Aachen, March 31, 1999 - ELSA AG, Aachen (Germany), one of the world’s leading providers of PC-components for computer graphics and data communications, looks back on a difficult fiscal year 1998. Despite a market, which was characterized by tumbling prices, concentration, the crisis in Asia and fierce competition, ELSA AG was able to increase its sales by 4.5% from DM 286.6 million in 1997 to DM 299.5 million in 1998. ELSA’s Computer Graphics business unit accounted for DM 213.5 million (compared to DM 196.7 in 1997) or 71.3% of total sales. After a weak Second and Third Quarter, ELSA again was able to post record sales in the Fourth Quarter, with respect to both the professional and the consumer segment. In the First and Second Quarter, ELSA’s Data Communications business unit suffered under the influence of the debate surrounding the standards for the new modem generation (56k/V.90-modems) and the resulting restrained buying behavior; however, after establishment of the new standard in the Fourth Quarter, this business unit recovered with record sales. The Data Communications business unit accounted for DM 86 million of sales (compared to DM 89.9 million in 1997) or 28.7% of total sales.
Domestic sales increased to 76% (compared to 73% in 1997). Production costs increased by 12.2% from DM 217.9 million in 1997 to DM 244.5 million in 1998. The consolidated year-end result of minus DM 5.9 million (compared to DM 7.3 million in 1997), determined in accordance with U.S. GAAP, resulted in part from anticipated start-up losses of the new distribution and marketing subsidiaries in Taiwan and Japan. Operating results were at minus DM 15.6 million (compared to DM 15.4 million in 1997); income per share was minus DM 1.68 (in accordance with DVFA/SG, minus DM 3.04).
A successful public offering resulted in a significant improvement of ELSA’s equity structure and created the financial foundation for further growth. In addition, short-term liabilities to financial institutions and a silent participation were decreased from DM 45.3 million to DM 2.7 million. Equity accounted for 64.2% of ELSA’s capital as of December 31, 1998.
In 1998, ELSA had 566 employees, thus creating 55 additional jobs.
According to Theo Beisch, Chairman of ELSA’s Management Board, ELSA made numerous investments in 1998, which are anticipated to result in significant sales increases in the near future. "ELSA’s innovative strength is documented by its ability to continually be the first company to bring new products to market. This constitutes a considerable competitive edge, which we will continue to expand." Research & Development expenses (DM 11.5 million in 1998) will continue to be increased.
In October, 1998, ELSA introduced the first European cable modem, which will be available starting in mid-1999. Independent market analysts predict a sales potential of U.S. Dollars 1.9 billion within the next four years in Western Europe alone. With the DSL-router recently presented at CeBIT, ELSA now offers all technologies for high-speed Internet access. According to Beisch, ELSA is also proud of the solutions for radio contact and PC access to the Internet, which were developed in collaboration with Siemens. "These developments will revolutionize access to the Internet and Intranet and their use." Since March, 1999, ELSA’s new Internet-modems, which are characterized by a competitive price/performance ratio, are in great demand throughout Europe. Starting in April, 1999, modems with the new and user-friendlier USB-port for Windows 98 and Windows 2000 PCs will be available in V.90 and ISDN-format in a new and attractive design.
Despite fierce competition in the area of consumer graphics and consolidation of competitors and suppliers in the area of professional graphics systems, ELSA was able to further expand its strong market position in computer graphics. ELSA strengthened its world market share in the area of entry-level NT-Workstation graphics from 5.6% to 8.7% with a 147% sales increase. ELSA is currently engaged in promising discussions with potential partners to further increase its market position, especially with respect to high-end products. The excellent acceptance of ELSA’s 3D-Shutter-Glasses, which have been lauded as an innovation at CeBIT and will be available starting in April, 1999, constitutes a significant technological edge in the competitive area of consumer graphics.
ELSA’s first priority in the current fiscal year is the expansion of its distribution and marketing activities and increased cost management. With two new Management Board members responsible for distribution, e-commerce, consumer products marketing and market research, ELSA will employ an aggressive distribution and marketing strategy.
In early 1999, in the course of further international expansion, ELSA established independent distribution and marketing companies in France, Great Britain and Italy. This increase in ELSA’s European presence geographically expands the availability of its entire product line.
"Fiscal year 1998 was characterized by different and unexpectedly difficult market conditions and by investments in ELSA’s future development. We are confident that our current measures create the necessary prerequisites to repeat the strong performance of former years," says Beisch.
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ELSA develops, produces and distributes PC hardware and software components for the areas of Data Communications and Computer Graphics. Its product line includes modems, ISDN-adapters, ISDN-routers, video conferencing systems, graphics cards and monitors. ELSA was founded in 1980. In addition to its headquarters in Aachen, Germany, ELSA has subsidiaries in Santa Clara, California, Taipei, Taiwan and Tokyo, Japan. Since June, 1998, the shares of ELSA AG are listed on the "Neuer Markt" of the Frankfurt Stock Exchange.
Names and designations are trademarks of their respective owners. ELSA’s logo is a registered trademark of ELSA AG. Notice to editors: ELSA is an abbreviation of "Electronic Systems Aachen" and is thus be written in all capital letters. |