1.1MB - Pirelli

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Aerial picture of the Berlin factory, to which Pirelli has transferred the German headquarters of Cables and Systems. A section of submarine optical amplifier. Having obtained the necessary approval from the EU authorities and the antitrust bodies, and after the completion of the due diligence review, in the last quarter of 1998 the acquisition began of the Power Cables Division of Siemens, as announced in July. The units are located in Germany, Hungary, Slovakia, South Africa, Turkey, Rumania, Italy, Spain, Austria, China and Russia. The new activities will generate strong synergies, starting with the integration of the markets, and will bring hi-tech production capacity, advanced research laboratories and top quality products. At December 31, 1998, the acquisitions of the companies in the following countries had been finalized: Germany, Hungary, South Africa, Turkey and Rumania. These companies were consolidated in the financial statements of the Cables and Systems Sector at December 31, 1998, line-by-line in the balance sheet for the German units and at purchase cost as far as the Hungarian, Turkish, Rumanian and South African units are concerned. Furthermore, in February 1999, the acquisition of companies located in Austria, Italy and Spain was finalized; the acquisition of the remaining activities is scheduled to take place during 1999. The following tables summarize the companies of the Siemens Group: Subsidiaries consolidated line-by-line in the balance sheet at December 31, 1998 Company Pirelli Kabel und Systeme Holding GmbH Pirelli Kabel Grundstücksverwaltungs GmbH Pirelli Kabel und Systeme Beteiligungs GmbH Bergmann Kabel und Leitungen GmbH Pirelli Kabel und Systeme GmbH & Co. KG Pirelli Kabel und Systeme Verwaltungs GmbH Country Germany Germany Germany Germany Germany Germany Subsidiaries valued at purchase cost in the balance sheet at December 31, 1998 Company MKM Magyar Kabel Muvek RT. "Kabel" Gepgyarto Epitoipari Es Szolgaltato KFT. MKM Balassagyarmati Kabelgyar KFT. MKM Erosaramu Kabelgyar KFT. MKM Kisteleki Kabelgyar KFT. MKM Szegedi Kabelgyar KFT. Kabel Keszletertekesito BT. S.C. Elcaro S.A. Turk Siemens Kablo ve Elektrik Sanayii A.S. AFCAB Holdings (Proprietary) Ltd African Cables Ltd Country Hungary Hungary Hungary Hungary Hungary Hungary Hungary Rumania Turkey South Africa South Africa Subsidiaries purchased after year-end 1998 Company Oekw Montagegesellschaft der Österreichischen Kabelwerke GmbH Codelca Due S.p.A. Fercable S.A. Country Austria Italy Spain i 17
Distribution of 1998 Cables and Systems sales by geographic area and product category. At the beginning of January 1999, an agreement was also signed on the basis of which the Australian subsidiary Pirelli Cables Australia Ltd. will acquire the Power Cables and Construction Division of the Australian company Metal Manufacturers Ltd.. The acquisition is scheduled for completion by March 31, 1999, once the necessary local authorizations have been secured. The key figures of the consolidated financial statements of the Cables and Systems Sector are as follows: (in billions of lire) 1998) 1998) (1) 1997) • Sales revenues 5,397) 5,397) (1) 5,843) • Gross operating profit 758) 758) (1) 720) % of sales 14%) 14%) (1) 12.3%) • Operating profit 496) 496) (1) 491) % of sales 9.2%) 9.2%) (1) 8.4%) • Extraordinary items, net (24) (24) (1) (53) • Net income 280) 280) (1) 260) % of sales 5.2%) 5.2%) (1) 4.4%) • Net financial debt 771) 501) (1) 488) • Capital expenditures 404) 299) (1) 270) • R&D expenditures 180) 180) (1) 168) • Personnel (number) 16,906) 14,923) (1) 14,245) • Factories (number) 52) 49) (1) 49) (1) With the same companies in consolidation as in 1997, excluding the effect of the acquisition of the Power Cables Division of Siemens A.G. Sales revenues show a drop of 7.6 percent compared to 1997, with the exchange effect being equal to a negative 0.2 percent. The reduction is due to a 4.7 percent decrease in the price of copper and 5.5 percent decline in other prices while the volumes and mix have presented a gain of 2.8 percent. Europe (of which Italy: 14.8%) The breakdown of sales revenues by geographic area and product is as follows: South America North America Asia Other areas (of which Oceania: 3%) Geographic area 1998 1997 Europe (of which Italy: 14.8%) 48% 47% South America 21% 22% North America 21% 19% Oceania 3% 3% Asia 5% 8% Other areas 2% 1% Product category 1998 1997 Power 28% 23% Telecommunications 29% 27% Building wires, special cables, enameled wires 32% 34% Accessories, installation, other activities 11% 16% Telecommunications Power Bulding wires, special cables, enameled wires Accessories, installation, other activities Operating profit rose from 8.4 percent to 9.2 percent of sales. Extraordinary items show a net expense balance of Lire 24 billion in 1998 (Lire 53 billion in 1997) as a result of the costs for the continuation of productive rationalization in some countries, particularly France. Net income posted a 7.7 percent increase over the prior year, reaching an amount of Lire 280 billion, equal to 5.2 percent of sales (4.4 percent in 1997). 18 i
Page 1 and 2: Pirelli S.p.A. Milan Annual Report
Page 3 and 4: Contents Board of Directors; Board
Page 5 and 6: Structure of Pirelli Group at Decem
Page 7 and 8: Five-year Summary of Selected Conso
Page 9 and 10: Gross Domestic Product of the main
Page 11 and 12: 1997-1998 trend in raw materials pr
Page 13 and 14: Distribution of Pirelli Group 1998
Page 15 and 16: The added value of submarine system
Page 17: Cables and Systems Sector Overall p
Page 21 and 22: Advanced studies within the laborat
Page 23 and 24: The first submarine optical amplifi
Page 25 and 26: In Iceland, Pirelli installed 150 k
Page 27 and 28: The rotating platform of the Pirell
Page 29 and 30: The new Audi TT is fitted with ultr
Page 31 and 32: The Lamborghini Diablo is among the
Page 33 and 34: The trend of truck tyres in Brazil
Page 35 and 36: New types and sizes of the “Scorp
Page 37 and 38: Pirelli supplied the Berlin electri
Page 39 and 40: The Pirelli Corporate Web, the Intr
Page 41 and 42: Certification activities in line wi
Page 43 and 44: Distribution of Group personnel by
Page 45 and 46: • revenues for goods and services
Page 47 and 48: Corporate Governance As represented
Page 49 and 50: Results of operations The 1998 resu
Page 51 and 52: Appointment of the audit firm Upon
Page 53 and 54: Consolidated balance sheets Assets
Page 55 and 56: Liabilities and shareholders’ equ
Page 57 and 58: Consolidated statements of income (
Page 59 and 60: - positive differences, where not a
Page 61 and 62: • Provision for income taxes The
Page 63 and 64: "Investments in associated companie
Page 65 and 66: - Other receivables Other receivabl
Page 67 and 68: Provisions for income taxes The pro
Page 69 and 70:
An analysis of payables by due date
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MEMORANDUM ACCOUNTS Memorandum acco
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Personnel costs Personnel costs con
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for liabilities and expenses accrue
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R&D expenditures In 1998 the Group
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Consolidated statements of cash flo
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Reconciliation of net results and s
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Assets (continued) (in thousands of
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Memorandum accounts (in thousands o
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List of investments Companies conso
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Percentage Company Activity Headqua
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Percentage Company Activity Headqua
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Other investments in subsidiaries a
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improvements and loan acquisition c
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Extraordinary part of the sharehold
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the two companies, given that that
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the formation of the value in this
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The weighted average cost of capita
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Result of the valuation and the sha
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Entering into the merits of the mer
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Group structure at December 31, 199
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Notice pursuant to art. 10, paragra
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1.i - Evaluations by the Board of D
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December 31, 1998, with the cancell
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Amendment of the by-laws Present wo
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6. Effects of the merger The transa
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and abroad, pursuant to the terms o
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or Managing Directors, the chair sh
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e enclosed with the lists together
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Attachment 2 Pirelli S.p.A. - Milan
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Article 10 In view of the nature of
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Article 19 The Board is authorized
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Failing any lists, the Board of Sta
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