PetroChina and Sinopec, as these customers focus on infrastructure investment in response to the challenging energy demands. In Australia, we will continue to leverage our local presence to pursue a growing market in operational and optimization solutions.
     Large consolidation prospects in the Middle-East and Africa regions continue to be strong. This is due to the low cost of production in the region and continued focus on operational efficiency. We are utilizing our local organization in Abu Dhabi to provide a base for expansion in the region, with both the Gulf States and Saudi Arabia being the target markets.
Transportation
     Our business in Transportation is related to critical infrastructure to be built or improved and maintained through latest technologies. Accurate transit and traffic information will become new added value to increase safety and mobility of people and goods. The transportation market is requesting more and more integrated solutions for traffic and transit, not only for management but also for operations: traffic incident management, emergency management, electronic payment and congestion pricing, fare integration, shared platforms, traveler information and information management.
     After the slowdown experienced in our Transportation activities during last two years, due to the budget constraints of public and private customers, and continuing economic problems in Spain, we remain cautious and conservative for 2011. We appreciate that stimulus packages launched in North America last year will released transportation technology projects while in Europe recovery will be very slow during 2011.
     In Europe, our exposure in Transportation is mostly in Spain. Our expectations for this market are summarized below:
    Our traffic activity is maintaining a consolidated position year after year. Besides the renewals of our current maintenance contracts, we believe that new opportunities will strengthen our leading position in the urban traffic market through Spanish Local and European Investment Plan (FEDER), which is focused on the promotion of public works at the municipalities over the next two years. During next year, traffic safety is still a high priority for the Spanish government and enforcement activities are receiving large investments from national and municipal funds, mainly in enforcement and violations processing systems. We believe that we have a strong portfolio of integrated urban traffic IT solutions and a well-established presence in Spain, which should benefit us to capture new business opportunities.
 
    In addition, the railway market will be receiving a growing investment plan. We expect the 2005-2020 Spanish Railway Investment Plan, whose aim is to bring railway into urban areas, to create new opportunities in 2011 and going forward, with the construction of new light railway lines and the extension of the existing subway networks which require fare collection systems. In addition, the high speed train market is also on the rise as this is the main area of interest for the Spanish administrators. During 2011, several Public Private Programs (PPP) to build high speed railway lines will be launched giving us more opportunities to grow. Our wide-ranging knowledge and expertise in railway traffic management systems and our excellent relationship with ADIF, the Spanish Administrator of Railway Infrastructures, should result in new opportunities related to the investment trend.
 
    The Spanish Road Traffic Authority (DGT) will reduced slightly their investments for 2011 dedicated to new projects but we expect new investments in our Enforcement Systems and in ITS Systems through extensions and upgrades of our yearly maintenance contracts, this will give us a more visible potential market and a clear tool to leverage our bookings
 
      Spanish Tolling market is moving to open road tolling systems. The first steps for approaching a free flow model for tolling systems is in government plans and this expectation will take form during 2011, giving us the opportunity to lead this new

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      technology trend, since we are able to provide a complete management platform for road and bridge tolling with online, real-time diagnostics of the entire tolling system.
    Additionally, the Maritime sector is becoming a promising sector that will bring us new growing revenues during 2011. Our latest success in the Protection Plan project for Melilla Port has consolidated our position as an innovative leader in this sector and has given us the opportunity to win the most modern integrated Port Management System for Barcelona Port, one of the largest ports in Mediterranean area.
     Elsewhere in Europe, we are continuing our sales and marketing efforts to position Telvent as a leading technology provider of ITS systems. The opportunities which may arise in the next few years are mainly in the tolling area, where we are already participating in several technological projects for the implementation of satellite toll systems and congestion charging projects to control access to large city centers. In most of the cases we are partnering with key alliances.
     In North America, the recovery of the transportation industry and our Transportation business is underway. In 2011, transportation technology funding increased significantly from prior years as federal funding reached historical highs. In many states, agencies have privately funded concessionaire efforts underway to expand infrastructure and technology using private and public sector funding. In public transportation, funds have been identified to increase efficiencies and reduce infrastructure cost.
     In all transportation sectors, technology is being utilized to improve the existing infrastructure. We believe that the trend of transportation in North America is directly linked with the strong financial conditions in the intelligent transportation industry in 2011. Key factors to take into account during 2011 that will be considered as indicators of a significant growth year include:
    Award of major tolling projects in the United States focusing on our strength in open road tolling technologies where Telvent has the greatest advantage, mirroring the industry trend,
 
    Expansion and execution of the Telvent transit technology in automated fare collect, facility management and vehicle tracking,
 
    Capitalizing on opportunities resulting from our strategic alliances,
 
    Passing of the next transportation highway bill — the new highway bill will set a new foundation for transportation in the next decade.
     We believe that traffic in the United States is evolving to a transaction management systems, based on traditional transportation systems for tolling, congestion pricing, back-office, etc. We believe that the Open-Road-Tolling (ORT) market has strong initiatives for 2011 and beyond, representing approximately a $150 million market opportunity in the United States, only for 2011. The transit technology will continue to expand to improve efficiency and ridership in our public transportation. Our signal system, freeway monitoring & control and tunnel control systems will continue to expand through government funded initiatives and concessions. Finally, we expect that our 511 traveller information projects will continue and evolve to a hosted solution for all departments of transportation.
     In Latin America, we believe that our main markets will be Brazil, Mexico and Panama where clear infrastructure investment plans and our local presence provide an optimistic outlook for new business. The 2014 World Football Championship and 2016 Rio de Janeiro Olympic Games funds are reinforcing current plans to develop additional transportation systems in the main cities (Rio, Sao Paulo, and other state capitals) that will be key sites for the events. Mobility plans, transit network upgrades to improve public transit use, as Bus Rapid Transit (BRT) or Light Rail Trains as well as metro networks will be build or extended. We believe our position in Rio de Janeiro, Sao Paulo and Belo Horizonte is give us excellent visibility to capture ITS projects in 2011. In addition, other countries are expected to continue developing their city and roads investments (Panama), their highways network (Mexico) or the renewal and construction of new railway infrastructures (Colombia and Mexico), which we believe represents new market opportunities for us in this region.
     In the Asia-Pacific region, we forecast investment in urban development that will provide opportunities in traffic control systems, especially in China and India. We expect that Beijing, Panjin and other main cities of China (where we have a recurrent presence) have a consistent investments in traffic control systems which should create opportunities. We also believe that new technologies in tolling systems to expand open road tolling concepts and the renewal and extension of China’s railway network are a priority for the Chinese government, which may provide opportunities in this region. We expect that India will be the main growing market in Asia. Large pipeline in urban traffic control systems and bus rapid transit networks in main capitals and metro investments will give us the opportunity of consolidating our presence in this market.

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     In the Middle East and Africa region, there is a clear long-term infrastructure investment strategy that is defining transportation plan, roads and railways. Our permanent local offices in Lebanon and Saudi Arabia, will give us the opportunity to participate in many new projects in the region. We are currently carrying out several traffic control projects for cities, roads and tunnels that allow us to establish Telvent in the market in the region. Therefore we believe this should represent a significant opportunity for future growth in the region. However, ongoing political unrest and instability in this region could adversely affect our growth opportunities in this region.
Environment
     In 2010, the significant growth in our Water business in North America, and a smooth and effective integration of the Telvent DTN weather services, meant the major achievements that led Environment to success.
     During 2010 our Value Proposition was strengthened through R&D and technological innovation. Investment in R&D in 2010 resulted in several significant releases in Weather Services and in Water Management.
     Year over year we have been decreasing the dependency of the Environment business on Spain, as the geographical diversification and the increased focus in North America were developing. The slowdown of the Spanish economy, as well as the turmoil situation in the Middle East and Africa Region, where Environment is developing business, may have some impact in 2011.
     Water scarcity is already a global phenomenon that is likely to worsen in the future. Consequently, water prices have been increasing steadily over the past years, making the commodity more valuable. In addition, we believe that the increase in population and consumption will drive an increase in water consumption. All these facts, combined with our solid position as a supplier of IT products and services related to water and new capital investments from private and public entities in charge of water management, should represent a good foundation for long-term growth in our water utilities business.
     We expect that developed economies will continue incorporating technology for improving efficiency, by preventing, detecting and ultimately reducing water leakage, and optimizing energy consumption. In addition, significant growth is also expected in regions where lack of water is becoming more and more a big issue, such as the Middle East region. We also believe that some areas in Latin America that are experiencing a solid and sustained growth, such as Brazil, represent significant opportunities for growth.
     We believe our wide experience in water related projects combined with our proven technical capabilities make us one of the few companies with both the technologies and the business knowledge necessary to understand water utilities as a whole. We believe this global vision allows us to provide these utilities with truly integrated solutions to help them to optimize their operations and business performance levels.
     We also believe that the increasing occurrence and severity of hydrologic events, driven by climate change, along with our proven technologies for hydrological monitoring and early warning systems, should result in business opportunities in the hydrology market.
     In addition, we believe weather is becoming more and more a key driver for many businesses. We believe that more accurate and timely weather information may result in significant improvements in efficiency and management across a broad range of businesses. We will continue leveraging our proprietary weather technologies to serve weather-sensitive businesses in key sectors including electricity generation, renewable power generation, water resource management, aviation, transportation, and public safety.
     We think that we now maintain a unique position in the business due to the combination of our weather observation with our weather forecasting capabilities. There is still a large area for developing synergies between our Weather unit and all other segments currently served by Telvent. Expanding weather integration into Telvent solutions for Aviation, for Traffic Management Systems, and for Energy Smart Grid solutions should result in growth opportunities.
     Finally, we expect that the environmental business will be driven in the mid-term by several conditions happening in the world, such as climate change and its main consequences; terrorist threats; increased energy regulations and quality standards; privatization and liberalization; and increasing efficiency through technology, among others.
Agriculture
     Over the course of the year, we continued to strengthen our position as a global leader in providing business information services to support the production, marketing and distribution of grains and livestock, predominately in the large, North American market.
     In 2010, our premium subscription services business experienced growth despite the difficult economic environment driven primarily by continued movement of our customers up the value chain, with emphasis on new proprietary content and data for both

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crop marketing and managing input prices. Additionally, our electronic grain trading initiative experienced significant growth, with the number of bushels transacted nearly doubled from 2009 to 2010, along with progress against all key metrics. Sales productivity and retention of customers also experienced some improvement in the second half of 2010. We expect to see this trend continue into 2011, with increased growth in revenue and sales productivity while retention remains strong.
     Our Progressive Farmer farm publication experienced a decrease in overall revenue during 2010 driven almost exclusively by a reduction in national advertising. Despite the difficult environment, our positioning as a core commercial agriculture publication and our commitment to industry-leading content continues to resonate with key agriculture advertisers. We expect to see recovery in the national advertising markets and this, in conjunction with our ongoing progress with key agriculture advertisers, should drive top-line revenue growth in 2011.
     The agriculture market experienced extreme volatility in 2010, with prices for major crops like corn, wheat and soybeans experiencing significant price swings during the year and generally being sharply higher than 2009 levels. Additionally, input prices, including fuel and fertilizer, were also unpredictable and experienced significant fluctuation. The combination of volatility and a shrinking credit market made the environment a challenging one for most agricultural market participants and many difficult decisions were faced. Our agriculture trading and risk management solutions activity during 2010 was driven by this increased market volatility and a strengthening of proprietary agriculture content that made producers and agribusinesses continued to look to Telvent DTN for the information needed to make these critical decisions. Our focus for 2011 remains on deepening and further differentiating our solutions to broaden our role in the agriculture supply chain, and we expect this to translate into growth for 2011.
     Finally, innovation, one of the cornerstones of business strategy, proved the key factor in the technological development that constitutes the company’s chief competitive edge. In 2010, Telvent DTN released new and improved products, and customers supported this effort by continuing to move to higher value solutions, and we expect this trend to continue in 2011.
Global Services
          Among to our different business activities, we find the following trends and opportunities for 2011:
          Business Consulting
    Expand in Latin America and North America our consultancy offer: our business consulting practice in Brazil is growing in size and we expect to increase business in this country during 2011. Brazil is one of the most dynamic economies around the world and there are several opportunities for Telvent to offer our Consulting business to a large range of customers. Additionally we want to continue our expansion in Mexico, Chile, Dominican Republic and the United States.
 
    Open innovation through alliances: we believe this activity will be the key to the future growth of our business. We think that innovation is one of the main enablers of competition in this market and the only possible means of survival for organizations, which must innovate in order to gain differentiation. The technologies available in the IT sector have an enormous potential to help other enterprises in this innovation process. We believe that forging alliances with the main players of the sector will generate the necessary synergies and economies of scale to move forward innovation in our organization.
    Integration and development
    We expect specific growth in three areas:
    Government: We are well-positioned to provide solutions in the area of citizen’s electronic access to public administration, particularly in Latin America. We empower more than 2,500 municipalities in providing the public with secure access to their electronic procedures serving a population of more than 30 million people.
 
    Software factories integration: We believe this is an area with significant opportunities for growth. We are currently identifying opportunities in several countries following the best practices and applying synergies in all the development process.
 
    Healthcare: The improvement of the healthcare systems in many regions, such as Latin America, where we already have a strong presence, can increase our business activity in this area.
          Outsourcing

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     IT technologies are unavoidable for cost-cutting and redefining business processes. The global economic crisis is making enterprise-wide cost reduction through the whole enterprise a priority. We anticipate that outsourcing of some of the enterprise-critical technological infrastructures can also represent an opportunity for cost cutting.
    CAPEX can be turned into OPEX with outsourcing. The current economic situation is forcing businesses to lower fixed costs of operations and management in ICT. Enterprises want to have predictable operating costs while looking towards increasing their global efficiency and reducing their OPEX in ICT. For many, the obvious solution is outsourcing. We believe that outsourcing could be a market that grows during times of crisis. In addition, we think that business process outsourcing (BPO) is a new outsourcing line of business with a strategic intent to expand customer relationships and capture one hundred percent of IT-related spending.
 
    Nearshoring. Some Eastern Europe countries are evolving as a nearshore location for Western European clients because of proximity and language skills. These same advantages might apply to our business due to our proficiency with such a universal language, such as Spanish, and our software factories network around the world (Uruguay and Brazil) and in Spain (Avila, Seville, Segovia, Coruña, Madrid, Leon and Vigo).
 
    Cloud Computing. We believe this represents our technological future. In accordance with Gartner’s predictions, Cloud Computing will be one of the deepest changes in IT evolution in the next ten years. Companies around the world may consider this alternative to avoid risks, save in the cost of licensees, improve their flexibility and scalability, have high availability and allocate their information around a whole network of data centers, although we do not believe Cloud Computing will be widely adopted by enterprises during 2011.
          IT Infrastructures management
     There are three new technologies for data centers: Virtualization, SaaS and SOA. We believe that virtualization is a first step towards eco-efficiency and towards service-oriented data centers, where companies will go from managing infrastructures to managing services. We believe that this trend will define the data center market in the following years. The convergence of these three technologies: virtualization, software as a service (SaaS) and service oriented architecture (SOA) will result in an IT dynamic infrastructure that should help align technology and businesses.
E. OFF-BALANCE SHEET ARRANGEMENTS
Guarantees
Performance Guarantees
     In the normal course of business, we provide performance guarantees in the form of performance bonds to customers that secure our fulfillment of the terms of the underlying contract. These bonds are for a fixed monetary amount and match the duration of the underlying contract that is generally between 18 and 36 months. We request similar bonds from our sub-contractors to mitigate this risk. The guarantees are generally not drawn upon, as we usually successfully complete the contract or renegotiate contract terms.
Financial Guarantees
     As of December 31, 2010, we maintained the following guarantees (amounts in thousands of euros):
                         
            Estimated        
    Maximum     Proceeds from     Carrying  
    Potential     Collateral/     Amount of  
    Payments     Recourse     Liabilities  
Performance guarantees
  €  211,288     €  23,854     €   
Financial guarantees
    9,090              
 
                 
 
  €  220,378     €  23,854     €   
 
                 
     Financial guarantees include € 7.6 million corresponding to standby letters of credit signed in connection with our acquisition of Telvent DTN.

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     The maximum potential payments represent a “worse-case scenario,” and do not necessarily reflect expected results. Estimated proceeds from collateral and recourse represent the anticipated value of assets that could be liquidated or received from other parties to offset our Company’s payments under guarantees.
Warranties
     We provide warranties in connection with all of our sales contracts, except for housing, hosting and maintenance contracts and information and electronic communications services. Warranties typically range from one to two years depending on the contract and cover factors such as non-conformance to specifications and defects in materials and workmanship. Based on historical experience, we have not incurred any material unexpected costs associated with servicing our warranties.
Commitments
     As described in Note 7 to our consolidated financial statements, our subsidiary, Telvent Outsourcing (which was merged into Telvent Global Services effective July 1, 2010), has an ownership stake of 15% in S21 Sec with a carrying value of € 5.6 million (carried at cost). S21 Sec is a leading Spanish company specializing in computer security. Navarra de Gestión para la Administración S.A.’s (“NGA”) has an option to sell us an additional 10% of the shares of S21 Sec on or before a date which originally was October 31, 2010, conditional upon us or any other company of the Abengoa Group investing € 15 million in the territory of Navarra. On November 25, 2010, the Company and NGA signed an addendum to the agreement, between Telvent Outsourcing (now merged into Telvent Global Services) and NGA, extending NGA’s option until May 25, 2012. We do not have the obligation or intent to make such investments, in which case NGA may still seek to require us to purchase the 10% stake of S21 Sec at a price not to exceed € 3.9 million.
     On April 27, 2007, our subsidiary, Telvent Traffic, completed the acquisition of 100% of the shares Telvent Caseta. Both companies merged into Telvent USA Corporation effective July 1, 2010. The stock purchase agreement with respect to the acquisition provides for contingent and variable earn-out payments and post-closing adjustments. There is an overall limit of U.S $20.7 million on the aggregate purchase price. We are not required to make any future payments that would cause the aggregate purchase price to exceed that limit. As of December 31, 2010, the total payments made for this acquisition amounted to U.S. $12.5 million and our best estimate of the potential additional earn-out payments under this agreement amounted to U.S. $0.6 million as of this date.
     As described in Note 23 to our consolidated financial statements, in October 2008 we completed the acquisition of 100% of the shares of DTN for a purchase price of U.S. $252.8 million (€ 189.1 million) including acquisition costs, payable in two payments: (i) a cash payment made on the closing; and (ii) a deferred payment to certain stockholders of Telvent DTN who are Telvent DTN employees (the “Employee Stockholders”). The deferred payment to the Employee Stockholders will be paid on or before December 31, 2011 together with interest thereon calculated at a rate equal to 90-day LIBOR as of the closing date adjusted as of the last day of each calendar year, but not less than 4% per annum (the “Deferred Payment”). The amount outstanding as of December 31, 2010 is U.S. $9.3 million (€ 7.0 million), including interest. In addition to the purchase price, the Employee Stockholders have the right to earn a premium, or earn out, on the amount of their deferred purchase price. Such premium or earn out will be a variable amount determined based on Telvent DTN achieving a stipulated amount in aggregate EBITDA for the period January 1, 2009 to December 31, 2011. We estimate the total amount of the earn-out to be approximately U.S. $8.1 million (€ 6.1 million), taking into consideration, on each closing date, the probability of such payment. See Note 23 to our consolidated financial statements for complete details on the commitments assumed in this acquisition.
     Also, as described in Note 23 to our consolidated financial statements, on February 3, 2009, our subsidiary, Telvent Farradyne, (known as Telvent USA Corporation effective July 1, 2010), signed an agreement through which it acquired certain of the assets of NLDC. The purchase price for these assets was U.S. $1.5 million, of which U.S. $1.0 million was paid as of December 31, 2010. In addition, Telvent Farradyne also entered into a Consulting Services Agreement under which we will pay a total of U.S. $2.0 million through four installments payable every six months starting July 1, 2009, of which U.S. $1.5 million was paid as of December 31, 2010, and an additional contingent payments of up to U.S. $0.5 million. In addition, Telvent will pay NLDC additional commission payments up to a maximum of U.S. $ 5.0 million in respect of contract bookings signed by Telvent during the four years from 2009 through 2012 related to back-office and customer service center systems utilizing the TollPro Software. As of December 31, 2010, our best estimate of the potential payments under these agreements amounted to U.S. $2.2 million (€ 1.7 million). As of December 31, 2010 we have recorded a liability of U.S. $1.8 million (€ 1.4 million) corresponding to the present value of such obligations in our consolidated balance sheets. Amounts have been recorded taking into consideration, on each closing date, the probability of such payments.

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     F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
     As of December 31, 2010, we had the contractual obligations set forth in the following table:
                                         
    Payments Due by Period  
            Less than                     More than  
    Total     1 year     1-3 years     3-5 years     5 years  
    (Euros in thousands)  
Contractual Obligations
                                       
Long-term debt
  €  220,254     €  28,868     €  61,262     €  121,767     €  8,357  
Short-term debt
    48,219       48,219                    
Deferred and contingent payment on acquisitions
    12,458       825       11,633              
Capital lease obligations
    3,356       1,656       1,700              
Operating lease obligations
    121,757       21,063       37,190       5,737       57,767  
Reserve for uncertain tax positions
    3,936                         3,936  
Convertible Notes
    103,534                   103,534        
Other long-term obligations
    10,291       631       2,581       3,597       3,482  
Purchase obligations
    136,710       135,490       1,220              
 
                             
 
                                       
Total contractual obligations
  €  660,515     €  236,752     €  115,586     €  234,635     €  73,542  
 
                             
     We have contractual obligations to make future payments on debt and lease agreements. Additionally, in the normal course of business, we enter into contractual arrangements where we commit to future purchases of services from unaffiliated and related parties, and request deposits from our customers.
     Long-term and short-term debt include the total amount outstanding under long-term and short-term financing arrangements and is more fully discussed in Notes 18 and 19 to our consolidated financial statements.
     Covertible Notes correspond to our U.S $200 million aggregate principal amount of 5.50% subordinated convertible notes and is more fully discussed in Note 21 to our consolidated financial statements.
     Deferred and contingent payment on acquisitions includes € 7.0 million related to the acquisition of DTN Holding Company, Inc. As described in Note 23 to our consolidated financial statements, in October 2008, we completed the acquisition of Telvent DTN for a total purchase price of U.S. $252.8 million (€ 189.1 million), including acquisition costs, payable in two payments: (i) a cash payment made on the closing; and (ii) a deferred payment to certain stockholders of Telvent DTN who were Telvent DTN employees (the “Employee Stockholders”). The deferred payment to the Employee Stockholders will be paid on or before December 31, 2011 together with interest thereon calculated at a rate equal to 90-day LIBOR as of the closing date adjusted as of the last day of each calendar year, but not less than 4% per annum. The amount outstanding as of December 31, 2010 amounts to U.S. $9.3 million (€ 7.0 million) and is recorded as a liability in our consolidated balance sheets, as described in Note 20 to our consolidated financial statements. In addition to the purchase price, the Employee Stockholders have the right to earn a premium, or earn out, on the amount of their deferred purchase price. Such premium or earn out will be a variable amount determined based on Telvent DTN achieving a stipulated amount in aggregate EBITDA for the period January 1, 2009 to December 31, 2011. We estimate the total amount of the earn-out to be approximately U.S. $8.1 million (€ 6.1 million). The amount outstanding as of December 31, 2010 for this premium amounted to € 4.1 million and is recorded in Other long-term liabilities in our consolidated financial statements (see Note 23 to our consolidated financial statements).
     In addition, Deferred and contingent payments on acquisitions includes, € 1.4 million related to the acquisition of certain assets of Northern Lakes Data Corp (see Note 23 to our consolidated financial statements).
     Capital lease obligations include the amounts owed to third parties in connection with facilities, equipment and machinery acquired under capital lease arrangements. Operating lease obligations include the amounts owed on leases for corporate buildings. Operating and capital lease obligations are more fully discussed in Note 23 to our consolidated financial statements.
     As we describe in Note 2 to our consolidated financial statements, the reserve for uncertain tax positions corresponds to the provision we recorded upon application of ASC 740-10 (pre-codification FIN-48) and to the amount resulting from the integration of Telvent DTN.

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     Other long-term obligations include the total amount outstanding under government loans, customer deposits, the provision for the extraordinary variable compensation plan and other payments due to suppliers, and are more fully discussed in Note 20 to our consolidated financial statements.
     Purchase obligations include any agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. DIRECTORS AND SENIOR MANAGEMENT
     On March 15, 2011, our directors and senior management were:
                 
                Expiration of
Name   Age     Position   Director Term
Ignacio González Domínguez
    43     Director, Chairman and Chief Executive Officer   2015
HRH Carlos de Borbón
    73     Director   2015
Miguel Cuenca
    62     Director   2015
Eduard Punset
    74     Director   2015
Javier Salas
    63     Director   2015
José B. Terceiro
    67     Director   2015
Bernardo Villazán
    51     Director   2015
Emilio Cassinello
    74     Director   2015
José Manuel Fernández Norniella
    65     Director   2015
Javier Castrillo Penadés
    46     Director   2015
Marta de Amusátegui y Vergara
    46     Director   2015
José Dominguez Abascal
    57     Director   2015
José Montoya Perez
    64     Deputy Chairman    
Javier Garoz Neira
    41     General Manager of Corporate Development    
Manuel Fernandez Maza
    37     Chief Financial Officer and Head of Investor Relations    
Carmen Rodriguez Carrión
    40     Internal Auditing    
Lidia García Páez
    37     Legal Counsel    
Aránzazu Caja Chocarro
    37     Director of Human Resources    
Larry Stack
    58     Energy President    
José I. del Barrio
    48     Transportation President    
Ronald J. Sznaider
    51     Environment Executive Vice President    
Cristobal Ramos Carranza
    49     Environment President    
John Leiferman
    53     President and Chief Financial Officer of Telvent DTN    
Dave Jardine
    68     North America Chairman    
Luis Rancé
    69     Mexico Chairman    
Marcio Leonardo
    59     Brazil Chairman    
Carlos Dai Yue
    47     China Chairman    
Alfredo Escribá Gallego
    41     Transportation Executive Vice President    
Manuel Losada Friend
    39     Energy Executive Vice President    
Javier de la Cuerda
    40     Global Services Executive Vice President    
Thomas Dilworth
    45     Chief Accounting Officer    
     Ignacio González Domínguez — Chairman and Chief Executive Officer. Director since May, 2010. Mr. González joined Telvent in 1990 as a project engineer participating in key control systems projects. From 1995 to 1998, he worked as an engineer and project manager for the electrical sub-segment of Telvent’s Energy Segment. In 1998, he was promoted to the position of International Proposals Department Manager. In 1999, he was named Telvent Mexico’s General Manager. In 2002, he was named General Manager of Telvent Energía y Medio Ambiente S.A., and served in that capacity until his appointment as Executive Vice President of Telvent Energy in 2006.
     Mr. González holds an honors degree in industrial engineering, with a specialization in electricity, from Seville University in Seville, Spain, and an MBA from San Telmo’s Institute in Seville, Spain.
     His Royal Highness Carlos de Borbón Dos Sicilias y Borbón Parma — Director since January 2003. His Royal Highness has served as a board member of several companies, including CEPSA (a Spanish energy company), Iberpistas (the Spanish tollway operator), Reyalurbis. He also sponsors and presides over various foundations, including Banesto, San Benito de Alcántara (the Spanish Nature Conservation Foundation) and the Foundation for the Protection of the Environment. At present, he is the President of

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the Patronage of the Navy Museum, President of the Foundation United World Collegues and President of Diana Capital. HRH Carlos de Borbón earned a law degree from Complutense University (Madrid, Spain).
     Miguel Cuenca — Director since November 2000. Since January 2008 he has served as a member of the Nominating and Compensation Committee. Mr. Cuenca was previously a member of the Audit Committee until December 2007. Mr. Cuenca was Secretary of the National Industry Institute (INI) from 1985 until 1992 and Vice-President from 1992-1996. INI is the Spanish state-owned holding company that holds all of the shares in governmental entities and state-owned companies in Spain. He also has been a Member of the Economic and Social Council of the European Union (1990-1992) and Vice-President of Iberia Airlines of Spain (1993-1995). Currently, he is President of the Innovation and Technology Wood Managing Commission Foundation, the Economic and Social Council of Cordoba (since 2004), and is a contributor to several newspapers and TV programs. Mr. Cuenca has a law degree from Complutense University (Madrid, Spain) and an MBA from IESE Business School of the University of Navarra (IESE) in Barcelona, Spain.
     Eduard Punset — Director since November 2000; a member of the Audit Committee until December 2007. Member of the Nominating and Compensation Committee since January 2008. Mr. Punset has written several books and co-authored others about the impact of technology on business growth. At present, he is a professor for several institutions and manages REDES, a television program about the public understanding of science. He is Chairman of Smart Planet (a multimedia science production company) and Board Member of Sol Meliá S.A. From 1969 to 1974 he was a senior member of The International Monetary Fund in Washington and their representative in the Caribbean. He was also the Deputy Director of Economic and Financial Studies for the Banco Hispano Americano and from 1980 to 1981, he was Spain’s Minister for Relations with the European Union. Mr. Punset has an Economics degree from the University of Madrid and received degrees in Monetary Economy at l’Ecole de Hautes Etudes of the Sorbonne and a Master in Science and Economy from the University of London. He is currently Professor of Science, Technology and Society at the Chemical Institute of Ramón Llull University (Barcelona).
     Javier Salas — Director since November 2000 and Chairman of the Audit Committee. Mr. Salas was General Manager of Corporate Management at the National Industry Institute (INI) from 1988 until 1990 and was later promoted to President. He was Chairman of Iberia Airlines of Spain from 1993-1995. At present, he is Chairman of the Board of Bloqmarine International, S.L. and a board member of several companies including Red Eléctrica Corporacion (electricity transmission and operation), GED Iberian Private Equity SGERC (private equity), and GED Capital Development, S.A. (venture capital). He is the member of the Audit Committee of Red Eléctrica Corporacion since 2005. He serves as the President of “Fundación Entorno” (Environment) and is a director partner of Saga Servicios Financieros, S.A. (financial services). Mr. Salas has an Economics degree from University of Málaga, Spain.
     José B. Terceiro — Director since November 2000. Mr. Terceiro is a Professor of Applied Economics at the University Complutense of Madrid. Mr. Terceiro is Chairman of the Board of Bioetonal Galicia, S.A. and is a Board Member of the Prisa Group, Abengoa and Iberia Airlines of Spain. He previously held several Spanish government offices, including Undersecretary of the Cabinet Office, General Director for Libraries and Books, the National Education Advisor and Vice-President of the Center for Constitutional Studies. He was a member of the Economic and Social Council of Spain. In addition, Mr. Terceiro has also been a Professor at several other universities in Spain and abroad, including the Universidad de La Havana and he developed the program of the North-American Universities for the University of Madrid. From 1983 until 1999, Mr. Terceiro was the advisor of the Academic Board of the Royal College Complutense at Harvard. Mr. Terceiro holds a PhD in Economics from the University Complutense of Madrid.
     Bernardo Villazán — Director since May 2005, member of the Nominating and Compensation Committee since June 30, 2005 and Chairman of the Nominating and Compensation committee since January 2008. Mr. Villazán was Managing Director and Chairman of Lucent Technology Spain and Portugal until December 2006 when Lucent merged with Alcatel. He served as Chief Marketing Officer of Alcatel Lucent for Europe and South (Europe, Latin America, India, Africa and Middle East) until February 29, 2008. Since March 1, 2008, he has been Chief Operating Officer of Barloworld Finanzauto. He has worked for more than 20 years in the Information Technology and Telecommunications sectors, Mr. Villazán is a member of the Advisory Administrators Institute of Spain, and was also a member of the Board of Directors and Treasurer of AETIC (Association of Electronics, Information Technologies and Telecommunications companies of Spain). Mr. Villazán has a degree in Industrial Engineering from the ICAI in Madrid, and a PADE from the IESE in Madrid.
     Emilio Cassinello — Director since May 2005 and a member of the Audit Committee. Mr. Cassinello is a career diplomat and Ambassador of Spain. Currently Mr. Cassinello is at present the Director General of the Toledo International Center for Peace, President of the European Peacebuilding Liason Office (Brussels) and Member of the Institutional Council of Casa Sefarad/Israel (Madrid). In the Ministry of Foreign Affairs, he has served as Assistant Director General for Africa, Director General of Organizations and International Conferences, Director General of Latin America Political Affairs, and Director of the Foreign Policy Planning Staff. He has acted as Commercial Counselor and Chargé d’ Affaires in the Embassies of Addis Ababa and Dar es Salaam, Cultural

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Counselor in Mexico, and Spain’s Ambassador in Angola (1978-79) and Mexico (1982-85). He was President and Chairman of the State Corporation for the Universal Exposition of Seville 1992 (1986-1991), and Commissioner General (1991-1993). He was also General Consul of Spain in New York (1998-2003) and Ambassador at large for North American Affaires (2003-2004).
     A Law Graduate from Madrid and Mexico Law Schools, Mr. Cassinello holds a LLM from Harvard Law School. He was the founding Secretary General of the Spain/United States Council and is Vice-President of the Euroamerican Foundation. He is also a member of the Scientific Council of Real Elcano Institute of International and Strategic Studies and of the Casa Árabe (Madrid); Honorary Fellow of the Foreign Policy Association of New York, and a member of the Advisory Council of the Dukes of Soria Foundation. He is also a member of the Board of both the Museum Picasso-Málaga and El Museo del Barrio (New York).
     José Manuel Fernández Norniella — Director since May 2007 and a member of the Audit Committee since January 2008. Mr. Fernández Norniella has worked as General Director of Administration of ABB, Vice President of Aldeasa, Chairman of Azucarera Ebro, Chairman of Ebro Puleva, Honorary Chairman of Ebro Puleva’s Group, Vice President of Iansa, Councillor of Argentaria, ENAGAS and Endesa. At present, he is member of the Councils of Iberia and Caja Madrid, and he is Vice President of Chilectra. José Manuel Fernández Norniella has also been a Councillor elected by the Parliament in RTVE, National Deputy for Madrid in the V and VI legislatures, Secretary of Estate of Comerce, Turism and Small and Medium-sized Enterprises (SMEs), and Chairman of the Council of the Chambers of Commerce of Spain.
     Javier Castrillo Penadés — Director since March 2010. Mr. Castrillo Penadés is Director of Retail Banking for Banco Santander. He has worked for Banco Santander since 2004, serving as a Manager in various departments. Prior to working for Banco Santander, he worked 14 years for Mckinsey & Company, the last six years as a partner. Mr. Castrillo Penadés holds a degree in Engineering from the Universidad Pontificia de Comillas (Madrid) and holds an MBA from INSEAD (Fontainebleau-France).
     Marta Amusátegui y Vergara — Director since March 2010. Ms. Amusátegui y Vergara, an independent consultant since 2008, she specializes in Corporate Finance and Mergers & Acquisitions. Prior to that, she worked for Bank of America, N.A., Branch in Spain from 2003 to 2008 in the positions of General Manager, Country Executive Officer and Managing Director of Corporate and Investment Banking. She also worked as Executive Director of Lehman Brothers in London from September 2001 to October 2002, and Executive Director for UBS Warburg from February 1996 to August 2001. Previously she was a consultant with McKinsey & Company from February 1992 to December 1995. Ms. Amusátegui y Vergara is a member of the Board of Directors of Eland Private Equity, S.G.E.C.R., S.A. and a member of the McKinsey Alumni Council in Spain. She holds a degree in Engineering from the Universidad Pontificia de Comillas (Madrid) and an MBA from INSEAD (Fontainebleau-France).
     José Domínguez Abascal — Director since November 2010. Mr. Abascal is the Technical General Secretary and CTO of Abengoa, responsible for its research, development and innovation activities. Prior to his appointment to his current position in May 2008, he served for four years as the General Secretary for Universities Research and Technology in the regional government of Andalusia, Spain. Additionally, Mr. Abascal served for 22 years as a Full Professor in the Structural Engineering Department of the University of Seville, Spain. During this time, he served as Vice-Rector (1990-1992) and Dean of Engineering (1993-1998). Mr. Abascal is a member of the European Academy in the Physics and Engineering Section and a member of the Real Academy of Sciences in Seville, Spain. In 2004, he received the Spanish National Award of Investigation in Engineering, Leonardo Torres Quevedo. Mr. Abascal obtained his Mechanical Engineering degree in 1975 and his Ph.D. in 1977 both at the University of Seville. He was a Research Fellow at the University of Southampton, United Kingdom while he worked on his Ph.D. thesis during 1976, and Postdoctoral Fulbright. Scholar and Research Associate at the Massachusetts Institute of Technology (MIT) from 1977 to 1978.
     Jose Montoya Pérez — Deputy Chairman of Telvent. Prior to his appointment as Deputy Chairman of Telvent, Mr. Montoya served as the President of Transportation from January 2007 until February 2010. From 1989 until December 2006, Mr. Montoya Pérez held the position of Vice President of Transportation. In 2007 he was appointed President of Transportation. Mr. Montoya Pérez held the position of Vice President Transportation. Currently, he is a member of the board of directors of several of our subsidiaries. He is also the Vice-Chairman of the Spanish Traffic Organization (PEMTRA); Vice-President of the Spanish Road Association and a member of the Road Safety National Council, to which he was appointed by the Department of the Interior of Spain. Mr. Montoya Pérez graduated in engineering from the Universidad Politecnica de Linares and also holds an MBA from lESE (Madrid, Spain).
     Javier Garoz Neira — Chief Operating and Corporate Development Officer. From 2002 until December 2003, Mr. Garoz Neira assumed the position of Manager of the Environmental Division in Seville. He joined Telvent in 2001, holding several positions in sales and management. He had worked for 20 years in several international and national businesses occupying different management positions. Javier Garoz Neira is a member of the Board of ViraNet, Ltd, and has a bachelor’s degree in marketing and commercial management through ESIC. He has completed the Program of Management Development through IESE.
     Manuel Fernández Maza Chief Financial Officer and Head of Investor Relations. Mr. Fernández, current Chief Finance Officer of Telvent, joined Telvent in 2003 as Financial Director. Since September 2006, Mr. Fernández held the position of CFO of Telvent North America, which included Telvent’s four subsidiaries in the United States and one in Canada. Prior to joining Telvent, Mr. Fernández spent five years in different areas and companies within Abengoa: Financial Director of Teyma Abengoa (Argentina)

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and Abengoa Chile, Financial Controller of Abengoa Mexico, and Audit and Consolidation Department of Abengoa. Mr. Fernández holds a Bachelor of Business Administration from Seville University, Spain, and an Executive MBA from IESE Business School in Madrid, Spain.
     Carmen Rodríguez Carrión — Chief Audit Officer. On October 17, 2006, Ms. Carmen Rodríguez Carrión was appointed by the Audit Committee as the Director of Internal Auditing. Ms Rodríguez Carrión has been in charge of internal auditing for us since 2003. Ms. Rodríguez Carrión joined Telvent in January 2002 as an Internal Auditor. In September 2003, she was promoted to the position of Internal Audit Manager and has been working in the implementation of Telvent’s system of internal control over financial reporting for the last years. Prior to joining Telvent, Ms. Rodríguez Carrión worked for three years in the tax practice of PricewaterhouseCoopers in Madrid, Spain. Before that, from 1996 to 1999, Ms. Rodríguez worked in the Financial Department of Visa. Ms. Rodríguez Carrión holds a bachelors degree in Business Administration and Economics from the CEU University of Madrid. In addition, she has a Masters Degree in Taxation from the Instituto de Empresa (Madrid, Spain).
     Lidia García Páez — Legal Counsel. Ms. García Páez joined Telvent in 2000 as Legal Counsel for Telvent Tráfico y Transporte, S.A. She held this position until 2005, when she was appointed Risk Manager for Telvent, a position that she held until 2006, when she was appointed Legal Counsel of Telvent. She has held the position of Secretary of the Board of several companies within Telvent, including her current position as Secretary of the Board of Telvent GIT, S.A. since June 2006. Prior to joining Telvent, Ms. García worked in the Committee on External Economic Relations of the European Parliament, in Brussels. Ms. García Páez graduated with a degree in Law from the University of Complutense of Madrid (CEU). She also holds a Diploma in European Union Law from the “College des Haute études Européens” from the Pantheon Sorbonne University in Paris. She is member of the Madrid Bar Association since 1998.
     Aránzazu Caja Chocarro — Director of Human Resources. Ms Caja Chocarro joined us in October 2000. Starting her professional career in the department of Human Resources of Abengoa. In January 2007, she was named Director of Human Resources of Telvent and the Nominating and Compensation Committee Secretary. Her previous professional background activities were carried out in companies like Amena where she focused her interests in management and organization of human resources. Ms. Caja holds a Bachelor degree of Psychology from the Comillas University.
     Larry Stack — President, Energy. Since January 2007, Mr. Stack has been responsible for the operations of our Energy segment. Beginning in 1986 at Valmet (later known as Metso Automation), a leading international automation company, Mr. Stack held various project, research and development management and executive positions. Mr. Stack held the position of Chief Technology Officer of Telvent Canadá and Telvent USA from January 2003 to January 2006, then Vice President of Telvent Canadá and Telvent USA from 2006 through 2007 when he was promoted to his current position. Mr. Stack graduated in Electronics Engineering Technology (with Honors) from the Southern Alberta Institute of Technology.
     Jose Ignacio del Barrio — President, Transportation. Prior to being appointed President of Telvent Transportation, Mr. del Barrio served as the President of Global Services. Mr. del Barrio joined Telvent in 1988 as a Project Manager for large-scale strategic projects in Africa and Latin America in the Communications Division and was later promoted to Director of the International Department. In 1993, Mr. del Barrio was named Telvent Mexico’s General Manager. After three years in Mexico, he took the position of Sales and Marketing Director of Telvent Energía y Medio Ambiente S.A. and in 1998 he was named Managing Director of the Communications Division. In 2001, he was named Telvent’s General Manager, where he founded and held executive positions in Telvent Housing, Telvent Datahouse and Telvent Interactiva. Mr. del Barrio graduated with a degree in Telecommunications Engineering from UPM (Madrid, Spain) and holds a degree from the Business Administration Program from IESE (Barcelona, Spain).
     Cristóbal Ramos Carranza — President, Environment. Mr. Ramos Carranza, our current Executive Vice President Environment, previously served as our Environment Operations Vice President from 2007 through May 5, 2009. Mr. Ramos joined us in 1988 as a software engineer. Since 1990, he worked as a Project Leader and Project Manager in our SCADA software/systems development projects. Mr. Ramos Carranza became Manager of the Meteorology Department within Telvent Energy and Environment in 1998 and was named Director of the Environment Division in 2003. Mr. Ramos Carranza holds a degree in Industrial Engineering from Seville University, Spain. He also holds an MBA from the Instituto San Telmo in Seville, Spain.
     John Leiferman President of Telvent DTN. Mr. Leiferman, current President of Telvent DTN, joined Telvent DTN in 1996 and has served in many capacities throughout his career. Prior to his appointment as President, Mr. Leiferman served as both the Chief Operating Officer and Chief Financial Officer. Mr. Leiferman holds a Bachelor of Science in Business Administration from the University of Nebraska and is a Certified Public Accountant.
     David Jardine — Chairman and President — North America. Mr. Jardine has led the Calgary, Canada based-unit (Telvent Canada and Telvent USA), which we acquired in 2003, since 1987. He has been Chairman and President of Telvent Farradyne since the acquisition of Telvent Farradyne in 2006. Previously, he was Vice President of Westronic Inc., which manufactured automation

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products for the electric utility market and was subsequently sold to GE Power Systems. Mr. Jardine received a degree in Electrical Engineering from the University of Manitoba and holds an MBA from the Haskayne Business School of the University of Calgary.
     Marcio Leonardo — Chairman Brazil. Mr. Leonardo has held his current position since 2001. Prior to joining us, he spent 17 years managing his own engineering company, which was a supplier to the industrial automation market in Brazil. Mr. Leonardo was also previously a Professor in the Electrical Department of the Catholic University of Minas Gerais and has held different board positions at the Brazilian Electrical and Electronic Industry Association. He holds a B.S. degree in electrical and electronic engineering from the Federal University of Minas Gerais and a specialization degree in industrial electronics from the Catholic University of Minas Gerais.
     Luis Rancé — Chairman Mexico. Mr. Rancé joined Telvent in 1990 at the time of incorporation of our Mexican subsidiary. Prior to joining us, he spent five years running his own energy management systems business. Before that, he spent 24 years with the main power utilities in Mexico: Luz y Fuerza del Centro (LYF) and Comisión Federal de Electricidad (CFE), both government utilities, where he held various executive operations positions. Mr. Rancé has a B.S. degree in electrical and mechanical engineering from Universidad Autónoma de Mexico (UNAM) and a Master’s degree in Power Systems from Pennsylvania State University.
     Carlos Dai Yue — Chairman China. Mr. Dai Yue joined Telvent in July 2002. Previously, he spent thirteen years as Chief Representative in China and Director of Projects for MQM, S.A. and two years with IBG Group as General Manager, where he specialized in industrial projects in China, including petrochemical, machine tools, defense, energy, water and waste treatment. Mr. Dai holds Masters degrees in communications and in Spanish culture from Beijing Foreign Study University of China.
     Alfredo Escribá Gallego — Executive Vice President Transportation since 2010. Mr. Alfredo Escribá Gallego joined Telvent in 1995 as a project engineer in the Traffic department of the Company. After living in Brazil and Argentina for 6 years leading the Transportation business in those regions, in 2002, he was appointed as Vice President of the International Traffic Business of Telvent. In 2007, he was promoted to the position of Senior Vice President and General Manager of Telvent Transportation North America and he moved to Rockville, MD.
     Mr. Alfredo Escribá holds a degree in engineering by the Universidad Politecnica de Madrid, Spain, and an MBA by the IAE Business School in Buenos Aires, Argentina.
     Manuel Losada Friend — Executive Vice President Energy since 2010. Mr. Losada joined Telvent in 1999 as a project engineer participating in key control systems projects for several utilities in Europe and Latin America. From 2001 to 2003, he worked as an engineer and project manager for the electrical distribution sub-segment of Telvent’s Energy Segment, managing both national and international projects. In 2003, he was promoted to the position of Manager of the Distribution department; one year later, in 2004, he broadened his role in the Department taking care not only of the Distribution area but also the Transmission sub-segment of Telvent Energy. In 2009, he assumed the responsibility of the vice presidency of the Electric business unit of Telvent Energy.
     Mr. Losada Friend holds a degree in industrial engineering, with a specialization in electricity, from Seville University in Seville, Spain, having studied part of his career at Danmarks Tekniske Universitet in Denmark, Copenhagen. He holds an MBA from San Telmo’s Institute in Seville, Spain, and a Master in Building and Managing Enterprises from Industrial Organization Business School in Seville, Spain.
     Javier de la Cuerda — Executive Vice President Global Services since 2011. Mr. de la Cuerda holds a degree in Electronic and Organization Engineer, PhD in International Management, General Management Program (PDG) in IESE and Master in Sales Management in ESADE Business School.
     Since 2005, Mr. de la Cuerda hold different positions in Telvent, including a position of Sales & Marketing Management, Head of the Outsourcing Business and Head of the Solution Center in Telvent Global Services.
     Prior to joining the Company, Mr. de la Cuerda worked as Principal Consultant in Equant (France Telecom), Business Development Manager in Interxion and Organization and IT&C Manager in GEA Tuchenhagen.
     Thomas Dilworth — Chief Accounting Officer effective January 2011. Mr. Dilworth joined Telvent in 2004 through the acquisition of Telvent Miner and Miner, based in Fort Collins, Colorado where he served as Chief Financial Officer from 1995 until April 2008 when he was appointed as Chiel Financial Officer for Telvent North America, responsible for the financial reporting obligations regarding the Energy, Environment and Traffic operating units in the U.S. and Canada.
     Mr. Dilworth earned his bachelor’s degree in business from California State University-Stanislaus and an MBA with honors from Colorado State University.
     Ronald J. Sznaider — Executive Vice President Environment. Prior to his appointment as Executive Vice President Environment in March 2011, Mr. Sznaider has served as General Manager of Telvent DTN Weather since 2010. Mr. Sznaider served as the Vice President of Telvent DTN Weather from 2009 until 2010. In addition, Mr. Sznaider served as Vice President of DTN Meteorlogix from 2000 until 2009 and Vice President of Kavouras Incorporated from 1998 until 2000.

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     Mr. Sznaider is a graduate of the University of Wisconsin-Madison with a B.S. degree in Atmospheric Sciences, with graduate studies at the Naval Postgraduate School in Monterey, California and the University of St. Thomas in Minneapolis, Minnesota. Mr. Sznaider has over 30 years of professional experience in the environment business, has developed several technology patents, and has served in various management capacities within different organizations.
B. COMPENSATION
Senior Management and Director Compensation
     For the year ended December 31, 2010, we paid aggregate directors’ fees plus meeting allowances and consulting fees of approximately € 0.4 million to our directors and we paid aggregate compensation (including salary and bonus) of € 4.5 million to the twenty members of our senior management listed above. These figures include accruals for contingent or deferred compensation.
Certain Transactions and Relations
     During 2010, H.R.H. Mr. Carlos de Borbón received € 46,961.96 in consulting fees from Telvent Corporation, S.L.
Abengoa Stock Purchase Plan
     On February 2, 2006, Abengoa implemented a Share Acquisition Plan, which was approved by the Board of Directors of Abengoa on January 23, 2006. The plan is for members of the senior management of Abengoa and its subsidiaries, including us and our subsidiaries (collectively, the “Abengoa Group”), under which the participants in the plan will be entitled to purchase shares of Abengoa. Our Nomination and Compensation Committee and Board of Directors approved participation in the plan by members of our senior management on January 19, 2006.
     The material terms of the plan are as follows: members of the senior management of the Abengoa Group, including 9 employees of Telvent, of which 7 belong to Telvent’s current senior management team, are eligible to participate in the plan. These 7 members have purchased 217,500 shares of Abengoa, which represents less than 1% of the equity of Abengoa all together.
     Each participant involved in the plan has used the proceeds of an individual bank loan secured or guaranteed by Abengoa and excluding the personal responsibility of the participants pursuant to Article 81.2 of the Companies Act (Spain) to acquire shares of Abengoa that were already issued, at the current market price, during the first and second quarter of 2006, in accordance with the Stock Exchange Act (Spain). The bank credit was obtained for a total amount of € 12.3 million (including expenses, commissions and interests) and to be paid over a period of five years and six months. Each participant has pledged the Abengoa shares acquired under the plan to the bank, without recourse to the participant. The shares have been purchased by the bank for the participants, and the acquisition cost for all participants has been the average acquisition price, plus associated costs, for all of the shares purchased under the plan.
     The duration of the plan is five complete financial years (2006 — 2010) plus six months (until June 30, 2011). The plan is based on the annual accomplishment by the participant of annual management objectives set for the participant by management of the company. If the annual objectives are not met by the participant, the bank may sell a percentage of the shares as follows: 2006 (30%), 2007 (30%), 2008 (15%), 2009 (15%) and 2010 (10%). A participant may not transfer, sell, borrow against or otherwise dispose of the shares before July 1, 2011. At the end of the five-year and six-month term of the plan, if the amount realized on a sale of the shares does not entirely cover the amount of the loan and costs and taxes on capital gains, Abengoa will compensate the participant with the necessary amount to meet the total amount required. In addition, the plan permits Abengoa to repurchase the shares from a participant on the occurrence of certain events, such as death, disability, retirement or termination of the employment of the participant.
2007 Extraordinary Variable Compensation Plan
     On March 22, 2007, the Nomination and Compensation Committee of the Telvent Board of Directors and the Telvent Board of Directors approved a variable compensation plan (the “Plan”) for members of the senior management of Telvent and its subsidiaries. The participants in the Plan include currently 29 members of the senior management of Telvent and various subsidiaries, including business unit managers, senior project managers, technical and research and development managers and corporate services officers and managers (the “Participants”). The Plan is based on the accomplishment of objectives based on the 2006 Strategic Plan of Telvent. The duration of the Plan is five complete fiscal years, commencing January 1, 2007, and ending December 31, 2011. The calculation and the payment of the benefits under the Plan must occur not later than June 30, 2012, after the verification of the fulfillment of the objectives based on the annual audit reports.

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     The Plan provides for extraordinary, variable compensation to the Participants based on fulfillment of annual objectives during the term of the Plan and is in addition to any other variable compensation and/or bonuses earned or which may be earned by each Participant. The compensation only vests and becomes payable after the end of the fifth year of the Plan.
     The following conditions must be fulfilled in order for a Participant to earn compensation under the Plan:
  (a)   The Participant must remain in the employment of the Company or another Telvent subsidiary as described in section 4.4 throughout the term of the Plan. In addition, if and so long as the Participant remains employed by an Affiliate (as hereinafter defined) of Telvent other than a Telvent subsidiary, such Participant may continue to participate in the Plan upon approval of the Board of Directors. Such approval of the Board of Directors shall be based upon the recommendation of the Nominating and Compensation Committee and the finding by the Board of Directors.
 
      For purposes of this section (a), the term affiliate shall mean any entity that Telvent controls, is controlled by, or is under common control with.
 
  (b)   For each fiscal year of the Plan, the Participant must be entitled to receive an annual bonus under the bonus plan of the company with which the Participant is employed for that year, based on the achievement of least 90% of the objectives other than bookings or quality specified in that company’s bonus plan. Failure to earn a bonus under that company’s bonus plan in one year does not disqualify a Participant from being eligible to earn compensation under the Plan in another year. Employees working in areas of general corporate services not associated with any particular business segment will have to fulfill additional objectives specifically defined by the President of Telvent.
 
  (c)   Fulfillment of the consolidated five-year budget of Telvent corresponding to the fiscal years 2007-2011 according to the Internal Strategic Plan dated June 2006.
 
  (d)   The price of the ordinary shares of Telvent listed on the NASDAQ Global Select Market on December 31, 2011 must be not less than U.S. $17.00 per share. If the list price is less than U.S. $17.00 due to circumstances of volatility of the share prices and/or the stock market, then the price of the Telvent shares will calculated using the average price during a reference period of three months before and three months after December 31, 2011, and this will be submitted for the consideration of our Nomination and Compensation Committee.
 
In case of termination of the employment of a Participant (whether voluntary or by dismissal) before the end of the term of the Plan, the Plan will terminate with respect to that Participant, and the Participant will not be entitled to receive any payment under the Plan.
 
In the case of death of a Participant, the Plan will terminate with respect to that Participant, and at the end of the term of the Plan, the heirs of the Participant will be entitled to receive the compensation earned under this Plan by the Participant for the fiscal years completed prior to the death of the Participant and proportionally for the completed months passed until the date of death, if the objectives for that fiscal year are fulfilled.
 
In the case of either retirement of a Participant on reaching 65 years of age or total disability (that prevents the Participant from being able to do any other type of work) before the end of the term of the Plan, the Plan will terminate with respect to that Participant and the Participant will be entitled to receive the compensation earned under this Plan for fiscal years completed to the date of his retirement. In addition, the Participant will be entitled to receive proportionate compensation for the completed months passed until the date of retirement during the fiscal year in which the Participant retired, if the objectives for that fiscal year are fulfilled. The calculation and payment of the compensation will be made at the end of the term of the Plan.
 
In the case of a change in job position by a Participant (within the Company or a transfer to another Telvent Subsidiary, or to an Affiliate in accordance with Section (a), above), the Participant will be treated as having earned the compensation for the completed months passed until the date of the change of position, if the objectives for that fiscal year are fulfilled and new objectives will be established applicable to the Participant’s new position. The calculation and payment of the compensation will be made at the end of the term of the Plan.
     On December 18, 2008, the Nomination and Compensation Committee and the Company’s Board of Directors approved an amendment to the Plan. Upon certain events, the amendment accelerated certain compensation that its participants are eligible to earn. In the event of a sale of 100% of the issued and outstanding ordinary shares (the “Shares”) of the Company whereby the Shares are sold at a price higher than the then-current market value of the Shares, subject to the approval the Board of Directors upon the recommendation of the Committee, all compensation that each participant is eligible to earn within the five-year period commencing on January 1, 2007 and ending on January 1, 2011 will be deemed to be earned and vested. In the event of any other sale of a controlling interest in the Company and irrespective of the price at which the Shares are sold, all compensation that each participant is

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eligible to earn with respect to the completed fiscal years at such time will be deemed to be earned and vested automatically and without further action of the Committee six months following the closing of such sale.
     On November 19, 2009, the shareholders of Telvent, at the Extraordinary Shareholder’s Meeting, ratified the decision taken by the Board of Directors on June 25, 2009, to amend the Extraordinary Variable Compensation Plan, in order to allow eligible Participants of the Plan to receive certain of their Plan awards in the form of the Company’s ordinary shares rather than in cash. At the election of Plan Participants, who had to accept and agree to the amendment at the grant date of June 25, 2009, the amount vested during the first three years of the Plan will be converted into such number of shares as is determined by dividing the amount of the original vested cash award by U.S. $18.50, the price paid by Telvent for such shares on September 15, 2009. Until the Plan fully vests on December 31, 2011, and the calculation and the payment of the benefits under the Plan occurs (no later than June 30, 2012), the shares will be held as treasury shares in the Consolidated Balance Sheets in our consolidated financial statements, and will be treated as issued, but not outstanding. The cash award to be vested during the last two years of the Plan is being recorded as compensation expense, against other long term liabilities, according to its vesting period. After this amendment, the amount available for distribution in cash is € 4.3 million.
     On November 22, 2010, the Nomination and Compensation Committee and the Board of Directors of the Company adopted an addendum to the Plan. The addendum clarifies that participants remaining employed by any entity that the Company controls, is controlled by or under common control with, may continue to participate in the Plan upon the recommendation of the Nominating and Compensation Committee and approval of the Board of Directors. Additionally, with respect to the death of a participant or upon the retirement, total disability, or change in position of a participant, the addendum provides for proportionate compensation for the completed months passed until the date of death, retirement, disability, or change in position during the fiscal year in which the participant died, retired, became totally disabled or changed positions, if the objectives for such fiscal year were fulfilled.
C. BOARD PRACTICES
Responsibilities and Terms
     Under Spanish Law, the board of directors of a Spanish corporation is responsible for management, administration and representation in all matters concerning our business, subject to the provisions of our bylaws and resolutions adopted at general shareholders’ meetings by a majority vote of the shareholders. A majority of our board consist of independent members under applicable NASDAQ listing standards appointed from outside of our company. Eight of our twelve current directors (Messrs. Cuenca, Punset, Salas, Villazán, Cassinello, Fernández, Castrillo and Amusategui) are independent under applicable NASDAQ listing standards.
     Directors are elected by our shareholders to serve five-year terms. A director may be re-elected to serve for an unlimited number of terms. If a director does not serve out his or her entire term, the board of directors may fill the vacancy by appointing a shareholder as a replacement director to serve until the next general shareholders’ meeting, when the appointment may be ratified or a new director to fill the vacancy is elected or replaced. A director may resign or be removed (with or without cause) from office by a majority vote of the shareholders at a general shareholders’ meeting. As a result of these five-year terms, not all of our directors will be elected each year, and in some years none of our directors will stand for election. Information about how long each of our current directors has served as a director and when his term expires, is set forth in Section 6.A. above.
     Under Spanish law, the board of directors may delegate its powers to an executive committee or other delegated committee or to one or more executive officers, unless the shareholders, through a meeting, have specifically delegated certain powers belonging to the shareholders’ meeting to the board and have not approved the possibility for the board’s delegation to others. Since November 2008, the independent directors on our board of directors have held meetings in conjunction with the regular meetings of the board of directors. Spanish corporate law provides that resolutions appointing an executive committee or any executive officer or authorizing the permanent delegation of all, or part of, the board’s power require a two-thirds majority of the members of the board of directors. Certain powers provided in Spanish corporate law may not be delegated, including the drafting of the financial statements and the proposal for its approval by the shareholders at their annual meeting, disapproval of which would prohibit the filing of the company’s annual accounts in the Mercantile Registry of Madrid.
     None of our directors have any contracts with us, including our subsidiaries, providing for benefits upon termination of their services as directors.
Audit Committee
     Our Audit Committee, which we established in January 2003, reports to the board regarding the appointment of our independent public accountants, the scope and results of our annual audits, compliance with our accounting and financial policies and

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management’s procedures and policies relative to the adequacy of our internal accounting controls. At this time, our Audit Committee is responsible for the oversight of our relationship with Abengoa, including the approval of the terms and conditions of transactions between Abengoa and us. The members of the Audit Committee are Messrs. Salas, Fernández and Cassinello, all of whom are independent in accordance with NASDAQ’s listing standards and the independence requirements of the SEC. The chairman and financial expert on the Audit Committee is Mr. Salas. Under Spanish law, shareholders have the authority to approve the engagement of the auditors for an initial period of at least three years up to a maximum of nine years. Our external auditors are appointed by our shareholders at each annual shareholder’s meeting.
     Our Board of Directors has adopted an Audit Committee Charter for the Audit Committee. A copy of such charter, as amended, is available on our website at www.telvent.com. In March 2005, September 2007 and in July 2009, our Board of Directors approved certain amendments to our Audit Committee Charter to clarify and expand it.
Nominating and Compensation Committee
     The Nominating and Compensation Committee was established in June 2005. The Nominating Committee is responsible for reporting to the Board of Directors on matters relating to the appointment, reelection, retirement, removal and compensation of the members of the Board of Directors, on general policy relating to compensation and incentives for the aforesaid members and senior management. The committee is responsible for preparing the proposals that the Board of Directors presents to the General Meeting of shareholders for the appointment or removal of Directors, including those appointed by the Board of Directors to fill vacancies.
     The members of the Nominating and Compensation Committee are Messrs. Villazán, Punset and Cuenca, each of whom is independent in accordance with NASDAQ’s listing standards and the independence requirements of the SEC.
     Our Board of Directors has adopted a Nominating and Compensation Committee Charter for the Nominating and Compensation Committee. A copy of such charter, as amended, is available on our website at www.telvent.com. In February 2008, our Board of Directors approved certain amendments to our Nominating and Compensation Committee Charter to clarify and expand it.
D. EMPLOYEES
     We had the following number of employees as of the dates and in the functional areas specified in the following table:
                         
    As of December 31,  
    2010     2009     2008  
Sales and marketing
    463       399       427  
Research, development and innovation
    552       514       549  
Management and administration
    1,777       1,655       1,769  
Engineering and integration
    3,371       3,139       3,355  
 
                 
Total employees
    6,163       5,707       6,100  
 
                 
     Our employees were located in the following geographic areas as of the dates specified in the following table:
                         
    As of December 31,  
    2010     2009     2008  
Europe
    3,728       3,370       3,657  
North America
    1,657       1,718       1,829  
Latin America
    623       460       439  
Asia-Pacific
    155       159       175  
 
                 
Total employees
    6,163       5,707       6,100  
 
                 
E. SHARE OWNERSHIP
     The following table sets forth certain information regarding beneficial ownership of our ordinary shares by each of our senior management and each of our directors as of March 16, 2011.

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            Percentage of  
Name of Beneficial   Total Shares     Ordinary  
Owner(1)   Beneficially Owned     Shares(2)  
Ignacio González Domínguez
    120,000         *
José Montoya
    106,620         *
HRH Carlos de Borbón
           
Miguel Cuenca
           
Eduard Punset
           
Javier Salas
           
José B. Terceiro
           
Bernardo Villazán
    600         *
Emilio Cassinello
           
Jose Manuel Fernández
           
Javier Castrillo Penedes
           
Marta de Amusátegui y Vergara
           
José Domínguez Abascal
           
Javier Garoz
           
Manuel Fernández
           
Carmen Rodríguez
           
Lidia García
           
Aránzazu Caja
           
Larry Stack
    72,000         *
José I. del Barrio
    82,500         *
Cristobal Ramos
           
John Leiferman
    400         *
Dave Jardine
    108,000         *
Marcio Leonardo
           
Luis Rancé
           
Carlos Dai Yue
           
Manuel Losada Friend
           
Thomas Dilworth
           
Alfredo Escribá Gallego
           
Javier de la Cuerda
           
Ronald J. Sznaider
    4,000        
All directors and executive officers as a group (30 persons)
               
Total
    494,120       1.45 %**
 
(1)   Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting or investment power with respect to the securities.
 
(2)   * represents beneficial ownership of less than 1% of our ordinary shares.
 
(3)   ** based on 34,094,159 shares issued.
     Each of the directors and executive officers listed above, except Bernardo Villazán and John Leiferman acquired his or her shares through the stock compensation plan described in “Item 6.B — Directors, Senior Management and Employees — Compensation.”
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. MAJOR SHAREHOLDERS
     As of March 31, 2011, the number of record holders of our ordinary shares in the United States was 76. To the best of our knowledge, we only have the following three major shareholders (the term “major shareholder” means any shareholder that beneficially owns 5.0% or more of our outstanding ordinary shares): Abengoa, Waddell & Reed Financial Inc and Newland Capital Management, LLC. None of our major shareholders have different voting rights.
Abengoa
     According to the Third Amendment to Schedule 13D, which relates to the Schedule 13D initially filed on November 6 2008, (the “Original Schedule 13D”), and as amended by Amendment No. 1 on June 12, 2009, and Amendment No. 2 on September 23, 2009,

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filed on December 3, 2009 by Abengoa, Abengoa beneficially owned 13,637,644 shares, or 40.4% of our outstanding ordinary shares, through its two subsidiaries, Siema AG (“Siema”) and Telvent Corporation, S.L. (“Telvent Corporation”). Siema directly owned 2,234,600 shares, or 6.6% of our outstanding ordinary shares. Telvent Corporation directly owned 11,403,064 shares, or 33.8% of our outstanding ordinary shares. Miguel Angel Jiménez-Velasco, as authorized representative, exercises voting rights and dispositive powers over the shares owned by Telvent Corporation. Mr. Jiménez-Velasco disclaims any beneficial ownership of the shares. Siema is wholly-owned by Siema, S.A.
     As of December 31, 2010, we believe that Inversión Corporativa owned approximately 56.0% of the shares of Abengoa. Inversión Corporativa is a private corporation, which we believe has approximately 300 shareholders, none of whom we believe has a controlling interest. Prior to our IPO, Abengoa owned 91% of our ordinary shares.
     Abengoa’s percentage ownership of our ordinary shares decreased to its current level on November 2, 2009 following Telvent Corporation’s sale of 3,650,000 of our ordinary shares in a public offering and an additional 542,374 shares to underwriters who exercised their full over-allotment option pursuant to our effective registration statement on Form F-3 (File No. 333-162278). During 2009, Telvent Corporation also sold: (i) 3,109,975 of our ordinary shares in an underwritten offering on June 2, 2009, and an additional 466,495 shares to underwriters who exercised their full over allotment on June 9, 2009, pursuant to our effective registration statement on Form F-3 (File No. 333-155933); and (ii) 370,962 of our ordinary shares to us.
Waddell
     According to joint Amendment No.4 to Schedule 13G, filed on February 8, 2011, by Waddell & Reed Financial, Inc. (“WDR”), Waddell & Reed Financial Services, Inc. (“WRFSI”), Waddell & Reed, Inc. (“WRI”), Waddell & Reed Investment Management Company (“WRIMCO”) and Ivy Investment Management Company (“IICO” and, together with WDR, WRFSI, WRI and WRIMCO, the “Waddell 13G Filers”) own an aggregate of a total 5,214,660, or 14.8%, of our ordinary shares as follows:
         
WDR:
  5,214,660  (indirect)
WRFSI:
  3,572,566  (indirect)
WRI:
  3,572,566  (indirect)
WRIMCO:
  3,572,566  (direct)
IICO:
  1,642,094  (direct)
     According to the joint Amendment No. 4 to Schedule 13G, such securities are beneficially owned by one or more open-end investment companies or other managed accounts which are advised or sub-advised by IICO, an investment advisory subsidiary of WDR or WRIMCO, an investment advisory subsidiary of WRI. WRI is a broker-dealer and underwriting subsidiary of WRFSI, a parent holding company. In turn, WRFSI is a subsidiary of WDR, a publicly traded company. The investment advisory contracts grant IICO and WRIMCO all investment and/or voting power over securities owned by such advisory clients. The investment sub-advisory contracts grant IICO and WRIMCO investment power over securities owned by such sub-advisory clients and, in most cases, voting power. Any investment restriction of a sub-advisory contract does not restrict investment discretion or power in a material manner. Therefore, IICO and/or WRIMCO may be deemed the beneficial owner of the securities covered by this statement under Rule 13d-3 promulgated under the Securities Exchange Act of 1934.
     According to the joint Amendment No. 4to Schedule 13G, each of the Waddell 13G Filers are of the view that they are not acting as a “group” for purposes of Section 13(d) of the Securities Exchange Act of 1934. Indirect “beneficial ownership” is attributed to the respective parent companies solely because of the parent companies’ control relationship to WRIMCO and IICO.
Newland
     According to the Schedule 13G, filed on March 7, 2011, Newland Capital Management, LLC (“Newland Capital”), Newland Master Fund, Ltd (“Newland Master”), Ken Brodkowitz (“Brodkowitz”), and Michael Vermut (“Vermut” and, together with Newland Capital, Newland Master, and Brodkowitz, the “Newland 13G Filers”) own an aggregate of and share voting power of a total of 1,726,691, or 5.1%, of our ordinary shares.

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B. RELATED PARTY TRANSACTIONS
Services and Supplies Provided by Abengoa to Us
     During the years 2010, 2009 and 2008, we entered into, or renewed, a number of service agreements with Abengoa for the provision of professional services to assist, improve and support us with the expansion of our activities. These transactions were completed at market rates. These services include:
  cash pooling arrangements;
  financial management;
  institutional support with international multilateral financing organizations;
  institutional commercial assistance;
  tax and legal advisory services;
  centralized asset management;
  support in providing official global credit rating;
  assistance with auditing and consolidation services under Spanish GAAP and IFRS (International Financial Reporting Standards);
  provision of guarantees and endorsements;
  negotiation and optimization of global corporate insurance policies;
  internal publicity and corporate image;
  human resources services; and
  other support services.
     Each agreement has a one-year term and is extended annually unless terminated by either party within 30 days prior to its expiration. Our subsidiaries may reduce the level of services they request under these agreements. Each agreement provides that either party may terminate the agreement if the other party does not fulfill its obligations. None of the agreements may be assigned without the prior written consent of the other party. The total amounts of the services provided by Abengoa under the services agreements were € 8.3 million, € 6.0 million, and € 5.9 million in 2010, 2009, and 2008, respectively.
     We also have entered into a service agreement with Gestión Integral de Recursos Humanos, S.A., or GIRH, a subsidiary of Abengoa. This agreement provides us with services for personnel management, recruiting and hiring personnel, human resources development, employment relationships and occupational safety. This agreement was entered into in 2004, with one-year renewable terms unless terminated by either party by notice given at least 60 days prior to the date of expiration. We recorded expenses under this agreement of € 1.1 million, € 1.0 million, and € 2.1 million in 2010, 2009, and 2008, respectively.
     In addition to the services agreements, we purchase a variety of supplies from Abengoa and its subsidiaries, which primarily consist of production, assembly and engineering of electronic and control boards and mechanical installation services. Our purchases of supplies from Abengoa and its subsidiaries totaled € 8.6 million, € 5.5 million, and € 7.6 million in 2010, 2009, and 2008, respectively. We believe these purchases were on at least as favorable terms and conditions as we could have obtained from third party suppliers.
     A subsidiary of Abengoa (Simosa IT) provides services to Telvent for the provision of communications, IT and related services. This agreement started on January 1, 2010, with one year renewable terms. In 2010 expenses from this agreement amounted to € 13.3 million.
     We lease our Seville facilities from a subsidiary of Abengoa (Centro Tecnológico Palmas Altas). The Agreement for the lease and services was extended into in 2010, with one-year renewable terms. In 2010, expenses from this agreement amounted to € 2.6 million.

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     We also lease our Mexico facility to Abengoa Mexico S.A. de C.V. (See “Item 10.C Additional Information — Material Contracts” for more information about this lease) and related maintenance services to Abengoa Servicios Mexico S.A. de C.V. Our lease expenses totaled € 0.1 million, € 0.3 million and € 0.5 million in the years 2010, 2009 and 2008 respectively.
Services Provided by Us to Abengoa
     We, and our subsidiaries, had an agreement to provide services to Abengoa primarily for the provision of communications, IT and related services. The largest of these agreements involved our subsidiary, Telvent Outsourcing, merged into Telvent Global Services effective July 1, 2010. In 2009 and 2008, the revenues from these agreements amounted to € 24.6 million and € 19.4 million, respectively. On February 1, 2010, Telvent Outsourcing, entered into an asset purchase agreement with Simosa IT, S.A, a wholly-owned subsidiary of Abengoa, under which Telvent Outsourcing agreed to sell to Simosa IT, S.A. certain of its assets used in providing IT services to Abengoa and its other business groups, including the employees, equipment, applications, hardware, software, and intellectual property necessary to provide such IT services. The sale of the assets also included Telvent Outsourcing’s stock ownership in Telvent Implantación y Sistemas, S.L. Our subsidiary Telvent Global Services has provided IT services to Simosa IT during 2010 amounting to 17.6 million in 2010.
     Finally, we also lease part of our Madrid facility space to several members of the Abengoa Group. Services and lease revenue related to the portion of our Madrid facility leased to members of the Abengoa Group was € 0.8 million, € 0.3 million and € 0.9 million in 2010, 2009 and 2008 respectively.
Credit Agreement with Abengoa and Abengoa Mexico
     On April 20, 2004, we established a reciprocal credit agreement with Abengoa which replaced any prior credit arrangements. Under this arrangement, we and Abengoa could borrow funds from or lend funds to each other, from time to time upon not less than 24 hours’ notice, up to a maximum of € 45.0 million (or the equivalent amount in any other currency quoted in the Spanish currency market). On August 1, 2007, we amended the agreement to increase the maximum credit limit to € 60.0 million (or the equivalent amount in any other currency quoted in the Spanish currency market). On January 1, 2010 the agreement was amended to increase the maximum credit limit to € 135.0 million. From that date, loan under this agreement bore interest at 8.35%. Each loan matured on the last date of the fiscal year in which such loan was made, without requiring any earlier payment of principal. This credit arrangement was optional and either the Company or Abengoa could elect not to make loans to the other. This agreement had an initial term ending December 31, 2004, and was renewed for annual one-year terms until March 31, 2010 when the agreement was replaced by a new credit agreement between Abengoa as lender and the Company as borrower.
     On March 31, 2010 the Company signed a unilateral credit agreement with its largest shareholder, Abengoa, that terminated the prior bilateral credit agreement, signed on January 1, 2010. Under the new agreement, the Company, on a consolidated basis, has a borrowing limit of €  60.0. The daily balance in the account resulting thereof shall accrue interest at an annual interest rate of 8.35%. The settlement and payment of interest shall be made at the end of each financial year and at the time the credit facility terminates. In the case a request for funds is made for an amount that results in an accumulated amount exceeding the maximum limit set forth, the lender may at its discretion charge to the account solely the amount needed to cover up to the maximum limit, or charge the total amount requested by the Company, in which case the limit is automatically modified between both parties, with no need to sign a new agreement. The initial term of the agreement expires on March 23, 2012, however if the Company draws any funds six months prior to the end of the initial term, then the agreement automatically extends for an additional two-year term.
     On December 1, 2002, Telvent Mexico established reciprocal credit agreements with Abengoa Mexico. Under these agreements, Telvent Mexico and Abengoa Mexico may borrow funds or lend funds to each other up a maximum amount which originally was U.S. $10.0 million. The agreements have been amended twice, the first time, on January 1, 2006, to increase the maximum of the credit limit to U.S. $25.0 million and the last time, on June 1, 2007 to increase the maximum credit limit to U.S. $30.0 million. Borrowings under these credit arrangements bear interest at three-months LIBOR plus a variable margin from 0.0% to 6.0%. These agreements renew for annual one-year terms until terminated by either party.
     On December 1, 2002, Telvent Energía established reciprocal credit agreements with Abengoa Mexico. Under these agreements, Telvent Energía and Abengoa Mexico may borrow funds or lend funds to each other up to a maximum amount of U.S. $10.0 million. Borrowings under these credit arrangements bear interest at three-months LIBOR plus a variable margin from 0.0% to 6.0%. These agreements renew for annual one-year terms unless either party gives notice in writing at least one week prior to the expiry date of of its intention to not renew the agreement.
     These credit arrangements result in a total credit line for the Company of approximately €  112.4. As of December 31, 2010 the net credit line payable was € 21.8, with € 90.6 remaining available to the Company as of this date. The Company incurs no costs and receives no payments under these arrangements unless and until it borrows or loans funds hereunder. The average monthly balance of

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amounts (due to) or due from Abengoa affiliates was € (92.4) and € (62.0) in 2010 and 2009, respectively. At each year end, the creditor has the right to demand, or to give notice of its intention to demand repayment.
Purchase Agreement regarding our Repurchase of our Ordinary Shares
     On September 11, 2009, we entered into a purchase agreement with Telvent Corporation, S.L., a subsidiary of Abengoa S.A. In connection with this agreement, we acquired 370,962 of our ordinary shares, nominal value € 3.00505 per share in exchange for a purchase price of U.S. $18.50 per share, for an aggregate purchase price of U.S. $6.9, equivalent to € 4.7 based on the U.S. $/Euro exchange rate on September 10, 2009 of 1.458 U.S. $/Euro. Closing of the purchase of the shares occurred on September 15, 2009. See “Item 10.C Additional Information — Material Contracts” for a complete discussion of the purchase agreement.
Bank Loans to employees guaranteed by Abengoa under the Abengoa Share Acquisition Plan
     As also described in detail in Item 6.B. Directors, Senior Management and Employees - Compensation, on February 2, 2006, Abengoa implemented a Share Acquisition Plan, which is for members of the senior management of Abengoa and its subsidiaries, including us and our subsidiaries, (collectively, the “Abengoa Group”), under which the participants in the plan will be entitled to purchase shares of Abengoa.
     Each participant involved in the plan has utilized the proceeds of an individual bank loan secured or guaranteed by Abengoa and excluding the personal responsibility of the participants pursuant to Article 81.2 of the Companies Act (Spain) to acquire shares of Abengoa that are already issued, at the current market price, during the first and second quarter of 2006, in accordance with the Stock Exchange Act (Spain). The bank credit has been obtained for a total amount of € 12.3 million (including expenses, commissions and interests) and is to be paid over a period of five years and six months. Each participant has pledged the Abengoa shares acquired under the plan to the bank, without recourse to the participant. The shares have been purchased by the bank for the participants, and the acquisition cost for all participants has been the average acquisition price, plus associated costs, for all of the shares purchased under the plan for all participants.
     The loans obtained by participants in this plan involved extensions of credit by either Banco Sabadell, S.A. or Caja de Ahorros y Monte de Piedad de Madrid. The interest rate on each of the following loans for the purchases of Abengoa shares is a variable rate equal to EURIBOR plus 0.75%. These are bullet and not amortizing loans. The following loans to key management personnel (and related Abengoa guarantees) in connection with the purchase of shares under the Abengoa Share Acquisition Plan were outstanding during the period from January 1, 2010 through March 1, 2011: (i)Ignacio González: the largest amount outstanding during the period from January 1, 2010 — March 1, 2011 (€ 910,957.39), the amount outstanding as of March 1, 2011 (€ 910,957.39); (ii) José I. del Barrio: the largest amount outstanding during the period from January 1, 2010 — March 1, 2011 (€  911,258.61), the amount outstanding as of March 1, 2011 (€ 911,258.61); (iii) Larry Stack: the largest amount outstanding during the period from January 1, 2010 — March 1, 2011 (€ 634,802.30), the amount outstanding as of March 1, 2011 (€ 634,802.30); (iv) José Montoya: the largest amount outstanding during the period from January 1, 2010 — March 1, 2011 (€ 910,831.31), the amount outstanding as of March 1, 2011 (€ 910,831.31); (v) David Jardine: the largest amount outstanding during the period from January 1, 2010 — March 1, 2011 (€ 479,973.04), the amount outstanding as of March 1, 2011 (€ 479,973.04); (vi) Marcio Leonardo: the largest amount outstanding during the period from January 1, 2010 — March 1, 2011 (€ 461,043.47), the amount outstanding as of March 1, 2011 (€ 461,043.47); and (vii) Carlos Dai: the largest amount outstanding during the period from January 1, 2010 — March 1, 2011 (€ 554,973.36), the amount outstanding as of March 1, 2011 (€  554,973.36).

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C. INTERESTS OF EXPERTS AND COUNSEL
     Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
Consolidated Financial Statements
     Please see “Item 18 — Financial Statements” and pages F-2 through F-45 of this annual report.
Other Financial Information
Export Sales
     Not applicable.
Legal Proceedings
     We are subject to lawsuits from time to time, including lawsuits that we have relating to our acquisitions. There are no material legal proceedings pending or, to our knowledge, threatened, against us.
Sintel
     A member of our Board of Directors, Mr. Cándido Velázquez Gaztelu, was the President of the Board of Directors of Telefónica S.A. in April 1996 when the sale of its subsidiary “Sintel” was approved. The Audiencia Nacional is investigating the reasons for Sintel’s insolvency. In connection with that investigation, the Audiencia Nacional called Mr. Cándido Velázquez Gaztelu, among others, to give testimony about Telefonica’s sale of Sintel.
     On December 12, 2007, the Audiencia Nacional made an order dismissing the action against Mr. Velázquez Gaztelu. On January 16, 2009, the Audiencia Nacional issued an order dismissing all appeals against the order made December 12, 2007. This order is non-appealable, final and binding, therefore the proceedings are closed with respect to Mr. Velázquez Gaztelu.
El Toyo Project
     On June 13, 2006, a court in Spain issued a judgment stating that the award of the concession contract for the Advanced Digital Services Center for the City of Almería (the “El Toyo Project”) to Telvent was void on the grounds that the procurement procedures followed by the government of the City of Almería in awarding the contract were inadequate. The City filed an appeal against the judgment. On July 6, 2006, Telvent, as an interested party, also filed an appeal. The filing of the appeals renders the judgment ineffective until all of the appeals have been resolved. On May 26, 2008, the Spanish appeals court issued a judgment accepting the appeal filed by Telvent. The appeals court revoked the judgment made on June 13, 2006 and replaced that judgment with a declaration that the awarding of the concession contract to Telvent by the City was valid. The other parties to the appeal did not exercise their right to appeal the judgment to the Supreme Court in Spain, therefore, we consider that the matter has now been concluded.
     As of December 31, 2008, the development and installation work for the El Toyo Project was substantially complete, although acceptance by the City has not yet been obtained. In addition to the fixed price for the works to be supplied by Telvent, the contract provides for a 20 year operation and maintenance period for which we will be paid by monthly payments over the 20 year period. Due to a dispute with the City over the calculation of the percentage of completion of the work, we have been unable to receive a works completion certificate to enable us to receive payments for a substantial part of the work completed to the present time. In addition, the dispute with the City has also delayed the commencement of the operations and maintenance period. The dispute and delays have resulted in additional costs being incurred by Telvent, including interest on a loan with Unicaja that was entered into for this project (described in Item 5B “Credit Arrangements and Loan Facilities” and in Note 19 of our Consolidated Financial Statements).
Saudi Arabia Project
     A commercial dispute between Telvent Tráfico and its client regarding a transportation project in Saudi Arabia was resolved and settled in August 2010. The dispute concerned the violations enforcement part of the project, which involved equipment that was

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subcontracted by Telvent Tráfico to Sensys Traffic AB, a Swedish company (“Sensys”). The client served a notice of termination of its contract with Telvent Tráfico on the basis that the violations enforcement equipment provided by Sensys did not meet the specifications of the contract. On August 28, 2010, we signed a settlement agreement with the customer pursuant to which the parties mutually exclude the violations enforcement system from Telvent Tráfico’s scope of work for the project.
     There is a dispute between Telvent Tráfico and Sensys in relation to the supply by Sensys of the enforcement equipment for the project. Telvent Tráfico has negotiated with Sensys to seek to reach an amicable resolution of the dispute but the parties have been unable to reach agreement. On February 23, 2011, Telvent Tráfico demanded payment of € 1.9 million under the performance bank guarantee that Sensys was required to provide under the subcontract to guarantee the fulfilment of its contractual obligations. On March 4, 2011 Telvent Tráfico received payment of the € 1.9 million from the bank that issued the performance guarantee. Telvent Tráfico is now preparing for arbitration proceedings with Sensys in which Telvent Tráfico will claim for the damages that it has suffered as a result of Sensys’s breaches of the subcontract.
Dividends
     Under Spanish law, a corporation may declare and pay dividends only out of profits remaining after transfer to legal reserves, or out of distributable reserves, and only if the net worth of the corporation is not, before or as a result of the dividend distribution, lower than its issued share capital. The calculations of these profits will be based on our unconsolidated net income in accordance with Spanish GAAP rather than U.S. GAAP.
     Spanish law requires us to allocate at least 10% of our net income each year to a legal reserve, until the balance of such reserve is equivalent to at least 20% of our issued share capital. A corporation’s legal reserve is not available for distribution to shareholders except upon liquidation. Our legal reserve, as of December 31, 2010, was below the required level of 20% of our issued share capital as of such date. Each year we are required to add 10% of our annual income, measured on an unconsolidated basis in accordance with Spanish GAAP, to our legal reserve each year until we have reached the required legal reserve of 20% of our issued share capital. In 2010, 10% of our previous year’s net income, measured on an unconsolidated basis in accordance with Spanish GAAP, was € 1.2 million. We may also make payment of dividends from our distributable reserves. As of December 31, 2010, we had distributable reserves of € 36.3 million. In addition, Spanish law makes it more difficult for us to pay dividends more frequently than annually, although our board of directors or shareholders under certain circumstances may declare a distribution of interim dividends based on the fiscal year’s results out of our distributable reserves and/or the profits since the beginning of the fiscal year if we have the minimum balance in our legal reserves and other reserves established by our bylaws.
     Prior to our initial public offering, as a 91%-owned subsidiary of Abengoa, we distributed our net income to our shareholders to the extent permitted by Spanish law. We will consider paying cash dividends in the future subject to approval at our shareholders’ meeting. We anticipate that any dividends that we do pay will be declared in Euros, as required by Spanish law, but paid in U.S. Dollars at the exchange rate as of the time of declaration of such dividends. We may pay shareholders residing in Europe in Euros. Our bylaws require majority shareholder approval for the declaration of dividends. As Abengoa owns approximately 40% of our ordinary shares, it effectively is able to control our dividend policy.
     The timing and amount of future dividend payments that we make, if any, will depend on a variety of factors, including our earnings, prospects and financial condition, capital investment required to implement our strategy for growth and expansion, other capital expenditure requirements, payment of financial obligations, our generation of cash from operations and general business conditions, legal restrictions and such other factors as our board of directors considers relevant.
     Dividends may be subject to withholding tax in Spain. Dividends payable by us to non-residents of Spain are subject to withholding tax at the rate of 19%, subject to reductions pursuant to a domestic exemption or applicable tax treaties. See “Item 10.E Additional Information — Taxation”.
     Although laws vary from state to state within the U.S., uncollected dividends and shares may be considered abandoned property under the laws of a shareholder of record’s state of residence after a period of time, ranging from three years to seven years, has passed since that shareholder’s last contact with our transfer agent. If a shareholder of record does not claim dividends from our transfer agent within the applicable time period, our transfer agent, in accordance with applicable state law, will transfer the amount of the unclaimed dividend and the related shares to the treasury of that shareholder’s state of residence as reflected in the transfer agent’s records, which may not be that shareholder’s actual state of residence. Amounts paid to a state treasury in this manner will not be repaid to us. Whether that shareholder is subsequently permitted to recover the property from the state treasury will depend on that state’s laws.
     We did not pay a dividend on our ordinary shares in 2010.

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B. SIGNIFICANT CHANGES
There have been no significant changes since the date of the financial statements included in this Annual Report.
ITEM 9. THE OFFER AND LISTING
A. OFFER AND LISTING DETAILS
     The trading history of our ordinary shares began with their listing on the NASDAQ National Market beginning on October 21, 2004 in connection with our initial public offering. The following table sets forth the closing price history of our ordinary shares since 2005:
                 
    High Market    
    Price   Low Market Price
    ($ Per Share)   ($ Per Share)
Annual highs and lows
               
2006
    16.30       10.76  
2007
    29.06       14.33  
2008
    28.25       7.33  
2009
    38.98       9.97  
2010
    40.63       16.70  
Quarterly highs and lows
               
2009
               
First Quarter
    14.73       9.97  
Second Quarter
    21.67       12.50  
Third Quarter
    29.40       20.13  
Fourth Quarter
    38.98       27.51  
2010
               
First Quarter
    40.63       27.33  
Second Quarter
    31.69       16.70  
Third Quarter
    22.62       17.12  
Fourth Quarter
    26.44       22.97  
2011
               
First Quarter
    30.00       26.85  
Monthly highs and lows
               
2010
               
September
    22.62       19.35  
October
    26.20       23.98  
November
    25.82       22.97  
December
    26.44       24.39  
2011
               
January
    28.99       26.85  
February
    30.00       28.38  
March
    29.18       26.91  
B. PLAN OF DISTRIBUTION
     Not applicable.
C. MARKETS
     Our ordinary shares are traded only on the NASDAQ Global Select Market under the symbol “TLVT”.
D. SELLING SHAREHOLDERS
     Not applicable.
E. DILUTION
     Not applicable.

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F. EXPENSES OF THE ISSUE
     Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. SHARE CAPITAL
     Not applicable.
B. MEMORANDUM AND ARTICLES OF ASSOCIATION
     The following discussion addresses some provisions of our bylaws and also compares some aspects of Spanish corporation law, which apply to us, to the Delaware General Corporation Law, the state law under which many corporations in the U.S. are incorporated, or, where relevant, to U.S. federal laws. This comparative information is only a summary, and it is subject to the complete text of our Articles of Association, which are incorporated by reference in the exhibits to this report and to the complete texts of the referenced laws, including the Spanish Capital Companies Act approved by Legislative Royal Decree 1/2010, as amended, and the Delaware law, including the Delaware General Corporation Law, and U.S. federal laws, as amended. Our charter documents are our Deed of Incorporation and our bylaws. Our bylaws set forth our purposes, our authorized share capital and the terms of our shares, and other important aspects of our corporate governance. The English translation of our bylaws is titled “Articles of Association,” after their Spanish title Estatutos Sociales.
     At a shareholders meeting held on March 16, 2010, a resolution was passed to modify Article 24 of our bylaws, to increase the maximum number of Directors to 12. A copy of the bylaws are available on our website (www.telvent.com).
Objects and Purposes
     We registered with the Madrid Mercantile Registry at Volume 15,370, Book 0 of the Companies Book, Section 8 (a), Sheet 164, Page M-257,879, 1st entry. Our corporate purposes, set forth at Article 4 of our bylaws, are as follows:
    To provide engineering and information services in the Internet and telecommunications markets.
 
    To manufacture, develop, market, maintain, repair and install all kinds of information, control, protection, monitoring and security devices and systems.
 
    To improve buildings that are specifically designed to house computer systems and equipment, and/or to house communications network operating systems and equipment owned by third parties.
 
    To develop, construct, assemble, operate, repair, maintain, import, export, sell and lease all kinds of (i) machines, devices, installations, units, sub-units, individual parts and materials for all computer, electronic, electromechanical and electrical applications and (ii) scientific devices for control, measurement and installation, repair and maintenance.
 
    To obtain, purchase, sell, transfer and operate concessions, rights and patents.
 
    To acquire, promote, dispose of, use and encumber all types of movable assets and real estate and intangible rights without restriction of any kind and any other commercial activities directly or indirectly related to the above-mentioned corporate purposes.
Directors
General
     Spanish Law. Under Spanish Law, the board of directors bears the ultimate responsibility for managing the business and affairs of a corporation. In discharging this function, directors of a Spanish corporation owe specific fiduciary duties of care, loyalty, non-competence and confidentiality to the corporation. In general terms, Spanish corporation law requires directors to perform their duties with the diligence of a responsible businessperson and a loyal representative complying with the duties set forth in the law and the bylaws of the corporation. In addition, directors are required to keep themselves informed of the corporation’s business.

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     Delaware Law. Under Delaware Law, the board of directors bears the ultimate responsibility for managing the business and affairs of a corporation. In discharging this function, directors of a Delaware corporation owe fiduciary duties of care and loyalty, non-competence to the corporation and to its stockholders. Delaware courts have decided that the directors of a Delaware corporation are required to exercise an informed business judgment in the performance of their duties. An informed business judgment means that the directors have informed themselves of all material information reasonably available to them. Delaware courts have imposed a heightened standard of conduct upon directors of a Delaware corporation who take any action designed to defeat a threatened change in control of the corporation. In addition, under Delaware law, when the board of directors of a Delaware corporation approves the sale or break-up of the corporation, the board of directors may, in certain circumstances, have a duty to obtain the highest value reasonably available to the stockholders.
Director’s Power to Vote on a Contract in which He or She is Materially Interested
     Our Bylaws and Spanish Law. While our bylaws do not explicitly address our directors’ power to vote on contracts in which they have a material interest, their duty of loyalty under Spanish law would prevent them from voting on such contracts. Under Spanish law, directors’ duty of loyalty requires that they comply with the duties imposed by the law and the bylaws with loyalty to the corporation’s interests, and that they put the interests of the corporation before their own. This duty of loyalty expressly requires under Spanish law that a director of a corporation:
    not use the corporation’s name or involve his or her status as director to carry out transactions for his or her personal benefit;
 
    refrain from taking advantage of business opportunities of the corporation, unless the corporation has determined, independently of the interested director, not to pursue the business opportunity;
 
    obtain shareholder approval prior to competing with the corporation;
 
    notify the corporation of any potential conflicts of interest, including the holding of any interest in competitors;
 
    refrain from disclosing confidential information obtained while serving as a member of the board; and
 
    not take advantage of any information that he or she may possess as a consequence of being a member of the board;
     Therefore, it is our policy and the Spanish applicable law that any director who has a personal interest in any proposal before the board, or in the re-election or resignation of a director, may not deliberate or vote on these matters, and that such votes will be conducted by secret ballot.
     Delaware Law. Transactions involving a Delaware corporation and an interested director of that corporation are generally permitted if:
    the material facts as to the interested director’s relationship or interest are disclosed and either a majority of disinterested directors or the stockholders approve the transaction; or
 
    the transaction is fair to the corporation at the time it is authorized, approved or ratified by the board of directors, a committee of the board of directors or the stockholders.
Power to Vote on Compensation for One or More Directors without an Independent Quorum
     Our Bylaws and Spanish Law. Our directors do not have the authority to vote on director compensation; Article 24 of our bylaws provides that directors’ compensation shall be determined yearly by the shareholders at the ordinary meeting of shareholders. Please see the discussion under “Shareholder Rights — Shareholder Meetings,” below, for information on quorum requirements.
     Additionally, in accordance to Article 24 of our bylaws the compensation to directors may consist on the delivery of shares of the corporation (or of option rights over shares or linked to their value) in any case subject to approval by the shareholders meeting.
     Delaware Law. Delaware law gives the board of directors the authority to fix the compensation of directors unless otherwise restricted by the certificate of incorporation or bylaws of the corporation. In voting on such compensation, the vote of a majority of the directors present at a meeting at which a quorum is present, or such greater number as required by the certificate of incorporation or bylaws, will be determinative. The number of directors needed for a quorum is set in either the certificate of incorporation or the bylaws, and generally may not be less than one-third of the total number of directors.

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Number of Shares a Director is Required to Hold
     Our Bylaws and Spanish Law. Under Spanish law, directors are not required to own any shares of capital stock of the companies on whose boards of directors they serve. However, Spanish law and our bylaws provide that a director appointed to fill a mid-term vacancy must hold at least one share of our capital stock.
     Delaware Law. Under Delaware law, directors are not required to own any stock of the companies on whose boards of directors they serve.
Shareholder Rights
Dividend Rights
     Our Bylaws and Spanish Law. Our bylaws require majority shareholder approval for the declaration of dividends. Under Spanish law, a corporation may declare and pay dividends only out of profits remaining after required transfers to legal reserves, or out of distributable reserves, and only if the net worth of the corporation is not, before or as a result of the dividend distribution, lower than its issued share capital. Additionally, in order for dividends to be declared, the amount of the distributable reserves needs to be, under Spanish Law, at least equal to the amount of research and development expenses appearing in the balance sheet. A person is entitled to dividends if such person was a shareholder on the dividend payment date adopted by our shareholders’ resolution to declare such dividends; its entitlement to those dividends lapses on the fifth anniversary of the payable date. However, our transfer agent would dispose of unclaimed dividends in accordance with the abandoned-property laws of our shareholders’ jurisdictions of residence (as shown on the transfer agent’s records). Please see “Dividends” under “Item 8.A — Financial Information — Consolidated Financial Statements and Other Financial Information” for a discussion of our dividend policy, our legal reserves, and how our transfer agent would treat unclaimed dividends.
     Delaware Law. Delaware law provides for the declaration and payment of dividends by a corporation’s board of directors in the exercise of the board’s business judgment, subject to the availability of net profits in excess of the amount of capital represented by the issued and outstanding stock of all classes, if any, having a preference upon the distribution of assets. Stockholders generally have no right to compel the directors to declare and pay dividends.
Voting Rights
     Our Bylaws and Spanish Law. Our ordinary shares are all of the same class and series and, in accordance with Article 9 of our bylaws, each share confers on its holder the right to attend general shareholders’ meetings, to vote, to challenge company resolutions, and to participate in the distribution of company earnings and in any surplus assets resulting from liquidation, as well as other rights inherent in the holder’s status as shareholder. Each ordinary share entitles its holder to one vote.
     Our directors serve five-year terms. The maximum term allowed by Spanish law is six years, which permits terms to be renewed without limit. While our directors’ terms begin in different years, our board is not staggered into separate classes. Under Spanish law, one or more shareholders can nominate, and vote their shares in favor of, one or more directors in proportion to the percentage of the total capital stock represented by the shares thus cast. Shares voted in the exercise of this special voting right cannot be voted for the election of additional directors.
     Delaware Law. Stockholders of Delaware corporations generally have such voting rights as are set forth in the certificate of incorporation. If not otherwise provided therein, each share of capital stock entitles its holder to one vote.
     The Delaware General Corporation Law generally provides for a one-year term for directors. The certificate of incorporation or bylaws may provide for the board to be “staggered” into two or three classes with terms of up to three years, with the term of each class expiring in a different year. There is no limit on the number of terms a director may serve. Delaware law permits cumulative voting if provided in a corporation’s certificate of incorporation.
Rights to Share in our Profits
     Our Bylaws and Spanish Law. Under Spanish corporation law, a stockholder has no interest in the profits of a corporation until a dividend has been declared and approved out of such profits. Our bylaws do not vary or expand upon this provision of Spanish law.
     Delaware Law. The provisions of Delaware law are not significantly different from those of Spanish law.

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Rights to Share in Surplus During Liquidation
     Our Bylaws and Spanish Law. Spanish corporation law requires that valid corporate debts be paid before a liquidating distribution is made to shareholders. Upon the payment of such debts, distributions to shareholders will generally be made in the manner set forth in the corporation’s bylaws, and holders of ordinary shares will be entitled only to what may be left after satisfaction of the priorities of any preferred stock. Our bylaws provide that our shareholders will, at a general meeting of shareholders, determine the payment of our surplus assets during liquidation. Our bylaws do not currently authorize any preferred shares.
     Delaware Law. The provisions of Delaware law are not significantly different from those of Spanish law.
Redemption of Shares
     Our Bylaws and Spanish Law. Under Spanish law, subject to certain exceptions, a corporation may purchase its own shares if:
    the purchase has been authorized by the shareholders at a general shareholders’ meeting by means of a resolution establishing the terms of the purchase, including the maximum number of shares to be purchased, the minimum and maximum purchase price and the duration of the authorization, which shall not exceed 5 years;
 
    the aggregate nominal value of the shares purchased, together with the aggregate nominal value of those shares already held by the corporation and its affiliates, does not exceed 20% of the share capital of the corporation;
 
    the purchase enables the corporation to create a special reserve equal to the purchase price of its own shares without decreasing its share capital and reserves; and
 
    the shares to be purchased are fully paid.
     Generally, shares that are not purchased in accordance with these rules must either be disposed of within one year from the date of the first purchase or be redeemed (breach of this obligation could take to a judicial redemption of the shares and even to directors liability if they breach their obligations under Spanish Law). Our bylaws do not vary or expand upon these provisions of Spanish law.
     Additionally, a corporation may acquire its own shares in the following cases:
  a)   when the shares are acquired in execution of a share capital decrease resolution adopted by the shareholders meeting;
 
  b)   when the shares are part of a patrimony acquired with universal character;
 
  c)   when the shares totally paid in are acquired for free;
 
  d)   when the shares totally paid are acquired as a consequence of a judicial allotment in payment of a credit right of the company against their holder.
     The shares acquired under sections b) and c) above shall be sold within a maximum term of three years unless they are previously redeemed or unless they do not represent, added to the ones already held in treasury stock by the company, more than a 20% of the share capital of the company.
     Delaware Law. A corporation may purchase or redeem shares of its own stock unless the capital of the corporation is impaired or the purchase or redemption would cause an impairment of the capital of the corporation. A Delaware corporation may, however, purchase or redeem out of capital any of its preferred stock or, if no preferred stock is outstanding, any shares of its own shares if such shares will be retired upon acquisition and the capital of the corporation will be reduced in accordance with specified limitations.
Shareholder Proposals
     Our Bylaws and Spanish Law. Shareholders representing 5% of the share capital are permitted to request the call of a general shareholders’ meeting and to propose the matters for vote. Our bylaws do not vary or expand upon this provision of Spanish law.
     Delaware Law. Delaware law does not specifically grant stockholders the right to bring business before an annual or special meeting. If a Delaware corporation is subject to the SEC’s proxy rules, a stockholder who owns at least $2,000 in market value, or 1% of the corporation’s securities entitled to vote, may propose a matter for a vote at an annual or special meeting in accordance with those rules.

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Appraisal Rights
     Our Bylaws and Spanish Law. Shareholders of a Spanish corporation do not have the right to demand payment in cash of the fair value of their shares determined by an independent expert in connection with a merger or consolidation involving the corporation, except when as a result of a merger there is a transfer of the registered address of the company abroad or a substitution of the corporate purpose of the company. Our bylaws do not vary or expand upon this provision of Spanish law.
     Delaware Law. The Delaware General Corporation Law affords stockholders, in certain cases, the right to demand payment in cash of the judicially-determined fair value of their shares in connection with a merger or consolidation involving their corporation, subject to certain exceptions.
Preemptive Rights
     Our Bylaws and Spanish Law. Pursuant to Spanish law and our bylaws, shareholders have preemptive rights to subscribe for any new shares issued by us, including our ordinary shares. These preemptive rights may be voluntarily waived by the shareholders or may be abolished in certain circumstances if our shareholders pass a resolution at a shareholders’ meeting in accordance with the specific requirements stated under Spanish corporation law.
     Delaware Law. Under Delaware law, stockholders have preemptive rights only to the extent, if at all, set forth in the corporation’s certificate of incorporation.
Changes in Shareholder Rights
     Our Bylaws and Spanish Law. A resolution passed at a shareholders’ meeting with the favorable vote of the majority of the shares metioned below and of the majority of the affected shares is required to change the rights of a class of shares.
     Delaware Law. The provisions of Delaware law are not significantly different from those of Spanish law.
Shareholder Meetings
     Our Bylaws and Spanish Law. Pursuant to our bylaws and Spanish law, general meetings of shareholders may be either ordinary or extraordinary. One ordinary general meeting must be convened within the first six months of each fiscal year on a date fixed by the board of directors. As a general rule, extraordinary general meetings may be called from time to time by our board of directors at its discretion or at the request of shareholders representing at least 5% of our share capital.
     At ordinary general meetings, shareholders are asked to approve the actions of our management, the financial statements for our previous fiscal year, the allocation of our profit or loss and any other item included on the agenda. All other matters may be addressed at extraordinary general meetings called for such purposes. After our shareholders approve our financial statements, we must file them with the Mercantile Registry of Madrid. If our shareholders do not approve our financial statements, we cannot file our annual accounts with the Mercantile Registry. If we do not file our annual accounts within one year after the end of the relevant fiscal year, we are precluded from registering any other resolution with the Mercantile Registry until we have filed the annual accounts.
     Notice of every shareholders’ meeting (except a meeting attended by all shareholders) must be published in the Mercantile Registry Official Gazette (Boletín Oficial del Registro Mercantil) and in a local newspaper within the province of Madrid at least thirty days prior to the date fixed for the meeting, and must include the agenda for the meeting. In addition, we have agreed with the underwriters of our IPO to furnish English-language notices of our regular annual meetings to holders of our ordinary shares.
     Spanish law provides that bylaws of a corporation can request nominative shareholders of record not less than five days before any shareholder’s meeting must be allowed to vote at such shareholder’s meeting.
     Any share may be voted by written proxy, and proxies may be given to any individual. Proxies are valid only for a single meeting. Neither our bylaws nor Spanish law require us to solicit proxies from shareholders. We make a form of proxy available to shareholders through our website in advance of shareholders’ meetings.
     Our bylaws provide that, on the first call of an ordinary shareholders’ meeting, a duly constituted ordinary meeting of shareholders requires a quorum of at least 25% of our subscribed share capital and, if a quorum was not obtained on the first call, on the second call, the meeting is validly convened regardless of the share capital attending. However, certain major corporate actions (such as issuing additional ordinary shares, increasing or decreasing share capital, issuing debt securities, amending the bylaws or mergers) that require shareholder approval can only be approved at a meeting at which 50% of the subscribed share capital is present or represented on the first call or 25% of the subscribed share capital is present or represented on the second call. When the shareholders attending a meeting represent less than 50% of the subscribed share capital, resolutions on any of these major corporate actions must be adopted

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by the affirmative vote of at least two-thirds of the share capital present or represented at such meeting. A shareholders’ meeting at which 100% of the capital stock is present or represented is validly constituted even if no notice of such meeting was given, and, upon unanimous agreement, shareholders may consider any matter at such meeting.
     A resolution passed at an ordinary meeting of shareholders by a majority of the shares represented in person or by proxy is binding on all shareholders, subject to Spanish law. In certain circumstances, such as substitution of corporate purpose or change of corporate form, Spanish law allows shareholders holding non-voting stock and dissenting or absent shareholders to withdraw from the company. In the case of resolutions contrary to law, the bylaws or public policy, the right to contest is extended to all shareholders; however, in the case of resolutions contrary to the bylaws or to public policy, those shareholders who were present at the meeting and did not oppose such resolutions may not contest them.
     Spanish corporation law does not permit shareholder action without calling a meeting.
     Delaware Law/NASDAQ Listing Standards/U.S. Federal Securities Laws. A Delaware corporation is required to hold an annual meeting of stockholders to elect directors, unless directors are elected by written consent in lieu of an annual meeting as described below. However, the failure to hold an annual meeting at the designated time or to elect a sufficient number of directors to conduct the business of the corporation does not affect otherwise valid corporate acts or cause any kind of forfeiture or dissolution of the corporation. Instead, the board of directors will be required to hold a meeting as soon as is convenient. Annual meetings of stockholders may be held at any place as may be designated by or in the manner provided in the certificate of incorporation or bylaws. In addition to the election of directors, the corporation may transact any other proper business of the corporation at an annual meeting of stockholders.
     Delaware law also permits a corporation to hold special meetings of stockholders, which may be called by the board of directors or anyone authorized in the certificate of incorporation or bylaws.
     Written notice of any meeting of stockholders of a Delaware corporation must be provided at least ten and not more than sixty days prior to the meeting. A notice for a special meeting must specify the purpose or purposes for which the meeting is called.
     The board of directors of a Delaware corporation may set a record date to determine the stockholders entitled to receive notice of or to vote at any meeting of stockholders. Such record date must be between sixty and ten days before the meeting date, and not earlier than the date on which the directors acted to fix it. If the directors do not set one, the record date is the close of business on the day before the day on which notice of the meeting is given.
     At least 33.33% of the shares entitled to vote at a meeting must be present to constitute a quorum for the conduct of business at any meeting of the stockholders of a Delaware corporation, although a corporation’s certificate of incorporation or bylaws can require a higher percentage. NASDAQ’s listing standards also require a quorum of 33.33% of outstanding shares for the conduct of business at a meeting of the stockholders of a NASDAQ-listed company. NASDAQ has exempted us from this requirement; we comply with the quorum requirements of Spanish law outlined above.
     Under Delaware law, unless the certificate of incorporation or the bylaws of a Delaware corporation provides otherwise, the affirmative vote of a majority of stockholders present and entitled to vote at a stockholders’ meeting constitutes the act of the stockholders in most matters. The election of directors requires a plurality of the votes, and certain matters require the affirmative vote of a majority of the outstanding capital stock, such as approval of changes to the certificate of incorporation or of a merger involving the corporation.
     Stockholders of Delaware corporations can authorize another person or persons to act for them by proxy. Such proxies can be valid for the period specified therein, which can extend for multiple years. In addition, NASDAQ-listed companies must comply with a NASDAQ requirement that they solicit proxies and provide proxy statements for all meetings of shareholders. NASDAQ has granted us an exemption from these requirements. We are also, as a foreign private issuer, generally exempt from the SEC’s rules governing the solicitation of shareholder proxies by publicly-traded companies. As noted above, we make a form of proxy available to our shareholders through our website in advance of shareholders’ meetings.
     Unless otherwise provided in the certificate of incorporation, any action required or permitted to be taken at any annual or special meeting of stockholders of a Delaware corporation may be taken without a meeting, without prior notice and without a vote, if a written consent, setting forth the action to be so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

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Limitations on Rights to Own Our Securities
     Our Bylaws and Spanish Law. Pursuant to Spanish Law 18/1992 on Foreign Investments (Ley 18/1992, dated July 1, 1992 and Royal Decree 664/1999 (Real Decreto 664/1999, dated April 23, 1999), foreign investors may invest freely in shares of Spanish companies except for companies operating in certain strategic industries, including air transportation, radio and television broadcasting, gaming, munitions and mining, unless the Spanish government has issued an exemption. While these provisions of Spanish law do not restrict the rights of foreign persons to own our ordinary shares, or to exercise full voting rights, these provisions of Spanish law could prevent us from investing in the restricted industries. We must report to the Spanish Registry of Foreign Investments our ordinary shares held by foreign investors. Our bylaws do not vary or expand upon these provisions of Spanish law.
     Delaware Law/U.S. Federal Law. The Delaware General Corporation Law does not restrict the rights of foreign persons to own shares of Delaware corporations, or to exercise full voting rights with respect to those shares. However, U.S. federal laws impose some restrictions on the ownership of interests in certain regulated industries, including the airline and broadcast industries.
Anti-Takeover Provisions
     Our Bylaws and Spanish Law. Our bylaws do not contain any provisions that would have the effect of delaying, deferring or preventing a change in control of our company. Although Section 60 of Spanish Law 24/1988, dated as of July 28, 1988, and Royal Decree 1066/2007, dated as of July 27, 2007, regulate takeover bids by regulating mechanisms and instituting procedures for acquiring a control position within