annual report 2002

ANNUAL REPORT 2002
ANNUAL REPORT 2002
GERICOM in Figures
2000
2001
2002
Difference
Deviation
Financial year
Sales
Gross profit from turnover
in TEuro
in TEuro
in TEuro
in %
332,701
539,897
544,074
0.77
02/01
4,177
24,697
40,793
37,129
-8.98
-3,664
Income before interest and tax (EBIT)
14,826
26,518
23,792
-10.28
-2,726
Income before tax (EBT)
13,840
26,894
24,070
-10.50
-2,824
9,211
18,446
18,635
1.02
189
235
269
299
11.15
30
150,516
204,126
225,879
10.66
21,753
Equity quota
37.22%
35.44%
37.01%
4.43
0
Investments
2,047
2,834
1,270
-55.19
-1,564
Cash flow from operating activities
3,327
12,148
1,249
-89.72
-10,899
Financial year
Financial year
Financial year
2000
2001
2002
10,900,000
10,900,000
10,900,000
Net income
Employees (average for year)
Balance sheet total
Share -related data
Share capital
Free float
22.00%
30.90%
34.44%
246 Mio Euro
335 Mio Euro
110 Mio Euro
Highest price
25.55
39.40
31.04
Lowest price
17.02
17.25
7.15
P/E high
24.33
23.31
18.15
P/E low
16.21
10.21
4.18
1.05
1.69
1.71
Market capitalisation (31.12.2001)
Earnings per share
Annual repor t 2002
Contents
3
Contents
Introduction of the Company Chairman
4
Repor t of the Supervisor y Board Chairman
6
The GERICOM AG management team
7
Por trait of GERICOM AG in brief
The GERICOM work force
8
10
Management Report
The mobile computing market
12
Analysis of the financial situation
19
The GERICOM share
23
Risk analysis repor t
27
Company Profile
Business model
30
Product por tfolio
32
Trend research, purchasing and upgrading
34
Sales and distribution concept
36
Marketing and sponsoring
38
E- commerce
40
Service and quality management
42
Strategy and outlook
44
Consolidated Financial Statements
Balance sheet
48
Income statement
50
Cash flow statement
51
Shareholders’ equity statement
53
Notes to the consolidated accounts
54
Notes to the balance sheet and the income
60
statement
Consolidated movement of fixed assets
70
Auditor’s Repor t
72
Company Financial Statements
Balance sheet
74
Income statement
76
Notes to the accounts 2002
78
Movements in the untaxed reserves
85
Schedule of investments
85
Movement of fixed assets
86
Auditor’s Repor t
88
Abbreviations
89
4
Introduction
Dear Reader,
An eventful year lies behind us. For despite unfavourable economic conditions and an absolute business
record in 2001, during the past financial year we were nonetheless able to increase our sales.
In 2002, GERICOM’s targeted approach to Europe was again rewarded with success. We obtained ad ditional sales par tners in five European countries and fur ther consolidated our market position as an
Hermann Oberlehner
international par tner to retailers across the continent. The positive ef fects of our expansion strategy in
tandem with dispropor tionately strong demand for fashionable, innovative products in the mobile computing and communications sector confirmed the probity of our business model and were mirrored by the
results for the 2002 financial year.
In 2002, GERICOM sales increased by 0.77% to EUR 544.07 m (2001: EUR 539.90 m). EBIT fell by
10.28 % to EUR 23.79 m (2001: EUR 26.52 m), but net income rose by 1.02 % to EUR 18.63 m (2001: EUR
18.44 m). Equity increased by 15.55% to EUR 83.60 m (2001: EUR 72.35 m) with a resultant rise in the
equity quota to 37.01% (2001: 35.44%).
Today, GERICOM exclusively markets products and pre - products from the mobile computer and communi cations technology field. This means that GERICOM is not only positioned in a dynamic market, but that
due to its concentration on the notebook, LCD - PC, TFT monitor and web appliance segments is success fully established in the fastest growing areas of information technology. One especially pleasing result
of this strategy is provided by fur ther market share gains. In 2002, sizeable, additional market shares
were captured in France, Italy and Spain. This enabled GERICOM to more than hold its own in extremely
tough, international competition. Moreover, as in 2001, during 2002 we succeeded in capturing market
leadership in the notebook private customer segment. GERICOM also continued to be the most purchased
notebook brand in Germany.
GERICOM’s sustained, powerful growth is the consequence of the company’s ability to continually inte grate the latest technology, trends and materials into its products within a minimum period and to sup plement them with an outstanding price - performance ratio. In addition, GERICOM also benefits from the
expansion among its sales par tners, who consist of large, international retail chains with a constantly
increasing number of national and international outlets. This growth leads to a steady enlargement of
both total volumes and the number of sales promotions. In 2002, GERICOM sold around 40 % of all its
notebooks outside Germany. Retailers from beyond the branch increasingly used company know - how in
the notebook sector. As a supplier of marketing services, GERICOM enables these retail chains to expand
their range to include attractive mobile computing and communications products and thus address ad ditional consumer groups with a minimum of ef for t.
Annual repor t 2002
Introduction
Due to our solid order backlog and the maintenance of positive order intake, we anticipate stable, operating results for the coming year. The focus will remain on a continuation of our strategy of European expansion. Fur thermore, progressive internationalisation and the excellent co - operation with our business
par tners in the retail sector, provide a springboard for more growth during 2003.
The sobering stock exchange year in 2001 was followed by an equally unsatisfactor y year in 2002. The
uncer tainty among investors remains tangible. Transparency, continuity and a permanent flow of informa tion can contribute to a recover y in shareholder confidence. For this reason, GERICOM was one of the
first companies to take decisive action in this regard by signing the Corporate Governance declaration
of the German Börse AG. We welcome this initiative for the restoration of trust in the interest of investor
protection.
People are the focal point of our activities and at this point, I would like to express my gratitude and rec ognition to all company employees for their outstanding commitment and performance during 2002. My
thanks also go to all shareholders, customers and par tners for their trust and excellent teamwork.
We have again set ourselves ambitious targets for 2003 and intend to do ever ything to achieve what is
expected of us.
Hermann Oberlehner
Chairman of the Managing Board
5
6
Super visor y
Report of the Supervisory Board Chairman
I became Chairman of the GERICOM AG Supervisor y Board on May 30, 2002. With its business concept,
the Managing Board is on the right path, as evidenced by the result for this turbulent year.
Throughout the 2002 financial year, the Supervisor y Board regularly monitored the work of the Managing
Board and provided advice and suppor t. Four meetings were held during the year under review and the
Supervisor y Board received periodic written and verbal repor ts. During the meetings of the Super visor y
Georg Bauer
Board, the Managing Board provided detailed information concerning the business, employment and fi nancial situation of the company. The Supervisor y Board carefully considered those matters requiring its
consent prior to granting approval.
The Managing Board presented the Supervisor y Board with the company financial statements prepared
according to the Austrian Commercial Code, the consolidated financial statements, which were drawn
up in accordance with the Accounting Principles Generally Accepted in the United States (US - GAAP), the
management repor t, the Group management repor t and the proposal of the Managing Board concerning
the distribution of profits for the 2002 financial year.
KPMG Alpen -Treuhand GmbH Wir tschaf tsprüfungs - und Steuerberatungsgesellschaf t, the auditors com missioned by the Supervisor y Board, audited the GERICOM AG financial statements, the consolidated
financial statements, the management repor t, the Group management repor t and notes as at December
31, 2002. All the repor ts were granted unqualified approval by the auditors.
At the balance supervisor y committee meeting in March 2003, the aforementioned repor ts were dis cussed in detail with the Managing Board and the auditors. The Supervisor y Board concurred with the
repor t of the auditors and raised no objections. The Supervisor y Board also agreed to the Managing
Board’s suggestion for the distribution of profits. Consequently, the annual financial statements can be
taken as approved.
The Supervisor y Board wishes to express its appreciation to the GERICOM management and staf f for their
ef for ts and commitment during the 2002 financial year. It also extends its thanks to the shareholders,
customers and business par tners for their trust in the company.
I am convinced that GERICOM AG possesses great potential for an attractive future and have confidence
in the competence of both the management and staf f.
Georg Bauer
Chairman of the Supervisor y Board
Annual repor t 2002
GERICOM management team
The GERICOM AG management team
Hermann Oberlehner - CEO
Having completed a course in mechanical engineering at secondar y engineering college, Chairman of the
Managing Board and company founder, Hermann Oberlehner, obtained a university degree in business
management. He then worked in one of Austria’s largest, heavy industr y companies from 1986 -1989. By
the end of this period, Hermann Oberlehner was head of a project for the introduction of new processes in
the area of innovative materials. Af ter a shor t spell as the CEO of a German computer company, in 1990,
Hermann Oberlehner founded S plus S Marketing, Engineering and Computerproduction GmbH, the fore -
Hermann Oberlehner
runner of today’s GERICOM AG. From the outset, Hermann Oberlehner has served as the company CEO. In
December 1999, he was appointed as the chairman of the GERICOM AG Managing Board.
Gerhard Leimer - CFO
Gerhard Leimer, the company CFO, first studied at commercial college. From 1990 to 1996, he worked
for an Austrian banking group, acting as a sales manager, head of EDP and finally as CFO for its subsidi aries, which had a combined work force of 700. Among other assignments, while at the bank, Gerhard
Leimer was responsible for the expansion of a foods chain. In 1997, he became the commercial director
at S plus S Marketing, Engineering and Computerproduction GmbH, from which today’s GERICOM AG has
emerged. Since August 2000, Gerhard Leimer has been a member of the GERICOM AG Managing Board
and the company CFO.
Gerhard Leimer
7
8
Por trait in brief
2002 – a year of success
Portrait of GERICOM AG in brief
February
Changing the world, crossing frontiers, pushing back limits, thinking ahead. These are just some of the
Leclerc company exhibition.
things that GERICOM has been doing for the past twelve years. For we have been involved with mobile
computing & communications since 1990 and have profited from the progressive convergence among
March
the information technologies.
Participation in the CeBIT 2002.
We combine telecommunications, enter tainment electronics and mobile data processing on the basis
April
Successful introduction of the X5
of innovative computer engineering and sell our products using comprehensive and innovative marketing concepts.
outdoor design notebook.
May
1990
1998
Foundation of the S plus S GmbH.
Development of on - line sales. EMAS accreditation.
Co - operation with Abocom, a leading producer of
Launch of the lightweight A2
aluminium notebook.
June
1991
mobile applications. First notebook with the Pen -
Entr y into the profitable notebooks and computer
tium II processor. First notebook with DVD drive.
market.
1999
Participation in the MEDPI France.
July
GERICOM A2 as price tip in PC
1992
Largest group - independent notebook marketing
Orientation of the customer structure towards
company in Europe. Co - operation with Compal.
chains such as Media Markt, Saturn, etc.
Development of an LCD PC. First notebook with
integrated CD burner.
magazine.
1993
August
Winner of the shareholder value
Complete range from simple to high - end devices.
2000
Green PC.
Co - operation with FIC (leading OEM notebook pro ducer). Renaming of the company as GERICOM AG.
test. Winner of the Hardware
Awards from PC. Games hardware
for the GERICOM X5 Fore.
1994
IPO on the Neuen Markt in Frankfur t. PDAs, web
Focus on notebooks. First Pentium notebook.
notebooks with wireless L AN. Hot swap education
notebooks. World’s first 1000 MHz notebook.
October
1995
Development of a web pad for the home market.
GERICOM signs the Corporate
Co - operation with a Taiwanese notebook produc -
Leader in the digital camera market in Austria. Co -
Governance declaration and thus
er in the high - end segment. Multimedia notebook.
operation with Uniwill (development and marketing
All - in - one PC.
of notebooks for the European domestic market).
1996
2001
Star t of direct sales to SMEs. Intel award for sup -
Market leader in the German and Austrian notebook
por t of the market development of Pentium proces -
segments. Game notebooks with ATI graphic chip,
sors. First notebook with 15” display.
web pads and the world’s first GPRS notebook.
1997
2002
Co - operation with the Taiwanese notebook manu -
Again market leader in the general German note -
facturer, Compal. Entr y into the digital camera
book segment. Notebook with CD - RW burner,
market. Design of LCD monitors.
lightweight notebook design and the world’s first
declares its support for the pro tection of shareholders through
greater transparency. Participation
in the SMAU in Milan.
November
Participation in the
SIMO in Madrid.
December
Prime Standard authorisation.
Purchase tip in Computer Easys
Spelling Evaluation, “Highly recom mended“.
semi - ruggedised notebook.
Annual repor t 2002
Company profile
The BTO - concept
flexible handling of any quantities in various configurations
risk-free, market-geared, “just in time” sales, minimum storage risk
The Products
The Network
mobile computing & communication
extensive network secures economic
permanent market research
purchasing of high-quality
long-term development co -operation with major customers
components
and leading technology suppliers
long-standing business
optimum price point tuning
relationships
Trendsetter with regard to design and product innovation
important European customer
After- Sales - Service
The Quality
comprehensive service package
extensive testing processes and quality assurance
service centre for activities throughout Europe
management
complete range, which allows retailers
repeated purchase recommendations in the specialist press
to commence the sale of new products
as a test winner
Sales and Distribution
three sales and distribution channels, e.g. promotion business, strategic partners and direct sales
value added for promotion customers through support during the entire sales strategy up to the POS, winning of new target
groups, increase in customer frequency and the sales potential among our clientele
comprehensive e -commerce concept
9
10
Team
The GERICOM work force,
the basis for success
The GERICOM team provides the foundation on
which company success is built. Company em ployees are characterised by a sense of individual
Regina Wagner,
Sales
responsibility and determination, high degrees of
personal motivation and commitment, team spirit
and loyalty.
The flat GERICOM hierarchy and a clearly defined
human resources policy promote employee ad vancement possibilities and performance levels.
Challenging assignments and the rapid assump tion of responsibility create impor tant impulses
Gerald Gruber,
Purchasing
for development and employee performance. Re muneration is also largely performance - oriented,
which stimulates a businesslike approach among
ever y member of the work force.
The introduction of a share option programme at
the time of the IPO also represented an impor tant
precondition for the recruiting of qualified staf f for
GERICOM. The options scheme binds employees
Matthias Schlägl,
Organisation
to the company and encourages entrepreneurial
thought and action. The details of the employee
ownership programme are contained in the con solidated notes.
On the balance sheet date, December 31, 2002,
GERICOM employed a work force of 306 ( Decem ber 31, 2001: 296). As compared to the average of
296 in 2001, this represents and increase of 11% .
Franz Märkl,
Quality assurance
However, personnel and social expenses in 2002
only rose by EUR 0.76 m to EUR 8.58 m.
The majority of the GERICOM team are active in
the ser vices sector, which was subject to targeted
expansion in 2002, in order to raise the levels of
customer satisfaction. As at December 31, 2002,
96 employees worked in this area, 49 in sales, 94
in administration and 67 in product upgrading.
Mathias Klein,
Accounting
MANAGEMENT REPORT
12
The mobile computing market
The mobile computing market – economic climate
At the beginning of the 2002 financial year, the global economy showed initial signs of recovering from the
slump in 2001. However, at the same time, the introduction of the euro led to uncer tainties among many
European consumers. In addition, by the spring of 2002, there were already increasing indications that,
contrar y to expectations, the economic recover y would be delayed for longer than expected. This resulted
Economic Growth
in the USA
in even greater insecurity among consumers and companies alike and the situation was fur ther exacerbated by the two - year fall in share prices, the Iraq crisis, the anxiety concerning the possible fall - out
in the global economy as a consequence of a militar y conflict and the lack of any sign of an immediate,
in %
4.5
4.0
3.5
powerful revival in the world economy. Companies and private individuals reacted with increasing caution
as far as investments and spending were concerned.
4.1
3.0
Moreover, future development is also threatened by the decline in US consumer spending, growing gov -
3.0
2.5
2.3
2.0
2.6
ernmental debt, the balance of payments deficit in the USA, doubts about the corporate profits trend and
the danger of an additional fall in the value of the US dollar. Moreover, Japan, the world’s third largest
1.5
industrial power, continues to be faced by considerable structural problems. High levels of unemploy -
1.0
0.3
ment, low share prices, the crisis in the banking sector and the fall in prices are restricting investment
1999 2000 2001 2002e 2003e
and private consumer spending. Nonetheless, if Japan is excluded, Asia as a whole has proved itself to
Source: WIFO. EU-Commission. OECD
be highly resistant to US weakness and the decline in share prices. Above all China, where GERICOM is
0.5
0,0
actively co - operating with numerous par tners, continues to show dynamic, current development.
Economic Growth
in the Euro Zone
The European economy –
little dynamism in the euro zone
recover y in the USA. Other factors included the
The European economy also lost impetus. Expor t
of the Iraq conflict and the related increase in oil
growth slowed and domestic market demand
prices, which led to additional uncer tainty among
was sluggish. Capital investment also tangibly
consumers and the business community. At the
3.0
declined since spring 2001. Moreover, the latest
end of the year, real, economic growth in Germany
2.5
upward valuation of the euro has raised expec -
stood at 0.4% , the weakest figure since 1993.
tations with regard to stability, but due to the
Due to the many unsolved structural problems, no
reduction in interest rates, has simultaneously
major growth impulses can be expected in 2003
reduced the chances of an improvement in mone -
and with anticipated growth of 1.4% , Germany is
tar y conditions. Financial policy, which last year
likely to be at the bottom of the growth table in
1999 2000 2001 2002e 2003e
was clearly directed towards expansion, has now
the euro zone.
Source: WIFO, EU-Commission, OECD
become restrictive. Consequently, the European
in %
4.0
3.5
3.6
2.6
2.0
1.5
1.0
0.5
0.0
1.8
1.5
0.8
economy will only star t to accelerate slowly in the
course of the year.
rise in the value of the euro, the intensification
Austrian economic
performance slightly better
In 2002, the Austrian economy grew by around
Structural problems put
a brake on the German economy
0.9 % . However, as a result of the negative mood
In 2002, the German economy continued to sta -
2003. As in the rest of the euro zone, growth of
gnate with a variety of factors preventing the
1.7% is forecast for Austria, which will be below
upturn initially predicted for the second half of
the medium - term trend. The expectations of
the year. One significant reason for this situation
companies and consumers are only improving
was a renewed fall in the international stock ex-
ver y gradually, due to the excessive risks in the
changes during the summer, which was mirrored
international finance, real estate and energy
by doubts concerning the sustainability of the
markets.
worldwide, only a slow upturn can be awaited in
Annual repor t 2002
Management repor t
European market for information
technology and telecommunications (ITK)
From a global perspective, the ITK branch has vir-
According to a BITCOM study, the Western Euro -
In 2000, record growth of around 13 % was attai -
pean market for information technology and tele -
ned, but these figures could not be maintained in
communications (ITK) should bottom out during
2001. The growth rate dropped to 2.8 % and this
the current year. Following a stagnation in sales,
was followed in 2002 by a fur ther decline to 1.2 % .
the trend for 2003 in most segments is marginally
For 2003, the EITO exper ts await growth of 4.5%
upward. All in all, the European ITK branch should
from EUR 2,153 bn to EUR 2,250 bn and in 2004,
growth by of 2.5% in 2003 to EUR 607 bn. For
expansion of 5.7% to EUR 2.378 bn. World mar-
2004, 4% growth to EUR 632 bn is predicted. This
ket growth during the past year was generated
data is based on the latest research by the Euro -
primarily by China, the Asian countries, the CEE
pean Information Technology Observator y (EITO).
states and par ts of Latin America and this trend
2000
will continue on 2003.
1500
tually doubled its sales during the past 10 years.
Global market for IT
and telecommunications
Volume (Mrd. Euro)
with the growth rates applicable across the EU.
2.7% and in 2003 and 2004, the US will continue
According to BITKOM, it is therefore all the more
to lag behind the global and European markets
impor tant that the branch be protected against
with growth of 1.1% and 2.6 % . As a consequence
extra costs, pointing to the burdens that would
of this trend, the share of the USA in the global
derive from the threatened taxes on printers and
ITK market has fallen to 31.5% and will continue
PCs, the imminent implementation of the used
to decline. At present, Europe has a 29 % market
equipment directive and the additional safety
share. The only sub - segment where the USA still
stipulations contained in the amendment to the
dominates, with a market share of 40 % , is infor-
Telecommunications Act.
mation technology.
Western European Notebook Market 2002
1,994,563 (24.07%)
Germany
1,692,882 (20.43%)
UK
1,073,994 (12.96%)
France
885,482 (10.69%)
in %
465,279 (5.62%)
Netherlands
2.10
2.28
2.61
454,891 (5.49%)
Spain
24.07
3.56
3.73
308,800 (3.73%)
Switzerland
6.46
5.49
294,700 (3.56%)
Sweden
5.62
Austria
216,194 (2.61%)
Belgium
188,833 (2.28%)
20.43
10.69
12.96
173,893 (2.10%)
Denmark
Source: Gartner Group
535,539 (6.46%)
Ohters
0
50
100
150
200
2,250
1,836
2,153
By contrast, sales in the USA have declined by
2,128
German market is continuing to fail to catch up
2,069
2500
In this connection, BITKOM makes clear that the
Italy
13
2.8
1.2
4.5
‘01
‘02
’03e
1000
500
0
9.6
12.7
‘99
‘00
Growth in %
Source: EITO
14
The mobile computing market
The weakness in the US market has led suppliers
mentation services. According to Harms, companies
to focus more closely than before on the remaining
are currently in the process of closing the gaps and
growth regions. Services suppliers have shown
media breaks in the digital value added chain and
themselves to be relatively crisis - resistant with
completely digitalising business processes from de -
the Western European telecommunications ser-
velopment to sales. The hardware sector developed
vices in par ticular, demonstrating stable growth
in an opposite manner to the services sector, with
of 4 - 5% p.a. During the past year, the IT services
regard to both end user devices and network infra -
suppliers were forced to reduce their growth ex-
structures. During the past year, there was a 6.9%
pectations, but still demonstrated a plus of 1.2 % .
slump in demand. Hardest hit were the producers
The ETO analysts forecast growth of 2.8 % in this
of data communications and network infrastructure
segment during 2003 and 4.7% for 2004.
equipment with a minus of 8.1% . The hardware market will slowly stabilise, but EITO first anticipates
Forecast PC‘s
in Germany
Software sales stagnated in 2002. For the current
growth of 2.8% in 2004. Initially, the suppliers of
year, the software houses can again expect growth
ITK equipment and systems must accept a further
in demand of around 2.4% . In 2004, EITO expects
decline in demand of minus 0.9% during 2003. The
growth of around 4% in the European software mar-
trend away from hard - to software and services was
ket. Significant impulses for growth are being gene -
maintained in the ITK branch. Only 26% of sales
rated by the so - called enterprise application inte -
were achieved in Europe with equipment, systems
gration, security solutions and e - government. These
and infrastructure, while the remainder of expenditu -
primarily involve the supply of consulting and imple -
re was spent of software and services.
PC‘s per 100 inhabitants 2002
USA
86
Norway
57
Sweden
56
Denmark
54
Swiitzerland
47
Netherlands
45
Japan
43
Finland
39
5
Great Britain
38
0
Germany
35
France
30
Western Europe
30
Ireland
29
Austria
29
Belgium
27
Italy
17
Portugal
15
Spain
14
Greece
10
PCs per 100 inhabitants
45
40
35
30
25
20
15
30
16
33
12
35
6
37
5
39
5
41
5
10
‘00 ‘01 ‘02 ‘03 ‘04 ’05
Growth in %
Source: BITKOM; Basis EITO
0
10
20
Source: BITKOM; basis: EITO
30
40
50
60
70
80
90
Annual repor t 2002
Management repor t
The mobile computing market
PC, TFT monitor and web appliance segment will
In the meantime, the notebooks/mobile com -
constitute one of the fastest expanding market
puting has become one of the most attractive
areas in the coming years with high, double - digit
markets in the entire consumer electronics sector
growth rates.
15
with regard to both growth and market volume.
IDC and Dataquest forecast medium - term growth
The development of the information society
of around 15% and according to a Gar tner Group
2002 saw the addition of an extra 216 million
study, in 2002 the private customer segment
communication outlets, a figure than excludes
expanded by 42 % and the commercial customer
analogue terrestrial network connections. The
segment by around 20 % .
number of cell phone users exceeded the one bil -
Mobile PC/Desktop PC
growth in Western Europe
in %
lion mark for the first time with over 70 % of cus -
80
Mobile computing and communications represents
tomers employing the GSM standard developed
70
GERICOM’s sole area of business activity. IT tech -
in Europe. The number of internet users rose by
60
nologies are subject to constant change and thus
around 100 million in the course of the year and
50
permit the creation of numerous, new, innovative
in the meantime, more than 600 million people
40
and for the end user, advantageous products.
lock on to the web. 54 million internet outlets are
30
GERICOM carries out research into these trends
already operating via wide band, with DSL sho -
20
at an early stage and due to the flexibility of its
wing the strongest growth. At the end of 2002,
10
business model is then able to react immediately
31 million people around the world were using this
with new products. The dynamic notebook, LCD
wide band system, which represented an increase
0
75.4
69.9
30.1
24.6
Deskbased PC
Q4/01 Q4/02
Mobile PC
Q4/01 Q4/02
Source: Gartner Group
Global information infrastructure trend 2001-2003
Mobile PC user growth
in Western Europe
127
118
ISDN-channels
2003
2002
105
70
2001
60
in million units
45
31
DSL outlets
in %
50
Cable TV
outlets
10
32
0
23
14
1119
943
708
PCs
623
540
726
Internet
users
614
513
300
Source: BITKOM; basis: EITO
400
500
600
700
800
900
1000
1100
1200
Professional
Q4/01 Q4/02
Source: Gartner Group
1269
Mobile
telephones
200
41.0
20
338
100
38.5
30
365
350
0
59.0
40
18
Cable modem
outlets
61.5
1300
Private
Q4/01 Q4/02
16
The mobile computing market
of 71% over the preceding year. 23 million hou -
around 44% , but by 2005 a fur ther four to five
seholds utilise cable modems for quick internet
million users will be added annually. This means
access. However, with only 90,000 outlets, in
that the German internet community is set to
Germany the cable modem remains a niche tech -
grow to 50 million.
nology. In future, mobile wide band applications
will become possible due to UMTS.
In relative terms, this places Germany in mid table, but in absolute figures Germany now rep -
29 million PCs have been installed in Germany
resents the world’s third largest internet market,
and in the course of 2003, this figure is set to
behind the USA in first place and just headed by
exceed the 30 million mark. This places Germany
Japan in second. Growth in this area is continu -
slightly above the European average, but well
ing at a high level and new, mobile technologies
below the level of the USA. The installed basis in
are set to provide the internet with additional
Germany is growing annually by around 1.5 million
impetus.
devices, but if this tempo is not accelerated, the
Shorter innovation cycles and permanent
replacement process generate growth
countr y will require more than 30 years to close
the gap on the USA.
The life cycles of high - tech products in the IT
Far stronger growth rates are evident in countries
branch are becoming ever shor ter. New types of
such as Japan, where in 2001 alone, ten million
product and technologies are coming onto the
additional PCs were installed and in 2002 five mil -
market with increasing regularity.
lion. In Germany, around ten million PCs are used
Forecast Internet users
in Germany
100
87
80
70
60
50
40
30
20
38
28
10
0
44
14
50
14
56
11
60
8
‘00 ‘01 ‘02 ‘03 ‘04 ’05
Growth in %
Source: BITKOM; basis: EITO
The tempo of innovation in the notebooks sector is
private households. Consequently, ever y second
especially great, as is the demand for high - perfor-
German household possesses its own PC.
mance notebooks, which offer users a complete re -
In 2003, an impor tant internet milestone will be
placement for desktops. Despite these new deve -
passed with ever y second German logging on re -
lopments, saturation in the market for private user
gularly. In 2002, the internet rate was still only
notebooks is not awaited in the medium - term.
Internet users per 100 inhabitants 2002
Internet users per 100 inhabitants
90
for business purposes and around 20 million by
USA
66
Denmark
61
Finland
61
Sweden
61
Norway
54
Graint Britain
53
Switzerland
44
Germany
44
Italy
38
Western Europe
36
Japan
33
France
32
Spain
27
East Europe
7
0
10
20
Source: BITKOM; basis: EITO
30
40
50
60
70
80
90
Annual repor t 2002
Management repor t
instead to result in a permanent replacement
Wireless computing –
virtually irreplaceable
process cycle, which is reflected by a constant
New data transmission technologies and stan -
demand for innovative, electronic trend ar ticles.
dards such as Bluetooth, wireless L AN, GPRS and
Customer behaviour is also changing with a gro -
UMTS facilitate rapid internet access and perfect
wing demand for quality and ever- greater product
communications between a variety of devices.
knowledge.
This will greatly alter the manner in which we work
This is because shor ter innovation periods tend
17
and communicate and means that the demand for
For many PC buyers faster computing per for -
mobile solutions is set to increase enormously in
mance, greater memor y capacity and multi - me -
the coming years. Wireless internet enables the
dia applications provide the main reasons for
user to enjoy permanent links and to have access
Forecast ISDN
their purchases. Moreover, combined drives (CD
to an extensive selection of data, language and
in Germany
burner and DVD drive in one) and high - capacity
video services at any time and from any location.
3D graphics are gaining in impor tance as essen -
ISDN channels per 100 inhabitants
50
tial equipment features. However, in the final
Standard GPRS, which is based on the GSM mo -
45
analysis, limited customer budgets are turning
bile radio network, is now available throughout
40
the price/per formance ratio into the central
vir tually all of Europe. The GSM mobile radio
30
competitive parameter in the end consumer
network creates data links similar to those used
25
market.
for telephone conversations, i.e. for the duration
20
of the link the connection is occupied for the data
Notebooks are steadily substituting desktop PCs
flow, even if data is no longer being transferred.
within the course of replacement purchases, be -
By contrast, GPRS links only utilise network ca -
cause they are smaller, lighter and of fer greater
pacity when data is actually being transmitted,
comfor t. The price dif ference between PCs and
thus freeing resources for other connections. In
notebooks is also shrinking.
2002, work star ted on additional networks for the
35
35
23
26
33
8
13
5
0
34
35
15
15
10
30
4
2
‘00 ‘01 ‘02 ‘03 ‘04 ’05
Growth in %
Source: BITKOM; basis: EITO
still faster third generation mobile radio standard,
According to the Gar tner Group, during the four th
UMTS. Due to its higher data flow rates (up to 2
quar ter of the preceding year, the market share
MBit/s), this system opens up new dimensions,
of notebooks as compared to desktop computers
par ticularly with regard to e - commerce and mobi -
in Western Europe already stood at around 30 %
le multimedia, which will extend to mobile video
(2001: 24.6 %).
transmissions. In the wireless, networked home,
The demand for lifestyle products is still growing
Forecast DSL
in Germany
DSL outlets per 100 inhabitants
1200
UMTS should facilitate the remote control of hea -
1100
ting, security and other systems and devices.
1000
along with that for design and new materials and
100
the notebook is increasingly becoming par t of this
The connectivity trend factor
90
genre. GERICOM specialises in the early recogni -
Connectivity, i.e. the possibility for permanent
70
tion of shif ts in trends and their rapid conversion
network linkage via UMTS, GPRS, wireless L AN
into new products.
and Bluetooth will have a considerable influence
upon the computer branch. In Europe and the
Another growth segment in the mobile computing
1095
USA, a growing number of high - tech devices such
sector is comprised by TFT and LCD monitors,
as digital cameras, pocket organisers and DVD
which according to IDC will steadily push tube
players will be linked to computers. In turn, this
monitors out of the market in the next few years.
increasing convergence between communications
The precondition for this development is expan -
and computer technology will result in an expan -
sion in product capacity in the Far East, which
ding need for multi - functional products combining
would allow the finished devices to be of fered at
elements from both the computing and wireless
markedly lower prices.
communications sectors.
80
76
60
64
50
45
40
39
30
27
20
10
0
52
34
23
19
2
‘00 ‘01 ‘02 ‘03 ‘04 ’05
Growth in %
Source: BITKOM; basis: EITO
18
The mobile computing market
GERICOM in the mobile computing market
GERICOM banks on European retail chains
GERICOM is well on the way to becoming one
Over 67% of consumer electronic sales in Europe
of the top names in Europe for notebooks. As in
derived from specialists such as Media - Markt,
2001, during 2002 the company again succeeded
Saturn, etc. Around 26 % of sales emanate from
in capturing the top spot in the German notebook
international food chains such as Carrefour, Real,
market. With 213,473 notebooks sold in Germany,
Plus, Tchibo, Hofer and Lidl.
GERICOM remains the clear number one.
The market share in Germany amounted to 10.7% .
GERICOM’s clientele includes the largest,
international top players
Moreover, the figures from the consumer sector,
Stable and successful par tnerships are based on
where GERICOM was the undisputed leader, are
trust, commitment and a permanent exchange of
even clearer. In the EMEA region (Europe, Middle
information. As a result of its continuous, long -
East and Asia) GERICOM has already captured
term co - operation with international top players,
seventh spot in the overall notebooks sector with
GERICOM has obtained an oppor tunity to grow
a market share in 2002 of around 3 % .
globally along with these chains.
Competitive situation in the notebook segment
of the German market (deliveries in 1,000 items)
2000
items
%
2001
items
%
2002
items
%
Toshiba
219.9
16.4
GERICOM
195.2
13.0
GERICOM
213.5
10.7
IBM
147.4
11.0
Toshiba
170.8
11.4
Toshiba
209.3
10.5
Compaq
117.9
8.8
Fujitsu Siemens
135.3
9.0
Fujitsu Siemens
163.8
8.2
Fujitsu Siemens
117.8
8.8
HP
135.2
9.0
Dell
157.0
7.9
GERICOM
111.1
8.3
Dell
129.2
8.6
HP
155.4
7.8
Dell
84.7
6.3
IBM
111.6
7.5
Acer
148.2
7.4
Acer
80.0
6.0
Acer
86.3
5.8
IBM
141.2
7.1
Sony
79.7
5.9
Sony
65.4
4.4
Sony
89.1
4.5
HP
63.0
4.7
IPC Archtec
53.8
3.6
Medion
88.5
4.4
IPC Archtec
57.6
4.3
Compaq
51.9
3.5
Actebis
46.5
2.3
Compaq
34.6
1.73
IPC
16.8
0.8
530.7
26.6
1,994.5
100.0
Others
Total
258.9
19.5
1,338.0
100.0
Others
Total
362.1
24.2
1,496.9
100.0
Sonstige
Total
Annual repor t 2002
Analysis of the financial situation
19
Analysis of the financial situation
During 2002, GERICOM achieved fur ther expansion. Group sales amounted to EUR 544.7 m (2001: EUR
539.90 m). This increase of EUR 207 m corresponds with growth of 0.77% over the preceding year. 2002
also witnessed a continuation of the strong upward trend in the notebooks sector. EUR 455.4 m, or 83.7%
of total sales, derived from this area. As compared to 2001, sales increased by around 0.90 % (EUR 4.1
m). GERICOM has been focused on the notebooks sector since 1994 and during 2002, the company
product range was extended to include LCD PCs, TFT monitors and web appliances. In 2002, 16.3 % of
Sales in Accordance with
US - GAAP 2001-2002
EUR m
600
500
sales (2001: 16.4%) were generated by the semi - manufactured products segment (special notebook ac -
400
cessories, peripherals, LCD screens, monitors) and web appliances (Webcams, MP3 players, LCD PCs).
300
GERICOM’s comprehensive range of notebook components facilitates the individual configuration and
200
extension of hardware according to the requirements of the customer. Moreover, it also meets the need
for the quick availability of spare par ts.
a business concept for this customer group that
Our customers profit from the extensive know- how
ties. Project business sales in 2002 amounted to
that the company has acquired in over a decade in
EUR 138.12 m (2001: EUR 155.3 m) and consti -
the mobile computing sector. GERICOM products
tuted 25.39 % of sales (2001: 29.00 %).
544.07
100
0
Targeted implementation of innovative
trends with electronics retailers
539.90
2001
2002
is especially attractive and creates close business
incorporate the latest technological trends, which
are identified through permanent market research
Direct sales
and long- term development co - operation with lead -
The target group for high - margin direct sales
ing technology suppliers and major customers.
consists of SMEs, freelancers and value added
Over the years, the company has also repeatedly
resellers, who primarily use our products for their
set new benchmarks with regard to design and has
own requirements, or as par t of overall solutions.
450
continually attracted market attention through
These companies receive individually designed
400
exceptional innovations like the world’s first
high - end devices within the scope of BTO produc -
semi - ruggedised notebook, which was launched
tion, which are then mainly sold in the upper price
250
in 2002. GERICOM sells most of its products via
segment. In 2002, 6.99 % of total sales (2001:
200
electronics retail chains such as Metro, Media
13.00 %) derived from direct sales.
Markt, Saturn, Dixons, Karstadt and Surcouf, etc.,
Notebook Sales
2001-2002
EUR m
500
451.3
455.4
2001
2002
350
300
150
100
50
which are active across Europe. In 2002, the com -
European expansion continues
pany achieved 67.62% (2001:58 %) of its sales via
One GERICOM objective is the penetration of the
this customer group. The large number of devices
entire Western European market. Accordingly, 2002
sold by the retailers also means that we reach an
witnessed further, systematic internationalisation
extensive range of end consumers.
and the addition of further market shares. Interna tional sales (sales outside Germany and Austria)
0
Notebooks by pieces
2001-2002
Promotion business with
non - branch retailers
went up to 30.04% in 2001 (2001: 22.8%).
When expanding their range to include high - qual -
GERICOM profited from the expansion among its
350
ity electronic articles, non - branch retailers such
sales par tners, large international retailers, who
300
as Hofer, Lidl and Tschibo are reliant on suppliers
continued to raise the number of their national
250
of marketing services such as GERICOM. Our com -
and international outlets. This led to a simultane -
200
prehensive project business consulting services,
ous increase in both total volume and the number
150
which extend from an initial strategy discussion,
of sales promotions. However, with 62.45% of
100
to product development for a specific promotion
sales (2001: 61.5%) Germany remained GERI -
50
and support during sales and marketing, add up to
COM’s key sales market.
1,000 pieces
400
0
373.87
328.51
2001
2002
20
Analysis of the financial situation
Sales by customer groups
in %
6.99%
EBIT margin and operating result
m (2001: EUR 5.99 m). This figure corresponds
Sales in 2002 rose by 0.77% to EUR 544.07
with 2.49 % of the balance sheet total (2001:
m (2001: EUR 539.9 m). The gross profit from
2.94%). Cash and cash equivalents totalled EUR
turnover fell by 8.98 % to EUR 37.13 m (2001: EUR
34.90 m (2001: EUR 41.92 m). Inventories rose
40.79 m). The gross margin amounted to 6.82 %
from EURO 52.10 m to EUR 57.41 m. The increase
(2001: 7.56 %).
in trade accounts receivable from EUR 97.49 m to
25.39%
EUR 120.53 m was created by dispropor tionately
67.62%
Retailers
Project business
Direct sales
Sales by country 2002
in %
Administrative and distribution expenses in sales
large sales growth in the four th quar ter of 2002.
stood at 3.02 % (2001: 2.73 %). Consequently,
Trade accounts receivable on December 31, 2002
EBIT (operating result) of EUR 23.79 m (2001:
generally corresponded with sales in November
EUR 26.52 m) was attained along with an EBIT
and December, whereby an average period for pay -
margin of 4.37% (2001: 4.91%). Following the
ment of up to 60 days was agreed with the retail -
deduction of income tax to the value of EUR 5.44
ers. Other current assets amounted to EUR 7.4 m
m (2001: EUR 8.45 m), net income of EUR 18.63
(2001: EUR 6.6 m). The largest item included in
m remained (2001: EUR 18.45 m). The earnings
this figure comprised receivables from tax of fices
per share in accordance with US - GAAP, which are
of EUR 3.76 m (2001: EUR 2.3 m), which in par ticu -
distributed over 10.9 million shares, amounted to
lar relate to impor t sales tax.
EUR 1.71, which was higher than the EUR 1.69 of
the previous year. The financial result for 2002
Equity quota up
totalled EUR 0.28 m (2001: EUR 0.38 m).
Liabilities and shareholders’ equity, consisting of
subscribed capital, capital reserves and revenue
30.04%
7.51%
62.45%
Germany
Austria
Other countries
Order backlog on December 31, 2002 amounted
reserves, rose from EUR 72.35 m to 83.60 m. The
to around EUR 53 m (Dec. 31, 2001: approx. EUR
equity quota as at December 31, 2002 amounted
12.9 m) and thus confirmed the continued positive
to 37.01% (2001:35.44%). Other accrued liabilities
business trend.
of EUR 14.67 m (2001: EUR 14.84 m), including
warranties and guarantees, expected repair work
Liquidity remains steady
and credit vouchers, were formed in accordance
Fixed assets, consisting of buildings, technical
with a flat rate calculation method based on
plant and machiner y, other proper ty, plant and of -
warranty- related sales. Notes payable to banks
fice equipment, as well as intangible assets, less
remained virtually unchanged at EUR 0.07 m. Trade
accumulated depreciation amounted to EUR 5.63
accounts payable went up to EUR 120.11 m (2001:
Income statement (Abridged version in TEUR according to US - GAAP)
Sales by product group
2001-2002
Sales
in %
Cost fo Sales
90
80
Gross profit from turnover
83.6 83.7
70
General, administrative and selling expenses
60
Other operating income and expenses
50
Operating income
40
Financial result
30
16.4 16.3
20
10
0
Notebooks
2001 2002
Others
2001 2002
2001
%
2002
%
539,897
100
544,074
100
- 499,104
92.44
-506,945
93.18
40,793
7.56
37,129
6.82
- 14,734
2.73
-16,452
3.02
458
0.08
3,115
0.57
26,518
4.91
23,792
4.37
0.05
376
0.07
278
Result before income taxes and minority interests
26,894
4.98
24,070
4.42
Icome taxes
- 8,448
1.56
-5,435
1.00
Net income
18,446
3.42
18,635
3.43
Annual repor t 2002
Management repor t
EUR 107.27 m). This rise relates to the increase
(2001: EUR 9.5 m). The largest item in this con -
in inventories and business activity in the four th
nection was taxation of EUR 2.2 m (2001: EUR
quar ter of 2002. Other loans totalled EUR 7.8 m
3.7 m).
21
Balance sheet (Abridged version in TEUR according to US - GAAP)
EBIT 2001-2002
2001
%
2002
%
5,991
2.94
5,631
2.49
Cash and cash equivalents
41,919
20.54
34,903
15.45
Inventories
52,104
25.53
57,414
25.42
Trade accounts receivable
97,495
47.76
120,529
53.36
6,617
3.24
7,402
3.28
20
Fixed assets
Other current assets
Balance sheet total
EUR m
30
25
204,126
100.00
225,879
100.00
15
Shareholders’ equity
72,349
35.44
83,599
37.01
10
Others provisions
14,842
7.27
14,665
6.49
Trade accounts payable
107,270
52.55
120,115
53.18
Notes payable to banks
7
< 0.01
71
0.03
3,695
1.81
2,247
0.99
Icome tax payable
Others loans
Balance sheet total
5,850
2.87
5,031
2.23
204,126
100.00
225,879
100
26.52
23.79
5
0
2001
2002
EBIT- Margin 2001-2002
in %
5.0
4.5
4.91
4.0
Cash flow
3.0
During the past year, the cash flow from operating activities fell from EUR 12.1 m in 2001 to EUR 1.2 m.
2.5
This was due to a change in net income of around EUR 20.7 m. As a consequence, investments of some
2.0
EUR 1.27 m were financed from cash earnings. The dividend of EUR 0.65 per share in 2001 led to a nega tive cash flow from financing activities of around EUR 7.02 m.
1.5
1.0
0.5
0.0
Cash - flow statement (abriged version in TEUR according to US - GAAP)
2001
2002
12,148
1,249
Cash-flow from investing activities
- 2,813
- 1,244
Cash-flow from financing activites
- 4,698
- 7,021
Cash-flow from operating activities
Net change in cash and cash equivalents
Cash and cash equivalents at the end of period
4.37
3.5
4,637
- 7,016
41,919
34,903
2001
2002
22
Analysis of the financial situation
In 2002, the working capital ratio, the relationship of current assets to shor t- term liabilities, amounted to
1.50 (2001: 1.55). The profit per share went up from EUR 1.69 to EUR 1.71 per share. Return on investment (ROI) totalled 8.80 % (2001: 10.81%).
Key figures (according to US - GAAP)
2001
Working Capital Ratio
2002
1.50
1.55
Equity quota
35.44%
37.01%
Return on Investment (ROI)
10.81%
8.80%
1.69
1.71
Earings per share (in EUR)
Investments
Investments in the 2002 financial year amounted to TEUR 1,269.5 (2001: approx. TEUR 2,833.62). The
majority of this sum related to changes in EDP, the adaptation of the notebook line and alterations to the
production building. Investments were financed from cash earnings.
Important post- reporting period events
No impor tant events occurred between the balance sheet date of December 31, 2002 and the printing
of the Annual Repor t, which could have had an ef fect on company assets, finances or income, or on the
course of business.
Annual repor t 2002
The GERICOM share
23
The GERICOM share in the 2002 stock exchange year
In 2002, the stock markets not only suf fered from the continuation of the global economic downturn, but
also a number of other negative factors. There was a steady loss of economic dynamism and many com panies corrected their sales and earnings forecasts downwards. All the impor tant share indices showed
marked losses in value. This made 2002 the third weak stock exchange year in succession.
The German Stock Market and in par ticular,
Following a large number of scandals, investor
the Neuen Markt trading segment in which the
confidence needs to be strengthened. Accordingly,
GERICOM share was listed up to the end of 2002,
shareholder protection and greater transparency
showed the largest falls of all the leading mar-
are the objective of the Corporate Governance
kets. At the end of 2002, the Nemax All Share
principles, which have been established by listed
stood at 405.62 (2001: 1,095.83 points), which
companies in Germany. GERICOM has fully com -
was well below the level at the close of 2001. In
mitted itself to these principles and therefore,
2002, the NEMAX 50, which is the main compara -
was among the first limited companies to sign the
ble index for GERICOM, fell by 69.25% , losing an
Corporate Governance declaration of Deutsche
even greater share of its value than in the compa -
Börse AG issued on October 30, 2002. In the
rable period of 2001.
course of the new share market segmentation for
Value Management
Award
2003, GERICOM AG was one of the initial group of
Against this background, the GERICOM share
companies to be admitted to the prime standard
followed the general trend, losing 67.10 % of its
segment. Since Januar y 2003, GERICOM has been
value. The share recovered markedly from its all -
par t of the new quality trading segment.
time low in October 2002 and closed the year on
December 31, 2002 at EUR 10.10. As a result,
New Supervisory Board confirmed
market capitalisation fell to around EUR 110 m
The Annual General Meeting took place on May 29
(2001: EUR 335 m). In June 2002, a dividend of
at the Ars Electronica Center in Linz. All the items
EUR 0.65 per share was paid for 2001 (2001: 0.42
on the agenda were approved by large shareholder
per share).
majorities.
GERICOM AG vs NEMAX 50 (rebased to 100)
GERICOM vs NEMAX Tech nology (rebased to 100)
120
110
120
100
100
90
80
80
60
70
40
60
20
1.1.2002
50
GERICOM
NEMAX Technology
40
30
20
Jan.
1.1.2002
GERICOM
NEMAX 50
Feb.
Mar.
Apr.
May
Jun.
Jul.
Aug.
Sep.
Oct.
Nov.
Dec.
31.12.2002
31.12.2002
24
The GERICOM share
A dividend of EUR 0.65 per share was agreed for the
from the end of the AGM on family grounds, but
2001 financial year. This represented an increase
will continue to be available to the company in a
of over 54.76% or 23 euro cents (2001: EUR 0.42)
consultative capacity. As one of the newly elected
and corresponded with 40 % of the Austrian Com -
members, Georg Bauer was appointed as the new
mercial Code balance sheet profit of EUR 17.71 m.
chairman of the Supervisor y Board. Gerhard Sperrer and Gernot Friedhuber were also confirmed in
Consequently, shareholders were also able to par-
their positions by the AGM.
ticipate directly in company success in the second
year since the IPO. The dividend return amounted
Wolfgang Stürzer resigned from the Board on
to 6 % (closing rate May 30, 2002). Three new
September 23, 2002, and was followed by Gernot
members of the Supervisor y Board were con -
Friedhuber on October 17, 2002. The GERICOM AG
firmed their posts by the AGM 2002. The previous
Supervisor y Board now consists of Georg Bauer,
chairman, Jochen Tschunke, resigned with ef fect
Har tmann Weirather and Gerhard Sperrer.
Shares and options of the Supervisory and managing Board members:
Supervisory Board
Function
Shares per
Sales
31.12.2001
Shares per
Options per
31.12.2002
31.12.2002
Georg Bauer
Chairman
0
0
0
Gerhard Sperrer
Member
1,350
0
1,350
Hartmann Weirather*
Member
85,000
28,050
56,950
Managing Board
Function
Shares
Sales
31.12.2001
Shares
Options per
31.12.2002
31.12.2002
Hermann Oberlehner**
CFO
7,145,503
0
7,145,503
Gerhard Leimer
CFO
8,500
4,250
4,250
Sonstige Mitarbeiter
10,000
285,612
*
The sales contract for 56,950 share has not been implemented, as the claim is dependent on the fulfilment of various conditions.
**
Hermann Oberlehner is the main beneficiar y of the Oberlehner Private Trust, which holds the shares.
Information for Investors
Key figures per share
Number of shares
Free float shares
Free float in %
Earnings per share
Price high
2001
2002
10,900,000
10,900,000
3,368,173
3,754,497
30.90%
34.44%
1.69
1.71
39.40
31.04
Price low
17.25
7.15
Year-end price
30.70
10.10
P/E 2001 high
23.31
18.15
P/E 2001 low
10.21
4.18
335 Mio. Euro
110 Mio. Euro
10,813
27,769
Year-end market capitalisation
Average number of shares traded per day (Xetra)
Annual repor t 2002
Management repor t
Corporate Governance
Following deferrals, remuneration to the Managing
GERICOM AG is convinced that companies and
Board during the 2002 financial year were as fol -
hence the stock markets can only recover the trust
lows (figures in EUR):
25
of investors and earn it when clear rules of behav iour are communicated and monitored.
Fixed
Variable
Total
308,407.22
50,000.00
358,407.22
For this reason, on October 30, 2002, GERICOM
AG and nine other companies listed on the Ger-
During the 2002 financial year, the GERICOM AG
man Stock Exchange have committed themselves
Supervisor y Board received emoluments total -
to uphold nationally and internationally recognised
ling EUR 50,034.27 in consulting fees and EUR
company management standards and have signed
14,114.37 for Supervisor y Board activities.
a joint Corporate Governance declaration.
In addition, during the financial year 2002, GERI GERICOM AG has implemented the standards
COM AG paid the auditors, KPMG Alpen -Treuhand
contained in the Corporate Governance declara -
GmbH Wir tschaf tsprüfung- und Steuerberatungs -
tion, whereby in a deviation form Item 3.2 b),
gesellschaf t, a fee of EUR 180,793.34.
Prime Standard: index
landscape form 2003
the Managing Board remuneration contained in
DAX
the notes to the consolidated financial repor t are
In this connection, it is also confirmed that an ap -
not repor ted individually, but on the basis of the
propriate independence declaration of the afore -
complete Board.
mentioned auditors has been given.
Begin Februar
Half Februar
21.03.2003
24.03.2003
Companies can
Stock exchange
Publication of the
Decision con -
Linkage date
Star t of trading
apply for accep -
structure comes
final rankings of
cerning index
(change afet clo -
of the new index
tance into the
into ef fect
all Prime Stan -
composition
se of trading)
family
dard companies,
closing date Ja nuary 31, 2003
Demands of the new standard
General Standard
Minimum legal requirements
Annual Report/Half-year Report
Free float in %
Additional requirements
Quartely reports
International accounting standards (IAS/US - GAAP)
Company calender
Active IR (analyst conference)
ad -hoc releases in English
On- Going reporting
Continuous trading (determined by Xetra liquidity, possibly designated sponsor)
SDAX
TecDAX
NEMAX 50
Prime All - Share - Index
2003
prime Standard
MDAX
Prime Standard
26
The GERICOM share
The Managing and Supervisor y Board of GERICOM
GERICOM wins shareholder value test
AG welcome the introduction of the Corporate Gov -
A shareholder value study of the most impor tant
ernance Code and have reaf firmed their intention
Austrostocks on the national and international
to implement and maintain the contents of Code at
markets was recently completed by exper ts from
the GERICOM Group.
Contrast Management Consulting at the request
of the Austrian magazine, “Format”, using criteria
GERICOM in the prime segment
of the German Stock Exchange
such as return on investment, return on capital
At the beginning of 2003, the Frankfur t Stock
(EVA) and return on equity. The basis for calcula -
Exchange was divided into two segments, Prime
tion was provided by the annual repor ts for the
Standard and General Standard. Par ticipation in
years from 1999 – 2001. GERICOM emerged as
the “Segment of the Regulated Market with Ad -
the winner of this survey, whereby it was stressed
ditional Obligations” (Prime Standard segment)
that the return on capital employed was espe -
places special demands on companies with regard
cially convincing. The receipt of the “Winner of
to investor protection.
the Shareholder Value Test“ award confirms the
employed (ROCE), relative economic value added
probity of our policy of open communications with
In addition to the basic legal stipulations, the ad -
the world of finance.
mitted companies must fulfil strict international
standards relating to transparency and informa -
Investor relations
tion. These include the publication of quarterly
2002 again confronted GERICOM AG investor rela -
reports with certain minimum items of information,
tions with major challenges. The long - term price
consolidated financial statements according to in -
potential of the GERICOM share was convincingly
ternational accounting standards, the publication
demonstrated to analysts and fund managers dur-
of a financial calendar, the completion of at least
ing numerous road shows, investor conferences
one analyst conference per year, as well as the pub -
both in Austria and other countries and detailed
lication of additional ad hoc releases in English.
individual discussions. GERICOM’s primar y ob jective is to guarantee continuous, transparent
GERICOM has already met these requirements
and reliable communications concerning ever y
and therefore the Prime Standard segment does
aspect of investor relations. Shareholders, ana -
not entail any extra expenditure for the company.
lysts and representatives of the press can inform
In December 2002, GERICOM applied for entr y
themselves about the company via our web site,
to the Prime Standard of the German Stock Ex-
www.gericom.com. Up to date annual and quar-
change and this was received at the beginning of
terly repor ts, ad hoc and press releases, press
the new financial year.
ar ticles, key figures and analyst assessments are
presented in detail. One focal point of investor
With the switch to the Prime Standard and its
relations activity in 2002 was the obtainment of
commitment to comprehensive Corporate Govern -
additional analysts to adjudge our share from a
ance, GERICOM has given to a clear signal that
capital market viewpoint. The resulting research
it intends to do ever ything possible to number
repor ts have an impor tant function in the deci -
among the top quality shares on the German
sion - making process among institutional and
Stock Exchange.
retail investors.
Annual repor t 2002
Risk repor t
Risk report
Economic risks
GERICOM minimises its inventor y risk by the built
During recent years, the economic situation and
to order principle. Manufacturer orders are only
consumer behaviour in Western Europe have not
allocated when a customer contract has been
developed in a par ticularly positive manner. GERI -
signed. Therefore, inventories largely consist
COM is well - positioned as a supplier of innovative
of goods that have already been sold or service
products from the notebook growth area with an
ar ticles. Targeted market research and realistic
excellent price - performance ratio. Should this
quantity increases also serve to minimise the
negative trend continue, it cannot be excluded
sales risks of our trading par tners.
that consumer spending will again fall sharply,
which in the final analysis would also have a
Sales risks
detrimental ef fect on the future development of
The main source of sales is comprised by the retail
GERICOM.
sector’s largest, international companies, with
whom GERICOM attains a very sizeable project
Sourcing risks
volume. Therefore, significant reductions in sales
GERICOM relies on external par tners for product
could result from the loss of just a single partner.
manufacture and the completion of logistical
processes in both a qualitative and price connec -
However, due to its good price - performance ratio,
tion. In par ticular, the sourcing markets for note -
GERICOM is an attractive par tner and has long-
book components and logistics services are vola -
term, stable customer relationships. It can there -
tile with regard to both capacity and price, while
fore be assumed that these retail par tners will
logistical ser vices can also be negatively af fected
not terminate their business links with GERICOM.
by political events such as the Iraq crisis.
Moreover, GERICOM reduces the credit risk due
to the fact that the majority of its customers are
However, as a result of its long- term business re -
insured against possible loss risks.
lationships, GERICOM has a ver y stable supplier
network. As a leading notebook supplier and due
Financial and currency risks
to its large trading volume, GERICOM receives
GERICOM’s financial requirements are almost ex-
preferential treatment in the case of supply bot-
clusively limited to project financing. As a result
tlenecks. GERICOM obtains its goods from lead -
of the company’s equity basis and good earnings
ing international manufacturers with high quality
power, it possesses a first class credit rating. In
standards and carries out its own checks before,
addition, the existing finance lines are suf ficient
during and af ter production.
to finance growth of up to 25% . There is no de pendency on individual banks and in addition, a
Inventory risks
large volume of supplier credits is available.
Due to dynamic, technical developments, high quality products in the mobile computing segment
There is a potential risk derived form the fact that
are subject to rapid obsolescence. Therefore, they
in the EDP branch, invoicing in US dollars is stand -
must be sold as quickly as possible, as otherwise
ard practice. This is minimised by project- related
depreciation risks can threaten.
hedging transactions.
27
28
Risk repor t
Outlook
GERICOM does not envisage a fundamental im provement in the general situation with regard
to consumer spending during 2003. Indeed, it is
probable that the price sensitivity among con sumers will increase still fur ther. Sales channels
with flat cost structures such as discounters will
continue to profit from this trend. However, in
the notebooks field we continue to await posi tive growth rates, which will primarily result from
increased demand in the consumer area. As the
German market leader, in the past GERICOM has
already demonstrated its special capabilities in
this connection.
GERICOM looks for ward to 2003 with optimism.
The company has an ef ficient purchasing and lo gistics network in order to place its products in
a broad market within a brief time - to - market pe riod. Both the production and sales sides of the
company possess great flexibility and excellent
cost structures. One focal point of activity will
be the fur ther expansion of the company’s inter national involvement for which an excellent basis
has been established during recent years. We
have accompanied existing customers into other
countries, obtained respected international re tail chains as new customers and established an
extensive, international ser vice and af ter - sales
network. GERICOM believes that its European
business model continues to of fer considerable
growth potential and that this international ori entation, a flexible of fer range and the strength
of the company’s purchasing and logistics sys tems, mean that it well - able to flourish even in
dif ficult periods.
We are therefore confident that in 2003, GERI COM can raise both its sales and net income for
the year by 15 % .
COMPANY PROFILE
30
Business model
The GERICOM AG business model
extensive
Recognising the latest trends and technologies, turning visions into reality and making the world tangible !
Marketing concepts
Since 1990, this statement has defined GERICOM’s activities as a trailblazer in the mobile computing
and communications field. The company combines telecommunications, enter tainment electronics and
mobile data processing on the basis of innovative computer technology and sells its products by means
strong sales
of successful, overall marketing concepts. As a result, GERICOM is pushing on with the unification of
par tnership
information technologies, while simultaneously benefiting from this global trend.
innovative
Value added for marketing sales partners
GERICOM provides an innovative marketing con -
Quality assurance from development to
customer service
Product por tfolio
cept, which enables retail chains from outside
GERICOM allocates product quality assurance top
the electronics branch such as Lidl, Real, Tchibo,
priority. Quality assurance covers the entire value
Zielpunkt (Plus Austria), Hofer (Aldi Austria), as
added chain from product development to custom -
pan - European
well as other companies from the media, enter-
er service. A modern, customer- oriented and pan -
Ser vice network
tainment and food branches to commence sales
European service concept is a central element in
of notebooks and other high - tech products for the
corporate strategy and represents a major factor
mobile computing and communications sectors. As
in the penetration of the European market.
Versatile
a services supplier, GERICOM undertakes the en -
sales strategy
tire value added process for the customer, offering
Four years of e - commerce success
partners all the support required for the marketing
Over 30,000 page visits and hundreds of orders
of GERICOM products to end customers, from indi -
per day (www.gericom.com) provide eloquent con -
Flexible, risk- free
vidual product specifications that are tailor- made
firmation of the success of our on - line activities.
BTO - System
to the market, pricing, the determination of promo -
The additional GERICOM web shops provided by
tion duration, the design of advertising and POS
our sales par tners and GERICOM products in in -
support, to a comprehensive af ter- sales service.
numerable online shopping malls supplement the
As a result, retail partners from outside the branch
range in this area.
focused r & d
can focus on the provision of selling space. The
product innovation
advantages derive from the marketing effect of pro -
Flexible and risk- free BTO system
forerunner
motions, which offers competitive differentiation,
Using its flexible and risk- free, built to order sys -
increases in customer frequency and sales poten -
tem, GERICOM is in a position to offer products
tial and an enlarged customer target group.
that meet customer requirements at any time. Com puter- optimised item quantities and configurations
low - cost
purchasing
Strong sales partners
are employed for the completion and sale of orders
GERICOM has a strong market rating and has long
with extremely short time - to - market intervals. The
enjoyed close links with leading, high -turnover elec -
logistical resources of our global supplier network
tronic retail groups across Europe such as Media
are used to the full in this connection.
Markt, Saturn, Karstadt, Metro, Fnac and Dixons.
Innovative product portfolio
Trend research and
development focal points
GERICOM concentrates on promotion business in
GERICOM’s
the mobile computing and communications sec -
activities involve engineering (e.g. the integra -
tor, which is the fastest growing segment in the
tion of Bluetooth technology, GPRS and UMTS in
IT technology market. Notebooks extending from
notebooks and web appliances such as tablet PCs
star ter to high - end models, LCD PCs, flat screens,
with integrated telephone and UMTS telephones),
PDAs, mobile accessories and web appliances
design (e.g. the matching of current trends to the
round of f the product range.
tastes of European customers), as well as perma -
trend
research
and
development
Annual repor t 2002
Company profile
nent trend and market research. One typical result
purchasing volume due to strong growth, GERICOM
of such endeavours is the first impact and splash -
has developed into an impor tant European buyer of
resistant design outdoor notebook, which GERI -
impor tant technology components and is allocated
COM launched onto the market in April 2002.
preferential treatment.
GERICOM as a trendsetter
Promotion business
GERICOM has its own trend research activities
At the beginning of a sales promotion, we draw up
and due to long- term development work with lead -
the general product specifications with our sales
ing technology suppliers and major customers,
partners in the course of strategic discussions.
constantly produces product innovations that at-
Precise pricing is then completed in a subsequent
tain market maturity within a very short space of
step, which serves as a basis for the development
time. On this basis, GERICOM continually sets new
of the actual product in close co - operation with
benchmarks with regard to design and technology in
our sub - suppliers.
Award from Intel
the mobile computing and communications sector.
GERICOM products are conspicuous due to their
The definition of the ideal promotion period and
especially young and modern design and use of new
the design of a successful advertising campaign
materials. Indeed, these “fashionable” features
(print, TV, web, billboards) are also decisive fac -
serve to differentiate them from standard devices.
tors for the success of the respective promotion.
We also support our sales partners in this area
Low- cost purchasing
through our long- term experience. Comprehensive
Due to our extensive network and long- term busi -
logistical planning secures optimum product avail -
ness relations in Asia, we can also secure the low-
ability at the customer premises. POS support and
cost sourcing of high - quality components, which
a full range of after- sales services then round off
are in shor t supply. As a result of an increase in
this full service package.
Distributor price list
Typical promotion business sequence
Product development with
Determination of the
pre -suppliers
promotion period
Advertising design
Price setting
Product delivery, logistics concept
Product specification
Point of Sale support
Strategy discussions
After Sales Service
Component
3 days for
3 days for
Goods in store
dispatch
customs and
dispatch to
at the customer
to Taiwan
delivery check, 2
Europe, 2 days for
1 week before
days assembly
distribution
advertising
Week 5
Week 6
Week 1
Week 2
Assembly
Week 3 + 4
Advertising
Online sales
31
32
Product por tfolio
Mobile computing product portfolio
Since 1994, GERICOM has focused mainly on notebooks and related mobile computing products. These
include dif ferent types of notebooks (high - end, lifestyle and educational notebooks and desk top replace A2
ments), LCD PCs, webcams, web pads and other hard and sof tware components. The company’s por tfolio
mirrors its core competence, which involves the ability to develop and produce innovative products for
the European market. Of central impor tance in this connection is the early recognition of technological
trends, individual development and creative product design.
Bellagio
Silver Seraph
Per4mance
GERICOM adapts the latest technological trends
Due to its technical competence and close links
and continually generates new product ideas with
with leading technology suppliers, GERICOM is
the aid of permanent market research and devel -
constantly able to recognise international cus -
opment co - operations with leading technology
tomer needs and trends at an early stage and
suppliers and major customers. As a result of its
to open up supply sources for innovative compo -
flexible production concept, GERICOM is able to
nents, which are then integrated into company
manufacture standard notebooks in large batches,
products. Consequently, GERICOM is not just
or as BTO products in accordance with individual
Intel’s only licensed OEM customer in Austria,
customer requirements. GERICOM has also long
but in the past was one of the first European com -
been a setter of benchmarks in the product design
panies to develop and launch notebooks with the
sector and has repeatedly attracted the attention
latest Intel products.
of the market with unusual innovations.
GERICOM is therefore the innovation leader in the
5 in 1 mobile
server
Silver Shadow
In April 2002, the company presented the first
notebooks and web appliance market:
impact- and splash - resistant, outdoor design
notebook with a magnesium casing and the en -
In 1994, GERICOM was one of the first produc -
ergy saving mobile Intel Pentium 4 processor. This
ers to introduce a Pentium notebook to the
product derived from the fact that according to
European market.
IDC, a third of notebooks are inoperative due to
In 1996, GERICOM launched a notebook with a
damage, which is largely caused by dropping, the
15 inch display onto the European market.
spilling of liquids onto the device, impacts and vi -
In 1998, GERICOM brought a notebook with a
bration. The X5 design outdoor notebook combines
Pentium II processor and a notebook with inte -
the performance of fered through mains - independ -
grated DVD drive onto the European market.
ent working with great durability.
In 1999, GERICOM produced a notebook with
GERICOM products stand out due to:
In 2000, GERICOM became the first European
integrated CD burner.
Webshox
Per4mance
Masterpiece Radeon
Masterpiece Per4mance
Mobility: flexible applications and new, innova -
company to introduce a notebook with a 1,000
tive materials facilitate the production of low-
MHz processor onto the market.
weight components
In 2001, GERICOM became the world’s first
Performance: future - oriented and high - perform -
company to of fer a GPRS notebook.
ance technology (integrated wireless L AN, Blue -
In 2002, GERICOM successfully launched the
tooth, GPRS)
world’s first semi - ruggedised notebook with the
Connectivity: maximum communicative capability
mobile Intel Pentium 4 processor and a note -
Design: the setting of new trends, specific char-
book with DVD - RW burner.
acteristics, new materials
X5 „Milka Edition“
Quality: extensive test processes and quality
Fur ther product innovations are currently under-
assurance (including LGA)
going development at GERICOM.
Annual repor t 2002
Company profile
Specialist journals regularly compare and evalu -
the mobile appliances sector, GERICOM also mar-
ate GERICOM products with their competitors.
kets products such as ISDN, Ethernet, modem,
This means that the top quality of GERICOM
GS, TV and combi - cards.
products receives repeated confirmation from an
independent quar ter.
A wireless future
X5 Force
With the world’s first GPRS notebook, GERICOM
The current product portfolio
set the scene in 2001 for mobile computing in a
From outdoor design notebook to MP3 player. Apar t
wireless future. With the integration of a GPRS
from high - end notebooks, which represent a fully
module into a notebook, it is at last possible
adequate substitute for desktops and stand out
to have constant, cable - free internet access. In
due to their high computing and graphic perform -
years to come, the connectivity of mobile devices
ance, GERICOM also of fers lifestyle notebooks in
is bound to be of special significance. Technolo -
modern design, equipped with the latest technol -
gies such as Bluetooth, wireless L AN, GPRS and
ogy and especially suited to frequent flyers. In ad -
UMTS facilitate perfect, wireless communications
dition, specially designed educational notebooks
between various devices and will drastically alter
are marketed in the school and university sector.
our work and communications patterns.
The employment of the GPRS “always on” feature
provides permanent linkage of the notebook to
The demand for mobile solutions is certain to rise
mobile radio networks without extra expense. This
markedly in the near future and with the emer-
is because costs first occur when data is trans -
gence of wireless internet access, we are on the
ferred. Unnecessar y, time - consuming and costly
threshold of the next communications revolution.
internet dialling is a thing of the past.
This will involve permanent linkage of users to the
Hollywood
Blockbuster
Radeon Advance
internet and the constant availability of a wide
The web appliances sector currently incorporates
range of data, language and video services. GERI -
all other products, which facilitate simple and
COM is already working at speed on the develop -
problem - free internet access. These include web
ment of products, which offer optimum connectiv -
pads, tablet PCs for mobile internet access, small
ity. Planned products include a PDA with GPRS and
digital webcams and innovative MP3 players. In
integrated digital camera, as well as LCD PCs.
Webgine Force
Overdose XL
Frontman
Force
Phantom
TView
33
34
Trend instead of basic research
Trend instead of basic research
GERICOM value added commences in the areas of trend research and product development. GERICOM
creates products in close co - operation with its sales par tners from the retail sector, who are included in
the decision - making process. Co - operation with leading technology suppliers (e.g. Intel, AMD, Microsof t,
ATI, Nvidia und Via) in the application and trend research field enables the early integration of the latest
technological developments and of customer requirements in company products. The identification and
realisation of new and innovative product ideas for the mass market represent the prime target. Costintensive basic research is not carried out. During the implementation of concrete product ideas, GERI COM can also rely on more than 1,500 development engineers from five leading Far Eastern notebook
manufacturers.
Question Marks
Technological partnerships
Activities
New products that are in the
GERICOM’s close contacts with the research and
GERICOM’s development activities involve engi -
initial phase of their life cycle and
development depar tments of global players in the
neering (e.g. the integration of Bluetooth technol -
which promise high growth levels.
production area also serve to quickly identif y new
ogy, GPRS and UMTS in notebooks, PDAs and web
trends and technologies.
appliances and TV features into LCD monitors),
design (matching of current trends to the tastes of
Stars
Products that constitute the cur-
These extremely flexible par tnerships provide
European customers) and general trend research
rent growth area of a company.
GERICOM with access to a large number of special -
(LCD - PC, tablet PC, etc.).
They provide profits, although
ist research teams working in a variety of fields,
these must be reinvested in
without an undue cost burden or the necessity of
GERICOM employees are jointly responsible for
order to maintain the share of a
guaranteeing permanent use of capacity.
the on - the - spot, continuing fur ther development
of the company por tfolio with leading technology
strongly growing market.
The paramount consideration in this regard is to
par tners in the Far East. Among other results, this
Cash Cows
keep the development period to a minimum. Any
teamwork provided the basis for the X5 impact-
These products provide profits,
derivative costs will be transferred to the number
resistant designer notebook series, the A2 series
which can be used to finance
of items actually produced at a later stage. Special
with its upgraded aluminium casing and a 3000
growth in other business areas.
impor tance is attached to the fact that the prod -
MHz notebook (Webgine Force).
ucts in the company por tfolio matrix var y between
Poor Dogs
“stars” and “cash cows”. These generate quickly
In addition, our teams are constantly working on
These are products, which are
increasing sales volume and high margins as inno -
new products in the tablet PC and PDA areas, as
at the end of their life cycle.
vations and then provide continuous income during
well as an enlargement to our notebook selection
They demonstrate below - aver-
their mature phase. As soon as a product star ts to
with a focus on web capabilities and graphic per -
age profits and even losses
show “poor dog” tendencies, i.e. falling sales, it is
formance. For a cer tain period, these products
and their market potential has
removed from the product range, as was the case
are then available to GERICOM for exclusive
a zero tendency.
with the PCs business area in 1999.
marketing.
Annual repor t 2002
Company profile
Hardware purchasing from technology leaders
GERICOM sourcing only takes place with companies that number among the respective market leaders
for the individual hardware components involved. Purchasing is carried out from company headquar ters in
Linz together with a separate company subsidiar y founded for this purpose in the Far East during 2001.
As a consequence of GERICOM’s long- term experi -
tent technology suppliers, thereby minimising the
ence, the company possesses profound knowledge
risks caused by possible bottlenecks through the
with regard to markets, products and technical de -
targeted spread of sourcing orders. This enables
velopments, as well as highly personal contacts,
the company to use its negotiating strengths with
built up over many years, which extend throughout
regard to suppliers to achieve an ef ficient price
the entire Asian and European notebook compo -
policy, without slipping into an excessive degree
nent sub - supplier market. A special source of sat-
of dependency.
isfaction is the intensification of the co - operation
with Intel, the world’s largest and most impor tant
In addition, through its purchasing policy, the com -
manufacturer of processors and chips.
pany seeks to achieve optimum use of capacity at
the plants of the notebook suppliers in Asia. GERI -
Due to the increase in GERICOM’s purchasing vol -
COM also fulfils a “sale function” in this regard. If
ume derived from strong company growth, it now
notebook suppliers have surplus capacity, we use
numbers among the leading European customers
this opportunity to purchase the wares for only the
of impor tant technology suppliers. This purchasing
variable cost of the supplier. This opens up addi -
power can be successfully used during the negotia -
tional potential for GERICOM to raise its gross mar-
tion of conditions. Fur thermore, GERICOM has an
gins. As a consequence of our precise knowledge
excellent market position, par ticularly in Taiwan
of the sub - supplier market, we are able to estimate
and China, which provides it with access to the
the availability of the components required at the
leading suppliers of various product components.
time of the respective marketing discussions,
In order to simplif y its purchasing strategy, GERI -
which particularly in the case of promotion busi -
COM focuses on a small number of highly compe -
ness, represents a major factor for success.
Upgrading in Linz
95% pre - assembled notebooks are delivered from Asia. All that happens on the extremely modern upgrad ing line in Linz is that these are tailored to specific, national needs and supplemented with price sensi tive par ts, such as processors, sof tware, specific national manuals and keyboards, and accessories. In
addition, the notebook configurations are stored in a database, in order to facilitate product tracing via
the serial number should servicing be required. In the case of project business with large batches of the
same configuration, the notebooks are generally manufactured entirely in the Far eats and then delivered
directly to the customers in Europe.
35
36
Successful three - prong sales strategy
Successful three - prong sales strategy
One impor tant element in GERICOM success is a simple, yet nonetheless ef fective, sales concept. Ac cordingly, our growth is not only clear evidence of the quality of the company’s products and ser vices, but
also of a highly ef fective sales strategy.
GERICOM sells its products via three channels comprising electronics retailers, promotion business with
retail chains from other branches, in par ticular foods, SMEs and value added re - sellers. All these groups
are addressed using a range of technical marketing features in the form of price, equipment, configura tion and design dif ferentiation. In addition, suppor t is also provided through an operative e - commerce
concept.
Sales partnerships with electronic retailers
(Aldi - Austria), Interspar or Tchibo to commence
GERICOM primarily markets its products across
the sale of notebooks, monitors, LCD PCs and web
Europe via the largest retailers in the electronics
appliances through an extensive range of innova -
branch such as Metro, Media Markt, Carrefour and
tive products and related services.
Dixons. The company has strategic sales par tnerships with the largest, European retailers, with the
GERICOM of fers its retail par tners from outside
result that all the market leaders number among
the branch attractive and comprehensive market-
the company’s customers.
ing concepts, which enable them to initiate sales
promotions using innovative mobile computing
For example, GERICOM supplies its products to
products without having to obtain cost- intensive
Media Markt in Germany, Austria, Switzerland,
know- how. Company par tners can focus on the pro -
Belgium, the Netherlands, Spain, France, Italy
vision of sales space. The marketing ef fect of the
and Hungar y. The sizeable numbers of devices
promotions is to dif ferentiate GERICOM’s retail
sold means that there is direct contact to a broad
par tners from their competitors and to increase
range of end users via the retailers. As a result
both customer frequency and sales potential. The
of BTO production, GERICOM is in a position to
GERICOM range extends from joint product devel -
supply its retail customers with large batches of
opment, price design, the determination of the
around 30,000 pieces and small units of around
promotion period, joint adver tising concepts and
100 items.
POS consulting, to a full af ter- sales ser vice.
Sales of the GERICOM product por tfolio to these
In 2002, GERICOM’s abilities with regard to the
retailers either takes place directly, or via on -
discover y and marketing of trend products made
line B2B stores specifically tailored for each of
possible promotions “hits” among its retail par t-
the companies involved. In the 2002 financial
ners involving the sale of notebooks, LCD PCs and
year, GERICOM achieved sales of EUR 376.92 m
monitors. During the past year, numerous sales
through the sale of its product por tfolio via elec -
promotions were also carried out simultaneously
tronics retailers. This corresponds with a 67.62 %
in up to eight European countries with customers
share of sales.
from the foods sector. Project business in 2002
amounted to a 25.39 % share of sales (2001:
Promotion business
29.00 %).
Retail sales channels are in a process of transi tion. Chains from outside the branch are increas -
Direct sales
ingly selling technically sophisticated electronics
The target groups in the high margin direct sales
ar ticles. In this connection, GERICOM acts as a
sector are SMEs, freelancers and value added re -
business enabler, facilitating the entr y of compa -
sellers (VARs), who do not market the notebooks as
nies such as Zielpunkt (Plus Austria), Lidl, Hofer
individual products, but rather as par t of an overall
Annual repor t 2002
Company profile
solution. The VARs use our equipment for their own
tion. As in 2001, existing direct sales business
needs or sell it in combination with their ser vices.
received additional suppor t in the form of e - com -
Individually configured, high - end devices, mainly
merce. Around EUR 38.04 m of sales (2001: EUR
derived from the upper price segment, are sold to
70.2 m), or 6.9 % (2001: 13 %), were generated in
these customers within the scope of BTO produc -
this area during the past financial year.
E - commerce
Direct Sales
(28 Platforms)
Promotion Business E.G.
Strategic Sales Par tner
LIDL, Ber telsmann
(Retailers)
VARs, KMUs
Mobile communications
network operators
End customers in Europe
37
38
Marketing and sponsoring
Marketing and sponsoring –
establishment of the GERICOM brand throughout Europe
GERICOM’s primar y marketing objective is the establishment of its brand throughout Europe as a syno nym for mobile computing and communications. Company marketing strategy has been systematically tai lored to fulfil this task. The GERICOM brand is the object of on - going consolidation by means of targeted
classic adver tising, event marketing, international trade fair par ticipation, public relations, test repor ts
and sponsoring.
Project business:
Zielpunkt Austria
Classic advertising
tional IT trade fairs and GERICOM attended both
In the classic adver tising area, activities ranged
in 2002, thereby strengthening existing business
from regular adver tisements in various European
relationships and making new contacts.
print media, to selective company and customer
measures. The latter involve the regular issue of
GERICOM notebooks convince
the specialist press
dealer price lists, which are sent to both VARs
GERICOM can point to long and excellent contacts
and SMEs. Special target groups are addressed
with all the relevant media and journalists in the
through company designed price lists and mail -
branch, which have been built up over the years.
ings. GERICOM price lists are frequently found as
The provision of products for test repor ts in the
a supplement in leading computer magazines.
specialist press plays a leading role in company
TV campaigns and extensive direct marketing
press relations. The result in 2002 was again
Direct-Sales
GERICOM enjoys permanent and highly ef fective
numerous evaluations and test results provided
marketing co - operations with its most impor tant
by independent exper ts of which the company is
retail sales par tners, which extend from TV cam -
justifiably proud.
paigns and adver tisements in fly sheets, to a
strong presence in various catalogues. As a result,
GERICOM Masterpiece
despite a relatively small budget, in 2002 this
Mc 12/2002. Despite a relatively reasonable
marketing mix again enabled GERICOM to become
price, the Masterprice numbers among the
the most purchased notebook brand in Germany.
most powerful notebooks on the market.
According to the Beyen market research institute,
Notebook, Organizer & Handy 12/2002. Due to
GERICOM was the most frequently mentioned note -
its Pentium 4 processors, which have a 2,4 GHz
book brand in the German print adver tising during
cycle frequency, the GERICOM Masterpiece is
2002. Our customers inser t this adver tising for
undoubtedly a high - end notebook.
our products.
PC Shopping 1/2003. The Masterpiece currently belongs to the fastest notebooks currently on
Trade fairs
Retail business:
Media Markt Spain
the market.
During 2002, GERICOM exhibited at a number of
leading trade fairs. The CeBIT is the largest in ternational exhibition in the IT technology sector.
GERICOM X5 Force
Chip 12/2002. The X5 Force is almost as good
Each year, suppliers and users from throughout
as a desktop PC and nonetheless mobile.
the information and telecommunications branch
CT magazine no. 22. The casing creates a far
meet up in Hanover. The por table computer domi -
more stable impression than many other note -
nated the CeBIT 2002 and there were unmistak-
books and stands out due to details such as the
able signs of the fact that mobile applications and
mechanical ejection lock on the optical drive, or
communications will have a massive influence on
clips for a carrier strap.
our digital future. The SMAU in Italy and the SIMO
Computer Easy Nr. 21. A fast notebook with
in Spain number among the most impor tant, na -
games capacity.
Annual repor t 2002
Company profile
PC - Shopping 10/2002. The GERICOM X5 con -
GERICOM as a young, dynamic brand
vinces with excellent, operative performance,
GERICOM uses targeted sponsoring in order to
3D games and a fair price.
strengthen both its company identity and the
PC Games Hardware 9/2002. Hardware award.
brand with an emphasis on the spor ting area. The
sponsoring of spectacular types of trend spor ts
GERICOM A2
has consolidated GERICOM’s image as a young
Notebook, Organizer & Handy 11/2002. The
and dynamic brand throughout Europe. Activities
many outputs are a ver y positive feature.
are focused on the sports sector and are divided
In addition to the USB por ts, there is also a
into two main areas. During 2002, a range of ex-
Firewire inter face, a TV outlet and a monitor
treme and trend sports such as Jump & Freeze,
connection.
skier cross, King of the Lake, Big Air, etc. were
PC Business 10/2002. The A2 is well - equipped
sponsored, which are primarily aimed at the young
for mobile use. The accessories also meet vir-
and trend - setting target group and create a direct
tually ever y requirement.
connection to our products and technologies.
Martin Schmitt
Ski jumper
PC magazine 10/2002. Price tip.
On the other hand, GERICOM was also involved in
GERICOM Supersonic XL
classic spor ts such as ski jumping, ice hockey and
Micro Hebdo 12/2002. The Supersononic XL is
motor spor t, all of which appeal to a broad audi -
a notebook, which is as powerful as a desktop
ence. Among the most well - known of the athletes
PC with the ver y latest interfaces (4 USB 2.0,
sponsored by GERICOM in 2002 were the German
Firewire, WL AN), an attractive look, long bat-
ski jumping idol Mar tin Schmidt, the Spanish mo -
ter y running times (over 3 hours). Highly suit-
tor cyclist Fonsi Nieto, the young ski jumpers,
able for games due to the Nvidia graphic card.
Stefan Turmbichler (Austria), Stefan Pieper and
Incomparable Memor y Card Reader (Multimedia
Emmanuel Chedal (France), as well as the extreme
Card, Smar t- Media and SD Card).
athlete, Georg Schauf (Germany), the ERC Ingol stadt ice hockey team, the Austrian high - speed
GERICOM Silver Seraph Per4mance
ComOnline 10/2002. Price tip.
Tamee Harrison
Popstar
Michelle Rodriguez
Hollywood Star
skier Harr y Egger and the racing driver, Mathias
Lauda (Spain).
Mathias Lauda
Upcoming racing driver
Fonsi Nieto
Motorcycle running driver
39
40
E- Commerce
E- commerce – Europe’s best on - line shop
E- commerce plays a central role in GERICOM sales strategy and during the 2002 financial year, sales
in this area increased by over 100 % as compared with the preceding year. The share of sales to value
added resellers and SMEs was raised considerably, while growth in the B2C sector was dispropor tionately
www.gericom.com
large. GERICOM e - commerce activities are characterised by high profit margins and par ticularly strong
expansion.
GERICOM AG currently of fers approximately 600
accommodation of individual market conditions
individual notebook configurations in the BTO area
and the establishment of notebook distribution in
on an on - line basis. This range is supplemented by
channels outside the branch.
numerous special configurations (24 - hour of fer),
Quelle AG configuration
which in Austria can be delivered within 24 hours
Targeted, on - line database evaluations allow
(Germany: 48 hours). Consequently, not only can
comprehensive conclusions to be drawn from nu -
customers be served, who attach value to indi -
merous demand and inquir y parameters and the
vidual, tailor- made notebooks, but an additional
determination of trends. On the basis of this infor-
on - line range is available that is characterised
mation, the por tfolio is then continually adjusted,
by minimum deliver y times and an excellent price -
altered and expanded. Sophisticated application
performance ratio derived from ver y high batch
scaling also permits a ver y rapid reaction to
numbers.
changes in the market and guarantees a risk- free
and stable margin system.
Since mid -2001, GERICOM has provided its stra -
www.geizhals.at
tegic sales par tners with an on - line configurator
B2B stores
application, i.e. the sof tware technology needed
At present, GERICOM of fers a total of 28 separate
for the operation of on - line notebook distribution.
on - line B2B stores with individual configurations
This is implemented on the par tner’s homepage
to its strategic business par tners. These permit
and then edited and provided with technological,
the provision of individual af ter sales suppor t and
product and technical price suppor t by GERICOM.
customer relationship management. In addition,
the e - commerce platform is employed for adver-
www.onetwosold.at
The adoption of GERICOM’s successful e - com -
tising. The large scaling capability of the system
merce business models by par tners that par tially
provides both considerable cost reductions on the
come from outside the electronics branch, has re -
customer side and enormous flexibility. Using the
sulted in major expansion in e - commerce distribu -
B2B platform, new strategic sales par tners can
tion, as it has led to additional GERICOM contacts
be rapidly supplied with their own web stores,
with new customer groups. Key advantages derive
whereby their individual range of products and
from range design, a continued focus on the B2C
prices is available on line within the shor test pos -
sector, related increases in margins and a far bet-
sible time.
ter forecast situation. This permits the accurate
assessment of requirements, demand and accept-
B2B – with 57,000 commercial customers
ance relating to GERICOM products.
GERICOM has also established B2B and B2C on line platforms for its approximately 57,000 (2001:
The high degree of application scaling available,
38,000) commercial customers in the direct sales
i.e. the extremely simple and quick alteration of
sector. The platform is already in active use by the
the product por tfolio, price structure and editorial
customers as a sales channel. The growing accept-
content, also serves to facilitate time - ef ficient,
ance of e - commerce platforms has resulted in an
e - commerce co - operation with our par tners, the
increased number of on - line orders.
Annual repor t 2002
Company profile
B2C in the high - end sector
Built to order – BTO
Business activities in the private end customer
The B2C on - line platform of fers SMEs and VARs
sector also increasingly switching to the internet.
an oppor tunity to individually configure their note -
The customers are themselves dealing with classic
books and then place an on - line order. The note -
specialist information areas, as internet data (e.g.
books are then assembled according to individual
configurations) is clear and simply prepared.
customer requirements.
Positioned directly behind the platform is e - sales
GERICOM has Europe’s best on - line shop
suppor t, which of fers specific advice concerning
A Boston Consulting Group (BCG) analysis shows
order procedures, or can under take product speci -
that the number of on - line shops in Europe fell
fication.
during 2002, but that quality standards had risen.
Czech Republic
Quality is also a significant factor with regard to
GERICOM intends to fur ther consolidate its posi -
the GERICOM web site. According to the “BCG
tion in the on - line consumer market utilising the
Website Quality Index“, with 65.9 points from a
existing B2C platform and the planned expansion
possible 100, the GERICOM homepage achieved
of special retailer por tals, which are employed to
the top rating for web sites with online shop
position the company range directly on the retail -
and is the best web site in Europe. In a national
er’s web site.
comparison, Germany has the highest quality web
Hungary
sites, followed by the Switzerland and Iceland.
Austria is in fif th place.
Western Europe E- commerce growth, 2002 and 2006
in EUR m
Business-to-Consumer
2002
Poland
Business-to-Business
39
Total Internet commerce
270
309
282
2006e
1,942
2,224
0
500
Source: BITKOM; basis: EITO
1000
1500
2000
2500
Karstadt AG
configuration
41
42
Ser vices and quality management
Services and quality management
One critical factor for survival in the IT market is the friendly and competent fulfilment of customer
needs, high quality and absolute customer satisfaction. Accordingly, a modern, client- oriented ser vices
concept is a central element in GERICOM corporate strategy. The stringent controls applied by the com pany’s systematic and ef ficient quality management.
LGA certificate
Multi - phase quality controls
Services enlarged and optimised
Quality assurance plays a major role at GERICOM.
Isolated criticism prompted a fur ther improvement
This not only applies to final production, but also
in GERICOM’s services during 2002. For this rea -
to sourcing, logistics, sales and other areas of the
son, the service crew at the company headquar-
company. Continuous improvement processes are
ters in Linz was enlarged by another 120 employ -
top of the day - to - day agenda. Company quality as -
ees. Outsourcing to external par tners comprised
surance measures cover the entire value added
a fur ther component in the new services concept
chain beginning with the selection of prestigious
and in the meantime, GERICOM has ten ser vice
and reliable component producers such as Intel,
companies available. As a result of this concept,
Fujitsu, Toshiba or Samsung. The company is
Toshiba’s und Fujitsu’s largest European customer
GERICOM is in a position to react flexibly to mar-
for hard disks, as well as being the biggest buyer
ket needs, while reducing its cost risk through
of memor y stores from Siemens Switzerland.
the transformation of fixed into variable costs.
In the case of defects, notebooks and monitors
The staf f of GERICOM Far East Limited, a GERICOM
are collected directly from the customer and then
AG subsidiar y in Taiwan, is concerned with the per-
returned following repair. Our customers can follow
manent, on - the - spot surveillance and control of
all repair procedures online via our website and
production in Asia. These controls relate both to
are therefore fully informed about the repair status
products, CE conformity and component compat-
at all times. Specially trained product exper ts are
ibility. In addition, evaluation tests and design
available for quick and competent assistance via
reviews are carried out prior to the introduction of
telephone hotlines. Moreover, GERICOM has an
new notebook models.
internet service por tal, which provides customers
with a quick and ef ficient means of self - help, e.g.
For their par t, the electronic product component
FAQs or downloads. This service por tal also facili -
manufacturers carr y out a burn - in test procedure,
tates the simple and comfor table online purchase
in order to exclude defective components. Release
of accessories, spare par ts and upgrades.
for deliver y is first given once detailed quality
checks have been completed. EMC test centres
examine the electromagnetic compatibility of prod -
More rights for GERICOM customers
ucts before they leave Taiwan and China. The Ba -
As of Januar y 1, 2002, a new warranty law came
varian “Landesgewerbeanstalt” examines product
into ef fect in the EU. Instead of a 6 - month war-
usability, electromagnetic compatibility and the
ranty period as in the past, the end user is now
electrical safety of the devices.
entitled to a legal warranty from the seller for 24
months from the hand - over of the product. GERI -
GERICOM possesses the coveted LGA perform -
COM was one of the first companies to react to
ance cer tificate for its Supersonic and Webgine
these statutor y changes and gave the customer an
notebook models, which among other characteris -
additional 12 - month manufacturer’s warranty in
tics confirms that during operation the notebooks
the summer of 2001. The actual legally anchored
attain a maximum temperature of 43°C.
requirement is only 6 months.
Annual repor t 2002
Company profile
GERICOM has also instituted a 24 - month manu -
purchased at a surcharge, offers our customers spe -
facturer guarantee for the customers, which
cial mobility and consists of three main elements:
commences upon the date of purchase. The com pany repairs all devices returned by the customer
Express Repair Ser vice (72 - hour ser vice): col -
within two year of purchase without requiring the
lection of a defect notebook within 24 hours;
customer to prove that the defect involved in the
repair on day 2; return transpor t of the repaired
claim was actually present at the time the device
notebook on day 3. This ser vice is valid for 12
was handed over. As the new warranty stipulations
or 24 months from the date of purchase.
foresee that the customer begins to bear the full
burden of proof that the malfunction existed at
Swappool Ser vice: in the case of a hardware de -
the date of receipt six months af ter purchase
fect, the customer receives a replacement note -
and that other wise no claim to free repair exists,
book (current GERICOM notebook) on the next
GERICOM’s full 24 - month guarantee furnishes
working day. This remains available throughout
customers with greater rights than those provided
the repair period.
Award PC Magazin:
A2 Preistipp
by the legislators under the new warranty regula tions. The legal guarantee period amounts to 24
Data security: customers can secure the data
months and is not restricted by the manufacturer
on their notebooks using an external PCMCIA
guarantee.
hard disk and work with this during the repair of
the notebook.
GERICOM Mobile Service Solutions
Since March 2002, GERICOM has been supplying an
As an option, customers can buy Module 1 and 2
optimum services package called the Gericom Mo -
throughout Europe and use this ser vice when they
bile Service Solutions. This package, which can be
are abroad.
Award PC Direkt:
1st Supersonic GPRS
Call
National and international
service numbers
Entry of serial number into
the telephone operating field
GERICOM Call centre
80% of connections within 20 seconds
Measured according to IVR announcement
Call-Back-Service
Customers can leave a message after 90 seconds, which will be answered immediately by
the Call Centre
Logging of customer, collection and delivery addresses, language, defect code and packaging,
as well as co -ordination with optional, additional services
Customers receive your seized data by email and/or fax.
Direct POSTAL dispatch
PICK-UP Service
The counterfoil allows the notebook to be brought to a post office
in its original packing and to dispatch it free of charge.
Orders via the hot-line. The freight service picks up the notebook
from the given address.
Collection time: call up to 2.00 p.m. on the next working day from
2.00 p.m. on the working day after next
Next day, the notebook is already in the repair centre.
GERICOM Service Centre
Repairs:
20% on day 1
50% on day 2
25% on day 3
95% of servicing within 3 days.
Express package
Express courier
Should delivery not be possible, the package will be deposited at the post office.
No defect is found in 5% of
notebooks. In such cases, direct
contact is made with the customer.
Award PC Games Hardware:
X5 Force
43
44
Strategy and outlook
Strategy and outlook
During 2002, a major step forward was made in the direction of establishing the GERICOM brand through out Europe. Together with its par tners, the company again succeeded in quickly opening up new markets
and consolidating existing ones. As these achievements indicate,
GERICOM has a suitable business model, the right products, powerful international customers and the
know- how to both remain one of Europe’s leading suppliers in the field of mobile computing in years to
come and to obtain additional market shares.
On course for Europe
private customer notebook segment. GERICOM
GERICOM aims to gradually open up the entire Eu -
intends to fur ther consolidate its market shares
ropean market. The company also intends to be a
and establish itself across Europe as a symbol for
leading supplier of notebooks, monitors, LCD PCs
mobile computing.
and other mobile computing and communications
technology products in areas beyond the German -
Targeted marketing measures in the adver tis -
speaking region and has already successfully initi -
ing, public relations and sponsoring areas ser ve
ated the capture of other European sales regions.
the achievement of this objective. The GERICOM
brand is to become a synonym for technical com -
In the 2002 financial year, GERICOM was able
petence, sales are be increased, customer ties
to attract new sales par tners in France, Italy
strengthened and brand value raised.
and Spain. In this regard, GERICOM profits from
of international retailing groups. This growth fa -
Expansion and intensification
of e - commerce
cilitates the joint penetration of new markets and
GERICOM furnishes its strategic sales par tners
results in an increase in overall volumes and the
with an on - line configurator application, i.e. the
number of promotions. Alternatively,
sof tware technology needed for the operation of
the expansion of its sales par tners, comprised
on - line notebook distribution.
in other countries GERICOM enters into par tnerships with new customers. In 2002, the transfer
This is implemented on the partner’s homepage
of the company’s convincing marketing and serv -
and then edited and provided with technological,
ices concept, for example to the UK and France,
product and technical price support by GERICOM.
proved extremely fruitful with 37.6 % of sales de riving from countries outside the Germany (2001:
The adoption of GERICOM’s successful e - com -
38.5%). GERICOM is currently active in over 20
merce business models by par tners, who par -
European countries with its full service concept.
tially come from outside the electronics branch,
This means that great potential is available
has resulted in major expansion in e - commerce
throughout the entire European notebook market
distribution, as it has led to additional GERICOM
is available.
contacts with new customer groups.
Establishment of GERICOM
as a familiar European brand
Key advantages derive from range design, a
During 2002, the GERICOM brand gained addition -
creases in margins and a far better forecast situ -
al recognition throughout Europe. This was prima -
ation. This permits the accurate assessment of
rily a consequence of European expansion and
requirements, demand and acceptance relating
the retention of market leadership in the German
to GERICOM products.
continued focus on the B2C sector, related in -
Annual repor t 2002
Company profile
A trendsetter in the area
of technical innovations
to market needs, while at the same time reducing
In 2002, GERICOM maintained its pacemaker role
fixed costs into variable costs.
its cost risk by means of the transformation of
in the area of the market introduction of product
made a sizeable contribution to the ver y pleasing
Information anywhere –
profitability at any time
sales figures of the past year. This first impact-
GERICOM today is a successful company with
and splash - resistant, outdoor design notebook is
clear business targets and technological visions.
fitted with a magnesium casing and the energy
The company’s twelve years of growth, all of
saving mobile Intel Pentium 4 processor.
which were profitable, constitute evidence of its
innovations. The X5 design outdoor notebook
successful and solid market positioning. Mobile
As a result of its technological exper tise, GERI -
computing and communications is the fastest
COM is capable of quickly implementing product
growing segment of the IT technology market and
innovations and obtaining reliable sources of in -
the company’s sole business area.
novative components, which are then integrated
into new products.
The US slogans, ”Information at your finger tips“
and ”Information ever ywhere, anyhow, anytime“
Enlargement of the portfolio with
additional mobile communications products
are set to become reality in the information and
GERICOM intends to focus its programme still
GERICOM intends to par ticipate in shaping this
more closely on connectivity, which is set to play
trend towards connectivity and to profit from it.
communications society of the immediate future.
a special role in the future. Technologies such
as Bluetooth, Wireless L AN, GPRS and UMTS fa -
Market proximity, a built to order concept, the
cilitate perfect, wireless communications between
best possible time - to - market, proven innova -
various devices.
tive strength and strong sales par tners, enable
GERICOM to profit from the growing demand for
The demand for mobile solutions is cer tain to rise
mobile data processing devices to an above - aver-
sharply in years to come and GERICOM is already
age extent and to make its mark on this market
working flat out on the development of products,
of tomorrow.
which of fer optimum connectivity. Another product
in the planning phase is a PDA with GPRS and inte -
The company intends to systematically pursue its
grated digital camera.
internationalisation strategy and to forge ahead
with European expansion though teamwork with
Upgrading of the services range
its sales par tners.
The friendly and competent fulfilment of customer
needs, top quality and absolute customer satis -
The core element in corporate strategy is the mar-
faction form the essential basis for successful
keting of innovative trend products within a shor t
sur vival in the IT market. A modern, client- ori -
period of time and at attractive prices, via the
ented ser vices concept is a central element in
major retail chains. GERICOM under takes the com -
GERICOM’s corporate strategy. With its assump -
plete value added process for the customer from
tion of a complete range of service functions, first
product design, purchasing, quality assurance and
and foremost,
logistics to af ter- sales services.
GERICOM enables customer groups from outside
As a result, during the past financial year, GERI -
the branch to successfully market company prod -
COM was not only able to consolidate its market
ucts. Through the outsourcing of services to com -
share, but also to raise it considerably, par ticu -
petent par tners, GERICOM is able to react flexibly
larly in France and Spain.
45
Strategy and outlook
For 2003, the Board anticipates an increase in
sales by 15% . In combination with the company’s
role as a trendsetter, the foundations for future
corporate success will remain the introduction
of new products, long- term co - operation with
suppliers and clients, customer satisfaction and
the motivation and enthusiasm of the company
work force.
ICEL AN D
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E N
N . IR EL A N D
IR EL A N D
DEN
MA
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SCOTLAND
P O L A N D
HO
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W A L E S
BE
LG
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G E R M A N Y
CZECH REPUBLIC
L U X EMBOURG
SL
A U S T R I A
F R A N C E
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SWITZ.
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OV
AK
IA
H U N G A R Y
IA
R O M A N I A
CROATIA
B
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S P A I N
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G R
P O
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46
L
G
A
R
IA
E
CONSOLIDATED
FINANCIAL STATEMENTS
48
Consolidated balance sheets
Consolidated balance sheets
as at December 31, 2002 and 2001
Assets:
Note
As at
As at
31.12.2002
31.12.2001
EUR
EUR
34,902,595
41,918,558
Current assets:
Cash and cash equivalents
Short-term investments/marketable securities
Trade accounts receivable
0
0
1
120,528,613
97,494,695
0
0
2
57,414,324
52,104,121
0
0
3
7,402,064
6,616,823
220,247,596
198,134,197
Accounts receivable due from related parties
Inventories
Deferred tax asset
Prepaid expenses and other current assets
Total current assets
Non - current assets:
Property, plant and equipment
Enclosure VI
5,242,791
5,306,928
Intangible assets
Enclosure VI
296,710
102,275
Goodwill
0
0
91,601
100,940
Liabilities in the group area
0
0
Notes receivable/loans
0
0
Deferred taxes
0
0
0
481,276
5,631,102
5,991,419
225,878,698
204,125,616
Investments
Other assets
Total non-current assets
Total assets
11,4/Enclosure VI
5, 12
Annual repor t 2002
Consolidated financial statements
Liabilities and shareholders‘ equity:
Note
As at
As at
31.12.2002
31.12.2001
EUR
EUR
Current liabilities:
Current portion of capital lease obligation
Short-term debt and current portion of long-term debt
11
Trade accounts payable
0
0
71,442
7,136
120,114,733
107,269,501
Accounts payable due to related parties
0
0
Advance payments received
0
0
14,665,340
14,842,072
Accrued expenses
6
Deferred revenues
Income tax payable
0
0
2,246,729
3,695,217
Deferred tax liability
7
158,622
845,760
Other current liabilities
8
4,872,429
5,004,517
142,129,295
131,664,203
Long-term debts, less current portion
0
0
Capital lease obligation, less current portion
0
0
Deferred revenues
0
0
Deferred tax liability
0
0
Pension accrual
0
0
150,365
112,435
150,365
112,435
0
0
Share capital
10,900,000
10,900,000
Additional paid-in capital
35,134,736
35,134,736
Total current liabilities
Non - current liabilities:
Other provisions for personnel
9
Total non-current liabilities
Minority interest
Shareholders‘ equity:
Treasury stock
Retained earnings (incl. reserves from retained earnings)
Accumulated other comprehensive income/loss
Total shareholders‘ equity
Total Liabilities and shareholders‘ equity
10
0
0
37,654,292
26,127,464
-89,990
186,778
83,599,038
72,348,978
225,878,698
204,125,616
49
50
Consolidated income statements
Consolidated income statements
for the financial years 2002 and 2001
Note
Revenues
16
Cost of revenues
Gross profit
Selling and marketing expenses
General and administrative expenses
Research and development
Other operating income and expenses
12
Amortization of goodwill
Operating income
Interest income and expenditure
2002
2001
EUR
EUR
544,073,553
539,897,135
-506,944,513
-499,103,843
37,129,040
40,793,292
-11,755,060
-10,161,249
-4,696,793
-4,572,273
0
0
3,115,205
458,218
0
0
23,792,392
26,517,988
277,716
376,447
Income from investments and participations
0
0
Income/expense from investments accounted for by the equity method
0
0
Foreign currency exchange gain/losses
0
0
Other income/expenses
0
0
24,070,108
26,894,435
-5,435,376
-8,447,958
Result before income tax and minority interest
Income tax
Extraordinary income/expenses
Result before minority interest
Minority interest
Net income
13
0
0
18,634,732
18,446,477
0
0
18,634,732
18,446,477
Net income per share (basic)
1.71
1.69
Net income per share (diluted)
1.71
1.68
Weighted average shares outstanding (basic)
10,900,000
10,900,000
Weighted average shares outstanding (diluted)
10,902,121
10,956,885
Annual repor t 2002
Consolidated cash flow statements
Consolidated cash flow statements
for the financial years 2002 and 2001
2002
2001
EUR
EUR
18,634,732
18,446,477
-276,768
2,453,826
-22,904
2,761
Cash flow from operating activities
Net profit
Changes in accumulated other comprehensive income
Changes in offset for currency translation
Adjustments for:
Minority interest
0
0
Depreciation and amortization
1,127,048
898,053
Increase/decrease in provisions and accruals
2,041,393
- 6,215,226
-4,053
-8,480
Income from the disposal of fixed assets
Foreign exchange gains/losses
Other
Change in net working capital
Net cash provided by operating activities
0
0
481,276
11,927
-20,732,039
-3,441,475
1,248,685
12,147,863
0
0
Cash flow from investing activities:
Acquisition of subsidiaries, net of cash acquired
Proceeds from disposal of a subsidiary,
net of cash transferred
Purchase of property, plant and equipment
Currency deviation
Proceeds from sale of equipment
Net cash used in investing activities
Carryforward
0
0
-1,269,524
-2,833,620
0
0
25,570
20,634
-1,243,954
-2,812,986
4,731
9,334,877
51
52
Consolidated cash flow statements
Consolidated cash flow statements
for the financial years 2002 and 2001
Carryforward
2002
2001
EUR
EUR
4,731
9,334,877
0
0
Cash flow from financing activities
Proceeds from issuance of share capital
Proceeds from short-term borrowings
Cash repayments of amounts borrowed
Payment of capital lease liabilities
64,306
0
0
-120,073
0
0
Dividend payments
-7,085,000
-4,578,000
Net cash used in financing activities
-7,020,694
-4,698,073
Net effect of currency translation in cash and cash equivalents
Reductions in liquidity
0
0
-7,015,963
4,636,804
Cash and cash equivalents at beginning of period
41,918,558
37,281,754
Cash and cash equivalents at end of period
34,902,595
41,918,558
Additional information
Interest payments
Income tax payments
253,256
700,134
3,878,246
6,123,104
Annual repor t 2002
Statement of shareholders‘ equity
Statement of shareholders‘ equity
Total
Subscribed
Capital
Retained
Other
shareholders‘
capital
reserves
earnings
Comprehensive
EUR
EUR
EUR
EUR
EUR
As at 1.1.2001
56,023,914
10,900,000
35,134,736
12,256,226
-2,267,048
Net income
18,446,477
0
0
18,446,477
0
2,761
0
0
2,761
0
-4,578,000
0
0
-4,578,000
0
2,267,048
0
0
0
2,267,048
equity
Offset from currency translation
Dividends payed
Income
Reversal of the accumulated
other comprehensive income
Change in value from derivatives
from cash flow hedging
186,778
0
0
0
186,778
As at 31.12.2001
72,348,978
10,900,000
35,134,736
26,127,464
186,778
Net income
18,634,732
0
0
18,634,732
0
-22,904
0
0
-22,904
0
-7,085,000
0
0
-7,085,000
0
-186,778
0
0
0
-186,778
Offset from currency translation
Dividends payed
Reversal of the accumulated
other comprehensive income
Change in value from derivatives
from cash flow hedging
As at 31.12.2002
-89,990
0
0
0
-89,990
83,599,038
10,900,000
35,134,736
37,654,292
-89,990
53
54
Notes to the consolidated financial statements
Notes to the consolidated financial statements as at December 31, 2002
prepared according to US Generally Accepted Accounting Principles
General Information
Company profile
Gericom AG was founded in Linz, Upper Austria, in 1990 and in the meantime has emerged as one of
Europe’s most impor tant notebook marketing companies. Business activities involve the design, devel opment, specification and upgrading of mobile computer and communications technology products for
strategic distribution par tners. Sales take place under the GERICOM and Advent (Dixons) brand names.
The notebooks, which are manufactured in Asia, are upgraded on an extremely modern, automated line
in Linz. Small batches are matched to specific national requirements and pricesensitive components
are added. As a result of order- related handling, there are no major production and stock risks and the
majority of notebook assembly takes place in Taiwan. Project customers from the foods and media sec tors requiring large batches with the same configuration are supplied directly from Taiwan. During 2002,
two - thirds of all the notebooks sold were handled entirely by the companies founded in Taiwan and Hong
Kong during 2001, which represents a decisive competitive advantage with regard to ef ficiency.
An integrated, mature and internet- compatible production planning and goods administration system,
which can also be used for e - commerce, facilitates just- in - time order completion and deliver y with orderdependent, flexible end production and warehousing.
GERICOM primarily sells its products to strategic sales par tners such as Media Markt, Saturn, etc. and to
project customers from the foods and media sectors, e.g. Lidl, Ber telsmann/News, Hofer, etc. A proven
B2B platform is already serving as an impor tant element in customer relationship management, as well
as contributing to sales, results and the creation of customer loyalty. In addition, existing direct sales via
e - commerce with commercial and industrial end customers also provide superior margins.
GERICOM attaches special priority to customer service. A modern service centre, competent employees,
on - line ordering, a pick- up service and strategic business par tners, e.g. Sinitec represent a guarantee
for excellent service.
Long- term business relations with impor tant sub - suppliers, e.g. Intel, and development par tnerships with
major customers facilitate the rapid implementation and marketing of the latest technology. Together with
leading technology par tners, GERICOM employees are responsible for the on - going development of the
GERICOM product por tfolio (e.g. integration of Bluetooth, GPRS and UMTS technology into notebooks,
PDAs and web appliances).
One example of such co - operation in 2001 was the design of the 1st Supersonic GPRS (the world’s first
notebook with GPRS) by the GERICOM development depar tment and leading Asian technology suppliers.
In addition, the company team is constantly at work on new products in the webpad and PDA areas, as
well as expansion to the notebook range with an emphasis on web compatibility.
At the end of the year, 3,754,497 shares were in circulation, which represented a free float of 34.44% . In
an extremely difficult stock exchange climate, during 2002, the GERICOM share fell by 67.1% , while the
Annual repor t 2002
Consolidated financial statements
Nemax 50 lost 69.25% of its value in the same period. GERICOM’s successful IPO has raised the recogni tion levels of its brand and created increased market acceptance among customers. Above all, it has also
enabled the penetration of markets such as the UK, France, Italy and Spain at an earlier date than planned
and the winning as customers of major retail chains from branches such as the food trade. Consequently,
GERICOM is to be found in the Top 10 of the mobile segment throughout the entire EMEA region.
Accounting and valuation principles
The attached consolidated financial statements as at December 31, 2002 and December 31, 2001, were
drawn up in accordance with the accounting principles generally acceptable in the USA (US - GAAP) valid
on the balance sheet date. The company’s accounts are kept in accordance with the provisions of the
Austrian Commercial Code (Austrian GoB). The Austrian GoB dif fers from US - GAAP in a number of im por tant respects. The company has therefore made cer tain adjustments in order to bring these financial
statements into line with US - GAAP.
The consolidated financial statements were prepared in euros (EUR). The company income statement was
drawn up using the cost- of - sales method.
As GERICOM AG exercised a controlling influence on six subsidiaries during 2002, an obligation to
consolidation existed as at December 31, 2002. The audited financial statements of GERICOM AG as at
December 31, 2001 are provided for the purposes of comparison.
Cash and cash equivalents
The company’s liquid assets basically comprise cash and credits at banks. They are repor ted at nominal
value, while foreign currency is translated at the exchange rate on the balance sheet date.
Inventories
Inventories are recognised at the cost of acquisition or production. During valuation, an amount below
the acquisition or production costs is stated if the replacement cost is lower, whereby the upper limit is
formed by the sales price less costs still outstanding and the lower limit by the sales price less costs
still outstanding and the average profit margin (lower of cost- or- market rule).
Securities
Available - for- sale securities are recognised at current value. Unrealised changes in asset value, less
any related tax ef fects relating to available - for- sale securities are repor ted as a separate item under
shareholders’ equity. Realised profits and losses from the disposal of available - for- sale securities are
established on the „first in, first out“ principle.
In the case of a non - temporary fall in the market value of a security to below the acquisition cost, the book
value is reduced to the actual current value. The loss in value is set against income and a new valuation ba sis for the security is ascertained. Dividends and interest income are treated as income upon realisation.
Tangible assets
Tangible assets are repor ted at historic acquisition or production costs, less scheduled depreciation.
The depreciation is basically straight- line and extends over an anticipated economically useful life of 4 - 8
years for “Other proper ty, plant and of fice equipment”, 10 -25 years for buildings on non - owned land.
55
56
Notes to the consolidated financial statements
Intangible assets
Intangible assets are shown at acquisition cost and likewise depreciated by the straight- line method over
an anticipated economically useful life of 4 -10 years.
Impairment of long- lived assets and long- lived assets for disposal
A review of the impairment of long- lived assets and long- lived assets for disposal is necessar y once
events or changed conditions indicate that the book value of an asset is no longer attainable. The recov erability of asset value is ascer tained by comparing the book value of an object with the expected future
net capital in - flow realised by this asset. If impairment obtains, depreciation is ef fected amounting to the
dif ference between the book value of the asset values and the current value.
Other accruals
The recognition of accruals under US - GAAP is based on various criteria connected to the related, poten tial liability and the likelihood of it occurring. Under US - GAAP, the carr ying value with the highest likeli hood of occurrence, or the lowest limit of a range of carr ying values of equal probability, is to be used.
Expense accruals are not permitted under US - GAAP.
Deferred taxes
Pursuant to the Statement of Financial Accounting Standards No. 109 (SFAS 109), “Accounting for In come Taxes”, deferred taxes are to be recognised for all taxable temporar y dif ferences between the book
value in the US - GAAP balance sheet and the book value in the tax balance sheet.
In line with US - GAAP, the recognition of deferred tax assets on loss carr yforwards is compulsor y, if it can
be assumed that these can be used against taxable profits in the foreseeable future.
Deferred tax assets and liabilities are stated on the basis of fixed tax rates applicable to the taxable
income in the financial years in which the temporar y dif ferences are recovered or cleared. For both repor ting years, the tax rate used is 34% . If deferred tax assets and liabilities fulfil the criteria for an of fset,
they are repor ted as netted.
Social capital accruals
Pursuant to the Statement of Financial Accounting Standards No. 87 (SFAS 87), “Employers‘ Accounting for Pensions”, and the Statement of Financial Accounting Standards No. 88 (SFAS 88), “Employers‘
Accounting for Settlement and Cur tailment of Defined Benefit Pensions Plans and for Termination Ben efits‘”, the only permitted actuarial procedure for the calculation of severance payments and long - ser vice
bonuses is the projected unit credit method. Under this procedure, the anticipated benefits to be paid are
spread over the active period or up to the probable date of incidence. Future anticipated pay increases
are taken into account, as are fluctuations in the work force. The interest rate is measured according to
the current long- term interest rate in the capital markets at the accounting date.
Realisation of sales and product warranties
Sales are reported in accordance with the agreed regulation of transfer of risk and property for deliveries and
services, less discounts, client bonuses and rebates. Provision is made for existing warranty risks and uncol lectable receivables on the basis of empirical values, taking the current economic environment into account.
Should obligations relating to the right of return exist, sales are only recognised when the criteria con tained in the Statement of Financial Accounting Standards No. 48 (SFAS 48), “Revenue Recognition When
Right of Return Exists” are fulfilled.
Annual repor t 2002
Consolidated financial statements
Research and development
As company business principally involves the marketing of innovative systems on the basis of already
marketable components and modules, no major basic research is under taken.
Advertising expenditure
All adver tising expenditure is recorded as an expense in the year it is incurred. Adver tising expenditure
amounted to EUR 3,974,169 and EUR 3,211,643 respectively for the financial years ending December
31, 2002 and 2001.
Foreign currency valuation
Monetar y items in foreign currency are repor ted at the exchange rate on the balance sheet date.
Derivative financial instruments and credit risks
The company is active internationally and therefore exposed to market risks arising from exchange rate
fluctuations. The company uses forward exchange transactions and currency options as derivative finan cial instruments to reduce such market risks.
According to the stipulations of SFAS 133 a dif ference is made between a fair value and cash flow hedge.
Where the prerequisites for hedging are met, alterations to the current value of the instruments used in a
cash flow hedge are recognised as non - realised other comprehensive income until the hedged basic busi ness is realised. In the case of fair- value hedging, both the basic business and the hedging transaction
are recognised at current value, whereby changes are repor ted as realised. Should the hedging purpose
no longer be attainable due to the cancellation of the basic business, then changes in the market value
of the related derivatives are recognised as realised (in the income from operating activities).
Scope of consolidation
Apar t from the parent company, on the balance sheet date of December 31, 2002, the following compa nies were included:
European Mobile Computer Service GmbH, Linz, capital holding 100 % .
GERICOM Schweiz GmbH, Kreuzlingen, Switzerland, capital holding 100 %
GERICOM Deutschland GmbH, Munich, Germany, capital holding 100 %
GERICOM Far East Limited, Wanchai, Hong Kong, capital holding 100 %
GERICOM Taiwan Co., Limited, Kweishan Hsiang, Taiwan, 100 % ige GERICOM Far East Limited subsidiary
FAR EAST IT SERVICES LTD., Tor tola, British Virgin Islands (foundation: July 31, 2002), 100 % GERICOM
Far East Limited subsidiar y
In principle, the initial inclusion of an af filiated company occurs at the point in time when control over the
assets and business of this company is actually transferred to the parent company.
Consolidation methods
Capital consolidation takes place on the basis of the book value method by means of the netting of the
cost of acquisition of the investment against the share of shareholders’ equity obtained on the date of
purchase. No dif ferences derive from capital consolidation.
All receivables and liabilities, expenses and income derived from netting among companies within the
scope of consolidation are eliminated. Except where material, interim results from inter- group transac tions are also eliminated.
57
58
Notes to the consolidated financial statements
The assets and debts of foreign subsidiaries were calculated at the mean rate of exchange on the balance
sheet date. Items in the income statement are translated at the mean rates for the financial year.
Earnings per share
The Statement of Financial Accounting Standards No. 128 (SFAS 128), “Earnings per share”, was used
to calculate earnings per share. The company calculates earnings per share by dividing net income by the
weighted average of shares outstanding in the financial year. The potential dilution ef fect derived from
equity instruments used by the company is considered appropriately.
Estimates
In accordance with recognised accounting principles, during the process of drawing up these financial
statements, the management of the company made a number of estimates and assumptions in connec tion with the recording of assets and liabilities and the stating of values for contingent claims and liabili ties. The amounts actually ensuing may dif fer from the estimates.
Additional notes concerning the consolidated financial statements due to
Austrian accounting regulations
Reporting according to US Generally Accepted Accounting Principles (US - GAAP)
The consolidated financial statements as at December 31, 2002, were drawn up in accordance with the
accounting principles generally acceptable in the USA (US - GAAP) valid on the balance sheet date. In ac cordance with the stipulations of § 245a HGB, consolidated financial statements prepared in line with
international principles constitute an exemption, when the preconditions laid down in Section 1, Lines
1- 3 are fulfilled. The following information is provided in order to meet these prerequisites.
Information required for the preparation of consolidated financial statements in accordance
with the 7th EC Directive (§ 245a Section 1 Line 1 HGB)
In accordance with US - GAAP valuation principles, in these financial statements securities are recognised
at current value, even where this is above the cost of acquisition. The balance derived from a change in
current value is not repor ted in the income statement, but included directly under shareholders’ equity.
Main dif ferences between Austrian accounting regulations (HGB) and US - GAAP
HGB and US - GAAP accounting regulations are subject to par tially divergent basic principles. While ac counting using HGB attaches priority to the principle of commercial prudence and the protection of credi tors, accounting according to US - GAAP places a stronger emphasis on the provision of information of
relevance to investors.
In these financial statements, the main discrepancies between the HGB and US - GAAP regulations af fect
the following items:
1. Deferred taxes
According to US - GAAP, deferred taxes are to be recognised for all taxable temporar y dif ferences between
the book values of the assets and liabilities in the US - GAAP balance sheet and those in the tax balance,
as well as any anticipated advantages derived from tax loss carr yforwards. Under Austrian accounting law
an obligation exists to recognise deferred tax liabilities and a selective right concerning the recognition
of deferred tax assets. It is generally accepted that under HGB, the recognition of deferred tax assets on
loss carr yforwards is not permissible.
Annual repor t 2002
Consolidated financial statements
2. Other accruals
In accordance with US - GAAP, accruals must be formed for liabilities to third par ties, which are likely to
occur and can be reliably evaluated. Under the HGB, the formation of accruals is subject to the principle
of commercial prudence. In practical terms, this frequently results in the formation of an accrual as soon
as a liability is indicated.
3. Foreign currency valuation
Whereas in line with the imparity principle, the HGB require the obligator y disclosure of unrealised
profits, according to the US - GAAP monetar y items in foreign currencies are generally recognised at the
exchange rate on the balance sheet date.
4. Hedging
As opposed to the HGB, in the US - GAAP derivatives relating to the planned transaction may under cer tain
circumstances be treated as hedging business and the change in their current value be recognised as
non - realised.
59
60
Notes to the balance sheets and the income statements
Notes to the balance sheets and the income statements
Consolidated movement of fixed assets
Movements in consolidated fixed assets as at December 31, 2002, are shown separately.
(1) Trade accounts receivables
Trade accounts receivable are as follows:
31.12.2002
Trade accounts receivable
less adjustments for doubtful receivables
Net trade accounts receivable
31.12.2001
EUR
EUR
123,585,043
99,474,011
-3,056,430
-1,979,316
120,528,613
97,494,695
31.12.2002
31.12.2001
(2) Inventories
Inventories are made up as follows:
Raw materials and supplies
Finished products and goods
EUR
EUR
3,120
3,120
59,543,349
54,324,033
Adjustments
-2,132,145
-2,223,032
Total inventories net
57,414,324
52,104,121
31.12.2002
31.12.2001
EUR
EUR
Receivables from tax offices
3,757,988
2,265,169
Transport losses and damage
1,081,833
0
Advertising and publicity grants
923,626
806,319
Licence clearing
528,557
0
Prepaid expenses and deferred charges
321,103
149,049
Advanced payments
255,017
255,017
Receivables from directors and members of staff
167,164
405,116
Windfall credits
118,884
111,442
(3) Prepaid expenses and other current assets
Other current assets are made up as follows:
Receivable loss insurance
11,153
713,378
Receivables from derivative financial instruments
10,766
1,830,307
Interest deferrals
Other
5,929
32,530
220,044
48,496
7,402,064
6,616,823
Annual repor t 2002
Consolidated financial statements
(4) Financial assets
The financial assets consist of available - for- sale securities.
(5) Other fixed assets
During the first quar ter of 2002, a piece of proper ty belonging to GERICOM AG, Linz, which was not re quired for operational purposes, was sold of at a price above its book value.
(6) Other accruals
Other accruals are made up as follows:
31.12.2002
31.12.2001
EUR
EUR
Guarantees and warranties
6,672,486
8,906,056
Impending losses from derivative financial instruments
4,756,600
701,901
Replacement credit notes
1,141,225
974,479
Discounts
1,092,342
323,743
Outstanding netting
260,000
300,000
Costs of legal proceedings
197,120
208,763
0
3,190,271
Purchase commission
Other
545,567
236,859
14,665,340
14,842,072
The provisions for warranties and guarantees are formed on the basis of empirical experience. A dif feren tiation is made between sales involving, or not involving service agreements with third par ties.
Reference should be made to Item (11) concerning the provision made for impending losses from deriva tive financial instruments.
Following an out- of - cour t settlement regarding a dispute concerning the level of accrual for purchase
commission, in the 2002 financial year this item was to be consumed or written back in the other operating income.
(7) Deferred tax
The following sets out the temporar y dif ferences between the book values and tax carr ying values of ma terial items as at December 31, 2002 and 2001, which were used to calculate the deferred tax stated:
61
62
Notes to the balance sheets and the income statements
31.12.2002
31.12.2001
EUR
EUR
Deferred tax assets (current):
Elimination of interim results
140,517
0
0
409,861
136,349
228,612
Valuation of trade accounts payable
Derivative financial instruments
Accruals for personnel
Other accruals
Depreciation on shareholdings
38,995
10,077
4,129,518
484,046
159,772
213,077
4,605,151
1,345,673
657,000
1,550,000
Deferred tax liabilities (current):
Other accruals
Cash/bank
55,123
58,173
Derivative financial instruments
10,376
1,360,610
77,083
861,000
Valuation of trade accounts receivable
Valuation of trade accounts payable
Other
Balance of assets and liabilities = deferral base
Rate of tax
Deferred tax
4,266,598
0
5,506
3,420
5,071,686
3,833,203
466,535
2,487,530
34.0 %
34.0 %
158,622
845,760
Netting was ef fected on the basis of the concurring and overlapping timing of deferred tax assets
and liabilities.
(8) Other current liabilities
31.12.2002
31.12.2001
EUR
EUR
Liabilities from customs duties
2,224,986
0
Tax liabilities
1,186,893
2,650,852
Customers’ windfall credit balances
591,006
842,527
Liabilities to members of staff
262,978
498,648
Liabilities from unconsumed leave
245,716
261,638
Social security liabilities
239,286
254,513
53,950
298,981
Liabilities from fees and bonuses
Other
67,614
197,358
4,872,429
5,004,517
(9) Accruals relating to personnel
The company makes accruals for statutor y obligations relating to severance payments. The company also
makes accruals for long- service bonuses, the size of which depends on the length of service. A severance
payment is due to employees upon termination of their employment by the company or retirement. The
amount of this payment depends on the length of service and the salar y paid.
Annual repor t 2002
Consolidated financial statements
The following table shows the amounts recognised in the company‘s balance sheets for these provisions
as at December 31, 2002 and 2001:
31.12.2002
Projected unit credit value (with no assumption of future increases in pay)
Effects of anticipated future pay rises
Projected unit credit value = total personnel accruals
31.12.2001
EUR
EUR
103,508
89,672
46,857
22,763
150,365
112,435
The net expenditure on provisions for severance payments and long- service bonuses is made up as fol lows:
2002
2001
EUR
EUR
75,811
65,989
Cash value of projected unit credit increment
in the financial year concerned including interest
up to the end of the financial year
Interest on the definitive nominal amount of the
projected unit credit value at the beginning of the year
after sub -annual outputs are taken into account
12,026
6,219
87,837
72,208
The statement of these provisions as at December 31, 2002 and 2001 is based on the following as sumptions:
2002
2001
%
%
Discounting interest rate
6.0
6.0
Expected future increase in pay
2.5
2.5
The deductions for fluctuations are graded according to employees‘ length of service.
(10) Share capital
The common stock of GERICOM AG amounts to EUR 10,900,000, and is divided into 10,900, 000 no par
value ordinar y bearer shares.
Subject to approval by the Supervisor y Board, the Managing Board is empowered to increase the level
of shareholders‘ equity in one or more stages by October 13, 2005 at the latest by a maximum amount
of EUR 5,500,000.00 through the issue of 5,500,000 no par value ordinar y bearer shares with voting
rights against cash or other asset payments
In addition, the Managing Board remains authorised to purchase own shares to the amount of 10 % of
company no par value stock by November 28, 2003.
63
64
Notes to the balance sheets and the income statements
GERICOM Fixed Stock Option Compensation Plan
In connection with the GERICOM IPO, company employees were provided with an oppor tunity to invest
in the company, its corporate value and future development through the GERICOM Fixed Stock Option
Compensation Plan. A predominant feature of this scheme was employee motivation and an additional
incentive for success - oriented working, identification with the company and the creation of ties between
the work force, GERICOM and its af filiates.
A total of up to 750,000 GERICOM AG shares are reserved for the stock option programme. Depending
on company choice, the shares issued to employees with an entitlement can either take the form of
greenshoe GERICOM AG shares, which will be created through the use of approved capital, or own shares
purchased by the company for the issue to employees with an entitlement.
The options are granted with an exercise price, which results from the market value within 20 days of the
granting of the entitlement and a related mark- up. 30 % of the options can be exercised following a two year freeze (Tranche 1 with 20 % mark- up), a fur ther 30 % af ter three years (Tranche 2 with 30 % mark- up)
and the remaining 40 % af ter 4 years (Tranche 3 with 40 % mark- up). The stock option programme has a
total length of five years.
The company is using right of selection for the evaluation of employee options contained in the State ment of Financial Accounting Standard No. 123 (SFAS 123) “Accounting for Stock- Based Compensation”,
in accordance with the intrinsic value method from the APB Opinion 25, “Accounting for Stock Issued to
Employees”. As the intrinsic value of the options was zero at the time they were granted, no personnel
expenses was recognised in the statements of income in connection with the stock option programme.
The use of the fair value at the time of the under taking as stipulated by SFAS 123 resulted in the following
pro forma net income and pro forma earnings per share.
EUR
Net income:
recognised
18,634,732
pro forma
18,518,168
Basic EPS:
recognised
1.71
pro forma
1.70
Dilutive EPS:
recognised
1.71
pro forma
1.70
The weighted average of the fair value of the stock option at the time of the under taking amounted to
EUR 1.88 per option and was determined by means of the “Black Scholes Options Price Model” using
the following evaluation parameters:
Annual repor t 2002
Consolidated financial statements
EUR
Risk-free interest rate:
5.2 %
Volatility:
30 %
Estimated period until exercise:
Tranche 1
2.1 years
Tranche 2
3.1 years
Tranche 3
4.1 years
Estimated dividend payment:
1.25 %
A status summar y of the options granted under the GERICOM Fixed Stock Option Compensation Plan is
contained in the table below:
Number of shares
Weighted average
exercise price EUR
Options granted as at Jan. 1, 2001
Granted
327,518
22.96
24,591
14.25
Exercised
Lapsed
Options granted as at Dec. 31, 2001
Exercisable options as at Dec. 31, 2001
0
n/a
-56,497
21.23
295,612
21.71
79,288
20.40
The exercise prices for the options granted as at December 31, 2002 ranged between EUR 10.90 and EUR
42.21, the remaining period to maturity to between 2.87 and 4.91 years.
(11) Financial instruments
Securities
Fixed asset securities are classified in the balance sheet as available - for- sale and valued accordingly.
In accordance with statutor y regulations for severance payment provisions in Austrian law, the company
has shares in cer tain investment funds. The costs and market value of available - for- sale securities as
of December 31, 2002 and 2001 were made up as follows:
Acquisition cost
Non-realised losses
EUR
EUR
Market value
EUR
31.12.2002
103,121
-11,520
91,601
31.12.2001
106,755
-5,815
100,940
The acquisition cost was ascer tained by the identity price method. All the securities are opendated.
Derivative financial instruments
The following summar y shows all the derivative financial instruments employed by the company as at
December 31, 2002.
Derivatives qualified as fair value hedge:
The derivative financial instruments qualified by the company as fair value hedge are under taken largely
against the exchange rate fluctuation risk relating to recognised liabilities in foreign currencies.
65
66
Notes to the balance sheets and the income statements
Upon the agreement of the derivative, valuation units were formed, in order to guarantee the formal
connection between the basic and the hedging transaction.
On the basis of company risk management targets and strategy, a high level of recognised hedging can be
anticipated due to the retrograde value trend in basic and hedging business. This will be repor ted upon
entr y to the hedging relationship and then during the hedging period.
Nominal amount
Nominal amount
Market value change
Hedge
Underlying
inefficiency
Derivates
USD
EUR
EUR
EUR
EUR
113,463,570
108,875,278
-4,756,601
4,809,133
52,532
The USD currency forwards agreed as at December 31, 2002 and qualified as fair value hedge are due
between Januar y 1 and Februar y 25, 2003. (2002 in German)
Derivatives qualified as cash flow hedge:
The derivative financial instruments qualified by the company as cash value hedge are under taken largely
in connection with planned orders and the resulting risk of exchange rate fluctuations on related liabili ties derived from the purchase of components in foreign currencies.
The planned transactions, which are secured by anticipator y hedging, can be regarded as likely.
Nominal amount
Nominal amount
Market value change
Other comprehensive
USD
EUR
Derivates EUR
income EUR
17,245,000
16,503,258
-136,349
-136,349
EUR
Market value change derivates
Taxes on income
Market evaluation change net of tax
-136,349
46,359
-89,990
The USD currency forwards agreed as at December 31, 2002 and qualified as cash flow hedge are due
on Februar y 3 -25, 2003.
Other derivatives:
A knock- out forward exchange transaction in dollars existed on the balance sheet date for the hedging
of liabilities in foreign currencies. The positive change in the market value of this derivative financial
instrument, which can be classified as speculative, amounting to EUR 10,376 was recognised as income
during the financial year under review.
(12) Other operating income and expenses
Other operating income mainly consists of the write - back of the accrual for purchase commission (EUR
3.1 m), the payment of claims (EUR 2.5 m) and the sale of a piece of proper ty not required for operating
purposes (EUR 0.5 m).
Annual repor t 2002
Consolidated financial statements
Other operating expenses relate to allocations for the value adjustment of receivables (EUR 0.6 m),
cases of damage and transpor t losses (EUR 2.7 m) and an allocation to the accrual for the payment of
copyright.
(13) Taxes on income
Taxes on income are structured as follows:
2002
Current
Deferred
Total
2001
EUR
EUR
5,980,645
8,681,225
-545,269
-233,267
5,435,376
8,447,958
The ef fective expense of tax on income amounted to EUR 5,435,376 and EUR 8,447,958 for the financial
years ending December 31, 2002 and 2001 respectively and relates to the income tax expense calcu lated at the Austrian corporation tax rate of 34% on profit before tax as follows:
2002
2001
EUR
EUR
Income tax expense at the statutory tax rate
8,183,837
9,144,108
Differing tax rates of international subsidiaries
-2,777,474
- 687,489
Educational allowance/Apprentice grants
-8,898
-18,846
Non-deductable expenses
47,151
3,464
Fictive netting of foreign withholding tax
-5,837
-13,181
Other
-3,403
19,902
5,435,376
8,447,958
Other information
(14) Contributions to advertising costs
The reductions in earnings include contributions made to customers for adver tising costs amounting
to EUR 2,939,928 (2001: TEUR 2,683). Those contributions to adver tising costs not directly related
to the volume of products purchased by the customer, are repor ted under the expenses for adver tising
(EUR 610,500 ; 2001: TEUR 0).
The contributions to adver tising costs received from suppliers amounting to EUR 3,796,767 (2001: TEUR
3,184,000) were again deducted from the production costs.
(15) Other financial obligations
The following statement sums up commitments not included among liabilities:
67
68
Notes to the balance sheets and the income statements
31.12.2002
Letters of credit
Bills of exchange
31.12.2001
EUR
EUR
8,760,849
4,436,477
2,721,310
3,559,539
11,482,159
7,996,016
(16) Transactions with related parties and companies
The company transacts sales on normal market terms with the foreign companies S plus S Poland Marketing, Engineering and Computer Production sp.zo.o., Poland, and S Co S, Ceské Budejovice, Czech Republic.
The company also transacts sales with EEE Electronic Holding GmbH, Linz, on normal market terms.
The companies mentioned above are af filiates of the Oberlehner Private Trust, the beneficiar y of which
is among other functions, the Chairman of Gericom AG. The companies granted the Chairman a loan of
EUR 157, 164 (2001: TEUR 175).
(17) Segment disclosures
The Statement of Financial Accounting Standards No. 131 (SFAS 131), “Disclosures about Segments of
an Enterprise and Related Information”, sees the star ting point for segment disclosures as being the
internal organisation or structure of a company, on the basis of which the management measures the
profitability of a branch, division, af filiate or similar (management approach), i.e. the segment disclosure
should constitute a breakdown of the financial statements in a manner that is used by management to
make decisions in operational matters.
The management does not consider either the individual product groups or geographical sales
areas as separate segments in the sense of SFAS 131, as these are only distinguishable from each other
in an immaterial way in terms of oppor tunities and risks, and moreover the markets and product groups
evolve in close interdependence.
2002 Sales
Share
2001 Sales
EUR
%
EUR
%
40,875,233
7.5
84,830,497
15.7
Germany
339,761,588
62.5
332,090,180
61.5
Other EU countries
146,244,873
26.9
103,404,693
19.2
CEE countries
7,076,359
1.3
8,347,201
1.5
Third countries
4,744,238
0.8
3,183,640
0.6
Switzerland
5,371,262
1.0
8,040,924
1.5
544,073,553
100.0
539,897,135
100.0
Austria
Share
Annual repor t 2002
Consolidated financial statements
The regional distribution of sales is in accordance with the location of the headquarters of the customers.
The company transacts substantial sales with a few impor tant large customers. In 2002, 60 % of sales in
the financial year were with the three
Linz, March 7, 2001
The Managing Board
Ing. Mag. Hermann Oberlehner
Gerhard Leimer
69
70
Consolidated movement of fixed assets
Consolidated movement of fixed assets as at December 31, 2002
Acquisition and production costs
currency deviation
Additions
Transfer
EUR
EUR
EUR
EUR
377,822
0
251,323
0
2,783,544
0
326,026
623,670
0
As at
1.1.2002
I.
Intangible assets:
Concessions, trademarks and similar rights, licences
II.
Tangible assets:
1.
Property, real property rights, including buildings on non-owned land
(therof land value: EUR 35.771; 2001: TEUR 36)
III.
2.
Machinery and equipment
2,879,848
0
128,492
3.
Other property, plant and office equipment
1,695,872
-1,438
563,683
0
4.
Assets under construction
623,670
0
0
- 623,670
7,982,934
-1,438
1,018,201
0
106,755
0
0
0
57,039
0
0
0
163,794
0
0
0
8,524,550
-1,438
1,269,524
0
Financial assets:
1.
Fixed asset securities (rights)
2.
Other borrowings
Annual repor t 2002
Consolidated financial statements
Disposals
As at
Accumulated
Book value as at
Book value as at
31.12.2002
depreciation
31.12.2002
31.12.2001
Depreciation
during the
financial year
EUR
EUR
EUR
EUR
EUR
EUR
0
629,145
332,435
296,710
102,275
56,887
82,925
3,650,315
968,912
2,681,403
1,955,874
224,167
370
3,007,970
1,361,516
1,646,454
2,064,670
546,707
88,867
2,169,250
1,254,316
914,934
662,714
293,581
0
0
0
0
623,670
0
172,162
8,827,535
3,584,744
5,242,791
5,306,928
1,064,455
3,634
103,121
11,520
91,601
100,940
5,706
0
57,039
57,039
0
0
0
3,634
160,160
68,559
91,601
100,940
5,706
175,796
9,616,840
3,985,738
5,631,102
5,510,143
1,127,048
71
72
Auditor’s repor t
Auditor’s report
To the Supervisor y Board and shareholders of GERICOM AG :
We have audited the accompanying consolidated financial statements of GERICOM AG, Linz, comprising
the consolidated balance sheets as at December 31, 2002 plus the related statements of income and
cash flows, and statements of shareholders’ equity, together with the notes for the financial years from
Januar y 1 to December 31, 2002. These consolidated financial statements are the responsibility of the
company‘s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with Austrian accounting principles and practice and the International Standards on Auditing of the International Federation of Accountants (IFAC). These standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes the examination, on a sample basis, of
evidence suppor ting the amounts and disclosures in the financial statements. An audit also includes an
assessment of the accounting and valuation principles used and significant estimates made by manage ment, as well as an evaluation of the overall presentation of the financial statements. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements of GERICOM AG give a true and fair view of the fi nancial position as at December 31, 2002, and the results of operations and cash flows of the financial
years from Januar y 1 to December 31, 2002, in accordance with the accounting principles generally
accepted in the USA (US - GAAP).
Pursuant to Austrian commercial law, the consolidated management repor t and adherence to the require ments for exemption from the compilation of consolidated financial statements in accordance with the
Austrian Commercial Code must be examined.
In our opinion, the management repor t complies with the consolidated financial statements and the
legal requirements for an exemption from the obligation to compile consolidated financial statements in
accordance with the Austrian Commercial Code has been met.
Linz, March 6, 2003
KPMG Alpen -Treuhand GmbH
Wir tschaf tsprüfungs - und
Steuerberatungsgesellschaf t
(Gabriele Lehner)
(Ernst Haidenthaler)
Char tered auditor and tax consultant
Char tered auditor and tax consultant
On disclosure or reproduction of the Consolidated Financial Statements in a form (e.g. abridged or trans lated into another language) that dif fers from the confirmed setting, the auditor’s opinion may neither be
quoted nor referred to without approval.
FINANCIAL STATEMENTS
74
Balance sheet
Balance Sheet as at December 31, 2002
with comparative figures for 2001 in EUR 1,000 (TEUR)
Assets
As at
As at
31.12.2002
31.12.2001
EUR
TEUR
296,710.04
102
A. Fixed assets:
I.
Intangible assets:
Franchise rights, commercial patents and trademarks, similar rights and
privileges and derivative licences
II.
Tangible assets:
1. Real estate, rights equivalent to real estate and buildings, including
buildings on non-owned land
2,681,402.30
2,437
2. Machinery and equipment
1,646,454.35
2,065
729,850.10
537
3. Other machinery, plant and office equipment
4. Work in progress
III.
0.00
624
5,057,706.75
5,663
Financial assets:
1. Investments in affiliated companies
91,852.43
92
2. Fixed asset securities (loan stock rights)
77,051.13
86
168,903.56
178
5,523,320.35
5,943
B. Current assets::
I.
Inventories:
1. Raw materials and supplies
2. Finished products and merchandise
3. Advance payments made
II.
3
40,393
255,016.24
255
33,953,481.66
40,651
Receivables and other assets:
1. Trade accounts receivable
III.
3,120.83
33,695,344.59
119,387,746.21
93,695
2. Receivables from affiliated companies
2,299,381.45
3,504
3. Other receivables and assets
6,754,408.14
4,366
128,441,535.80
101,565
Cash, deposits at banks
C. Deferred income:
33,188,085.90
41,082
195,583,103.36
183,298
314,855.76
142
201,421,279.47
189,383
Annual repor t 2002
Financial statements
Liabilities and shareholders‘ equity
As at
As at
31.12.2002
31.12.2001
EUR
TEUR
10,900,000.00
10,900
38,750,937.49
38,751
143,104.36
51
A. Shareholders‘ equity::
I.
Share capital
II.
Capital reserves: :
III.
Retained earnings:
IV.
Net profit (thereof profit/loss carried forward
appropriated capital reserves
Other retained earnings (voluntary reserves)
EUR 10,621,923.18; 2001: TEUR 1,121)
22,624,656.02
17,707
72,418,697.87
67,409
216,956.68
309
B. Untaxed reserves:
Other untaxed reserves
C. Provisions:
1.
Provision for severance payments
2.
Provision for taxes
3.
Other provisions
115,872.65
73
2,123,700.00
3,614
11,375,879.74
17,673
13,615,452.39
21,360
D. Liabilities:
1.
Liabilities to credit institutions
276.36
0
2.
Trade accounts payable
52,237,466.43
50,979
3.
Liabilities to affiliated companies
58,468,070.80
45,151
4.
Other liabilities (thereof taxes: EUR 1,186,892.88;
4,464,358.94
4,175
2001: TEUR 2,651; thereof social security payments
EUR 189,102.64; 2001: TEUR 183)
Contingent liabilities
115,170,172.53
100,305
201,421,279.47
189,383
5.459.362,39
3.618
75
76
Income statement
Income statement for the financial year 2002
with comparative figures for 2001 in EUR 1,000 (TEUR)
1.
Sales
2.
Other operating income:
3.
4.
a)
Income from the disposal of the fixed assets with the exception of financial assets
b)
Income from the reversal of provisions
c)
Other
2001
EUR
TEUR
663,849,968.81
567,352
82,041.16
3
5,639,072.83
32
3,917,113.19
4,455
9,638,227.18
4,490
- 619,151,686.95
-502,406
Cost of materials and services:
a)
Cost of materials
b)
Cost of services
-10,393,081.79
-17,027
- 629,544,768.74
-519,433
Personnel expenses:
a)
Wages
-1,056,686.01
-1,329
b)
Salaries
-4,046,751.00
-3,477
c)
Severance payments
d)
Compulsory social security contributions and payroll-related taxes
e)
Other social expenses
5.
Depreciation of intangible assets and tangible assets
6.
Other operating expenses:
a)
b)
7.
2002
Taxes other than those included under item 14
Miscellaneous
Sub -total from items 1 - 6
-42,498.74
-26
-1,405,971.52
-1,245
-44,301.50
-11
- 6,596,208.77
- 6,088
-1,086,308.43
-876
- 6,532.73
-72
-18,576,942.36
-20,599
-18,583,475.09
-20,671
17,677,434.96
24,774
Annual repor t 2002
Financial statements
8.
Other interest and similar income (thereof from affiliated companies EUR 6,104.01; 2001:
2002
2001
EUR
TEUR
555,555.43
1,098
6,366.36
0
TEUR 9)
9.
Income from the disposal of financial assets
10.
Expenses on financial assets
11.
Interest and similar expenses (thereof from affiliated companies EUR 11,484.00; 2001:
Depreciation
-5,706.00
-3
-271,706.21
-704
TEUR 0)
12.
Sub -total from items 8 -11
13.
Result from ordinary business activities
284,509.58
391
17,961,944.54
25,165
14.
Taxes on income
15.
Net income
-5,959,211.70
-8,581
12,002,732.84
16,584
16.
Reversal of untaxed reserves
17.
Allocation to the retained earnings
18.
Profit carried forward
10,621,923.18
1,121
19.
Net profit
22,624,656.02
17,707
91,937.89
31
-91,937.89
-29
77
78
Notes for the financial year 2002
Notes for the financial year 2002, GERICOM AG, Linz
I. Application of commercial law stipulations
These financial statements for 2002 were prepared in accordance with the stipulations of the Austrian
Commercial Code. The company is a large corporation in the sense of § 221 of the Austrian Commercial
Code. Individual items in the balance sheet and income statement that were combined in the interest
of clarity are repor ted separately in the Notes. Additional information is provided in the Notes where
this is impor tant to the determination of the fairest view possible of the company’s assets, finances
and earnings situation. The income statement is prepared in tabular form in accordance with the cost
of production method. The method of repor ting employed in the annual accounts of the preceding year
is retained.
The company is the parent company of the GERICOM Group and subject to a consolidation requirement.
II. Accounting and valuation methods
The financial statements were prepared in accordance with the principles of orderly accounting, as well
as the general principle of providing the fairest view possible of the company‘s assets, finances and earn ings situation. The principle of completeness was also adhered to during the preparation of the financial
statements. Evaluation was based on the going concern principle. The principle of individual evaluation
was applied to the assets and liabilities. The commercial prudence principle was complied with insofar
that only such profits realised up to and on the balance sheet date are repor ted.
All recognisable risks and impending losses, which occurred in 2002, or in a previous financial year,
were taken into account. The valuation methods employed previously were retained. Intangible assets
purchased against payment are shown at the cost of acquisition less scheduled depreciation calculated
using the straight- line method. An economically useful life of 4 -10 years was assumed. Tangible assets
are repor ted at historic acquisition or production costs, less scheduled or extraordinar y depreciation.
The useful economic life for developed real estate is 25 - 50 years, for buildings on non - owned land, 10 -25
years, for machiner y and equipment, 4 - 5 years, and for tools, plant and
of fice equipment, 4 - 8 years.
Low value assets are fully depreciated in the year of purchase. Extraordinar y depreciation is under taken
where it is necessar y that the amount repor ted should be lower or where this is permitted under special
tax regulations. No extraordinar y depreciation on assets was under taken during the year under review.
The financial assets are reported at the cost of acquisition, or at a lower value should this be applicable.
The company made no use of the selective right of capitalisation available under § 198 Section 10 of the
Austrian Commercial Code f f EUGesRÄG. Inventories are recognised at the cost of acquisition or produc tion, or the lower value on the balance sheet date.
In accordance with the lower of cost or market principle, appropriate depreciation was under taken in the
case of above - average storage periods or limited usability and for a loss - free valuation.
Receivables and other assets are repor ted at nominal value. Receivables in foreign currency are repor ted
at the lower of the exchange rate on the date of accrual and the mean exchange rate on the balance
Annual repor t 2002
Financial statements
sheet date. Individual provisions were formed for recognisable risks. A flat rate deduction was made for
the general credit risk.
In line with statutor y requirements, all recognisable risks and impending losses were taken into account
during the calculation of the receivables. When determining the provision for warranties and guarantees,
dif ferent provisions are made for sales with and without service agreements with third par ties.
The accruals for severance payments were simplified by repor ting at 47.5% or 60 % of the fictitious entitle ment on the balance sheet date. There are no objections to the use of this percentage, as a calculation
completed during 2002 according to actuarial principles showed that the tax amount repor ted was suf ficient to meet commercial law requirements. The accrual for obligations similar to severance payments
related to the provision for long- service bonuses. The actuarial calculation took place on the basis of an
interest rate of 4% and a deduction for fluctuation of 50 % .
Liabilities are repor ted at their repayment value. Liabilities in foreign currencies are repor ted at the
exchange rate on the date of accrual or at the higher selling exchange rate on the balance sheet date.
Where appropriate valuation units could be formed with derivative financial instruments, the valuation of
liabilities in foreign currencies took place at the secured forward rate.
III. Notes to the balance sheet
Assets
The breakdown of the assets and asset movements during the year under revue are contained in the
movement of fixed assets table (compare Enclosure 1 to the Notes). Due to long- term rental agreements,
in 2002 there was a liability on assets not repor ted in the balance sheet of EUR 270,949.04
(2001:
TEUR 188). Liabilities for the next five years total EUR 1,327,485.40 (2001: TEUR 944).
During the financial year under review, extraordinar y depreciation of EUR 5,706.00 was under taken
(2001: TEUR 3). Fixed asset securities were purchased for the statutor y coverage of the accrual for
severance payments. A breakdown of investments is contained in the list of investments (Enclosure 3 to
the Notes).
79
80
Notes for the financial year 2002
Receivables and other assets
Carrying value
Thereof maturing
Thereof maturing
31.12.2002
in less than one
in less than one
Flat rate provision
Carrying value
EUR
year EUR
year EUR
EUR
EUR
Trade accounts receivable
119,387,746.21
119,387,746.21
0.00
(45,783.89)
93,695,411.65
Receivables from affiliated
2,299,381.45
2,213,306.40
86,075.05
(0.00)
3,503,611.83
6,754,408.14
6,754,408.14
0.00
(0.00)
4,366,212.30
128,441,535.80
128,355,460.75
86,075.05
(45,783.89)
101,565,235.78
31.12.2001
companies
Other receivables and
assets
As at December 31, 2002, there were receivables maturing in more than one year to the value of EUR
86,075.05 and the flat rate provision was lef t at a total of EUR 45,783.89. Income of EUR 1,418, 092.59
(2001: TEUR 1,558) is included under the item „Other receivables and assets”, which was first recog nised af ter the balance sheet date.
Share capital
As at December 31, 2002, share capital amounted to EUR 10,900,000, and is divided into 10,900,
000 no par value ordinar y bearer shares with a nominal value of EUR 1.00 each. Subject to approval by
the Supervisor y Board, the Managing Board is empowered to increase the level of shareholders‘ equity
in one or more stages by October 13, 2005 at the latest by a maximum amount of EUR 5,500,000.00
through the issue of 5,500,000 no par value ordinar y bearer shares with voting rights against cash or
other asset payments
In addition, the Managing Board remains authorised to purchase own shares to the amount of 10 % of
company no par value stock by November 28, 2003.
Retained earnings
The retained earnings consisted entirely of other reserves (voluntar y reserve).
Untaxed reserves
A breakdown of the untaxed reserves and movements during the year under review is repor ted separately
(compare Enclosure 2 to the Notes).
Other provisions
The item “Other provisions”, amounting to EUR 11,375,879.74, largely consist of provisions for warranties and guarantees (EUR 6,507,000.00), replacement vouchers (EUR 1,141,225.73) and discounts
(EUR 1,092,342.32).
Annual repor t 2002
Financial statements
Liabilities
Carrying value
Thereof maturing
Carrying value
Thereof maturing
31.12.2002
in less than one
31.12.2001
in less than one
EUR
year EUR
EUR
year EUR
276.36
276.36
0.00
0.00
Trade accounts payable
52,237,466.43
52,237,466.43
50,978,678.69
50,978,678.69
Liabilities to affiliated companies
58,468,070.80
58,468,070.80
45,151,657.59
45,151,657.59
4,464,358.94
4,464,358.94
4,174,615.64
4,174,615.64
115,170,172.53
115,170,172.53
100,304,951.92
100,304,951.92
Liabilities to credit institutions
Other liabilities
The item “Other liabilities” contains expenses of EUR 427,376.60 recognised after the balance sheet date.
On the balance sheet date there were no liabilities with a maturity period of more than five years.
Contingent liabilities
31.12.2002
Credits
Bills
31.12.2001
EUR
EUR
2,738,052.02
58,229.08
2,721,310.37
3,559,538.55
5,459,362.39
3,617,767.63
The bills repor ted in the contingent liabilities relate to discounted bills, which on the date of the audit had
already been redeemed to an amount of EUR 1,614,801.55.
IV. Notes to the income statement
Sales
2002
2001
EUR
EUR
Third party revenues:
Gross domestic revenues
Gross international revenues
Group revenues
38,581,212.89
86,851,194.82
513,838,339.16
468,063,782.12
552,419,552.05
554,914,976.94
125,862,263.18
24,909,217.03
-11,539,025.71
-9,424,670.33
minus:
Sales commission and advertising cost grants
Customer discounts and rebates
-2,892,820.71
-3,047,442.98
-14,431,846.42
-12,472,113.31
663,849,968.81
567,352,080.66
81
82
Notes for the financial year 2002
The reductions in earnings include contributions made to customers for adver tising costs amounting to
EUR 2,939,927.78 (2001: TEUR 2,683). Those contributions to adver tising costs not directly related to
the volume of products purchased by the customer, are repor ted under the expenses for adver tising (EUR
610,500.00 ; 2001: TEUR 0).
In addition, the contributions to adver tising costs received from suppliers amounting to EUR
3,796,767.12 (2001: TEUR 3,184) have been deducted from the production costs.
Employees (annual average)
2002
2001
Blue -collar
64
71
White -collar
175
145
Total
239
216
Share options
In connection with the GERICOM IPO, company employees were provided with an oppor tunity to invest in
the company, its corporate value and future development through the GERICOM Fixed Stock Option Com pensation Plan. The predominant features of this scheme were employee motivation and an additional
incentive for success - oriented working, identification with the company and the creation of ties between
the work force, GERICOM and its af filiates. A total of up to 750,000 GERICOM AG shares are reser ved
for the stock option programme. Depending on company choice, the shares issued to employees with an
entitlement can either take the form of greenshoe GERICOM AG shares, which will be created through
the use of approved capital, or own shares purchased by the company for the issue to employees with
an entitlement.
The options are granted with an exercise price, which results from the market value and a related markup. 30 % of the options can be exercised following a two - year freeze (Tranche 1 with 20 % mark- up), a
fur ther 30 % af ter three years (Tranche 2 with 30 % mark- up) and the remaining 40 % af ter 4 years (Tranche
3 with 40 % mark- up).
Following the freeze period, rights can be exercised subsequent to the ordinar y annual general meeting
and af ter the results for the second and third quar ters have been published. The stock option programme
has a total length of five years.
The number and distribution of the rights allocated and exercised during the financial year are as follows:
Number of shares
Granted as at 1.1.2002:
Weighted average
Gerhard Leimer
Other employees
exercise price EUR
10,000
317,296
22.96
Granted
0
24,591
14.25
Exercised
0
0
na
Expired
0
56,275
21.23
10,000
285,612
21.71
3,000
76,288
20.40
Granted as at 31.12.2002
Right of exercise as at 31.12.2002
Annual repor t 2002
Financial statements
The market value determined using the “Black Scholes options price model“ to which the options al located up to December 31, 2002 were granted, ranged between EUR 0.30 and EUR 3.00 depending
on the date of the commitment and the respective exercise tranche. The total value amounted to EUR
163,553.96.
Other operating income
Income from the write - back of provisions mainly derived from the par tial write - back of the provision for
guarantees and warranties and the write - back of the accrual for purchase commission. The remaining
other operating income derived form the payments of claims, excess customer payments, passed on
personnel expenses and insurance income.
Other operating expenses
In par ticular, the other operating expenses repor ted contain damage claims, insurance premiums, mon etar y movement charges, the write - of f of receivables, legal and consultancy fees, maintenance, rents
and leasing expenses, contributions to professional bodies, communications costs, of fice expenses,
vehicle costs, employee training, allocations to the provision for receivables, research and development
and foreign exchange rate expenses.
Taxes on income
On December 31, 2002, the capitalised amount for asset side tax deferrals, which in accordance with § 198
Section 10 HGB - ff EU - GesRÄG 1996 (using the transitional stipulations pursuant to Art XVI Section 3 EU GesRÄG 1996) does not require separate reporting, totalled around EUR 72,300.00 (2001: TEUR 255).
83
84
Notes for the financial year 2002
V. Additional information
Members of the Managing Board during the 2002 financial year:
Hermann Oberlehner, Linz (Chairman)
Herr Gerhard Leimer, Wels
Members of the Supervisor y Board during the 2002 financial year:
Jochen Tschunke, Chairman, (from Januar y 1 until May 29, 2002)
Georg Bauer, Chairman, (from May 30, 2002)
Wolfgang Stürzer, Deputy Chairman (from Januar y 1 until May 29, 2002)
Har tmann Weirather
Gerhard Sperrer, Deputy Chairman (from December, 2002)
Gernot Friedhuber (from Januar y 1 until October 17, 2002)
Remuneration to active members of the Managing Board during the period under review totalled EUR
443,102.37.
Linz, March 7, 2003
The Managing Board
Hermann Oberlehner
Gerhard Leimer
Chief Executive Of ficer
Chief Financial Of ficer
Enclosure 1 to the Notes: movement of fixed assets table
Enclosure 2 to the Notes: movement of untaxed reserves table
Enclosure 3 to the Notes: table of investments
Annual repor t 2002
Financial statements
Enclosure 2: Movements in the untaxed reserves
As at 1.1.2002
Reversal due to premature
As at 31.12.2002
withdrawal
EUR
EUR
EUR
1998
91,937.89
91,937.89
0.00
1999
65,634.03
0.00
65,634.03
Other untaxed reserves:
Investment allowances in accordance with
§ 10 Austrian Income Tax Law:
2000
151,322.65
0.00
151,322.65
308,894.57
91,937.89
216,956.68
Enclosure 3: Table of investments
Capital share
Currency
in %
Equity
Net result
2002
2002
Gericom Deutschland GmbH, Munich, Germany
100.0
TEUR
18
0
Gericom Schweiz GmbH, Kreuzlingen, Swiss
100.0
TCHF
398
145
European Mobile Computer Service GmbH, Linz
100.0
TEUR
139
12
Gericom Far East Limited, Hong Kong, China
100.0
TEUR
10,140
8,118
85
86
Movement of fixed assets
Enclosure 1: Movement of fixed assets as at December 31, 2002
Acquisition and production costs
I.
Disposals
Transfer
EUR
EUR
EUR
377,822.09
251,322.55
0.00
3,325,282.62
326,025.89
623,669.67
0.00
Intangible assets:
Concessions, trademarks and similar rights, licences
II.
1.1.2002
Tangible assets:
1.
Property, real property rights, including buildings on
non-owned land (therof land value: EUR 35.771,31;
2001: TEUR 36)
III.
2.
Machinery and equipment
2,879,848.13
128,491.85
3.
Other property, plant and office equipment
1,537,246.69
449,031.32
0.00
4.
Assets under construction
623,669.67
0.00
- 623,669.67
8,366,047.11
903,549.06
0.00
Financial assets:
1.
Shareholdings in affiliated companies
91,852.43
0.00
0.00
2.
Fixed asset securities (rights)
92,102.77
0.00
0.00
3.
Other borrowings
57,038.59
0.00
0.00
240,993.79
0.00
0.00
8,984,862.99
1,154,871.61
0.00
Annual repor t 2002
Financial statements
Disposals
31.12.2002
Accumulated
Book value as at
Book value as at
Depreciation dur-
depreciation
31.12.2002
31.12.2001
ing the financial
EUR
EUR
EUR
EUR
EUR
year EUR
0.00
629,144.64
332,434.60
296,710.04
102,274.51
56,887.02
624,664.15
3,650,314.03
968,911.73
2,681,402.30
2,437,149.89
230,131.32
370.12
3,007,969.86
1,361,515.51
1,646,454.35
2,064,669.90
546,707.40
78,906.16
1,907,371.85
1,177,521.75
729,850.10
536,664.48
252,582.69
0.00
0.00
0.00
0.00
623,669.67
0.00
703,940.43
8,565,655.74
3,507,948.99
5,057,706.75
5,662,153.94
1,029,421.41
0.00
91,852.43
0.00
91,852.43
91,852.43
0.00
3,633.64
88,469.13
11,418.00
77,051.13
86,390.77
5,706.00
0.00
57,038.59
57,038.59
0.00
0.00
0.00
3,633.64
237,360.15
68,456.59
168,903.56
178,243.20
5,706.00
707,574.07
9,432,160.53
3,908,840.18
5,523,320.35
5,942,671.65
1,092,014.43
87
88
Auditor’s repor t
Auditor’s report
We have examined the consolidated financial statements of GERICOM AG as at December 31, 2002,
which were prepared pursuant to current Austrian commercial law, in accordance with auditing princi ples. These consolidated financial statements are the responsibility of the company‘s management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with Austrian accounting law and practice. These standards re quire that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes the examination, on a sample basis, of
evidence suppor ting the amounts and disclosures in the financial statements. An audit also includes an
assessment of the accounting and valuation principles used and significant estimates made by manage ment, as well as an evaluation of the overall presentation of the financial statements. We believe that
our audit provides a reasonable basis for our opinion.
On the basis of our audit, we allocate the following unqualified approval pursuant to § 274 Section 1 of
the Austrian Commercial Code:
„In our opinion, the accounting and consolidated financial statements fulfil the statutor y requirements.
The consolidated financial statements give a true and fair view of the assets, financial position and
earnings of the company in accordance with the principles of orderly accounting. The management repor t
corresponds with the consolidated financial statements.“
Linz, March 7, 2003
KPMG Alpen -Treuhand
Wir tschaf tsprüfungs - und
Steuerberatungs - GmbH
(Gabriele Lehner)
(Ernst Haidenthaler)
Char tered auditor and tax consultant
Char tered auditor and tax consultant
On disclosure or reproduction of the Consolidated Financial Statements in a form (e.g. abridged or trans lated into another language that dif fers from the confirmed setting), the auditor’s opinion may neither
be quoted nor referred to without approval.
Annual repor t 2002
Abbrevations
AFTER SALES SERVICE
Customer service, e.g. the repair or expansion of a product,
which is available to the customer following the purchase of a
product
ASSEMBLY
Production of a functional end product using various
components
B2B
Business transacted on the internet between dif ferent
companies
B2C
Business to Consumer
Business transacted on the internet between commercial
suppliers and private customers
BLUETOOTH
New standard for radio communications with a reach of
approximately 12 metres. Facilitates cable - free data exchange
between notebooks, printers, mobiles, digital cameras,
handhelds and all types of electronic devices
BTO - PRODUCTION
Built to Order- Production
Production procedures that enable notebooks to be produced
in line with the wishes of customers, as expressed in individual
contracts
BURN - IN - PROCEDURE
Quality assurance test carried out on individual notebook
components (e.g. memor y components), or other products
during pilot operation
BUSINESS ENABLER
allows retailers from other branches to commence the sale of
notebooks and other high - tech products
CAGR
Compounded Average Growth Rate
Average annual growth rate over a number of years
CD - Burner
A device for recording large amounts of data onto CD - ROMs and
other compact discs
CD - ROM
Compact Disc Read Only Memory
Optical data store in the form of a compact disc. The storge
capacity of a CD - ROM is up to 680 Megabytes. This is enough to
store large amounts of data such as digitalised music, large scale software programmes, text or pictures. It is not possible to
subsequently change the stored data (Read Only Memory, ROM)
CONNECTIVITY
possibility for permanent network linkage via various
technologies like UMTS, GPRS, wireless L AN, Bluetooth
89
90
Abbrevations
CUSTOMER
REL ATIONSHIP MANAGEMENT
Management System to provide customer suppor t and secure
DESKTOP- PC
Conventional personal computer in which the actual computer is
customer loyalty
housed in a dif ferent casing to, e.g. the screen or the keyboard
DVD
Digital Versatile Disk
The DVD is the successor to the CD - ROM and at present is
mainly used for video data, e.g. for storing films
EBIT
Earnings before interest and taxes
E- BUSINESS
Electronic business system based on internet technology,
which networks all business transactions between dif ferent
companies and customers, in order to open up new channels of
distribution, improve service and cut costs
E- COMMERCE
A general term applied to all forms of business transactions
agreed by suppliers and customers via the internet
EDUCATION NOTEBOOKS
Notebooks tailor- made for applications in schools and
universities
E- SALES
Sales via the internet
FAQ
Frequently asked questions
Replies to frequently asked questions
FORECAST
Estimate of customer requirements
GDP
Gross domestic product
GOING PUBLIC
Company flotation on the stock exchange
GPRS
General Packet Radio System faster data transmission
technology for existing GSM - networks
HIGH PERFORMANCE
NOTEBOOK
Notebook for the professional user, which is especially powerful
in terms of technical demands such as speed, storage capacity
and interfaces
IPO
Initial Public Of fering
Issue of securities by a company for a cer tain market segment
I - STATION
Name given to the computer station developed by GERICOM,
which makes internet access possible
Annual repor t 2002
Abbrevations
ISO
International Organization for Standardization
L AN
Local Area Network, local corporate network
LCD
Liquid Cr ystal Display
LCDs are flat displays with liquid cr ystal indicators, which are
mainly used in por table computers or mobile phones
LCD - PC
All - in - one device, in which the latest notebook technology and
components are integrated into one housing, in order to meet high
demands with regard to performance an enlargement capacity
LIFESTYLE NOTEBOOKS
GERICOM notebooks with a good price - performance ratio and
modern design
MARKET CAPITALISATION
Number of shares issued by a company multiplied by the
respective share price
MICROSOFT WINDOWS CE
An operating system that was developed by Microsof t especially
for hand - held PCs and PDAs
MOBILE COMPUTING &
COMMUNICATION
Collective term for mobile data processing equipment and
accessories, from notebooks and handhelds, to enlargement
cards, e.g. for modems, ethernet, wireless L AN, GPS receivers,
and internal components such as hard disks, processors,
storage devices and batteries
NEMAX ALL SHARE
Index of all companies listed on the New Market
OEM - CONTRACTS
Original Equipment Manufacturer Contracts
Original Equipment Manufacturer Contracts are contracts
concluded with companies, which purchase products or
components from other manufacturers and sell them on under
their own name or integrate them into their own products
PCMCIA
Personal Computer Memor y Card Industr y
Association; the interface standard for all mobile personal
computers
PDA
Personal Digital Assistant – PDAs are small mobile computers,
which are used as appointment books, reference works and for
the storage of small amounts of data. It is also possible to send
and receive faxes or connect to the internet via a radio Telefone
PICK - UP SERVICE
Defect equipment is collected directly from the customer and
then returned when repaired
91
92
Abbrevations
POINT OF SALE
Place at which a product is sold
PR
Public relations
RETAILER
Chain stores with large amounts of floor space
SHAREHOLDER VALUE
APPROACH
Process for assessing the value of a company. This demands
concentration on the long- term maximisation of corporate value
to the benefit of the shareholders
SME
small and medium - sized enterprise
TFT- DISPL AY
Thin Film Transistor Display
Flat screen with a liquid cr ystal colour display
TOUCH - SCREEN
A computer screen which enables the user to give commands by
touching its surface
UMTS
Universal Mobile Telecommunications System
A new, globally used mobile phone standard, which covers the
European GMS standard, the Japanese PHS standard and the
American AMPS standard, and provides access to internet
applications via mobile phones
USB
Universal Serial Bus; a universal interface used as a connection
to other peripherals
VALUE ADDED RESELLER – VAR
SMEs, which sell their services in combination with products
WEB
Shor t for World Wide Web, the complete collection of internet
documents stored on internet servers around the world
WEB - APPLIANCES
Hardware products that provide access to the internet
WEB PAD
The name given to a small mobile computer (8 x 12 inches
format), which will be of fered by GERICOM in the future. It will
have a touch screen and will provide mobile Internet access
WEB SHOP, WEB STORE
Vir tual internet business
WIRELESS L AN
Wireless local area network – Network for the local wireless
transmission of data
GERICOM Aktiengesellschaf t
A - 4021 Linz | Industriezeile 35
investor@ gericom.com | www.gericom.com