1.1MB - Pirelli

A co-operation agreement has been signed
between Pirelli and Michelin for the joint
development of the Pax System.
Following page: Pirelli Cables and Systems
Sector’s manufacturing presence.
On February 22, 1999, in the Tyres Sector, Pirelli and Michelin signed a cooperation
agreement to further develop the Pax System together, with Pirelli adding its greater
technological experience in the area of Total Mobility and high performance to the
Michelin project.
As from January 1, 1999, the Pirelli Group has decided to adopt the euro as its currency of
account and settlement; after approval of the 1998 financial statements, the euro will
become the currency of account for the Group companies operating in the eleven
countries that are part of the European Monetary Union.
A great deal of attention is being paid to customer relations; as far as invoicing is
concerned, the companies operating in EMU countries have sent their customers a letter
advising them of the Group’s position to adopt euro from the start of the transition period
and to find out the choice made by the counterpart, under the neither-nor principle of
“neither compulsion, nor prohibition”; the same letter has also been sent to suppliers.
Consistent with the accounting system, in 1999 the internal reporting cycle and the
consolidated financial statements of the Group will also be expressed in euro.
As regards the information systems, the SAP system which was introduced over the last
few years at the Group companies, has allowed the use of Release 3.1.I, updated for the
conversion of the euro within the framework of corporate procedures.
The installation of this system made it possible to cope with the problems associated with
the year 2000 with greater clarity and timeliness.
The Board of Directors of Pirelli S.p.A., on February 2, 1999, with the power vested in it by
the shareholders’ meeting of May 15, 1998, passed a resolution for the increase of share
capital for Lire 1,435,000,000 through the issue of shares with a nominal value of Lire 1,000
each to be assigned to management of the Group. The resolution was approved by the
Milan Courts on March 3, 1999 and therefore the share capital of Pirelli S.p.A. amounts to
Lire 1,984,558,489,000 consisting of 1,896,552,473 ordinary shares and 88,006,016 savings
shares, of nominal value Lire 1,000 each.
Future outlook
The outlook for the current year will be affected by contrasting factors. On the one hand,
the cost reduction and efficiency improvement programs are rapidly being implemented,
together with the recent acquisitions and strategic agreements, will begin to show the first
positive results in the second half of the year. On the other hand, the weakness of the
world markets, with the exception of the United States, connected above all to the
turbulence of the South American, Asian, and former Soviet Union markets, will constitute
an element of instability.
Taking into account the above, and while it is still too early to have a precise picture
concerning the possible results for the current year, we do estimate, however, that
operating profit, and, therefore, the results before financial expenses and the tax charge,
can be kept in line with the previous year.
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