<PAGE>
Rules 424(b)(3) and 424(c)
Registration No. 333-1928
PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED MARCH 28, 1996
AND PROSPECTUS SUPPLEMENTS DATED MAY 21, 1996
AND JULY 16, 1996
U.S. OFFICE PRODUCTS COMPANY
U.S. Office Products Company (the "Company") has prepared this Prospectus
Supplement to update certain information included in the Company's Prospectus
dated March 28, 1996, covering 19,174,575 shares of the Company's common stock,
$.001 par value (the "Common Stock"), and Prospectus Supplements dated May 21,
1996 and July 16, 1996.
On July 22, 1996, U.S. Office Products Company (the "Company") and its
wholly-owned subsidiary, Blue Star Group Limited ("Blue Star"), agreed to
acquire all of the outstanding stock of Whitcoulls Group Limited, a New Zealand
corporation ("Whitcoulls"), for $220 million in cash (the "Acquisition"). In
connection with the Acquisition, the Company will repay $35 million of
Whitcoulls' indebtedness on the closing date. The consideration to be paid in
the Acquisition was determined pursuant to arm's-length negotiations and will be
paid from the Company's cash on hand. The Company intends to continue the use of
the assets of Whitcoulls in the businesses in which they currently operate. The
closing of the Acquisition is subject to foreign investment approval in New
Zealand.
As of July 22, 1996, Whitcoulls operated nine principal subsidiaries that it
has acquired during the past six years. Through its subsidiaries, Whitcoulls
sells a broad array of office, educational and printing products and services to
the commercial, retail and school supply markets in New Zealand. In addition,
Whitcoulls operates numerous stationery and book stores, (including franchised
stores) in New Zealand and Australia.
Attached hereto (and made a part hereof) are (i) the pro forma financial
statements of the Company as of April 30, 1996 and for the years ended April 30,
1996, 1995 and 1994, and (ii) financial statements for Whitcoulls.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JULY 23, 1996
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma combined balance sheet gives effect to the
Company's acquisitions of businesses acquired after the end of fiscal 1996
(the "Fiscal 1997 Completed Acquisitions"), the 42 acquisitions the Company
considers probable to occur (the "Fiscal 1997 Pending Acquisitions") and the
Fiscal 1997 Pending Acquisition of Whitcoulls Group Limited ("Whitcoulls") as
if all such acquisitions had occurred as of the Company's most recent balance
sheet date, April 30, 1996. The unaudited pro forma combined balance sheet
also gives effect to the sales by the Company in May and June 1996 of 5-1/2%
Convertible Subordinated Notes due 2003 (the "May Notes") in the principal
amount of $230 million (the "May Notes Offering") as if such sales had been
made on April 30, 1996.
The pro forma combined statement of income for the year ended April 30,
1996 gives effect to (i) the acquisitions completed during fiscal 1996 in
business combinations accounted for under the purchase method of accounting
(the "Fiscal 1996 Purchased Companies") as if all such acquisitions had been
made on May 1, 1995; (ii) the Fiscal 1997 Completed Acquisitions, the
Fiscal 1997 Pending Acquisitions and the Fiscal 1997 Pending Acquisition of
Whitcoulls as if all such acquisitions had been made on May 1, 1995; (iii)
the sales completed by the Company in August 1995 of 4,025,000 shares of
Common Stock (the "Second Offering") as if such sales had been made on May 1,
1995; (iv) the sales by the Company in February and March 1996 (the "February
Offerings") of 5,543,045 shares of Common Stock and 5-1/2% Convertible
Subordinated Notes due 2001 (the "February Notes") in the principal amount of
$143.75 million as if such sales had been made on May 1, 1995; and (v) the
sales by the Company of the May Notes in the May Notes Offering as if such
sales had been made on May 1, 1995.
The historical financial statements of the Company give retroactive
effect to the results of companies acquired by the Company in fiscal 1996 in
business combinations accounted for under the pooling-of-interests method.
The pro forma combined statement of income for the year ended April 30,
1996 includes (i) the audited financial information of the Company for the
year ended April 30, 1996, (ii) the unaudited financial information of the
businesses acquired during fiscal 1996 in business combinations accounted for
under the purchase method of accounting (the "Fiscal 1996 Purchased
Companies") for the period from May 1, 1995 to the consummation date and
(iii) the unaudited financial information of the Fiscal 1997 Completed
Acquisitions, the Fiscal 1997 Pending Acquisitions and the Fiscal 1997
Pending Acquisition of Whitcoulls for the most recently completed fiscal
year, except that unaudited financial information for the year ended
April 30, 1996 is included for each such acquisition, accounted for or to be
accounted for under the purchase method where the entity's fiscal year end is
not within 93 days of the Company's year end.
The pro forma combined statement of income for the years ended April 30,
1995 and 1994 gives effect to the Fiscal 1997 Pending Acquisitions which will
be accounted for under the pooling-of-interests method.
The pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deems appropriate. The
unaudited pro forma combined financial data presented herein does not purport
to represent the results the Company would have obtained had the transactions
which are the subject of pro forma adjustments occurred at the beginning of
the period, as assumed, or the future results of the Company. The pro forma
combined financial statements should be read in conjunction with the other
financial statements and notes thereto included elsewhere in this Report and
in other reports filed by the Company.
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
PRO-FORMA COMBINED BALANCE SHEET
APRIL 30, 1996
(000'S)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
FISCAL 1997
-----------------------------------------------------------
U.S. OFFICE PENDING
PRODUCTS CONSUMMATED PENDING ACQUISITION PRO-FORMA
COMPANY ACQUISITIONS ACQUISITIONS OF WHITCOULLS ADJUSTMENTS
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents............. $ 165,659 $ 4,473 $ 16,878 $ 4,974 $ (273,265)(c)
(109,830)(b)
Accounts receivable................... 126,159 24,735 45,492 29,695 --
Lease receivable ..................... 24,807 --
Inventory............................. 71,306 26,567 37,165 69,919 --
Prepaid and other current assets...... 18,463 4,479 7,390 -- --
------------ ----------- ------------ ------------- -------------
Total current assets................ 406,394 60,254 106,925 104,588 (383,095)
Property and equipment, net............. 50,529 11,172 30,237 56,016 16,214 (c)
Intangible assets, net.................. 133,803 7,567 2,708 34,958 319,794 (c)
Lease Receivables....................... 47,005 --
Other assets............................ 13,796 1,691 6,165 1,491 (6,575)(c)
------------ ----------- ------------ ------------- -------------
Total assets........................ $ 651,527 $ 80,684 $ 146,035 $ 197,053 $ (53,662)
------------ ----------- ------------ ------------- -------------
------------ ----------- ------------ ------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term debt....................... $ 86,260 $ 22,150 $ 20,707 $ 14,459 $ 33,817 (b)
Accounts payable...................... 63,763 15,042 32,364 42,399 --
Accrued compensation.................. 12,754 1,441 1,845 -- --
Other accrued liabilities............. 13,758 7,085 7,337 73 --
------------ ----------- ------------ ------------- -------------
Total current liabilities........... 176,535 45,718 62,253 56,931 33,817
Long-term debt.......................... 157,303 16,537 11,505 43,026 (71,068)(b)
Notes payable to related parties........ -- 2,321 1,610 -- (3,931)(b)
Deferred income taxes................... 6,148 23 186 (980) --
Other long-term liabilities............. 109 22 1,096 1,815 --
------------ ----------- ------------ ------------- -------------
Total liabilities................... 340,095 64,621 76,650 100,792 (41,182)
Minority Interest....................... 6,023 -- -- 483 (6,023)(c)
Stockholders' equity 6,684 (c)
Common stock.......................... 31 1,432 1,384 -- (2,805)(c)
Additional paid-in capital............ 279,306 4,604 2,425 -- 152,713 (c)
Cumulative Translation Adjustment..... 483 -- -- -- --
Retained earnings..................... 25,589 (12,511) 20,843 -- --
Equity of Purchased Companies........... 22,538 44,733 95,778 (163,049)(c)
------------ ----------- ------------ ------------- -------------
Total stockholders' equity.......... 305,409 16,063 69,385 95,778 (13,141)
------------ ----------- ------------ ------------- -------------
Total liabilities and stockholders'
equity............................. $ 651,527 $ 80,684 $ 146,035 $ 197,053 $ (53,662)
------------ ----------- ------------ ------------- -------------
------------ ----------- ------------ ------------- -------------
<CAPTION>
PRO-FORMA
MAY OFFERING PRO-FORMA
ADJUSTMENTS COMBINED
------------ ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents............. $ 222,600(a) $ 31,489
Accounts receivable................... 226,081
Lease receivable ..................... 24,807
Inventory ............................ 204,957
Prepaid and other current assets...... 30,332
------------ ----------
Total current assets................ 222,600 517,666
Property and equipment, net............. 164,168
Intangible assets, net.................. 498,830
Lease receivables....................... 47,005
Other assets............................ 7,400(a) 23,968
------------ ----------
Total assets........................ 230,000 $1,251,637
------------ ----------
------------ ----------
Current liabilities
Short-term debt....................... $ 177,393
Accounts payable...................... 158,568
Accrued compensation.................. 16,040
Other accrued liabilities............. 28,253
------------ ----------
Total current liabilities........... 375,254
Long-term debt.......................... 230,000(a) 387,303
Notes payable to related parties........ --
Deferred income taxes................... 5,377
Other long-term liabilities............. 3,042
------------ ----------
Total liabilities................... 230,000 770,976
Minority Interest....................... 7,167
Stockholders' equity
Common stock.......................... 42
Additional paid-in capital............ 439,048
Cumulative Translation Adjustment..... 483
Retained earnings..................... 33,921
Equity of Purchased Companies........... --
------------ ----------
Total stockholders' equity.......... -- 473,494
------------ ----------
Total liabilities and stockholders'
equity............................. $ 230,000 $1,251,637
------------ ----------
------------ ----------
</TABLE>
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED APRIL 30, 1996
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNT)
(UNAUDITED)
<TABLE>
<CAPTION>
FISCAL 1997
--------------------------------------------
U.S. OFFICE 1996 PENDING
PRODUCTS PURCHASED COMPLETED PENDING ACQUISITION OF
COMPANY COMPANIES ACQUISITIONS ACQUISITIONS WHITCOULLS
----------- --------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Revenues.............................. $ 701,949 $ 307,954 $ 295,122 $ 430,141 $ 419,024
Cost of revenues...................... 523,409 214,072 217,327 298,020 261,496
----------- --------------- ------------ ------------ ----------
Gross profit........................ 178,540 93,882 77,795 132,121 157,528
Selling, general and administrative
expenses............................. 152,796 84,070 71,000 113,325 125,150
Nonrecurring acquisition costs........ 8,057 -- -- --
Nonrecurring restructuring costs...... 8,092 -- --
Discontinuation of printing division
at subsidiary........................ 682 -- -- --
----------- --------------- ------------ ------------ ----------
Operating income.................... 17,005 1,720 6,795 18,796 32,378
Other (income) expense:
Interest expense.................... 6,476 2,761 5,398 2,073 6,893
Interest income..................... (3,097) -- (118) (258) (194)
Other............................... (599) (24) (371) 26 --
Minority Interest in Subsidiary....... 671 -- -- 202 69
----------- --------------- ------------ ------------ ----------
Income (loss) before provision for
income taxes......................... 13,554 (1,017) 1,886 16,753 25,610
Provision for income taxes............ 4,814 45 343 3,778 8,683
----------- --------------- ------------ ------------ ----------
Net income (loss)..................... 8,740 (1,062) 1,543 12,975 16,927
----------- --------------- ------------ ------------ ----------
----------- --------------- ------------ ------------ ----------
Weighted average shares outstanding...
Net income per share..................
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS COMBINED
----------- ------------
<S> <C> <C>
Revenues.............................. $ 2,154,190
Cost of revenues...................... 1,514,324
----------- ------------
Gross profit........................ -- 639,866
Selling, general and administrative
expenses............................. 8,630 (d) 543,570
(8,869)(e)
(2,532)(f)
Nonrecurring acquisition costs........ (8,057)(f) --
Nonrecurring restructuring costs...... 8,092
Discontinuation of printing division
at subsidiary........................ 682
----------- ------------
Operating income.................... 10,828 87,522
Other (income) expense:
Interest expense.................... 8,562 (g) 32,163
Interest income..................... 2,750 (g) (917)
Other............................... (968)
Minority Interest in Subsidiary....... (671)(h) 1,235
964 (h)
----------- ------------
Income (loss) before provision for
income taxes......................... (777) 56,009
Provision for income taxes............ 6,041 (i) 23,704
----------- ------------
Net income (loss)..................... (6,818) 32,305
----------- ------------
----------- ------------
Weighted average shares outstanding... 40,633 (j)
Net income per share.................. $ 0.80
------------
------------
</TABLE>
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
PRO-FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED APRIL 30, 1995
(000'S)
(UNAUDITED)
<TABLE>
<CAPTION>
PENDING
U.S. OFFICE 1997 PRO-FORMA PRO FORMA
PRODUCTS POOLINGS ADJUSTMENTS COMBINED
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues........................................................ $ 355,821 $ 173,756 $ -- $ 529,577
Cost of revenues................................................ 265,690 109,330 375,020
----------- ---------- ----------- ----------
Gross profit.................................................. 90,131 64,426 -- 154,557
Selling, general and administrative expenses.................... 80,129 59,256 139,385
----------- ---------- ----------- ----------
Operating income.............................................. 10,002 5,170 -- 15,172
Other (income) expense:
Interest expense.............................................. 2,310 754 3,064
Interest income............................................... (376) (104) (480)
Other......................................................... 162 (657) (495)
----------- ---------- ----------- ----------
Income before provision for income taxes........................ 7,906 5,177 -- 13,083
Provision for income taxes...................................... 1,761 (1) 3,866(k) 5,626
----------- ---------- ----------- ----------
Net income...................................................... $ 6,145 $ 5,178 $ (3,866) $ 7,457
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
</TABLE>
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
PRO-FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED APRIL 30, 1994
(000'S)
(UNAUDITED)
<TABLE>
<CAPTION>
PENDING
U.S. OFFICE 1997 PRO-FORMA PRO FORMA
PRODUCTS POOLINGS ADJUSTMENTS COMBINED
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues........................................................ $ 267,774 $ 160,459 $ -- $ 428,233
Cost of revenues................................................ 192,062 101,712 293,774
----------- ---------- ----------- ----------
Gross profit.................................................. 75,712 58,747 -- 134,459
Selling, general and administrative expenses.................... 68,926 55,089 124,015
----------- ---------- ----------- ----------
Operating income.............................................. 6,786 3,658 -- 10,444
Other (income) expense:
Interest expense.............................................. 1,609 651 2,260
Interest income............................................... (172) (161) (333)
Other......................................................... (648) (624) (1,272)
----------- ---------- ----------- ----------
Income before provision for income taxes........................ 5,997 3,792 -- 9,789
Provision for income taxes...................................... 1,195 448 2,566(k) 4,209
----------- ---------- ----------- ----------
Net income...................................................... $ 4,802 $ 3,344 $ (2,566) $ 5,580
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
</TABLE>
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
1. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
(a) Adjustment to reflect the proceeds from the sale of $230,000 of May
Notes in the May Notes Offering, net of expenses and underwriters'
discount.
(b) Adjustment to reflect the use of a portion of the proceeds from the
issuance of Common Stock and the February Notes in the February
Offerings, the proceeds from the May Notes in the May Notes Offering
and incremental borrowings under the Company's line of credit to (i) repay
short-term debt of $57,316, (ii) repay long-term debt of $139,716 which
is assumed to be the amount of debt outstanding related to the Fiscal
1997 Consumated Acquisitions, Fiscal 1997 Pending Acquisitions and the
Fiscal 1997 Pending Acquisition of Whitcoulls and (iii) repay notes
payable to officers and stockholders of $3,931.
(c) Adjustment to reflect purchase price adjustments associated with the
Fiscal 1997 Completed Acquisitions, the Fiscal 1997 Pending Acquisitions
and the Fiscal 1997 Pending Acquisition of Whitcoulls noted below. The
portion of the consideration assigned to goodwill in transactions
accounted for as purchases represents the excess of the cost over the
fair value of the net assets acquired. The Company amortizes goodwill
over a period of 40 years. The recoverability of the unamortized
goodwill will be assessed on an ongoing basis by comparing anticipated
undiscounted future cash flows from operations to net book value.
<TABLE>
<CAPTION>
STOCK
------------------------
COMPANY CONSIDERATION CASH SHARES VALUE GOODWILL
- ---------------------------------------- ------------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Fiscal 1997 Completed Acquisitions
Significant .......................... $ 70,000 $ -- 2,591,094 $ 70,000 $
Other ................................ 60,675 26,984 1,313,028 33,691 28,251
------------- --------- ------------ ---------- ----------
Total............................... 130,675 26,984 3,904,122 103,691 28,251
Fiscal 1997 Pending Acquisitions
Whitcoulls ........................... 220,000 220,000 176,656
Significant .......................... 80,000 2,105,264 80,000
Other ................................ 188,840 26,281 4,703,801 162,559 114,887
------------- --------- ------------ ---------- ----------
Total .............................. 488,840 246,281 6,809,065 242,559 291,543
------------- --------- ------------ ---------- ----------
Total .................................. $ 619,515 $ 273,265 10,713,187 $ 346,250 $ 319,794
------------- --------- ------------ ---------- ----------
------------- --------- ------------ ---------- ----------
</TABLE>
Adjustment includes the elimination of minority interest of $6,023 due
to the acquisition of the remaining 49% of the outstanding common stock
of the Company's 51% owned subsidiary, Blue Star Group Limited ("Blue
Star") and the creation of minority interest of $6,684 related to the
increase of the Company's ownership interest in Wang-New Zealand to 60%.
Adjustment also includes the write-up of certain land and buildings to
fair market value.
2. UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME ADJUSTMENTS
(d) Adjustment to reflect the increase in amortization expense relating to
the goodwill and increase in depreciation expense resulting from the
write-up of certain fixed assets to fair market value recorded in
purchase accounting related to the 1996 Purchased Companies, the Fiscal
1997 Completed Acquisitions, the Fiscal 1997 Pending Acquisitions and the
Fiscal 1997 Pending Acquisition of Whitcoulls accounted for or to be
accounted for under the purchase method of accounting. The goodwill is
being amortized over an estimated life of 40 years.
YEAR ENDED
APRIL 30,
1996
-----------
1996 Purchased Companies .................................... $ 1,570
Fiscal 1997 Completed Acquisitions .......................... 495
Fiscal 1997 Pending Acquisitions ............................ 3,083
Fiscal 1997 Pending Acquisition of Whitcoulls ............... 3,482
-----------
$ 8,630
-----------
-----------
(e) Adjustment to reflect the reduction in executive compensation, as a
result of the elimination of certain executive positions and the
renegotiation of executive compensation arrangements.
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(DOLLARS AND SHARE AMOUNTS IN THOUSANDS)
(f) Adjustment to reflect the reduction of (i) nonrecurring acquisition
costs related to pooling-of-interests business combinations of $8,057
and (ii) certain other restructuring charges from certain acquisitions.
(g) Adjustment to reflect an increase in interest expense resulting from
the utilization of the proceeds from the sale of the February Notes
issued in the February Offerings and the sale of the May Notes issued
in the May Notes Offering to effect acquisitions and incremental interest
expense related to debt assumed to be outstanding for certain
acquisitions as if such debt had been outstanding for the entire year.
In addition, the adjustment reflects an increase in interest expense
as a result of amortization expense related to the debt issue costs
over the term of the February Notes and May Notes. The increase is
offset by a reduction of interest expense resulting from refinancing
of existing debt of the Fiscal 1997 Completed Acquisitions, Fiscal 1997
Pending Acquisitions, and the Fiscal 1997 Pending Acquisition of
Whitcoulls. Adjustment also reflects a decrease in interest income
resulting from the utilization of a portion of the proceeds from the
issuance of Commmon Stock and the February Notes in the February
Offerings to effect certain transactions and refinance existing debt.
(h) Adjustment to reflect the elimination of the minority interest
representing 49% of the net income of Blue Star and the creation of
minority interest representing 40% of the net income of Wang-New Zealand.
(i) Adjustment to calculate the provision for income taxes on the combined
pro forma results at an effective income tax rate of approximately 42%.
The difference between the effective tax rate of 42% and the statutory
tax rate of 35% relates primarily to state income taxes and
non-deductible goodwill.
(j) The weighted average shares outstanding used to calculate pro forma
earnings per share is 40,633, consisting of 30,868 shares of Common
Stock outstanding for the year ended April 30, 1996, 478 Common Stock
equivalents considered to be outstanding related to stock options for
the year ended April 30, 1996, 3,904 shares issued for the Fiscal 1997
Completed Acquisitions, and 6,809 shares to be issued for the Fiscal 1997
Pending Acquisitions, less 1,426 shares of Common Stock related to the
unused portion of the proceeds from the February Offerings for the
period from the beginning of fiscal 1996 to the date of closing of the
February Offerings.
(k) Adjustment to reflect the income taxes for certain acquisitions
accounted for under the poolings-of-interests method which were taxed as
subchapter S corporations as if these companies had been subject to
taxation as C corporations. As a result of being subchapter
S corporations, any tax liabilities prior to acquisition were the
responsibility of the individual company stockholders.
<PAGE>
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
(unaudited)
(Amounts in $NZ000)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
----------------------- YEAR ENDED
31/12/95 31/12/94 30/06/95
$000 $000 $000
-------- -------- --------
<S> <C> <C> <C>
Revenue 310,584 318,217 603,455
-------- -------- --------
Less:
Operating Expenses (Note 4) 259,702 267,106 509,773
Depreciation of Fixed Assets 6,370 5,903 12,021
Audit Fees 126 130 254
Rental and Lease Expenses 17,521 15,155 33,268
Directors' Fees n/a 15 31
Directors' Remuneration 248 n/a n/a
Goodwill Amortisation 1,426 1,472 2,974
-------- -------- --------
Earnings Before Interest and Taxation 25,191 28,436 45,134
Net Interest Expense 5,749 5,169 11,293
-------- -------- --------
Net Profit Before Taxation 19,442 23,267 33,841
Provision for Taxation (Note 5)
Current 7,128 8,856 15,380
Deferred (1,188) (733) (1,842)
-------- -------- --------
5,940 8,123 13,538
-------- -------- --------
Less Minority Interests 48 62 115
-------- -------- --------
Net Profit After Taxation 13,454 15,082 20,188
-------- -------- --------
-------- -------- --------
</TABLE>
CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY
(unaudited)
(Amounts in $NZ000)
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED YEAR
----------------------- ENDED
31/12/95 31/12/94 30/06/95
$000 $000 $000
-------- -------- --------
<S> <C> <C> <C>
Equity at Start of Period 148,100 140,411 140,411
Net Profit After Taxation 13,454 15,082 20,188
Decrease in Revaluation Reserve - - (547)
Minority Interest Movement 40 62 92
Currency Translation Difference (330) 84 56
Dividends Paid and Proposed (6,050) (4,840) (12,100)
-------- -------- --------
Equity at End of Period (Note 6) 155,214 150,799 148,100
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(unaudited)
(Amounts in $NZ000)
<TABLE>
<CAPTION>
AS AT
----------------------- AS AT
3l/12/95 31/12/94 30/06/95
$000 $000 $000
-------- -------- --------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash at Bank and on Deposit 5,208 - -
Accounts Receivable 46,234 48,284 48,783
Inventory 127,401 160,542 123,383
Tax Refund Due - - 1,275
-------- -------- --------
178,843 208,826 173,441
NON CURRENT ASSETS
Fixed Assets 105,203 117,191 111,005
Investments 2,320 2,591 2,519
Deferred Charges 152 428 247
Goodwill 51,265 54,139 52,158
-------- -------- --------
158,940 174,349 165,929
-------- -------- --------
Total Assets 337,783 383,175 339,370
-------- -------- --------
-------- -------- --------
LIABILITIES
CURRENT LIABILITIES
Bank Overdraft - 5,460 11,176
Creditors 88,031 99,769 70,655
Provision for Dividend 6,050 4,840 7,260
Provision for Taxation 1,048 5,413 -
Current Portion of Term Liabilities 21,219 21,547 21,134
-------- -------- --------
116,348 137,029 110,225
DEFERRED TAXATION (1,811) 120 (627)
TERM LIABILITIES
Loans 66,041 94,412 79,882
Finance Lease Liabilities 1,991 815 1,790
-------- -------- --------
68,032 95,227 81,672
-------- -------- --------
TOTAL LIABILITIES 182,569 232,376 191,270
EQUITY 155,214 150,799 148,100
-------- -------- --------
TOTAL EQUITY AND LIABILITIES 337,783 383,175 339,370
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(Amounts in $NZ000)
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED YEAR
----------------------- ENDED
31/12/95 31/12/94 30/06/95
$000 $000 $000
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was Provided From:
Receipts From Customers 313,708 318,339 600,969
Interest Received 101 28 154
-------- -------- --------
313,809 318,367 601,123
Cash was Disbursed To:
Payments to Employees and Suppliers 265,948 298,514 553,143
Interest Paid 6,070 4,965 11,091
Tax Paid 4,781 2,315 15,593
-------- -------- --------
276,799 305,794 579,827
-------- -------- --------
Net Cash Flows From Operating Activities 37,010 12,573 21,296
Cash Flows From Investing Activities
Cash was Provided From:
Disposal of Fixed Assets 6,158 532 4,149
Net Effect of Resolution of Angus & Robertson
Bookworld dispute (Note 3) 2,891 - -
Proceeds from Sale of Business - - 2,466
-------- -------- --------
9,049 532 6,615
Cash was Applied To:
Purchase of Fixed Assets 6,211 12,703 19,627
Payments Made for Acquisition of Business - 197 -
-------- -------- --------
6,211 12,900 19,627
-------- -------- --------
Net Cash Flows from Investing Activities 2,838 (12,368) (l3,012)
Cash Flows From Financing Activities
Cash was Provided From:
Loans Received 48,757 9,990 19,254
Finance leases Received 990 709 2,081
-------- -------- --------
49,747 10,699 21,335
Cash was Applied To:
loans repaid 64,757 10,145 29,855
Finance Leases Repaid 704 1,149 1,731
Dividends Paid 7,260 4,840 9,680
-------- -------- --------
72,721 16,134 41,266
-------- -------- --------
Net Cash Flows From Financing Activities (22,974) (5,435) (19,931)
-------- -------- --------
Net Cash Received (Disbursed)
During the Period 16,874 (5,230) (11,647)
Cash at Beginning of Period (11,176) 197 197
Exchange Rate Adjustments (490) (427) 274
-------- -------- --------
Cash at End of Period 5,208 (5,460) (11,176)
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
RECONCILIATION OF CONSOLIDATED NET PROFIT AFTER TAXATION TO
NET CASH FLOWS FROM OPERATING ACTIVITIES
(unaudited)
(Amounts in $NZ000)
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED YEAR
----------------------- ENDED
31/12/95 31/12/94 30/06/95
$000 $000 $000
-------- -------- --------
<S> <C> <C> <C>
NET PROFIT AFTER TAXATION 13,454 15,082 20,188
NON CASH ITEMS
Depreciation 6,370 5,903 12,021
Goodwill 1,426 1,472 2,974
Minority Interests 48 62 115
-------- -------- --------
7,844 7,437 15,110
MOVEMENTS IN WORKING CAPITAL
Current Liabilities: Increase/(Decrease)
Creditors 16,187 15,449 (10,146)
Provision for Taxation 2,322 5,413 (958)
Current Assets: (Increase)/Decrease
Accounts Receivable 6 123 (1,068)
Inventory (1,759) (31,535) (590)
Deferred Charges 96 120 301
-------- -------- --------
16,852 (10,430) (12,461)
OTHER
(Gain)/Loss on Disposal of Fixed Assets 23 89 (443)
(classed as investing activity)
Increase/(Decrease) in Deferred Tax (1,163) 395 (1,098)
-------- -------- --------
(1,140) 484 (1,541)
-------- -------- --------
CASH FLOW FROM OPERATING ACTIVITIES 37,010 12,573 21,296
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)
1. GENERAL
These unaudited accounts have been prepared using the same accounting policies
as applied in the preparation of the published accounts for the year ended 30
June 1995.
2. SEGMENTAL INFORMATION
The Group operates in two industry sectors, the retailing of books and
stationery and the manufacture and printing of paper-based products.
<TABLE>
<CAPTION>
NEW ZEALAND AUSTRALIA CONSOLIDATED
$NZ000 $NZ000 $NZ000
1995 1994 1995 1994 1995 1994
BY GEOGRAPHIC SEGMENTS $000 $000 $000 $000 $000 $000
<S> <C> <C> <C> <C> <C> <C>
Revenue
Sales Outside the Group 241,924 234,214 68,660 84,003 310,584 318,217
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
A$60,345 A$69,563
Earnings before Interest, Tax
& Amortisation of Goodwill 22,738 26,125 3,879 3,783 26,617 29,908
-------- -------- -------- --------
-------- -------- -------- --------
A$3,410 A$3,132
Amortisation of Goodwill (1,426) (1,472)
-------- --------
Earnings before Interest & Tax 25,191 28,436
-------- --------
-------- --------
Total Assets 281,047 310,172 56,736 73,003 337,783 383,175
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
A$49,865 A$60,330
RETAIL MANUFACTURING CONSOLIDATED
$NZ000 $NZ000 $NZ000
1995 1994 1995 1994 1995 1994
BY ACTIVITY SEGMENT $000 $000 $000 $000 $000 $000
Revenue
Sales Outside the Group 261,296 265,954 49,288 52,263 310,584 318,217
-------- --------
-------- --------
Sales to Group Companies - - 18,355 18,567
-------- -------- -------- --------
261,296 265,954 67,643 70,830
-------- -------- -------- --------
-------- -------- -------- --------
Earnings before Interest, Tax
& Amortisation of Goodwill 18,680 21,156 7,937 8,752 26,617 29,908
-------- -------- -------- --------
Amortisation of Goodwill (1,426) (1,472)
-------- --------
Earnings before Interest & Tax 25,191 28,436
-------- --------
-------- --------
Total Assets 258,352 296,481 79,431 86,694 337,783 383,175
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. ACQUISITION MATTERS OUTSTANDING
With respect to Croxley Collins Olympic, the position is as described in Note 19
of the Annual Report for the year ended 30 June 1995. The matter has been set
down for hearing in the High Court in October 1996.
The Angus & Robertson Bookworld dispute is now settled, with the agreement in
principle referred to in Notes 19 and 20 of the Annual Report for the year ended
30 June 1995 having been documented and executed.
4. ABNORMAL
Restructuring and relocation costs of NZ$1,022,000 were incurred by GP Print
Limited during the six month period ended 31 December 1995 and are included
in operating expenses.
5. TAXATION
No taxation expense has been charged for the six month period ended 31
December 1995 against the profit of Angus & Robertson Bookworld Pty Ltd in
view of tax credits held. This has reduced the consolidated tax expense by
NZ$1,058,000.
6. EQUITY
The Company has on issue 121,000,398 ordinary shares.
7. CONVERSION FROM NEW ZEALAND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (U.S. GAAP)
EFFECTING SHAREHOLDERS' EQUITY AND REPORTED EARNINGS.
As indicated in Note 1, the financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) followed in New
Zealand. Had these financial statements been prepared on the basis of generally
accepted accounting principles in the United States (US GAAP), the material
differences which affect earnings and shareholders' equity would be as follows:
1. New Zealand GAAP allows for the revaluation of fixed assets with a
corresponding adjustment to capital reserves. Whitcoulls Group Limited have
revalued land, buildings and a certain item of plant. This type of revaluation
is not in accordance with U.S. GAAP and accordingly, US GAAP basis for fixed
assets should be presented at their historical cost amounts. In this regard
depreciation and gains or losses on disposal of fixed assets would be computed
on the basis of the historical cost amounts and not upon the revalued amounts.
2. New Zealand GAAP allows for the recognition of dividend distributions on an
accrual basis. Under US GAAP, dividends are only recognised if they are
declared prior to the balance sheet date.
3. New Zealand GAAP allows the immediate recognition of gains arising from
sale and leaseback transactions which meet certain criteria. U.S GAAP requires
that these gains within specified limits be recognised over the term of the
related Lease.
4. New Zealand GAAP requires that the earnings of foreign subsidiaries be
recognised at the year end exchange rate. US GAAP requires that the earnings
be recognised at a weighted average rate. This results in a reallocation of
earnings between the income statement and the exchange translation reserve.
5. US GAAP requires a deferred tax liability to be recognised for
differences between the assigned tax and book basis of assets in a purchase
business combination.
A reconciliation of the key components of the financial statements between New
Zealand GAAP and U.S. GAAP are as follows:
<TABLE>
<CAPTION>
SHAREHOLDER FIXED INVESTMENTS GOODWILL DEFERRED DEFERRED PROVISION NET PROFIT
EQUITY ASSETS TAX INCOME FOR AFTER TAX
DIVIDEND
$NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 MONTHS ENDED 31 DECEMBER
1995
Reported under NZ GAAP 155,214 105,203 2,320 51,265 (1,811) 6,050 13,454
1. Adjustments related to
changes in accounting for
Fixed Assets (21,574) (21,323) (251) 266
2. Adjustments related to
changes in accounting for
Dividends 6,050 (6,050)
3. Adjustment related to
changes in accounting for
sale and leaseback
transactions (803) 803 41
5. Adjustment for differences
between assigned values and tax
basis on acquisitions (70) 333 403 (10)
Restated under U.S GAAP 138,817 83,880 2,069 51,598 (1,408) 803 -- 13,751
<CAPTION>
SHAREHOLDER FIXED INVESTMENTS GOODWILL DEFERRED DEFERRED PROVISION NET PROFIT
EQUITY ASSETS TAX INCOME FOR AFTER TAX
DIVIDEND
$NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 MONTHS ENDED 31 DECEMBER
1994
REPORTED UNDER NZ GAAP 150,799 117,191 2,591 54,139 120 4,840 15,082
1. Adjustments related to
changes in accounting for
Fixed Assets (22,808) (22,557) (251) 366
2. Adjustments related to
changes in accounting for
Dividends 4,840 (4,840)
3. Adjustment related to
changes in accounting for sale
and leaseback transactions (886) 886 41
5. Adjustment for differences
between assigned values and tax
basis on acquisitions (50) 353 403 (10)
Restated under U.S GAAP 131,895 94,634 2,340 54,492 523 886 -- 15,479
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Directors of
Whitcoulls Group Limited
Auckland
New Zealand
We have audited the accompanying consolidated balance sheet of Whitcoulls
Group Limited as of 30 June 1995 and 30 June 1994, and the related Profit
and Loss Account, and Statement of Cash Flows for the years then ended (all
expressed in New Zealand 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 audits.
We conducted our audits in accordance with auditing standards generally
accepted in New Zealand and the United States of America. 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.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Group at 30 June 1995 and 30 June
1994, and the results of their operations and their cash flows for the
years then ended in conformity with accounting principles generally
accepted in New Zealand.
Accounting principles generally accepted in New Zealand vary in certain
significant respects from accounting principles generally accepted in the
United States. The application of the latter would have affected the
determination of net income for each of the two years in the period
ended 30 June 1995 and the determination of stockholders' equity and
financial position at 30 June 1995 and 30 June 1994 to the extent
summarised in Note 22. Additional disclosures required under
US GAAP are summarised in Note 22.
DELOITTE TOUCHE TOHMATSU
7 September 1995
Auckland, New Zealand
<PAGE>
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
CONSOLIDATED COMPANY
1995 1994 1995 1994
NOTE $000 $000 $000 $000
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUE 2 603,455 526,832 12,089 13,959
------- ------- ------- -------
LESS:
Operating Expenses 509,773 447,265 251 557
Depreciation of Fixed Assets 12,021 9,321 23 19
Audit Fees 254 230 - 18
Rental and Lease Expenses 33,268 25,561 - -
Directors' Fees 31 28 21 19
Goodwill Amortization 2,974 2,164 8 -
------- ------- ------- -------
EARNINGS BEFORE INTEREST AND TAXATION 45,134 42,263 11,786 13,346
Net Interest Expense 2 11,293 6,836 (943) (288)
------- ------- ------- -------
NET PROFIT BEFORE TAXATION 33,841 35,427 12,729 13,634
Provision for Taxation 3 13,538 11,291 250 (103)
Minority Interests 115 74 - -
------- ------- ------- -------
NET PROFIT AFTER TAXATION 20,188 24,062 12,479 13,737
Plus Retained Earnings Brought Forward 59,401 42,628 9,021 3,754
Transfer from Reserves 14 65 1,181 - -
Dividends Paid and Proposed 4 (12,100) (8,470) (12,100) (8,470)
------- ------- ------- -------
Retained Earnings Carried Forward 67,554 59,401 9,400 9,021
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See accompanying notes to the financial statements.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
BALANCE SHEET
AS AT 30 JUNE
($NZ000's)
<TABLE>
<CAPTION>
CONSOLIDATED COMPANY
1995 1994 1995 1994
NOTE $000 $000 $000 $000
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash at Bank and on Deposit 5 - 197 - 578
Accounts Receivable 6 48,783 48,526 32 90
Inventory 7 123,383 129,007 - -
Income Tax Receivable 1,275 317 536 357
------- ------- ------- -------
173,441 178,047 568 1,025
NON CURRENT ASSETS
Fixed Assets 8 111,005 111,012 42 51
Amount Due from Subsidiaries - - 162,833 112,832
Investments 9 2,519 2,471 68,365 68,383
Deferred Charges 10 247 548 247 440
Goodwill 52,158 55,414 158 -
------- ------- ------- -------
165,929 169,445 231,645 181,706
------- ------- ------- -------
TOTAL ASSETS 339,370 347,492 232,213 182,731
------- ------- ------- -------
------- ------- ------- -------
LIABILITIES
CURRENT LIABILITIES
Bank Overdraft 5 11,176 - 1,769 -
Accounts Payable 70,655 84,320 6,448 6,803
Provision for Dividend 4 7,260 4,840 7,260 4,840
Current Portion of Term Liabilities 11, 12 21,134 21,754 20,000 20,298
------- ------- ------- -------
110,225 110,914 35,477 31,941
DEFERRED TAXATION LIABILITY/(ASSET) 3 (627) 42 56 103
TERM LIABILITIES
Loans 11 79,882 95,007 46,981 59,354
Amounts Due to Subsidiaries - - 84,504 26,517
Finance Lease Liabilities 12 1,790 1,118 - -
------- ------- ------- -------
81,672 96,125 131,485 85,871
------- ------- ------- -------
TOTAL LIABILITIES 191,270 207,081 167,018 117,915
MINORITY INTERESTS 600 508 - -
SHAREHOLDERS' FUNDS
Issued and Paid Up Capital 13 12,100 12,100 12,100 12,100
Reserves 14 67,846 68,402 43,695 43,695
Retained Earnings 67,554 59,401 9,400 9,021
------- ------- ------- -------
TOTAL SHAREHOLDERS' FUNDS 147,500 139,903 65,195 64,816
------- ------- ------- -------
TOTAL SHAREHOLDERS' FUNDS AND LIABILITIES 339,370 347,492 232,213 182,731
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See accompanying notes to the financial statements.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE
($NZ000's)
<TABLE>
<CAPTION>
CONSOLIDATED COMPANY
1995 1994 1995 1994
$000 $000 $000 $000
---- ---- ---- ----
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was Provided From:
Receipts From Customers 600,969 532,202 - 184
Interest Received 154 337 62 770
------- ------- ------ -------
601,123 532,539 62 954
Cash was Disbursed To:
Payments to Employees and Suppliers 553,143 482,319 87 521
Interest Paid 11,091 6,998 7,247 5,299
Tax Paid 15,593 13,151 624 208
------- ------- ------ -------
579,827 502,468 7,958 6,028
------- ------- ------ -------
Net Cash Flows From Operating Activities 21,296 30,071 (7,896) (5,074)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was Provided From:
Disposal of Fixed Assets 4,149 2,491 - 645
Proceeds from Sale of Businesses 2,466 - - -
Proceeds from Sale of Investment Properties - 1,700 - -
------- ------- ------ -------
6,615 4,191 - 645
Cash was Applied To:
Purchase of Fixed Assets 19,627 9,457 10 29
Payments Made for Acquisition of Business - 134,773 - 94,256
------- ------- ------ -------
19,627 144,230 10 94,285
------- ------- ------ -------
Net Cash Flows from Investing Activities (13,012) (140,039) (10) (93,640)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was Provided From:
Loans Received 19,254 126,012 14,000 90,359
Advances from Subsidiaries - - 62,673 38,814
Finance Leases Received 2,081 1,636 - -
Share Capital Paid Up - 44,967 - 44,967
------- ------- ------ -------
21,335 172,615 76,673 174,140
Cash was Applied To:
Loans Repaid 29,855 68,676 26,672 69,286
Advances to Subsidiaries - - 34,762 -
Finance Leases Repaid 1,731 1,163 - -
Dividends Paid 9,680 5,748 9,680 5,748
------- ------- ------ -------
41,266 75,587 71,114 75,034
Net Cash Flows From Financing Activities (19,931) 97,028 5,559 99,106
------- ------- ------ -------
NET CASH RECEIVED (DISBURSED) DURING
THE PERIOD (11,647) (12,940) (2,347) 392
CASH AT BEGINNING OF PERIOD 197 13,137 578 186
Impact of Foreign Exchange 274 - - -
------- ------- ------ -------
Cash at End of Period (11,176) 197 (1,769) 578
------- ------- ------ -------
------- ------- ------ -------
</TABLE>
See accompanying notes to the financial statements.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
RECONCILIATION OF NET CASH FLOWS FROM OPERATING
ACTIVITIES TO NET PROFIT AFTER TAXATION
($NZ000's)
<TABLE>
<CAPTION>
CONSOLIDATED COMPANY
1995 1994 1995 1994
$000 $000 $000 $000
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET PROFIT AFTER TAXATION 20,188 24,062 12,479 13,737
NON CASH ITEMS
Depreciation 12,021 9,321 23 19
Goodwill 2,974 2,164 8 -
Minority Interests 115 74 - -
Other Non-cash Expenses - - 14 1
------ ------ ------ -------
15,110 11,559 45 20
MOVEMENTS IN WORKING CAPITAL
Current Liabilities: Increase/(Decrease)
Accounts Payable (10,146) (455) (355) 633
Amounts Due to Subsidiaries - - 24,846 -
Provision for Taxation (958) (2,327) (179) (357)
Current Assets: (Increase)/Decrease
Accounts Receivable (1,068) 5,560 58 623
Income Tax Receivable - (317) - -
Amounts Due from Subsidiaries - - (44,935) (19,934)
Inventory (590) (7,675) - -
Deferred Charges 301 (376) 192 (268)
------ ------ ------ -------
(12,461) (5,590) (20,373) (19,303)
OTHER
(Gain)/Loss on Disposal of Assets (443) 173 - (645)
(classed as investing activity)
Increase/(Decrease) in Deferred Tax (1,098) (133) (47) 1,117
------- ------ ------ -------
(1,541) 40 (47) 472
------- ------ ------ -------
Net Cash Flows From Operating Activities 21,296 30,071 (7,896) (5,074)
------- ------ ------ -------
------- ------ ------ -------
</TABLE>
See accompanying notes to the financial statements.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
(1) STATEMENT OF ACCOUNTING POLICIES
These financial statements are presented in accordance with the Companies Act
1955 and have been prepared in accordance with the Financial Reporting Act 1993.
The Company's financial statements are for Whitcoulls Group Limited as a
separate entity and the consolidated financial statements are for the Whitcoulls
Group, which includes all its subsidiaries and associate entities as disclosed
in note 17.
GENERAL ACCOUNTING POLICIES
The general accounting policies recognised as appropriate for the measurement
and reporting of profit and the financial position on an historical cost basis
are followed with the exception that certain land, buildings and plant are
recorded at valuation.
PARTICULAR ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include those of the parent company and
its subsidiaries and incorporate the equity share of the earnings and net assets
of associated companies. The purchase method of accounting has been used. All
significant inter-company transactions are eliminated on consolidation.
INVENTORIES
Inventories are stated at the lower of net realisable value and cost, using
either a first-in first-out or weighted average basis.
Work in progress is valued at the cost of materials and labour and includes
fixed and variable overheads to the last completed stage of manufacture.
Finished manufactured goods are valued at the lower of cost and net realisable
value. Cost includes fixed and variable production overheads.
ACCOUNTS RECEIVABLE
Accounts receivable are stated at expected realisable value.
FIXED ASSETS
The cost of purchased fixed assets is the value of the consideration given to
acquire the assets and the value of other directly attributable costs which have
been incurred in bringing the assets to the location and condition necessary for
their intended use.
Land and buildings are revalued annually by independent registered valuers on
the basis of net current value. Changes in valuation are transferred directly to
the Asset Revaluation Reserve. On the sale of an asset the balance in the Asset
Revaluation Reserve pertaining to that asset is transferred to Retained
Earnings. Where the sale value differs to the carrying value that difference is
recognised through the Profit and Loss Account.
Fixed assets are depreciated on a straight line basis at rates which will write
off the cost or valuation of those assets over their estimated useful lives.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
The following estimated useful lives have been applied:
Motor Vehicles 5 years
Furniture and Fittings 5 to 10 years
Plant and Machinery 5 to 15 years
Office and EDP Equipment 3 to 5 years
Buildings 30 to 80 years
LEASED ASSETS
Finance leases are capitalised to reflect the term borrowings incurred and the
cost of the asset acquired. The finance cost portion of lease payments is
expensed and the leased asset is depreciated on a straight line basis over the
estimated useful life of the asset.
FOREIGN CURRENCIES
Foreign currency transactions are translated to New Zealand currency at the rate
of exchange ruling at the date of those transactions. At balance date foreign
monetary assets and liabilities are translated at the closing rate and exchange
variations arising from these translations are included in the Profit and Loss
Account.
The financial statements of independent foreign operations are translated at the
closing rate. The exchange difference arising from the translation of the
opening net investment at an exchange rate different from that at which it was
previously reported is taken to the foreign currency translation reserve.
GOODWILL
Goodwill represents the excess of purchase consideration over the fair value of
net tangible assets acquired at the time of acquisition of a business or a
subsidiary. Goodwill is amortised using the straight line method over the period
during which benefits are expected to be received. This period has been assessed
to be 20 years.
TAXATION
Taxation accounted for in the Profit and Loss Account is the estimated total
liability including both current and deferred taxation. In calculating the
taxation payable full advantage is taken of all allowable taxation deductions.
Deferred taxation is provided on the comprehensive basis using the liability
method.
FINANCIAL INSTRUMENTS
The Group has certain financial instruments with off-balance sheet risk for the
primary purpose of reducing its exposure to fluctuations in interest rates.
While these financial instruments are subject to risk that market rates may
change subsequent to acquisition, such changes would generally be offset by
opposite effects on the items being hedged.
Interest rate swaps have been entered into to manage interest rate exposure. The
differential to be paid or received is accrued as interest rates change and is
recognised as a component of interest expense.
CHANGES IN ACCOUNTING POLICIES
There have been no changes in accounting policies.
All policies have been applied on a basis consistent with those used in the
previous year.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED COMPANY
1995 1994 1995 1994
(2) PROFIT AND LOSS ACCOUNT $NZ000 $NZ000 $NZ000 $NZ000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Included in the Profit and Loss account are:
Interest Income (154) (337) (8,605) (5,819)
Interest Expense on Finance Leases 251 257 - -
Interest Expense on Term Loans 10,994 6,916 7,466 5,427
Other Interest Expense 202 - 196 104
-------- -------- -------- --------
Net Interest Expense/(Income) 11,293 6,836 (943) (288)
Sales 603,451 526,575 - -
Dividend Income - 58 12,000 13,214
Share of Associates After Tax Profit 4 199 - -
Gains/(Losses) on Sale of Fixed Assets (479) (173) - -
Gains/(Losses) on Sale of Business 922 - - -
(3) TAXATION
Provision for Taxation
The current taxation charge is calculated as follows:
Net Profit Before Taxation 33,841 35,427 12,729 13,634
Taxation at 33% 11,167 11,691 4,201 4,499
Adjusted for the effect of:
Permanent Differences 707 (400) (3,951) (4,602)
Timing Differences not Recognised 1,664 - - -
-------- -------- -------- --------
Net Taxation Charge 13,538 11,291 250 (103)
-------- -------- -------- --------
-------- -------- -------- --------
Accounted for as follows;
Current 15,380 11,424 297 (149)
Deferred (1,842) (133) (47) 46
-------- -------- -------- --------
13,538 11,291 250 (103)
-------- -------- -------- --------
-------- -------- -------- --------
Deferred Taxation
Opening Balance (Asset)/Liability 42 719 103 (1,014)
Charge to P&L (1,842) (133) (47) 46
Adjustments:
Transfers 1,173 (544) - 1,071
-------- -------- -------- --------
Closing Balance (Asset)/Liability (627) 42 56 103
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
Future income tax benefits of NZ$1,872,000 arising from tax losses and other
timing differences in Angus & Robertson Bookworld Pty Limited have not been
taken into account in accordance with Australian Accounting Standards Board 1020
and New Zealand Society of Accountants Statement of Standard Accounting Practice
12. The effect on this year's tax charge in the Profit and Loss Account is to
increase the charge by NZ$1,664,000.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED COMPANY
1995 1994 1995 1994
$NZ000 $NZ000 $NZ000 $NZ000
---- ---- ---- ----
<S> <C> <C> <C> <C>
IMPUTATION CREDIT ACCOUNT
Opening Balance 16,437 6,155 5,498 2.498
Income Tax Paid/(Refunded) 15,384 13,151 477 141
Transfers - - - (141)
Imputation Credits on Dividends Received 35 26 5,910 5,895
Less: Credits Attributed to Dividends Paid (4,768) (2,895) (4,768) (2,895)
-------- -------- -------- --------
27,088 16,437 7,117 5,498
-------- -------- -------- --------
-------- -------- -------- --------
(4) DIVIDENDS AND BONUS ISSUE
INTERIM DIVIDEND 4,840 3,630 4,840 3,630
Interim dividend of 4 cents per share
(1994: 3 cents per share)
FINAL DIVIDEND 7,260 4,840 7,260 4,840
A proposed final dividend of 6 cents
per share (1994: 4 cents per share)
-------- -------- -------- --------
12,100 8,470 12,100 8,470
-------- -------- -------- --------
-------- -------- -------- --------
(5) SET-OFF OF ASSETS AND LIABILITIES
The Group has established a legal right of set-off with
the Westpac Banking Corporation. Accordingly current
accounts have been set-off against the bank overdrafts.
Bank Overdraft Prior to Set-Off (18,095) (2,915) (1,769) -
Deposits on Hand 6,919 3,112 - 578
-------- -------- -------- --------
Bank Overdraft after Set-Off (11,176) 197 (1,769) 578
-------- -------- -------- --------
-------- -------- -------- --------
(6) ACCOUNTS RECEIVABLE
Accounts Receivable are recorded net of a
provision for doubtful debts.
Provision for Doubtful Debts 480 355 - -
-------- -------- -------- --------
(7) INVENTORY
Finished Goods 110,491 118,112 - -
Work in Progress 2,845 2,340 - -
Raw Materials 10,047 8,555 - -
-------- -------- -------- --------
123,383 129,007 - -
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
Certain inventories are subject to restrictions of title. ie. Romalpa clauses.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATION COMPANY
COST VALUATION ACCUM NET COST ACCUM NET
DEPN BOOK DEPN BOOK
VALUE VALUE
$NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000
<S> <C> <C> <C> <C> <C> <C> <C>
(8) FIXED ASSETS
30 JUNE 1995
Motor Vehicles 697 - 232 465 - - -
Capitalised Leased
Motor Vehicles 4,755 - 1,752 3,003 - - -
Plant & Machinery 36,110 - 12,413 23,697 - - -
Office Equipment/
Furniture & Fittings 36,914 - 17,957 18,957 104 62 42
Leasehold Improvements 3,932 - 1,689 2,243 - - -
Buildings - 28,255 - 28,255 - - -
Land - 34,385 - 34,385 - - -
------ ------ ------ ------- ----- ----- -----
82,408 62,640 34,043 111,005 104 62 42
------ ------ ------ ------- ----- ----- -----
------ ------ ------ ------- ----- ----- -----
30 JUNE 1994
Motor Vehicles 622 - 148 474 - - -
Capitalised Leased
Motor Vehicles 4,053 - 1,277 2,776 - - -
Plant & Machinery 32,772 - 8,791 23,981 - - -
Office Equipment/
Furniture & Fittings 32,022 - 14,132 17,890 90 39 51
Leasehold Improvements 2,714 - 1,377 1,337 - - -
Buildings - 29,237 - 29,237 - - -
Land - 35,317 - 35,317 - - -
------ ------ ------ ------- ----- ----- -----
72,183 64,554 25,725 111,012 90 39 51
------ ------ ------ ------- ----- ----- -----
------ ------ ------ ------- ----- ----- -----
</TABLE>
Land and buildings are restated to valuation in accordance with valuation
reports of registered independent valuers, with the exception of Croxley
Stationery Limited's Avondale property which is valued at market value based on
an unconditional agreement to sell this property in October 1995.
Valuations were prepared by Jones Lang Wootten Ltd (report dated 30 June 1995),
Colliers Jardine New Zealand Limited (report dated 30 June 1995) and Lockwood &
Associates Limited (report dated 30 June 1995). The telephone directory press is
stated at valuation (recognised as deemed cost) as at 30 June 1991 less
depreciation.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED COMPANY
1995 1994 1995 1994
$NZ000 $NZ000 $NZ000 $NZ000
---- ---- ---- ----
<S> <C> <C> <C> <C>
(9) INVESTMENTS
Other Investments 116 76 5 5
Investment in Subsidiaries - - 68,360 68,378
Associate Companies
Shares at Cost 1,045 1,045 - -
Share of
-- Retained Profits 452 506 - -
-- Revaluations 252 252 - -
Advances to Associates 654 592 - -
------- ------- ------- -------
2,403 2,395 - -
------- ------- ------- -------
2,519 2,471 68,365 68,383
------- ------- ------- -------
------- ------- ------- -------
(10) DEFERRED CHARGES
Deferred charges include costs incurred on raising
term loans. Such costs are capitalised and written
off over the term of the loans.
(11) LOANS
Loans--Secured 99,882 115,305 66,981 79,652
Less: Included in Current Liabilities 20,000 20,298 20,000 20,298
------- ------- ------- -------
79,882 95,007 46,981 59,354
------- ------- ------- -------
------- ------- ------- -------
Repayable as follows:
Between 1 and 2 years 79,882 20,298 46,981 20,298
Between 2 and 5 years - 74,709 - 39,056
------- ------- ------- -------
79,882 95,007 46,981 59,354
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
The loans are secured by mortgages over all of the properties owned and by
debentures over the assets and undertakings of the parent and its subsidiaries.
Interest rates charged during the year ranged from 6.93% to 10.2%.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED COMPANY
1995 1994 1995 1994
$NZ000 $NZ000 $NZ000 $NZ000
---- ---- ---- ----
<S> <C> <C> <C> <C>
(12) FINANCE LEASE LIABILITIES
The consolidated future lease rental payments under
finance leases are:
Not later than 1 year 1,388 1,669 - -
1 - 2 years 1,060 816 - -
2 - 5 years 936 393 - -
------- ------- ------- -------
3,384 2,878 - -
Less future interest expense 460 304 - -
------- ------- ------- -------
2,924 2,574 - -
------- ------- ------- -------
------- ------- ------- -------
Representing:
Current Liability 1,134 1,456 - -
Term Liability 1,790 1,118 - -
------- ------- ------- -------
2,924 2,574 - -
------- ------- ------- -------
------- ------- ------- -------
(13) SHARE CAPITAL
Authorised Share Capital
500,000,000 (1994: 500,000,000) Ordinary
Shares of NZ$0.10 (1994: NZ$0.10) Each 50,000 50,000 50,000 50,000
------- ------- ------- -------
------- ------- ------- -------
ISSUED AND FULLY PAID CAPITAL
121,000,398 (1994: 121,000,398) Ordinary
Shares of NZ$0.10 (1994: NZ$0.10) Each 12,100 12,100 12,100 12,100
------- ------- ------- -------
------- ------- ------- -------
(14) RESERVES
SHARE PREMIUM RESERVE
Opening Balance 43,695 240 43,695 240
Movements - 43,455 - 43,455
------- ------- ------- -------
Closing Balance 43,695 43,695 43,695 43,695
ASSET REVALUATION RESERVE
Opening Balance 24,597 10,653 - -
Revaluation (548) 15,125 - -
Adjustment for Assets Sold (65) (1,181) - -
------- ------- ------- -------
Closing Balance 23,984 24,597 - -
CURRENCY TRANSLATION RESERVE
Opening Balance 110 - - -
Movements 57 110 - -
------- ------- ------- -------
Closing Balance 167 110 - -
------- ------- ------- -------
TOTAL RESERVES 67,846 68,402 43,695 43,695
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED COMPANY
1995 1994 1995 1994
$NZ000 $NZ000 $NZ000 $NZ000
---- ---- ---- ----
<S> <C> <C> <C> <C>
(15) OPERATING LEASE COMMITMENTS
Commitments under operating leases are due as follows:
Not later than 1 year 31,272 30,878 - -
1-2 years 28,911 25,378 - -
2-5 years 44,607 33,125 - -
Over 5 years 13,701 16,477 - -
------- ------- ------- -------
118,491 105,858 - -
------- ------- ------- -------
------- ------- ------- -------
<CAPTION>
NEW ZEALAND AUSTRALIA CONSOLIDATED
1995 1994 1995 1994 1995 1994
BY GEOGRAPHIC SEGMENTS $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000
------- ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
(16) SEGMENTAL REPORTING
REVENUE
Sales Outside the Group 472,718 432,403 130,737 94,429 603,455 526,832
------- ------- ------- ------ ------- -------
------- ------- ------- ------ ------- -------
EARNINGS BEFORE INTEREST, TAX
AND AMORTISATION OF GOODWILL 48,271 43,973 (163) 454 48,108 44,427
------- ------- ------- ------
------- ------- ------- ------
Amortisation of Goodwill (2,974) (2,164)
------- -------
EARNINGS BEFORE INTEREST AND TAX 45,134 42,263
------- -------
------- -------
TOTAL ASSETS 287,767 285,122 51,603 62,370 339,370 347,492
------- ------- ------- ------ ------- -------
------- ------- ------- ------ ------- -------
<CAPTION>
RETAIL MANUFACTURING CONSOLIDATED
1995 1994 1995 1994 1995 1994
BY ACTIVITY SEGMENT $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000
------- ------- ------- ------- ------- -------
REVENUE
Sales Outside the Group 502,208 426,619 101,247 100,213 603,455 526,832
------- -------
------- -------
Sales to Group Companies - - 32,969 24,983
------- ------- ------- -------
502,208 426,619 134,216 125,196
------- ------- ------- -------
------- ------- ------- -------
EARNINGS BEFORE INTEREST, TAX
AND AMORTISATION OF GOODWILL 31,409 30,374 16,699 14,053 48,108 44,427
------- ------- ------- -------
------- ------- ------- -------
Amortisation of Goodwill (2,974) (2,164)
------- -------
EARNINGS BEFORE INTEREST AND TAX 45,134 42,263
------- -------
------- -------
TOTAL ASSETS 258,957 260,860 80,413 86,632 339,370 347,492
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
(17) RELATED PARTIES
The ultimate parent company is Rank Commercial Limited. (This company is not
consolidated in these Financial Statements.)
Significant subsidiaries consolidated at 30 June 1995 (and 30 June 1994) are:
<TABLE>
<CAPTION>
% OWNED PRINCIPAL ACTIVITY
<S> <C> <C>
Whitcoulls Limited 100 Book & Stationery Retailing
London Bookshops Limited 100 Book & Stationery Retailing
Angus & Robertson Bookworld Pty Limited 100 Book & Stationery Retailing
GH Bennett & Company Limited 100 Tertiary & Professional Book Retailing
Croxley Stationery Limited 100 Stationery Manufacturing & Wholesaling
Armidale Industries Limited 65 Stationery Manufacturing
OTC Office Supplies Limited 100 Commercial Stationery Retailing
Whitcoulls Office Products Limited 100 Commercial Stationery Retailing
Hollands Limited 100 Commercial Stationery Retailing
School Supplies Limited 100 Scholastic Stationery Retailing
GPO Holdings Limited 100 Printing & Publishing
WGL Group Limited 100 Holding Company
Whitcoulls Group Services Limited 100 Management Services
</TABLE>
Significant Associate Companies equity accounted at 30 June 1995 are:
University Bookshop (Auckland) Limited 50 Tertiary Book Retailing
University Bookshop (Canterbury) Limited 50 Tertiary Book Retailing
University Book Shop (Otago) Limited 50 Tertiary Book Retailing
Whitcoulls Group Limited has entered into the following related party
transactions with its subsidiaries.
COMPANY
1995 1994
$NZ000 $NZ000
Interest Charged to Subsidiaries 8,605 5,819
Management Fees from Subsidiaries 89 -
The outstanding balances at year end are disclosed in the Balance Sheet, and
financing cash flows are disclosed in the Statement of Cash Flows.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
(18) FINANCIAL INSTRUMENTS
CURRENCY AND INTEREST RATE RISK
CURRENCY
Whitcoulls Group Limited has a 100% investment in a subsidiary company located
in Australia--Angus & Robertson Bookworld Pty Limited. The purchase price of
this investment was fully funded in Australian currency loans.
The Group has exposure to foreign exchange risk as a result of transactions
denominated in foreign currencies in the normal course of trading. Where these
exposures are considered significant, the Group's policy is to cover the
transaction. No significant exposures existed at year end.
INTEREST RATE
The Group has long term borrowings which are used to fund on-going activities.
These borrowings have interest rate maturity dates of 90 days. It is Group
policy to manage its interest rate exposure in accordance with prudent
commercial practice. The Group has entered into interest rate swaps to convert a
portion of its interest rate exposure from floating to fixed. The notional
principal amounts of interest rate contracts outstanding at balance date were as
follows:
CONSOLIDATED COMPANY
1995 1994 1995 1994
$NZ000 $NZ000 $NZ000 $NZ000
------ ---- ------ ----
Interest Rate Swaps 91,000 - 70,000 -
INTEREST RATE REPRICING
The Group has entered into interest rate swap agreements where a portion of the
Group's floating rate debt has been effectively converted to fixed. These
agreements mature approximately evenly over the period to October 1999. Interest
rates range from 8.67% to 9.35%.
CREDIT RISK
In the normal course of business, the Group incurs credit risk from trade
debtors and transactions with financial institutions. The Group has a credit
policy to manage this exposure to credit risk. Credit risk in respect to debtors
is limited due to the large number of customers included in the Group's customer
base. The Group does not require collateral from debtors.
FAIR VALUES
As at balance date, the fair value of the interest swap agreements were
approximately equal to their carrying value. This value was calculated based on
the variance between the floating and fixed rates in effect at balance date.
The Directors are of the opinion that the fair value of the Group's remaining
financial assets and liabilities approximate their carrying value.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
(19) ACQUISITION MATTERS OUTSTANDING
CROXLEY COLLINS OLYMPIC
Croxley Collins Olympic was acquired on 29 November 1993.
The purchase price of the business was finalised at NZ$51.5 million which after
a payment of NZ$46.0 million left a final balance due of NZ$5.5 million.
Upon taking over the business Whitcoulls Group Limited formed the opinion that
certain breaches of the Sale and Purchase Agreement by the vendors had occured
and retained the final payment pending resolution of these matters.
The vendor sued for summary judgement. Whitcoulls Group Limited counterclaimed
for NZ$11.2 million for breach of contract.
The hearing took place in August 1994 and the High Court dismissed the summary
judgement proceedings and found Whitcoulls Group Limited had an arguable case
regarding the alleged breach of contract. The vendor appealed this decision to
the Court of Appeal but withdrew this appeal prior to the hearing.
Pending resolution of this matter the final balance due to the vendor of NZ$5.5
million has been accrued as a liability in the balance sheet and is included in
accounts payable. Legal costs have been expensed as incurred and no provision
has been made for any interest liability.
ANGUS & ROBERTSON BOOKWORLD
Angus & Robertson Bookworld was acquired on 29 November 1993. The purchase price
was provisionally assessed and paid, subject to the estimated retention of $8.7
million. The final purchase price was to be determined upon the provision by the
vendor of an audited statement of net assets. This statement has not been
received.
In May 1994 two of the vendors, Bibury Limited (formerly Brash Holdings Limited)
and Brashs Pty Limited were placed into Administration.
At the date of issue of the 1994 Annual report, Whitcoulls Group Limited
believed that the final purchase price would not exceed the amount paid to that
date, with the difference relating primarily to the overvaluation of inventories
in the provisional assessment of the purchase price.
Subsequently Whitcoulls Group Limited concluded that the business had been
misrepresented and sued for damages.
An agreement in principle has been reached with the Administrator, subject to
final legal documentation. No further monies were paid to, or are owing to, the
Administrator in respect of this acquisition.
These accounts have been prepared incorporating the terms of the agreement
reached.
(20) CONTINGENT LIABILITIES/ASSETS
There were no contingent liabilities.
Angus and Robertson Bookworld Pty Ltd has been admitted as an unsecured creditor
of Bibury Limited (formerly Brash Holdings Limited) (Subject to Deed of Company
Arrangement) for A$7.5 million.
No monies will be received in respect of this proof of debt until the other
unsecured creditors have received A$38 cents per dollar of admitted proof.
(21) CAPITAL COMMITMENTS
There were no material capital commitments at year end. (1994:NIL)
- --------------------------------------------------------------------------------
<PAGE>
(22) CONVERSION FROM NEW ZEALAND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(GAAP) TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(U.S. GAAP) EFFECTING SHAREHOLDERS' EQUITY AND REPORTED EARNINGS.
As indicated in Note 1, the financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) followed in New
Zealand. Had these financial statements been prepared on the basis of generally
accepted accounting principles in the United States (US GAAP), the material
differences which affect earnings and shareholders' equity would be as follows:
1. New Zealand GAAP allows for the revaluation of fixed assets with a
corresponding adjustment to capital reserves. Whitcoulls Group Limited have
revalued land, buildings and a certain item of plant. This type of revaluation
is not in accordance with U.S. GAAP and accordingly, US GAAP basis for fixed
assets should be presented at their historical cost amounts. In this regard
depreciation and gains or losses on disposal of fixed assets would be computed
on the basis of the historical cost amounts and not upon the revalued amounts.
2. New Zealand GAAP allows for the recognition of dividend distributions on an
accrual basis. Under US GAAP, dividends are only recognised if they are
declared prior to the balance sheet date.
3. New Zealand GAAP allows the immediate recognition of gains arising from
sale and leaseback transactions which meet certain criteria. U.S GAAP requires
that these gains within specified limits be recognised over the term of the
related Lease.
4. New Zealand GAAP requires that the earnings of foreign subsidiaries be
recognised at the year end exchange rate. US GAAP requires that the earnings
be recognised at a weighted average rate. This results in a reallocation of
earnings between the income statement and the exchange translation reserve.
5. US GAAP requires a deferred tax liability to be recognised for
differences between the assigned tax and book basis of assets in a purchase
business combination.
A reconciliation of the key components of the financial statements between New
Zealand GAAP and U.S. GAAP are as follows:
<TABLE>
<CAPTION>
SHAREHOLDER FIXED INVESTMENTS GOODWILL DEFERRED DEFERRED PROVISION NET PROFIT
EQUITY ASSETS TAX INCOME FOR AFTER TAX
DIVIDEND
AUDITED INFORMATION
$NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED 30 JUNE 1995
Reported under NZ GAAP 147,500 111,005 2,519 52,158 (627) 7,260 20,188
1. Adjustments related to
changes in accounting for Fixed
Assets (21,837) (21,586) (251) 789
2. Adjustments related to
changes in accounting for
Dividends 7,260 (7,260)
3. Adjustments related to
changes in the accounting for
sale and lease back transactions (844) 844 82
4. Adjustment related to using
weighted average exchange rate
rather than year end exchange
rate for earnings of foreign
subsidiary 332
5. Adjustment for differences
between assigned values and tax
basis on acquisitions (60) 343 403 (20)
Restated under U.S GAAP 132,019 89,419 2,268 52,501 (224) 844 -- 21,371
<CAPTION>
Shareholder Fixed Investments Goodwill Deferred Deferred Provision Net Profit
Equity Assets Tax Income for After Tax
Dividend
AUDITED INFORMATION
$NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED 30 JUNE 1994
Reported under NZ GAAP 139,903 111,012 2,471 55,414 42 4,840 24,062
1. Adjustments related to
changes in accounting for
Fixed Assets (23,174) (22,923) (251) 1,720
2. Adjustments related to
changes in accounting for
Dividends 4,840 (4,840)
3. Adjustment related to
changes in accounting for
sale and leaseback
transactions (927) 927 41
5. Adjustment for differences
between assigned values and tax
basis on acquisitions (40) 363 403 (20)
Restated under U.S GAAP 120,602 88,089 2,220 55,777 445 927 - 25,803
</TABLE>
<PAGE>
ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
YEARS ENDED 30 JUNE 1995 AND 1994
1. NATURE OF BUSINESS
Whitcoulls Group Ltd operates nine main subsidiary companies.
Summarised below are the activities for each of the main subsidiaries:
Whitcoulls Ltd operates 74 stores throughout New Zealand, retailing books,
paperbacks, magazines, commercial and household stationery, greeting cards,
videos, and other complementary products.
London Bookshops Ltd operates 36 stores (nine of which are franchised)
throughout New Zealand, retailing books, paperbacks, magazines, commercial
and household stationery, greeting cards, videos, and other complementary
products.
Angus & Robertson Bookworld Pty Ltd operates Australia's largest chain of
bookshops, comprising 87 company owned and 81 franchised stores. Books are
the core of the product range, with some stores also carrying magazines and a
limited range of household stationery.
OTC Office Supplies Ltd is the largest commercial stationery retailer in New
Zealand, operating four sales and distribution centres in Auckland, Hamilton,
Wallington and Christchurch.
Whitcoulls Office Products Ltd is New Zealand's second largest commercial
stationer, operating 17 retail and warehouse branches and includes a
specialist retailer of computer consumables and related products.
Hollands Ltd is a retailer of stationery and office furniture to the Auckland
market.
School Supplies Ltd operates 11 branches throughout New Zealand, supplying
schools with a wide range of stationery, art supplies and text books.
Croxley Stationary Ltd is a manufacturer and wholesaler of stationery,
including filing products, diaries, scholastic products, pads, envelopes,
writing instruments and recycled laser cartridges. It manufactures
approximately 70% of its product range at its four factories.
GP Print Ltd (formerly the Government Printing Office). It holds long term
contracts to produce all New Zealand's telephone directories and to print and
distribute Parliamentary legislation. It is also one of New Zealand's largest
commercial printers.
<PAGE>
2. PROFIT AND LOSS STATEMENT
Operating expenses in the Profit and Loss Account comprise;
1995 1994
NZ$000 NZ$000
Cost of Product sold 392,557 342,401
Selling, General, Administrative
and Other Expenses 117,216 104,864
-----------------------
Total Operating Expenses $509,773 $447,265
-----------------------
3. STATEMENT OF CASH FLOWS
NZ GAAP includes bank overdraft as under the cash caption in the Statement of
Cash Flows under US GAAP a bank overdraft is included as financing activities.
Effect on the Cash Flow Statement is to increase cash received from financing
activities by NZ$11,176,000 in the 1995 year. There is no effect to respect of
the 1994 or 1993 years.
The restated cash flow in summary form is as follows:
1995 1994
NZ$000 NZ$000
Net Cash flows from Operating Activities 21,296 30,071
Cash Flows from Investing Activities (13,012) (140,039)
Cash Flows from Financing Activities (8,755) 97,028
Net Cash (Disbursements) during period (471) (12,940)
Cash at beginning of period 197 13,137
Impact of Foreign Exchange 274
------------------------
Cash at end of Period Nil 197
------------------------
4. IMPUTATION CREDIT BALANCE
Imputation credit disclosed in Note 3 relates to taxation credits available
to be attached to dividend distributions to shareholders. These credits are
lost on significant changes in shareholders.
<PAGE>
5. LOANS
The term position of loans disclosed in Note 11 comprise:
1995 1994
NZ$000 NZ$000
Repayable
1 & 2 years 79,882 20,298
2 & 3 years -- 74,709
--------------------------
79,882 95,007
--------------------------
6. FINANCE LEASE LIABILITIES
Finance lease commitments disclosed in Note 12 comprises:
1995 1994
NZ$000 NZ$000
Repayable:
Current 1,388 1,669
1 & 2 years 1,060 816
2 & 3 years 936 393
--------------------------
3,384 2,878
--------------------------
Less
Future interest 460 304
expenses
--------------------------
2,924 2,574
--------------------------
7. EARNINGS PER SHARE
1995 1994
NZ$ NZ$
Earnings per share (cents) 17.7 22.7
8. MATERIAL ACQUISITIONS
1995 1994
NZ$000 NZ$000
Net assets acquired - $140,290
--------------------------
Payments made per -
Statement of Cash Flows 134,773
Included in Creditors - 5,517
--------------------------
- $140,290
--------------------------
<PAGE>
9. LOANS
Included in loans (part of net liabilities of foreign subsidiaries) is
Australian denominated debt of NZ$32.9 million for the year ended 30 June 1995,
and NZ$35.6 million for the year ended 30 June 1994.
10. NON-CASH FINANCING ACTIVITIES
New Zealand GAAP requires that bonus shares (stock dividends) are recorded at
par value. US GAAP requires stock dividends involving issuance by the company
of additional shares in ratios of less than 20% to 25% of the previously
outstanding shares accounted for by the issuer to be transferred from
retained earnings to share capital and share premium at a combined amount
equal to the fair value of the additional shares issued.
On 11 December 1992 a one-for-ten bonus issue was made. The fair value was
NZ$22,138,000, which under US GAAP would have been transferred from Related
Earnings to Capital Reserves. Under NZ GAAP the par value of shares NZ$963,000
was transferred. This adjustment has no effect on total reported
shareholders' equity.
11. FOREIGN SUBSIDIARIES
Net liabilities of foreign subsidiaries which are denominated in Australian
dollars amount to NZ$4,884,000 as at 30 June 1995 and NZ$1,248,000 as at 30
June 1994.
12. UNUSED LETTERS OF CREDIT
1995 1994
NZ$000 NZ$000
Total as at 30 June 588 1,524
13. OPERATING LEASE EXPENSE
Operating lease expense comprise:
1995 1994
NZ$000 NZ$000
Base 35,339 27,004
Contingent 450 395
Less sub-lease (2,511) (1,838)
------------------------------
$33,268 $25,561
------------------------------
<PAGE>
14. BUSINESS COMBINATION:
PURCHASE METHOD
In year ending 30 June 1994, the Company made 8 acquisitions accounted
for under the purchase method for an aggregate purchase price which was
initially the sum of NZ$140.3 million, but which was subsequently reduced to
NZ$137.7 million as a result of adjustments to the purchase price of Angus &
Robertson Bookworld. Payment for the acquisitions was financed entirely by
cash, apart from NZ$5.5 million which is under dispute and still remains to be
paid. The total assets related to these 8 acquisitions were NZ$182.0 million
including goodwill of NZ$46.6 million. The results of these acquisitions have
been included in the Company's results from their respective dates of
acquisitions.
The following presents the unaudited pro forma results of operations of
the Company for the fiscal year ended 30 June 1994 as if the purchase
acquisitions described above had been consummated as of the beginning of the
financial year ended 30 June 1994. The results presented below include
certain pro forma adjustments to reflect the amortization of intangible
assets, the cost of funding, adjustments in executive compensation and the
inclusion of an income tax provision:
FOR THE
FISCAL
YEAR ENDED
JUNE 30 1994
($NZ000, except
per share amount)
Revenues.............................. 607,453
Net income............................ 18,288
Net income per share.................. 15.11 cents
The unaudited pro forma results of operations are prepared for comparative
purposes only and do not necessarily reflect the results that would have
occurred had the acquisitions occurred at the beginning of the financial year
ending 30 June 1994 or the results which may occur in the future.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Directors of
Whitcoulls Group Limited
Auckland
New Zealand
We have audited the accompanying consolidated balance sheet of Whitcoulls
Group Limited as of 30 June 1994 and 30 June 1993, and the related Profit
and Loss Account, and Statement of Cash Flows for the years then ended (all
expressed in New Zealand 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 audits.
We conducted our audits in accordance with auditing standards generally
accepted in New Zealand and the United States of America. 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.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Group at 30 June 1994 and 30 June
1993, and the results of their operations and their cash flows for the
years then ended in conformity with accounting principles generally
accepted in New Zealand.
Accounting principles generally accepted in New Zealand vary in certain
significant respects from accounting principles generally accepted in the
United States. The application of the latter would have affected the
determination of net income for each of the two years in the period
ended 30 June 1994 and the determination of stockholders' equity and
financial position at 30 June 1994 and 30 June 1993 to the extent
summarised in Note 22. Additional disclosures required under
US GAAP are summarised in Note 22.
DELOITTE TOUCHE TOHMATSU
16 September 1994
Auckland, New Zealand
<PAGE>
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
1994 1993
NOTE $000 $000
-------- --------
<S> <C> <C> <C>
Revenue 2 526,832 302,355
-------- --------
Less:
Operating Expenses 447,265 254,287
Depreciation of Fixed Assets 9,321 5,377
Audit Fees 230 106
Rental and Lease Expenses 25,561 11,425
Directors' Fees 28 11
Goodwill Amortisation 2,164 612
-------- --------
Total Expenses 484,569 271,818
-------- --------
Earnings Before Interest and Taxation 42,263 30,537
Net Interest Expense 2 6,836 4,172
-------- --------
Net Profit Before Taxation 35,427 26,365
Provision for Taxation 3 11,291 7,852
Minority Interests 74 -
-------- --------
Net Profit After Taxation 24,062 18,513
Retained Earnings Brought Forward 42,628 27,683
Transfer from Reserves 13 1,181 571
Dividends and Bonus Issue 4 (8,470) (4,139)
-------- --------
Retained Earnings Carried Forward 59,401 42,628
-------- --------
-------- --------
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE
<TABLE>
<CAPTION>
1994 1993
NOTE $000 $000
-------- --------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash at Bank and on Deposit 197 13,137
Accounts Receivable 5 48,526 30,621
Inventory 6 129,007 48,909
Tax Refund Due 317 -
-------- --------
178,047 92,667
Non Current Assets
Fixed Assets 7 111,012 60,627
Investments 8 2,471 2,272
Deferred Charges 9 548 172
Goodwill 55,414 11,020
-------- --------
169,445 74,091
-------- --------
Total Assets 347,492 166,758
-------- --------
-------- --------
LIABILITIES
Current Liabilities
Creditors 84,320 38,808
Provision for Dividend 4 4,840 2,117
Provision for Taxation - 2,327
Current Portion of Term Liabilities 10, 11 21,754 13,065
-------- --------
110,914 56,317
Deferred Taxation 3 42 719
Term Liabilities
Loans 10 95,007 44,325
Finance Lease Liabilities 11 1,118 1,288
-------- --------
96,125 45,613
-------- --------
Total Liabilities 207,081 102,649
Minority Interests 508 -
SHAREHOLDERS' FUNDS
Issued and Paid Up Capital 12 12,100 10,588
Reserves 13 68,402 10,893
Retained Earnings 59,401 42,628
-------- --------
Total Shareholders' Funds 139,903 64,109
-------- --------
Total Shareholders' Funds and Liabilities 347,492 166,758
-------- --------
-------- --------
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
1994 1993
$000 $000
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities
Cash was Provided From:
Receipts from Customers 532,202 295,057
Interest Received 337 1,011
Dividends Received - 27
-------- --------
532,539 296,095
Cash was Applied to:
Payments to Employees and Suppliers 482,319 268,796
Interest Paid 6,998 4,898
Tax Paid 13,151 6,658
502,468 280,352
-------- --------
Net Cash Flows from Operating Activities 30,071 15,743
Cash Flows From Investing Activities
Cash was Provided From:
Disposal of Fixed Assets 2,491 6,231
Proceeds from Sale of Investment Properties 1,700 2,750
-------- --------
4,191 8,981
Cash was Applied to:
Purchase of Fixed Assets 9,457 17,880
Payments Made for Acquisition of Business 134,773 -
-------- --------
144,230 17,880
-------- --------
Net Cash Flows from Investing Activities (140,039) (8,899)
Cash Flows from Financing Activities
Cash was Provided From:
Loans Received 126,012 7,700
Finance Leases Received 1,636 2,746
Rights Issue 44,967 -
-------- --------
172,615 10,446
Cash was Applied To:
Loans Repaid 68,676 11,122
Finance Leases Repaid 1,163 856
Dividends Paid 5,748 2,503
-------- --------
75,587 14,481
Net Cash Flows from Financing Activities 97,028 (4,035)
-------- --------
Net Cash Received (Disbursed) During the Year (12,940) 2,809
-------- --------
Cash at Beginning of Year 13,137 10,328
-------- --------
Cash at End of Year 197 13,137
-------- --------
-------- --------
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
RECONCILIATION OF CONSOLIDATED NET CASH FLOWS FROM OPERATING
ACTIVITIES TO NET PROFIT AFTER TAXATION
<TABLE>
<CAPTION>
1994 1993
$000 $000
-------- --------
<S> <C> <C>
Net Profit After Taxation 24,062 18,513
Non Cash Items
Depreciation 9,321 5,377
Goodwill 2,164 612
Minority Interests 74 -
Other Non-cash Expenses - 143
-------- --------
11,559 6,132
Movements in Working Capital
Current Liabilities: Increase/(Decrease)
Creditors (455) 3,571
Provision for Taxation (2,327) 322
Current Assets: (Increase)/Decrease
Accounts Receivable 5,560 (7,180)
Tax Refund Due (317) -
Amount Due from Associates - (132)
Inventory (7,675) (6,183)
Deferred Charges (376) 57
-------- --------
(5,590) (9,545)
Other
(Gain)/Loss on Disposal of Fixed Assets 173 (204)
(classed as investing activity)
Increase/(Decrease) in Deferred Taxation (133) 847
-------- --------
40 643
-------- --------
Net Cash Flows From Operating Activities 30,071 15,743
-------- --------
-------- --------
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
PARENT COMPANY BALANCE SHEET
AS AT 30 JUNE
<TABLE>
<CAPTION>
1994 1993
NOTE $000 $000
-------- --------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash at Bank and on Deposit 578 186
Accounts Receivable 5 90 713
Due from Related Parties 15 34,546 1,620
Tax Refund Due 357 -
-------- --------
35,571 2,519
Non Current Assets
Due from Related Parties 15 78,286 35,243
Future Income Tax Benefit - 1,014
Fixed Assets 7 51 40
Investments in Subsidiaries 15 68,383 48,027
Deferred Charges 9 440 172
-------- --------
147,160 84,496
-------- --------
Total Assets 182,731 87,015
-------- --------
-------- --------
LIABILITIES
Current Liabilities
Creditors 6,803 653
Provision for Dividend 4 4,840 2,117
Due to Related Parties 15 - 6,839
Current Portion of Term Liabilities 10 20,298 10,253
-------- --------
31,941 19,862
Deferred Taxation 103 -
Term Liabilities
Loans 10 59,354 40,325
Due to Related Parties 15 26,517 12,247
-------- --------
85,871 52,572
-------- --------
Total Liabilities 117,915 72,434
SHAREHOLDERS' FUNDS
Issued and Paid Up Capital 12 12,100 10,588
Reserves 13 43,695 240
Retained Earnings 9,021 3,753
-------- --------
Total Shareholders' Funds 64,816 14,581
-------- --------
Total Shareholders' Funds and Liabilities 182,731 87,015
-------- --------
-------- --------
</TABLE>
See accomanying notes to the financial statements.
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
WHITCOULLS GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
1 STATEMENT OF ACCOUNTING POLICIES
GENERAL ACCOUNTING POLICIES
The general accounting policies recognised as appropriate for the measurement
and reporting of profit and the financial position on an historical cost basis
are followed by the group with the exception that certain land, buildings and
plant are recorded at valuation.
Accrual accounting is used to match expenses and revenues. Reliance is placed on
the fact that the group is a going concern.
PARTICULAR ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include those of the parent company and
its subsidiaries and incorporate the equity share of the earnings and net assets
of the associated companies. The purchase method of accounting has been used.
All significant inter-company transactions are eliminated on consolidation.
INVENTORIES
Inventories are stated at the lower of net realisable value and cost, using
either a first-in-first-out or weighted average basis.
Work in progress is valued at the cost of materials and labor and includes fixed
and variable overheads to the last completed stage of manufacture.
Finished manufactured goods are valued at the lower of cost and net realisable
value. Cost includes fixed and variable production overheads.
ACCOUNTS RECEIVABLE
Accounts receivable are stated at expected realisable value.
FIXED ASSETS
Fixed assets are depreciated on a straight-line basis at rates which will write-
off the cost or valuation of those assets over their estimated useful lives.
The following lives have been estimated:
Motor Vehicles 5 years
Furniture and Fittings 5 to 10 years
Plant and Machinery 5 to 15 years
Office and EDP Equipment 3 to 5 years
Buildings 30 to 80 years
Land and buildings are revalued to net current value on an annual basis. The
valuations are carried out by independent registered valuers.
Changes in valuations are transferred directly to the Asset Revaluation Reserve.
On the sale of an asset the balance in the Asset Revaluation Reserve pertaining
to that asset is transferred to Retained Earnings. Where the sale value differs
to the carrying value that difference is recognised through the Profit and Loss
Account.
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
LEASED ASSETS
Finance leases are capitalised to reflect the term borrowings incurred and the
cost of the asset acquired. The finance cost portion of lease payments is
expensed and the leased asset is depreciated on a straight-line basis over the
estimated useful life of the asset.
FOREIGN CURRENCIES
Foreign currency transactions are translated to New Zealand currency at the rate
of exchange ruling at the date of those transactions. At balance date foreign
monetary assets and liabilities are translated at the closing rate and exchange
variations arising from these translations are included in the profit and loss
account.
The financial statements of independent foreign operations are translated at the
closing rate. The exchange difference arising from the translation of the
opening net investment at an exchange rate different from that at which it was
previously reported is taken to the foreign currency translation reserve.
TAXATION
Taxation accounted for in the Consolidated Profit and Loss Account is the
estimated total liability including both current and deferred taxation. In
calculating the taxation payable full advantage is taken of all allowable
taxation deductions. Deferred taxation is provided on the comprehensive basis
using the liability method.
GOODWILL
Goodwill represents the excess of purchase consideration and associated costs
over the fair value of net tangible assets acquired at the time of acquisition
of a business or a subsidiary. Goodwill is amortised using the straight-line
method over the period during which benefits are expected to be received. This
period has been assessed to be 20 years.
CHANGES IN ACCOUNTING POLICIES
There have been no changes in accounting policies.
2 PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
CONSOLIDATED
1994 1993
$000 $000
-------- --------
<S> <C> <C>
Included in the Consolidated Profit and Loss Account are:
Interest Income 337 1,052
Interest Expense on Finance Leases (257) (204)
Other Interest Expense (6,916) (5,020)
-------- --------
Net Interest Expense (6,836) (4,172)
-------- --------
Gain (Loss) on Sale of Fixed Assets (173) 204
Share of Associates' After Tax Profit 199 132
The Parent's profit after taxation was $13,737,000
(1993:$7,420,000).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3 TAXATION
CONSOLIDATED
1994 1993
$000 $000
-------- --------
<S> <C> <C>
Provision for Taxation
The current taxation charge is calculated as follows:
Net Profit Before Taxation 35,427 26,365
Permanent Differences (1,212) (2,573)
-------- --------
34,215 23,792
Taxation at 33% 11,291 7,852
-------- --------
-------- --------
Accounted for as follows:
Current 11,424 7,005
Deferred (133) 847
-------- --------
11,291 7,852
-------- --------
-------- --------
DEFERRED TAXATION
The balance comprises:
Future Income Taxation Benefit (1,170) -
Deferred Taxation 1,212 719
-------- --------
42 719
-------- --------
-------- --------
</TABLE>
The future income taxation benefit relates to taxation losses and other timing
differences arising in Angus and Robertson Bookworld which is based in the
Australian taxation jurisdiction.
<TABLE>
<CAPTION>
<S> <C> <C>
Imputation Credit Account
Opening Balance 6,189 24
Income Tax Paid 13,151 6,658
Imputation Credits on Dividends Received 26 28
Less: Credits Attributed to Dividends Paid (2,895) (521)
-------- --------
16,471 6,189
-------- --------
-------- --------
4 DIVIDENDS AND BONUS ISSUE
COMPANY AND CONSOLIDATED
1994 1993
$000 $000
-------- --------
Interim Dividend
An interim dividend of 3 cents per share
(1993: 1 cent per share) 3,630 1,059
Final Dividend
A proposed final dividend of 4 cents per share
(1993: 2 cents per share) 4,840 2,117
-------- --------
8,470 3,176
Bonus Issue
A bonus issue of fully paid ordinary shares in
the ratio of 1 for 10 - 963
-------- --------
8,470 4,139
-------- --------
-------- --------
</TABLE>
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
5 ACCOUNTS RECEIVABLE
Accounts Receivable are recorded net of a provision for doubtful debts. The
consolidated provision for doubtful debts is $355,000 (1993:$278,000).
6 INVENTORY
An analysis of inventories is as follows:
<TABLE>
<CAPTION>
CONSOLIDATED
1994 1993
$000 $000
-------- --------
<S> <C> <C>
Finished Goods 118,112 43,335
Work in Progress 2,340 1,342
Raw Materials 8,555 4,232
-------- --------
129,007 48,909
-------- --------
-------- --------
</TABLE>
7 FIXED ASSETS
<TABLE>
<CAPTION>
COMPANY CONSOLIDATED
COST ACCUM NET COST VALN ACCUM NET
DEPN BOOK DEPN BOOK
VALUE VALUE
$000 $000 $000 $000 $000 $000 $000
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
30 JUNE 1994
Motor Vehicles - - - 350 - 91 259
Capitalised Leased
Motor Vehicles - - - 4,053 - 1,277 2,776
Plant & Machinery - - - 54,089 - 17,758 36,331
Office Equipment 90 39 51 10,248 - 4,735 5,513
Leasehold Improvements - - - 3,443 - 1,864 1,579
Buildings - - - - 29,237 - 29,237
Land - - - - 35,317 - 35,317
-------- -------- -------- -------- -------- -------- --------
90 39 51 72,183 64,554 25,725 111,012
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
30 JUNE 1993
Motor Vehicles - - - 117 - 78 39
Capitalised Leased
Motor Vehicles - - - 2,250 - 476 1,774
Plant & Machinery - - - 24,373 3,673 14,236 13,810
Office Equipment 61 21 40 5,042 - 3,077 1,965
Leasehold Improvements - - - 4,035 - 1,996 2,039
Buildings - - - - 17,255 - 17,255
Land - - - - 23,745 - 23,745
-------- -------- -------- -------- -------- -------- --------
61 21 40 35,817 44,673 19,863 60,627
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
</TABLE>
Land and buildings are restated to valuation at 30 June 1994 in accordance with
valuation reports of registered independent valuers at that date. The valuers
used were Jones Lang Wootten, Colliers Jardine and Lockwood and Associates. The
telephone directory press is stated at valuation (recognized as deemed cost) as
at 30 June 1991 less depreciation.
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
8 INVESTMENTS
<TABLE>
<CAPTION>
CONSOLIDATED
1994 1993
$000 $000
-------- --------
<S> <C> <C>
Other Investments 76 76
Associate Companies
Shares at Cost 1,045 1,045
Share of:
--Retained Profits 506 307
--Revaluations 252 252
Advances to Associates 592 592
-------- --------
2,395 2,196
-------- --------
2,471 2,272
-------- --------
-------- --------
</TABLE>
9 DEFERRED CHARGES
Deferred charges include costs incurred on raising term loans. Such costs are
capitalised and written off over the term of the loans.
10 LOANS
<TABLE>
<CAPTION>
COMPANY CONSOLIDATED
1994 1993 1994 1993
$000 $000 $000 $000
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Loans--Secured 79,652 50,578 115,305 56,578
Less: Included in Current Liabilities 20,298 10,253 20,298 12,253
-------- -------- -------- --------
59,354 40,325 95,007 44,325
-------- -------- -------- --------
-------- -------- -------- --------
Repayable as follows:
Between 1 and 2 years 20,298 10,253 20,298 12,253
Between 2 and 5 years 39,056 30,072 74,709 32,072
-------- -------- -------- --------
59,354 40,325 95,007 44,325
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The loans are secured by mortgages over all properties owned and by debentures
over the assets and undertakings of the parent and its subsidiaries.
Interest rates charged during the year ranged from 5.15% to 9.02%.
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
11 FINANCE LEASE LIABILITIES
<TABLE>
<CAPTION>
CONSOLIDATED
1994 1993
$000 $000
-------- --------
<S> <C> <C>
The consolidated future lease rental payments
under finance leases are:
Not later than 1 year 1,669 1,000
1-2 years 816 891
2 -5 years 393 549
-------- --------
2,878 2,440
Less future interest expense 304 340
-------- --------
2,574 2,100
-------- --------
-------- --------
Representing: Current Liability 1,456 812
Term Liability 1,118 1,288
-------- --------
2,574 2,100
-------- --------
-------- --------
12 SHARE CAPITAL
COMPANY AND CONSOLIDATED
1994 1993
$000 $000
-------- --------
Authorized Share Capital
500,000,000 (1993:500,000,000) Ordinary Shares of
$0.10 (1993:$0.10) Each 50,000 50,000
-------- --------
-------- --------
Issued and Fully Paid Shares
121,000,398 (1993:105,876,210) Ordinary Shares 12,100 10,588
-------- --------
-------- --------
</TABLE>
A one for seven renounceable cash issue of ordinary shares of 10 cents each at a
price of $3.00 per share was effective on 31 December 1993.
13 RESERVES
<TABLE>
<CAPTION>
COMPANY CONSOLIDATED
1994 1993 1994 1993
$000 $000 $000 $000
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Share Premium Reserve
Opening Balance 240 240 240 240
Movements 43,455 - 43,455 -
-------- -------- -------- --------
Closing Balance 43,695 240 43,695 240
Asset Revaluation Reserve
Opening Balance - - 10,653 9,485
Revaluation - - 15,125 1,739
Adjustment for Assets Sold - - (1,181) (571)
-------- -------- -------- --------
Closing Balance - - 24,597 10,653
Currency Translation Reserve
Opening Balance - - - -
Movements - - 110 -
-------- -------- -------- --------
Closing Balance - - 110 -
-------- -------- -------- --------
Total Reserves 43,695 240 68,402 10,893
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
The Adjustment for Assets sold of $1,181,000 (1993 $571,000) relates to the sale
of a non core property and represents the realisation of the revaluation amount
above original cost. This has been transferred to retained earnings.
14 SEGMENT INFORMATION
The Group operates predominantly in the industry of printing and supplying
paper-based products. Operations are carried out in two geographical segments--
New Zealand and Australia.
<TABLE>
<CAPTION>
1994 1993
$000 $000
-------- --------
<S> <C> <C>
Revenue
New Zealand 432,403 302,355
Australia 94,429 -
-------- --------
526,832 302,355
-------- --------
-------- --------
Earnings Before Interest, Taxation and Amortization
of Goodwill
New Zealand 43,973 31,149
Australia 454 -
-------- --------
44,427 31,149
-------- --------
-------- --------
Total Assets
New Zealand 285,122 166,758
Australia 62,370 -
-------- --------
347,492 166,758
-------- --------
-------- --------
</TABLE>
15 RELATED PARTIES
Related party transactions are limited to those companies which are included
within the consolidation.
Significant subsidiaries consolidated at 30 June 1994 are:
<TABLE>
<CAPTION>
<S> <C> <C>
% OWNED PRINCIPAL ACTIVITY
Whitcoulls Limited 100 Book & Stationery Retailing
London Bookshops Limited 100 Book & Stationery Retailing
Angus & Robertson Bookworld Pty Limited 100 Book & Stationery Retailing
G H Bennett & Company Limited 100 Tertiary & Professional Book
Retailing
Croxley Stationery Limited 100 Stationery Manufacturing &
Wholesaling
Armidale Industries Limited 65 Stationery Manufacturing
OTC Office Supplies Limited 100 Commercial Stationery Retailing
Whitcoulls Office Products Limited 100 Commercial Stationery Retailing
Hollands Limited 100 Commercial Stationery Retailing
School Supplies Limited 100 Scholastic Stationery Retailing
GPO Holdings Limited 100 Printing & Publishing
WGL Group Limited 100 Holding Company
Whitcoulls Group Services Limited 100 Management Services
</TABLE>
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Significant Associate Companies equity accounted at 30 June 1994 are:
<S> <C> <C>
% OWNED PRINCIPAL ACTIVITY
University Bookshop (Auckland) Limited 50 Tertiary Book Retailing
University Bookshop (Canterbury) Limited 50 Tertiary Book Retailing
University Book Shop (Otago) Limited 50 Tertiary Book Retailing
</TABLE>
16 MATERIAL ACQUISITIONS
During the year the Group acquired the following businesses and subsidiaries:
BUSINESS/COMPANY NAME ACQUISITION DATE
Wiljef Stationery 1 July 1993
Inca Products 1 July 1993
Microtronix Computer Supplies 1 July 1993
Bob Atley 1 October 1993
London Bookshops Limited 1 October 1993
Hollands 1 November 1993
AllenBank Office Products 1 November 1993
Croxley Collins Olympic 29 November 1993
Armidale Industries Limited 29 November 1993
Angus & Robertson Bookworld 29 November 1993
Philip King Booksellers 1 December 1993
These acquisitions contributed $5,127,000 of net profit before tax and intra-
group profit elimination.
Assets and liabilities acquired at acquisition date were as follows:
$000
Current Assets 100,039
Fixed Assets 35,369
Goodwill 46,558
-------
Total Assets 181,966
Current Liabilities (41,676)
-------
Net Assets 140,290
-------
-------
17 ACQUISITION MATTERS OUTSTANDING
CROXLEY COLLINS OLYMPIC
Croxley Collins Olympic was acquired on 29 November 1993.
The purchase price of the business was finalised at $51.5 million which after a
payment of $46.0 million left a final balance due of $5.5 million.
Upon taking over the business Whitcoulls Group Limited formed the opinion that
certain breaches of the Sale and Purchase Agreement by the vendors had occurred
and retained the final payment pending resolution of these matters.
The vendor sued for summary judgement. Whitcoulls Group Limited counterclaimed
for $11.2 million for breach of contract.
The hearing took place in August 1994 and the High Court dismissed the summary
judgement proceedings and found Whitcoulls Group Limited had an arguable case
regarding the alleged breach of contract. The court established procedures for
the conduct of a full hearing.
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
Pending resolution of this matter the final balance due to the vendor of $5.5
million has been accrued as a liability in the balance sheet and is included in
the creditors.
ANGUS & ROBERTSON BOOKWORLD
Angus & Robertson Bookworld was acquired on 29 November 1993. The purchase price
was provisionally assessed and paid, subject to the estimated retention of $8.7
million. The final purchase price is to be determined upon the provision by the
vendor of an audited statement of net assets. This statement has not yet been
received.
Whitcoulls Group Limited believes that the final purchase price will not exceed
the amount paid to date with the difference relating primarily to the
overvaluation of inventories in the provisional assessment of the purchase
price. The inventories to which the overvaluation applies were held "in
quarantine" at 30 June 1994. An independent person is to be appointed to value
such inventories in accordance with the Sale and Purchase Agreement.
Should the independent assessment of inventories result in the net assets being
reduced by less than $8.7 million there will be a further liability to recognize
which will be offset by a corresponding increase in the net realisable value of
inventories held.
Should the independent assessment of inventories result in the net assets being
reduced by more than $8.7 million, Whitcoulls Group Limited would become an
unsecured creditor of Brash Pty Limited (in Administration) and some loss would
result.
Pending resolution of this matter, no amount is included as owing to the vendor.
The Directors believe that the ultimate outcome will not have a material effect
on these financial statements.
18 FINANCIAL INSTRUMENT DISCLOSURE
The nature of activities and management policies with respect to financial
instruments are:
CREDIT
In the normal course of business the company incurs credit risk from debtors and
financial institutions. The company has a credit policy to manage this exposure
to credit risk. Credit risk in respect to debtors is limited due to the large
number of customers included in the Group's customer base. The company does not
require any collateral from debtors.
FAIR VALUES
The Directors are of the opinion that the fair value of the company's financial
assets and liabilities approximate their carrying value stated in the accounts.
FOREIGN EXCHANGE
Investment Risk
Whitcoulls Group Limited has a 100% investment in a subsidiary company located
in Australia--Angus & Robertson Bookworld Pty Limited. The purchase price of
this investment was funded fully in Australian currency loans and therefore is
fully hedged.
<PAGE>
FINANCIAL STATEMENTS CONTINUED
- -------------------------------------------------------------------------------
TRADING RISK
The company undertakes transactions denominated in foreign currencies from time
to time and these activities result in foreign currency exposures. It is the
company's policy to hedge significant foreign currency exposures as they arise.
The company uses forward exchange contracts to manage these exposures.
INTEREST RATE
The company monitors its interest rate exposure on a continual basis. At balance
date the interest rate maturity profile of debt was less than three months.
19 OPERATING LEASE COMMITMENTS
<TABLE>
<CAPTION>
CONSOLIDATED
1994 1993
$000 $000
-------- --------
<S> <C> <C>
Commitments under operating leases are due as follows:
Not later than 1 year 30,878 9,770
1-2 years 25,378 8,538
2 -5 years 33,125 19,338
Over 5 years 16,477 6,861
-------- --------
105,858 44,507
-------- --------
-------- --------
</TABLE>
20 CONTINGENT LIABILITIES
There were no contingent liabilities other than those referred to in relation to
Angus & Robertson Bookworld (Note 17). (1993:nil).
21 CAPITAL COMMITMENTS
There were no material capital commitments at year end. (1993: $16 million).
22 CONVERSION FROM NEW ZEALAND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(GAAP) TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
(U.S. GAAP) EFFECTING SHAREHOLDERS' EQUITY AND REPORTED EARNINGS.
As indicated in Note 1, the financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) followed in New
Zealand. Had these financial statements been prepared on the basis of generally
accepted accounting principles in the United States (US GAAP), the material
differences which affect earnings and shareholders' equity would be as follows:
1. New Zealand GAAP allows for the revaluation of fixed assets with a
corresponding adjustment to capital reserves. Whitcoulls Group Limited have
revalued land, buildings and a certain item of plant. This type of revaluation
is not in accordance with U.S. GAAP and accordingly, US GAAP basis for fixed
assets should be presented at their historical cost amounts. In this regard
depreciation and gains or losses on disposal of fixed assets would be computed
on the basis of the historical cost amounts and not upon the revalued amounts.
2. New Zealand GAAP allows for the recognition of dividend distributions on an
accrual basis. Under US GAAP, dividends are only recognised if they are
declared prior to the balance sheet date.
3. New Zealand GAAP allows the immediate recognition of gains arising from
sale and leaseback transactions which meet certain criteria. U.S GAAP requires
that these gains within specified limits be recognised over the term of the
related Lease.
4. New Zealand GAAP requires that the earnings of foreign subsidiaries be
recognised at the year end exchange rate. US GAAP requires that the earnings
be recognised at a weighted average rate. This results in a reallocation of
earnings between the income statement and the exchange translation reserve.
5. US GAAP requires a deferred tax liability to be recognised for
differences between the assigned tax and book basis of assets in a purchase
business combination.
A reconciliation of the key components of the financial statements between New
Zealand GAAP and U.S. GAAP are as follows:
<PAGE>
<TABLE>
<CAPTION>
Shareholder Fixed Investments Goodwill Deferred Deferred Provision Net Profit
Equity Assets Tax Income for After Tax
Dividend
AUDITED INFORMATION
$NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED 30 JUNE 1994
Reported under NZ GAAP 139,903 111,012 2,471 55,414 42 4,840 24,062
1. Adjustments related to
changes in accounting for
Fixed Assets (23,174) (22,923) (251) 1,720
2. Adjustments related to
changes in accounting for
Dividends 4,840 (4,840)
3. Adjustment related to
changes in accounting for
sale and leaseback
transactions (927) 927 41
5. Adjustment for differences
between assigned values and tax
basis on acquisitions (40) 363 403 (20)
Restated under U.S GAAP 120,602 88,089 2,220 55,777 445 927 - 25,803
<CAPTION>
Shareholder Fixed Investments Goodwill Deferred Provision for Net Profit
AUDITED INFORMATION Equity Assets Tax Dividend After Tax
$NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000 $NZ000
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED
30 JUNE 1993
Reported under NZ GAAP 64,109 60,627 2,272 11,020 719 2,117 18,513
1. Adjustments related to
changes in accounting for
Fixed Assets (9,769) (9,518) (251) 1,007
2. Adjustments related to
changes in accounting for
Dividends. 2,117 (2,117)
5. Adjustments for differences
between assigned values and tax
basis on acqisitions. (20) 383 403 (20)
Restated under U.S GAAP 56,437 51,109 2,021 11,403 1,122 - 19,500
</TABLE>
<PAGE>
ADDITIONAL DISCLOSURES REQUIRED UNDER U.S. GAAP FOR THE
YEARS ENDED 30 JUNE 1994 AND 1993
1. NATURE OF BUSINESS
Whitcoulls Group Ltd operates nine main subsidiary companies.
Summarized below are the activities for each of the main subsidiaries:
Whitcoulls Ltd operates 71 stores throughout New Zealand, retailing books,
paperbacks, magazines, commercial and household stationery, greeting cards,
videos, and other complementary products.
London Bookshops Ltd operates 24 stores (nine of which are franchised)
throughout New Zealand, retailing books, paperbacks, magazines, commercial
and household stationery, greeting cards, videos, and other complementary
products.
Angus & Robertson Bookworld Pty Ltd operates Australia's largest chain of
bookshops, comprising 92 company owned and 85 franchised stores. Books are
the core of the product range, with some stores also carrying magazines and a
limited range of household stationery.
OTC Office Supplies Ltd is the largest commercial stationery retailer in New
Zealand, operating four sales and distribution centres in Auckland, Hamilton,
Wellington and Christchurch.
Whitcoulls Office Products Ltd is New Zealand's second largest commercial
stationer, operating 20 retail and warehouse branches and includes a
specialist retailer of computer consumables and related products.
Hollands Ltd is a retailer of stationery and office furniture to the Auckland
market.
School Supplies Ltd operates 11 branches throughout New Zealand, supplying
schools with a wide range of stationery, art supplies and text books.
Croxley Stationary Ltd is a manufacturer and wholesaler of stationery,
including filing products, diaries, scholastic products, pads, envelopes,
writing instruments and recycled laser cartridges.
GP Print Ltd (formerly the Government Printing Office). It holds long term
contracts to produce all New Zealand's telephone directories and to print and
distribute Parliamentary legislation. It is also one of New Zealand's largest
commercial printers.
<PAGE>
2. PROFIT AND LOSS STATEMENT
Operating expenses in the Profit and Loss Account comprise:
1994 1993
NZ$000 NZ$000
Cost of Product sold 342,401 198,715
Selling, General, Administrative
and Other Expenses 104,864 55,572
-----------------------
Total Operating Expenses $447,265 $254,287
-----------------------
-----------------------
3. IMPUTATION CREDIT BALANCE
Imputation credit disclosed in Note 3 relates to taxation credits available
to be attached to dividend distributions to shareholders. These credits are
lost on significant changes in shareholders.
4. LOANS
The term position of loans disclosed in Note 11 comprise:
1994 1993
NZ$000 NZ$000
Repayable
1 & 2 years 20,298 10,253
2 & 3 years 74,709 10,000
3 & 4 years 10,000
4 & 5 years 10,072
------------------------------
$95,007 $40,325
------------------------------
------------------------------
5. FINANCE LEASE LIABILITIES
Finance loans commitments disclosed in Note 12 comprise:
1994 1993
NZ$000 NZ$000
Repayable:
Current 1,669 1,000
1 & 2 years 816 891
2 & 3 years 393 549
-----------------------------
2,878 2,440
Loss
Future interest 364 340
expenses
-----------------------------
$2,574 $2,100
-----------------------------
-----------------------------
<PAGE>
6. EARNINGS PER SHARE
1994 1993
Earnings per share (cents) 22.7 18.4
7. MATERIAL ACQUISITIONS
1994 1993
NZ$000 NZ$000
Net assets acquired $140,290 -
note 16 -----------------------------
Payments made per
Statement of Cash Flows 134,773 -
Included in Creditors 5,517 -
-----------------------------
$140,290 -
-----------------------------
-----------------------------
8. LOANS
Included in loans (part of net liabilities of foreign subsidiaries) is
Australian denominated debt of $35.6 million for the year ended 30 June 1994
and for 30 June 1993 Nil, which was a hedge by the company's Australian
denominated assets.
9. NON-CASH FINANCING ACTIVITIES
New Zealand GAAP requires that bonus shares (stock dividends) are recorded at
par value. US GAP requires stock dividends involving issuance by the company
of additional shares in ratios of less than 20% to 25% of the previously
outstanding shares accounted for by the issuer to be transferred from
retained earnings to share capital and share premium at a combined amount
equal to the fair value of the additional shares issued.
On 11 December 1992 a one-for-ten bonus issue was made. The fair value was
$22,138,000, which under US GAAP would have been transferred from Related
Earnings to Capital Reserves. Under NZ GAAP the par value of shares $963,000
was transferred. This adjustment has no effect on total reported
shareholders' equity.
10. FOREIGN SUBSIDIARIES
Net liabilities of foreign subsidiaries which are denominated in Australian
dollars amount to $1,248,000 as at 30 June 1994 and 30 June 1993 Nil.
11. UNUSED LETTERS OF CREDIT
1994 1993
NZ$000 NZ$000
Total as at 30 June 1,524 -
<PAGE>
12. OPERATING LEASE EXPENSE
Operating lease expense comprise:
1994 1993
NZ$000 NZ$000
Base 27,004 11,944
Contingent 395 105
Less sub-lease (1,838) (624)
------------------------------
$25,561 $11,425
------------------------------
<PAGE>
13. BUSINESS COMBINATION:
PURCHASE METHOD
In year ending 30 June 1994, the Company made 8 acquisitions accounted
for under the purchase method for an aggregate purchase price which was
initially the sum of $140.3 million, but which was subsequently reduced to
$137.7 million as a result of adjustments to the purchase price of Angus &
Robertson Bookworld. Payment for the acquisitions was financed entirely by
cash apart from $5.5 million which is under dispute and still remains to be
paid. The total assets related to these 8 acquisitions were $182.0 million
including goodwill of $46.6 million. The results of these acquisitions have
been included in the Company's results from their respective dates of
acquisitions.
The following presents the unaudited pro forma results of operations of
the Company for the fiscal years ended 30 June 1994 and 1993 as if the
purchase acquisitions described above had been consummated as of the
beginning of the financial year ended 30 June 1993. The results presented
below include certain pro forma adjustments to reflect the amortization of
intangible assets, the cost of funding, adjustments in executive compensation
and the inclusion of an income tax provision:
FOR THE FISCAL
YEAR ENDED JUNE 30
1994 1993
($NZ000's except per
share amounts)
Revenues.............................. 607,453 572,075
Net income............................ 18,288 11,840
Net income per share.................. 15.11cents 9.79cents
The unaudited pro forma results of operations are prepared for comparative
purposes only and do not necessarily reflect the results that would have
occurred had the acquisitions occurred at the beginning of the financial year
ending 30 June 1993 or the results which may occur in the future.
