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