-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, MpIxO9xYS2XzYXzR1tCSMp+8k4YwFGIQu7NqZf/EtxkrKavKDKTGikzNi0UIKnab topZyz7dJp+cu94/Jrlklg== 0000053117-94-000023.txt : 19940516 0000053117-94-000023.hdr.sgml : 19940516 ACCESSION NUMBER: 0000053117-94-000023 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940427 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19940429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JAMES RIVER CORP OF VIRGINIA CENTRAL INDEX KEY: 0000053117 STANDARD INDUSTRIAL CLASSIFICATION: 2621 IRS NUMBER: 540848173 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07911 FILM NUMBER: 94525267 BUSINESS ADDRESS: STREET 1: 120 TREDEGAR ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8046445411 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) April 27, 1994 JAMES RIVER CORPORATION OF VIRGINIA (Exact name of registrant as specified in its charter) Virginia (State or other jurisdiction of incorporation) 1-7911 54-0848173 (Commission File Number) (IRS Employer Identification Number) 120 Tredegar Street, Richmond, Virginia 23219 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code (804) 644-5411 Item 5. Other Events. On April 27, 1994, James River Corporation of Virginia ("James River") announced the signing of a share acquisition agreement with Montedison S.p.A. and Rayne Holdings Inc. ("Rayne"), whereby James River will acquire the 50% ownership interest in Jamont Holdings, N.V. ("Jamont Holdings") currently owned by Rayne for $575 million in cash. James River currently owns the remaining 50% of Jamont Holdings. Jamont Holdings owns 86.4% of Jamont N.V. ("Jamont"), which has operations in 12 European countries and produces branded and private label tissue and foodservice products for the retail and away-from-home markets. Jamont had sales of approximately $1.4 billion in 1993. Upon the consummation of the acquisition, Jamont will become a consolidated subsidiary of James River. James River intends to finance this transaction through the issuance of a combination of debt and equity securities. The final transaction, which is subject to normal closing conditions, as well as obtaining necessary financing and securing the approval of James River's lenders, is expected to be completed during the third quarter of 1994. Item 7. Financial Statements and Exhibits. (a) Managing Director's report and audited financial statements of Jamont Holdings N.V. for the year ended December 31, 1993: (i) Managing Director's Report 1993 (ii) Report of independent accountants (iii) Consolidated balance sheets at December 31, 1993 and 1992 (iv) Consolidated profit and loss account for the years ended December 31, 1993 and 1992 (v) Notes to the consolidated accounts at December 31, 1993 (c) Exhibits 23 Consent of Coopers & Lybrand 99(a) Press release dated April 27, 1994, published by James River 99(b) Financial statements of Jamont Holdings N.V. referenced in Item 7(a), above SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. JAMES RIVER CORPORATION of Virginia By:/s/Michael J. Allan Michael J. Allan Vice President, Treasurer Date: April 27, 1994 EX-23 2 CONSENT Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference: (i) in Registration Statement No. 33-50284 on Form S-8 pertaining to the James River Corporation of Virginia Stock Purchase Plan; (ii) in Registration Statement No. 33-25851 on Form S-8 pertaining to the James River II Salaried Employees Retirement Savings Plan; (iii) in Registration Statement No. 33-45079 on Form S-8 pertaining to the James River Corporation of Virginia UK Employee Share Accumulation Plan; (iv) in Registration Statement No. 33-43207 on Form S-8 pertaining to the James River Corporation of Virginia Canadian Employees Stock Purchase Plan; (v) in Registration Statement No. 33-43894 on Form S-8 pertaining to the James River Corporation of Virginia Stock Option Plan for Outside Directors; (vi) in Post-Effective Amendment No. 1 to Registration Statement No. 2-83979 on Form S-8, serving as Post-Effective Amendment No. 5 to Registration Statement No. 2-64057, and as Post-Effective Amendment No. 2 to Registration Statement No. 2-76900, each pertaining to the James River Corporation of Virginia Stock Option Plan; and (vii) in Registration Statement No. 33-43594 on Form S-8 pertaining to the James River Corporation of Virginia 1987 Stock Option Plan, of our report, dated March 14, 1994 on our audit of the consolidated financial statements of Jamont Holdings, N.V. as of December 31, 1993 and for the year then ended, which report is filed on this Form 8-K. COOPERS & LYBRAND Eindhoven, The Netherlands April 29, 1994 EX-99 3 NEWS RELEASE Exhibit 99(a) News Release: Immediate Contact: Celeste Gunter (804) 649-4307 James River to Acquire Rayne Ownership in Jamont RICHMOND, VIRGINIA, April 27, 1994 -- James River Corporation announced today the signing of an agreement with Montedison S.p.A. and Rayne Holdings Inc. ("Rayne") providing for the acquisition by James River of Rayne's 43% indirect interest in Jamont N.V. ("Jamont"). Jamont, with operations in 12 European countries and 1993 sales of approximately $1.4 billion, produces branded and private label tissue, hygiene, and foodservice products for the retail and away-from-home-markets. Jamont currently holds the overall number two position in the European tissue market with a market share of approximately 15%. Many of Jamont's products hold the number one market position in their respective countries. Under the current ownership structure, James River and Rayne each hold 50% of Jamont Holdings N.V. ("Holdings"), which owns 86.4% of Jamont. The remaining 13.6% of Jamont is owned by EuroPaper Inc. The agreement provides that James River will acquire Rayne's 50% interest in Holdings for approximately $575 million in cash. At the completion of the transaction, James River will own 86.4% of Jamont, which will then become a consolidated subsidiary. James River intends to finance this transaction through the issuance of a combination of debt and equity securities. James River and Rayne are parties to a put and call agreement related to Rayne's interest in Jamont. Pursuant to this agreement, Rayne has the option to put its interest in Jamont to James River during the summer of 1996 and the summer of 1998 for a total of approximately $820 million. In addition, James River has a currently exercisable option to call Rayne's interest in Jamont, at a price of approximately $650 million as of the expected closing date for the announced transaction. This transaction will allow James River to acquire Rayne's interest in Jamont at a significant discount to the scheduled put and call prices. The total savings to James River have a present value of approximately $100 million, after assumed financing. "This acquisition fits James River's long-term strategy of expanding its presence in Europe, where tissue consumption is generally increasing at a faster rate than in the United States. With its well-known premium branded products, strong market shares, cost-effective manufacturing, advanced technology base, and broad distribution network, Jamont is strategically positioned to outperform its competitors in the European market," said Robert C. Williams, Chairman, President, and Chief Executive Officer of James River. "While Jamont's recent results have been hampered by the recession in Western Europe, its recently completed capital expansion and upgrade program and its significant cost reduction efforts have resulted in positive free cash flow and should provide the base for improving earnings during the coming years." The acquisition, which is subject to normal closing conditions, as well as obtaining necessary financing and approval of James River's lenders, is expected to be completed during the third quarter of 1994. James River Corporation, headquartered in Richmond, Virginia, is a marketer and manufacturer of consumer products, food and consumer packaging, and communications papers. These product lines include leading brands such as Quilted Northern(r) bathroom tissue, Brawny(r) paper towels, Dixie(r) cups and plates, Eureka!(tm) recycled copy paper, Quilt-Rap(tm) sandwich wrap, and Qwik Crisp(r) microwave packaging. For the year which ended on December 26, 1993, James River had sales of $4.6 billion. EX-99 4 JAMONT F/S Exhibit 99(b) JAMONT HOLDINGS NV ANNUAL REPORT 1993 JAMONT HOLDINGS NV ANNUAL REPORT DECEMBER 31, 1993 CONTENTS Page MANAGING DIRECTOR'S REPORT 1993 1 - 3 REPORT OF INDEPENDENT ACCOUNTANTS 4 CONSOLIDATED BALANCE SHEET 5 CONSOLIDATED PROFIT AND LOSS ACCOUNT 6 NOTES TO THE CONSOLIDATED ACCOUNTS 7 - 22 JAMONT HOLDINGS NV MANAGING DIRECTOR'S REPORT 1993 Background 1993 was a year of sharp contrasts for Jamont. Internally, the company made excellent progress on all fronts and strengthened its competitive position substantially. Externally, the business environment was very poor. The overall economy is the worst it has been since World War II and overcapacity has developed in our industry. Increasingly cost conscious consumers are trading down and retail customers are engaged in tough market battles, putting unprecedented pressures back onto manufacturers. As a result of all these forces, prices have fallen steadily since the second half of 1992, arriving by year end at a level 13% below the mid-'92 mark. Internal improvements at Jamont have come as a result of our continued aggressive implementation of the strategy we developed several years ago. At the core of this strategy is a commitment toward improving product quality, packaging, advertising, and service to strengthen all of our principal brands. Substantial progress was made in 1993 on our tissue brands such as Lotus, Colhogar, Tenderly and Embo, and also on our Vania feminine hygiene brand. Improved products, based on advanced tissue making technology and proprietary converting processes, will continue to be extended across Europe. At the end of 1993, Jamont introduced a fully integrated line of Lotus Professional brand products for away-from-home markets with product specifications and positioning designed to meet a wide range of distributor and end-user needs across Europe. Capital Expenditure The year was also marked by the completion of our US $600 million capital investment program begun in 1991. This program included a number of projects which are enhancing quality, expanding capacity, and reducing cost throughout the system. All projects were completed on schedule, on budget, and have come up their learning curves quickly. Toward the end of 1992, a new 50,000 ton per year machine and deinking plant started up at the Hondouville, Normandy mill, providing a world class site for the manufacture of away-from- home products. In the Spring of 1993, a new 40,000 ton per year tissue machine started up, replacing an older machine at the Castelnuovo mill in Italy. The improved quality and lower costs provided by this facility are enabling us to make substantial volume gains and strengthen our Tenderly brand. Despite interruption related to a warehouse fire at the Allo mill in Spain last Spring, a new 50,000 ton per year tissue machine was successfully brought on-line at that site in the Summer, with the project and ongoing operations functioning at normal levels by year end. In addition, an expansion of a converting plant at the Bridgend consumer products mill in the United Kingdom began operating in late 1993. These capital projects, along with productivity enhancement efforts, have enabled us to close converting plants in Biessard, France; Tottenham, United Kingdom; Calenzano, Italy during the year, while at the same time expanding total capacity and increasing sales volume. These closures and other measures have allowed us to reduce our workforce by approximately 5% or 450 people. These efforts will continue during 1994. During 1993, new capital appropriations were scaled back drastically to a level of approximately US $60 million. This reduction in appropriations is not only in response to the difficult business environment, but also reflects the completion of the major capital expansion program during 1993. Cost Reduction With strict attention toward reducing costs, Jamont continued an intense focus on improving manufacturing and distribution efficiency. Machine speeds and uptime, waste reduction, and efficient energy usage all improved during the year. Our total quality initiatives have been of great importance in this regard. As a result of all these efforts operating margins dropped by only 1.2% of sales since 1991, despite a decrease of over 10% in selling prices over the same period. Jamont's efforts to reduce working capital are of equal importance. Inventory levels were reduced by 19.6% during 1993, while unit sales volume increased by 4.4%. Reduced working capital, combined with the decreased levels of capital spending toward the end of the major capital expansion program, contributed to Jamont's generation of positive free cash flow of US $28 million during the second half of the year. Efforts to continue reducing working capital and increasing cash flow are a high priority for 1994. Financial Results For the full year, Jamont's financial results reflect the countervailing forces of 4.4% volume growth and substantial cost reduction more than offset by falling prices. Net sales of US $1,346 million in 1993 were 12.8% lower than those in 1992, after eliminating sales attributable to Kaysersberg Packaging, which was sold at the end of the first quarter of 1992. However, decreased net sales were partially offset by the benefits realised from cost reduction efforts. Operating profits were US $81.2 million in 1993, compared with US $127.1 million in the prior year. Net financial expenses were US $60.7 million in 1993, a decrease of US $13.8 million compared to 1992 amounts. This decrease was the result of the focused efforts at reducing outstanding debt levels, as well as the general reductions in interest rates experienced throughout Europe in 1993. Jamont net profit for 1993 was US $29.1 million, a decline of US $20.9 million compared to profits reported in 1992. During 1993, Jamont changed its accounting policy relating to goodwill. Previously, goodwill was recognised as an asset and amortised over 40 years. Under the new policy, goodwill arising on acquisition is eliminated against distributable reserves. The new policy provides for a better understanding of Jamont's operations, as well as a clearer basis for the evaluation of its performance. The current goodwill policy also conforms to that utilised by the majority of publicly traded pan-European companies, providing for better comparability of Jamont's financial performance. Outlook The outlook for 1994 is similar to 1993, as markets continue to be very competitive and downward pricing pressures persist. We believe that significant improvements in profitability depend on a general European economic recovery and improved industry conditions which are not expected to occur until 1995 and 1996. In the meantime, Jamont is continuing its initiatives on volume growth, quality and service improvements, and cost reduction in order to offset the effects of the poor business environment. We remain confident of our long-term strategy and expect to emerge from this difficult period not only as a much stronger company but as the clear leader of the consumer paper products industry in Europe. Ronald L. Singer Member of Stichting European Tissue Amstelveen, March 14, 1994 REPORT OF INDEPENDENT ACCOUNTANTS To the Supervisory Board and Management Board of Jamont Holdings N.V.: We have audited the accompanying consolidated financial statements of Jamont Holdings N.V. and Subsidiaries as of December 31, 1993 and for the year then ended, which are expressed in United States dollars. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in The Netherlands, which are substantially the same as auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Jamont Holdings N.V. and Subsidiaries as of December 31, 1993 and the consolidated results of their operations for the year then ended in conformity with accounting principles generally accepted in The Netherlands. The consolidated financial statements have been prepared in accordance with accounting principles prevailing in The Netherlands, which differ in certain respects from those generally accepted in the United States. The approximate effect of the major differences in the determination of net income and shareholders' equity is shown in Note 26 to the consolidated financial statements. COOPERS & LYBRAND Eindhoven, The Netherlands March 14, 1994 JAMONT HOLDINGS NV CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 1993 AND 1992 (Including proposed appropriation of results for the year) (Expressed in thousands of U.S. dollars) Restated Notes 1993 1992 US $000 US $000 FIXED ASSETS Intangible fixed assets 4 5,128 3,533 Tangible fixed assets 5 1,111,096 1,140,928 Financial fixed assets 6 37,564 45,317 Long-term receivables 15,007 7,806 ________ ________ Total fixed assets 1,168,795 1,197,584 ________ ________ CURRENT ASSETS Inventories 7 175,998 218,887 Trade accounts receivable 343,957 363,013 Other receivables and prepaid expenses 57,985 72,227 Cash and short-term investments 8 81,444 119,006 ________ ________ Total current assets 659,384 773,133 ________ ________ CURRENT LIABILITIES Trade accounts payable 272,358 310,875 Short-term loans 9 249,971 291,281 Accrued expenses and other payables 10 97,507 104,493 ________ ________ Total current liabilities 619,836 706,649 ________ ________ Current assets less current liabilities 39,548 66,484 ________ ________ Assets less current liabilities 1,208,343 1,264,068 ======== ======== LONG-TERM LIABILITIES Long-term loans 11 506,733 482,458 Other long-term liabilities 9,058 24,929 ________ ________ Total long-term liabilities 515,791 507,387 PROVISIONS 12 94,456 131,450 MINORITY INTERESTS 13 105,105 116,419 SHAREHOLDERS' EQUITY 14 492,991 508,812 ________ ________ Non current liabilities, minority interests and shareholders' equity 1,208,343 1,264,068 ======== ======== The accompanying notes are an integral part of these financial statements. JAMONT HOLDINGS NV CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992 (Expressed in thousands of U.S. dollars) Restated Notes 1993 1992 US $000 US $000 NET SALES 16 1,345,602 1,612,595 Cost of sales 17 (923,069) (1,076,042) _________ _________ GROSS MARGIN 422,533 536,553 Operating expenses 18 (341,358) (409,475) _________ _________ OPERATING PROFIT 81,175 127,078 Net financial expense 19 (60,668) (74,480) ________ _________ PROFIT BEFORE TAXATION 20,507 52,598 Taxation 20 5,534 1,811 Net results from participations 21 5,979 8,147 ________ _________ PROFIT AFTER TAXATION 32,020 62,556 Minority interest (2,963) (12,590) ________ _________ NET PROFIT FOR THE YEAR 29,057 49,966 ======= ======== The accompanying notes are an integral part of these financial statements. JAMONT HOLDINGS NV NOTES TO THE CONSOLIDATED ACCOUNTS AT DECEMBER 31, 1993 NOTE 1 - ACTIVITY The activities of the group relate principally to the manufacture and sale of hygienic products in the European market. These products include soft tissue, feminine hygiene, and food service products. The company prepares its accounts in accordance with accounting principles generally accepted in The Netherlands and in European Currency Units ("Ecu"), as they better reflect the European character and activity base of its operations. For purposes of these financial statements, all amounts have been translated to US dollars in accordance with accounting policies described in Note 3 below. (See Note 26 for a reconciliation to United States generally accepted accounting principles.) NOTE 2 - CHANGE IN ACCOUNTING POLICY The group has implemented a change in accounting policy in respect of goodwill which was previously recognised as an intangible asset and amortised over a life of 40 years. Under the new policy, any goodwill arising on acquisition is eliminated against distributable reserves as outlined in the Significant Accounting Policies (Note 3 below). It is the group's opinion that the new policy enables a better understanding of the group's operations and provides a clearer basis for the evaluation of its performance than was previously possible. The change has been accounted for as an adjustment to opening shareholders' equity at 1 January 1993. The net book value of goodwill of US $495 million has been eliminated against the balance of the share premium account as at that date. The 1992 financial statements have been restated to allow a true comparison with the 1993 statements prepared under the new policy. The impact of the restatement on 1992 reported net profit and on shareholders' equity at the end of that year is as follows. NET PROFIT 1992 US $000 Net profit as originally stated 37,620 Effect of change in accounting policy 12,346 ______ Net profit as restated 49,966 ====== SHAREHOLDERS' EQUITY US $000 Balance at December 31, 1992 as originally stated 936,625 Elimination of goodwill balance, net of amount attributable to Minority Interests (427,813) ________ Balance at December 31, 1992 as restated 508,812 ======= NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation The consolidated accounts include those of the company and companies in which over 50% of the voting rights are directly or indirectly owned or which are otherwise controlled by the company. Companies are excluded from consolidation when control is intended to be temporary. A list of directly held consolidated companies is presented below. Name Location Domicile Percentage owned Jamont NV Amstelveen The Netherlands 86.4% Unikay Srl (a) Genoa Italy 22.8% (a) The remaining shares of Unikay SRL are owned by Jamont NV, a controlled subsidiary of the company. A full list of all material subsidiaries and associates is included in Note 25 of this Annual Report. All material inter-company balances, inter-business transactions, internal profits, profit distributions, and mutual shareholdings of the group companies are eliminated. Goodwill A change in the accounting policy for goodwill has been implemented in the year and details relating to this change can be seen in Note 2 above. Goodwill represents the excess of cost of acquisition over fair value of the acquired net assets on the date of acquisition. Goodwill is eliminated against distributable reserves on acquisition. Foreign companies The balance sheets of foreign companies are translated at the rates of exchange ruling at the balance sheet date. The profit and loss accounts are translated using average rates of exchange for the period covered. Translation differences arising from the above are taken to reserves. For Ipek Kagit AS, Istanbul, Turkey, which operates in a hyper- inflationary economy, translation differences are included in net earnings. Investments in associated companies Investments in associated companies, which comprise companies in which at least 20% of the voting rights are owned, are included in the consolidated financial statements using the equity method of accounting. The group's share of net income is included in the consolidated profit and loss account. The group's principal associated company is Ipek Kagit AS, Istanbul, Turkey. Investments in other companies Investments in other companies are valued at their acquisition cost less any provision for permanent diminution in value. Income from these investments is recognised in the profit and loss account only upon receipt of dividends. Foreign currency translation Transactions in foreign currencies are recorded at the rates of exchange ruling at the dates of the transactions. Unsettled foreign currency transactions are valued at the rates of exchange ruling at the balance sheet date. Exchange differences are included in the profit and loss account, except in respect of gains and losses on borrowings used to finance or hedge foreign equity investments. The net exchange movements on these borrowings and investments are taken to reserves. Intangible fixed assets Intangible fixed assets are stated at cost less amortisation. Amortisation is calculated using the straight line method to write off the cost over expected useful lives which are normally : Years Concessions/Trademarks/Licences 40 Patents/Intellectual Property 20 Tangible fixed assets Tangible fixed assets are stated at cost or valuation applied under purchase method accounting. Financing costs that are attributable to a construction project and are incurred up to project completion date are capitalised. Depreciation is calculated using the straight line method to write off the cost over expected useful lives which are normally : Years Buildings 20-40 Plant and machinery 10-20 Other tangible fixed assets 3-5 Land and construction in progress are not depreciated. Inventories Inventories are stated at the lower of cost and net realisable value. The cost of goods purchased for resale includes all costs incurred in bringing the goods to their present location. The cost of manufactured goods includes raw materials, other direct production costs, and an appropriate proportion of indirect production costs. In general, cost is determined on the FIFO (first-in, first-out) basis, although, depending on the nature of the business activities, the weighted average price method may be used. When determining net realisable value, provision is made for excess, slow moving, old, or obsolete stock. Receivables Receivables are stated at net realisable value. When determining net realisable value, provision is made for doubtful debts. Other assets and liabilities Other assets and liabilities are stated at their nominal value except where indicated otherwise in the related note. Provisions Taxation The financial statements include direct taxes based on the results of the companies for the financial year calculated according to local tax rules, including any taxes that may arise upon dividends being declared. Deferred tax is provided on the liability method in respect of timing differences between accounting income and taxable income, except where the liability is not expected to crystallise in the foreseeable future. This partial application is used in certain circumstances except in respect of timing differences which arise as a result of revaluation adjustments to tangible fixed assets applied under purchase method accounting. Pension funding For funded schemes, the charge for pensions in the year is based upon the cost of providing pensions on a systematic and rational basis over the period during which the company benefits from the employees' services. Any deficits or surpluses arising on actuarial valuations requiring additional or reduced contributions are allocated over a period not exceeding the expected remaining working lives of participating employees. Other provisions All other provisions are stated at nominal value. Net turnover Net turnover represents the proceeds of goods sold and services rendered during the year, excluding sales taxes. Costs and determination of results Costs are in principle allocated to the financial year in which the relevant goods or services are supplied. Results are determined on the basis of the difference between realisable value of goods supplied, and costs and other expenses for the year. Results from transactions are accounted for in the year in which they are realised; losses are accounted for as soon as they are foreseeable. Research and development Research and development costs are expensed in the year in which they occur. NOTE 4 - INTANGIBLE FIXED ASSETS Concessions Patents trademarks intellectual licences property Total US $000 US $000 US $000 Net book value at January 1, 1993 (Restated) 3,470 63 3,533 Additions 3,079 0 3,079 Amortisation (1,129) (14) (1,143) Currency translation (332) (9) (341) _____ _____ ______ Net book value at December 31, 1993 5,088 40 5,128 ===== ===== ====== At December 31, 1993: Gross book value 8,270 90 8,360 Accumulated amortisation (3,182) (50) (3,232) _____ _____ ______ Net book value 5,088 40 5,128 ===== ===== ====== NOTE 5 - TANGIBLE FIXED ASSETS Other Con- tangible struction Land and Plant and fixed in buildings machinery assets progress Total US $000 US $000 US $000 US $000 US $000 Net book value at January 1, 1993 320,354 662,539 31,850 126,185 1,140,928 Additions/transfers 28,104 195,616 13,148 (67,655) 169,213 Disposals (1,121) (10,972) (2,463) - (14,556) Depreciation (9,881) (62,642) (8,596) - (81,119) Currency translation (26,936) (64,418) (2,519) (9,497) (103,370) ______ ______ ______ ______ _______ Net book value at December 31, 1993 310,520 720,123 31,420 49,033 1,111,096 ====== ====== ====== ====== ======= At December 31,1993: Gross book value 344,162 921,573 63,881 49,033 1,378,649 Accumulated depreciation (33,642) (201,450) (32,461) - (267,553) _______ _______ _______ _______ ________ Net book value 310,520 720,123 31,420 49,033 1,111,096 ======= ======= ======= ======= ======= Further information on tangible fixed assets is as follows: a)The book value of assets held under finance lease at December 31, 1993 is US $30.2 million (1992: US $23.9 million). b)Construction in progress includes an amount of US $5.5 million (1992: US $23.6 million) for payments in advance on capital projects. c)Interest capitalised in the year on construction in progress amounted to US $9.3 million (1992: US $12.2 million) d)The current value of tangible fixed assets does not deviate significantly from net book value. NOTE 6 - FINANCIAL FIXED ASSETS 1993 1992 US $000 US $000 Investments in associated companies 18,547 17,704 Investments in other companies 17,576 25,376 Other financial fixed assets 1,441 2,237 _______ ______ 37,564 45,317 ====== ====== The movements in financial fixed assets during the year were as follows: Investments in Investments Other associated in other financial companies companies fixed assets US $000 US $000 US $000 Balance at January 1, 1993 17,704 25,376 2,237 Additions - 227 276 Disposals and other movements, net - (4,448) (939) Net results from participations 2,294 (2,964) - Currency translation (1,451) (615) (133) ______ ______ ______ Balance at December 31, 1993 18,547 17,576 1,441 ====== ====== ====== NOTE 7 - INVENTORIES 1993 1992 US $000 US $000 Raw materials 29,064 38,673 Work in progress and semi-finished goods 34,771 43,487 Finished goods and goods for resale 77,909 103,759 Spare parts and consumables 34,254 32,968 ________ ______ 175,998 218,887 ======= ====== The market value of inventories does not differ significantly from net book value. NOTE 8 - CASH AND SHORT-TERM INVESTMENTS The balance of US $81.4 million includes short-term deposits which mature within twelve months. Of this amount, US $5.7 million has been placed in a blocked account as security for a short-term financial debt of a subsidiary. NOTE 9 - SHORT-TERM LOANS 1993 1992 US $000 US $000 Current portion of syndicated revolving credit and term loans 22,600 - Current portion of other long-term loans 24,122 152,119 Bank overdrafts and short-term loans 203,249 139,162 ________ ______ 249,971 291,281 ======= ====== Bank overdrafts and short-term loans bear interest at varying market rates. Guarantees given as security for these bank overdrafts and loans are further discussed in Note 11. NOTE 10 - ACCRUED EXPENSES AND OTHER PAYABLES 1993 1992 US $000 US $000 Taxes and social security 49,586 52,764 Other payables 38,352 25,912 Accruals and deferred income 9,569 25,817 _______ ______ 97,507 104,493 ====== ====== NOTE 11 - LONG-TERM LOANS The Jamont NV group's principal source of long-term finance is the Ecu 400 million (US $446 million using current exchange rates as of December 31, 1993) syndicated revolving credit and term loan facility entered into at the end of 1991. The facility, which is divided equally between revolving credit and long-term, is repayable by November 1997, the first repayments being due in November 1994. The loan agreement requires that the group maintain certain ratios of financial condition which at the balance sheet date have been met. As security for the loan, Jamont NV has committed to pledge 55% of its shares in its significant wholly owned subsidiaries and associates, except for its holdings in Sarrio Tisu SA, Ipek Kagit AS and Cartellas SA. Further details of the long-term loans are as follows : 1993 1992 US $000 US $000 Syndicated revolving credit and term loan 243,170 268,869 Other credit institutions 197,410 139,763 Convertible loan from S.A.C.I. SpA 16,357 17,468 (see Note 24) Subordinated loan from Sarrio SA 49,796 56,358 (see Note 24) ________ ______ 506,733 482,458 ======= ====== a)The long-term debts bear interest at varying market rates with the exception of the convertible loan from S.A.C.I. SpA where no interest cost is recorded. b)In 1989 Jamont Holdings NV ("Holdings") received an advance of ITL 20.9 million from S.A.C.I. SpA, one of the original shareholders, which at the option of Holdings can be converted into 529,610 common shares in Holdings on February 20, 1994. The advance has been recorded at Nlg 60 per share, which is equivalent to the share value at the advance date. Further details are provided in Note 24. c)The current portion of long-term debt is included with short-term loans. d)The portion of long-term debt due in more than 5 years is US $28.9 million (1992 US $57.8 million). e)In addition to the syndicated loan which is secured by share pledges, other short-term and long-term loans of US $42.3 million are secured by asset pledges and mortgages. NOTE 12 - PROVISIONS 1993 1992 US $000 US $000 Deferred tax 46,087 60,518 Pension 10,365 11,929 Other provisions 38,004 59,003 _______ ______ 94,456 131,450 ======= ====== Application of full deferred tax accounting to significant timing differences would have resulted in the provision of additional cumulative deferred taxation amounting to US $50.2 million (1992: US $36.4 million) at the balance sheet date. Of the total amount of provisions, US $67.8 million (1992: US $91.6 million) can be considered long-term at the balance sheet date. NOTE 13 - MINORITY INTERESTS The movement in minority interests during the year were as follows : US $000 Balance at January 1, 1993 (Restated) 116,419 Share of minority interests in the results of subsidiaries 2,963 Dividends paid to minority interests (3,562) Other movements, net 1,112 Currency translation (11,827) _______ Balance at December 31, 1993 105,105 ====== NOTE 14 - SHAREHOLDERS' EQUITY The company's share capital is analysed as follows: 1993 1992 1993 1992 NLG'000 NLG'000 US $000 US $000 Authorised share capital 100,000,000 shares of Nlg 10 each 1,000,000 1,000,000 Issued and fully paid 26,521,792 shares of Nlg 10 each 265,218 265,218 139,001 139,001 The movements in shareholders' equity during the year are analysed as follows : Issued and Accumulated Total fully paid Share translation Retained shareholders' capital premium reserve earnings equity US $000 US $000 US $000 US $000 US $000 Balance at January 1, 1993 (Restated) 139,001 267,245 2,373 100,193 508,812 Profit for the year 29,057 29,057 Other movements, net (1,112) (1,112) Movement in accumulated translation reserve (43,766) (43,766) __________________________________________________ Balance at December 31, 1993 139,001 266,133 (41,393) 129,250 492,991 ========= ========= ========= ========= ========= NOTE 15 - CONTINGENT LIABILITIES AND COMMITMENTS Normal commitments and contingent liabilities consisting of bank guarantees, taxes, rents, operating lease commitments, capital commitments, and other claims, are not considered to be material in relation to the company's financial position. At the balance sheet date, there existed an agreement with Sarrio SA, holder of 50% of shares in Sarrio Tisu SA ("Sarrio Tisu"), whereby Jamont NV. could acquire the remaining 50% of shares in February 1994. Further details are provided in Note 24 of this Annual Report describing Post Balance Sheet Events. The group company Jamont NV is a joint venture partner in Ipek Kagit AS, Istanbul, Turkey where it has jointly guaranteed certain debts amounting to US $2.7 million at the balance sheet date. NOTE 16 - NET SALES 1993 1992 US $000 US $000 Gross sales 1,586,878 1,853,093 Commercial rebates (101,572) (107,515) ________ _______ Net turnover 1,485,306 1,745,578 Trade promotions (139,704) (132,983) _________ ________ Net sales 1,345,602 1,612,595 ======== ======== Net turnover split by geographical area is as follows: 1993 1992 US $000 US $000 The Netherlands 51,878 59,465 Other European Union countries 1,328,935 1,553,820 Other European countries 84,212 101,505 Rest of the World 20,281 30,788 _________ ________ Net turnover 1,485,306 1,745,578 ========= ======== NOTE 17 - COST OF SALES Research and development expenditures of US $17.3 million (1992: US $20.6 million) are included in cost of sales. NOTE 18 - OPERATING EXPENSES 1993 1992 US $000 US $000 Distribution expenses 118,947 141,634 Selling and marketing expenses 149,307 180,994 Administration expenses 75,474 83,214 Other operating (income)/expenses (2,370) 3,633 ________ ______ 341,358 409,475 ======= ====== NOTE 19 - NET FINANCIAL EXPENSE 1993 1992 US $000 US $000 Interest income 13,426 13,737 Interest expense (68,417) (81,152) ________ ______ Net interest expense (54,991) (67,415) Exchange difference (1,765) (3,687) Other financial costs (3,912) (3,378) ________ _______ (60,668) (74,480) ======== ======= NOTE 20 - TAXATION 1993 1992 US $000 US $000 Statutory taxation on ordinary activities (1,728) (5,483) Deferred taxation 7,262 7,294 _______ _______ Taxation credit on ordinary activities 5,534 1,811 ======= ======= The statutory tax charge for the year is effectively reduced by the claiming of accelerated depreciation allowances. Deferred taxation has not been provided for these timing differences as they are not expected to reverse in the foreseeable future. NOTE 21 - NET RESULTS FROM PARTICIPATIONS 1993 1992 US $000 US $000 Share of income/(loss) in participations 2,294 (3,957) Net gain on disposals and adjustments relating to valuation of participations 3,685 12,104 _______ ______ 5,979 8,147 ======= ====== Included above in the amount for 1993 is a gain of US $6.7 million relating to the charges provided for upon sale of the French packaging business in 1992. The comparative 1992 results include a gain of US $16.8 million arising from the same transaction. NOTE 22 - EMPLOYEES Average number of employees was : 1993 1992 Manufacturing 5,415 6,035 Distribution 626 620 Sales and marketing 934 1,015 Administration 847 901 _____ _____ 7,822 8,571 ===== ===== Aggregate payroll costs comprise : 1993 1992 US $000 US $000 Wages and salaries 231,446 268,598 Pension costs 10,249 12,479 Social charges 61,325 77,059 _______ _______ 303,020 358,136 ====== ======= NOTE 23 - CHANGES IN GROUP STRUCTURE On March 31, 1992, the group sold its French packaging business. That business, carried on by Kaysersberg Packaging SA had third party net sales of US $70.2 million in the first quarter of 1992, and these were included in the group's comparative 1992 results. The average number of group employees in 1992, excluding those employed by Kaysersberg Packaging was 8,211. NOTE 24 - POST BALANCE SHEET EVENTS In February 1994, Jamont NV acquired the remaining 50% of Sarrio Tisu SA under an existing agreement with Sarrio SA. The consideration amounted to Pts 2.9 billion which approximates to US $21 million at the date of transaction. At the same time, the subordinated loan from Sarrio SA, explained in Note 11, was repaid using the group's existing facilities and resulted in no additional financing cost. The convertible advance from S.A.C.I. SpA to Jamont Holdings NV described in Note 11 has been converted to equity during February 1994. NOTE 25 - OTHER INFORMATION A. APPROPRIATION OF PROFIT In accordance with article 32 of the statutes, the profit for the year is at the disposition of the annual meeting of shareholders. Management recommends that the profit be added to retained reserves. B. SUBSIDIARIES, ASSOCIATES AND INVESTMENTS IN OTHER COMPANIES All significant consolidated subsidiaries and associates of the group are listed below : Name Location Domicile % owned Jamont NV Amstelveen The Netherlands 86.4% Kaysersberg SA Kaysersberg France 86.4% Celtona BV Cuijk The Netherlands 86.4% Vania Nederland BV Cuijk The Netherlands 86.4% Sarrio Tisu SA Navarra Spain 43.2% Unikay Srl Genoa Italy 89.5% Jamont Services SA Brussels Belgium 86.4% JRF Immobiliere SA Brussels Belgium 86.4% Cartellas SA Athens Greece 86.4% Ipek Kagit AS (Associate) Istanbul Turkey 43.2% Vania Expansion SNC Courbevoie France 43.2% Laboratoires Polive SNC Courbevoie France 43.2% Eutima SA Eeklo Belgium 86.4% Jamont UK Ltd London United Kingdom 86.4% Jamont Ireland Ltd Dublin Ireland 86.4% Jamont GmbH Moers Germany 86.4% Sodipan SA Rouen France 86.4% Nokian Paperi Oy Nokia Finland 86.4% Nokian Paperi A/S Billingstad Norway 86.4% Dancrepe A/S Copenhagen Denmark 86.4% The significant companies which the group accounts for as investments are detailed below : Wuhrlin-Soplamed SA Courbevoie France 100.0% Gloystarne & Co Ltd Rotherham United Kingdom 86.4% Morgan-Varylease Ltd Birmingham United Kingdom 86.4% Cellox Paper Co. Ltd Bangkok Thailand 21.8% The company has chosen under Article 379 (2c) of the Dutch civil code to omit the names of companies in which the investment is considered to be insignificant. C. EXCHANGE RATES The principal exchange rates which are of relevance to the group are presented below : As at As at December 31 December 31 Average 1 ECU = 1993 1992 1993 Dutch Guilder 2.166 2.192 2.173 French Franc 6.584 6.657 6.626 Spanish Peseta 159.3 138.4 148.9 Italian Lira (000) 1.909 1.781 1.839 Belgian Franc 40.31 40.05 40.43 Greek Drachma 278.1 259.4 268.2 Turkish Lira (000) 16.17 10.35 12.807 British Pound 0.754 0.796 0.779 Irish Punt 0.791 0.742 0.799 Finnish Markka 6.457 6.307 6.691 Norwegian Krone 8.386 8.357 8.304 Danish Krone 7.576 7.579 7.583 U.S. Dollar 1.115 1.205 1.171 NOTE 26 - RECONCILIATION OF FINANCIAL INFORMATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The consolidated financial statements of Jamont Holdings have been prepared in accordance with generally accepted accounting principles in The Netherlands ("Netherlands GAAP"), which differ in certain respects from generally accepted accounting principles in the United States ("U.S. GAAP"). The principle differences are described as follows: (a) Goodwill Under Netherlands GAAP, goodwill may be either capitalised or written off directly to distributable reserves. Under U.S. GAAP, goodwill (representing the excess of the cost over the fair value of acquired net assets on the date of acquisition) must be capitalised and amortised over the period which it is estimated to benefit. Jamont Holdings' policy is to eliminate goodwill against distributable reserves upon acquisition. For U.S. GAAP purposes, such amounts of goodwill have been restored, and amortisation related thereto has been recognised. (b) Deferred income taxes Under Netherlands GAAP, provision is made for deferred income taxes under the partial liability method. Under this method, the tax consequences of timing differences between accounting and taxable income are recorded as deferred taxes, except where the related asset or liability is not expected to be realised in the foreseeable future. Under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," deferred income tax liabilities and assets are fully recognised for the expected future tax consequences of all temporary differences and income tax credits, except where it is more likely than not that some or all of the tax benefits of future deductions will not be realised. In these instances, a valuation allowance is recorded to reduce the amount of the deferred tax asset. The application of U.S. GAAP would have had the following approximate effect on the net income and shareholders' equity of Jamont Holdings as of December 31, 1993 and for the year then ended: US $000 Net profit reported pursuant to Netherlands GAAP 29,057 Goodwill amortisation (13,098) Deferred income tax provision (21,197) Minority interests in goodwill amortisation and deferred taxation 4,984 ______ Approximate net loss under U.S. GAAP (254) ====== US $000 Shareholders' equity as of December 31, 1993 reported pursuant to Netherlands GAAP 492,991 Goodwill 451,273 Deferred income tax liability, net of valuation allowance (47,586) Minority interest in goodwill and deferred income tax liability (53,727) ______ Approximate shareholders' equity under U.S. GAAP 842,951 ====== -----END PRIVACY-ENHANCED MESSAGE-----