1.1MB - Pirelli

Detail of the production of active optical fiber
for submarine optical amplifiers.
The new DeskWave TM cables, which made
their debut in 1999, improve the efficiency
of buildings’infrastructures.
Net financial debt totals Lire 771 billion at December 31, 1998, a change of Lire 283
billion compared to Lire 488 billion at year-end 1997. The increase in debt is essentially due
to the financing secured by Pirelli S.p.A., at the best market terms, to purchase Siemens.
At the end of 1998, considering the same companies in consolidation, the number of
factories totaled 49, the same as the prior year: 32 in Europe, 6 in North America, 6 in
South America and 5 in Australia, Asia and Africa. To these must be added the 3 factories
acquired from Siemens A.G. in Germany and consolidated line-by-line, bringing the total to
52. The factories of the other units include 3 in Hungary, 1 in Turkey, 1 in South Africa and
1 in Rumania.
During 1999, following the conclusion of the process to acquire the Power Cables Division
from Siemens A.G., the number of factories will increase by another 5, bringing the total
number of production units of the Cables and Systems Sector to 63.
During the year, while producing much higher volumes than in the previous year, the
factories have continued to limit product costs by steadily improving productivity and
materials efficiency.
According to corporate strategic guidelines, in 1998 there were significant improvements
in the quality of the product and the level of service, as a tangible sign of the considerable
degree of attention being focused on the customer.
The process to obtain the ISO 14001 Environmental Certification, begun last year in the
various subsidiaries, is proceeding according to schedule; in 1998, 7 factories were
awarded certification, which, with the 3 certified in 1997, brings the total to 10 factories.
The overall work force of the Sector at December 31, 1998, considering the same
companies in consolidation, numbered 14,923 (including 1,877 under temporary
employment contracts). Compared to the end of the prior year, this corresponds to an
increase of 678 units, equal to 4.7 percent of the total. The acquisition of the Power Cables
Division from Siemens A.G. led to an increase of 1,983 units for the companies in Germany,
hence reaching a consolidated total of 16,906 persons. The employees of the companies in
Hungary, Turkey, Rumania and South Africa number 3,026 units; when the acquisitions are
completed, this will bring additions to the work force of approximately 1,590 units.
The organizational structures of the Sector have been further strengthened to cope with
evolving markets and specialization.
The integration of the organization of the Power Cables Business acquired from Siemens
was started immediately, which will enable further rationalization on a regional basis to
take place in 1999.
At December 31, 1998, the breakdown of the work force was as follows:
1998 1998 1997
excluding
Siemens
• Management 1.8% 1.9% 2.1%
• Staff 30.3% 30.3% 30.9%
• Operatives 67.9% 67.8% 67.0%
Capital expenditures in 1998 amounted in total to Lire 299 billion (+11 percent compared
to 1997), and are equivalent to 126 percent of depreciation.
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