SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A AMENDMENT NO. 2
TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 22, 1996
Crown Cork & Seal Company, Inc.
(Exact name of Registrant as specified in its charter)
Pennsylvania 1-2227 23-1526444
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
9300 Ashton Road, Philadelphia, PA 19136
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 698-5100
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of CarnaudMetalbox.
The Registrant hereby files, and incorporates herein by reference from
Exhibit 99.1 of this Form 8-K/A, the audited consolidated financial statements
of CarnaudMetalbox for the years ended December 31, 1995, 1994 and 1993 and the
independent auditors' report thereon, which were not available when the Form
8-K, to which this Amendment No. 2 relates, was filed on March 1, 1996.
(b) Pro Forma Financial Information.
The Registrant hereby files, and incorporates herein by reference from
Exhibit 99.2 of this Form 8-K/A, the unaudited pro forma consolidated condensed
financial statements of CarnaudMetalbox and the Registrant for the year ended
December 31, 1995, which were not available when the Form 8-K, to which this
Amendment No. 2 relates, was filed on March 1, 1996.
(c) The following exhibits are filed as part of this report on Form 8-K:
23.1 Consent of Arthur Andersen LLP, Befec-Price Waterhouse, Salustro
Reydel and Claude Chevalier.
99.1 The audited consolidated financial statements of CarnaudMetalbox
for the years ended December 31, 1995, 1994 and 1993 and the independent
auditors' report thereon.
99.2 The unaudited pro forma consolidated condensed financial
statements of CarnaudMetalbox and the Registrant for the year ended December 31,
1995.
- 2 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CROWN CORK & SEAL COMPANY, INC.
By /s/ Alan W. Rutherford
-----------------------------
Executive Vice President
Chief Financial Officer
Date: May 3, 1996
- 3 -
<PAGE>
EXHIBIT INDEX
Exhibit No.,
As provided Page in
in Item 601 Sequentially
Exhibit Number Description Numbered Copy
23.1 Consent of Arthur Andersen LLP,
Befec-Price Waterhouse, Salustro
Reydel and Claude Chevalier.
99.1 The audited consolidated financial
statements of CarnaudMetalbox for
the years ended December 31, 1995,
1994 and 1993 and the independent
auditors' report thereon.
99.2 The unaudited pro forma
consolidated condensed financial
statements of CarnaudMetalbox and
the Registrant for the year ended
December 31, 1995.
- 4 -
Form of Accountants Consent
We hereby consent to the incorporation by reference in this Form 8-K/A and in
the Registration Statements on Form S-3 (No. 33- 56965) and Form S-8 (Nos.
33-01893, 33-45900, 33-39529, 33-63732, 33-61240, 33-61238, 33-50369 and
33-52699) of Crown Cork & Seal Company, Inc. of our report dated February 21,
1996 relating to the consolidated financial statements of CarnaudMetalbox, which
report is incorprated by reference into Item 7(a) and appears in Exhibit 99.1 of
this Form 8-K/A.
Paris, 3rd May 1996
/s/ Arthur Andersen LLP /s/ M.S. Moralee
Arthur Andersen LLP(1) Befec-Price Waterhouse(1)
M.S. Moralee
/s/ J.P. Crouzet /s/ C. Chevalier
Salustro Reydel(2) C. Chevalier(3)
J.P. Crouzet
(1) For the years ended December 31, 1995, 1994 and 1993.
(2) For the year ended December 31, 1995.
(3) For the years ended December 31, 1994 and 1993.
EXHIBIT 99.1
[GRAPHIC OMITTED - LOGO]
CARNAUD METALBOX
1995
Group Consolidated Financial Statements
(US format & IAS principles)
<PAGE>
Auditors' report
To the Shareholders of CarnaudMetalbox,
We have audited the accompanying consolidated balance sheets of CarnaudMetalbox
and its subsidiaries (the "Company") as of December 31, 1995, 1994 and 1993 and
the related consolidated statements of income, cash flows and changes in
shareholders' equity for each of the three years in the period ended December
31, 1995. 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 audits.
We conducted our audits in accordance with generally accepted auditing standards
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 audits provide a reasonable basis for our
opinion.
As discussed in the Note on Accounting Principles and Policies, the Company has
deferred the application of the IAS rules revised in November 1993 (the "New
Rules") normally effective January 1, 1995. The main difference between the
accounting principles currently used by the Company in the preparation of the
accompanying consolidated financial statements and the New Rules concerns the
period of amortization of goodwill. Had the change been applied as of January 1,
1995, according to the prospective method, on the basis of a maximum twenty-year
amortization period, there would have been no impact on opening shareholders'
equity and net income for the year-ended December 31, 1995 would have been
reduced by FF 87 million.
In our opinion, except for the effect on the December 31, 1995 financial
statements of the matter described in the preceding paragraph, the consolidated
financial statements present fairly, in all material respects, the financial
position of CarnaudMetalbox and its subsidiaries as of December 31, 1995, 1994
and 1993 and the results of their operations, their cash flows and changes in
shareholders' equity for each of the three years in the period ended December
31, 1995 in conformity with International Accounting Standards issued by the
IASC. With respect to Salustro Reydel, the opinion applies only to the
consolidated financial statements for the year ended December 31, 1995. With
respect to C. Chevalier, the opinion only applies to the consolidated financial
statements for the years ended December 31, 1994 and 1993.
Certain accounting practices of the Company used in preparing the accompanying
consolidated financial statements conform with International Accounting
Standards, but do not conform with accounting principles generally accepted in
the United States. A description of these differences and the adjustments
required to conform net income and shareholders' equity with accounting
principles generally accepted in the United States are set forth in Note 1-B.
Chicago and Paris,
February 21, 1996
Arthur Andersen LLP (1)
The Statutory Auditors
Members of the Compagnie Regionale de Paris
Befec-Price Waterhouse (1) Salustro Reydel (2) C. Chevalier (3)
M.S. Moralee J.P. Crouzet
(1) For the years ended December 31, 1995, 1994 and 1993.
(2) For the year ended December 31, 1995.
(3) For the years ended December 31, 1994 and 1993.
1
<PAGE>
Consolidated statements of income
for the years ended December 31,
<TABLE>
<CAPTION>
(In millions of FF) Notes 1995 1994 1993
<S> <C> <C> <C> <C>
Net sales 24 24,610 24,890 24,340
Cost of sales (excluding depreciation and amortization) (19,569) (19,315) (19,035)
Selling and administrative expense (1,719) (1,883) (1,831)
Research and development expense (350) (340) (291)
Depreciation and amortization (1,373) (1,355) (1,294)
Provision for restructuring (250) (288) (306)
------ ------ ------
Operating income 24 1,349 1,709 1,583
Gain on disposals (net) 17 98 242 193
Financial expense (net) 15 (567) (530) (575)
------ ------ ------
Income before income tax 880 1,421 1,201
Provision for income tax 18 (94) (245) (283)
------ ------ ------
Income from operations 786 1,176 918
Share in income of associated companies 4 -- 14
Minority interests in consolidated subsidiaries 15 (226) (97)
------ ------ ------
Net income 805 950 835
=== === ===
Earnings per share (in French Francs) 19 9.40 11.6 10.3
==== ==== ====
</TABLE>
The Notes on pages 6 to 43 are an integral part of the consolidated financial
statements.
2
<PAGE>
Consolidated balance sheets
as of December 31,
<TABLE>
<CAPTION>
(In millions of FF)
ASSETS Notes 1995 1994 1993
<S> <C> <C> <C> <C>
Intangible assets 3 4,916 4,792 4,803
Goodwill 4 4,061 4,073 4,002
Property, plant and equipment 5 8,713 8,633 8,512
Investments 6 273 266 367
------ ------ ------
Total non-current assets 17,963 17,764 17,684
------ ------ ------
Inventories 7 3,677 3,948 3,699
Trade and other receivables 8 4,475 4,467 4,302
Cash and cash equivalents 2,645 2,293 1,764
------ ------ ------
Total current assets 10,797 10,708 9,765
------ ------ ------
Total assets 28,760 28,472 27,449
====== ====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Common stock 9 862 823 813
Paid-in capital 7,212 6,570 6,396
Retained earnings 5,746 5,443 4,863
Cumulative translation adjustment (1,520) (1,157) (954)
------ ------ ------
Shareholders' equity 12,300 11,679 11,118
------ ------ ------
Minority interests 10 1,355 1,829 1,720
------ ------ ------
Perpetual notes (TSDI) 11-1 1,087 1,146 1,199
------ ------ ------
Preference shares 11-2 and 13 2,100 627 1,307
------ ------ ------
Provisions for liabilities and accruals 12 1,469 1,645 1,631
Long-term debt 13 2,577 2,723 2,118
------ ------ ------
Provisions and long-term liabilities 4,046 4,368 3,749
------ ------ ------
Short-term debt 13 1,584 1,388 1,473
Accounts payable and other current liabilities 14 6,288 7,435 6,883
------ ------ ------
Current liabilities 7,872 8,823 8,356
------ ------ ------
Total liabilities and shareholders' equity 28,760 28,472 27,449
====== ====== ======
Net balance sheet debt
(including TSDI and Preference shares) 13 4,703 3,591 4,333
===== ===== =====
</TABLE>
The Notes on pages 6 to 43 are an integral part of the consolidated financial
statements.
3
<PAGE>
Consolidated statements of cash flows
for the years ended December 31,
<TABLE>
<CAPTION>
(In millions of FF) Notes 1995 1994 1993
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income 805 950 835
Adjustments to reconcile income from operations to
operating cash flows:
Minority interests and share in income of
associated companies (15) 226 83
Depreciation of property, plant and equipment 5 1,256 1,240 1,190
Amortization of goodwill 4 117 115 104
Gain on sale of businesses 17 (76) (23) (178)
Gain on sale of property, plant and equipment 17 (22) (219) (15)
Change in operating assets and liabilities 20 (709) 68 126
Restructuring and other provisions (111) 56 29
Other changes, net (158) 34 (5)
------ ------ ------
Cash flows from operating activities 1,087 2,447 2,169
------ ------ ------
Cash flows from investing activities
Purchase of intangible assets (122) (16) (13)
Purchase of property, plant and equipment (1,977) (1,896) (1,643)
Acquisition of businesses, net of cash acquired (284) (394) (2,478)
Proceeds from sale of businesses 335 83 881
Proceeds from sale of property, plant and equipment 150 546 103
------ ------ ------
Cash flows from investing activities (1,898) (1,677) (3,150)
------ ------ ------
Cash flows from financing activities
Proceeds from issuance of shares:
- - Total shares issued 681 184 54
- - Shares issued in exchange of FA.BA Spa shares (615) -- --
Proceeds from CarnaudMetalbox Asia Ltd. (Singapore)
issuance of shares
-- -- 444
Issuance of Preference shares 11-2 1,530 -- --
Redemption of Preference shares 11-2 -- (627) --
Dividends paid and withholding tax ("precompte") (502) (370) (340)
Increase in long term debt 1,710 1,696 1,834
Decrease in long term debt (1,343) (1,054) (1,369)
Net variation in short term debt (157) (45) 26
------ ------ ------
Cash flows from financing activities 1,304 (216) 649
===== ==== ===
Effect of changes in exchange rates on cash and
cash equivalents (141) (25) 2
Increase / (decrease) in cash and cash equivalents 493 554 (332)
Cash and cash equivalents at beginning of year 2,293 1,764 2,094
------ ------ ------
Cash and cash equivalents at end of year 2,645 2,293 1,764
===== ===== =====
</TABLE>
The Notes on pages 6 to 43 are an integral part of the consolidated financial
statements.
4
<PAGE>
Consolidated statements of changes
in shareholders' equity
<TABLE>
<CAPTION>
Cumulative
(In millions of FF) Common Paid-in Retained translation Total
Stock Capital Earnings adjustment
<S> <C> <C> <C> <C> <C>
At January 1, 1993 809 6,346 4,490 (788) 10,857
Translation adjustment (166) (166)
Postretirement benefit obligation Note 12-1 (122) (122)
Stock issued 4 50 54
Dividends paid (FF4.00 per share) (1) (340) (340)
Net income for the year 835 835
--- ----- ----- ------ ------
At December 31, 1993 813 6,396 4,863 (954) 11,118
--- ----- ----- ------ ------
Translation adjustment (203) (203)
Stock issued 10 174 184
Dividends paid (FF4.00 per share) (1) (370) (370)
Net income for the year 950 950
--- ----- ----- ------ ------
At December 31, 1994 823 6,570 5,443 (1,157) 11,679
--- ----- ----- ------ ------
Translation adjustment (363) (363)
Stock issued 39 642 681
Dividends paid (FF4.40 per share) (1) (502) (502)
Net income for the year 805 805
--- ----- ----- ------ ------
862 7,212 5,746 (1,520) 12,300
=== ===== ===== ====== ======
<FN>
(*) Shareholders' equity as of December 31, 1995 does not include a deduction
for dividends, if any, which may be distributed in 1996 out of 1995 income.
(1) The tax credit ("avoir fiscal") attached to dividends paid in 1993, 1994
and 1995 relating to 1992, 1993 and 1994 income respectively, amounted to
the respective sums of FF 2.00, FF 2.00 and FF 2.20.
</FN>
</TABLE>
The Notes on pages 6 to 43 are an integral part of the consolidated financial
statements.
5
<PAGE>
Notes to the consolidated financial statements
(millions of French Francs unless otherwise indicated)
Accounting principles and policies
The consolidated financial statements of CarnaudMetalbox (the "Group" or the
"Company") have been prepared in accordance with the French law of January 3,
1985 and its Application Decree of February 17, 1986. These principles are also
in accordance with international accounting principles formulated by the
International Accounting Standards Committee with the exception of the IAS rules
revised in November 1993 effective January 1, 1995, the application of which has
been deferred as permitted by the Commission des Operations de Bourse. The only
significant impact of the application of the revised IAS rules on the
consolidated accounts of the Group relates to IAS No.22 "Business Combinations"
which requires that the amortization period of goodwill should not exceed five
years unless a longer period, not exceeding twenty years from the date of
acquisition, can be justified. Had the change been applied as of January 1,
1995, according to the prospective method, on the basis of a maximum twenty year
amortization period, there would have been no impact on opening shareholders'
equity and net income for the year ended December 31, 1995 would have been
reduced by FF 87 millions.
Certain reclassifications of items from the previously published financial
statements have been made in these consolidated financial statements in order to
conform to a presentation format which is more understandable to a United States
reader.
Basis of consolidation
The Group financial statements include the accounts of all significant
subsidiaries in which CarnaudMetalbox holds, directly or indirectly, a
controlling interest.
The result from operations of significant subsidiaries acquired or sold during
the year are consolidated as from or up to their respective dates of acquisition
or disposal.
Companies in which the Group exercises a significant influence in financial and
operating policy decisions without having a majority control are accounted for
under the equity method of accounting.
Significant subsidiaries consolidated in 1995 are listed in Note 27.
INTANGIBLE ASSETS
The difference arising between the cost of shares and the net assets acquired
following the merger in 1989 between Carnaud and MB Packaging has been allocated
to the value of the Eurosteel Segment due to the significant European market
position thus acquired in Food Cans, Speciality Packaging, Food Closures and
Aerosols.
This intangible asset is not amortized; its value is reviewed each year on the
basis of the evolution of indices of volume of activity and the productivity of
personnel, any deterioration of which over a cumulated period of three years
would give rise to the creation of a valuation allowance.
Other "intangible assets" are comprised of start-up costs, land user rights,
goodwill, patents, licenses and trademarks which are amortized over their useful
life.
GOODWILL
On the acquisition of a subsidiary, goodwill representing the difference between
the purchase price and the fair value of the identifiable underlying net assets
acquired is carried as an asset in the balance sheet and amortized on a straight
line basis against income over a period not exceeding 40 years.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are shown at historical cost. Depreciation is
provided, except on freehold land, on a straight-line basis over the estimated
useful lives of the assets, as follows :
Buildings 10 to 50 years
Industrial plant and machinery 3 to 10 years
Other tangible assets 3 to 15 years
Capital grants received are classified in Provisions for Liabilities and
Accruals and credited to income over the estimated useful life of the related
asset.
6
<PAGE>
CAPITALIZATION OF INTEREST COSTS
The interest cost incurred during the period of time required to bring an asset
to the condition and location necessary for its intended use is capitalized as
part of the historical cost of acquiring the asset and depreciated over the
estimated life of the related asset.
CAPITAL LEASES
Assets held under capital leases are included within Property, Plant & Equipment
and depreciated over the expected useful life of the asset. The corresponding
liability is recorded under financial debt, and the interest element of the
lease rental is charged to income over the period of the lease.
INVESTMENTS IN UNCONSOLIDATED COMPANIES
Investments are carried at cost after deducting appropriate allowances for
permanent impairment in value.
INVENTORIES
Inventories, including work in progress, are valued at the lower of cost and
estimated net realizable value. Cost is determined on a first in, first out
basis. The cost of work in progress and finished goods comprises materials,
labor and attributable manufacturing overheads.
START-UP COSTS
Qualifying start-up costs include : (i) costs incurred during the start-up
period which are of a non-recurring nature and (ii) costs which will continue
after the end of the start-up period but are expected to decrease significantly.
These costs are amortized over 3 years from the end of the start-up period.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are made up of cash held in banks and in hand and
short-term investments generally having a maturity of three months or less
(mainly debt securities, short-term loans and accrued interest).
PENSIONS AND RETIREMENT BENEFITS
Retirement benefit obligations are valued using the projected benefit valuation
method.
In France, the Group has accorded to certain of its employees pension benefits
complementary to the state pension scheme. Furthermore, French legislation also
requires the Group to provide for employees' lump sum termination benefits
depending upon the length of employee service.
The employer is required to meet the full cost of both forms of retirement
benefits, and provision is made in the Group balance sheet under Provisions for
Liabilities and Accruals in respect of those liabilities. Regular actuarial
valuations are carried out in order to determine the Group's obligation in
respect of those retirement benefits.
In the United Kingdom, retirement benefit obligations are financed by
contributions to a separate independently administered fund which is subject to
regular actuarial valuation. Contributions to the fund are charged to the
statements of income so as to spread the cost of pensions over the expected
service lives of employees.
In other countries amounts are set aside in accordance with local legislation to
provide fully for termination and retirement benefit obligations relating to
employees.
Differences arising from changes in actuarial assumptions are spread over the
average remaining service lives of the employees.
Post-retirement benefits other than pensions mainly relating to United States
and United Kingdom subsidiaries have been reflected in the Group balance sheet,
as of January 1, 1993. The accumulated net post-retirement benefit obligations
as of that date (FF 122 million) have been deducted from retained earnings.
7
<PAGE>
DEFERRED TAX
Deferred tax is provided using the liability method on all timing differences
for items of income and expense which are recognized for accounting purposes in
different periods than those used for the determination of corporation tax
currently payable. Deferred tax assets are normally not recognized in respect of
tax losses.
RESEARCH AND DEVELOPMENT EXPENSE
Such expenditure is charged to the statements of income in the year in which it
is incurred. Fixed assets related to research and development are depreciated
over the expected useful life of the asset.
FOREIGN CURRENCY TRANSLATION
Balance sheet items denominated in foreign currencies are translated into French
Francs at the year-end exchange rate. Statement of income items denominated in
foreign currencies are translated into French Francs at the average rate for the
relevant accounting period. Translation differences arising from the application
of those rates are treated as movements in shareholders' equity.
The financial statements of subsidiaries operating in a hyperinflation
environment are translated using the US dollar as the functional currency. Under
this method, non-monetary assets and liabilities and income statement items are
translated at the historical exchange rate, while monetary items are translated
at year end exchange rate. Translation differences are recorded in the income
statement.
FINANCIAL INSTRUMENTS
The Group is exposed to exchange rate and interest rate fluctuations as a result
of both international trade and the use of diversified financing.
The Group's policy is to concentrate these exposures on the main holding
companies and to manage them at Group level. Both foreign exchange and interest
rates risks are covered using forward transactions and options entered into with
the Group's primary relationship banks.
a- Foreign currency transactions
Foreign exchange assets, liabilities and forward contracts including
currency swaps outstanding at the balance sheet date are converted at spot
rate at closing date.
Gains and losses on foreign exchange forward contracts covering sales or
purchase commitments are deferred and accounted for when the related hedged
transactions are realized.
Exchange differences arising on foreign currency borrowings (including
contracts) used to finance foreign investments, are taken to shareholders'
equity.
All other exchange differences arising from foreign currency transactions
are included in the consolidated statements of income.
b- Interest rate swaps
Interest rate swaps are accounted for under the accrual method.
EARNINGS PER SHARE
Primary earnings per share are calculated by dividing net income by the average
number of shares outstanding during the year.
Diluted earnings per share are calculated by dividing net income restated for
the interest income that would be derived from the cash proceeds on the exercise
of stock options and conversion of bonds, net of tax, by the average number of
shares after full dilution.
REVENUE RECOGNITION
Sales are primarily recorded as products are shipped and services rendered.
8
<PAGE>
Note 1-A - ACQUISITIONS, DIVESTITURES AND SIGNIFICANT EVENTS
(i) - Acquisitions and divestitures
1993
Acquisitions
In January 1993, the Group acquired Anchor Hocking Packaging Co., a leading
North American closures business with 1993 net sales of FF 935 million.
In March, the Group also acquired the packaging activities of Fima Metal
Box Bhd, a company listed on the Malaysian stock exchange. CarnaudMetalbox
had been a minority shareholder for many years in this company which was
treated as an associated company up to December 31, 1992. Net sales made
during 1993 since the acquisition date were FF 370 million.
In September 1993, the Group announced the acquisition of the German Zeller
Plastik group, a worldwide manufacturer of speciality closures and
dispensing systems for the health and beauty and household products
industry, with 1993 net sales of about FF 650 million.
At the end of the year, the Group took a majority stake in the Finnish
metal packaging business of G.W. Sohlberg through a newly formed company,
GWS Metallipakkaus OY. The company, with annual net sales of FF 150
million, is the leading Finnish supplier of metal cans for food, paint and
industrial products.
These transactions gave rise to goodwill of FF 1,575 million as at December
31, 1993, based on the initial valuation of the net assets acquired as of
that date. The effect on goodwill of the completion in 1994 of the full
valuation exercise carried out on the net assets acquired was an increase
of FF 188 million.
During the year, the Group also invested in and signed joint venture
agreements in Egypt, Vietnam and China.
Disposals
At the end of the half year, the Group disposed of Impetus Packaging,
specializing in PET (Polyethylene terephtalate) bottles and preforms for
the beverage industry, and its Spanish subsidiary Bioplast, with net sales
of FF 780 million. Impetus became a wholly owned subsidiary of the Group in
February 1993 following the acquisition of 50% of the shares held by Lawson
Mardon group. The sale had no impact on the net sales of the Group since
Impetus has always been consolidated by the equity method.
At the end of June 1993, Pharmaflex Ltd., a UK pharmaceutical packaging
foils printer, was sold.
At the end of November 1993, the Group sold its High Performance Plastics
division, which manufactured multilayer thermoform plastics packaging for
the food industry with net sales of about FF 600 million.
These transactions generated an income before tax of FF 178 million which
was included in gain on disposals (net). The Group results for the year
include net sales of FF 645 million and operating income of FF 40 million
relating to these businesses up to the date of disposal.
The interests of the Group in the Tunisian market through its subsidiaries
Stumetal and EMS were deconsolidated as of July 1, 1993. Net sales and
operating income for the first half year amounted respectively to FF 103
million and FF 8 million.
1994
Acquisitions
During the first quarter of 1994, the Group's stake in AMS Packaging
increased from 79.6% to 94.99%. Given the lack of liquidity in the shares
and the unlikelihood of any improvement in the future, the decision was
made to delist AMS Packaging. With the agreement of the other major
shareholders, Clinvest and the Banque Arjil, who together controlled 14.69%
of the shares, a Public Exchange Offer was launched on December 27, 1993,
on the basis of 2 CarnaudMetalbox shares for 9 AMS Packaging shares. A FF
42 per share cash offer was made for holders of less than 9 shares.
Following the Public Exchange Offer, the Group and the Banque Demachy
together controlled 99.70% of the shares.
On March 1994 AMS Packaging was transferred onto the over-the-counter
market. Given the lack of liquidity of the remaining shares, a
"Squeeze-out" procedure was launched on October 4, 1994 and AMS Packaging
was delisted from the over-the-counter market on October 18, 1994.
Following these offers, the Group and the Banque Demachy together control
100% of the shares.
Early in 1994 the Group also acquired the remaining 20% minority interest
in the Zuchner group.
These transactions gave rise to goodwill of FF 78 million as at December
31, 1994.
9
<PAGE>
Disposals
At the end of June 1994, the Group disposed of its interest in Secura
Singapore Private Ltd. The principal activity of Secura is security
printing. At the end of December, Plasticon (Malaysia) Sdn Bhd, which was
engaged in the plastics business, was sold. These disposals are in line
with the Group's strategy to focus on its core businesses in the Asia
Pacific region. In December 1994, the Group sold Speedprint, a company
engaged in the flexible business. These transactions generated an income
before tax of FF 23 million included in gain on disposals (net) with a
positive net impact on net income of FF 7 million. The Group results for
the year include net sales of FF 113 million and net operating loss of FF
11 million relating to these businesses up to the date of disposal.
On June 24, 1994 CarnaudMetalbox Asia Ltd., which is listed on the stock
exchange of Singapore, signed a sale and purchase contract with Centrepoint
Properties Ltd. for the freehold on its factory site at Woodlands in
Singapore. Centrepoint Properties Ltd. is the listed property development
arm of Fraser and Neave which has a 49% interest in CarnaudMetalbox (Asia
Pacific) Holding Pte Ltd., which in turn owns 70% of CarnaudMetalbox Asia
Ltd. The Woodlands factory is to be replaced by a state-of-the-art plant in
Tuas, Singapore, where the Group will move its manufacturing operations in
stages. Thus, simultaneous with the completion of the sale, the Woodlands
property was leased to CarnaudMetalbox Asia Ltd. for a period of up to five
years by Centrepoint Properties Ltd. This sale generated an income before
tax of FF 196 million included in gain on disposals (net) with a positive
net impact on net income of FF 80 million.
1995
Acquisitions
In February 1995, the Group acquired the Swiss company, BMW Vogel AG, a
leading supplier of speciality metal and plastic pails and drums to many of
the blue-chip companies in the chemical, paints and food sectors, with net
sales of FF 85 million in 1994.
In March 1995, the Group entered into an agreement to acquire the remaining
50% stake in the FA.BA group in exchange for CarnaudMetalbox shares for FF
615 million and cash consideration of FF 62 million. This transaction was
approved by the Extraordinary General Meeting held on June 2, 1995 and
generated goodwill of FF 423 million.
Disposals
Early in January 1995, the Group's 50% stake in CMB Sonoco (net sales of FF
152 million in 1994) was sold as part of the ongoing process of focusing on
the Group's core metal and packaging businesses. This transaction gave rise
to a net gain in the Group's net income of FF 59 million.
On November 24, 1995 CarnaudMetalbox sold its flexible packaging business
in France, Spain and Portugal to Danisco, a Danish packaging company. The
business sold had revenues of FF 617 million in 1994. This transaction did
not have a significant impact on the Group's results in 1995.
The following represents the non-cash impact of the acquisitions noted
above:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Fair value of assets acquired 955 567 2,988
Liabilities assumed (56) (173) (510)
CarnaudMetalbox shares issued in exchange of FA.BA
Spa shares (615) - -
--- --- -----
Cash paid 284 394 2,478
=== === =====
</TABLE>
10
<PAGE>
(ii) - Significant events
Combination of CarnaudMetalbox and Crown Cork & Seal Company, Inc.
On May 22, 1995, Crown Cork & Seal Company, Inc. (CCS) and the Compagnie
Generale d'Industrie et de Participations (CGIP), principal shareholder of
CarnaudMetalbox with 46% of voting rights, announced the signing of a
definitive agreement calling for the combination of CCS and
CarnaudMetalbox, to create the world's largest packaging company.
The transaction was approved by the European Commission on November 15,
1995. This approval is conditional on the new company resulting from the
merger divesting five businesses within the Aerosols operation. Three of
these are in the CarnaudMetalbox Group as follows: Laon in France, Reus in
Spain and Schwedt in Germany. The transaction was approved by the
shareholders of CCS at a Special Meeting held on December 19, 1995.
The Offer which was conducted as an Offre Publique d'Echange a titre
principal et d'achat a titre subsidiaire (public exchange offer with a
secondary cash offer for outstanding CarnaudMetalbox shares) commenced on
January 3, 1996 and was closed on February 1, 1996. The results of the
offer were published by the Societe des Bourses Francaises on February 15,
1996 CCS having over 98% of CarnaudMetalbox shares as of that date. Cash
and equity settlement for CarnaudMetalbox shares should occur on February
26, 1996 and CCS shares should be listed on the Paris Stock Exchange on
February 28, 1996.
As this combination constitutes an event subsequent to the December 31,
1995 balance sheet, the consolidated financial statements of the
CarnaudMetalbox Group for the year ended December 31, 1995 do not give
effect to any adjustments which may arise from this transaction.
11
<PAGE>
Note 1-B - SUMMARY OF DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE
COMPANY AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The accompanying consolidated financial statements have been prepared in
accordance with the accounting policies described in Accounting Principles
and Policies above ("IAS") which differ in certain significant respects
from those applicable in the United States ("US GAAP").
These differences have been reflected in the financial information given in
paragraph (j) below and mainly relate to the following items.
(a) Income taxes
For US GAAP purposes, SFAS No. 109 ("Accounting for Income Taxes") has
been applied effective January 1, 1993. Accordingly, the cumulative
effect of the change would have been reported in the 1993 consolidated
statement of income prepared on a US GAAP basis.
Provision for income tax on a US GAAP basis is as follows:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Current
Domestic (3) 97 27
US (5) (4) (4)
Foreign (121) (346) (204)
Deferred
Domestic (21) (13) (31)
US 30 21 (5)
Foreign 64 121 (73)
--- ---- ----
(56) (124) (290)
=== ==== ====
</TABLE>
The provision for income tax differs from the amount computed by
applying the French statutory income tax rate of 36 2/3 in 1995 and 33
1/3 % in 1994 and 1993 because of the effect of the following items :
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Net income per US GAAP 745 1,001 714
Provision for income tax 56 124 290
Minority interests (15) 226 97
Cumulative effect of initially applying SFAS No. 109 - - (137)
Share in income of associated companies (4) - (14)
------ ------ ------
Pretax income before cumulative effect of SFAS No. 109 782 1,351 950
French statutory tax rate 36 2/3% 33 1/3% 33 1/3%
------ ------ ------
Computed income tax at French statutory tax rate (287) (450) (317)
Foreign subsidiaries at different tax rates (6) 37 28
Capital gains and dividends taxed at lower rates 40 76 20
Reversal of tax provisions 42 112 152
Permanent differences (64) (70) (53)
Change in valuation allowance 134 162 (106)
Other, net 85 9 (14)
------ ------ ------
Provision for income tax (56) (124) (290)
=== ==== ====
</TABLE>
12
<PAGE>
Deferred tax assets/(liabilities) consist of the following:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Gross Deferred tax assets
Net operating losses (NOLs) and tax credit carryforwards 970 926 1,105
Valuation allowances and accruals not currently
deductible for tax purposes 59 158 170
Retirement benefit plans 234 229 187
Other 502 426 288
------ ------ ------
1,765 1,739 1,750
Valuation allowance (486) (531) (705)
------ ------ ------
Deferred tax assets 1,279 1,208 1,045
------ ------ ------
Gross deferred tax liabilities
Excess tax over book depreciation (649) (550) (712)
Undistributed earnings of equity investees (18) (18) (18)
Other (445) (499) (293)
------ ------ ------
Deferred tax liabilities (1,112) (1,067) (1,023)
------ ------ ------
Net deferred tax asset 167 141 22
=== === ==
</TABLE>
As of December 31, 1995, the Company has net operating losses (NOLs)
and tax credit carryforwards expiring in the following years:
<TABLE>
<CAPTION>
(In millions of FF) NOLs Tax Credits
(tax effect) (tax effect)
<S> <C> <C>
1996 45 3
1997 38 2
1998 34 1
1999 37 2
2000 47 9
2001 and after 209 3
Unlimited 434 106
--- ---
844 126
=== ===
</TABLE>
Distribution to shareholders of the FF 2,976 million retained earnings
of the parent company available for distribution as of December 31,
1995 would trigger a taxation ("precompte") of a total amount of
approximately FF 792 million which would be withheld from the amount
distributed.
(b) Intangible assets
The Company does not systematically amortize its intangible assets
(which comprise mainly the goodwill resulting from the 1989 merger
between Carnaud and MB Packaging - see Note 3).
Under US GAAP, intangible assets should be amortized over the
estimated useful economic life, up to a maximum of 40 years. For
reconciliation purposes the amortization period used is 40 years.
(c) Early redemption of preference shares
In 1992, the Company redeemed British Pounds 50 million (FF 418
million) of the British Pounds 200 million redeemable preference
shares issued by its wholly-owned subsidiary, CarnaudMetalbox Holdings
(UK) Ltd. and maturing in 1997. As part of the settlement, the Company
entered into an interest rate swap agreement which under US GAAP
should have been marked to market, and which is presently accounted
for under the accrual method.
In 1994 the Company redeemed British Pounds 75 million (FF 627
million) of the remaining British Pounds 150 million redeemable
preference shares. The loss on extinguishment has been deferred and is
being amortized over the remaining life of the shares. Under US GAAP
this loss would have been charged to income.
13
<PAGE>
(d) Accrued restructuring costs
Certain provisions made by the Company, relating to reorganizations or
as a result of business combinations accounted for under the purchase
method, would not be allowed under US GAAP. In addition, certain
accrued restructuring costs have been eliminated to comply with the
requirements of Emerging Issue Task Force issue No. 94-3. The
adjustments to pretax income related to these provisions are the
following:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Purchase accounting provisions (32) (33) (34)
Reorganization provisions :
- Termination and redundancy provisions (25) 42 -
- Exit and other restructuring costs - 35 -
--- --- ---
Increase (decrease) (57) 44 (34)
=== == ===
</TABLE>
(e) Pension plans
In order to comply with US GAAP, the Company has applied SFAS No. 87
"Employers' Accounting for Pensions" and SFAS No 88 "Employers'
Accounting for Settlements and Curtailments of Defined Benefit Pension
Plans and for Termination Benefits" as follows:
- the transition obligation or fund excess has been determined as
of January 1, 1987 for United States, January 1, 1989 for United
Kingdom and January 1, 1993 for other countries as being the
difference between the liabilities accounted for under prior
years' accounting policies and the funded status of the plans
resulting from actuarial calculations ; transition obligation or
fund excess for other countries, as determined at January 1,
1993, have been reduced to their amortized value as if SFAS No.
87 had been applied from 1989. The amortization period used in
most cases is the greater of 15 years and the average residual
active life of the population covered by each plan ;
- severance indemnities payable to employees on leaving the Company
for any reason in Italy ("trattamento di fine rapporto") are
estimated on the basis of their vested value which is higher than
their actuarial value ;
- special termination benefits are recorded on an accrual basis at
the time the offer is accepted by the employees or their
representatives and the amount can be reasonably estimated ;
- the actuarial method used is the projected unit credit method.
However, when the benefit formulas attribute more benefits to
senior employees or when the plans are integrated with social
security systems or multiemployer plans, the Company has elected
to apply the projected unit credit service pro-rata method
(prospective method) to avoid delayed recognition of pension
costs ;
- the market-related value of assets is computed with a spread of
investments gains and losses over three years ;
- prior service cost and experience gains and losses are amortized
over the average residual active life of participants.
14
<PAGE>
The funded status of pension plans determined in accordance with US
GAAP is as follows:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Actuarial present value of benefit obligations :
Vested benefit obligation (6,949) (7,023) (7,976)
Non-vested benefit obligation (338) (497) (428)
------ ------ ------
Accumulated benefit obligation (7,287) (7,520) (8,404)
Excess of projected benefit obligation over accumulated
benefit obligation (128) (106) (97)
------ ------ ------
Projected benefit obligation (7,415) (7,626) (8,501)
Plan assets at fair value 8,106 7,829 9,036
------ ------ ------
Plan assets in excess of projected benefit obligation 691 203 535
Unrecognized net transition asset 48 56 64
Unrecognized net actuarial gain (333) 221 -
------ ------ ------
Net pension asset recognized 406 480 599
=== === ===
</TABLE>
The net pension asset is analyzed as follows:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Accrual (582) (545) (521)
Prepaid 988 1,025 1,120
--- ----- -----
Net pension asset under US GAAP 406 480 599
=== === ===
</TABLE>
The net periodic pension cost of the Company's pension plans
determined in accordance with US GAAP includes the following
components:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Service cost - benefits earned during the year 217 281 223
Interest cost on projected benefit obligation 593 612 568
Actual return on plan assets (1,316) 628 (2,001)
Net amortization and deferral 620 (1,296) 1,424
------ ------ ------
Net pension cost 114 225 214
=== === ===
</TABLE>
Average assumptions used in accounting for the Company's pension plans
under US GAAP were:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Discount rate 8.50% 8.50% 7.50%
Rate of increase in compensation levels 5.80% 5.80% 5.80%
Expected long-term rate of return on plan assets 9.50% 9.50% 9.50%
</TABLE>
(f) Postretirement benefits
Under IAS, the Accumulated Postretirement Benefit Obligation (APBO)
for United States and United Kingdom subsidiaries has been measured as
of January 1, 1993 and was recorded as an adjustment to shareholders'
equity.
Under US GAAP ("SFAS No. 106 ; Employer's Accounting for
Postretirement Benefits Other Than Pensions"), the APBO for United
States and United Kingdom subsidiaries would have been measured as of
January 1, 1993 and would not have been deducted from shareholders'
equity. For US GAAP reconciliation, the deduction of shareholders'
equity has been reversed and APBO as of January 1, 1993 has been
amortized over a 20 year period. Also, the projected future cost of
providing postretirement benefits, such as health care and life
insurance, is accrued over the period earned.
The effect of adopting SFAS No. 106 for other countries is deemed to
be immaterial.
15
<PAGE>
The actuarial and recorded liabilities under US GAAP for these
postretirement benefits are as follows:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Accumulated postretirement benefit obligation :
Retirees (59) (64) (71)
Eligible active plan participants (88) (88) (97)
Other active plan participants (17) (18) (20)
---- ---- ----
Total (164) (170) (188)
Plan assets at fair value 4 3 2
---- ---- ----
Accumulated postretirement benefit obligation in excess of
plan assets (160) (167) (186)
Unrecognized net actuarial loss (10) (10) -
Unrecognized transition obligation 114 134 152
---- ---- ----
Postretirement benefit liability (56) (43) (34)
=== === ===
</TABLE>
Net periodic postretirement benefit cost includes the following
components:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Service cost for benefits earned 4 6 4
Interest cost on accumulated postretirement benefit
obligation 12 13 14
Actual return on plan assets - - -
Amortization of the transition obligation 7 8 8
--- --- ---
Net postretirement benefit cost 23 27 26
=== === ===
</TABLE>
The accumulated postretirement benefit obligation was determined using
an average discount rate of 8.5% and an average health care cost trend
rate of approximately 8.25%.
Increasing the assumed health care cost trend rates by one percentage
point in each year and holding all other assumptions constant would
increase the accumulated postretirement benefit obligation as of
December 31, 1995 by approximately FF 19.9 million and increase the
aggregate of the service and interest cost components of the net
periodic postretirement benefit cost for 1995 by approximately FF 2.4
million.
(g) Accounting for stock options
The Company generally grants to eligible employees and executives a
discount from the market price for shares purchased pursuant to stock
option plans. The accounting for such discounts is not addressed by
IAS and these transactions have no effect on the statement of income.
Under US GAAP, the discount, measured at the date of grant, is
considered compensation to employees and executives and, accordingly,
is charged to the statement of income.
The effect of applying US GAAP is not material and therefore is not
included in the reconciliation presented below in Section (j).
(h) Investments in debt and marketable equity securities
In accordance with IAS, the Company's policy is to record any
impairment in value on an individual basis for its investments and
short-term equity securities. Unrealized gains are not recognized.
For US GAAP purposes, the Company has adopted the provisions of SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", as of January 1, 1994. In accordance with SFAS No. 115,
and except for debt securities classified as "held-to-maturity
securities", unrealized holding gains and losses for "trading" and
"available for sale" debt and marketable securities should be included
in the statement of income or directly in shareholders' equity
respectively until realized.
The effect of applying SFAS No. 115 is not material and, therefore, no
adjustment is made for this difference in the net income and
shareholders' equity reconciliations in Section (j) below.
16
<PAGE>
(i) Consolidation of non-subsidiaries
The Company had a 50% holding in FA.BA. and its subsidiaries which has
been accounted for under the full consolidation method.
Under US GAAP, this investment would have been accounted for under the
equity method up to June 2, 1995 as the Group entered into an
agreement (approved by the June 2, 1995 Extraordinary General Meeting)
to acquire the remaining 50% stake in the FA.BA Group.
This difference does not impact net income nor shareholders' equity.
The main balance sheet and income statement data relating to FA.BA.
and its subsidiaries are set forth below:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
(up to June 2, (12 months) (12 months)
1995)*
<S> <C> <C> <C>
Net sales 588 1,511 1,444
Operating income 66 187 180
Income before taxes 65 187 174
Net income 14 45 36
-------------------------------------------------------------------------------------------------
Non-current assets (including goodwill) 415 419
Current assets 993 930
Provisions and long-term liabilities (105) (95)
Current liabilities (607) (610)
Minority interests (341) (312)
---- ----
Equity in FA.BA. and its subsidiaries 355 332
=== ===
<FN>
(*) Date of approval of the transaction by shareholders' Extraordinary
General Meeting
</FN>
</TABLE>
(j) Conversion to US GAAP
Net income and shareholders' equity
The following is a summary of the estimated adjustments to net income
and shareholders' equity for the years ended December 31, 1995, 1994
and 1993 which would be required if US GAAP had been applied instead
of IAS.
<TABLE>
<CAPTION>
(In millions of FF) Net income
1995 1994 1993
<S> <C> <C> <C>
Amounts per accompanying consolidated financial statements 805 950 835
US GAAP adjustments Increase/(decrease) due to :
Income taxes (a) 9 108 (64)
Cumulative effect of adopting SFAS No. 109 (a) - - 137
Intangible assets (b) (59) (64) (64)
Early redemption of preference shares (c) 2 31 (31)
Accrued restructuring costs (d) (57) 44 (34)
Pension plans (e) 24 (66) (105)
Postretirement benefits (f) (8) (15) (17)
Tax effect of reconciling items 29 13 57
---- ----- ----
Approximate amounts under US GAAP 745 1,001 714
---- ----- ----
Primary earnings per share (Note 2 (k)) 8.82 12.32 8.94
Fully diluted earnings per share (Note 2 (k)) 8.81 12.30 8.93
---- ----- ----
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
(In millions of FF) Shareholders' equity as of December 31,
1995 1994 1993
<S> <C> <C> <C>
Amounts per accompanying consolidated financial statements 12,300 11,679 11,118
US GAAP adjustments Increase/(decrease) due to :
Income taxes (a) 170 172 (65)
Cumulative effect of adopting SFAS No. 109 (a) - - 137
Intangible assets (b) * (2,171) (1,637) (1,639)
Early redemption of preference shares (c) (56) (58) (89)
Accrued restructuring costs (d) (39) 12 (35)
Pension plans (e) (147) (197) (137)
Postretirement benefits (f) 62 82 104
Tax effect of reconciling items 150 121 108
------ ------ -----
Approximate amounts under US GAAP 10,269 10,174 9,502
====== ====== =====
<FN>
(*) The gross amount of intangible assets subject to amortization after US
GAAP adjustments amounts to FF 2,265 million at December 31, 1995 (FF
2,494 million and FF 2, 596 million at December 31, 1994 and 1993
respectively).
</FN>
</TABLE>
(k) Earnings per share
Earnings per share under IAS is calculated by dividing net income by
the weighted average number of common shares equivalents (see Note
19). Under US GAAP, stock options are considered as common stock
equivalents and their amount is determined according to the treasury
method. Earnings per share are calculated under US GAAP on a weighted
average of 85.7 million shares in issue during the year (1994 - 82.4
million ; 1993 - 81.6 million).
Earnings per share prepared in accordance with APB15 are as follows :
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Primary earnings per share (in FF) 8.82 12.32 8.94
Number of shares (in thousands) 85,698 82,394 81,568
Fully diluted earnings per share (in FF) 8.81 12.30 8.93
Number of shares (fully diluted) 85,788 82,601 82,518
</TABLE>
The net effect of options has been determined using the treasury
method.
<TABLE>
<CAPTION>
(In number of shares) 1995 1994 1993
<S> <C> <C> <C>
Common shares 85,327,985 82,048,458 81,119,881
Stock options 370,367 345,699 447,961
---------- ---------- ----------
85,698,352 82,394,157 81,567,842
========== ========== ==========
(In millions of FF) 1995 1994 1993
Net income 745 1,001 714
Interest on stock options 18 21 23
Related tax effect (7) (7) (8)
---------- ---------- ----------
Net income restated 756 1,015 729
---------- ---------- ----------
Earnings per share (in FF) 8.82 12.32 8.94
========== ========== ==========
</TABLE>
18
<PAGE>
The effect of a full conversion of outstanding shares would be as
follows :
<TABLE>
<CAPTION>
(In number of shares) 1995 1994 1993
<S> <C> <C> <C>
Common shares 85,327,985 82,048,458 81,119,881
Stock options 460,143 345,699 447,961
Bonds - 207,086 950,133
---------- ---------- ----------
85,788,128 82,601,243 82,517,975
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Net income 745 1,001 714
Interest on stock options 18 21 23
Interest on convertible bonds 88 - 1 11
Related tax effect (7) (7) (11)
---------- ---------- ----------
Net income restated 756 1,016 737
---------- ---------- ----------
Earnings per share on fully diluted basis (in FF) 8.81 12.30 8.93
========== ========== ==========
</TABLE>
(l) Additional US GAAP information
Recently issued US accounting standards
Impairment of long lived assets
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of". SFAS No. 121 provides guidance on when to assess and how
to measure impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and used
and for long-lived assets and certain identifiable intangibles to be
disposed of. This Statement is effective for financial statements for
fiscal years beginning after December 15, 1995. The Company has not
yet assessed the impact of adopting SFAS No. 121.
19
<PAGE>
Note 2 - EXCHANGE RATE TRANSLATION IMPACT ON STATEMENTS OF INCOME
Had the 1995 average exchange rates been applied in 1994 and the 1994
average exchange rates in 1993, the Group results would have been as
follows:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
At 1995 At 1994
Actual exchange Actual exchange Actual
rates rates
<S> <C> <C> <C> <C> <C>
Net sales 24,610 23,725 24,890 23,834 24,340
Operating income 1,349 1,588 1,709 1,543 1,583
Income before income tax 880 1,343 1,421 1,167 1,201
Income from operations 786 1,129 1,176 898 918
Net income 805 913 950 821 835
</TABLE>
Note 3 - INTANGIBLE ASSETS
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Eurosteel segment 4,691 4,691 4,691
Other intangible assets 225 101 112
----- ----- -----
4,916 4,792 4,803
===== ===== =====
</TABLE>
Intangible assets comprise principally the value of the Eurosteel
segment which arose on the merger of the Carnaud and the MB Packaging
businesses in 1989. Other intangible assets at December 31, 1995
include start-up costs (FF 91 million), land user rights (FF 42
million), patents, licenses and trademarks (FF 7 million) and other
(FF 85 million).
Note 4 - GOODWILL
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Net book value at January 1 4,073 4,002 2,577
Translation adjustment (222) (182) 90
Additions 486 317 1,601
Disposals (111) (29) (140)
Reclassification (48) 80 (22)
----- ----- -----
4,178 4,188 4,106
Amortization provided during the year (117) (115) (104)
----- ----- -----
Net book value at December 31 4,061 4,073 4,002
===== ===== =====
</TABLE>
The net book value at December 31, 1995 is made up of cost of FF 4,614
million and accumulated amortization of FF 553 million. An amount of
FF 952 million net relates to the merger of the Carnaud and MB
Packaging groups in 1989.
As discussed in the Note on Accounting Principles and Policies, the
Group has deferred the application of the revised IAS rule No.22
"Business Combinations" which requires that the amortization period of
goodwill should not exceed five years unless a longer period, not
exceeding twenty years from the date of acquisition, can be justified.
Had the change been applied as of January 1, 1995, according to the
prospective method, on the basis of a maximum twenty-year amortization
period, total amortization expense for the year ended December 31,
1995 would have been FF 204 million (as compared to FF 117 million)
and accumulated amortization at December 31, 1995 would have been FF
640 million (as compared to FF 553 millions).
20
<PAGE>
Additions to goodwill in 1995 mainly relate to the acquisition of the
remaining 50% stake in the FA.BA. group (FF 423 million). Disposals
mainly relate to the disposal of the Group's interest in its flexible
packaging business in France, Spain and Portugal (FF 109 million). The
reclassification in 1995 mainly relates to the reversal through
goodwill, following the re-evaluation of provision requirements, of
restructuring provisions which were recorded as part of the valuation
exercise performed in 1993 and 1994 of the net assets acquired in 1993
of the Anchor Hocking and Zeller Plastik groups.
Additions to goodwill in 1994 included FF 78 million resulting from
the acquisitions described in Note 1-A as well as the effect on
goodwill of the completion in 1994 of the valuation exercise carried
out on the net assets acquired in 1993 of the Anchor Hocking, Zeller
Plastik and Fima Metal Box Bhd groups (FF 188 million). The
reclassification in 1994 mainly relates to Impalsa which was
previously accounted for as an equity investment but which has been
fully consolidated as from July 1, 1994.
Note 5 - PROPERTY, PLANT AND EQUIPMENT
Movements in property, plant and equipment
<TABLE>
<CAPTION>
Land and Plant, Capital Other Total
(In millions of FF) buildings machinery work in
and tools progress
<S> <C> <C> <C> <C> <C>
Gross
At January 1, 1993 2,729 10,273 534 1,390 14,926
------ ------ ------- ------ ------
Translation adjustment (17) (65) 6 (12) (88)
Businesses acquired/sold 342 1,013 45 104 1,504
Capital expenditure 184 816 414 153 1,567
Other movements 142 377 (476) 21 64
Disposals (137) (521) (40) (97) (795)
------ ------ ------- ------ ------
At December 31, 1993 3,243 11,893 483 1,559 17,178
------ ------ ------- ------ ------
Translation adjustment (117) (413) (6) (48) (584)
Businesses acquired/sold 16 51 - 5 72
Capital expenditure 219 940 683 146 1,988
Other movements 44 302 (312) (8) 26
Disposals (259) (437) (33) (85) (814)
------ ------ ------- ------ ------
At December 31, 1994 3,146 12,336 815 1,569 17,866
------ ------ ------- ------ ------
Translation adjustment (142) (549) (76) (39) (806)
Businesses acquired/sold (33) (298) (15) (24) (370)
Capital expenditure 146 1,160 540 151 1,997
Other movements 27 380 (434) (38) (65)
Disposals (129) (297) (29) (44) (499)
------ ------ ------- ------ ------
At December 31, 1995 3,015 12,732 801 1,575 18,123
===== ====== === ===== ======
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Land and Plant, Capital Other Total
(In millions of FF) buildings machinery work in
and tools progress
Depreciation
<S> <C> <C> <C> <C>
At January 1, 1993 852 5,734 - 854 7,440
-------- -------- -------- -------- --------
Translation adjustment (8) (42) - (6) (56)
Businesses acquired/sold 29 504 - 61 594
Provided during the year 111 931 2 146 1,190
Other movements (12) 6 - (5) (11)
Disposals (59) (359) - (73) (491)
-------- -------- -------- -------- --------
At December 31, 1993 913 6,774 2 977 8,666
-------- -------- -------- -------- --------
Translation adjustment (23) (230) - (33) (286)
Businesses acquired/sold 10 24 - 2 36
Provided during the year 111 972 1 156 1,240
Other movements 8 26 - (26) 8
Disposals (40) (326) (1) (64) (431)
-------- -------- -------- -------- --------
At December 31, 1994 979 7,240 2 1,012 9,233
-------- -------- -------- -------- --------
Translation adjustment (26) (326) - (49) (401)
Businesses acquired/sold (55) (201) - (16) (272)
Provided during the year 134 978 - 144 1,256
Other movements (6) (4) 3 (23) (30)
Disposals (36) (298) - (42) (376)
-------- -------- -------- -------- --------
At December 31, 1995 990 7,389 5 1,026 9,410
-------- -------- -------- -------- --------
Net book value
At January 1, 1993 1,877 4,539 534 536 7,486
-------- -------- -------- -------- --------
At December 31, 1993 2,330 5,119 481 582 8,512
-------- -------- -------- -------- --------
At December 31, 1994 2,167 5,096 813 557 8,633
-------- -------- -------- -------- --------
At December 31, 1995 2,025 5,343 796 549 8,713
======== ======== ======== ======== ========
</TABLE>
The net book value of property, plant and equipment as of December 31,
1995 includes an amount of FF 268 million in respect of assets held
under capital leases (FF 356 million and FF 434 million in 1994 and
1993 respectively).
Note 6 - INVESTMENTS
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Equity in associated companies 103 103 80
Investments in unconsolidated companies 88 97 140
Loans receivable 51 56 128
Other investments 31 10 19
--- --- ---
273 266 367
=== === ===
</TABLE>
22
<PAGE>
The movement in equity in associated companies is as follows:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
At January 1 103 80 279
Share in income for the year 4 - 14
Dividends (8) (8) (38)
Acquisitions - - -
Disposals - - (117)
Other 4 31 (58)
--- --- ---
At December 31 103 103 80
=== === ==
</TABLE>
In 1994, other movements are mainly due to Dufalco which was accounted
for under the equity method of accounting for the first time in 1994
and Impalsa which has been fully consolidated as from July 1, 1994. In
1993, the other movements of FF 58 million are mainly due to the full
consolidation, following the acquisition of 100% of the packaging
activities, of Fima Metal Box Berhad and Italgraf (subsidiary of
Faba). The disposals in 1993 relate to Impetus and Plastono (High
Performance Plastics division).
The movement in investments in unconsolidated companies is as follows:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
At January 1 97 140 165
Change in structure (8) (50) 14
Acquisitions 7 9 42
Disposals (7) (7) (82)
Other (1) 5 1
--- --- ---
At December 31 88 97 140
=== === ===
</TABLE>
The change in structure in 1994 relates to Dufalco which has been
accounted for under the equity method of accounting and to S.M.P.M.
which has been fully consolidated as from January 1, 1994. In 1993,
the disposals mainly relate to the 16.6% stake in Gault et Fremont
which was sold for FF 76 million.
The main unconsolidated companies are as follows:
<TABLE>
<CAPTION>
(In millions of FF) Book value Percentage Business Net sales Country
<S> <C> <C> <C> <C> <C>
Stumetal and EMS 47 49.9% Packaging 250 Tunisia
Nafcel 21 16.0% Packaging 309 Saudi Arabia
Other 20
--
88
==
</TABLE>
Note 7 - INVENTORIES
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Goods purchased for resale 169 139 104
Raw materials and consumables 1,987 2,150 2,038
Work in progress 608 624 606
Finished goods 1,266 1,413 1,317
----- ----- -----
4,030 4,326 4,065
----- ----- -----
Less: valuation allowance (353) (378) (366)
----- ----- -----
3,677 3,948 3,699
===== ===== =====
</TABLE>
23
<PAGE>
Note 8 - TRADE AND OTHER RECEIVABLES
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Trade receivables 4,069 3,953 3,842
Other receivables 587 680 570
Prepayments and accrued income 162 186 215
----- ----- -----
4,818 4,819 4,627
----- ----- -----
Less: allowance for doubtful accounts (343) (352) (325)
----- ----- -----
4,475 4,467 4,302
===== ===== =====
</TABLE>
It is the Group's practice to sell part of its trade receivables to
finance the business. At December 31, 1995, such disposals with
limited recourse amounted to FF 487 million (1994 - FF 534 million ;
1993 - FF 638 million) which have been deducted from trade receivables
accordingly. Discounted bills with recourse are disclosed in Note
23-2.
Note 9 - COMMON STOCK
The common stock (FF 862 million at December 31, 1995) comprises fully
paid shares with a nominal value of FF 10. Movements in the number of
shares are as follows:
<TABLE>
<CAPTION>
(In number of shares) 1995 1994 1993
<S> <C> <C> <C>
At January 1 82,296,751 81,288,141 80,918,630
Exercise of stock options 440,350 66,466 306,895
Conversion of bonds - 559,410 62,616
Issued in exchange for - AMS Packaging shares - 382,734 -
- FA.BA. Spa shares 3,416,667 - -
---------- ---------- ----------
At December 31 86,153,768 82,296,751 81,288,141
========== ========== ==========
</TABLE>
At December 31, outstanding shares that might be issued are as follows
(according to origin):
<TABLE>
<CAPTION>
(In number of shares) 1995 1994 1993
<S> <C> <C> <C>
Convertible bonds 1988 - - 893,802
Stock options 1,720,630 2,100,980 2,011,946
--------- --------- ---------
1,720,630 2,100,980 2,905,748
========= ========= =========
</TABLE>
Depending on the option date, the issue price may range from FF 69.67
to FF 203.12.
The average number of shares for the earnings per share calculation
(see Note 19) is as follows:
<TABLE>
<CAPTION>
(In number of shares) 1995 1994 1993
<S> <C> <C> <C>
Average outstanding 85,327,985 82,048,458 81,119,881
Average fully diluted 87,281,668 84,196,385 84,048,225
</TABLE>
24
<PAGE>
Note 10 - MINORITY INTERESTS
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
At January 1 1,829 1,720 1,246
Translation adjustment (123) (64) (5)
Dividends paid by consolidated subsidiaries (33) (41) (38)
Changes in Group structure (303) (12) 420
Share in net (loss)/income for the year (15) 226 97
----- ----- -----
At December 31, 1,355 1,829 1,720
===== ===== =====
</TABLE>
The changes in Group structure are mainly due to the acquisition of
minority interests in FA.BA (FF 318 million) in 1995, the acquisition
of minority interests in the Zuchner Group and AMS Packaging in 1994,
and the rights issue realized by CarnaudMetalbox Asia Ltd. (Singapore)
for FF 444 million at the end of 1993.
Note 11 - PERPETUAL NOTES (TSDI) AND PREFERENCE SHARES
11-1 Perpetual notes (TSDI)
In December 1990, CarnaudMetalbox issued FF 1,700 million Perpetual
Notes or Titres Subordonnes a Duree Indeterminee (TSDI), carrying
interest at a floating rate of PIBOR plus 0.6% per annum.
The Group's liability to pay interest on the notes is for fifteen
years; thereafter, the continuing interest liability will
contractually pass to a third party in consideration for a FF 373
million payment made by the Group when the notes were issued. As part
of the repackaging arrangements, the third party has invested this FF
373 million in a 15-year zero coupon bond issued by the Republic of
Austria.
For accounting purposes the TSDI is treated as a borrowing and
consequently the financial charge and the amortization of the
principal are included in the statement of income determined under the
interest rate method.
The tax treatment of the TSDI has been approved by the Service de la
Legislation Fiscale in France, with the effect that CarnaudMetalbox
will be entitled to claim tax deductions on interest payments
calculated on the net proceeds of the issue (FF 1,327 million).
11-2 Redeemable Preference Shares
In 1990, CarnaudMetalbox Holdings (UK) Ltd., a subsidiary of the
parent company, CarnaudMetalbox, issued British Pounds 200 million of
non-voting, non-convertible Preference Shares by way of a Private
Placement with two major United Kingdom banks. The issue was
guaranteed by CarnaudMetalbox.
British Pounds 50 million (FF 418 million) of those Preference Shares
were redeemed in December 1992 and British Pounds 75 million (FF 627
million) in December 1994. The Preference Shares which amount to
British Pounds 75 million at December 31, 1995 (FF 570 million) carry
a preference dividend entitlement at an average fixed rate of 8.6% per
annum, net of tax. They have been redeemed on January 31, 1996. The
par value of these shares is shown as a liability in the Group's
balance sheet. The dividend payable to the Preference shareholders is
included in the statement of income under Financial expense (net) (see
Note 15).
On December 29, 1995, Societe de Participations Etrangeres de
CarnaudMetalbox (SPEC), a wholly owned subsidiary of the Group, issued
to an Investor group FF 1.5 billion shares carrying preferred
dividends (yield 6.7%) subject to availability of distributable
earnings.
These shares represent 28% of the voting rights of SPEC. Societe de
Participations CarnaudMetalbox (SPC), a wholly owned subsidiary of the
Group, and the Investor group have entered into an agreement whereby
the Group has the obligation to repurchase the shares and the Investor
has the obligation to sell the shares in November 1998. The value of
the shares (FF 1,530 million at December 31, 1995) is shown as a
liability in the Group balance sheet and the preferred dividend
payable on the shares is included in the statement of income under
Financial expense (net) (see Note 15).
25
<PAGE>
Note 12 - PROVISIONS FOR LIABILITIES AND ACCRUALS
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Pensions and retirement benefits 617 616 671
Deferred tax, net 228 232 229
Restructuring 305 446 435
Other 319 351 296
----- ----- -----
1,469 1,645 1,631
===== ===== =====
</TABLE>
Movements in provisions are analyzed as follows:
<TABLE>
<CAPTION>
Pensions &
retirement Deferred Other
(In millions of FF) benefits tax, net Restructuring provisions Total
<S> <C> <C> <C> <C> <C>
At January 1, 1993 464 321 141 295 1,221
Translation adjustment (8) - 11 (4) (1)
Deductions made against expenses incurred (35) - (306) (75) (416)
Additions 61 - 306 78 445
Post retirement obligations 137 (15) - - 122
Income tax expense for the period - 102 - - 102
Purchase accounting and other movements 52 (179) 283 2 158
--- --- --- --- -----
At December 31, 1993 671 229 435 296 1,631
--- --- --- --- -----
Translation adjustment (18) (8) (18) (6) (50)
Deductions made against expenses incurred (55) - (336) (60) (451)
Additions 87 - 288 132 507
Income tax expense for the period - (8) - - (8)
Purchase accounting and other movements (69) 19 77 (11) 16
--- --- --- --- -----
At December 31, 1994 616 232 446 351 1,645
--- --- --- --- -----
Translation adjustment (14) (16) (18) (12) (60)
Deductions made against expenses incurred (43) - (332) (49) (424)
Additions 46 - 249 18 313
Income tax expense for the period - (35) - - (35)
Purchase accounting and other movements 12 47 (40) 11 30
--- --- --- --- -----
At December 31, 1995 617 228 305 319 1,469
--- --- --- --- -----
</TABLE>
12-1 Pensions and retirement benefits
Other movements in 1994 mainly result from the reclassification of a
FF 62 million prepaid pension for Risdon from Other receivables to
Pensions & retirement benefits. In 1993, the increase in provisions of
FF 137 million relates to the post retirement benefit obligations for
the United-Stated subsidiaries (FF 92 million) and the United Kingdom
subsidiaries (FF 45 million). In 1993, included under other movements
are provisions related to businesses acquired, principally Zeller
Plastik (FF 49 million) and Fima Metal Box Bhd (FF 2 million).
Additions refer to increases in accruals for the year. No charge in
income is recognized for countries such as the United Kingdom where
excess funding of schemes is currently used to cover normal pension
costs.
12-2 Deferred tax, net
The major elements of the deferred tax provision relate to timing
differences in respect of excess tax over book depreciation and
provisions. Other movements mainly relate to transfers to and from
current income taxes.
26
<PAGE>
12-3 Restructuring
As part of the Group's continuing program of reorganization and
rationalization, decisions have been taken to close certain locations,
discontinue certain production lines, relocate production and reduce
the labor force.
Details of restructuring are as follows :
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Redundancy 147 146 145
Reorganization 65 69 52
Purchase accounting 93 231 238
-- --- ---
305 446 435
=== === ===
</TABLE>
Redundancy and reorganization
Redundancy costs primarily include severance costs to be paid to
terminated employees. These benefits mainly comprise severance
payments and payments in lieu of notice whether arising as a business
reorganization or an on-going redundancy program.
Reorganization costs include expenses relating to the removal of
production line, cost of equipment and production plant disassembly
and reassembly, losses on net assets disposals, committed costs during
the period preceding the termination of an activity and personnel
relocation expenses.
Redundancy and reorganization provisions which amount to FF 147
million and FF 65 million, respectively, at December 31, 1995 should
be substantially expensed in the later part of 1996.
Purchase accounting provisions
Other movements in Purchase accounting provisions in 1995 mainly
relate to the reversal through goodwill, following the re-evaluation
of provision requirements, of restructuring provisions which were
recorded as part of the valuation exercise performed in 1993 and 1994
of the net assets acquired in 1993 of the Anchor Hocking and Zeller
Plastik groups.
Purchase accounting provisions relating to the acquisition of Anchor
Hocking (FF 37 million at December 31, 1995, FF 132 million at
December 31, 1994 and FF 163 million at December 31, 1993) mainly
cover the closure of the Glassboro manufacturing facility in the
United States.
Also included in the purchase accounting provisions is an amount of FF
56 million at December 31, 1995 (FF 99 million at December 31, 1994
and FF 75 million at December 31, 1993) relating to the acquisition of
the German Zeller Plastik group. The provisions mainly relate to exit
and employee termination costs to be incurred in connection with the
integration of the acquired activities into the Plastics packaging
operations of the Group which is expected to be substantially
completed by the end of 1996.
12-4 Other provisions
The main elements of other provisions are grants received, reinsurance
reserves, warranty obligations, termination indemnities and accruals
for risks, litigation and claims. The Company has recorded its best
estimate of the probable exposure which might result from legal
proceedings, environmental compliance and other matters arising out of
the past and present conduct of the Company's business, and does not
expect that amounts, if any, which may be required to be paid as a
result, will materially affect its financial position or results from
operations.
12-5 Environmental
The Group's operations are subject to extensive environmental laws and
regulations relating to air emissions, wastewater discharges,
hazardous substances, the remediation of contamination and employee
health and safety. Internal compliance examinations and other events
have from time to time resulted in the identification of contamination
or the absence of required permits at particular facilities. However,
the Group does not expect that any of these circumstances identified
to date are likely to have a material effect on the Group.
Reserves for environmental costs included in "Other provisions"
amounted to FF 11 million as of December 31, 1995.
27
<PAGE>
Note 13 - SENIOR DEBT
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Debenture loans 1,917 2,248 1,505
Capital lease obligations 238 286 356
Banks and other 422 189 257
----- ----- -----
2,577 2,723 2,118
Preference shares 2,100 627 1,307
----- ----- -----
Total long-term debt 4,677 3,350 3,425
----- ----- -----
Short-term debt (including
current portion of
long-term debt) 1,584 1,388 1,473
----- ----- -----
</TABLE>
Loans (excluding capital lease obligations) are secured by assets
amounting to FF 217 million (1994: FF 193 million ; 1993 : FF 298
million).
Loan repayment schedule (excluding short-term portion) :
<TABLE>
<CAPTION>
(In millions of FF) 1995 % 1994 % 1993 %
Year
<S> <C> <C> <C> <C> <C> <C>
1995 - - - - 397 12 %
1996 - - 305 9 % 174 5 %
1997 827 18 % 796 24 % 1,386 40 %
1998 188 4 % 141 4 % 95 3 %
1999 (and after) 1,590 34 % 115 3 % 1,373 40 %
2000 (and after) 624 13 % 1,993 60 % - -
2001 and after 1,448 31 % - - - -
----- --- ----- --- ----- ---
TOTAL 4,677 100 % 3,350 100 % 3,425 100 %
===== === ===== === ===== ===
</TABLE>
Analysis of long-term debt by currency:
<TABLE>
<CAPTION>
(In millions of FF) 1995 % 1994 % 1993 %
<S> <C> <C> <C> <C> <C> <C>
French Franc 2,642 56 % 1,320 39 % 617 18 %
US Dollar 1,135 24 % 1,103 33 % 1,227 36 %
Pound Sterling 565 12 % 725 22 % 1,370 40 %
Deutsch Mark 43 1 % 55 2 % 116 3 %
Italian Lira 230 5 % 36 1 % 44 1 %
Other currencies 62 2 % 111 3 % 51 2 %
----- --- ----- --- ----- ---
TOTAL 4,677 100 % 3,350 100 % 3,425 100 %
===== === ===== === ===== ===
</TABLE>
Analysis of long-term debt by interest rate:
These analyses take into account interest rates swaps operations.
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Fixed rates
- below 6 % 83 135 122
- 6 to 8.5 % 189 228 359
- 8.5 % and over 641 382 2,008
Floating rates (*) 3,764 2,605 936
----- ----- -----
TOTAL 4,677 3,350 3,425
===== ===== =====
<FN>
(*) Floating rates are principally based on 6 months LIBOR.
</FN>
</TABLE>
28
<PAGE>
As of December 31, 1995, the parent company had an amount of FF 2,600
million of medium-term lines of credit, of which FF 319 million were
used. At December 31, 1994 there was a FF 3,000 million available
credit of which FF 250 million were used. At December 31, 1993 there
was FF 3,600 million available credit, none of which was being used.
These facilities are primarily with international banks and initially
extend for periods up to 5 years (with an average maturity of
approximately 2.5 years).
Net balance sheet debt
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Long-term debt (including preference shares) 4,677 3,350 3,425
Short-term debt 1,584 1,388 1,473
----- ----- -----
Total debt (including preference shares) 6,261 4,738 4,898
Cash and cash equivalents (2,645) (2,293) (1,764)
TSDI 1,087 1,146 1,199
----- ----- -----
4,703 3,591 4,333
===== ===== =====
</TABLE>
Convertible and other bonds
In 1988, the Group issued 1,445,000 bonds of FF 550 each, convertible
into ordinary shares on a one for three basis. The 297,934 bonds
outstanding at 31 December 1993 matured within the first quarter 1994.
Other bonds :
<TABLE>
<CAPTION>
(In millions of FF) Less than Interest Total
1 year accrued
<S> <C> <C> <C> <C>
6.20 % 1986 100 3 103
First maturity July 8, 1993
Last July 8, 1996
</TABLE>
Private placement
To finance the acquisition of Anchor Hocking, CarnaudMetalbox
Investments (USA), Inc. issued in May 1993 a Private Placement of US
Dollar 205 million with two tranches maturing respectively in 2000 for
US Dollar 100 million, and 2005 for US Dollar 105 million, subscribed
by US investors (Insurance companies) and guaranteed by
CarnaudMetalbox. The average interest is 7.3 %.
Note 14 - ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Trade accounts payable 4,182 4,931 4,277
Current income tax liability 210 438 523
Other taxes and social security 398 503 452
Other payables and accruals 1,498 1,563 1,631
----- ----- -----
6,288 7,435 6,883
===== ===== =====
</TABLE>
29
<PAGE>
Note 15 - FINANCIAL EXPENSE (NET)
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Net interest income 123 94 138
Gain on sale of marketable securities 2 1 8
---- ---- ----
Total financial income 125 95 146
---- ---- ----
Interest on TSDI (99) (101) (139)
Preference share dividends (77) (137) (164)
Interest on debt (550) (363) (404)
---- ---- ----
Total financial expense (726) (601) (707)
---- ---- ----
Dividends received 24 28 37
Translation and exchange adjustments (12)(*) (14)(*) 6(*)
Other, net 22 (38) (57)
---- ---- ----
(567) (530) (575)
==== ==== ====
<FN>
(*) Includes the effect of translating the financial statements
of subsidiaries operating in hyperinflationary economies (FF
(12) million, FF (22) million and FF (12) million in 1995,
1994 and 1993 respectively).
</FN>
</TABLE>
Note 16 - STAFF COSTS
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Wages and salaries including social security
and other related costs 5,508 5,625 5,632
------ ------ ------
Average number of employees during the year 30,190 31,100 31,910
------ ------ ------
Number of employees at year end 28,500 30,290 31,880
====== ====== ======
</TABLE>
Note 17 - GAIN ON DISPOSALS (NET)
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Net gain on sale of property, plant and equipment 22 219 15
Net gain on sale of businesses 76 23 178
-- -- ---
98 242 193
== === ===
</TABLE>
The FF 76 million gain from the disposal of businesses in 1995 mainly
relates to the sale of the Group's 50 % stake in CMB Sonoco. The FF
219 million gain from sale of property, plant and equipment in 1994 is
mainly attributable to the sale of the factory site at Woodlands in
Singapore (FF 196 million). The FF 23 million net gain from the
disposal of businesses mainly relates to the sale of Secura Singapore
Private Ltd. and Speedprint.
In 1993, the FF 178 million gain from the disposal of businesses
relates mainly to the sale of Pharmaflex, High Performance Plastics
division and Bioplast/Impetus.
30
<PAGE>
Note 18 - PROVISION FOR INCOME TAX
The provision for income tax consists of the following :
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Current income tax (129) (253) (181)
Deferred income tax 35 8 (102)
--- ---- ----
(94) (245) (283)
=== ==== ====
</TABLE>
The overall effective tax rate is 9.4 % (1994 - 16.0 % and 1993 - 21.7
%). The reduction of the overall effective tax rate in 1995 as
compared to 1994 resulted from the effects of reorganization and
rationalization of the Group's legal and financial structure and a
continuing re-evaluation of provision requirements. The reduction in
1994 as compared to 1993 mainly resulted from the combination of
reduced taxation on capital gains (primarily the sale of the Woodlands
factory site in Singapore) and the re-evaluation of provision
requirements. As of December 31, 1995, the tax effect of the Group's
worldwide tax losses amounts to FF 844 million, of which FF 727
million have an expiry date after 1998.
Note 19 - EARNINGS PER SHARE
Earnings per share are calculated on a weighted average of 85.3
million shares in issue during the year (1994 - 82.0 million and 1993
- 81.1 million).
<TABLE>
<CAPTION>
(In FF) 1995 1994 1993
<S> <C> <C> <C>
Earnings per share 9.4 11.6 10.3
--- ---- ----
</TABLE>
The effect of a full conversion of outstanding shares would be as
follows:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Net income 805 950 835
Interest on convertible bonds 1988 - 1 11
Interest on stock options 18 21 23
Related tax effect (7) (7) (11)
---- ---- ----
Net income restated 816 965 858
Average number of shares (fully diluted) (in millions) 87.3 84.2 84.1
Earnings per share on fully diluted basis (in FF) 9.3 11.5 10.2
-----------------------------------------------------------------------------------
</TABLE>
Note 20 - CONSOLIDATED STATEMENTS OF CASH FLOWS
Change in operating assets and liabilities
The table below sets out a reconciliation between the balance sheet
movements related to working capital and the decrease/(increase) in
working capital in the cash flow statements.
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Decrease/(increase) in inventories 271 (249) (165)
(Increase)/decrease in trade and other receivables (8) (165) 37
(Decrease) /increase in trade and other payables (1,147) 552 277
------ --- ---
(Increase)/Decrease in working capital per balance
sheet (884) 138 149
Working capital of newly consolidated subsidiaries 23 (89) 247
Working capital of subsidiaries sold (104) (18) (91)
Currency conversion 49 (74) (162)
Movement in payables for capital expenditure (20) (102) 76
Decrease in current income tax liability 227 85 7
Payment of acquisition liability of GWS Metallipakkaus OY - 128 -
Working capital of subsidiaries deconsolidated - - (117)
Other, net - - 17
------ --- ---
Change in working capital per cash flow statements (709) 68 126
==== == ===
</TABLE>
31
<PAGE>
Note 21 - SUBSEQUENT EVENTS
Refer to Note 1 relating to the combination of CarnaudMetalbox and
Crown Cork & Seal Company, Inc.
Note 22 - FINANCIAL INSTRUMENTS
Financial instruments with off-balance sheet risk and concentration of
credit risk.
The Group uses financial instruments with off-balance sheet risks
primarily to manage its exposure to fluctuations in interest rates and
foreign currency exchange rates. The Group controls the credit risks
associated with these financial instruments through credit approvals,
investment limits and centralized monitoring procedures but does not
normally give or require collateral or other security to or from the
parties to the financial instruments with off-balance sheet risk. In
addition, the Group conducts its operations with customers located
throughout the world. Management believes that receivables are well
diversified, thereby reducing potential risk to the Group. As a
consequence, the Group does not anticipate non-performance by
counterparts which could have a significant impact on its financial
position or results of operations. As far as financial instruments are
concerned, the Group uses liquid instruments with creditworthy
financial institutions. The Group does not enter into leveraged,
tiered or illiquid contracts.
22-1 Hedging strategy
Hedging of trade transactions in foreign currencies
The policy of the Group is to hedge its transactional exposure
involving cash flows in foreign currencies. Cover is executed
centrally by the Group Treasury Department which seeks to match a net
exposures across the Group and then to cover the net position
externally. The Group Treasury Department exercises limited discretion
over the timing of such cover activity within well defined and tightly
controlled limits.
Balance sheet hedging
In terms of balance sheet exposure, the policy is implemented by
matching foreign currency assets and liabilities wherever possible.
This is achieved through the individual capital structure of overseas
subsidiaries complemented by Group central hedging activity. Such
hedging activity includes interest rate and currency swaps, interest
rate options and forward rate agreements.
Commodities
In terms of commodity price risk, the Group's policy is to hedge known
commitments in order to reduce adverse price fluctuations. This is
achieved through a combination of commercial supply contracts and
financial instruments, including forward swaps and options.
32
<PAGE>
22-2 Summary of financial instruments
<TABLE>
<CAPTION>
(In millions of FF) 1995
Instrument Maturity
Interest rate hedging activity Total 1996 1997 1998 1999 2000 beyond
<S> <C> <C> <C> <C> <C> <C> <C>
Long-term interest rate swap
- - Receive-fixed swap Notional amount(a) 4,136 - 760 1,530 - 490 1,356
Weighted average received rate 7.81%
Weighted average paid rate (as of 31.12.95) 6.70%
- - Pay-fixed swap Notional amount(a) 3,754 311 2,325 245 - - 873
Weighted average paid rate 8.37%
Weighted average received rate (as of 31.12.95) 5.27%
-------------------------------------------------------------
Foreign currency hedging activity Total 1996 1997 1998 1999 2000 beyond
Forward exchange contract Notional amount 1,811 1,787 24 - - - -
Short-term currency swaps Notional amount 7,883 7,883 - - - - -
------------------------------------------------------------------------------
Commodity hedging activity Total 1996 1997 1998 1999 2000 beyond
Forward swaps Notional amount 150 135 15 - - - -
Collars Notional amount 154 154 - - - - -
------------------------------------------------------------------------------
</TABLE>
(a) Notional amount includes different swaps denominated in foreign currencies
and translated into French Francs using the consolidation closing rate.
<TABLE>
<CAPTION>
(In millions of FF) 1994
Instrument Maturity
Interest rate hedging activity Total 1995 1996 1997 1998 1999 beyond
<S> <C> <C> <C> <C> <C> <C> <C>
Long-term interest rate swap
- - Receive-fixed swap Notional amount(a) 2,895 - - 835 - - 2,060
Weighted average received rate 8.15%
Weighted average paid rate (as of 31.12.94) 8.38%
- - Pay-fixed swap Notional amount(a) 3,814 321 34 2,384 267 - 808
Weighted average paid rate 8.03%
Weighted average received rate (as of 31.12.94) 6.22%
------------------------------------------------------------------------------
FRA contract
Notional amount bought 411 411 - - - - -
Guaranteed rate 5.86%
Notional amount sold 536 536 - - - - -
Guaranteed rate 6.00%
------------------------------------------------------------------------------
CAP (b)
Notional amount bought 1,484 1,484 - - - - -
Guaranteed rate 6.40%
------------------------------------------------------------------------------
FLOOR (b)
Notional amount bought 418 418 - - - - -
Guaranteed rate 5.00%
------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Foreign currency hedging activity Total 1995 1996 1997 1998 1999 beyond
<S> <C> <C> <C> <C> <C> <C> <C>
Forward exchange contract Notional amount 1,123 1,085 26 12 - - -
Short-term currency swaps Notional amount 11,551 11,551 - - - - -
<FN>
(a) Notional amount includes different swaps denominated in foreign currencies
and translated into French Francs using the consolidation closing rate.
(b) These CAPS and FLOORS cover 1994 operations and mature early January 1995.
</FN>
</TABLE>
<TABLE>
<CAPTION>
(In millions of FF) 1993
Instrument Maturity
Interest rate hedging activity Total 1994 1995 1996 1997 1998 1999 beyond
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term interest rate swap
- - Receive-fixed swap Notional amount(a) 1,209 - - - - - - 1,209
Weighted average received rate 7.28%
Weighted average paid rate (as of 31.12.93) 5.37%
- - Pay-fixed swap Notional amount(a) 2,422 295 354 295 436 295 - 747
Weighted average paid rate 8.33%
Weighted average received rate (as of 31.12.93) 4.37%
Swaption
- Pay-fixed swap Notional amount 884 884 - - - - - -
Paid rate 7.36%
Received rate (as of 31.12.93) 5.25%
----------------------------------------------------------------------------------
FRA contract
Notional amount bought 1,192 1,192 - - - - - -
Guaranteed rate 7.26%
Notional amount sold 1,024 1,024 - - - - -
Guaranteed rate 6.64%
----------------------------------------------------------------------------------
CAP (b)
Notional amount bought 2,256 737 1,519 - - - - -
Guaranteed rate 5.49%
----------------------------------------------------------------------------------
FLOOR (b)
Notional amount bought 436 - 436 - - - - -
Guaranteed rate 5.00%
----------------------------------------------------------------------------------
Foreign currency hedging activity Total 1994 1995 1996 1997 1998 1999 beyond
Forward exchange contract Notional amount 856 845 11 - - - - -
Short-term currency swaps Notional amount 674 674 - - - - - -
----------------------------------------------------------------------------------
<FN>
(a) Notional amount includes different swaps denominated in foreign currencies
and translated into French Francs using the consolidation closing rate.
</FN>
</TABLE>
22-3 Concentration of credit risk
The financial instruments discussed above contain an element of risk
that the counterparts may be unable to meet the terms of the
agreements. However, the Group minimizes such risk exposure by
limiting the counterparts to major international banks and financial
institutions. Management does not expect to record any significant
losses as a result of counterpart default. The Group has business
activities with customers and associates around the world, and its
receivables from and guarantees to such parties are well diversified.
Consequently, in management's opinion, no significant concentration of
credit risk exists for the Group.
34
<PAGE>
22-4 Fair value of financial instruments
In December 1991, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 107 ("SFAS 107")
"Disclosures about Fair Value of Financial Instruments", which was
subsequently amended in 1994 by Statement of Financial Accounting
Standards No. 119 ("SFAS 119") "Disclosure about Derivatives Financial
Instruments and Fair Value of Financial Instruments". SFAS 107 and
SFAS 119 require disclosures of the estimated fair value of all
financial instruments other than specified items such as lease
contracts, subsidiary and affiliate investments and employers' pension
and benefit obligations. Except for publicly traded equity and
marketable debt securities for which market prices have been used,
these values have been estimated for the majority of the Group's
financial instruments. Accordingly, fair values are based on estimates
using various valuation techniques, such as present value of future
cash flows. However, methods and assumptions used to disclose data
presented herein are inherently judgmental and involve various
limitations, including the following :
- fair values presented do not take into consideration the effects
of future interest rate and currency fluctuations,
- fair values presented do not take into consideration any tax
impact,
- estimates are not necessarily indicative of the amounts that the
Group would realize upon subsequent disposal or termination of a
financial instrument.
As a consequence, the use of different estimations, methodologies and
assumptions may have a material effect on the estimated fair value
amounts. The methodologies used are as follows :
Non-current assets, investments and loans to non-consolidated
companies
The fair values of these financial instruments were determined by
estimating future cash flows on an item-by-item basis and discounting
these future cash flows using the Group's incremental rates at
year-end for similar types of financial instruments.
Cash and cash equivalents, trade and other receivables, bank
overdrafts, short-term borrowings, accounts payable and other current
liabilities
The carrying amounts reflected in the consolidated financial
statements are reasonable estimates of fair value because of the
relatively short period of time between the origination of the
instruments and their expected realization.
Long-term debt
The fair values of these financial instruments were determined by
estimating future cash flows on a borrowing-by-borrowing basis and
discounting these future cash flows using the Group's incremental
borrowing rates at year-end for similar types of borrowing
arrangements. Interest on floating long-term debt are settled for
short periods. As a consequence, the fair value is approximated by the
carrying value.
Interest rate swaps, currency swaps, FRAs, swaptions, options and
forward exchange contracts
The fair value of these instruments is the estimated amount that the
Group would receive or pay to settle the related agreements as of
December 31, 1995, 1994 and 1993 based upon current interest rates.
35
<PAGE>
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
Carrying Estimated Carrying Estimated Carrying Estimated
amount fair value amount fair value amount fair value
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
Equity securities for which it is :
- Practicable to estimate fair value 88 88 97 97 140 140
- Not practicable 31 31 10 10 19 19
Loans and advances 56 53 56 52 128 125
Perpetual notes (c) 1,087 929 1,146 1,042 1,199 1,349
Debenture loans 1,917 1,943 2,248 2,117 1,505 1,612
Bank loans 422 414 189 190 257 257
Preference shares (d) 2,100 2,122 627 621 1,307 1,373
Current portion of long-term debt 1,379 1,379 1,318 1,318 1,399 1,399
(excluding current portion of
capital lease obligation)
OFF-BALANCE SHEET
Long-term interest rate swaps - (38) - (182) - (158)
Short-term currency swaps - (b) - (b) - (b)
Caps/Floor contracts - (a) - (a) - (a)
FRA contracts - (a) - (a) - (a)
Swaptions - (a) - (a) - (a)
Forward exchange contracts - (a) - (a) - (a)
Financial guarantees - (a) - (a) - (a)
Commodity hedging activity
Forward swaps - (10) - - - -
Collars - (a) - - - -
<FN>
(a) Estimated fair value is immaterial.
(b) In view of the short average remaining maturity of the currency swaps, the
effect of discount premiums on the fair value was considered immaterial.
(c) The fair value of the Perpetual notes (FF 624 million, FF 769 million and
FF 735 million at December 31, 1995, 1994 and 1993 respectively) includes
the effect of the related swap for FF 305 million, FF 273 million and FF
614 million at December 31, 1995, 1994 and 1993 respectively.
(d) The fair value of Preference shares at December 31, 1995 includes the
effect of indemnity fees (FF 48 million) relating to SPEC Preference
shares.
</FN>
</TABLE>
Note 23 - OTHER COMMITMENTS
23-1 Capital commitments
At December 31, 1995, total capital commitments (authorized and
committed) amounted to FF 369 million.
23- 2 Other commitments
Commitments not otherwise disclosed amount to:
<TABLE>
<CAPTION>
(In millions of FF) 1995 1994 1993
<S> <C> <C> <C>
Retirement indemnities (1) 101 107 96
Discounted bills with recourse 131 155 191
Other commitments 356 302 237
<FN>
(1) net amount of differences arising from changes in actuarial
assumptions spread over the average remaining service lives of
the employees.
</FN>
</TABLE>
36
<PAGE>
Note 24 - INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHICAL AREA
The tables below set out an analysis of net sales, operating income,
capital expenditure, number of employees, identifiable assets,
corporate assets and total assets at year end by business segment and
geographical area (country of production):
24-1 Business segment
<TABLE>
<CAPTION>
Engineering
Metal Plastics & other Intersegment
(In millions of FF) Packaging Packaging activities Sales Total
<S> <C> <C> <C> <C> <C>
1993
Net sales 17,899 5,341 1,232 (132) 24,340
Operating income 1,288 316 (21) 1,583
Capital expenditure 1,125 385 57 1,567
Number of employees 21,010 7,940 2,930 31,880
Identifiable assets (*) 11,574 3,593 2,435 17,602
Corporate assets (*) - - 1,154 1,154
Goodwill 2,692 1,250 60 4,002
Merger intangible 4,691 - - 4,691
Total assets 18,957 4,843 3,649 27,449
----------------------------------------------------------
1994
Net sales 18,615 5,055 1,334 (114) 24,890
Operating income 1,451 245 13 1,709
Capital expenditure 1,540 382 66 1,988
Number of employees 20,240 7,350 2,700 30,290
Identifiable assets (*) 11,408 3,937 2,873 18,218
Corporate assets (*) - - 1,490 1,490
Goodwill 2,593 1,409 71 4,073
Merger intangible 4,691 - - 4,691
Total assets 18,692 5,346 4,434 28,472
----------------------------------------------------------
1995
Net sales 18,678 5,085 992 (145) 24,610
Operating income 1,139 234 (24) 1,349
Capital expenditure 1,541 361 95 1,997
Number of employees 20,720 6,223 1,557 28,500
Identifiable assets (*) 12,547 2,733 2,530 17,810
Corporate assets (*) - - 2,198 2,198
Goodwill 2,706 1,207 148 4,061
Merger intangible 4,691 - - 4,691
Total assets 19,944 3,940 4,876 28,760
----------------------------------------------------------
<FN>
(*) excluding goodwill and merger intangible
</FN>
</TABLE>
37
<PAGE>
24-2 Geographical area
<TABLE>
<CAPTION>
(In millions of FF) European Other Total
Union
<S> <C> <C> <C>
1993
Net sales 19,317 5,023 24,340
Operating income 1,189 394 1,583
Capital expenditure 1,010 557 1,567
Number of employees 21,460 10,420 31,880
Identifiable assets (*) 11,961 5,641 17,602
Corporate assets (*) 1,137 17 1,154
Goodwill 2,206 1,796 4,002
Merger intangible 4,691 - 4,691
Total assets 19,995 7,454 27,449
------ ----- ------
1994
Net sales 19,478 5,412 24,890
Operating income 1,409 300 1,709
Capital expenditure 1,128 860 1,988
Number of employees 20,480 9,810 30,290
Identifiable assets (*) 12,178 6,040 18,218
Corporate assets (*) 1,279 211 1,490
Goodwill 2,559 1,514 4,073
Merger intangible 4,691 - 4,691
Total assets 20,707 7,765 28,472
------ ----- ------
1995
Net sales 19,185 5,425 24,610
Operating income 1,111 238 1,349
Capital expenditure 1,160 837 1,997
Number of employees 18,910 9,590 28,500
Identifiable assets (*) 11,996 5,814 17,810
Corporate assets (*) 1,972 226 2,198
Goodwill 2,692 1,369 4,061
Merger intangible 4,691 - 4,691
Total assets 21,351 7,409 28,760
------ ----- ------
<FN>
(*) excluding goodwill and merger intangible
</FN>
</TABLE>
Note 25 - RELATED PARTIES
Transactions with equity investees
Net sales, receivables and payables with related parties (equity
investees) were not material for 1993, 1994 and 1995.
Note 26 - LEASES (*)
<TABLE>
<CAPTION>
(In millions of FF) Capital Leases Operating Leases
Rentals payable Rentals payable
1995 1994 1995 1994
<S> <C> <C> <C> <C>
1995 - 96 - 33
1996 79 79 72 27
1997 67 72 39 18
1998 58 56 24 16
1999 51 52 18 15
2000 (and after) 29 112 14 49
2001 and after 76 - 40 -
--- --- --- ---
Total minimum rentals 360 467 207 158
Less: amounts representing interest (92) (111) === ===
--- ---
Capital lease obligations 268 356
=== ===
<FN>
(*) Information not available for 1993
</FN>
</TABLE>
38
<PAGE>
Note 27 - LIST OF THE MAIN GROUP ENTITIES AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
Group entities Countries Group interest Percentage of
control
<S> <C> <C> <C>
EUROSTEEL
Food Europe
CarnaudMetalbox Alimentaire SA France 100.00 100.00
CarnaudMetalbox BMI France 100.00 100.00
CarnaudMetalbox Cofem/BMA France 100.00 100.00
Eurocan Food NV Belgium 100.00 100.00
CarnaudMetalbox Magyarorszag KFT Hungary 100.00 100.00
CarnaudMetalbox Slovakia Sro Slovakia 75.00 75.00
CarnaudMetalbox Plc (1) United Kingdom 100.00 100.00
Zuchner Verpackungen GmbH & Co. KG Germany 100.00 100.00
Blechpackungswerk Eberswalde / Britz GmbH Germany 100.00 100.00
CarnaudMetalbox Nahrungsmitteldosen GmbH Germany 100.00 100.00
Eberswalde Verpackungen GmbH Germany 100.00 100.00
Wehrstedt Verwaltungs GmbH Germany 100.00 100.00
GWS Metallipakkaus OY Finland 80.00 80.00
Envases CarnaudMetalbox SA (1) Spain 99.86 99.86
CMB Envases Alimentarios SA Spain 99.86 99.86
Envases Murcianos SA Spain 100.00 100.00
CMB Colep Embalagens SA Portugal 54.92 54.92
Faba Spa Italy 100.00 100.00
Faba Sud Spa Italy 90.48 100.00
Nuova Sirma Spa Italy 100.00 100.00
Baroni Srl Italy 100.00 100.00
Italgraf Spa Italy 90.00 90.00
Hellas Can SA (1) Greece 72.79 72.79
<FN>
(1) Companies operating in several segments/operations
(2) Associated companies
</FN>
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Group entities Countries Group interest Percentage of
control
<S> <C> <C> <C>
Food Closures
CarnaudMetalbox Closures Plc United Kingdom 100.00 100.00
CMB Italcaps Srl Italy 100.00 100.00
Zuchner Verschlusse GmbH Germany 100.00 100.00
Envases CarnaudMetalbox SA (1) Spain 99.86 99.86
CMB Closures Benelux BV The Netherlands 100.00 100.00
CarnaudMetalbox Capsules SA France 100.00 100.00
Anchor Hocking Packaging Co. United States 100.00 100.00
Anchor Cap and Closures Canada 100.00 100.00
Speciality Packaging Europe
CarnaudMetalbox Industries SA France 100.00 100.00
SMG France 100.00 100.00
CarnaudMetalbox Speciality Packaging (UK) Plc United Kingdom 100.00 100.00
Zuchner Gruss Metallverpackungen GmbH & Co. KG Germany 100.00 100.00
Zuchner Metallverpackungen GmbH Germany 100.00 100.00
CMB Promotional Packaging BV The Netherlands 100.00 100.00
Speciality Packaging Nederland BV The Netherlands 100.00 100.00
Envases Metalner SA Spain 100.00 100.00
Speciality Packaging Belgium NV Belgium 100.00 100.00
CarnaudMetalbox Enterprises, Inc. (1) United States 100.00 100,00
Quitmann Ltd. Ireland 100.00 100.00
Stephan & Hoffman Germany 100.00 100.00
BMW Vogel AG Switzerland 100.00 100.00
Aerosols Europe
CarnaudMetalbox Aerosols (UK) Plc United Kingdom 100.00 100.00
Superbox Aerosols Srl Italy 100.00 100.00
CarnaudMetalbox Aerosols France SA France 100.00 100.00
CarnaudMetalbox Aerosoles SA Spain 99.86 100.00
CMB Aerosoldosen Deutschland GmbH Germany 100.00 100.00
CarnaudMetalbox Enterprises, Inc. (1) United States 100.00 100.00
BEVERAGE
CarnaudMetalbox Bevcan Plc United Kingdom 100.00 100.00
Envases de Bebidas SA Spain 99.86 100.00
Eurocan Dranken NV Belgium 100.00 100.00
Eurodeksels NV Belgium 100.00 100.00
Hellas Can SA (1) Greece 72.79 72.79
Sofreb France 100.00 100.00
Superbox Contenitori per Bevande Srl Italy 100.00 100.00
CarnaudMetalbox Ambalaj Sanayive Ticaret AS Turkey 100.00 100.00
Dufalco (2) Belgium 50.00 50.00
ENGINEERING
CarnaudMetalbox Engineering Plc United Kingdom 100.00 100.00
CarnaudMetalbox Enterprises, Inc. (1) United States 100.00 100.00
Simplimatic Engineering Company United States 100.00 100.00
<FN>
(1) Companies operating in several segments/operations
(2) Associated companies
</FN>
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Group entities Countries Group interest Percentage of
control
<S> <C> <C> <C>
PLASTICS
AMS Europe
AMS Packaging SA France 94.99 94.99
AMS Europe France 94.99 100.00
EMA France 94.99 100.00
Kerplas SNC France 94.99 100.00
Plastigold France 94.99 100.00
Reggiani Italy 100.00 100.00
Kerplas Neuenburg Germany 100.00 100.00
Momiplast Belgium 81.02 85.30
Momitube Belgium 87.87 100.00
Risdon Ltd. United Kingdom 94.99 100.00
AMS America, Inc. United States 100.00 100.00
Risdon (USA)
Risdon Corporation United States 100.00 100.00
Bottles & Closures Europe
CarnaudMetalbox Plastique SA France 100.00 100.00
Astraplastique France 100.00 100.00
CMB Plastique France 100.00 100.00
Polyflex France 94.99 100.00
BAP France 100.00 100.00
CMB Plastique SNC France France 100.00 100.00
CMB Bottles & Closures Plc United Kingdom 100.00 100.00
Massmould Holdings Ltd. United Kingdom 100.00 100.00
United Closures and Plastics Plc United Kingdom 100.00 100.00
Raku Germany 100.00 100.00
Rexpak SA Spain 100.00 100.00
CMB Plastpak Plastik Ambalaj Sanayi AS Turkey 100.00 100.00
Zeller Plastik GmbH Germany 100.00 100.00
Spraysol GmbH Germany 100.00 100.00
Zeller France SA France 100.00 100.00
Zeller Plastik UK Ltd. United Kingdom 100.00 100.00
Zeller Plastik Italia Spa Italy 49.00 49.00
Zeller Plastik SA (ex Intaplas SA) Spain 98.98 99.12
Zeller Closures Inc. (USA) United States 100.00 100.00
Zeller Plastik SEA Pte Ltd. Singapore 100.00 100.00
Noltemeyer GmbH Germany 100.00 100.00
<FN>
(1) Companies operating in several segments/operations
(2) Associated companies
</FN>
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Group entities Countries Group interest Percentage of
control
<S> <C> <C> <C>
ASIA-PACIFIC
CarnaudMetalbox (Asia-Pacific) Holdings Pte Ltd. Singapore 51.00 51.00
CarnaudMetalbox Asia Ltd. Singapore 40.85 75.20
Pet Containers Pte Ltd. Singapore 29.82 73.00
CarnaudMetalbox Bevcan Ltd. Thailand 40.33 100.00
CarnaudMetalbox (Thailand) Ltd. Thailand 24.33 59.57
CarnaudMetalbox (Hong Kong) Ltd. Hong Kong 48.46 100.00
CarnaudMetalbox (HK) Holdings Ltd. Hong Kong 48.46 100.00
CarnaudMetalbox (Hong Kong) Ltd Hong Kong 48.46 50.00
CarnaudMetalbox (Shenzhen) Ltd. China 48.46 100.00
CarnaudMetalbox (Guangzhou) Ltd. China 34.72 85.00
Shanghai CarnaudMetalbox Co. Ltd. China 26.55 65.00
Beijing CarnaudMetalbox Co. Ltd. China 24.51 60.00
CarnaudMetalbox (Wuxi) Closures Co. Ltd China 54.21 57.00
CarnaudMetalbox Packaging Pte Ltd. Singapore 40.85 100.00
CarnaudMetalbox Technical Services Pte Ltd. Singapore 40.85 100.00
CarnaudMetalbox Closures Pte Ltd Singapore 95.10 100.00
CarnaudMetalbox Bevcan Sdn Bhd Malaysia 100.00 100.00
CarnaudMetalbox Packaging Sdn Bhd Malaysia 100.00 100.00
CarnaudMetalbox (Saigon) Ltd. Vietnam 28.60 70.00
AFRICA - MIDDLE EAST - CARIBBEAN
CarnaudMetalbox Overseas Ltd. United Kingdom 100.00 100.00
CarnaudMetalbox Nigeria Plc Nigeria 56.14 56.14
CarnaudMetalbox Toyo Glass Nigeria Plc Nigeria 53.48 53.48
CarnaudMetalbox Kenya Ltd. Kenya 98.81 98.81
CarnaudMetalbox Siem Ivory Coast 84.75 84.75
CarnaudMetalbox (Zimbabwe) Ltd. Zimbabwe 70.00 70.00
CarnaudMetalbox Senegal Senegal 72.47 72.47
CarnaudMetalbox Jamaica Ltd. Jamaica 100.00 100.00
CarnaudMetalbox Barbados Ltd. Barbados 100.00 100.00
CMB Packaging Trinidad Ltd. Trinidad 100.00 100.00
CarnaudMetalbox Tanzania Ltd. Tanzania 57.00 57.00
Carnaud Maroc (2) Morocco 44.67 44.67
<FN>
(1) Companies operating in several segments/operations
(2) Associated companies
</FN>
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Group entities Countries Group interest Percentage of
control
<S> <C> <C> <C>
TECHNOLOGY
CarnaudMetalbox Technology Plc United Kingdom 100.00 100.00
HOLDINGS
CarnaudMetalbox France Parent Company
Societe de Participations CarnaudMetalbox (SPC) France 100.00 100.00
CarnaudMetalbox Group Services (GEIE) France 100.00 100.00
Societe de Participations Etrangeres CarnaudMetalbox (SPEC) France 100.00(*) 72.00(*)
CMB Packaging International NV Belgium 100.00 100.00
CarnaudMetalbox NV The Netherlands 100.00 100.00
CarnaudMetalbox Group UK Ltd. United Kingdom 100.00 100.00
CarnaudMetalbox Holdings (UK) Ltd. United Kingdom 100.00 100.00
CarnaudMetalbox Plc (1) United Kingdom 100.00 100.00
CarnaudMetalbox Deutschland GmbH Germany 100.00 100.00
CarnaudMetalbox Plastik Holding GmbH Germany 100.00 100.00
CarnaudMetalbox Italia Srl Italy 100.00 100.00
Envases CarnaudMetalbox SA (1) Spain 99.86 99.86
CarnaudMetalbox Investments (USA), Inc. United States 100.00 100.00
Standfast Reinsurance Luxembourg 100.00 100.00
<FN>
(1) Companies operating in several segments/operations
(2) Associated companies
(*) See Note 12-2
</FN>
</TABLE>
43
Exhibit 99.2
Unaudited Pro Forma Consolidated Condensed Financial Statements
The following unaudited pro forma consolidated condensed financial statements
give effect to the acquisition of CarnaudMetalbox ("CMB") under the purchase
method of accounting. The unaudited pro forma consolidated condensed balance
sheet combines the historical consolidated balance sheets of Crown Cork & Seal
Company, Inc. ("Crown") and CMB giving effect to the acquisition as if it had
occurred on December 31, 1995. The unaudited pro forma consolidated condensed
statement of operations for the year ended December 31, 1995 combines the
historical consolidated statements of operations of Crown and CMB giving effect
to the acquisition as if it had occurred on January 1, 1995.
The unaudited pro forma consolidated condensed financial statements are for
illustrative purposes only and have been presented to meet the requirements of
the Securities and Exchange Commission. They are not necessarily indicative of
the results of operations that might have occurred had the acquisition actually
taken place on January 1, 1995 or the actual financial position that might have
resulted had the acquisition been consummated on December 31, 1995, or of future
results of operations or financial position of Crown.
The unaudited pro forma consolidated condensed financial statements are based on
the historical consolidated financial statements of Crown and CMB and should be
read in conjunction with such historical financial statements and the notes
thereto, which are, in the case of CMB, included as Exhibit 99.1 to this Form
8-K (the "CMB Financial Statements"), and, in the case of Crown, filed with
Crown's Annual Report on Form 10-K for the year ended December 31, 1995. Certain
reclassifications have been made to CMB's historical consolidated financial
statements to conform with the presentation of Crown's historical consolidated
financial statements for the year ended December 31, 1995. Furthermore, the
historical financial statements for CMB, prepared in accordance with French law
and presented in French francs, have for purposes of preparing these unaudited
pro forma consolidated condensed financial statements been conformed to comply
with U. S. GAAP and, in accordance with SFAS No. 52, have been translated to U.
S. dollars at an assumed exchange rate equal to FF 4.982/$1.00 (the average 1995
rate) for the pro forma statement of operations for the year ended December 31,
1995 and FF 4.904/$1.00 (the December 31, 1995 closing rate) for the pro forma
balance sheet as of December 31, 1995. See Note 1-B of the CMB's Financial
Statements for the reconciliation of CMB's 1995, 1994 and 1993 net income and
shareholders' equity to U. S. GAAP. Such translations should not be construed as
representations that French franc amounts represent, have been or could be
converted into U. S. dollars at that or any other rate. The use of exchange
rates different from those used in the unaudited pro forma consolidated
condensed financial statements could have a material impact on the information
presented therein.
<PAGE>
Unaudited Pro Forma Consolidated Condensed Financial Statements (Continued)
In accordance with the purchase method of accounting, the total purchase price
has been allocated to the assets and liabilities of CMB based upon their
relative fair values. The accompanying unaudited pro forma consolidated
condensed financial statements reflect the preliminary allocation of purchase
price to assets and liabilities. Accordingly, the final allocations will differ
from the amounts reflected herein.
The $3.2 billion pro forma excess of purchase price over net assets acquired as
of December 31, 1995 is being amortized over 40 years at a rate of $80 million
per year, in accordance with generally accepted accounting principles, which
require that acquired intangibles be amortized over lives not to exceed 40
years. Crown believes that the intangible assets acquired, representing
principally CMB's customer base and CMB's European market presence, represent
assets with indefinite lives, which have historically appreciated in value over
time. In addition, the acquisition will facilitate the continued expansion of
current lines of business as well as the development of new businesses via the
cross-selling of packaging product offerings of both Crown and CMB to existing
and potential customers. Crown believes it will benefit from the acquisition for
a period of at least 40 years and, therefore, a 40-year amortization period is
considered appropriate.
Crown has commenced appraisals and other studies of the significant assets,
liabilities and business operations of CMB. The unaudited pro forma consolidated
condensed financial statements reflect the preliminary results of these reviews,
including Crown's initial estimate of known restructuring and rationalization
efforts. Crown expects to incur further restructuring costs and expenses in
connection with the acquisition which are not currently determinable.
A final allocation of the purchase price, including allocation to tangible
assets, liabilities, identifiable intangible assets and goodwill will be
completed during the year when appraisals, other studies and additional reviews
are completed.
Crown will perform periodic reviews of the goodwill and other intangible assets
arising from the acquisition, to ensure that they are carried at recoverable
amounts in light of current business conditions.
<PAGE>
Pro Forma Consolidated Condensed Statement of Operations
For the Year Ended December 31, 1995
Unaudited
( US Dollars in millions, except per share data)
<TABLE>
<CAPTION>
Historical Amounts Pro Forma
Crown CMB Adjustments Consolidated
<S> <C> <C> <C> <C>
Net Sales $ 5,054 $ 4,939 $ 9,993
Costs of products sold 4,311 3,926 8,237
Depreciation and amortization 256 292 $ (18) (A) 530
Selling and administrative expense 139 415 554
Provision for restructuring 103 55 158
Interest expense 149 130 135 (B) 414
Interest income (13) (25) (38)
Translation and exchange adjustments (1) 2 1
Preference share dividends and other (13) (13)
------------- ------------- ------------- -------------
Income from operations before
income taxes 110 157 (117) 150
-
Income taxes 25 11 (26) (C) 10
Equity in earnings of affiliates 4 1 5
Minority interests (14) 3 (3) (D) (14)
------------- ------------- ------------- -------------
Net income 75 150 (94) 131
Crown Acquisition Preferred Stock dividends (23) (E) (23)
------------- ------------- ------------- -------------
Net income available for common stock $ 75 $ 150 $ (117) $ 108
============= ============= ============= =============
Earnings per share $ 0.83 $ 1.76 $ 0.85
Average number of common shares
outstanding 90,233,518 85,327,985 127,534,336
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
A. To reflect the net decrease in depreciation and amortization expense due to
(i) amortization of the excess purchase price over net tangible assets
acquired on a straight-line basis over 40 years, net of elimination of CMB
historical amortization of excess acquisition costs over the values
assigned to net assets acquired in prior acquisitions, (ii) additional
amortization resulting from basis assigned to intangible assets other than
goodwill, (iii) net decrease in depreciation resulting from change in asset
basis and lives identified in the preliminary appraisal process, and (iv)
decreased depreciation resulting from property and equipment written-off
under known plans of restructuring.
B. To reflect the increase in interest expense resulting from the use of new
borrowings to finance a portion of the purchase price. The interest rate on
new borrowings of $1.8 billion is assumed to be 7.5%.
C. Income tax effect of increased interest net of decreased depreciation at
the statutory tax rate of 37%. The Company expects its effective income tax
rate to be higher in the future since a significant portion of the purchase
price will be non-deductible for tax purposes.
D. To reflect minority interests of approximately 1.3% in CMB.
E. To reflect dividends on Crown Acquisition Preferred Stock of $1.88 per
share per annum on 12,432,622 outstanding shares.
<PAGE>
Pro Forma Consolidated Condensed Balance Sheet
December 31, 1995
Unaudited
( US Dollars in millions)
<TABLE>
<CAPTION>
Historical Amounts Pro Forma
Crown CMB Adjustments Consolidated
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 68 $ 539 $ 554
Receivables 744 1,080 $ 53 (A) 1,824
Inventories 812 749 1,561
Prepaid expenses and other current assets 85 85
Long-term receivables 64 64
Investments 57 56 113
Excess of purchase price over net assets 0
acquired, net of amortization 1,096 1,239 1,910 (B) 4,245
Property, plant and equipment 2,006 1,785 139 (C) 3,930
Other non-current assets 120 201 111 (D) 432
-------- -------- -------- --------
Total assets $ 5,052 $ 5,649 $ 2,107 $ 12,808
======== ======== ======== ========
Liabilities and shareholders' equity
Short-term debt and current portion of long-term
debt $ 608 $ 323 $ 931
Accounts payable and accrued liabilities 668 1,259 1,927
Other current liabilities 3 43 46
Long-term debt, excluding current maturities 1,490 1,175 $ 1,790 (E) 4,455
Postretirement and pension liabilities 591 130 721
Other non-current liabilities 112 348 379 (F) 839
Minority interests 119 276 (50) 345
Crown Aquisition Preferred Stock 521 (G) 521
Common stock 593 176 10 (H) 779
Retained Earnings 1,049 998 (998)(H) 1,049
Cumulative translation adjustment (192) (550) 550 (H) (192)
Other shareholders' equity 11 1,471 (95)(H) 1,387
-------- -------- -------- --------
Total liabilities and shareholders' equity $ 5,052 $ 5,649 $ 2,107 $ 12,808
======== ======== ======== ========
</TABLE>
<PAGE>
A. The pro forma adjustment to cash represents transaction expenses estimated
at approximately $53 million.
B. To reflect the excess of acquisition cost over the estimated fair market
value of net assets acquired (goodwill).
C. To reflect the step-up in property, plant and equipment values to
preliminary appraised fair market value. Included within the pro forma
adjustment are gross step-up in asset values of $354 million and write-off
of asset values of $215 million. The write-off of asset value relates to
appraised fair market values being less than carrying value and also to
those assets which are included within a known and approved plan of
restructuring whose estimated recovery value is less than carrying value.
D. To reflect estimated net deferred income tax assets arising from the pro
forma adjustments. Included within the pro forma adjustment to other
non-current assets is $50 million related to the estimated fair market
value of intangible assets acquired.
E. To reflect the borrowings to finance the cash portion of the purchase
price.
F. To reflect fair market value adjustments to the carrying value of other
non-current liabilities, unfavorable leases, contracts and commitments and
restructuring accruals. Restructuring accruals include the costs associated
with plant rationalizations and employee terminations to eliminate
duplicate facilities and excess capacity.
G. To reflect Crown Acquisition Preferred Stock issued in consideration of the
purchase price.
H. To reflect the elimination of the shareholders' equity accounts of CMB and
to reflect the issuance of Crown common stock in consideration of the
purchase price.
