Date: 07.04.2006 - 14:05 (GMT+3) , Exchange: VLN , Company: Ekranas

EKR: CONCERNING THE ACTIVITY OF EKRANAS AB

EKRANAS AB                Stock Exchange Release            07/04/2006

CONCERNING THE ACTIVITY OF EKRANAS AB

The electronics market invigorated at the end of the last year - the increased 
demand for vacuum devices as well as the prices allowed to forecast more 
optimistic results of Ekranas AB operations for 2006. Over the Q1 of 2006, 
in line with the planned sales objectives, Ekranas AB sold 1 235,5 thous. 
of tubes, which is by 44 % more compared to the Q1 of 2005, which was  
856 thous. tubes. Over the Q1 of 2006, the prices for tubes increased by 11%.

In order to use the favorable development of market tendencies, Ekranas AB 
invoked all the possible measures to stabilize the business: good will of 
employees, cost reduction policy, extensive marketing strategy, support of 
financial institutions and the Government of the country.

Company’s Efforts

Thanks to the efforts of more than 4000 staff, the Board of the company and 
the Administration the following accomplishments have been made:
-production costs have been reduced by more than 4 % over the last half-year, 
regardless of the steady increase of the prices of production materials and 
labor costs;
-preparations have been finished for mass production of the highly marketable 
Slim Type CPT;
-many alternative materials and components have been found in various new 
sources and have already been introduced into production.

Actions of Shareholders

The intensive activities of Ekranas AB shareholders did not remain unnoticed 
in the European Union:
-The Board representative of Ekranas in EDIA worked very hard during the past 
two years to convince the EDIA Board to make action against unfair competition and 
all ırregularities concerning CPTs imported from third countries.
-at the beginning of 2006, the European Commission commenced the anti-dumping 
investigation of imports of color picture tubes originating in People’s Republic 
of China, Republic of Korea, Malaysia and Thailand;
-the Vice-Chairman of the Board of the Company Aydin Giz has been elected to 
the presidency of EDIA (European Display Industry Association) and as a member 
of the Board of Directors at EECA (European Electronic Component Manufacturers 
Association);
-many meetings took place with responsible officials of the European Commission 
aiming at protecting the interests of Ekranas AB and of all other European 
electronics companies;
-significant lobbying actions have been taken in the European Commission in 
order to stabilize the functioning of the company as well as the entire European 
electronics industry;
-a lot of actions were taken to keep alive the European CPT glass and related 
companies.


Unfavorable Business Context

 This unfavorable business context in the European Union and a long procedure 
for measures were not sufficient to ensure profitable operations of Ekranas AB. 
Today the company is not capable of competing with manufacturers of South East 
Asian and Latin American countries which are actively supported by national 
authorities in forming of advantageous tax policy, subsidising new products, 
investments and research and development promotion in every possible way of 
exports of production manufactured in the country and subsidizing of companies 
and sales with dumped prices to eliminate all European CPT, glass and consumer 
electronics. 

Currently only three tubes production companies operate in European Union: 
Ekranas AB, Videocon – THOMSON (Poland) and Samsung (Hungary). A month ago, the 
biggest worldwide CPT producers LG Philips Holding BV and recently Tesla – Ecimex 
Company (Czech Republic) announced bankruptcy and termination of its operations. 
During recent years, several factories of traditional tubes owned by multinational 
companies were relocated from Europe into Latin American or South East Asian 
countries. Over the last year and a half 15 companies engaged in color picture tubes 
and glass and also the related industries closed their plants in Europe.

Although the conclusions of electronics experts show that in 2009 more than 60% 
of TV sets sold all over the world will be vacuum devices, the unfair competition 
of third countries, their unfair sales policy and the costs of tubes produced 
in the European Union countries do not allow to ensure profitable business.

New Technologies

The Ekranas’ Board and management considered and evaluated formally and 
informally the possibility to produce LCD and Plasma in Ekranas. However, the 
reality shows that at this time no company gave a lisence to Ekranas for 
production of these items and on the other side, a minimum 1.5 billion USD 
investment for each line and product is needed. The reality is such, that in any 
case it is not possible to collect this amount for investment to LCD and Plasma. 
Actualy there is no production in European Union of LCD and Plasma due to very 
huge investments amount needed and losses incurred also in this production.

Later on, Ekranas AB management decided to investigate the possibility to only 
assemble the LCD parts in Ekranas. And again  due to huge investment amount 
requested only for unsophisticated assembly, the company was forced to dismiss 
this project and to concentrate on the future of Slim Type CPT, to succeed in 
the design etc. 

Decision to Announce the Bankrupt

At present, three tubes assembly lines operate in Ekranas AB, however the 
company is unable to make due payments for the material delivered, repay credits 
and fulfill other material obligations. On the one hand, there is a market  
demand, on the other side, there is a lack of materials and finances to produce 
more, to decrease the costs and in turn increase profitability. Furthermore, 
the unfortunate partial collapse of the panels’ glass melting furnace particularly 
aggravated the situation. 

Ekranas’ management tried all the economical, strategical, and marketing efforts 
to survive and to continue the production and maintain the working places with 
all possible devotion, imaginable hard work and persistence.

The Board of Ekranas AB and the management realize the social responsibility to 
the employees and the community of the city, however, the economic situation on 
the global market impels to undertake radical measures in order to avoid more 
detriment being done against the people of the city. Phenomena of globalization 
did not bypass Lithuania.

The Board after the evaluation of the inside and outside possibilities of 
business and aforementioned reasons decided to agree with judgment to apply 
to the court for necessary procedure for  Ekranas AB on the 7 of April, 2006.

Today I, Eimutis Žvybas, submited an application to the Court of Panevezys 
county under obligation of the Board.

Difficult, but Unavoidable Decision

This was the most difficult decision during our business life.

We are worried and anxious about all employees and their families as they 
can incur moral and financial difficulties.

A lot of good employees, experienced and young managers work for Ekranas AB. 
They had plenty of possibilities to learn and develop, to acquire 
professional skills and creativity. We hope, all that intellectual capital 
will be used in new spheres of activity.

The managers of subdivisions of the company will be obliged to inform all 
employees about legal guarantees and rights as quickly as possible.

We express our gratitude for dedication and honest work for Ekranas AB. 
We deeply regret about this difficult, but unavoidable decision was 
determined by very complicated circumstances in the market.


Eimutis Žvybas
Ekranas AB Chairman of the Board, Chief Executive Officer 

Aydin Giz
Ekranas AB Vice Chaiman of the Board


Phone: +370 699 88330