SNIA GROUP 2000 ANNUAL REPORT FISCAL YEAR

Transcription

SNIA GROUP
2000 ANNUAL REPORT
83 FISCAL YEAR
RD
SNIA S.p.A. - Capital stock: 520,691,756 euros - Registered Office: 14 Via Borgonuovo, Milan
Milan Company Register No. 00736220153
BOARD OF DIRECTORS
CHIEF
CHAIRMAN AND
EXECUTIVE OFFICER
VICE CHAIRMAN
DIRECTORS
°
Member of the Strategic Projects Review
Consulting Committee.
°° Member of the Compensation Policies
Consulting Committee.
(1) Under the Bylaws, the Chairman and Vice Chairman
are empowered to represent the Company.
(2) By resolution dated September 6, 1999, the Board of
Directors granted the Chief Executive Officer the
power to carry out all acts necessary for the
Company’s ordinary operations, as well as the
authority to buy and sell real property and enter
into lease agreements with terms which may exceed
nine years.
Umberto Rosa (1) (2)
Carlo Callieri ° (1)
Leonardo Bossini
Giorgio Cirla °°
Umberto Colombo °°
Andrea Dini
Emilio Gnutti °°
Paolo Alberto Lamberti
Andrea Pininfarina °
Silvano Pontello
Luigi Verde °
Marco Vitale
BOARD OF STATUTORY AUDITORS
CHAIRMAN
STATUTORY AUDITORS
Luigi Martino
Sergio Cascone
Salvatore Spiniello
INDEPENDENT AUDITORS
KPMG S.p.A.
COMMITTEES
STRATEGIC PROJECTS
REVIEW COMMITTEE
It provides consulting support with regard to the Group’s planning process and on
investment, acquisition and divestiture proposals. Its members are:
Luigi Verde
Coordinator
Carlo Callieri
Andrea Pininfarina
COMPENSATION POLICIES
COMMITTEE
It provides consulting support with regard to the fees received by Directors, the
compensation of paid top management and the Company’s overall compensation
policies. Its members are:
Umberto Colombo Coordinator
Giorgio Cirla
Emilio Gnutti
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THE SNIA GROUP MANAGEMENT TEAM
The Snia Group is organized into Business Units reporting to the Parent Company.
The areas of business are: Medical Technology, Textile Filaments, Chemicals and Energy.
Standing from left to right:
Seated from left to right:
Aldo Lombardi, Corporate Controller, Secretary of the Executive Committee
Gilberto Pane, Senior Vice President, Human Resources and Corporate Affairs
Stefano Rimondi, General Manager, Renal Care Business Unit
Franco Vallana, General Manager, Cardiovascular Implantable Devices Business Unit
Giovanni Ardizzone, General Manager, Agrochemicals Business Unit
Carlo Veronelli, General Manager, Nylstar
Maurizio de Costanzo, General Manager, Flexible Packaging Business Unit
Bruno Inguaggiato, General Manager, Cardiac Rhythm Management Business Unit
Fausto Ferrazzi, General Manager, Chemicals Business Unit
Piero Pagli, Executive Vice President, Medical Technology - General Manager, Cardiac Surgery Business Unit
Carlo Vanoli, Executive Vice President, Strategic Planning and Business Development
Umberto Rosa, Chairman and Chief Executive Officer
Virgilio Vecchio, Senior Vice President, Chief Financial Officer
Giorgio de Panno, Executive Vice President, Chemicals and Energy
Giancarlo Berti, Coordinator, Textile Filaments
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BIOGRAPHICAL PROFILES
OF THE COMPANY’S DIRECTORS
LEONARDO BOSSINI
Mr. Bossini is an entrepreneur in the mechanical engineering industry. He is Sole
Director of BOSSINI Srl, a company specialized in the production of accessories for
plumbing fixtures, showers and flexible hoses located in Lumezzane (Brescia). He is also
Chief Executive Officer of Società Italiana Lastre SpA and a Director of I.I.L. SpA, VemerSiber SpA, Hopa SpA and Fingruppo Holding SpA.
CARLO CALLIERI
Mr. Callieri, who holds a Law Degree, is Chairman of E.VIA SpA, Chief Executive Officer
of INIZIATIVA PIEMONTE SpA and Vice Chairman of Compagnia di San Paolo di Torino.
He served as Executive Vice President of Fiat SpA and was a Director of the Il Sole-24
Ore Publishing Group, Chief Executive Officer of the Rizzoli-Corriere della Sera Group,
Vice Chairman of Confindustria and Vice Chairman of Assolombarda.
GIORGIO CIRLA
Mr. Cirla is Chief Executive Officer of INTERBANCA SpA. After a long career at Banco
Lariano, where he rose to the position of Deputy General Manager, he was named Chief
Executive Officer of Arca Merchant SpA and was a Director of Banque Rivaud SA, Paris.
He also served on a provisional basis on the Boards of several subsidiaries of Arca
Merchant and Banco Lariano. He is a Director of Banca Cattolica SpA, Interbanca
Gestione Investimenti SGR SpA, Antonveneta ABN AMRO SGR SpA and Sirti SpA.
UMBERTO COLOMBO
Mr. Colombo, who holds a Degree in Physical Chemistry, is Chairman of the Scientific
Committee at the ENI Enrico Mattei Foundation, and Chairman of Novamont SpA and
Alcantara SpA. He is also a Director of of Eni SpA, Acea SpA, Ericsson SpA, Saes Getters
and Energy Conversion Devices (USA). He was Chairman of Enea from 1982 to 1992 and
served as Minister for University Education and Scientific and Technological Research
from 1993 to 1994.
ANDREA DINI
Mr. Dini, who holds a Degree in Corporate Finance from Bocconi University and earned
a Masters Degree in Foreign Administration in the United States, is Vice Chairman of
DAMA SpA, a family-operated business that owns the Paul & Shark brand. He is also a
Director of Fingruppo SpA.
EMILIO GNUTTI
Mr. Gnutti, who holds a Degree in Letters and Philosophy, is Vice Chairman and Chief
Executive Officer of HOPA SpA. He is currently Chairman of GI-EM Srl, a company
specialized in the production of small electric motors, which he helped establish. He is
also Chief Executive Officer of Molveno Oem Srl, a producer of electrical equipment and
components for household appliances, and of Siber SpA, the leading European producer
of switches for small household appliances. In addition, he is Chairman and Chief
Executive Officer of Società Europea Componenti Elettrici SpA. He was recently
appointed to the Boards of Olivetti SpA and Telecom Italia SpA.
PAOLO LAMBERTI
Mr. Lamberti, who holds a Degree in Economics and Business and earned a Masters
Degree in Business Administration in the United States, is Vice Chairman of LAMBERTI
SpA, a producer of auxiliary chemical products for industrial applications. He currently
serves as Vice Chairman of Banca Popolare di Luino e di Varese, sits on the Board of
Banca Popolare Commercio e Industria and is the President of Carlo Cattaneo-LIUC
University in Castellanza.
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ANDREA PININFARINA
Mr. Pininfarina holds a Degree in Mechanical Engineering and is Chief Executive Officer
and General Manager of INDUSTRIE PININFARINA SpA. Within the Confindustria, he
serves as Chairman of Federmeccanica, Chairman of the Turin Manufacturers’
Association, is a member of the Managing Board and sits on Confindustria’s Executive
Committee. He is also Chairman of ITP – Agenzia per gli Investimenti a Torino e in
Piemonte and a Director of Banca del Piemonte SpA, Comau B.V., Siemens SpA and
Fastbuyer SpA.
SILVANO PONTELLO
Mr. Pontello, who holds a Degree in Economic Sciences, is Vice Chairman and General
Manager of BANCA ANTONVENETA and serves as Vice Chairman and member of the
Executive Committee of Interbanca SpA. He is also Vice Chairman of Banca Cattolica
SpA, Banca di Credito Popolare di Siracusa, Banca Popolare Ionica and Antonveneta
Vita. In addition, he is a Director of Antonveneta Abn Amro Sgr SpA, Credito Industriale
Sammarinese and Lloyd Adriatico SpA and is a Director and member of the Executive
Committee of ABI, the Italian bankers’ association.
UMBERTO ROSA
Mr. Rosa holds a Degree in Industrial Chemistry and became an Associate Professor of
Radiochemistry at the University of Pisa in 1967. He has been SNIA’s Chief Executive
Officer since 1990 and its Chairman since 1997. He is also a Director of Air Liquide Italia
SpA, Istituto Europeo di Oncologia (IEO) SpA and Fondazione San Raffaele.
He serves as Chairman of Istituto per l’Ambiente and Vice Chairman of Federchimica. In
addition, he has been a member of the Board of Confindustria, with responsibility for
research, technological innovation and environmental issues. In 1997 he received the
Légion d’Honneur from the President of France.
LUIGI VERDE
Mr. Verde, who holds a Degree in Industrial Chemistry Engineering, is currently an industrial
consultant, after having overseen the planning and control activities of the ENI Group. In
2000, he became a Director of TAV (Treno Alta Velocità) and this year joined this company’s
Executive Committee. Prior to that, he served as Director of Manufacturing Coordination at
Enichem, Director of Technology at Selm (Montedison) and Manager of the Research and
Engineering Division of Alusuisse Italia.
MARCO VITALE
A corporate economist and a former partner of Arthur Andersen, Mr. Vitale is one of the
founders and Chairman of VITALE-NOVELLO & Co., a company that provides consulting
services to senior management of many major corporations. He is Chairman of A.I.F.I. (the
Italian merchant banking association), serves as Vice Chairman and member of the
Executive Committee of Banca Popolare di Milano and sits on the Executive Committee of
the ISTAO Business School. He taught at the Pavia and Bocconi Universities and was
Chairman and a professor of the Carlo Cattaneo Free University, which he helped establish.
He was appointed Chairman of Ferrovie Nord Milano, which he reorganized, and served as
Commissioner for Economic Activities for the City of Milan, Special Commisioner for
Milan’s Ospedale Maggiore and Sole Commissioner with responsibility for the coordination
and management of private-sector contributions for the Kosovo refugees.
5
CAFFARO
ENERGIA
CAFFARO FLEXIBLE PACKAGING
M.V.V. Meccanico Vittorio Veneto S.p.A.
A Letter from
the Chairman
In 2000, Snia took another decisive step forward as it evolved into an
enterprise with a business and corporate structure that is more
competitive and better suited to take advantage of future growth
opportunities.
This transformation occurred concurrently with a sharp increase in the
Group’s operating profitability.
Two significant developments characterize the year: a rise in revenues
and earnings from the Medical Technology operations following the
acquisition of Cobe Cardiovascular in the United States in May 1999 and
the adoption of a new structure by the Snia Group after the merger with
Sorin Biomedica S.p.A. and Caffaro S.p.A. during the first half of 2000. The
time needed to complete the integration of Cobe and realize the expected
synergies was significantly shorter than originally anticipated at the time
of the acquisition.
The acquisition of Cobe Cardiovascular produced a significant expansion
in business volume for the Cardiac Surgery Business Unit, which became
the undisputed world leader in its industry. Its distribution organization,
which relies primarily on a direct sales force, is present in all the principal
developed countries of the world. Going forward, the Group’s Medical
Technology operations will use this global presence as a source of
additional growth.
The merger between Snia and its subsidiaries Sorin Biomedica and
Caffaro provided the Group with an opportunity to restructure its entire
organization.
Sorin’s operations were divided into three Business Units, each headed by
a separate company: Dideco (Cardiac Surgery), Bellco (Dialysis) and Sorin
Biomedica Cardio (Cardiac Valves, Angioplasty and Pacemakers). The
same process was applied to the Chemicals operations, as the activities
7
formerly controlled by Caffaro S.p.A. were divided into Flexible Packaging
(Films), Caffaro (Chemicals and Agrochemicals) and Caffaro Energia (a
50-50 joint venture with Sondel). Two other joint ventures, Nylstar (Nylon
Filaments) and Novaceta (Acetate Filaments), complete the picture of a
Snia Group organized into Business Units that enjoy considerable
autonomy in setting their growth strategies and a Parent Company that
retains financial control and sets strategic guidelines.
The Group entered the 2001 fiscal year fully confident that it will benefit
from the flexibility inherent in its new structure.
The Group is determined to achieve impressive growth in revenues and
earnings, particularly in Medical Technology, and is pursuing several
important projects. More specifically, Caffaro Energia has applied for a
permit to build a cogenerating power plant with an installed capacity of
800 MW; Caffaro is divesting its agrochemicals operations; Nylstar is
completing a new polyamide filament plant in the United States; and the
bioengineering operations are seeking to strengthen their position in the
market for products that control cardiac rhythm. This last goal was
effectively achieved at the end of April 2001 with the acquisition of ELA
Medical, a French company with technologies and market share that are
of great strategic significance to our Group.
These developments are consistent with the strategy of selective
expansion that Snia has pursued since its demerger from FIAT in 1998.
This strategy is based on: expanding the Medical Technology operations at
a rapid pace and making them Snia’s core business and the engine of
growth for the entire Group; increasing Nylstar’s international presence
by collaborating with a French partner and consolidating its position as
the second largest producer of nylon filaments in the world; and
expanding in the energy field.
8
The pursuit of growth both internally and through acquisitions , combined
with our commitment to provide increasing returns for our stockholders,
produced a short-term rise in the Group’s level of indebtedness, which,
nevertheless, remains reasonable when measured in terms of the ratios of
debt to equity and of gross operating result to financial expense. One of
the benefits of the new Business Unit structure, where each Unit is
responsible for its own operating and financial performance, is that line
executives are made more sensitive to and responsible for the optimum
management of their cash flow.
A Snia that has an expanding wealth of technology and is increasingly
focused on its growth objectives is a company that will attract and
nurture top-quality human resources and will meet the expectations of
the social, economic and financial community to which it belongs.
Umberto Rosa
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OPERATING SECTORS AND
STRUCTURE OF THE GROUP
MEDICAL TECHNOLOGY
CARDIAC SURGERY
CARDIAC RHYTHM
MANAGEMENT
CARDIOVASCULAR
IMPLANTABLE DEVICES
RENAL CARE
Dideco
ELA Medical
Sorin Biomedica Cardio
Bellco
Cobe Cardiovascular
(France)
(USA)
Stöckert Instrumente
(Germany)
TEXTILE FILAMENTS
POLYAMIDE FILAMENTS
CELLULOSE
FILAMENTS
Nylstar
Novaceta
(Netherlands)
(UK)
Nuova Rayon
CHEMICALS AND ENERGY
CHEMICALS
Caffaro
AGROCHEMICALS
Caffaro
FLEXIBLE PACKAGING
ENERGY
Caffaro Flexible Packaging
Caffaro Energia
Emblem Europe
DIVERSIFIED ACTIVITIES
Immobiliare Snia
Meccanico Vittorio Veneto
50-50 joint ventures.
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The Group is structured into Business Units that operate in the following fields:
MEDICAL TECHNOLOGY SECTOR
Medical Technology. This Sector includes products to treat cardiovascular diseases,
pacemakers, coronary stents, cardiac valves, cardiac surgery devices and hemodialysis
products. The main Sector companies are Dideco, Sorin Biomedica Cardio, Bellco,
Stöckert Instrumente and Cobe Cardiovascular. The Group is the world’s largest
producer of cardiac surgery devices and ranks among the leaders in the other medical
technology businesses in which it operates. With the acquisition of ELA Medical, Snia
entered the market for implantable defibrillators.
TEXTILE FILAMENTS SECTOR
Special Textile Filaments (polyamide filaments for textile applications, cellulose
diacetate filaments and rayon filaments). Snia’s companies in this Sector are Nylstar, a
joint venture with Rhodia that is Europe’s largest producer of polyamide filaments for
textile applications; Novaceta, a joint venture with Acordis that leads the European
market for cellulose diacetate filaments; and Nuova Rayon, which is Italy’s sole
producer of rayon filaments for the fashion industry.
CHEMICALS
AND
ENERGY SECTOR
Chemicals. The Chemicals operations, which are headed by Caffaro, produce
intermediates for fine and specialty chemicals, agrochemicals and flexible packaging
materials. The Group is the largest European manufacturer of nylon film for food and
pharmaceutical packaging, with a 50% market share. It is also a major producer of
composite materials, which are used by the Composite Systems operations to make
railroad, aircraft and automotive components.
Energy: In 1999, following the deregulation of the Italian energy market, Snia entered
into a strategic alliance with Sondel, a Falck Group company. Together, the two
companies established Caffaro Energia, a 50-50 joint venture to which Snia contributed
its Val Caffaro (Brescia) and Val Meduna (Pordenone) hydroelectric power plants.
Caffaro Energia is pursuing several projects, including the construction of a
cogenerating, combined-cycle turbogas power plant. This 800-MW facility will be
located at Caffaro’s factory in Torviscosa (Udine).
Diversified Activities. This Sector includes the real estate and mechanical engineering
operations of the Snia Group.
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SIGNIFICANT EVENTS OCCURRING IN 2000
AND THE FIRST QUARTER OF 2001
January 2000
Snia reaches an agreement with the unions to close the Gissi (Chieti) factory, which
assembled hematic lines for hemodialysis. Production is moved to Mirandola, which
becomes the Group’s main hub for the production of disposable devices used in
cardiac surgery and hemodialysis.
February 2000
Novaceta, a joint venture of Snia and Acordis, ceases production at its British
facilities in Nuneanton and Little Heath, Coventry. This step is necessary due to a
slump in demand, rising imports of low cost fibers, fabrics and garments, and an
unfavorable foreign exchange rate. This decision reaffirms Snia’s strategy of focusing
its textile filaments business on special fibers and in particular on the polyamide
filaments market.
The U.S. Food and Drug Administration, the agency that oversees and approves the
marketing of biomedical and pharmaceutical products in the United States,
authorizes Snia to begin clinical trials of a cardiac valve manufactured in Italy. This
is the first time that the FDA has approved clinical trials of foreign-made products
of such critical importance on American patients.
March 2000
The 10,000th Carbostent, a highly innovative product introduced by Snia in January
1999, is implanted in a patient in Italy. This stent, which was approved by the
European Union at the end of 1998 for use in coronary angioplasty, is an application
of the pyrolytic carbon technology that Snia developed for the production of
mechanical cardiac valves.
An environmental impact study for the new cogenerating, combined-cycle power
plant that will be constructed in the industrial complex operated by Industrie
Chimiche Caffaro in Torviscosa (Udine) is filed with the Italian Ministry of the
Environment and local government authorities in the Friuli Venezia Giulia Region.
The plant will be built by Caffaro Energia, a 50-50 joint venture of Caffaro and
Sondel (Falck Group). The project calls for the construction of a cogenerating,
combined-cycle power plant. This high-efficiency facility, which will be fired with
natural gas and have a power rating of 800 MW, will be instrumental in attracting
to Torviscosa new industrial projects that are consistent with the Group’s expansion
programs.
Effective March 31, Caffaro S.p.A. and Sorin Biomedica S.p.A. are absorbed by Snia
S.p.A. This step marks the completion of a merger process that began in October
1999 and, by enabling the Group to further streamline its corporate and operating
structure, results in a new organization based on Business Units owned directly by
Snia S.p.A.
April 2000
Nylstar, a 50-50 joint venture of Snia and Rhodia that leads the European market for
nylon textile filaments, completes the acquisition of Amfibe, a producer of nylon
filaments based in Virginia. This acquisition will enable Nylstar to introduce in the
U.S. market a range of special products for the textile and garment industry that
have been very successful in Europe. The production from the U.S. facilities, when
added to the output of plants in Spain, France, Germany, Italy, Poland and Slovakia,
will propel Nylstar to the rank of second-largest manufacturer of nylon textile
filaments in the world.
13
June 2000
Snia’s Stockholders’ Meeting approves the 1999 Annual Report and elects Marco
Vitale to the Board of Directors of Snia S.p.A., expanding the Board’s membership
from 11 to 12.
Nylstar, a 50-50 joint venture of Snia and Rhodia, is the first company in the textile
industry to launch an e-business site that customers can access directly through a
dedicated Internet portal. After gaining access with a password, customers can place
orders, listing the desired technical specifications, price, and time and place of delivery.
They can then follow the progress of their orders online through the Nylstar website,
which uses SAP technology.
September 2000
The reverse split of Snia common, convertible savings and nonconvertible savings
shares becomes effective September 18, 2000. The reserve split gives shareholders 13
new Snia shares, with a par value of one euro each, for 25 old Snia shares, which
have a par value of 0.52 euros each. Following this reverse split, Snia’s capital stock
amounts to 520,691,756 euros. As agreed by Snia S.p.A. and Borsa Italiana S.p.A.,
only the new Snia shares, with a par value of one euro each, are traded beginning
September 18, 2000.
October 2000
After approval from the U.S. Food and Drug Administration in February 2000, 60 Snia
cardiac valves are implanted in American patients at major cardiac surgery centers in
the United States and Canada.
Sorin Biomedica Cardio expands its share of the world market (excluding the United
States) for artificial mechanical and tissue cardiac valves to 15%. Since 1977, Sorin
Biomedica Cardio has produced 250,000 valves, 180,000 of which were
manufactured during the last 10 years. At the 14th Annual Convention of the
European Association for Cardio-Thoracic Surgery in Frankfurt, this Snia Group
company presents the findings of a clinical trial of more than 80,000 implants of the
Bicarbon cardiac valve and announces the marketing of two new tissue valves that
incorporate technologies developed in Italy.
The Food and Drug Administration authorizes the sale throughout the United States
of the Lilliput line of oxygenators for neonatal surgery, which are manufactured by
Dideco, a Snia Group company. In these sophisticated oxygenation systems, the areas
that come in contact with the patient’s blood are treated with a special, highly
biocompatible coating. The Lilliput oxygenators are used to provide extracorporeal
circulation during surgical procedures to correct congenital neonatal cardiopathies
that must be rectified within 60 days of birth to ensure survival. The Lilliput line is
sold in the United States by the sales network of the Cobe Cardiovascular subsidiary.
All the research and development work for the Lilliput oxygenators was done in Italy
at a facility in Mirandola (Modena).
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November 2000
Snia continues to consolidate its European operations. Stöckert Instrumente, a
wholly owned German subsidiary, inaugurates a new facilities that manufactures
heart-lung machines, which are used to provide and manage extracorporeal
circulation during stopped heart surgery. The new plant, which occupies an area of
more than 9,000 square meters and employs over 190 people, was built in less than
12 months in a suburban manufacturing district. Snia has concentrated all its
German medical research and development and manufacturing operations at this
plant. Through Stöckert Instrumente and the U.S. subsidiary Cobe Cardiovascular,
Snia has a 54% share of the world market for heart-lung machines.
February 2001
Dideco, the world’s leading producer of cardiac surgery systems and equipment, signs
an agreement with HemoDynamics, an Israeli company, that gives it exclusive rights
to market throughout Europe (except Spain) a line of disposable products and
equipment that lower the risks and difficulties inherent in all beating heart surgical
procedures. Thanks to this new technique, even high-risk patients can benefit from
beating heart cardiac surgery.
March 2001
Snia reports positive results for 2000, in line with expectations. The Board of
Directors approves the preliminary financial statements, which show consolidated
net revenues of 1,265.9 million euros (+10.9% over 1999), 39.1% of which was
generated by the Medical Technology Sector. Operating income tripled to 68.8
million euros (23.4 million euros in 1999) and consolidated net income totaled 20.6
million euros. The dividend is kept at the same level of the previous fiscal year.
Snia acquires 100% control of ELA Medical, a French company that ranks second
among European producers of cardiac stimulators. ELA Medical is one of the few
companies in the world that has the technology to develop and manufacture
implantable defibrillators. These miniaturized, highly sophisticated devices can
automatically restore normal heart rhythm after an arrest caused by ventricular
fibrillation.
Snia, which is already active in the cardiac stimulation market through Sorin
Biomedica Cardio, will use this acquisition to create a highly competitive European
hub in this industry, which is characterized by a high degree of technological
innovation. The combined operations, which will have initial revenues of more than
165 million euros and will control about 16% of the European market, are expected
to grow at a rate of more than 10% a year.
Snia begins negotiations for the sale of its Agrochemicals Business Unit (Chemicals
Sector).
This transaction is part of a program of gradual divestiture of those businesses that
are no longer strategic and in which the Group does not posses sufficient knowhow
nor research and development capabilities to compete successfully in the
international markets.
At a meeting in Milan, Snia presents its growth strategy for the next four years to
the financial community and provides indications of Group performance in 2001.
15
GLOSSARY
MEDICAL TECHNOLOGY
Acute kidney failure: Refers to a clinical syndrome characterized by a sudden drop in
kidney function due either to renal causes or non-renal causes.
Angioplasty: Restoring of a blood vessel by means of a cardiac intervention procedure
using a balloon catheter.
Apheresis: Methodologies for separating blood into its components.
Artificial cardiac valves (mechanical and tissue valves): Implantable prostheses
intended to replace natural cardiac valves that are damaged or function poorly.
Cardiac defibrillator: An implantable system using high energy stimulation to block the
occurrence of the fibrillation phenomenon that causes the patient’s spontaneous heart
rate to rise above normal values.
Cardiac surgery: Surgery applied to the heart and the circulatory system.
Cardiology: Science studying the structure, function, and pathology of the heart.
Chronic kidney insufficiency: Refers to an irreversible loss of kidney function causing
serious alterations in the composition of the body’s fluids.
Coronary stent: An implantable device that is inserted into the coronary arteries during
angioplasty procedures, consisting of a metal cage capable of going from a contracted
configuration to an expanded one in order to open up the coronary artery.
Dialysis equipment: Equipment for producing dialysis liquid and controlling
extracorporeal circulation.
Dialysis fluid: A solution of a predetermined composition that is made to flow through
the dialyzer along with the blood in order to purify it and reestablish electrolyte
equilibrium.
Dialysis: Dialysis refers to the physical process by which the toxic substances that
accumulate in the blood due to renal insufficiency, and which are normally eliminated
by the kidneys, are removed from the patient’s uremic blood.
Disposables: Products that can be used only once.
Extracorporeal hemodialysis lines: Disposable products consisting of tubes, connectors,
and drip chambers made of highly biocompatible Pivipol plastic.
Food and Drug Administration (FDA): A government agency in charge of controlling
and authorizing the marketing of biomedical and pharmaceutical products in the United
States.
Heart and Lung Machine (HLM): A device for extracorporeal circulation during cardiac
arrest.
16
Hemocompatibility: Reduction of the degree of interaction between a biomaterial and
blood to minimize the risk of thrombosis.
Implantable devices: High-tech products that are inserted into the human body and
perform life-sustaining functions. Snia produces cardiac valves, coronary stents, and
pacemakers.
Investigational Device Exemption (IDE): An authorization issued by the FDA, which is
necessary for performing clinical evaluations of medical/surgical devices with the
intention of obtaining an approval for sale in the United States.
Medical technologies: All of the research, design, engineering, and production activities
for disposable devices, implantable prostheses, and machines that temporarily or
permanently replace the functions of vital organs in the human body.
Nephrology: Science studying non-surgical kidney diseases.
Oxygenators: Devices for oxygenating the blood during extracorporeal circulation.
Pacemaker: An implantable device whose function is to generate electrical pulses that
reach the heart through special conductors, called electro-catheters, and allow it to
contract so as to correct any cardiac rhythm disorders.
Pediatric oxygenators: Devices for oxygenating the blood during extracorporeal
circulation for neonatal patients (from a weight of 1,000 g — in practice one day old —
to 6 kg, whose blood volume may be as small as 250 ml) and pediatric patients (up to
15 kg).
Self-transfusion kit: A set of disposable lines for recovering blood during and after
operations.
Self-transfusion: Methods for recovering blood during and after operations.
Vascular access: In order to perform extracorporeal dialysis, the blood to be purified
needs to be taken out of the body and the purified blood returned to the body using an
artificial basal access (arterovenous fistula) or central venous catheters.
17
TEXTILE FILAMENTS
Cellulose diacetate filament: A chemically modified continuous filament of cellulose
origin for linings and women’s clothing.
Easy-care clothing: Products that are easy to care for (washing in water and ironing).
Mixes with synthetic filaments: Various types of filaments (cellulose and/or synthetic)
that are combined during the spinning and/or twisting phase.
Polyamide textile filament: A continuous filament of nylon 6 and 6.6 for stockings,
underware, sports apparel, leisure time, and technical applications.
Solution-dyed filaments: Continuous filaments dyed through injection of coloring
material during the spinning phase.
Viscose rayon textile filament: A continuous filament of regenerated cellulose used in
knitting and weaving for linings, clothing, and upholstery.
CHEMICALS AND ENERGY
Agrochemicals/Phytochemicals: Products used to protect crops against fungus
diseases, insects, and weeds.
Bioriented films: Products that can be made using industrial processes that, after
extrusion of the film, include a biaxial drafting unit (simultaneous or sequential)
capable of imparting special mechanical or gas-barrier properties to the films thus
produced.
Chlorthalonil: An active ingredient having a fungicidal action used primarily to combat
crop diseases.
Combined-cycle cogeneration power plant: A plant that simultaneously produces
electrical power and steam (cogeneration). The electrical power is produced by
converting the thermal energy of natural gas using a gas turbine and a steam turbine
(combined cycle). In the case of Torviscosa, the plant will be fired with natural gas.
Commodities: Products that are not characterized by specific market barriers (technical,
process, etc.).
Cupric fungicides: Products based on cupric salts used to protect crops against disease
(especially against grape peronospora).
Electrolytic and auxiliary products: Caustic soda, chlorine, hydrogen, and derivatives.
Produced through electrolysis of sodium chloride (salt).
Fine chemicals intermediates: Organic molecules produced with one or more synthesis
cycles and used as the raw materials in the production of highly complex molecules,
such as active ingredients in pharmaceuticals.
Flexible packaging: Flexible packaging consisting of single- or multiple-layered
polymer films of various compositions suitable for the containment, transport,
distribution, and preservation of various types of products.
18
Hydroelectric power plant: A plant that generates electrical power using the hydraulic
energy of a catchment basin.
Multifunction facility: A chemical facility designed in such a way as to produce
different molecules based on the customer’s requirements. It differs from dedicated
facilities, which are designed to produce a single product.
Nylon films: Products obtainable by various industrial extrusion processes, primarily
through a flat or circular extrusion head, using polyamide polymers.
Nylon polymers (polyamides): Synthetic polymer substances characterized by the
presence of amide functional groups in the repeating unit.
Organic additives: Synthetic chemical substances that are used in the formulation of
finished products, such as detergents, plastics, and paints to provide them with desired
performance properties.
Organic-mineral fertilizers: Special fertilizers consisting of an organic matrix (humus)
bound to one or more fundamental mineral elements through a special process, used for
plant nutrition (nitrogen, phosphorus, potassium).
Polyester films: Products obtainable by various industrial extrusion processes,
essentially using polyethyleneterephthalate polymer, generally by means of a flat
extrusion head and then biorientation.
Specialties: Products having specific properties obtainable through the application of
exclusive/original knowhow.
Thermal ketones: Molecules produced by chemical synthesis performed at high
temperature.
Toluene derivatives: Products derived from the oxidation of toluene.
Water treatment and purification (drinking and industrial water): Products,
application technologies and services necessary to purify water resources for human
consumption or treat waste water before discharging into the environment.
WDG copper: A special (granular) formulation of products based on cupric salts.
19
FINANCIAL HIGHLIGHTS
BY SECTOR (in millions of euros)
Medical Technology (*)
Textile Filaments
1999
2000
1999
2000
415.5
494.4
346.8
399.3
Depreciation and amortization
32.7
39.5
24.0
27.7
Operating income
19.6
42.1
8.8
14.7
Capital expenditures
21.1
33.3
17.4
33.8
Net consolidated revenues by Sector
Intersector transactions
Consolidated net revenues of the Group
Net invested capital
512.0
Number of employees at 12/31
3,377
Net borrowings
(199.1)
515.8
3,384
15.3
(*) The Bioengineering Sector has been renamed Medical Technology Sector.
(**) The figures for 1999 are those of the Group’s holding companies (SNIA S.p.A. and SIFI S.p.A.). Those for 2000 refer to SNIA S.p.A.,
which during the year absorbed Caffaro S.p.A., Sorin Biomedica S.p.A., Old Bellco S.r.l., SGS S.r.l. and SIFI S.p.A.
20
282.6
2,565
(125.7)
333.1
2,987
(177.4)
Chemicals
and Energy
Diversified
Activities
Holding Companies
and adjustments (**)
1999
2000
1999
2000
367.7
361.5
26.7
16.6
1999
Total for
the Group
2000
1999
2000
9.3
21.2
1,166.0
1,293.0
(24.1)
(27.1)
(24.1)
(27.1)
1,141.9
1,265.9
22.8
20.5
4.9
2.4
0.2
2.0
84.6
92.1
1.9
13.6
(3.6)
3.2
(3.3)
(4.8)
23.4
68.8
13.1
13.0
0.4
4.9
0.6
0.5
52.6
85.5
91.3
79.5
44.6
47
43
301.4
331.3
1,757
1,492
21.2
178
(4.7)
(62.0)
(57.5)
21.6
101
45.2
(148.0)
1,231.9
1,281.3
7,920
8,011
(320.4)
Operating Income
Net Revenues
(millions of euros)
(millions of euros)
494.4
415.5
42.1
399.3
367.7 361.5
346.8
19.6
14.7
13.6
8.8
3.2
1.9
26.7 16.6
00
21
99
00
99
00
99
Diversified Activities
99
00
Chemicals and Energy
99
Textile Filaments
00
Medical Technology
99
00
99
Textile Filaments
00
Medical Technology
99
-3.6
00
(372.3)
22
REPORT ON OPERATIONS (Part I)
(Prepared in accordance with Article 2428 of the Italian
Civil Code and Article 40 of Legislative Decree No. 127/91.)
Dear Stockholders:
During the first quarter of 2000, Sorin Biomedica and Caffaro, two publicly traded subsidiaries of the Group, were merged into Snia. These mergers helped the Group eliminate
the duplications that are inherent in a multi-tier organization and adopt a structure based
on Business Units that are totally self standing from a business operating standpoint.
These Units employ a much more flexible decision-making process, are able to focus on
objectives that are germane to their businesses and report directly to the Group’s top
management.
The Group’s new organization, combined with the beneficial impact of programs launched
in 1999 and a somewhat more favorable economic environment, provided the Group with
fresh momentum. Revenues increased by about 11% in 2000 and operating income tripled
to 68.8 million euros, up from 23.4 million euros in 1999. These results are roughly in line
with the objectives set forth in the industrial plan presented at the end of 1999.
In 2000, Snia vigorously pursued the objectives of this plan, making significant progress in
its effort to shift the focus of the Group to leading-edge, high-tech businesses. The Medical Technology Sector benefited from the acquisition of Cobe Cardiovascular Inc. (Cobe
CV) which it bought in 1999, and entered the angioplasty market by introducing highly innovative stents. In particular:
• The contribution of Cobe CV was reflected in the results for the full year, as opposed to a
little more than half of 1999, and most of the manufacturing and marketing synergies
that the European and U.S. operations were expected to generate have already been realized.
• The Sector’s angioplasty business generated revenues of about 14 million euros, earning a substantial profit. Unit sales rose to 27,135 stents, compared with 8,276 in 1999.
The Medical Technology Sector, Interbanca and Iniziativa Piemonte, working within the
framework of a management buyout, acquired the Diagnostics operations of the American Standard Group.
These operations, which Sorin Biomedica had sold to American Standard in 1997, include
Diasorin, a company based in Saluggia, and a subsidiary with a factory in Stillwater, Minnesota.
Snia purchased a 30% interest in this company at a cost of 5 million euros.
Snia was also active in the energy business, where a joint venture established with Sondel
began the administrative procedures required to build a plant that will use natural gas to
generate clean energy. Preliminary steps included the preparation of an environmental
impact study that has been filed with the Italian Ministry of the Environment for review.
Based on the progress made thus far, the company expects to receive a favorable ruling
during the first half of 2001.
The programs that are being implemented have produced a significant shift in the Group’s
mix of businesses, with a greater emphasis on non-cyclical industries. The revenue contribution of the Medical Technology and Chemicals operations has changed from about 30%
from each in previous years to 38% and 28%, respectively, in 2000 .
In further pursuit of its refocusing objective, Snia sold 50% of Sistemi Compositi and 80%
of Sniaricerche. Other transactions, including the merger of Fapack into Caffaro Flexible
Packaging and the absorption of SIFI (Società per le Iniziative Finanziarie e Immobiliari)
and SGS (Servizi Gruppo Snia) by Snia, were carried out to further streamline the Group’s
structure.
Programs implemented to increase efficiency and reengineer the manufacturing organization included the closure of Novaceta’s Little Heath and Nuneaton plants in England
and the adoption of new work methods at Nuova Rayon’s factory in Rieti, which enabled
the company to cut its payroll.
23
Net Revenues by Sector
in %
100%
36.4
39.1
Medical
Technology
32.2
28.6
Chemicals
31.5
30.4
Textile
Filaments
1.0
0
99
Other
Activities
0.8
00
In 2000, the Medical Technology Sector grew by 19%. On a comparable consolidation
basis, the rate was equivalent to 7.3%.
The Cobe acquisition, which helped Sorin consolidate its leadership position in world markets, accounts for a large portion of this gain, because in 1999 Cobe’s results were not included for the full year.
The Sector’s improved profitability reflects the beneficial impact of the synergies generated by the Cobe acquisition and a positive performance by the Angioplasty operations,
which became profitable after successfully completing the startup phase.
The Sector’s combined revenues totaled 494.4 million euros, up from 415.5 million euros in
1999. Operating income rose to 42.1 million euros, compared with 19.6 million euros in
the previous year.
The results of the Textile Filaments Sector reflect stronger sales of polyamide filaments
than of cellulose filaments. Demand for polyamide filaments was high during the first six
months but slowed during the second half of the year, while shipments of cellulose filaments, which had been in a slump since the end of 1998, began to pick up toward the end
of 2000.
The Sector responded to weak demand by implementing incisive efficiency-boosting programs, which increased the profitability of its operations in these two businesses.
Total Sector revenues came to 399.3 million euros, or 15.1% more than in the previous fiscal year. On a comparable consolidation basis, the increase is 7.3%.
Operating income grew from 8.8 million euros in 1999 to 14.7 million euros in 2000.
In 2000, the Chemicals and Energy Sector was able to significantly increase the profitability of its industrial operations despite rising costs for most of its raw materials. This
was accomplished by closing unprofitable chemicals businesses and restructuring the
Flexible Packaging Unit. At the same time, the nylon film business enjoyed substantially
higher unit sales and prices.
Overall, the Group’s chemicals operations were able to undergo this restructuring process
without losing momentum while maintaining the positions it has attained in domestic
and international markets.
The Sector had revenues of 361.5 million euros, compared with 367.7 million euros in
1999. This decline was due entirely to divestitures. On a comparable consolidation basis,
revenues would have been up 4.6%.
Operating income rose to 13.6 million euros, compared with 1.9 million euros in 1999.
The Group invested 85.5 million euros in fixed assets, up from 52.6 million euros in 1999.
Investments in research and development, including Group outlays, which are charged to
income when incurred, and funding provided by third parties, totaled 37.5 million euros,
down from 39.5 million euros in the previous fiscal year.
The 2000 annual report of Snia S.p.A., which we submit for your approval, shows net income of 10.6 million euros, compared with 27.3 million euros in 1999. Consolidated net
income before minority interest amounted to 20.6 million euros, as against 22.7 million
euros in the previous fiscal year.
Net indebtedness increased from 320.4 million euros to 372.3 million euros, due primarily
to the Nylon USA (Amfibe) acquisition, which required an investment of 8.6 million euros
by Snia, and the costs incurred to complete several merger transactions, which amounted
to 12 million euros, net of the proceeds from the extraordinary conversion of the nonconvertible savings shares .
24
In 2001, the Medical Technology Sector should report a significant improvement in its
gross operating result as it benefits from internal growth and the favorable impact of the
ELA Medical acquisition. However, the profitability of the manufacturing operations will
be constrained by an increase in depreciation and amortization caused by a rise in goodwill. During the first half of the year, the other operations of the Group, which are more directly affected by conditions in the international economy, could experience lower sales
and a decline in manufacturing margins.
The Group’s net indebtedness will rise due to the acquisition of ELA Medical. However, this
increase will be offset in part by the sale of the Agrochemicals Business Unit and may be
eliminated completely if Snia is able to divest non-operating assets once it receives the
permits required to start construction of a new cogenerating power plant in Torviscosa.
The Group’s ambitious capital investment program and higher interest charges will absorb
all the cash flow from operations.
At the end of 2001, if all non-operating assets are indeed sold, borrowings should be comparable with the level at December 31, 2000. However, a deterioration in economic conditions, which at this point is a possibility, could have a negative impact on cash flow generation and working capital turnover, thereby producing a sizable increase in indebtedness.
Gross Operating Result
(EBITDA) by Sector
(millions of euros)
88.1
56.6
44.6
38.3
35.4
26.6
00
99
00
Chemicals
and Energy
99
Textile
Filaments
00
Medical
Technology
99
Medical Technology
EBITDA % - 1999: 13.6 - 2000: 17.8
Textile Filaments
EBITDA % - 1999: 11.0 - 2000: 11.2
Chemicals and Energy EBITDA % - 1999: 7.2 - 2000: 9.8
25
HUMAN RESOURCES AND
INDUSTRIAL RELATIONS
At December 31, 2000, the Snia Group had 8,011 employees, or 91 more than at the end
of 1999 (7,920).
A breakdown of this change is provided below:
Employees at 12/31/99
• additions
• reductions
• change in the scope of consolidation
• attrition and restructuring
Total changes
Employees at 12/31/00
7,920
95
- 35
503
- 472
91
8,011
due to Amfibe Inc.
due to Biomateriali S.r.l.
incl. 624 Stilon S.A. employees
A total of 3,567 employees, or 44.5% of the total payroll, worked for foreign companies
at December 31, 2000, for an increase of 416 compared with the end of 1999.
A breakdown by country is as follows:
ITALY
SECTOR
Medical Technology
Textile Filaments
and SNIA S.p.A.
Grand total
EU
(excluding Italy)
EASTERN
EUROPE
NORTH
AMERICA
REST OF
THE WORLD
TOTAL No. OF
EMPLOYEES
1,878
534
—
903
69
3,384
938
824
1,123
102
—
2,987
1,480
12
—
—
—
1,492
148
—
—
—
—
148
4,444
1,370
1,123
1,005
69
8,011
At December 31, 2000, 20 employees were receiving special temporary layoff benefits.
Eighty-six employees were enrolled in this program at the end of 1999.
During 2000, the Group implemented a series of streamlining and restructuring programs.
These programs, which were consistent with the new organization by Business Units,
caused the overall staff to decline by 472 employees.
In Italy, 545 employees left the Group and 376 were added to the payroll, for a net decrease of 169 units. About 60% of the new employees have either a technical school
diploma or a college degree.
The restructuring programs, which required the use of the special temporary layoff benefits program, affected the Chemicals (Brescia and Torviscosa plants) and Agrochemicals
(Aprilia and Galliera factories) Business Units in particular. The Group reached the requisite agreements with the unions to use the long-term layoff benefits program for employees of the Flexible Packaging Business Unit (Ceriano Laghetto and Pisticci locations).
The training programs offered in 2000 were designed to meet the specific needs of the
Business Units and focused on consolidating professional skills in the different businesses
in which the Group operates.
26
No options were awarded under the first cycle of the Stock Option Plan because none of
the award requirements set forth in the Plan’s Regulations were met during the year 2000.
Following the absorption of the subsidiaries Caffaro S.p.A. and Sorin Biomedica S.p.A., the
redenomination of the capital stock into euros and a reverse stock split, the Board of Directors updated the regulations that govern the Stock Option Plan, which now call for:
• Two award cycles: 7/1/01 and 7/1/02.
• The exercise by the beneficiaries of their subscription rights exclusively during a period falling between the beginning of the third and the end of the fifth year after the
date of award.
• Issuance of new shares as follows:
• 1st cycle
• 2nd cycle
maximum of
maximum of
Total
•
•
•
•
1,291,142
1,652,662
shares
shares
2,943,804
shares
Given that no options were awarded during the first cycle, the Board of Directors has
been authorized to carry out contributory capital stock increases up to a maximum of
3,873,426 euros until January 28, 2004.
Award of registered and nontransferable options to subscribe common Snia shares to
executives of Snia and its subsidiaries selected by the Compensation Policies Committee based on recommendations by the Board of Directors.
Attribution of option rights based on the ability of the Snia common shares to outperform the MIB 30 Index, measured in accordance with parameters determined by the
Board of Directors.
The issue price of the shares purchased upon the exercise of the option is 2.42 euros
per share, which is equivalent to the average of the closing prices of Snia shares on
the Online Stock Trading System of Borsa Italiana S.p.A. during the three months preceding the date when the Plan was approved by the Board of Directors (February-April
1999). The price at which the shares will be issued will remain unchanged during the
three years of the Plan.
Management of the Plan to be handled by the Compensation Policies Committee.
27
SAFETY AND THE ENVIRONMENT
Safety and respect for the environment have traditionally been important values for Snia,
which has always sought to combine the achievement of positive economic results with
the protection of the environment and the health and safety of its employees and the
communities in which it operates.
Consistently with this approach, Snia was among the first companies in Italy to join the
Responsible Care Program sponsored by the Italian Federation of Chemical Manufacturers.
In Italy, investments in environmental protection facilities totaled 7,383,000 euros. A
breakdown by Sector is as follows:
(000s of euros)
• Medical Technology
• Textile Filaments
• Chemicals and Energy
272
4,400
2,728
Total
7,400
Capital expenditures were earmarked primarily to minimize the environmental impact of
the Group’s manufacturing facilities, create more healthy working conditions and prevent
accidents.
As part of their efforts to comply with Article 17 of Legislative Decree No. 22 of February
5, 1997 and Ministerial Decree No. 471 of October 25, 1999, the Group’s operating companies began surveys designed to determine soil conditions at the various manufacturing
facilities.
28
NET REVENUES BY GEOGRAPHIC REGION
ITALY
EU
EUROPE:
NORTH
(excl. Italy) other countries AMERICA
REST OF
TOTAL
THE WORLD REVENUES
MEDICAL TECHNOLOGY
SECTOR
• Net revenues by origin
(millions of euros)
• % of revenues by origin
295.9
59.8
101.3
20.5
---
94.9
19.2
2.3
0.5
494.4
100.0
• Net revenues by destination
(millions of euros)
• % of revenues by destination
100.9
20.4
147.4
29.8
23.6
4.8
128.9
26.1
93.6
18.9
494.4
100.0
(millions of euros)
170.5
42.7
156.7
39.2
68.7
17.2
3.4
0.9
---
399.3
100.0
(millions of euros)
162.9
40.8
152.3
38.1
39.3
9.8
20.5
5.1
24.3
6.2
399.3
100.0
(millions of euros)
361.5
100.0
---
---
---
---
361.5
100.0
(millions of euros)
238.4
65.9
86.8
24.0
7.4
2.1
6.5
1.8
22.4
6.2
361.5
100.0
(millions of euros)
838.6
66.2
258.0
20.4
68.7
5.4
98.3
7.8
2.3
0.2
1,265.9
100.0
(millions of euros)
511.9
40.4
387.1
30.6
70.5
5.6
155.9
12.3
140.5
11.1
1,265.9
100.0
CHEMICALS AND
ENERGY SECTOR
SNIA GROUP
100%
11
Net revenues of
the Snia Group
by destination
9
4
11
Rest of
the world
12
North
America
Europe
6
(other countries)
32
31
EU
(excluding Italy)
44
40
Italy
0
99
00
29
OPERATING RESULTS AND FINANCIAL
PERFORMANCE BY OPERATING SECTOR
Net Revenues by
Business Unit
Change
1999
2000
(in millions of euros)
Net revenues
Operating income
Number of employees
at December 31
Net (indebtedness)
financial assets
International revenues %
64%
Cardiac Surgery
19%
Renal Care
10%
Cardiovascular Implantable Devices
7%
Cardiac Rhythm
CARDIAC SURGERY
415.5
19.6
21.1
512.0
3,377
(199.1)
75.7
494.4
42.1
33.3
515.8
3,384
15.3
79.6
from 1999
%
+ 19.0
+ 114.8
+ 57.8
+ 0.7
+ 0.2
_
On a comparable consolidation basis (i.e., when the figures are restated to account for
the different consolidation periods of Cobe CV in 1999 and 2000), the Sector’s revenues
were up 7.3%. Following the merger of Sorin Biomedica S.p.A. into Snia S.p.A., the Sector
was restructured into the Business Units listed below.
Net revenues came to 317.1 million euros, compared with 247.1 million euros in 1999.
Cobe’s products accounted for 37% of total revenues.
Such a substantial increase was made possible by higher unit sales and a better product
mix, which resulted in a gain of 17.3% (4.3% on a comparable consolidation basis), and
by the beneficial impact of favorable exchange rates, which accounted for an increase of
10.8%. Sales of oxygenators were up 5%, shipments of HLM machines rose 61% and
sales of self-transfusion kits held steady at last year’s level. Shipments of the Avant 1.6
hollow fiber oxygenator for adults rose to more than 25,000 units.
The positive impact of foreign exchange rates and the increased manufacturing
efficiency achieved during the year enabled the Business Unit to hold the ratio of gross
operating result to revenues at the same level as in 1999.
During the year, the Unit pursued several product innovation projects, including:
• Continuation of U.S. clinical trials for the enhanced version of the Avant oxygenator
(Model 2.0), which produced encouraging results.
• Development of a new plan for manufacturing the oxygenators produced by the Dideco-Sorin-Cobe Group. Over the next three to five years, all adult models will be redesigned to incorporate the same gas exchanger module without blurring the different brand identities. This modification is expected to produce significant savings in
research and development and manufacturing costs.
• Completion of pre-series production of the new Electa self-transfusion machine,
which will replace the Compact-Advanced model. Pre-series units have been installed
in European hospitals where they have performed well up to this point.
• Increasingly successful work on the development of extracorporeal systems coated
with hemocompatibility agents.
• Receipt of FDA approval for the sale in the U.S.A. of the Lilliput-Phisio line for children.
31
by Business Unit
(amounts in millions of euros)
66.0
In 2000, capital investments were focused primarily on helping Cobe CV complete the
expansion of its raw materials and components warehouse and on the restructuring of
several manufacturing operations following the transfer of the production formerly
carried out by Sorin Biomedical Inc., which was absorbed by its parent company and
ceased operations in February 2000, to new plants.
41.7
15.5 13.8
99 00
99 00
99 00
99 00
Renal Care
5.1
Cardiovascular
Implantable Devices
3.2
Cardiac Rhythm
3.2
Cardiac Surgery
2.7
Cardiac Surgery EBITDA % - 1999: 16.9 - 2000: 20.8
Cardiac Rhythm EBITDA % - 1999: 7.5 - 2000: 9.0
Cardiovascular Implantable Devices
EBITDA % - 1999: 8.8 - 2000: 10.4
Renal Care
EBITDA % - 1999: 16.2 - 2000: 14.8
CARDIOVASCULAR
IMPLANTABLE DEVICES
Cobe CV also invested in upgrading its information technology systems, making them
compatible with those of other companies within this Business Unit.
At Dideco – Italy, capital expenditures were earmarked primarily to build a new
customized packaging system, develop and install dies and equipment for the new Sorin
oxygenator and manufacture the new Electa self-transfusion machine.
Research efforts concentrated on a medium-term project to develop an extracorporeal
circulation system that will feature highly integrated components, greater
biocompatibility and improved patient safety, as well as on the production of new
hemocompatible coatings for all extracorporeal circulation systems. In this last area,
the Business Unit made significant progress, developing an antithrombogenic version of
a phospholipidic coating incorporating heparin that is now being readied for
manufacturing. Lastly, the work required to start production of a second generation
hollow fiber oxygenator for adults is almost complete. Marketing of this new product,
which will replace the Monolyth model, should begin within 18 months.
At December 31, 2000, the Business Unit had 1,947 employees.
This Business Unit sells two separate product lines: mechanical and tissue cardiac
valves, which generated revenues of 33.5 million euros, or 13% more than in 1999, and
angioplasty products, including coronary stents and catheters for percutaneous
transluminal coronary angioplasty (PTCA), which produced sales of 14 million euros
(+212% over 1999).
In 2000, the Unit sold 27,135 stents, compared with 7,276 in 1999.
This gain in unit sales explains the rise in the Unit’s revenues, as prices were virtually
unchanged from the previous year.
The Unit’s profitability, which benefited from the higher margins earned on sales of
cardiac valves, was boosted primarily by the strong performance of its angioplasty
products, which became profitable during the fourth quarter after generating losses
during the startup phase.
A significant development involving the Unit’s cardiac valves was the FDA’s decision to
grant an Investigational Device Exemption (IDE) for Sorin’s bileaflet valve. In addition,
all the work needed to begin marketing the Pericarbon More and Pericarbon Freedom
lines of tissue valves was completed during the year. Following receipt of the CE mark,
preparatory production work got under way quickly. Unfortunately, problems in
procuring the tissue components arose after the close of the fiscal year.
In July, this Business Unit reached a significant milestone, selling its 100,000th bileaflet
valve and shipping its 130,000th single leaflet disc valve.
Work involving angioplasty products included a complete renewal of the PTCA catheter
line, resulting in the introduction of the new Pegaso model, and of the Unit’s family of
coronary stents, culminating in the launch of the new Sirius model and the introduction
of new stent sizes.
32
Capital investments totaled 4.7 million euros. They were earmarked primarily to increase
production capacity in order to keep up with the sharp gain in unit sales experienced
during the year and the additional growth expected in 2001. A portion of these
investments was used to automate the Unit’s manufacturing systems.
Cardiac valve research focused on the development of a new line of detoxified tissue
valves and the development of a new family of annuloplasty rings.
At a symposium held at the convention of the European Association for Cardio-Thoracic
Surgery (EACTS), the Unit presented very attractive clinical findings, which were based
on 10 years of experience with its Bicarbon valve.
In the area of angioplasty products, research focused on three main areas: the
development of stents that carry radioactive isotopes, the development of stents that
allow the controlled release of drugs and the start of a project to create new product
lines for noncoronary vascular surgery.
Special attention was paid to obtaining worldwide patent protection for these new
products.
At the two most important Transcatheter Cardiovascular Therapeutics conventions in
the world, one held in Washington and the other in Paris, the Unit presented the
findings of two clinical studies that showed the superior performance of the Sorin
stents compared with other commercially available devices. In particular, the trials
demonstrated the excellent antithrombogenic properties of the carbofilm coating.
At December 31, 2000, the Unit had 616 employees.
CARDIAC RHYTHM
MANAGEMENT
Revenues totaled 35.7 million euros, or one percent less than in 1999. The Unit sold a
total of 18,236 pacemakers, about the same as in the previous fiscal year. The decrease
in revenues was due to lower prices, offset in part by a more favorable product mix,
which produced a gain of more than one percent in the average price charged.
An analysis of revenues by geographic distribution shows a sharp increase in shipments
to customers in Spain.
Contrary to the previous year, the Unit was profitable at the operating level, thanks to
a reduction in overhead and a gain in manufacturing efficiency.
Positive developments involving the Unit’s products included receipt of the CE mark for
the new line of Elect stimulators and for the Hepta and Minibest electrocatheters, and
start of the certification process for the Elect D line of stimulators.
The Unit applied for two European patents to protect innovations in the area of cardiac
stimulation.
The pacemaker manufacturing cycle was reduced from 44 days in 1999 to 34 days in
2000, with a positive impact on inventory levels.
In 2000, capital investments were earmarked to enhance the automatic testing and
technical data management systems and to purchase terminals, dies and equipment for
the production and testing of new product lines.
The research effort focused on the development of more sensitive endocardial sensors,
the integration and manufacturing of less expensive electronic circuits and the
development of new technologies for electrocatheters.
The Unit signed a contract with IMI and the Italian Ministry of Scientific Research
concerning the “Body Worn” project, which provides patient monitoring and assistance.
33
RENAL CARE
Revenues amounted to 93 million euros, or 3.6% less than in 1999.
Lower purchases by customers in some Latin American countries and a general reduction
in prices are the reasons for the revenue shortfall.
Healthy demand for the Unit’s new dialysis machine and the introduction of filters made
with Diapes, a new polyethersulfone fiber, should produce a strong turnaround in 2001.
Product improvements include modifications to components and manufacturing
programs that will allow increased automation of production. In addition, a new kit
that can be used to deliver a purified endogenous liquid is being readied for market
introduction.
Capital investments were made primarily to buy stamping presses for components and
the dies needed for the upgraded product line.
A significant investment was also made in machines needed to manufacture new filters
with innovative membranes.
Research and development outlays, which are charged in full to income, were
equivalent to 2.6% of revenues in 2000.
During the year, the Unit conducted in vitro and in vivo testing of filters with low- and
high-flow synthetic membranes and began work on a cartridge containing sodium
bicarbonate instead of liquids, which by their very nature become more easily
contaminated than powders do. This new configuration will produce a significant
reduction in logistics costs.
Operating Performance of the Principal Companies
Dideco S.p.A. (Snia 100%), which manufactures oxygenators and equipment for selftransfusion, had net revenues of 103.4 million euros in 2000, up from 90.9 million euros
in the previous fiscal year.
Net income came to 9.9 million euros, after depreciation and amortization of 5.9
million euros, compared with earnings of 3.5 million euros in 1999, after depreciation
and amortization of 6.9 million euros.
At December 31, 2000, the company had 591 employees (577 at the end of 1999).
Sorin Biomedica Cardio S.p.A. (Snia 100%) produces cardiac valves, pacemakers and
coronary stents. In 2000, it booked net revenues of 84.2 million euros, compared with
74.4 million euros in 1999.
Net income totaled 2.2 million euros, after depreciation and amortization of 5.8 million
euros. In 1999, the company reported a loss of 0.7 million euros, after depreciation and
amortization of 3.7 million euros.
At December 31, 2000, the company had 725 employees, compared with 631 at the end
of 1999.
Cobe Cardiovascular Inc. (USA) (Dideco 100%) manufactures oxygenators for surgical
procedures and distributes heart-lung machines.
Cobe Cardiovascular is the Sector’s only U.S. manufacturing and marketing subsidiary.
The company reported a loss of US$0.5 million, after depreciation and amortization of
US$8.9 million. In 1999, the company lost US$6.3 million, after depreciation and
amortization of US$6 million.
At December 31, 2000, Cobe Cardiovascular had 892 employees, down from 967 at the
end of the previous fiscal year.
34
Stöckert Instrumente GmbH (Germany) (Dideco 100%) produces heart-lung machines
for extracorporeal circulation.
During 2000, it absorbed Sorin Biomedica Deutschland AG.
Revenues totaled 60.2 million euros, up from 24.2 million euros in 1999. Net income,
which is net of depreciation and amortization of 1.6 million euros, came to 4.5 million
euros compared with 2.9 million euros in 1999, after one million euros in depreciation
and amortization.
At December 31, 2000, the company had 188 employees, as against 160 at the end of
1999.
Bellco S.p.A. (Snia 100%), which manufactures dialysis filters and equipment, had net
revenues of 86.3 million euros.
In 2000, it earned 5.2 million euros, after depreciation and amortization of three million
euros.
No comparison with 1999 is provided, as the figures would not be comparable due to
the transfer of business operations in 1999.
At December 31, 2000, the company had 414 employees, 10 more than at the end of
1999.
Hemoline S.p.A. (Bellco 100%) manufactures hematic lines at a facility in Villacidro
(Cagliari).
In 2000, it had revenues of 6.4 million euros and reported a net loss of 0.7 million euros,
after depreciation and amortization amounting to 0.9 million euros. In 1999, revenues
totaled 6.4 million euros and the net loss was 0.8 million euros, after depreciation and
At December 31, 2000, the company had 97 employees, the same as at the end of the
previous year.
35
TEXTILE FILAMENT SECTOR
Net Revenues by
Business Unit
Change
1999
2000
Net revenues
Operating income
Number of employees
at December 31
Net indebtedness
81%
Nylstar (50%)
12%
Novaceta (50%)
7%
N.Rayon
46.1
40.6
0.4
-0.8 -1.7
00
99
00
N. Rayon
99
Novaceta 50%
Nylstar 50%
00
2,565
(125.7)
58.4
2,987
(177.4)
59.2
+
+
+
+
15.1
67.0
94.3
17.9
+ 16.5
+ 41.1
Stated on a comparable basis, revenues were up 7.3% compared with 1999. Over the
same period, capital expenditures increased by 5.6% and the work force declined by 239
employees (-9.3%).
99
399.3
14.7
33.8
333.1
The Nylstar joint venture consolidates the data for the polyamide textile filaments
operations of Stilon, a Polish company, on a line-by-line basis as of January 1, 2000 and
those of Amfibe Inc., a U.S. company, since April 2000.
by Business Unit
-1.5
346.8
8.8
17.4
282.6
from 1999
%
Nylstar EBITDA % - 1999: 15,1 - 2000: 14.2
Novaceta EBITDA % - 1999: -2,9 - 2000: 0.8
N.Rayon EBITDA % - 1999: -3,0 - 2000: -6.2
The Sector includes the following companies:
• Nylstar N.V. (Netherlands), a joint venture of Snia S.p.A. and Rhodianyl S.n.c. that
produces polyamide filaments.
• Novaceta Ltd., a joint venture with Acordis Europe Investments B.V. that manufactures cellulose diacetate textile filaments.
• Nuova Rayon S.p.A., a wholly-owned subsidiary of Snia S.p.A. that produces rayon
viscose textile filaments.
In 2000, the Sector’s manufacturing operations benefited from buoyant demand for
nylon textile filaments and, during the final months of the year, an upturn in the market
for cellulose filaments.
During the year, the Group’s cellulose filament operations underwent a restructuring
process that included the closure of two Novaceta facilities in Great Britain and the
implementation of efficiency measures by Nuova Rayon, which offered long-term layoff
benefits to some of its employees.
The sharp rise in raw materials and energy costs caused by a higher dollar exchange rate
and an increase in the price of oil could not be passed on fully to customers, as demand
remained relatively soft. This development had a particularly negative impact on the
acetate and rayon filaments business.
In 2001, the profitability of the cellulose filaments operations should rebound, as
women’s fashion trends favor more formal wear and large cutbacks in European capacity
lead to a better balance between supply and demand.
The data for the Nylstar and Novaceta joint ventures, which are reviewed below, are
taken from financial statements prepared for Group consolidation purposes.
37
POLYAMIDE FILAMENTS
Conditions in the European market for polyamide textile filaments varied widely
between the first and second half of 2000. Demand rose sharply during the first six
months (+20% over the same period in 1999), but fell by 6.6% during the second half.
On an annualized basis, Nylstar’s unit sales increased by 6.8% in Western Europe.
During 2000, the Business Unit restructured its Polish subsidiary, Stilon S.A., launched
new production lines for Nylstar Slovakia A.S. (formerly Chemlon A.S.) and acquired
Amfibe Inc., a Virginia-based U.S. company that will provide the Unit with a specialized
manufacturing presence in the United States.
The increase in revenues made possible by an enlarged scope of consolidation helped
the Unit increase its profit margins despite a sizable rise in the cost of raw materials.
Nylstar’s capital expenditures totaled 60.9 million euros in 2000, up from 27.3 million
euros in the previous fiscal year. They were used primarily for technology upgrades at
its facilities in Poland and Slovakia.
Net revenues rose to 644.1 million euros in 2000, compared with 538.9 million euros in
1999. On a comparable consolidation basis, the 2000 revenues amount to 592.7 million
euros.
Operating income came to 45.2 million euros, after depreciation and amortization of
43.1 million euros. In 1999, operating income totaled 36.1 million euros, after
depreciation and amortization of 34.3 million euros.
Consolidated net income declined to 21.3 million euros from 44.8 million euros in 1999,
when the figure included 27.9 million euros in deferred-tax assets.
At December 31, 2000, the Business Unit had 4,950 employees (3,628 employees when
the staff of Amfibe and Stilon is excluded), compared with 3,804 at the end of 1999.
38
CELLULOSE
DIACETATE FILAMENTS
In Europe, demand for diacetate filaments was extremely low during the first six
months of 2000 but turned around during the second half of the year, improving
slightly over the corresponding period in 1999. This upswing was due in part to
changing fashion trends, which saw a comeback of more classic and elegant garments.
Export sales were up, particularly in the countries of the Far East, where the financial
crisis appears to have ended. During the last quarter, additional help came from the
appreciation of the dollar, which made European exports more competitive.
Overall, producers of cellulose filaments are in the process of restructuring their
facilities and reducing capacity. This should produce a better balance between supply
and demand and lead to better utilization of the remaining plants.
This reduction of supply is enabling producers to ask for price increases the beneficial
impact of which will be felt starting in the first quarter of 2001.
During the first half of 2000, Novaceta restructured its operations,closing its Little
Heath and Nuneaton factories in Great Britain. The shutdown of these facilities cut
manufacturing capacity by 9,000 tons and reduced the payroll by 240 employees. The
related writeoffs and layoff costs totaled 28 million euros.
Capital expenditures, which amounted to 3.9 million euros (4.7 million euros in 1999),
were earmarked primarily to upgrade the Unit’s plant in Magenta.
Novaceta had net revenues of 99.6 million euros in 2000, compared with 103.2 million
euros in 1999.
This shortfall is due mainly to a decrease in average unit prices.
During the second half of the year, the Business Unit’s plant utilization index reached
90% and special filaments accounted for 50% of total output.
In 2000, Novaceta reported an operating loss of 6 million euros, after depreciation and
amortization of 6.3 million euros, compared with an operating loss of 11.6 million euros
in 1999, after depreciation and amortization of 8.3 million euros.
The consolidated net loss came to 0.5 million euros, an improvement over the loss of
38.4 million euros in 1999, when the figure reflected the establishment of restructuring
reserves.
At December 31, 2000, this Business Unit had 576 employees, compared with 830 at
the end of 1999. The reduction was due to the restructuring programs discussed above.
39
RAYON FILAMENTS
In 2000, European demand for viscose filaments remained weak, with shipments falling
5% below the 1999 level, which was already 36% lower than in the previous year.
European installed capacity, which totaled 72,000 tons/year at the beginning of 2000,
decreased to 45,000 tons/year due to the closure of obsolete facilities by several of the
Business Unit’s competitors. This process will help rebalance supply and demand, which
will have a positive impact on profit margins.
In Italy, where Nuova Rayon has traditionally sold most of its products, demand
improved during the closing months of 2000, reflecting not only the normal seasonality
of the textile production cycle, but also and more importantly a refocusing of fashion
trends on classic women’s garments, which make greater use of cellulose fibers.
In this environment, Nuova Rayon increased unit sales by 13% compared with 1999,
thanks to higher shipments to Italian customers and rapidly rising exports to Middle
Eastern countries.
The Unit continued to successfully market new specialty yarns in which viscose
filaments are solution-dyed or mixed with synthetic filaments for use in easy-care
garments.
The Unit’s manufacturing operations responded to the inadequate utilization of plant
capacity by adopting incisive efficiency-boosting measures, which included a hiring
freeze and the use of the Government’s Layoff Benefits Fund during the first quarter of
2000. Additional staff reductions were achieved by offering employees long-term layoff
benefits in anticipation of pre-retirement and severance incentive packages.
40
The appreciation of the U.S. dollar produced a sharp increase in raw materials and
energy costs, which could not be passed on to customers due to continuing demand
weakness. As a result, average unit revenues, which were also affected by an
unfavorable shift in the manufacturing and geographic mix, were 7% lower than in the
previous year.
Capital expenditures totaled 1.4 million euros. They were used for technology upgrades
and to install automated process control systems.
In 2000, Nuova Rayon had revenues of 27.7 million euros, compared with 26.3 million
euros in 1999.
Net income rose to 7 million euros, after depreciation and amortization of 3.4 million
euros, up from a loss of 2.9 million euros in 1999, when depreciation and amortization
amounted to 3 million euros.
At December 31, 2000, this Unit had 244 employees, down from 248 at the end of
1999.
41
42
Net Revenues by
Business Unit
CHEMICALS AND ENERGY SECTOR
Change
1999
2000
39%
Chemicals
36%
Agrochemicals
23%
Flexible Packaging
2%
Energy (50%)
Net revenues
Operating income
Number of employees
at December 31
Net (indebtedness)
financial assets
367.7
1.9
13.1
301.4
1,757
21.2
32.2
361.5
13.6
13.0
331.3
1,492
(4.7)
34.1
from 1999
%
- 1.7
_
- 0.8
+ 9.9
- 15.1
_
Following the merger of Caffaro S.p.A. into Snia S.p.A., this Sector includes the following
Business Units: Chemicals, Agrochemicals, Energy and Flexible Packaging.
CHEMICALS
After restructuring its operations in 1999 and shutting down production of major lines
of basic chemicals, this Business Unit continued determinedly to pursue a strategy of
focusing all of its resources on strategically important market segments and product
groups. As a result, its revenues grew by 5.8% on a comparable consolidation basis,
rising from 138.1 million euros in 1999 to 146.1 million euros in 2000.
Profit margins also improved, thanks in part to the disposal of inventory.
In 2000, demand for chemicals was very strong during the first six months, but the rate
of expansion diminished during the second half due to market weakness in the United
States, where the economy slowed more than anticipated, and in the Far East.
The higher costs paid for energy and all of the principal raw materials could not be
reflected fully in the prices charged to customers, which had a highly negative impact on
profit margins. This occurred because falling demand made raising prices increasingly
difficult.
The performance of the Unit’s principal product lines is reviewed below.
Electrolytic and Related Products
Higher energy costs (+22%) could not be passed on fully to customers. However,
increased use of internally produced chlorine, a satisfactory rate of plant utilization and
a better sales mix produced a 5% increase in revenues and a slight improvement in the
operating result.
Products for Water Treatment and Purification
Following the sale of the operations that manufacture wastewater treatment products,
which became effective on July 1, 2000, this Business Segment focused on products for
the purification of drinking and industrial water. In particular, it developed complete
packages that include products, technical support and equipment specially designed for
large public- and private-sector customers.
43
As a result of this strategy, revenues were up 10% on a comparable consolidation basis
and market shares improved both in Italy and abroad.
by Business Unit
Fine Chemical Intermediates
Revenues increased by 8.1% compared with 1999.
17.6
Following the closure of the caprolactam production facilities, the Segment successfully
completed the process of developing a more efficient means of producing toluene
14.1
derivatives. However, an extraordinary spike in the price of toluene (+64% on average
for the year) had a dampening effect on profit margins, which were already under
pressure due to an excess of supply.
9.7
7.1
Sales of thermal ketones improved nicely, owing to the introduction of new products.
5.1
4.9
On the other hand, the Segment’s new multifunction facility is still not performing at
the desired level.
3.7
1.8
Detergents
A drastic change in the scope of consolidation caused by the closure of the perborate and
Chemicals
Agrochemicals
Flexible Packaging
Energy
99
00
99
sodium silicate plants in July 1999 makes a comparison with last year’s figures meaningless.
00
Energy (50%)
00
Flexible Packaging
99
Agrochemicals
00
Chemicals
99
EBITDA % - 1999: 8.7 - 2000: 12.0
EBITDA % - 1999: 5.4 - 2000: 13.9
EBITDA % - 1999: 2.3 - 2000: 11.7
EBITDA % - 1999: 57.6 - 2000: 61.6
On a comparable consolidation basis, the Segment performed better than in 1999,
improving its market share in an industry dominated by global suppliers and customers.
However, greater than anticipated increases in the price of key raw materials had a
negative impact on the Segment’s ability to reach its profitability targets.
Organic Additives
Rising demand, particularly from PVC manufacturers, and a strong competitive position
helped this Business Segment turn in an outstanding performance. Revenues grew by
more than 10% and profit margins improved.
The Chemicals Unit’s capital expenditures, which totaled about 6.5 million euros, were
earmarked for programs designed to optimize and streamline production facilities, with
special emphasis on improving safety and minimizing environmental impact.
The Unit began construction of a new plant for the production of iodine chloride, with
completion scheduled in 2001. Research programs focused on developing new chemical
intermediates and improving existing product lines. A significant development in the
area of chemical intermediates was the establishment of close collaborative
relationships with several Italian pharmaceutical groups to study and industrialize new
processes for preparing intermediates.
At December 31, 2000, this Business Unit had 771 employees.
AGROCHEMICALS
Revenues for the entire Business Unit totaled 131.1 million euros, or 1.2% less than in
1999.
The Italian agrochemicals market contracted by about 2% in 2000, continuing a trend
that emerged last year due to the recurrence of a negative business environment, brought
on most notably by adverse weather conditions, and to a structural drop in prices.
44
This unfavorable development business environment reflects a reduction in the
purchasing power of farmers, who suffered as a result of lower subsidies from the
European Union and a decline in the price of agricultural commodities.
Sales of Caffaro products were up 7.6% due to strong demand for cupric fungicides and to
an expansion of the product line. Shipments of Siapa products declined by 5.9%,reflecting
the loss of a license to distribute a major product due to a change in strategy by the
licensor, and the replacement of certain branded products with generic alternatives.
Despite a decline in net revenues, Caffaro maintained its share of the Italian market for
crop protection products, which it leads together with two other companies, Aventis
and Novartis.
In Italy, the market for crop nutrition products was characterized by a slump in mineral
fertilizers and a slight upturn in demand for combined organic/mineral fertilizers. The
Siamer joint venture, which operates in the latter market segment, posted a 3% revenue
increase.
In the home and garden segment of the Italian market, where demand is relatively steady,
the Verde Vivo product line posted a further 22% increase. The Business Segment signed
important distribution agreements with Elf Ato Agritalia and Aventis Agrosciences.
Exports of products for crop protection and nutrition posted gratifying increases, with
45
revenues rising by about 12.5% in an international market where demand was relatively
flat.
The French and Spanish subsidiaries consolidated their positions. Most of the gains in
this area came in Greece and Turkey, where the Segment reorganized its distribution
network.
Sales of chlorothalonil, a fungicide, produced slightly lower revenues (-2.4% compared
with 1999) in a market where demand was little changed but prices were weaker in
several important regions.
Capital expenditures were earmarked primarily for the following projects:
• Completion of the water dispersible granules (WDG) plant in Aprilia and the oil facility in Adria.
• Automation of the packaging lines and construction of a new compressor room for
the production of micronization air at the Aprilia factory, which produced an increase in manufacturing yield.
• Purchases of new high-performance testing equipment for the Galliera Testing and
Research Center.
The Testing and Research Center focused primarily on developing innovative molecules,
which will be introduced in 2002 both in the Italian and export markets, and on the
preparation of new formulations, particularly of WDG copper.
The Center is also collaborating with ENEA on research conducted within the framework
of projects funded by the European Regional Development Fund (PROBIO).
At December 31, 2000, this Business Unit had 382 employees.
ENERGY
This Business Unit is operated by Caffaro Energia S.r.l., a 50-50 joint venture between
Snia and Sondel.
Energy sales by the Caffaro Valley and Meduna Valley hydroelectric power plants totaled
293 GWh, or 11.5% less than in 1999. This reduction was due to decreased precipitation
during the first part of 2000 and the court ordered closure of a tunnel in the Caffaro
Valley, which caused a portion of the Caffaro Valley power plant to cease production.
Following a rockslide above the hamlet of Lodrone, which is within the municipality of
Storo (Trento), the court alleged that work done in the tunnel might have been the
cause.
The Group has reason to believe that Caffaro Energia will not incur additional damages
beyond the lost revenues caused by the production stoppage and the legal costs
incurred to argue its lack of culpability.
Revenues totaled 16.3 million euros, or 26% more than in 1999, reflecting the increased
prices received for energy that previously was sold to Enel and is now sold to customers
in the free market and the beneficial impact of the higher cost of benchmark energy
products.
Preparations continued for the construction of an 800-MW gas-fired, cogenerating
power plant in Torviscosa (Udine). All the agencies to which the Italian Ministry of the
46
Environment had entrusted the evaluation of the plant’s environmental impact study
expressed favorable opinions at the beginning of 2001.
Pursuant to Legislative Decree No. 79/99 (Bersani Decree), which requires that energy
producing and energy distribution operations be kept separate, ownership of the high
voltage transmission lines, which are connected to the national power grid, was
transferred to a wholly owned subsidiary called Caffaro Energia Trasmissione S.r.l.
At December 31, 2000, Caffaro Energia had 63 employees, or one more than at the end
of 1999.
FLEXIBLE PACKAGING
This Business Unit had revenues of 83.0 million euros in 2000, for a gain of 13.6% over
1999 on a comparable consolidation basis.
This improvement reflects a sizable increase in film shipments, which more than offset
the decline in polymer sales caused by the implementation of a strategy designed to
optimize the Unit’s product mix.
These developments, coupled with successful efforts to reduce overhead and increase
efficiency, produced a sharp gain in profitability.
During the year, the Unit continued the process of focusing its resources on its core
flexible packaging business, which included transactions aimed at simplifying and
focusing its corporate organization.
As part of this streamlining effort, the affiliate Emblem Europe absorbed its subsidiary
STP Tecno Polimeri Sud. In 2000, European demand for nylon polymers and flexible
packaging expanded by 14% and 9%, respectively.
However, this trend reversed itself in December 2000, as the euro gained ground versus
the dollar and raw materials prices weakened. This development had no impact on the
results for 2000, but its effects could be felt during the first half of 2001.
The performance of the principal Business Segments is reviewed below.
Nylon Polymers
This Segment continued the repositioning process that started in 1999, when it ceased
production of commodity polymers to concentrate on specialty polymers and special
formulations.
This approach caused unit sales and revenues to fall by 29% and 14%, respectively.
However, production costs were cut drastically due to a sharp increase in yields and to
the reorganization of two manufacturing facilities in Ceriano Laghetto and Pisticci.
Nylon Film
Unit sales of nylon film were up 11%, reflecting a 17% gain in shipments of bioriented
film. Revenues increased by 25%.
This improvement, which increased the Segment’s share of the European market, was
made possible by strengthening the Segment’s position as a supplier to major
manufacturing companies, and by improving customer service and enhancing the
product line.
At the same time, the manufacturing operations achieved significant cost reductions.
The stronger position attained by the Segment points to a continuation of this pattern
of growth in 2001.
47
Polyester Film
An 18% gain in unit sales produced a 54% rise in revenues, as unit sales prices
increased significantly more than raw material costs.
In addition, the Segment improved its cost structure, mainly by streamlining its
manufacturing organization.
Higher demand enabled the Segment’s facilities to operate at full capacity during the
second half of 2000.
No major capital spending programs were carried out during the year. Relatively small
amounts were invested in optimizing the production system and improving
manufacturing yields.
Research was focused on improving the formulation of the Segment’s products with the
goals of making them more easily processable and increasing manufacturing efficiency.
The Segment developed two new nylon films. One, which is designed for medical
applications, has particularly attractive growth potential.
At December 31, 2000, the Flexible Packaging Business Unit had 307 employees.
Operating Performance of the Principal Companies
Caffaro S.p.A., formerly Industrie Chimiche Caffaro (Snia 100%) – This company, which
demerged some of its operations and transferred them to Caffaro Flexible Packaging
S.p.A., now controls the Chemicals and Agrochemicals Business Units.
In 2000, it had revenues of 307.1 million euros and reported a loss of 2.9 million euros,
after depreciation and amortization totaling 17 million euros. In 1999, net revenues
amounted to 333.5 million euros and the net loss was 14.2 million euros, after
depreciation and amortization of 16.7 million euros.
At December 31, 2000, Caffaro S.p.A. had 1,144 employees, compared with 1,468 at the
end of 1999.
Caffaro Flexible Packaging S.p.A., formerly Fapack S.p.A. (Snia 100%) – This new
company operates the Flexible Packaging Business Unit that was demerged from Caffaro
S.p.A. in 2000.
Obviously, a meaningful comparison with 1999 is not possible.
In 2000, revenues totaled 33.6 million euros and net income amounted to 3.1 million
euros, after depreciation and amortization of 2.7 million euros.
Caffaro Energia S.r.l. (Snia 50%, Sondel 50%) – This company became operational in
1998, when the Caffaro and Meduno hydroelectric power plants were transferred to it.
In 2000, Caffaro Energia had revenues of 16.3 million euros and net income of 2.1
million euros, after depreciation and amortization of 5 million euros. In 1999, revenues
were 13 million euros and net income totaled 1.8 million euros, after depreciation and
At December 31, 2000, this company had 63 employees, compared with 62 at the end
of 1999.
Emblem Europe S.p.A. (Caffaro Flexible Packaging S.p.A. 60%) produces bioriented
polyamide film at a factory in Pisticci (Matera).
48
Net revenues totaled 27.9 million euros in 2000, up from 19.7 million euros in 1999.
The year ended with net income of 0.5 million euros, after depreciation and
amortization of 3.6 million euros, compared with a net loss of 0.4 million euros, after
depreciation and amortization of 1.9 million euros, in 1999.
At December 31, 2000, Emblem Europe had 67 employees, compared with 2 at the end
of 1999, when it transferred 23 employees to the subsidiary STP Tecnopolimeri Sud S.r.l.,
which it absorbed in 2000 (48 employees at December 31, 1999).
49
50
1999
2000
Net revenues
Operating income
Number of employees
at December 31
Net indebtedness
26.7
(3.6)
0.4
91.3
16.6
3.2
4.9
79.5
178
(62.0)
11.9
47
(57.5)
6.0
The table above does not show the percent change from 1999 to 2000, because the
removal of Fapack S.p.A., SGS S.r.l., CTP Snia S.p.A. and Sniaricerche S.c.p.A. from the
scope of consolidation makes a comparison between the two years meaningless.
Diversified Activities include the following companies:
Immobiliare SNIA S.r.l. (Snia 100%) had net revenues of 12.3 million euros in 2000,
compared with 10.1 million euros in 1999.
It sold buildings valued at 6.9 million euros, generating gains of 2.9 million euros.
The fiscal year ended with a loss of 0.6 million euros, compared with net income of 0.9
million euros in 1999.
At December 31, 2000, the company had 10 employees, or one more than at the end of
the previous fiscal year.
M.V.V. Meccanico Vittorio Veneto S.p.A. (SNIA 100%) specializes in producing small
runs of maximum-precision mechanical components that are used primarily in spinning
chemical fibers. In 2000, its net revenues amounted to 4.3 million euros, compared with
4.4 million euros in the previous fiscal year. Over the same period, net income increased
from 0.2 million euros, after depreciation and amortization of 0.3 million euros, to 0.3
million euros, after depreciation and amortization of 0.4 million euros.
At December 31, 2000, the company had 37 employees, compared with 38 at the end of
1999.
51
SIGNIFICANT EVENTS OCCURRING
SINCE THE END OF THE FISCAL YEAR
On March 15, 2001, the Group concluded the acquisition of ELA
Medical, a Sanofi-Synthelabo Group company that produces cardiac rhythm control devices. The acquisition is subject only to the
approval of the antitrust authorities in the countries where the
investee company operates.
This transaction calls for ownership of the company to be transferred by April or May 2001 against payment in a lump sum of a
debt-free consideration of 140 million euros, which can be reduced if on the transfer date net invested capital is less than the
stipulated amount.
The Group also expects to incur an additional outlay of 20 million
euros for restructuring programs and to settle pending disputes.
The cost of this acquisition includes goodwill of about 80 million
euros.
ELA, which reported revenues of 127 million euros in 2000, had
683 employees at December 31, 2000, including 200 who work in
research and development and perform clinical trials.
This acquisition will have a beneficial impact on profitability, as
the synergies that it will generate should enable ELA to increase
its gross operating margin (2.2% in 2000) to the level currently
enjoyed by the Medical Technology Sector (17.7%) without sacrificing its commitment to research.
The newly acquired company and the Group’s existing operation
in this area will have combined annual revenues of 165 million
euros and a 16% share of the European market. In addition, ELA
Medical is already present in the United States, where the FDA
has approved some of its products.
In the future, the combined operations should grow at a rate of
about 10% a year by leveraging ELA’s wealth of technological innovations, which it developed by investing about 100 million euros in research over the last four years. ELA will benefit especially
from a proprietary technology for the development and production of implantable defibrillators, several hundred of which were
implanted in 2000.
52
ANALYSIS OF THE OPERATING PERFORMANCE , FINANCIAL POSITION
AND FINANCIAL PERFORMANCE OF SNIA S . P. A .
The instruments setting forth the merger by absorption of Caffaro
S.p.A., Sorin Biomedica S.p.A. and Old Bellco S.r.l. into Snia S.p.A.
were executed on March 21, 2000. Those covering the absorption
of SIFI S.p.A. and SGS S.r.l. were signed on November 11, 2000.
For accounting purposes these transactions are effective as of
January 1, 2000.
•
After making distributions and equalization payments to dissenting stockholders, the merger surpluses stemming from
the exchange of the Caffaro S.p.A. and Sorin Biomedica S.p.A.
shares amounted to 70.1 million euros and 2.7 million euros,
respectively.
• The surpluses upon merger are net of the dividends paid to
the holders of savings shares of the “old” Caffaro S.p.A. and
the dividends paid by Old Bellco S.r.l.
A breakdown of the changes to the net financial position attributable to the companies subject of these merger transactions is
provided below:
These transactions produced a change in the balance sheet of
Snia S.p.A. A pro forma summary of the balance sheet at December 31, 1999 restated to reflect the impact of these mergers is
provided below.
B.I.
B.II.
B.III.
•
•
C.
Intangibles
Property, plant and equipment
Financial fixed assets
Total fixed assets
Net working capital
Reserve for employee
severance indemnities
SNIA S.p.A.
12/31/99
SNIA S.p.A.
12/31/99
pro forma
–
0.7
707.6
708.3
35.1
3.2
12.0
992.6
1,007.8
16.0
Caffaro
Indebtedness of Sorin Biomedica
Indebtedness of Old Bellco
Financial assets of SIFI
Financial assets of SGS
Distributions to dissenting stockholders
Equalization payments to dissenting stockholders
46.3
(73.4)
(3.1)
10.9
2.5
(12.9)
(7.4)
(37.1)
(2.3)
(7.8)
741.1
1,016.0
Capital stock
Reserves and net income
405.1
370.4
517.1
496.2
Stockholders’ equity
775.5
1,013.3
Net (indebtedness)
financial assets
•
•
•
•
•
•
•
34.4
(2.7)
The balance sheet data at December 31, 1999 are taken from the
respective financial statements and converted into euros. The
preparation of the pro forma balance sheet required the following
adjustments:
• The shares or partnership interests of the absorbed companies
were cancelled, based on the interests held in the respective
stockholders’ equities at December 31, 1999.
• The loss upon merger stemming from the cancellation of the
Sorin Biomedica S.p.A. shares, equivalent to 120 million euros
was added to the carrying value of the investments in Dideco
S.p.A. and Bellco S.p.A.
• The surplus upon merger stemming from the cancellation of
the shares/partnership interests of Caffaro S.p.A. and Old
Bellco S.r.l., totaling 53 million euros, was added to stockholders’ equity.
• The capital stock of Snia S.p.A. was increased by 112 million
euros to enable the stockholders of Caffaro S.p.A. and Sorin
Biomedica S.p.A. to exchange their shares.
53
OPERATING PERFORMANCE
Net extraordinary income amounted to 6.7 million euros, compared with net extraordinary expense of 2 million euros in 1999.
This improvement is due mainly to the reversal of reserves originally established by Snia and its subsidiaries to provide for pending litigation, which were resolved favorably for the Company.
The year ended with net income of 10.6 million euros, compared
with 27.3 million euros in 1999. This decline is the net result of a
decrease in investment income (-7.6 million euros) and higher
writedowns of equity investments (-32.4 million euros), which
more than offset an increase in extraordinary income (+8.7 million euros), a gain in operating income (+7.2 million euros) and a
positive change in the income tax account (+7.4 million euros).
Condensed
statement of income
Financial income
(expense)
D. Value adjustments on
financial assets
A-B. Net production
value
2000
1999
The positive income tax balance, which amounted to 1.8 million
euros, is the net result of 0.7 million euros in current taxes and a
tax asset of 2.5 million euros.
Change
C.
Income before
extraordin. items
E.
Extraordinary income
(expense)
• Income tax balance
Net income
27.7
35.3
- 7.6
(25.9)
6.5
- 32.4
0.3
(6.9)
+ 7.2
2.1
34.9
- 32.8
6.7
1.8
(2.0)
(5.6)
+ 8.7
+ 7.4
10.6
27.3
- 16.7
Net financial income decreased from 35.3 million euros to 27.7
million euros, due to a reduction in dividends earned and related
tax credits, which fell from 31.6 million euros to 28.1 million euros, and to an increase in financial expense stemming from a
higher level of indebtedness, which reflected the assumed debt of
the absorbed companies and the borrowings incurred to finance
large equity investments. The rise in financial expense was offset
in part by foreign exchange gains, which rose from 0.3 million euros in 1999 to 2.8 million euros in 2000.
Value adjustments on financial assets were booked to recognize
losses incurred by the following Group companies: Nuova Rayon
S.p.A., Caffaro S.p.A., Immobiliare Snia S.r.l., Biofin Holding International N.V., Novaceta Ltd and Novaceta S.p.A.
Income before extraordinary items increased by 7.2 million euros
compared with the previous year, due to the favorable impact of
nonrecurring gains made possible by an increase in revenues,
which provided a better coverage for the overhead of the absorbed companies.
54
FINANCIAL POSITION
The main reason for the rise in total fixed assets is an increase of
430.6 million euros in financial fixed assets, which is broken
down as follows: 285 million euros contributed by the absorbed
companies, 202.8 million euros in additions for the year, (17.1)
million euros in distributions of capital and reserves by Caffaro
Energia S.r.l., (14.1) million euros in disposals of equity investments and (26) million euros in value adjustments.
The mergers by absorption of Caffaro S.p.A., Sorin Biomedica
S.p.A., Old Bellco S.r.l., SIFI S.p.A. and SGS S.r.l. into SNIA S.p.A.
have significantly altered the Company’s balance sheet. A direct
result of these mergers was a shift in the financial position,
which, as shown below, changed from net financial assets of
34.4 million euros to net indebtedness of 2.7 million euros.
A breakdown of stockholders’ equity is provided below:
Description
2000
1999
1,149.9
741.1
+
408.8
1,001.9
775.5
+
226.4
34.4
-
182.4
741.1
+
408.8
Net (indebtedness)
financial assets
•
•
•
•
Paid-in capital
Equity reserves
Retained earnings
Net income
A. Stockholders’ equity
(148.0)
1,149.9
2000
1999
Change
520.7
355.9
114.7
10.6
405.1
263.8
79.3
27.3
+ 115.6
+ 92.1
+ 35.4
- 16.7
1,001.9
775.5
+ 226.4
Change
A breakdown of the change in stockholders’ equity is as follows:
(millions of euros)
A breakdown of net invested capital is as follows:
Intangibles
Property, plant
and equipment
B.III.1. Financial fixed
assets
10.1
0.7
+
9.4
1,138.2
707.6
+
430.6
• Net income
• Dividend distribution
• Increase in capital stock for share exchange
• Merger surplus (*)
• Increase in additional paid-in capital due to equalization
• payments for extraordinary conversions of
• nonconvertible savings shares of Snia S.p.A.
Total change in stockholders’ equity
Total fixed assets
1,148.5
708.3
+
440.2
(*)
5.7
35.1
-
29.4
(4.3)
(2.3)
+
2.0
+
408.8
Description
B.I.
B.II.
•
C.
Net working
capital (*)
Reserve for
employee severance
indemnities
Net invested
capital
(*)
2000
1999
0.2
—
+
0.2
1,149.9
741.1
Change
It includes: current assets (C.), net of C.III. and C.IV. and any loans
receivable listed under these captions; reserves for risks and charges (B.);
liabilities (D.)net of D. 1.2.3.4. and net of loans payable to subsidiaries,
affiliated companies and controlling companies listed under captions D.
8.9.10.; and accruals and deferrals for trade-related transactions listed
under caption D. on the asset side and caption E. on the liabilities side.
Net invested capital increased by 408.8 million euros reflecting a
rise in total fixed assets, which rose from 708.3 million euros in
1999 to 1,148.5 million euros in 2000, and a decline in working
capital, which contracted by 29.4 million euros due chiefly to the
inclusion of the data of the absorbed companies.
55
10.6
(26.8)
112.0
121.6
9.0
226.4
Net of the dividends distributed to the stockholders of Caffaro S.p.A. who
tendered their shares and the dividend distributed by Old Bellco S.r.l.
A breakdown of the net financial position is as follows:
Description
2000
1999
A breakdown of the change in net indebtedness is provided below:
Change
2000
1999
Net financial assets at January 1
34.4
24.7
34.0
10.3
21.1
(1.1)
(3.5)
(0.6)
(164.1)
(26.8)
17.9
(27.6)
- 41.7
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
+
Net (indebtedness) financial
assets at December 31
Short-term financial
assets
C.IV.
Liquid assets
6.8
8.6
-
1.8
143.2
176.2
3.1
12.4
-
9.3
—
0.3
-
0.3
Loans receivable
C.III.7. Other loans
receivable
•
Short-term loans
receivable (*)
•
Long-term loans
receivable (*)
D.
Financial accrued
income and
prepaid expenses
Total financial assets
•
•
E.
Short-term
borrowings (**)
Long-term
debt (**)
Financial accrued
expenses and
deferred income
2.8
0.1
155.9
197.6
(164.7)
(135.9)
(3.3)
(163.2)
—
—
- 33.0
+
2.7
1.5
Cash flow
Change in working capital
Change in the reserve for
employee severance indemnities
Net (additions to)
retirements of fixed assets
Distributions of earnings
Net financial change
due to mergers
Dividends paid to holders
of Caffaro savings shares
Utilization of reserves
Additions to reserves due to equalization payments from the conversion
of nonconvertible savings shares
(37.1)
—
(0.6)
(3.6)
—
—
9.0
—
(148.0)
34.4
+ 135.9
+
Within the framework of its resource provisioning policy, the
Company carried out transactions involving the assignment with
recourse of corporate income tax refunds receivable plus accrued
interest and other receivables. The outstanding portion of these
receivables amounted to 35.9 million euros at December 31, 2000
and 24.3 million euros at the end of 1999.
The turnover of receivables assigned with recourse was 35.9 million euros, compared with 25.2 million euros in 1999.
3.3
Total financial
liabilities
(303.9)
(163.2)
+ 140.7
Net (indebtedness)
financial assets
(148.0)
34.4
- 182.4
(*)
It includes loans receivable listed as current assets (C.), excluding
financial assets not held as fixed assets (C.III.) and liquid assets (C.IV.).
(**) It includes amounts due to banks, amounts due to other lenders, and loans
payable to subsidiaries, affiliated companies and controlling companies.
Financial assets consist primarily of loans receivable from Group
companies. Short-term financial liabilities include loans payable
to Group companies and credit institutions.
The increase in long-term debt reflects the assumption of indebtedness owed by the absorbed company Sorin Biomedica and a
loan in U.S. dollars payable by the Company to a pool of banks
following the assumption of an equal amount of debt owed by
the subsidiary Cobe Cardiovascular Inc.
This debt obligation has been hedged for possible fluctuations in
the exchange rate of the U.S. dollar.
56
TRANSACTIONS OF SNIA S.P.A. WITH GROUP
COMPANIES AND OTHER RELATED PARTIES
Snia S.p.A. provides group companies with consulting and support
services in the following areas: human resources; financial management, which includes a centralized cash management system
and the stipulation of Group-wide agreements with credit institutions; legal services; taxation consulting; and general corporate
services.
These services are provided at cost and payments are made semiannually.
STATEMENT OF INCOME
• Service revenues
and other revenues
• Purchases, outside services
and use of property
not owned
• Interest income and
other income
• Interest expense and
other expanses
SUBSIDIARIES,
AFFILIATES AND
JOINT VENTURES
2000
1999
28.3
10.6
3.2
3.6
8.8
8.2
1.7
5.5
2.4
143.2
—
0.6
176.2
7.7
0.1
105.7
0.2
158.2
54.6
38.3
BALANCE SHEET
Assets
• Trade accounts receivable
• Loans receivable
• Other receivables
Liabilities
• Trade accounts payable
• Loans payable
Memorandum accounts
57
CORPORATE GOVERNANCE
The Board of Directors of Snia S.p.A. tackled the issue of corporate
governance as early as 1998, when it enlisted the support of
Spencer Stuart, a management consulting firm, to develop rules
of business conduct.
In September 1998, the Board created two advisory committees:
• The Compensation Policies Committee, which provides consulting support with regard to the fees received by Directors,
the compensation paid to top management, the Group’s overall compensation policies and the implementation of its Stock
Option Plan.
The following Directors are currently members of the Committee: Umberto Colombo, Giorgio Cirla and Emilio Gnutti;
• The Strategic Projects Review Committee, which provides
consulting support with regard to the Group’s planning
process and on investment, acquisition and divestiture proposals.
The following Directors are currently members of the Committee: Luigi Verde, Carlo Callieri and Andrea Pininfarina.
The establishment of an effective corporate governance system is
essential for a company such as Snia, whose shares are publicly
traded and held by a broad stockholder base.
The Company’s largest stockholder is Bios S.p.A., which controls
28.33% of the voting shares, with Banque du Gothard a distant
second (2.12%), followed by Banca d’Italia (2.04%). Bios was established by a large number of investors, each of whom holds direct investments in Snia not exceeding 8.5% of the capital stock.
ordinary operations, as well as the authority to buy and sell real
property and enter into lease agreements with terms that may exceed nine years.
Fees payable to Directors for special assignments are determined
by the Board of Directors upon the recommendation of the Compensation Policies Committee. The compensation paid to the
Chief Executive Officer includes a variable portion tied to the operating performance of the Company.
In order to strengthen its ability to oversee the Company’s overall
operating performance and comply with the recommendations of
the Code of Conduct, the Board of Directors created an Internal
Controls Committee. The Board will select the members of this
Committee from a roster of candidates submitted by the various
Directors. In its work, this Committee will be supported by KPMG
Audit S.r.l., to which it will outsource the internal auditing needs.
Relations with institutional investors and other stockholders are
handled by the executive in charge of Communications, Image
and External Relations and by the Investor Relations Department.
The Company has also created a website where investors can access press releases, annual reports and quarterly and semiannual
reports.
The Bylaws have been amended to comply with the provisions of
Legislative Decree No. 58/98 that protect the rights of minority
stockholders.
For the time being, the Company has chosen not to adopt special
regulations for its Stockholders’ Meeting, since the practices followed in past Meetings are already consistent with the regulations suggested by industry associations and consumer groups.
Pending the enactment of new laws applicable to corporate gatherings, the Chairman summarizes the rules governing the operation of the Stockholders’ Meeting at the beginning of each Meeting.
At a meeting held on March 30, 2001, the Board of Directors of
Snia S.p.A. accepted the recommendations of Borsa Italiana S.p.A.
on corporate governance. Accordingly, it compared its corporate
governance system with the system recommended in the Code of
Conduct and determined that it was already largely in compliance
with the Code’s provisions.
In particular, the powers and organization of the Board of Directors are consistent with those outlined in the Code. Board meetings, where the Chief Executive Officer reports on work performed
in exercise of the powers entrusted to him, on material transactions involving the Company and its subsidiaries, and on transactions entailing potential conflicts of interest, are scheduled at
least quarterly.
The Board of Directors can number from 9 to 15 members. Currently it comprises 12 Directors who are elected by the Stockholders’ Meeting on motions made by the majority stockholder. The
Board includes an adequate number of independent Directors.
Lastly, the provisions of the Bylaws that concern the Board of
Statutory Auditors have been amended to allow the election of a
Statutory Auditor and an alternate designated by minority stockholders.
The Board granted executive powers to one Director (Umberto
Rosa), who serves as Chairman and Chief Executive Officer and
has the power to carry out all acts necessary for the Company’s
58
EQUITY INVESTMENTS OF DIRECTORS
AND STATUTORY AUDITORS
First and
last name
Share
class
Umberto Colombo
Common
Emilio Gnutti
Nonconvertible savings
Common
(1)
Number
of shares
held at the
end of the
previous year
Number
of shares
bought
—
145,000 (1)
—
Number
of shares
sold
Number
of shares
held at the
end of the
current year
20,000
—
20,000
—
—
—
—
—
75,400 (1)
Held indirectly through G.P. Finanziaria S.p.A.
Upon their extraordinary conversion, the nonconvertible savings shares became common shares. Subsequently, following the redenomination of the capital
stock into euros, which required a reverse stock split and the cancellation of some shares, these shares were exchanged on the basis of 13 new shares for every
25 old shares.
59
MOTION FOR THE ALLOCATION OF NET INCOME
AND DIVIDEND DISTRIBUTION
Dear Stockholders:
Your Company’s financial statements
at December 31, 2000
show net income of
The total dividend of 0.065 euros paid on each common share,
0.097 euros paid on each convertible saving share and 0.107 euros paid on each nonconvertible savings share conveys a full tax
credit of 58.73%.
10,623,354 euros
We submit these financial statements for your approval and we
ask you to adopt the following resolutions:
The dividend will be payable as of June 7, 2001.
The Stockholders’ Meeting,
- being cognizant of the Board of Directors’ Report on Operations,
- being cognizant of the Report of the Statutory Auditors,
- being cognizant of the Report of the Independent Auditors,
- having reviewed the financial statements at December 31,
2000, which show net income of 10,623,354 euros,
resolves
- to approve the Board of Directors Report on Operations,
- to approve the financial statements at December 31, 2000
and the individual items contained therein,
- to allocate the net income of 10,623,353.55 euros (which in
the financial statements has been rounded to 10,623,354 euros) as follows:
• to the stockholders
a dividend of
10,136,511.79 euros
- 0.018 euros on each of the
501,559,193 common shares,
totaling about 9 million euros;
– 0.050 euros on each of the
3,950,747 convertible savings shares,
totaling about 0.2 million euros;
- 0.060 euros on each of the 15,181,816
nonconvertible savings shares,
totaling about 0.9 million euros;
• to retained earnings the
remainder amounting to
486,841.76 euros
TOTAL
10,623,353.55 euros
- to the stockholders
a further distribution of
24,472,512.54 euros
broken down as follows:
- 0.047 euros on each of the
520,691,756 shares comprising the
entire capital stock, drawing the
resources from the following reserves:
• Special reserve
14,992,581.92 euros
• Retained earnings
1,520,069.78 euros
• Reserve for reinvested
capital gains
7,959,860.84 euros
Milan, March 30, 2001
The Board of Directors
By the Chairman and Chief Executive Officer
60
2 0 0 0 C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
OF THE SNIA GROUP
REPORT ON OPERATIONS – PART II
(continued)
OPERATING PERFORMANCE AND FINANCIAL POSITION
CONSOLIDATED OPERATING
RESULTS
Net revenues totaled 1,265.9 million euros, or 10.9% more than
in 1999 (+7% less on a comparable consolidation basis), owing
primarily to a positive performance by the Nylon Filaments, Flexible Packaging, Energy and Cardiac Surgery Business Units.
The 2000 fiscal year ended with net income of 20.6 million euros,
compared with 13.7 million euros in 1999. This improvement was
made possible by a gain in operating income (+45.4 million euros), which more than offset increases in extraordinary expense
(+15.6 million euros) and taxes (+25.4 million euros) and a decline in net extraordinary income.
Description
A-B. Net production
value (Operating
income)
C.
D.
Financial income
(expense)
Value adjustments
on financial
assets
Net income from
operations
E.
Extraordinary income
(expense)
• Income taxes
• Minority interest
in net (income)
loss
Net income
1999
1,195.3
+ 121.4
B. 6.7.8.11.14. Cost of raw
materials, outside services and
miscellaneous operating costs
(836.3)
(769.3)
-
67.0
480.4
426.0
+
54.4
(308.3)
(301.9)
-
6.4
Gross operating result
172.1
124.1
+
48.0
(98.0)
(93.6)
-
4.4
(7.1)
+
1.8
+
45.4
68.8
23.4
+
45.4
B.10. Depreciation,
amortization and writedowns
(24.6)
(9.0)
-
15.6
B.12.13. Provisions for
risks and charges
(5.3)
A-B. Net production
value (Operating
income)
68.8
(1.3)
(1.7)
+
0.4
42.9
12.7
+
30.2
4.8
(27.1)
11.7
(1.7)
-
6.9
25.4
(9.0)
+
9.0
13.7
+
6.9
—
20.6
Change
1,316.7
B.9. Personnel expense
Change
1999
A. Production value
Value added generated
Condensed
statement of income 2000
2000
23.4
The growth of the Medical Technology Sector and the programs
implemented to restructure the manufacturing operations enabled the Group to reduce its exposure to highly cyclical businesses and improve the competitiveness of those products that
are more affected by price competition. As a result, operating
income increased to 68.8 million euros (5.2% of production value), up from 23.4 million euros in 1999 (2% of production value).
The rise in production value (+10.2%), which reflects an equal
gain in revenues, more than offset increases in materials and
other expenses (+8.7%) and labor costs (+2.1%), produced a
38.7% improvement in the gross operating result.
Financial expense rose by 15.6 million euros compared with the
previous fiscal year, reflecting an increase in interest expense
caused by a higher level of indebteness (the Cobe acquisition was
completed on May 17, 1999) and rising interest rates. In addition,
the Group recorded no foreign exchange gains in 2000, compared
with gains totaling 6.2 million euros in 1999. In 2000, the Group
changed the manner in which it recognizes transactions and
items denominated in foreign currencies. If the same principle
had been applied in 1999, it would have caused foreign exchange
gains to increase by an additional one million euros.
62
CONSOLIDATED
FINANCIAL POSITION
Value adjustments on financial assets, which were a negative
1.3 million euros (negative 1.7 million euros in 1999), consist primarily of writedowns in the carrying value of the investment in
Sniaricerche S.c.p.A., Nylon Corporation of America Inc., CTP Snia
S.p.A., Sorin Biomedical Industrial Ltda and Tecnogen S.c.p.A..
Net indebtedness totaled 372.3 million euros, up from 320.4 million euros at the end of 1999. This increase reflects the regular
resource provisioning transactions, as well as changes in the
scope of consolidation (18.7 million euros), distributions of dividends (26.8 million euros), capital expenditures (102.5 million euros) and outlays incurred in connection with the mergers of subsidiaries into Snia S.p.A. (20.9 million euros), which were offset in
part by equalization payments from Snia S.p.A. stockholders who
tendered their nonconvertible shares for extraordinary conversion
(9 million euros). A summary of the change in net financial position is provided on the following pages.
The debt/equity ratio rose from 0.35 at December 31, 1999 to
0.41 at the end of 2000.
Net extraordinary income, which totaled 4.8 million euros (net
extraordinary income of 11.7 million euros in 1999), reflects the
gain earned on the sale of a 50% interest in Caffaro Energia S.r.l.
and the recognition of the prepaid taxes attributable to prior fiscal years, net of extraordinary charges and provisions.
Income taxes, which amounted to 27.1 million euros, includes an
8.5-million-euro net deferred-tax liability. In 1999, income taxes
totaled 1.7 million euros, reflecting the positive impact of a net
deferred-tax asset amounting to 42.6 million euros. Consequently, the tax rate increased from 7% in 1999 to 56.8% in 2000.
As a result of the above items, consolidated net income amounted
to 20.6 million euros in 2000, compared with 13.7 million euros in
1999. Over the same period, Group interest in net income declined from 9 million euros in 1999 to zero in 2000.
2000
1999
Change
1,281.3
1,231.9
+
49.4
909.0
911.5
-
2.5
Net indebtedness
(372.3)
(320.4)
+
51.9
In the table below the data for 1999 are restated on a comparable
consolidation basis to show the impact of changes in the scope of
consolidation caused by the following transactions:
• Inclusion of Amfibe Inc. and the textile filaments operations of
Stilon S.A.
• Removal of Sistema Compositi S.p.A., Sorin S.A., Sorin Biomedica Industrial Ltda, Sniaricerche S.c.p.A., CTP Snia S.p.A. and
Biomateriali S.r.l..
The data for Amfibe Inc. are as of 4/30/00.
2000
63
1999
(comparable
consolidation)
Change
1,281.3
1,251.8
+
29.5
909.0
912.7
-
3.7
Net indebtedness
(372.3)
(339.1)
+
33.2
A breakdown of net invested capital is as follows:
Description
A breakdown of stockholders’ equity is a follows:
2000
1999
Intangibles
233.3
222.0
+
11.3
B.II Property, plant
and equipment
660.5
643.9
+
16.6
B.I
B.III Financial fixed
assets (*)
15.5
27.0
-
11.5
909.3
892.9
+
16.4
Net working
capital (**)
442.9
416.0
+
26.9
Reserve for
employee severance
indemnities
(70.9)
(77.0)
-
6.1
Total fixed
assets
•
C.
Change
Net invested
capital
1,281.3
1,231.9
+
Description
• Capital stock
• Reserves
• Group interest in net
income (loss) for
the fiscal year
Group interest in
consolidated
stockholders’ equity
• Minority interest in
capital stock and reserves
• Minority interest in
net income (loss)
for the fiscal year
Minority interest in
consolidated
49.4
A.Consolidated stockholders’ equity incl.
minority interest
(*) It does not include long-term loans to other companies (B.III.2).
(**) It includes: current assets (C.), net of C.III. and C.IV. and any loans
receivable listed under these captions; reserves for risks and charges (B.);
liabilities (D.), net of D. 1.2.3.4.7. and net of loans payable to subsidiaries,
affiliated companies and the Parent Company listed under captions
D.8.9.10.; and accruals and deferrals for trade-related and other
non-financial transactions listed under caption D. on the asset side and
caption E. on the liabilities side.
1999
(comparable
consolidation)
909.3
909.6
-
0.3
• Working capital
442.9
417.0
+
25.9
• Reserve for employee
severance indemnities
Net invested
capital
520.7
359.9
405.1
281.2
20.6
13.7
901.2
700.0
+ 201.2
7.8
202.5
- 194.7
—
9.0
7.8
211.5
- 203.7
909.0
911.5
-
Stockholders’ equity before minority
interest at 12/31/99
•
•
•
•
Net income
Dividend distribution
Capital increase for minority stockholders
Impact of the mergers of Caffaro S.p.A. and
Sorin Biomedica S.p.A. into SNIA S.p.A.:
- Distributions to dissenting stockholders
- Equalization payments to tendering stockholders
- Dividends to holders of Caffaro savings shares
• Equalization payments to Snia S.p.A. stockholders
for extraordinary conversions of
nonconvertible savings shares
• Foreign exchange differences from the translation
of foreign company data and other changes
Change
• Total fixed assets
1999
Stockholders’ equity before minority
interest at 12/31/00
(70.9)
1,281.3
(74.8)
1,251.8
+
3.9
+
29.5
Change
+ 115.6
+ 78.7
+
-
6.9
9.0
2.5
As shown in the table below, stockholders’ equity decreased to
2.5 million euros. Following the merger of Caffaro S.p.A. and Sorin
Biomedica S.p.A. into SNIA S.p.A., the Group interest in stockholders’ equity is equivalent to virtually the entire amount.
Net invested capital increased by 49.4 million euros. The main
reasons for this rise are a gain in working capital caused by revenue expansion, the utilization of reserves for restructuring that
had been established in 1999 and the transfer to earnings of unused reserves that had been established in previous years in anticipation of risks and charges that did not materialize.
The table below provides a breakdown of net invested capital, restated on a comparable consolidation basis.
2000
2000
64
911.5
20.6
(26.8)
1.6
(12.9)
(7.4)
(0.6)
9.0
14.0
909.0
A breakdown of net indebtedness is as follows:
Description
The table below provides a breakdown of the change in net indebtedness:
2000
1999
35.0
42.5
0.8
0.8
42.7
47.8
-
5.1
5.2
13.2
-
8.0
4.0
3.6
+
0.4
87.7
107.9
-
20.2
(211.1)
(151.8)
+
59.3
(244.7)
(273.6)
-
28.9
(4.2)
(2.9)
+
1.3
Total financial liabilities
(460.0)
(428.3)
+
31.7
Net indebtedness
(372.3)
(320.4)
+
51.9
Net indebtedness at 12/31/99
Change
• Changes in the scope of consolidation (*)
Short-term
financial assets
C.IV Liquid assets
-
Net indebtedness at 12/31/99 on a consolidation
basis comparable with 12/31/00
7.5
• Dividends
• Capital expenditures
• Sale of equity investments (45% of Sniaricerche
S.c.p.A. and 50% of Sistema Compositi S.p.A.)
• Financial impact of the mergers of Caffaro S.p.A.
and Sorin Biomedica S.p.A. into SNIA S.p.A.:
- Distributions to dissenting stockholders
- Equalization payments to tendering stockholders
- Dividends to holders of Caffaro savings shares
• Equalization payments to Snia S.p.A. stockholders
for extraordinary conversions of
nonconvertible savings shares
• Utilization of restructuring reserves
• Capital increase for minority stockholders
• Cash generation from (utilization for) operating activities
Loans receivable
• Other loans receivable (*)
• Short-term loans
receivable (**)
• Long-term loans
receivable (**)
D. Financial accrued income
and prepaid expenses
Total financial assets
• Short-term loans
payable (***)
• Long-term loans
payable (***)
E. Financial accrued expenses
and deferred income
—
Net indebtedness at 12/31/00
(*)
It includes receivables from stockholders (A), long-term loans to other
companies (B.III.2) and financial assets not held as fixed assets (C.III.6).
(**) It includes loans receivable listed as current assets (C), excluding financial
assets not held as fixed assets (C.III.6), and liquid assets (C.IV).
(***) It includes: bonds; convertible debentures; amounts due to banks;
amounts due to other lenders; loans payable to subsidiaries, affiliated
companies, and the Parent Company; and liabilities represented by credit
instruments.
(*)
(320.4)
(18.7)
(339.1)
(26.8)
(102.5)
4.5
(12.9)
(7.4)
(0.6)
9.0
(29.3)
1.6
131.2
(372.3)
Reflects the consolidation of Amfibe Inc. and the Textile Filaments
operations of Stilon S.A., and the deconsolidation of Sistema Compositi
S.p.A., Sorin S.A., Sorin Biomedical Industrial Ltda., Sniaricerche S.c.p.A.,
CTP Snia S.p.A. and Biomateriali S.r.l.
The data for Amfibe Inc. are as of 4/30/00.
At December 31, 2000, within the framework of its resource provisioning policy, the Group had assigned receivables totaling
106.1 million euros (43.2 million euros at 12/31/99), including
71.5 million euros assigned with recourse and 34.6 million euros
assigned without recourse. The turnover of receivables assigned
was 204.5 million euros, compared with 153 million euros in
1999.
The magnitude of the increase in indebtedness, which went from
363.6 million euros at the end of 1999 to 478.4 million euros at
December 31, 2000, explains the rise in financial expense.
Milan, March 30, 2001
65
CONSOLIDATED BALANCE SHEET
ASSETS
(amounts in thousands of euros)
12/31/00
Item
12/31/99
Total
A. RECEIVABLES FROM
STOCKHOLDERS
Item
Total
—
—
B. FIXED ASSETS
I. Intangibles
1. Start-up and expansion costs
3. Industrial patents and
intellectual property rights
4. Permits, licenses, trademarks and
similar rights
5. Goodwill
6. Work in progress and advances
7. Other intangibles
8. Consolidation difference
Total intangibles (B.I.)
4,619
7,364
2,417
2,053
10,109
152,025
1,361
45,488
17,246
233,265
5,668
152,519
3,040
48,016
3,299
221,959
214,219
342,031
44,349
16,419
43,508
660,526
210,202
351,025
34,868
18,524
29,254
643,873
1,476
9,866
3,950
15,292
419
24,601
1,784
26,804
749
841
749
841
749
841
215
16,256
234
27,879
II. Property, plant and equipment
1.
2.
3.
4.
5.
Land and buildings
Plant and machinery
Manufacturing and distribution equipment
Other assets
Construction in progress and advances
Total property, plant and equipment (B.II.)
III. Financial fixed assets
1. Equity investments in:
a. unconsolidated subsidiaries
b. affiliated companies and joint ventures
d. other companies
Total equity investments (B.III.1.)
2. Long-term loans to:
d. other companies
2. due after one year
Total long-term loans to
other companies (B.III.2.d.)
Total long-term loans (B.III.2.)
3. Other securities
Total financial fixed assets (B.III.)
TOTAL FIXED ASSETS (B)
910,047
893,711
C. CURRENT ASSETS
I. Inventories
1. Raw materials, auxiliaries and supplies
2. Work in progress and
semifinished goods
3. Contract work in process
4. Finished goods and merchandise
5. Advances
Total inventories (C.I.)
98,094
84,304
23,766
1,308
178,677
2,064
303,909
34,217
2,164
169,416
2,121
292,222
66
ASSETS
12/31/00
Item
12/31/99
Total
Item
Total
II. Accounts receivable
1. Trade accounts receivable
a. due within one year
b. due after one year
390,557
431
390,988
400,100
1,916
402,016
2. Accounts receivable from subsidiaries
40
143
Total accounts receivable from
subsidiaries (C.II.2.)
40
143
3. Accounts receivable from affiliated
companies and joint ventures
3,178
2,541
Total accounts receivable
from affiliated companies
and joint ventures (C.II.3.)
3,178
2,541
73,384
18,180
67,062
134,070
28,750
76,264
Total trade accounts receivable (C.II.1.)
5. Accounts receivable from outsiders
c. deferred-tax asset
Total accounts receivable
from outsiders (C.II.5.)
Total accounts receivable (C.II.)
158,626
239,084
552,832
643,784
1
20,417
20,418
1
8,058
8,059
32,564
2,468
35,032
39,972
2,451
42,423
III. Financial assets not held
as fixed assets
4. Other equity investments
7. Other financial assets
Total financial assets (C.III.)
IV. Liquid assets
1. Bank and postal accounts
3. Cash on hand
Total liquid assets (C.IV.)
TOTAL CURRENT ASSETS (C)
912,191
986,488
D. ACCRUED INCOME AND
PREPAID EXPENSES
1. Accrued income
2. Prepaid expenses
1,895
18,809
TOTAL ACCRUED INCOME AND
PREPAID EXPENSES (D)
TOTAL ASSETS (A + B + C + D)
67
1,117
18,991
20,704
20,108
1,842,942
1,900,307
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS’ EQUITY
12/31/00
Item
12/31/99
Total
Item
Total
A. STOCKHOLDERS’ EQUITY
•
•
•
Capital stock
Reserves
Net income (loss) for the fiscal year
Total Group interest in consolidated
•
Minority interest in capital stock and reserves
520,692
359,857
20,616
405,103
281,257
13,673
901,165
700,033
7,825
211,458
TOTAL CONSOLIDATED STOCKHOLDERS’
EQUITY INCLUDING MINORITY INTEREST (A)
908,990
911,491
B. RESERVES FOR RISKS
AND CHARGES
1. Reserve for pensions and similar obligations
2. Reserve for taxes
b. Deferred taxes
4. Other reserves
9,357
9,089
15,058
35,333
14,830
77,821
TOTAL RESERVES FOR RISKS AND CHARGES (B)
59,748
101,740
C. RESERVE FOR EMPLOYEE
SEVERANCE INDEMNITIES
70,847
76,972
D. LIABILITIES
3. Due to banks
Total due to banks (D.3.)
4. Due to other lenders
Total due to other lenders (D.4.)
5. Advances
Total advances (D.5.)
6. Trade accounts payable
Total trade accounts payable (D.6.)
7.
Liabilities represented by credit instruments
125,299
218,859
344,158
82,410
177,981
260,391
80,801
25,807
106,608
61,014
95,642
156,656
1,440
666
2,106
1,853
1,660
3,513
209,330
396
209,726
208,206
213
208,419
4,955
4,976
Total liabilities represented by
credit instruments (D.7.)
4,955
4,976
8. Accounts payable to subsidiaries
204
—
Total accounts payable
to subsidiaries (D.8.)
204
—
9. Accounts payable to affiliated companies
and joint ventures
626
4,182
Total accounts payable to affiliated
companies and joint ventures (D.9.)
626
4,182
68
11. Taxes payable
12/31/00
Item
12/31/99
Total
Item
Total
Total taxes payable (D.11.)
40,739
4,404
45,143
78,340
6,607
84,947
12. Contributions to pension and
social security institutions
10,308
748
12,423
740
Total contributions to pension and
social security institutions (D.12.)
11,056
13,163
22,529
184
22,713
29,700
—
29,700
13. Other liabilities
Total other liabilities (D.13.)
TOTAL LIABILITIES (D)
747,295
765,947
E. ACCRUED EXPENSES AND
DEFERRED INCOME
1. Accrued expenses
2. Deferred income
41,170
14,892
TOTAL ACCRUED EXPENSES AND
DEFERRED INCOME (E)
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY (A + B + C + D + E)
31,220
12,937
56,062
44,157
1,842,942
1,900,307
MEMORANDUM ACCOUNTS
•
•
•
•
•
•
•
Guarantees and sureties provided
to subsidiaries
to affiliated companies
to outsiders
Collateral provided to outsiders
Other guarantees provided
to joint ventures
Other guarantees provided
to outsiders
Other memorandum accounts
3,988
—
11,159
2,918
15,316
247
50,653
—
1,714
982
87,917
840,410
60,304
265,758
TOTAL MEMORANDUM ACCOUNTS
960,751
69
380,615
CONSOLIDATED STATEMENT OF INCOME
12/31/00
Item
12/31/99
Total
Item
Total
A. PRODUCTION VALUE
1. Sales and service revenues
2. Change in inventory of work in progress,
semifinished goods and finished goods
3. Change in contract work in process
4. Increases in company produced
additions to fixed assets
5. Other revenues and income:
a. operating grants
b. miscellaneous revenues and income
Total other revenues and income (A.5.)
1,262,233
1,137,632
(4,187)
142
2,029
(1,897)
8,764
8,663
274
49,456
49,730
353
48,561
48,914
TOTAL PRODUCTION VALUE (A)
1,316,682
1,195,341
B. COST OF PRODUCTION
6.
7.
8.
9.
Raw materials, auxiliaries and supplies
Outside services
Use of property not owned
Personnel costs:
a. wages and salaries
b. social security contributions
c. provision for severance indemnities
d. provision for pensions
and similar obligations
e. other personnel costs
Total personnel costs (B.9.)
10. Depreciation, amortization
and writedowns:
a. amortization of intangibles
b. depreciation of property,
plant and equipment
d. writedowns of loans included in
current assets and liquid assets
570,189
249,432
8,946
512,638
237,296
9,690
227,103
65,622
10,636
221,234
64,441
12,072
1,551
3,429
308,341
741
3,448
301,936
21,379
16,923
70,763
67,739
5,843
8,973
Total depreciation, amortization
and writedowns (B.10.)
97,985
93,635
11. Change in inventory of raw materials,
auxiliaries, supplies and merchandise
12. Provisions for risks
13. Other provisions
14. Miscellaneous operating costs
(11,953)
3,506
1,763
19,691
(11,498)
2,218
4,860
21,156
TOTAL COST OF PRODUCTION (B)
NET PRODUCTION VALUE (A - B)
70
1,247,900
1,171,931
68,782
23,410
12/31/00
Item
12/31/99
Total
Item
Total
C. FINANCIAL INCOME (EXPENSE)
16. Other financial income from:
b. securities included in financial fixed
assets, other than equity investments
c. securities included in current assets,
other than equity investments
d. other financial income from:
1. subsidiaries
2. affiliated companies and
joint ventures
4. outsiders
e. foreign exchange gains
Total other financial income (C.16.)
17. Interest and other financial expense:
a. interest paid to subsidiaries
b. interest paid to affiliated
d. interest paid to outsiders
e. foreign exchange losses
Total interest and other financial expense (C.17.)
TOTAL FINANCIAL INCOME
(EXPENSE) (C.16. - C.17.)
D. VALUE ADJUSTMENTS ON
FINANCIAL ASSETS
18. Upward adjustments of:
a. unconsolidated equity investments
Total upward adjustments (D.18.)
19. Writedowns of:
a. unconsolidated equity investments
c. securities, other than equity investments, included in current assets
Total writedowns (D.19.)
TOTAL VALUE ADJUSTMENTS
ON FINANCIAL ASSETS (D.18. - D.19.)
E. EXTRAORDINARY INCOME
AND EXPENSE
20. Income:
a. gains on disposals
b. other extraordinary income
Total extraordinary income (E.20.)
21. Expense:
a. losses on disposals
b. taxes attributable to prior fiscal years
c. other extraordinary expense
Total extraordinary expense (E.21.)
TOTAL EXTRAORDINARY INCOME
AND EXPENSE (E.20. – E.21.)
INCOME BEFORE
TAXES (A - B +/ - C +/ - D +/ - E)
10
7
525
1,427
59
—
1,039
10,339
18
11,990
334
8,236
6,158
16,162
82
—
59
36,442
—
36,583
103
25,023
—
25,126
(24,593)
(8,964)
31
31
201
201
1,362
1,913
—
1,362
16
1,929
(1,331)
(1,728)
522
16,983
17,505
59,484
38,931
98,415
281
827
11,541
12,649
2,271
1,272
83,206
86,749
22. Income taxes:
a. current
b. deferred (prepaid)
26. Net income (loss) before
minority interest
27. Minority interest in net
income (loss)
28. Group interest in
4,856
11,666
47,714
24,384
18,639
8,485
44,319
(42,614)
20,590
22,679
(26)
net income (loss)
20,616
71
9,006
13,673
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SCOPE OF CONSOLIDATION
Principles of Consolidation
The consolidated financial statements of the SNIA Group include the
financial statements at December 31, 200 of the Parent Company,
SNIA S.p.A., those of the Italian and foreign subsidiaries in the capital stock of which SNIA S.p.A. holds a direct or indirect interest of
more than 50%, which are consolidated on a line-by-line basis, and
those of companies managed jointly with other stockholders, which
the Group has elected to consolidate by the proportional method, as
allowed under Article 37 of Legislative Decree No. 127/1991.
The consolidation principles applied were the following:
a) Assets and liabilities of consolidated companies are included
on a line-by-line basis or by the proportional method, offsetting the carrying value of the respective investment held by
the Parent Company or other consolidated companies against
the underlying interest in the respective stockholders’ equity.
When companies are first consolidated, any difference resulting from the abovementioned offsetting process that cannot
be attributed to individual assets or liabilities is charged
against equity reserves in the consolidated balance sheet. Any
amount in excess of these reserves is booked as an asset and
amortized on a straight-line basis.
The financial statements used in the consolidation are those approved by the Stockholders’ Meeting of the respective companies
with any adjustments necessary to make them consistent with
the Group accounting principles described on the following pages.
b) Receivables and payables and revenues and expenses arising
from transactions between companies included in the scope
of consolidation are eliminated.
When the financial statements of a company are not approved by
its Stockholders’ Meeting in time for the preparation of the consolidated financial statements, the preliminary financial statements approved by the Board of Directors are used.
c) Significant earnings included in the inventories of consolidated companies and gains from intra-Group disposals of assets
are likewise eliminated.
The closing date of the consolidated financial statements is December 31, the same as for the Parent Company SNIA S.p.A.
If the fiscal year of a company included in the consolidation is
different from the closing date of the consolidated financial
statements, the company in question is consolidated on the basis
of a pro-forma annual financial statement that reflects the official Group fiscal year.
d) Dividends distributed by consolidated companies are eliminated from the statement of income and transferred to reserves.
e) Minority interest in stockholders’ equity and net income is
shown separately in the balance sheet and in the statement
of income, respectively.
Subsidiaries that fall in the categories listed in Article 28 of Legislative Decree No. 127/1991 are not consolidated. In particular,
companies that are dormant or in liquidation are not consolidated.
A list of the companies included in the Snia Group and schedules
showing the changes that occurred to the scope of consolidation
in 2000 are appended to these Notes to the Financial Statements
f) Financial statements denominated in foreign currencies are
translated into euros using year-end exchange rates for the
balance sheet and average annual exchange rates for the
statement of income, except for the financial statements of
subsidiaries operating in high-inflation countries (Brazil), for
which the statement of income is also translated using yearend exchange rates. Any differences between the net income
translated in euros at average exchange rates and at year-end
rates are posted to consolidated stockholders’ equity. Exchange differences between the value of the opening balances of stockholders’ equity translated at the exchange rates
prevailing on the balance sheet date and those used in the financial statements for the previous fiscal year are reflected
directly in consolidated stockholders’ equity.
The Exchange rates used are shown in the Other Information
section of the Notes to the Financial Statements.
PRINCIPLES OF CONSOLIDATION,
VALUATION CRITERIA AND
ACCOUNTING PRINCIPLES
The principles of consolidation and valuation criteria used in
preparing the consolidated financial statements are consistent with
the provisions of Legislative Decree No. 127 of 4/9/91 and with the
pronouncements of the pertinent professional organizations.
72
g) The Group’s interest in any gains generated by valuation carried out in connection with extraordinary transactions (mergers, asset contributions, etc.) is reflected as an addition to
stockholders’ equity, when these transactions are carried out
in connection with a process of industrial or commercial restructuring, up to the amount of the respective market value.
Any gains stemming from the sale of investments or businesses to joint ventures over which the Group exercises a
dominant influence are reflected in the statement of income,
on the basis of the pro rata share corresponding to the interest purchased by non-Group stockholders in the joint venture.
Industrial Patents and Intellectual
Property Rights
Exclusive utilization rights are capitalized when they are acquired for consideration from a party outside the Group or
when they are produced internally, provided they have been
legally recognized and exist as an identifiable asset. Items purchased from outsiders are booked at cost, plus incidentals. Internally produced items are booked on the basis of the direct
costs incurred to obtain legal recognition of the protected
right. In both cases, they are amortized over their useful life,
but not in excess of the period of legal protection.
h) Retained earnings that appear in the financial statements of
subsidiaries exclusively for the purpose of deferring the respective tax liability are eliminated.
Permits, Licenses, Trademarks
and Similar Rights73
Permits, licenses and trademarks are booked at the cost incurred
to obtain them and amortized over the life of the respective contracts.
VALUATION CRITERIA
AND ACCOUNTING PRINCIPLES
The valuation criteria and accounting principles applied are consistent with those used in the previous fiscal year, except for the
treatment of transactions and items denominated in foreign currencies, which is governed by Accounting Principle No. 26 of the
Boards of Italian Certified Public Accountants and Bookkeepers.
This change in accounting principles did not have a material effect on the results for the year.
Goodwill
Goodwill is capitalized if the consolidating company acquired it
for consideration. It is booked at cost and amortized on a
straight-line basis.
PROPERTY, PLANT
AND EQUIPMENT
INTANGIBLES
Assets acquired from outsiders are booked at cost, including installation expenses, without deducting any grants received. Internally
produced assets are booked by capitalizing all direct and indirect
costs attributed by the individual companies that produced them.
Interest paid on loans received for the purpose of buying or
building a specific asset is added to the costs of the asset until
the asset is put into service.
Maintenance and repair costs that do not extend the useful life
of assets are charged to income in the year they are incurred.
Assets are eliminated upon sale or demolition.
The historical cost of certain assets has been restated as a result
of inflation adjustments made pursuant to law and of voluntary
revaluations carried out to reflect the higher values attributed to
certain assets upon merger, as explained in Item g) of the Principles of consolidation.
Start-up and Expansion Costs
This item includes costs incurred by Group companies to establish
and expand their operations. They include incorporation expenses
and costs paid in connection with capital increases and the startup of production facilities. They are amortized over five years.
Research, Development
and Advertising Expenses
They are charged in full to income in the year they are incurred.
All related operating grants are recognized as income when collected.
73
The amounts booked to assets are depreciated annually on a
straight-line basis at a rate that reflects the estimated useful life
of the assets. Assets purchased during the fiscal year are depreciated at half the regular rate to reflect their shorter period of utilization.
No depreciation is taken until the assets are put into service. If at
the end of the fiscal year the useful life of the assets is deemed
to be less than originally estimated, the residual value is adjusted
accordingly.
Assets that are returnable at no cost are depreciated over the remaining term of the respective license.
Capital grants are booked as deferred income when collected and
recognized as income on a pro-rata basis over the useful life of
the respective assets.
Assets acquired under finance leases are recognized at their contract values, offset by corresponding financial liabilities. The carrying values are depreciated annually on a straight-line basis,
based on the useful life of the assets. The corresponding financial
liabilities are reduced proportionately to the principal amounts
redeemed under the respective lease-payment schedule. Any
gains generated by sales and leaseback transactions are booked
as deferred income and recognized in earnings on a pro-rata basis, taking into account the depreciation schedule and the useful
life of the assets in question.
FINANCIAL FIXED ASSETS
Equity Investments
Equity investments in companies that are not consolidated either
on a line-by-line basis or by the proportional method are valued
as follows:
a. by the equity method, if the interest held directly or indirectly
by the Parent Company is at least 20%;
b. at cost, when the interest held directly or indirectly is less
than 20%.
FIXED-RATE OR INDEXED DEBT
SECURITIES
Fixed-rate or indexed debt securities are booked at net cost. Interest is accrued at the respective coupon rate and the securities
are valued at the lower of cost or realizable value, based on market prices, or at the contract price, if acquired under reverse repurchase agreements. Debt securities denominated in foreign currencies are adjusted in accordance with year-end exchange rates.
INVENTORIES
Raw materials and auxiliaries and finished products are valued at
the lower of purchase or production cost or market value.
Cost is determined by the FIFO method and the computation is
carried out on the basis of the monthly weighted average cost.
Work in progress is valued at the average cost of production for
the year, based on the percentage of completion.
The cost of work in process and finished goods includes the prorata share of the depreciation taken on the respective production
equipment, and indirect production costs.
Work and services in process under long-term contracts are valued on the basis of the revenues accrued under the respective
contracts, using the percentage of completion method.
74
They are reflected in the financial statements on an accrual basis,
in accordance with the general principle of matching costs and
revenues.
RECEIVABLES AND PAYABLES
Receivables are carried at their estimated realizable value.
Payables are shown at their face value.
Receivables and payables denominated in foreign currencies are
adjusted to year-end exchange rates. Any resulting gains or losses
are credited or debited to the statement of income.
When contracts have been executed to hedge foreign exchange
risks, any gain or loss that arises upon valuing these contracts at
year-end exchange rates, compared with their value at the spot
rates prevailing at the time of purchase, are reflected in the
statement of income, offsetting the impact of any losses or gains
generated by the underlying transaction.
The Group takes a conservative approach when valuing long-term
items. Accordingly, if the combined effect of the valuation of
hedging contracts and of the translation of receivables and
payables denominated in foreign currencies is a gain, the respective amount is set aside in a special reserve.
RESERVES FOR RISKS
AND CHARGES
The reserves for risks and charges cover contingent liabilities of
the Group companies, determined on the basis of a realistic assessment of their disposition, which cannot be attributed to specific asset accounts.
Other reserves also include the provision recorded when, as discussed earlier in these notes, the overall effect of translating
long-term receivables and payables denominated in foreign currencies is a gain.
Discounting of Receivables
INCOME TAXES
Accounts receivable assigned with recourse are deleted from the
balance sheet and the respective proceeds are deducted from net
indebtedness. Discounting charges are reflected in the statement
of income on an accrual basis.
Contingent liabilities from the risk of recourse are reflected under
memorandum accounts at the face value of the receivables assigned with recourse and still outstanding.
Accounts receivables assigned without recourse are likewise deleted from the balance sheet and the respective proceeds are deducted from net indebtedness.
The provision for current taxes, including the Regional Tax on Production Activities, is booked as taxes payable, on the basis of a
reasonable valuation of the tax liability for the current fiscal year,
taking into account any tax loss carryforward and exemptions.
Income taxes for the fiscal year are shown net of tax credits
earned on any dividends received.
Prepaid and deferred taxes are computed on the temporary differences that arise between the values assigned to assets for reporting and tax purposes and on those items like tax loss carryforwards which, while not recognized on the balance sheet, have the
potential of creating future tax credits.
Deferred taxes have been computed on accelerated depreciation
and amortization, which is reversed at the consolidated level.
Prepaid taxes are recognized when there is reasonable certainty
that they will be recovered.
In the balance sheet, prepaid taxes are offset by accounts receivable from outsiders – deferred-tax asset.
Deferred taxes are not recognized when it is unlikely that a corresponding liability will arise.
In the balance sheet, deferred taxes are offset by a reserve for deferred taxes.
ACCRUALS AND DEFERRALS
Accrued income and expenses are the offsetting entries of revenues and expenses attributable to two or more years, for which
the respective cash entries had not been made on the balance
sheet date.
Prepaid expenses and deferred income represent the portion of
cost and revenues attributable to two or more years, which cannot be reflected in the statement of income in the year when the
respective cash entry was made.
75
RESERVE FOR EMPLOYEE
SEVERANCE INDEMNITIES
The reserve for employee severance indemnities is computed in
accordance with labor legislation and the pertinent collective
bargaining agreements. It reflects the accrued liability of Group
companies toward their employees, net of any advances paid.
OFF-BALANCE SHEET
INSTRUMENTS
Contracts executed to hedge foreign exchange risks are shown
among memorandum accounts at the notional amount.
Charges and income, representing the financial component of
these contracts, are recognized on an accrual basis.
Any gain or loss that arises upon valuing hedging contracts at
year-end exchange rates, compared with their value at the spot
rates prevailing at the time of purchase, are reflected in the computation of net income, offsetting the impact of any losses or
gains generated by the underlying transaction.
Contracts executed to hedge interest rate risks are shown among
memorandum accounts at the face value of the principal amounts
actually hedged. Any resulting gains or losses (interest differentials) are recognized in earnings on an accrual basis.
REVENUE RECOGNITION
Revenues, net of returns, discounts, allowances, bonuses and directly related taxes, are recognized at the time title to the goods
passes to the customer or the provision of the services is completed. Revenues from long-term contracts are recognized using the
percentage of completion method, based on work officially accepted by customers.
76
ANALYSIS OF THE INDIVIDUAL ITEMS OF THE FINANCIAL
STATEMENTS AND CHANGES FROM THE PREVIOUS YEAR
The consolidated financial statements have been prepared in accordance with the provisions of Legislative Decree No. 127 of April 9,
1991 and comply with the recommendations of the Consob with regard to supplemental disclosure.
BALANCE SHEET
ASSETS
B. FIXED ASSETS
B.I. Intangibles
Intangibles increased by 11,306,000 euros to 233,265,000 euros
due to the inclusion of Amfibe Inc. and the textile filaments operations of Stilon S.A. in the scope of consolidation.
A breakdown of intangibles is provided below:
Description
B.I.1.
B.I.3.
B.I.4.
B.I.5.
B.I.6.
B.I.7.
B.I.8.
Start-up
Industrial
Permits,
Good-
Work in
Other
Consoli-
and
patents
licenses,
will
progress
intan-
dation
expansion
and intel-
trade-
and
gibles
differ-
lectual
marks
advances
costs
(in thousands of euros)
Total
ence
property and simirights
lar rights
Balance at 12/31/99
•
Carrying value
7,364
2,053
5,668
152,519
3,040
48,016
3,299
—
24
(2,705)
1,164
(162)
—
(1,518)
3,330
83
1,120
(434)
(5,109)
15,366
(32)
—
—
—
(1,387)
1,361
45,488
17,246
221,959
Changes in 2000
•
•
•
•
•
Changes in the scope of consolidation
Currency conversion differences
Reclassification
Purchases/Internal production
Disposals/Writedowns
Amortization for the year
(30)
(2)
—
139
(141)
(2,711)
(30)
—
729
427
—
(762)
5
170
1,976
4,529
(192)
(2,047)
4,619
2,417
10,109
14
8,558
—
297
—
(9,363)
13,807
12,048
83
7,676
(929)
(21,379)
Balance at 12/31/00
•
Carrying value
77
152,025
233,265
The amount shown for the Medical Technology Sector includes
the goodwill attributed to Cobe Cardiovascular Inc., which was
carrried at 111,204,000 euros at the end of 2000.
The longer amortization period adopted for the Medical Technology Sector reflects the lengthy development periods that are
typical of the biomedical industry. Cobe’s goodwill is amortized
over 20 years in view of the nature of this investment, which
provides the Group with a highly strategic presence in the U.S.
market, where most of its biomedical operations are concentrated.
B.I.1. Start-up and expansion costs
Startup and expansion costs decreased by 2,745,000 euros compared with 1999.
They include 1,109,000 euros for costs incurred to establish or
modify the legal status of companies, 971,000 euros for capital increases and 2,539,000 euros for production startup
costs.
B.I.3. Industrial patents and intellectual
property rights
B.I.7. Other intangibles
This item was 364,000 euros higher than in the previous year, due
to the combined impact of the amortization and additions for the
year.
Other intangibles totaled 45,488,000 euros, or 2,528,000 euros
less than in 1999. They consist almost exclusively of assets originating from the Cobe acquisition.
B.I.4. Permits, licenses, trademarks
and similar rights
B.I.8. Consolidation difference
This item, which increased by 4,441,000 euros over 1999, includes
permits valued at 166,000 euros, licenses booked at 9,473,000
euros and trademarks worth 470,000 euros.
The consolidation difference increased by 13,947,000 euros as the
net result of the recognition of assets obtained through the absorption of Amfibe Inc. (6,290,000 euros) and the textile filaments operations of Stilon S.A. (9,076,000 euros), the amortization for the year and foreign exchange differences.
In 1999, this item consisted entirely of the higher value attributed
to the investment in Novaceta following a payment made by Snia
S.p.A. to the former Courtaulds Plc. in 1998.
This item is amortized on a straight line basis, taking into account
the nature of the underlying financial fixed assets.
B.I.5. Goodwill
Goodwill totaled 152,025,000 euros, for a decrease of 494,000
euros compared with the previous fiscal year.
A breakdown by Sector is provided below:
Balance at
12/31/00
• Medical Technology
Sector
• Textile Filaments Sector
• Chemicals and
Energy Sector
Maximum length
of amortization
period (in years)
151,214
539
30
10
272
10
152,025
78
B.II. Property, plant and equipment
This item totaled 660,526,000 euros, or 16,653,000 euros more
than in the previous fiscal year. The table below shows a breakdown of its components and the changes that occurred in 2000.
Description
B.II.1.
Land and
buildings
B.II.2.
Plant and
machinery
B.II.3.
Manufact. and
distrib. equip.
B.II.4.
B.II.5.
Other
Construct. in
assets progr. and adv.
266,078
(55,876)
210,202
632,672
(281,647)
351,025
77,421
(42,553)
34,868
53,454
(34,930)
18,524
29,254
—
29,254
1,058,879
(415,006)
643,873
9,208
(4,391)
16,134
(7,238)
(5,782)
4,506
(254)
251
3,916
—
23,222
(6,872)
2,486
(523)
3,642
(1,728)
(351)
259
(123)
147
540
—
6,194
(1,845)
Total
Balance at 12/31/99
•
•
•
Gross value
Accumulated depreciation
Carrying value
Changes in 2000:
•
•
•
•
•
•
•
– Gross value
– Accumulated depreciation
Foreign exchange differences
– Gross value
Reclassifications
– Gross value
Purchases/Internal production
Upward value adjustments
– Gross value
Disposals/Writedowns
– Gross value
Depreciation for the year
2,576
2,437
4,751
932
24,266
6,296
702
—
391
—
13,622
(2,831)
14,301
453
1,273
6,017
8
—
14
—
(3,655)
1,417
(10,991)
(24,505)
14,568
(41,752)
(4,995)
2,098
(11,354)
(8,074)
4,857
(6,666)
282,146
(67,927)
214,219
635,562
(293,531)
342,031
94,224
(49,875)
44,349
51,487
(35,068)
16,419
(42,811)
—
54,105
—
—
(1,496)
—
—
(25,228)
25,145
85,470
1,115
—
(42,725)
22,940
(70,763)
Balance at 12/31/00
•
•
•
Gross value
Accumulated depreciation
Carrying value
The amount shown for writedowns includes writeoffs booked by
Novaceta U.K. Ltd. (7,189,000 euros), which were funded through
a reserve for restructuring established in 1999.
43,508
—
43,508
1,106,927
(446,401)
660,526
Buildings
•
Industrial buildings
2.0/10.0%
Plant and machinery
•
Depreciation for the period was taken on a straight-line basis using the rates shown in the table to the right and taking into account the remaining estimated useful life of the assets.
General purpose and specialized
3.0/22.5%
Other assets
•
•
•
Furniture and fixtures
Vehicles
Miscellaneous equipment
12.0/20.0%
20.0/25.0%
10.0/40.0%
No capitalized interest was added to property, plant and equipment in 2000.
79
B.III.
Financial fixed assets
B.III.1. Equity investments
Equity investments amounted to 15,292,000 euros or 11,512,000
euros less than at the end of 1999. This decline was due mainly to
the reclassification of Stilon S.A., which is now consolidated on a
proportional basis.
Description
Balance at 12/31/99
B.III.1.a.
Equity investments in
unconsolidated
subsidiaries
B.III.1.b.
Equity investments in affiliated
companies and
joint ventures
B.III.1.d.
Equity
investments
in other
companies
Total
419
24,601
1,784
26,804
2,096
—
—
(659)
(809)
429
(18,430)
8,051
31
(3,791)
(428)
(168)
983
1,257
—
(26)
(125)
77
(15,351)
9,308
31
(4,476)
(1,362)
338
1,476
9,866
3,950
15,292
Changes in 2000
•
•
•
•
•
•
Additions, subscriptions, capital contributions
Upward value adjustments
Disposals
Writedowns
Other changes
Balance at 12/31/00
80
A breakdown of equity investments by valuation method is provided below:
unconsolidated subsidiaries
2000
1999
496
126
402
419
affiliates and joint ventures
other companies
2000
1999
2000
1999
1,363
1,363
4
4
1,367
1,367
Equity investments
valued by the equity method
•
•
•
•
•
•
•
•
•
•
•
Sniaricerche S.c.p.A.
CTP Snia S.p.A.
Nysam S.A. in liquidation
Zaklad Wlokien Chemicznych Stilon S.A.
Sorin S.A. in liquidation
Nylon Corporation of America Inc.
Vischim S.r.l.
Derechim S.r.l.
Rhodia Polyammide Engineering S.a.S.
Sistema Compositi S.p.A.
Other companies
Total equity investments
valued by the equity method
23,226
452
479
279
76
747
258
244
3,808
1,476
419
4,642
24,475
Siamer S.r.l.
Fin 2001 S.A.
Other companies (*)
52
5,158
14
52
74
2,583
417
valued at cost
5,224
126
2,583
417
9,866
24,601
3,950
1,784
Equity investments valued at cost
•
•
•
(*)
1,476
419
Equity investments in other companies include interests in Istituto Europeo di Oncologia S.r.l. (1,251,000 euros) and interests held by Stilon S.A. in smaller
companies (1,104,000 euros).
B.III.2. Long-term loans
B.III.3. Other securities
Long-term loans decreased to 749,000 euros, or 92,000 euros less
than in 1999.
Other securities, which totaled 215,000 euros, consist entirely of
government securities.
81
C. CURRENT ASSETS
C.I. Inventories
Balance at
12/31/99
Change
in 2000
Balance at
12/31/00
C.I.1. Raw materials, auxiliaries and supplies
84,304
+ 13,790
98,094
C.I.2. Work in progress and semifinished goods
34,217
- 10,451
23,766
C.I.3. Contract work in process
C.I.4. Finished goods and merchandise
C.I.5. Advances
2,164
-
856
1,308
169,416
+
9,261
178,677
2,121
-
57
2,064
+ 11,687
303,909
292,222
Finished goods include real property held for resale by Immobiliare Snia S.r.l. valued at 16,599,000 euros.
At December 31, 2000, receivables assigned with recourse totaled
71,437,000 euros and receivables assigned without recourse
amounted to 34,625,000 euros. In 1999, all receivables
(43,213,000 euros) were assigned with recourse.
C.II. Accounts receivable
Accounts receivable amounted to 552,832,000 euros, or
90,952,000 euros less than in the previous year.
In 2000, the turnover of assigned receivables came to
204,522,000 euros.
Balance at
12/31/99
Change
in 2000
Balance at
12/31/00
C.II.1. Trade accounts receivable
a.
b.
due within one year
due after one year
400,100
1,916
-
9,543
1,485
390,557
431
143
-
103
40
2,541
+
637
3,178
134,070
28,750
76,264
- 60,686
- 10,570
- 9,202
73,384
18,180
67,062
643,784
- 90,952
552,832
C.II.2. Accounts receivable from subsidiaries
a.
due within one year
C.II.3. Accounts receivable from affiliated
a.
due within one year
C.II.5. Accounts receivable from outsiders
a.
b.
c.
due within one year
due after one year
prepaid taxes
82
Due after
five years
C.II.1.a. Trade accounts receivable due
C.II.1.b. Trade accounts receivable due
within one year
after one year
At 390,577,000 euros, this item was 9,543,000 euros less than in
1999.
A writedown of 19,699,000 euros was recognized to bring the carrying value of these receivables to their estimated realizable value.
A breakdown by Sector is as follows:
This item totaled 431,000 euros, or 1,485,000 euros less than in
the previous year.
A writedown of 22,000 euros was recognized to bring the carrying value of these receivables to their estimated realizable value.
These receivables refer exclusively to the Medical Technology
Sector.
2000
1999
•
•
•
•
•
Medical Technology Sector
Textile Filaments
Chemicals and Energy Sector
Holding Companies
208,632
74,963
121,239
2,253
3,169
212,363
77,167
119,256
5,497
136
•
Value adjustments
410,256
(19,699)
414,419
(14,319)
390,557
400,100
C.II.2.a. Accounts receivable from
subsidiaries due within one year
This item, which amounted to 40,000 euros, consists entirely of
trade receivables owed by CTP Snia S.p.A.
affiliated companies and joint ventures
due within one year
At 3,178,000 euros, this item was higher by 637,000 euros compared with 1999.
The carrying values of these receivables were lowered to their estimated realizable values with a writedown of 101,000 euros.
The exposure to the various companies is shown below:
2000
Finan. receiv.
Trade receiv.
Finan. receiv.
1999
Trade receiv.
Joint ventures:
•
•
•
Novaceta Ltd and its subsidiaries
Nylstar N.V. and its subsidiaries
Caffaro Energia S.r.l.
180
289
290
101
741
336
Affiliated companies:
•
•
•
•
•
•
Vischim S.r.l.
Derechim S.r.l.
S.I.S.E. S.r.l.
Consorzio per le Biotecnologie
Siamer S.r.l.
Sistema Compositi
Total before adjustments
Value adjustments
916
263
252
836
97
746
13
88
237
264
233
20
1,179
2,100
264
2,359
3,279
(101)
2,623
(82)
3,178
2,541
83
Other receivables, which represent miscellaneous items, include
13,000 euros owed by the Italian Treasury, 482,000 euros owed
by employees, sundry receivables of 10,684,000 euros and security deposits totaling 1,779,000 euros.
Other receivables also include 10,019,000 euros owed by Nyltech,
a former joint venture of the Group.
The exposure to joint ventures, which are consolidated by the
proportional method, takes into account the interest held by minority stockholders.
outsiders due within one year
In 2000, these receivables decreased by 60,686,000 euros to
73,384,000 euros.
•
•
Financial receivables
Other receivables
2000
C.II.5.c. Accounts receivable from
outsiders – Deferred-tax asset
At 67,062,000 euros, this item decreased by 9,202,000 euros
compared with 1999.
This decline had a negative impact on earnings as an equal
amount was entered in the statement of income under deferred
(prepaid) taxes.
A breakdown of this item, net of the reserve for deferred taxes, is
provided below:
1999
21,106
52,278
39,447
94,623
73,384
134,070
Financial receivables decreased by 18,341,000 euros, due mainly
to the collection of virtually all amounts owed by the Italian Treasury, as the Company availed itself of the option provided under
Law No. 53 of February 10, 1996 and elected to receive government securities instead of cash.
Other receivables, which represent miscellaneous items, include
35,036,000 euros owed by the Italian Treasury, 1,600,000 euros
owed by employees, 14,808,000 euros owed by various government agencies and security deposits amounting to 834,000 euros.
12/31/00
12/31/99
• Deferred taxes due on:
- Accelerated depreciation
recognized in equity
- Accelerated depreciation
recognized in accumulated deprec.
- Capital gains with deferred taxation
- Other items
164
255
7,172
4,385
3,337
8,198
4,463
1,914
15,058
14,830
Taxed reserves for risks and charges 11,050
Writedowns deductible in subs. years 10,473
Recognition of taxed costs
398
Maintenance in excess of
2,362
tax deductible ceilings
- Other items
10,982
14,658
16,774
571
Total deferred taxes
• Prepaid taxes on:
-
C.II.5.b. Accounts receivable from
outsiders due after one year
This item totaled 18,180,000 euros, or 10,570,000 euros less than
in the previous year.
•
•
Financial receivables
Other receivables
2000
1999
5,222
12,958
13,223
15,527
18,180
28,750
84
3,158
10,489
Total prepaid taxes
35,265
45,650
• Tax benefit arising from
loss carryforward
54,513
69,354
• Adjustments the recoverability
of which is uncertain
(22,716)
(38,740)
Total receivables from outsiders –
deferred-tax asset, net of the
reserve for deferred taxes
52,004
61,434
No amount was recognized for deferred taxes on retained earnings of subsidiaries and affiliated companies, since in most cases such distributions would convey tax credits and, in any case,
the Company holds these investments as long-term investments
and intends to reinvest indefinitely the earnings of its subsidiaries.
Deferred taxes of 29,223,000 euros arising from temporary differences related to reserves held on a deferred-tax basis were
not recognized because the Company does not intend to use
these reserves in manners that would make them taxable.
Deferred-tax assets include a tax loss carryforward of
35,807,000 euros. An additional tax loss carryforward of
18,706,000 euros and other assets amounting to 4,010,000 euros were not recognized in the financial statements.
C.IV. Liquid assets
Liquid assets amounted to 35,032,000 euros or 7,391,000 euros
less than in 1999.
They include 32,564,000 euros in bank deposits and 2,468,000
euros of cash and securities on hand.
D. ACCRUED INCOME AND
PREPAID EXPENSES
Accrued income and prepaid expenses came to 20,704,000 euros
for an increase of 596,000 euros over the previous year. A breakdown of this item is provided below.
C.III.7. Other financial assets
Other financial assets totaled 20,417,000 euros, for an increase
of 12,359,000 euros over the previous fiscal year.
2000
Nysam S.A.
Sniaricerche S.c.r.l.
CTP Snia S.p.A.
—
109
67
•
•
38
—
—
605
9,140
5,366
606
7,407
—
Financial items
Non-financial items:
— interest and
sales commissions
trade related items
— prepaid rent
— other prepaid expenses
Affiliated companies
•
•
Other affiliated companies
Other companies
1,836
59
841
276
1,895
1,117
2,099
2,782
16,710
868
231
15,110
16,209
18,809
18,991
20,704
20,108
D.2. Prepaid expenses
Joint ventures
•
•
•
Financial items
Non-financial items
1999
Subsidiaries
•
•
•
1999
D.1. Accrued income
•
•
2000
5,125
5
—
3
—
4
20,417
8,058
TOTAL ACCRUED INCOME
AND PREPAID EXPENSES
158
135
16,417
The increase of other non-financial prepaid expenses reflects
primarily taxes on intra-Group transfers that were removed
from the consolidated result and reflected as an accrual on the
asset side of the balance sheet for use to offset the lower depreciation and amortization recognized in the consolidated financial statements.
The exposure to joint ventures, which are consolidated on a
proportional basis, reflects the interests held by minority stockholders.
85
A. STOCKHOLDERS’ EQUITY
Group interest in stockholders’ equity
As shown in the table below, Group interest in stockholders’ equity
totaled 201,132,000 euros at December 31, 2000.
BALANCE AT 12/31/98
Capital
stock
Reserves
(*)
405,103
329,617
Consolidation
difference
(65,489)
Net income
(loss) for the
fiscal year
32,337
Total Group interest
in consolidated
701,568
INCREASES DUE TO:
•
•
Changes in the scope of
integration and interests held
Differences from the translation of
fin. statements in foreign currencies
9,313
9,313
4,530
4,530
DECREASES DUE TO:
•
•
•
Reclassifications
Appropriation of net income
– Dividend distribution
– Statutory reserve
– Special reserve
– Retained earnings
Other changes
(8,672)
(27,558)
(764)
(11,167)
(1,520)
764
11,167
1,520
(1,493)
NET INCOME FOR THE YEAR
BALANCE AT 12/31/99
8,672
405,103
343,068
(61,811)
(27,558)
(1,493)
13,673
13,673
13,673
700,033
INCREASES DUE TO
•
•
•
•
•
Impact of the mergers into Snia S.p.A.:
– Capital increase carried out to
execute share exchange
– Merger surplus
– Change in interests held
Utilization of the special reserve
to redenominate the par value
of the shares
Equalization payments to holders
of Snia S.p.A. savings shares
Differences from the translation of
Other changes
112,041
112,041
121,627
(46,994)
121,627
(46,994)
3,548
(3,548)
8,946
8,946
11,003
1,024
11,003
1,024
DECREASES DUE TO:
•
•
•
Reclassifications
Appropriation of net income
– Dividend distribution
– Special reserve
Change in the scope of integration
and interests held
(13,617)
(26,825)
(465)
465
(306)
NET INCOME FOR THE YEAR
BALANCE AT 12/31/00
(*)
13,617
520,692
470,558
(110,701)
(26,825)
(306)
20,616
20,616
20,616
901,165
As shown in the statement of changes in the stockholders’ equity of Snia S.p.A., which appears elsewhere in these Notes, the reserves are those of the Parent
Company.
86
The consolidation difference is a negative 110,701,000 euros because in the years prior to 1994 the value assigned to certain equity investments in excess of the interest in the stockholders’ equity of the consolidated companies that could not be allocated to
specific asset accounts was recognized in equity as a deduction.
The consolidation difference also includes the results of prior
years, except for the appropriation of the net income of Snia
S.p.A.
2000
1999
520,692
470,558
10,623
405,103
343,068
27,290
1,001,873
775,461
Stockholders’ equity Snia S.p.A.
•
•
•
Capital stock
Reserves
Net income for the year
Changes:
•
A reconciliation between stockholders’ equity and net income of
Snia S.p.A. and the corresponding amounts for the Group is provided below.
•
•
Net income of Snia S.p.A.
2000
1999
10,623
27,290
Changes:
Result of consolidated
companies, net of the difference
between the value of stockholders’
equity and the carrying value
of shares sold and of the gains
generated by intra-Group
transactions
•
76,963
30,470
•
Adjustments required
by the consolidation process
(20,575)
(6,194)
•
Dividends of integrated companies
Group interest in net income
(46,395)
(37,893)
9,993
(13,617)
20,616
13,673
Result of consolidated companies
not recognized by the
Parent Company
Adjustments required
by the consolidation
process
Prior year’s difference between
the stockholders’ equity of
Snia S.p.A. and the Group’s
interest in stockholders’ equity:
– Stockholders’ equity of
consolidated companies
– Elimination of the amounts
corresponding to consolidated
equity investments
held by Snia S.p.A.
– Consolidation adjustments
Differences arising from changes
in the scope of integration
and interests held
Differences from the translation
of financial statements
in foreign currencies
Other changes
Group interest in
87
30,568
(7,423)
(20,575)
(6,194)
629,555
641,796
(703,413)
(1,570)
(714,730)
(1,227)
(47,300)
9,313
11,003
1,024
4,530
(1,493)
(100,708)
(75,428)
901,165
700,033
B.2.b. Reserve for deferred taxes
Minority interest in capital stock
and reserves
In 2000, the reserve for taxes increased by 228,000 euros to
15,058,000 euros.
1999 due to the merger of Caffaro S.p.A., Sorin Biomedica S.p.A. and
Old Bellco S.r.l. into Snia S.p.A.
Balance at 12/31/99
2000
1999
211,458
205,985
Additional information on the reserve for deferred taxes is provided in the note to item C.II.5.c. Accounts receivable from outsiders
– Deferrred-tax assets, which contains a breakdown of the items
included in the reserve.
Changes:
• Net income for the year
• Impact of mergers into SNIA S.p.A.
• Change in the scope of integration
and interests held
• Dividend distribution
• Differences from the translation of
• Contributory capital increases
• Other changes
(26)
(207,528)
2,085
—
2,044
(6,581)
229
1,593
14
1,041
—
(37)
(203,633)
Balance at 12/31/00
9,006
—
7,825
B.4. Other reserves
Other reserves totaled 35,333,000 euros, or 42,488,000 euros
less than in the previous year.
The largest component of this item is a Reserve for miscellaneous risks (30,615,000 euros) established to provide for restructuring programs and future non-recurring charges.
This item also includes a Reserve for currency risks (148,000 euros), a Reserve for warranties (2,187,000 euros) and a Reserve
for supplemental payments to customers and agents (2,383,000
euros).
A breakdown of this item is provided below.
5,473
211,458
The impact of the mergers into Snia is reflected in the reclassification and transfer to the Group interest in stockholders’ equity of the
interest held by minority stockholders in the stockholders’ equity of
the absorbed companies. The different impact on the Group interest
in stockholders’ equity (186,674,000 euros) and minority interest in
stockholders’ equity (-207,528,000 euros) is due to liquidation payments to dissenting stockholders (12,871 euros), equalization payments to tendering stockholders (7,415,000 euros) and dividends to
savings stockholders of the former Caffaro (568,000 euros).
(thousands of euros)
• Balance at 12/31/99
• Changes:
Change in the scope of consolidation
Reclassifications
Provision for the year
Utilization for the year and transfer to earnings
B. RESERVES FOR RISKS
AND CHARGES
At 9,357,000 euros, this reserve increased by 268,000 euros compared with 1999. A breakdown is as follows:
9,089
• Changes:
Reclassifications
Utilization for the year
(795)
1,551
(488)
9,357
(446)
(1,236)
1,416
9,570
(51,792)
35,333
The main components of the provision are additions of 7,914,000
euros to the Reserve for miscellaneous risks and 4,153,000 euros
set aside for extraordinary items.
The reduction in Other reserves refers to the Reserve for miscellaneous risks, which was used primarily for the restructuring programs carried out during the year by the Novaceta joint venture,
by Cobe Cardiovascular Inc. and by Caffaro S.p.A. (formerly I.C.C.).
B.1. Reserve for pensions and
similar obligations
77,821
88
A breakdown by Sector of Other reserves for risks and charges is
provided below.
•
•
•
•
•
Textile Filaments Sector
Holding Cos. and adjustments
2000
C. RESERVE FOR
EMPLOYEE SEVERANCE
INDEMNITIES
1999
At 70,847,000 euros, this reserve was 6,125,000 euros less than
at December 31, 1999. A breakdown is as follows:
18,485
4,950
6,652
3,027
2,219
36,742
20,117
15,218
1,982
3,762
35,333
77,821
76,972
• Changes:
Change in the scope of consolidation
Reclassifications and transfers
Utilization for the year
(2,211)
83
(1,915)
10,636
(12,718)
70,847
D. LIABILITIES
Liabilities totaled 747,295,000 euros, for a decline of 18,652,000
euros compared with the previous year.
Balance at
12/31/99
Change
in 2000
Balance at
12/31/00
Due after
five years
D.3. Due to banks
82,410
177,981
+ 42,889
+ 40,878
125,299
218,859
7,735
61,014
95,642
+ 19,787
- 69,835
80,801
25,807
11,415
D.4. Due to other lenders
D.5. Advances
1,853
1,660
-
413
994
1,440
666
208,206
213
+
+
1,124
183
209,330
396
4,976
-
21
4,955
—
+
204
204
4,182
-
3,556
626
78,340
6,607
- 37,601
- 2,203
40,739
4,404
12,423
740
+
2,115
8
10,308
748
29,700
–
+
7,171
184
22,529
184
- 18,652
747,295
D.6. Trade accounts payable
D.7. Liabilities represented by credit instruments
D.8. Accounts payable to subsidiaries
D.9. Accounts payable to affiliates and joint ventures
D.11. Taxes payable
D.12. Contributions to pension and social secur. inst.
D.13. Other liabilities
765,947
89
19,150
A breakdown by interest rate of the bank borrowings outstanding
at December 31, 2000 is provided below.
D.3.a. Amount due to banks within one
year
The amount due to banks within one year increased by
42,889,000 euros to 125,299,000 euros, 7,713,000 euros of which
is collateralized. A breakdown of the collateral provided is as follows: 6,952,000 euros in mortgages on land and buildings and
761,000 euros in liens an machinery and equipment.
•
•
•
•
Rates up to 5%
Rates between 5% and 7.5%
Rates between 7.5% and 10%
Rates above 10%
134,200
72,463
10,287
1,909
218,859
D.3.b. Amount due to banks after
The above interest rates are net of any interest subsidies.
one year
The increase in the amount due to banks within and after one
year is explained in the note to Due to other lenders after one
year.
The amount due to banks after one year increased by 40,878,000
euros to 218,859,000 euros, 30,119,000 euros of which is collateralized.
A breakdown of the collateral provided is as follows: 28,210,000
euros in mortgages on land and buildings and 1,909,000 euros in
liens an machinery and equipment.
D.4.a. Amount due to other lenders
within one year
A breakdown by maturity date of bank borrowings outstanding at
December 31, 2000 is provided below.
At 80,801,000 euros, this item was 19,787,000 euros more than
at December 31, 1999.
It includes the current portion of long-term debt due to other
lenders (1,937,000 euros).
•
•
•
•
•
2002
2003
2004
2005
After 2005
D.4.b. Amount due to other lenders after
78,437
53,943
51,548
27,196
7,735
one year
The amount due to other lenders after one year decreased by
69,835,000 euros to 25,807,000 euros, 6,732,000 euros of which
is collateralized. A breakdown of the collateral provided is as follows: 2,699,000 euros in liens an machinery and equipment and
4,033,000 euros in other guarantees.
218,859
A breakdown by Sector of the amounts due to other lenders is as
follows:
•
•
•
90
Restatements
2000
1999
—
26,413
(606)
75,248
21,000
(606)
25,807
95,642
The elimination of amounts due to other lenders by the Medical
Technology Sector reflects the absorption of Sorin Biomedica
S.p.A. into Snia S.p.A. and the assumption by the Parent Company
of debt owed by the subsidiary Cobe Cardiovascular Inc., which
was replaced by medium-term financing for an equal amount
provided by a pool of banks.
The portion of these liabilities that matures in 2001 is reflected in
item D.3.a. The remaining portion is shown under D.3.b.
D.7,a. Trade accounts payable due
after one year
This account, which had a balance of 4,955,000 euros, consists
entirely of commercial paper issued by the Textile Filaments
Sector.
D.8.a. Accounts payable to subsidiaries
due within one year
D.6.a. Trade accounts payable due within
one year
This item, which totaled 204,000 euros, consists of trade payables
owed to Sniaricerche S.c.p.A. (12,000 euros) and CTP Snia S.p.A.
(192,000 euros).
Trade accounts payable totaled 209,330,000 euros, or 1,124,000
euros more than in the previous year.
•
•
•
•
•
Holding Companies
2000
1999
67,687
57,819
78,164
1,979
3,681
62,581
55,461
83,062
3,326
3,776
209,330
208,206
D.9.a. Accounts payable to affiliated
companies and joint ventures due within
one year
This item totaled 626,000 euros at December 31, 2000. A breakdown is provided below.
2000
Finan. receiv.
Trade receiv.
Finan. receiv.
1999
Trade receiv.
Joint ventures:
•
•
•
125
10
117
139
5
279
3,416
•
Vischim S.r.l.
Subtotal
374
10
616
626
343
3,416
766
4,182
The exposure to joint ventures, which are consolidated on a
proportional basis, reflects the interest held by minority stockholders.
91
E. ACCRUED EXPENSES AND
DEFERRED INCOME
D.11.a. Taxes payable due within one
year
As shown in the table below, accrued expenses and deferred income increased by 11,905,000 euros to 56,062,000 euros.
At 40,739,000 euros, taxes payable due within one year were
37,601,000 euros less than at the end of 1999.
2000
1999
15,777
8,841
5,261
178
10,682
25,893
4,371
22,730
730
24,616
40,739
78,340
2000
1999
E.1. Accrued expenses
•
•
•
•
•
Holding Companies
•
•
Financial items
— interest and
sales commissions
— personnel
— other accrued expenses
2,918
1,407
31,064
5,781
2,834
3,240
20,603
4,543
38,252
28,386
41,170
31,220
1,302
62
D.11.b. Taxes payable due after one
E.2. Deferred income
year
•
•
The main component of this item, which totaled 4,404,000 euros,
or 2,203,000 euros less than the previous year, is a liability for the
substitute tax payable on the gain generated by the intra-Group
transfer of the Energy Operations in 1998.
Financial items
— interest and
sales commissions
— capital contributions
— other deferred income
D.12.a. Contributions to pension
and social security institutions due within
TOTAL ACCRUED EXPENSES
AND DEFERRED INCOME
one year
At 10,308,000 euros, this item was 2,115, 000 euros less than at
December 31, 1999. It consists of liabilities to various social security institutions (INPS, INPDAI, FISDAF and Fonchim).
—
7,423
6,167
79
6,101
6,695
13,590
12,875
14,892
12,937
56,062
44,157
Other non-financial deferred income includes the higher value assigned to the assets of the Nylstar joint venture which were sold
and leased back in 1999.
In accordance with current accounting principles, the resulting
deferred income is recognized in earnings on a pro-rata basis
concurrently with the additional depreciation and amortization.
D.12.b. Contributions to pension
and social security institutions due after
one year
The contributions due after one year totaled 748,000 euros, unchanged from the previous year.
D.13.a. Other liabilities due within
one year
Other liabilities due within one year came to 22,529,000 euros,
compared with 7,171,000 euros at the end of 1999.
A total of 7,263,000 euros was owed to employees.
92
MEMORANDUM ACCOUNTS
2000
1999
GUARANTEES PROVIDED
• Guarantees and sureties provided to:
–
–
–
subsidiaries
affiliated companies
outsiders
3,988
11,159
15,316
2,918
50,653
• Collateral provided to:
–
outsiders
247
30,710
53,571
1,714
982
• Other guarantees provided to:
–
joint ventures
• Other guarantees provided to outsiders
–
–
–
Recourse risk
Portfolio risks and risks on assignments with recourse
Other risks
15,844
71,437
636
87,917
89,631
16,455
43,213
636
60,304
61,286
120,341
114,857
474
2,354
• Group assets held by outsiders
59,813
54,332
• Sureties/Guarantees received by the Group
59,776
75,119
Other memorandum accounts
• Assets of outsiders held by the Group
• Off-balance-sheet financial instruments
–
–
Currency swaps and forward
foreign exchange contracts
that hedge foreign exchange risks:
•
purchased from outsiders
•
sold to outsiders
Interest rate swaps and forward
rate agreements that hedge
interest rate risks
128,909
182,252
• Miscellaneous memorandum accounts
93
311,161
9,431
9,431
361,292
87,428
47,894
37,094
840,410
265,758
960,751
380,615
The table below provides an overview of the currency swaps and
forward foreign exchange contracts outstanding at 12/31/00.
POSITION / INSTRUMENT
CURRENCY
NOTIONAL AMOUNT
(face value at expiration)
AND SCHEDULED MATURITY
2001
2002
Total
and after
MARKET
VALUE
PURCHASES
Domestic currency swaps
Domestic currency swaps
Forward
Forward
U.S. dollar
Japanese yen
U.S. dollar
British pound
23,397
144
35,452
1,602
68,315
—
—
—
91,712
144
35,451
1,602
91,508
150
36,116
1,607
60,595
68,315
128,909
129,381
45,736
716
305
—
5,717
17,788
76,530
9,170
444
14,508
7,609
1,941
1,442
346
—
—
—
—
—
—
—
—
—
—
—
—
—
—
45,736
716
305
—
5,717
17,788
76,530
9,170
444
14,508
7,609
1,941
1,442
346
45,723
716
298
—
5,532
16,963
71,310
7,824
437
13,858
7,609
1,941
1,442
246
TOTAL SALES
182,252
—
182,252
173,899
GRAND TOTAL
242,847
68,315
311,161
303,280
TOTAL PURCHASES
SALES
Domestic currency
Domestic currency
Domestic currency
Domestic currency
Domestic currency
Forward
Forward
Forward
Forward
Forward
Forward (1)
Forward (1)
Forward (1)
Currency swaps
(1)
swaps
swaps
swaps
swaps
swaps
U.S. dollar
Danish krone
Canadian dollar
British pound
Japanese yen
British pound
U.S. dollar
Japanese yen
Other currencies
U.S. dollar
U.S. dollar
Japanese yen
British pound
U.S. dollar
Since the market value was not available, the notional amount was used instead.
94
ANALYSIS OF THE STATEMENT OF INCOME
Since the statement of income provides a detailed breakdown of
the individual revenue and expense items and detailed information
has already been provided in the notes to the balance sheet, only
the main captions of the statement of income are reviewed below.
A.2. Change in inventory of work
in progress, semifinished goods
and finished goods
The net change was a negative 4,187,000 euros. A breakdown by
Sector is as follows:
A. PRODUCTION VALUE
1,316,682,000 euros
A.1. Sales and service
revenues
2000
•
•
•
•
(10,980)
5,322
5,081
(3,610)
Sales and service revenues totaled 1,262,233,000 euros, or
124,601,000 euros more than in 1999. They include sales revenues of 1,228,218,000 euros and service revenues of 34,015,000
euros.
2000
1999
•
•
•
•
•
493,826
398,789
359,370
15,360
(5,112)
414,448
346,366
363,948
26,116
(13,246)
Holding Companies and adjustments
1,262,233
(4,187)
14,178
(4,129)
(6,161)
(1,859)
2,029
A.3. Changes in contract work
in process
The net change was a positive 142,000 euros. A breakdown by
2000
1999
1,137,632
•
•
•
A revenue breakdown by geographical destination is as follows:
2000
1999
•
•
•
•
•
•
•
508,694
386,863
70,539
155,810
35,016
87,834
17,477
499,581
362,286
45,510
107,084
33,284
66,968
22,919
1,262,233
1,137,632
Italy
EU (excluding Italy)
Other European countries
North America
Africa and Middle East
Asia/Australia/Oceania
Central and South America
1999
—
142
—
(1,452)
408
(853)
142
(1,897)
A.4. Increases in company
produced additions to fixed
assets
This item, which grew by 101,000 euros to 8,764,000 euros, includes 8,743,000 euros for property, plant and equipment and
21,000 euros for intangibles.
95
A.5. Other revenues
and income
B.7. Outside services
The cost of outside services totaled 249,432,000 euros, or
12,136,000 euros more than in the previous year.
Other revenues and income increased to 49,730,000 euros, or
816,000 euros more than in 1999. This item includes operating
grants (274,000 euros), rebilled costs (3,541,000 euros), capital
grants recognized in earnings in 1999 (1,737,000 euros), gains
on the disposal of fixed assets (864,000 euros), royalty income
(634,000 euros), and sales of byproducts, miscellaneous revenues and out-of-period income (42,680,000 euros).
•
•
•
•
•
Holding Companies and adjustments
2000
A breakdown is provided below.
2000
1999
•
•
•
•
55,373
131,944
61,467
648
54,954
122,836
57,628
1,878
249,432
237,296
Industrial services
Other services
Variable selling costs
Royalty expense
1999
13,467
6,025
24,067
1,519
4,652
13,744
5,156
18,620
2,502
8,892
49,730
48,914
Service costs include the fees paid to Directors and Statutory Auditors. A breakdown of the fees paid for services provided by the
Directors and Statutory Auditors to the Parent Company and to
other consolidated companies is provided below.
B. COST OF PRODUCTION
(1,247,900,000) euros
• Directors
• Statutory Auditors
B.6. Raw materials, auxiliaries and
supplies
At 570,189,000 euros, this item was 57,551,000 euros higher
than in 1999. Purchases of raw and auxiliary materials accounted
for 515,429,000 euros and other purchases for the remaining
54,760,000 euros.
(*)
Services to
the Parent
Company
Services to
other
consolidated
companies (*)
2000
1999
2000
1999
965
156
1,511
148
—
32
79
243
1,121
1,659
32
322
Pro-rated on the basis of the consolidation percentage.
B.8. Use of property not owned
At 8,946,000 euros, this item declined by 744,000 euros compared with 1999. Its main components are lease payments, licenses, photocopier costs, rent, hardware maintenance costs and
technical support.
96
B.9. Personnel costs
Personnel costs totaled 308,341,000 euros, or 6,405,000 euros
more than in 1999. A breakdown of the Group’s workforce is provided below.
Average number of employees
Employees categories
Parent Company
2000
•
•
•
•
(*)
Executives
Middle managers
Office staff/Specialists
Factory staff
Companies consolidated
as per Art. 26, L.D. 127/91
Companies consolidated as
per Art. 37, L.D. 127/91 (*)
1999
2000
1999
2000
1999
33
30
64
5
22
9
14
—
97
314
1,778
2,946
137
378
1,908
3,088
35
126
542
2,191
28
112
513
1,786
132
45
5,135
5,511
2,894
2,439
The number of employees shown reflects the percentage of consolidation.
B.10.d. Writedowns of loans
assets
B.11. Change in inventory of raw
materials, auxiliaries, supplies and
merchandise
In 2000, this item totaled 5,843,000 euros, for a decline of
3,130,000 euros compared with the previous year.
The change was a negative 11,953,000 euros. A breakdown by
included in current assets and liquid
A breakdown by Sectors is provided below.
•
•
•
•
•
Holding Companies
2000
1999
4,803
420
586
34
—
1,936
1,605
957
39
4,436
5,843
8,973
•
•
•
•
97
2000
1999
(12,112)
(3,880)
4,144
(105)
(10,478)
807
(2,031)
204
(11,953)
(11,498)
B.12. Provisions for risks
C. FINANCIAL INCOME
(EXPENSE)
(24,593,000) euros
Provisions for risks came to 3,506,000 euros, or 1,288,000 euros
more than in 1999.
C.16. Other financial income
The table below shows a breakdown by Sector.
C.16.c. Other financial income
2000
1999
1,676
13
747
1,070
1,247
268
678
25
3,506
2,218
from securities included in current
assets, other than equity investments
•
•
•
•
This item totaled 525,000 euros, or 902,000 euros less than
in the previous year. It includes interest income of 285,000
euros and gains on disposals of assets amounting to 240,000
euros.
C.16.d. Other financial income
B.13. Other provisions
C.16.d.1. Other financial income
At 1,763,000 euros, other provisions were 3,097,000 euros less
than in the previous year.
•
•
•
2000
1999
—
1,721
42
1,143
3,680
37
1,763
4,860
from subsidiaries
The balance of 59,000 euros includes income received from
Sniaricerche S.c.p.A. (41,000 euros), Biomateriali S.r.l. (2,000 euros) and CTP Snia S.p.A. (16,000 euros).
C.16.d.2. Other financial income
from affiliates and joint ventures
This item, which totaled 1,039,000 euros, or 705,000 euros more
than in 1999, consists primarily of interest earned on loans provided to the following companies:
B.14. Miscellaneous operating costs
This item amounted to 19,691,000 euros, or 1,465,000 euros less
than in 1999. It includes indirect taxes and fees (4,816,000), losses on the disposal of fixed assets (1,220,000 euros), and general
corporate expenses, entertainment expenses, memberships in industry associations and out-of-period charges for the balance.
2000
1999
422
271
279
4
20
35
291
38
13
—
1,039
334
Joint ventures
•
•
Novaceta Ltd. and its subsidiaries
•
•
•
98
Derechim S.r.l.
Vischim S.r.l.
C.16.d.4. Other financial income from
C.17.b. Interest and other financial
outsiders
expense paid to affiliated companies
and joint ventures
At 10,339,000 euros, this item was 2,103,000 euros higher than
in 1999. It includes: interest earned on loans (1,394,000); interest
earned on commercial transactions (3,469,000 euros); gains on
hedging contracts (2,702,000 euros); and miscellaneous income
(2,774,000 euros), which consists primarily of interest earned on
amounts owed by the tax authorities.
This item totaled 59,000 euros, or 44,000 euros less than
in 1999.
It includes payments made to the following companies:
2000
1999
59
69
—
34
59
103
Joint ventures
C.16.e. Foreign exchange gains
•
Foreign exchange gains totaled 18,000 euros, up from foreign exchange gains of 6,158,000 euros in 1999.
For more effective disclosure, foreign exchange differences are
shown on a net basis, as a single item in the statement of income.
The net foreign exchange gain shown in the 2000 statement of
income includes the following: a net gain of 1,560,000 euros
(gain of 1,287,000 euros in 1999) from the translation of intraGroup transactions of a commercial nature, which are eliminated
in the consolidated financial statements, and a net loss of
1,542,000 euros (net gain of 4,871,000 euros in 1999) incurred to
manage the foreign-currency collection and payment flows of
Group companies.
During the year, the Company changed the accounting treatment
of transactions and items denominated in foreign currencies. If
the same principle had been applied in 1999, it would have generated a benefit of 1,018,000 euros.
•
Vischim S.r.l.
C.17.d. Interest and other financial
expense paid to outsiders
At 36,442,000 euros, this items was 11,419,000 euros higher than
1999. It includes interest paid on loans received (28,307,000 euros), interest paid on commercial transactions (957,000 euros),
losses on hedging contracts (2,590,000 euros) and miscellaneous
charges (4,588,000 euros) consisting mainly of discounts paid,
bank charges and bank fees.
Miscellaneous charges also include 2,520,000 euros in costs incurred to discount receivables.
C.17. Interest and other financial expense
A breakdown of interest and other financial expense is as follows:
C.17.a. Interest and other financial
expense paid to subsidiaries
This item, which totaled 82,000 euros, consists exclusively of
amounts paid to Biomateriali S.r.l..
•
•
99
Due to banks
Due to other lenders
2000
1999
25,023
11,419
15,370
9,653
36,442
25,023
E.20.b. Other extraordinary income
D. VALUE ADJUSTMENTS ON
FINANCIAL ASSETS
(1,331,000) euros
Other extraordinary income decreased to 16,983,000 euros, or
21,948,000 euros less than in 1999.
It includes transfers of reserves to earnings (5,910,000 euros),
gains on the disposal of business operations (2,050,000 euros)
and miscellaneous out-of-period income (9,023,000 euros).
In 1999, this item included a prepaid-tax benefit stemming from
prior periods (32,950,000 euros).
D.18. Upward adjustments of
unconsolidated equity investments
This item, which totaled 31,000 euros, refers to Vischim S.r.l. and
Sistema Compositi S.p.A..
E.21. Extraordinary expense
D.19. Writedowns
E.21.a. Losses on disposals
D.19.a. Writedowns of unconsolidated
These losses, which totaled 281,000 euros, or 1,990,000 euros less
than in the previous year, were incurred exclusively on the disposal of fixed assets.
equity investments
At 1,362,000 euros, this item was 567,000 euros less than in
1999.
The largest writedowns concerned Sniaricerche S.c.p.A. , CTP Snia
S.p.A., Sorin Biomedical Industrial Ltda., Derechim S.r.l., Nylon
Corporation of America Inc. and Tecnogen S.c.p.A..
E.21.c. Other extraordinary expense
1999. It includes extraordinary additions to the reserve for miscellaneous risks (4,153,000 euros) and to the allowance for
sundry doubtful accounts (2,333,000 euros), as well as miscellaneous out-of-period charges (5,055,000 euros).
In 1999, this item consisted primarily of deferred taxes stemming
from prior periods (5,195,000 euros) and additions to the reserve
for restructuring costs (73,013,000 euros).
E. EXTRAORDINARY INCOME
AND (EXPENSE)
4,856,000 euros
E.20. Extraordinary income
E.20.a. Gains on disposals
INCOME TAXES
27,124,000 euros
Gains on disposals totaled 522,000 euros, compared with
59,484,000 euros in 1999.
This item includes gains on the disposal of fixed assets (519,000
euros) and on the sale of equity investments (3,000 euros).
In 1999, it included a gain of 58,216,000 euros from the sale of a
50% interest in Caffaro Energia S.r.l.
This item includes 18,639,000 euros for current taxes and
8,485,000 euros representing net deferred taxes. In 1999, these
items amounted to 44,319,000 euros and a negative 42,614,000
euros, respectively, for a balance of 1,705,000 euros.
100
OTHER INFORMATION
CONSOLIDATED STATEMENT OF CASH FLOW
2000
A. NET LIQUID ASSETS (INDEBTEDNESS) AT JANUARY 1
1999
(12,904)
13,774
20,616
(26)
92,142
(1,935)
1,331
—
(14,815)
(3,837)
(2,461)
13,673
9,006
84,662
(56,445)
1,711
8,170
(9,996)
(4,647)
620
91,015
46,754
(7,676)
(85,470)
(9,308)
23,544
(7,274)
(52,577)
(5,194)
84,100
(78,910)
19,055
1,593
27,059
(48,863)
—
12,794
(16,203)
2,243
10,856
(17,968)
7,447
(26,825)
—
(27,558)
(6,580)
(26,825)
(34,138)
B. CASH FLOW – OPERATING ACTIVITIES
Net income (loss) for the year:
– Group interest
– Minority interest
Depreciation and amortization
(Gains) Losses on the disposal of fixed assets
(Gains) Losses on the valuation of equity investments
Writedowns of fixed assets
Change in working capital
Net change in reserve for employee severance indemnities
Other changes
C. CASH FLOW – INVESTING ACTIVITIES
Investments in fixed assets
• Intangibles
• Property, plant and equipment
• Financial fixed assets
Proceeds from the sale or redemption of fixed assets
D. CASH FLOW – FINANCING ACTIVITIES
Contributions of minority stockholders for capital increases
New borrowings
Loan repayments
Net change in long-term loans and
other financial payables
E. EARNINGS DISTRIBUTION
Parent Company
Other Group companies to minority stockholders
F. LOSS ON MERGER TRANSACTIONS
G. DIVIDENDS TO SAVINGS STOCKHOLDERS OF THE FORM. CAFFARO
(20,285)
—
(568)
—
H. INCREASES IN RESERVE FROM EQUALIZATION PAYMENTS
UPON CONVERSION OF NONCONVERTIBLE SAVINGS SHARES
8,945
I. OTHER CHANGES TO STOCKHOLDERS’ EQUITY
(5,077)
(2,725)
L. CHANGE TO NET LIQUID ASSETS (INDEBTEDNESS)
DUE TO A CHANGE IN THE SCOPE OF CONSOLIDATION
AND FOREIGN EXCHANGE DIFFERENCES
(16,623)
(63,071)
M. NET CASH FLOW FOR THE PERIOD (B+C+D+E+F+G+H+I+L)
(66,296)
(26,678)
N. NET LIQUID ASSETS (INDEBTEDNESS) AT DECEMBER 31 (A+M)
(79,200)
(12,904)
—
N.B. The changes shown in the statement of cash flow are net of changes stemming from the inclusions in or removals from the scope of consolidation, and of
foreign exchange differences stemming from the translation of financial statements of foreign companies that were already consolidated in 1999.
Net liquid assets (indebtedness) do not include the current portion of long-term debt.
101
APPENDIX TO THE CONSOLIDATED STATEMENT OF CASH FLOW
CHANGE IN WORKING CAPITAL
UNADJUSTED NET CHANGE
(26,825)
Change caused by:
• Companies included in the scope of consolidation
• Companies removed from the scope of consolidation
• Reclassifications and other captions of the financial statements
• Reversal of foreign exchange differences affecting the working
capital of foreign companies already consolidated in 1999
10,628
(8,022)
5,395
4,009
CHANGE AS PER THE STATEMENT OF CASH FLOW
(14,815)
CHANGE TO NET LIQUID ASSETS (INDEBTEDNESS)
DUE TO A CHANGE IN THE SCOPE OF CONSOLIDATION
Change caused by:
• Companies included in the scope of consolidation
• Companies removed from the scope of consolidation
• Price paid for companies consolidated on a line-by-line basis
• Foreign exchange differences applicable to the net liquid assets (indebtedness)
of foreign companies already consolidated in 1999
(10,459)
2,859
(9,209)
186
(16,623)
NET LIQUID ASSETS (INDEBTEDNESS) AT DECEMBER 31
AS PER THE STATEMENT OF CASH FLOW (Total line N)
(79,200)
LONG-TERM DEBT
Balance at January 1
(307,527)
Changes:
• New borrowings
• Loan repayments
• Net change in long-term loans and other financial payables
• Change in the scope of consolidation and foreign exchange differences
(27,059)
48,863
(2,243)
(5,145)
14,416
Balance at December 31
(293,111)
NET INDEBTEDNESS AT DECEMBER 31
(372,311)
102
TRANSACTIONS OF THE SNIA GROUP WITH COMPANIES THAT
ARE NOT CONSOLIDATED ON A LINE-BY-LINE BASIS AND
OTHER RELATED PARTIES
SUBSIDIARIES AND AFFILIATES
THAT ARE NOT CONSOLIDATED
ON A LINE-BY-LINE BASIS
STATEMENT OF INCOME
2000
1999
23.6
23.7
•
Sales and service revenues and other income
•
Cost of raw materials, outside services,
use of property not owned and other costs
4.3
2.1
•
Interest and other income
1.1
0.3
•
Interest and other expense
0.1
0.1
2000
1999
2.0
21.6
—
2.4
8.3
0.2
Trade accounts payable
Loans payable
Other payables
0.8
—
—
0.8
3.4
—
Memorandum accounts
16.9
3.9
All intra-Group transactions are carried out at market prices and interest rates.
BALANCE SHEET
Assets
•
•
•
Trade accounts receivable
Loans receivable
Other receivables
Liabilities
•
•
•
103
PRINCIPAL INTRA-GROUP TRANSACTIONS
CARRIED OUT IN 2000
•
Mergers by absorption into SNIA S.p.A. of Caffaro S.p.A., Sorin
Biomedica S.p.A., Old Bellco S.r.l., Sifi S.p.A. and SGS S.r.l.,
which for accounting purposes were effective January 1, 2000.
Transactions with related Parties
Other than Companies of the Snia
Group
•
Transfer by Caffaro S.p.A. (formerly Industrie Chimiche Caffaro S.p.A.) to Snia S.p.A. of the entire capital stock of Sistema
Compositi S.p.A.. At the end of June, Snia S.p.A. sold to outsiders a 50% interest in this company.
•
Transfer by Dideco S.p.A. to SNIA S.p.A. of the entire capital
stock of Sorin Biomedica Cardio S.p.A.
• In the normal course of business, the Nylstar and Novaceta joint
ventures bought and/or sold on market terms products and services from/to their stockholders Rhodia S.n.c. and Acordis Europe
Investments B.V. and their subsidiaries. Upon the establishments
of these joint ventures, the existence of these transactions was
reviewed by the supervisoty authorities of the European Union.
•
Merger by absorption into Emblem Europe S.p.A. of
SNIA Tecnopolimeri Sud S.r.l.
•
Prior to the merger by absorption into Snia S.p.A., transfer by
Sifi S.p.A. to Caffaro S.p.A. (formerly Industrie Chimiche Caffaro S.p.A.) of the entire capital stock of Caffaro Flexible
Packaging S.p.A. (formerly Fapack S.p.A.).
•
Demerger of Chemlon A.S. and incorporation of Nylstar Slovakia A.S. and Rhodia Industrial Yarns Slovakia A.S. as wholly
owned subsidiaries of Rhodia Slovakia Holding N. V.
•
Merger by absorption of Sorin Biomedica Deutschland A.G.
into Stockert Instrumente GmbH.
•
Transfer by Caffaro S.p.A. to SNIA S.p.A. of the entire capital
stock of Caffaro Flexible Packaging S.p.A. following the
contribution of the respective businesses to the new company.
•
Merger by absorption of Nordfaser Industrieverwaltungs
GmbH into Nylstar Nordfaser GmbH.
All intra-group transfers of equity investments were effected at
book value.
In 2000, intra-Group assignment of corporate income tax (IRPEG)
credits totaled 6.2 million euros.
104
TRANSLATION OF THE FINANCIAL STATEMENTS
OF FOREIGN COMPANIES
The exchange rates used to translate the financial statements of
consolidated companies located in countries that have not adopted the euro as their currency are listed below.
Exchange rate for one euro
Swiss franc
British pound
Swedish krona
Norwegian krone
Slovakian koruna
Polish zloty
U.S. dollar
Australian dollar
Canadian dollar
Singapore dollar
Japanese yen
Brazilian real
Avg. 2000
1.558
0.609
8.445
8.113
42.590
4.009
0.924
1.589
1.371
1.591
99.475
—
At 12/31/00
1.523
0.624
8.831
8.234
43.990
3.850
0.931
1.677
1.397
1.613
106.920
—
105
Avg. 1999
1.600
0.659
8.806
8.309
44.106
—
1.066
1.652
1.583
1.806
121.209
1.800
At 12/31/99
1.605
0.622
8.563
8.077
42.462
—
1.005
1.542
1.461
1.672
102.730
1.800
C O M PA N I E S O F T H E S N I A G R O U P
( S TAT U S
AT
12/31/00)
COMPANIES OF THE SNIA GROUP
(Status at 12/31/00)
Company
Registered office
Currency
Capital
stock
at
12/31/00
Par value
per share or
partnership
interest
PARENT COMPANY
SNIA S.p.A.
Milan
EUR
520,691,756
on a line-by-line basis
Dideco S.p.A.
Mirandola (Modena)
ITL
13,622,983,000
1,000
Milan
ITL
9,100,000,000
1,000
Sorin Biomedica Cardio S.p.A.
Dideco Handelsgesellschaft mbH
Vienna (Austria)
AST
500,000
500,000
Dideco France S.A.
Antony (France)
FRF
21,559,570
10
Dideco Scandinavia AB
Taby (Sweden)
KRS
2,100,000
100
Sorin Biomedica S.p.A.
Milan
ITL
4,787,664,000
1,000
Hemoline S.p.A.
Milan
EUR
3,120,000
0.52
Mirandola ( Modena)
EUR
15,102,906
0.52
Gressvik (Norway)
NOK
1,000,000
1,000
Espoo Helsinki (Finland)
FIM
900,000
100
Glostrup (Denmark)
DKK
1,000,000
500
Sorin Biomedica (Schweiz) A.G.
St. Gallen (Switzerland)
CHF
175,000
1,000
Sorin Biomedica Nederland N.V.
Utrecht (Netherlands)
NLG
2,160,000
1,000
Stöckert Instrumente GmbH
Munich (Germany)
DEM
2,500,000
2,500,000
Sorin Biomedica Benelux S.A.
Brussels (Belgium)
BEF
95,000,000
126.16
Sorin Biomedica Espana S.A.
Barcelona (Spain)
ESP
300,000,000
1,000
Sorin Biomedica France S.A.
Antony (France)
FRF
46,398,925
25
Sorin Biomedica (UK) Ltd.
Gloucester (Great Britain)
GBP
7,804,686
1
Biofin Holding International N.V.
Amsterdam (Netherlands)
NLG
10,129,000
1,000
Bellco S.p.A.
Sorin Biomedica Norge AS
Sorin Biomedica Finland OY
Sorin Biomedica Danmark A/S
108
Consolidated
% interest
held by
the Group
Name
INVESTOR COMPANY
% interest
% of the
held
common voting
shares held
100.000
SNIA S.p.A.
100.000
100.000
SNIA S.p.A.
100.000
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
Nominees
100.000
Dideco S.p.A.
100.000
SNIA S.p.A.
100.000
Bellco S.p.A.
100.000
100.000
SNIA S.p.A.
100.000
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
Nominees
99.867
0.133
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
Nominees
99.999
0.001
100.000
Dideco S.p.A.
100.000
100.000
SNIA S.p.A.
100.000
99.997
0.001
0.002
100.000
86.423
13.577
109
% of the
voting
stock held
MEDICAL TECHNOLOGY SECTOR (continued)
Company
Sorin Biomedica Canada Inc.
Sorin Biomedica Asia PTE Ltd.
Sorin Biomedica Japan K. K.
Cobe Cardiovascular CWH
Cobe Cardiovascular France S.A.
Cobe Cardiovascular Australia PTY Ltd
Cobe Cardiovascular (UK) Ltd.
Cobe Cardiovascular Espana S.A.
Cobe Cardiovascular Inc.
Registered office
Currency
Capital
stock
at
12/31/00
Par value
per share or
partnership
interest
Richmond Hill (Canada)
CAD
943,040
1
Singapore (Singapore)
SGD
4,700,000
1
Tokyo (Japan)
JPY
35,000,000
50,000
Zaventem (Belgium)
BEF
127,500,000
127,500
Antony (France)
FRF
22,750,000
100
Melbourne (Australia)
AUD
5,200,100
1
Gloucester (Great Britain)
GBP
6,650,002
1
Barcelona (Spain)
ESP
642,000,000
10,000
Arvada (Colorado, USA)
USD
1
0.01
Lugano (Switzerland)
CHF
1,000,000
1,000
São Paulo (Brazil)
BRL
20,808,482
1
Companies valued by
the equity method
Sorin Biomedica Industrial Ltda
Companies valued at cost
Consorzio per le Biotecnologie in liquidation
Brescia
ITL
70,000,000
35,000,000
Centro Industriale Ricerca e Formazione
Genoa
ITL
178,054,708
59,351,569
Loc. La Fag. Piana
Monte Verna
ITL
5,830,000,000
10,000
Tecnogen S.c.p.A.
Consorzio Medal Energia
Fin 2001 S.A.
Modena
EUR
6,000
1,000
Luxembourg
EUR
17,300,000
10
110
Consolidated
% interest
held by
the Group
Name
INVESTOR COMPANY
% interest
% of the
held
common voting
shares held
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
100.000
100.000
Dideco S.p.A.
Sorin Biomedica Benelux S.A.
99.900
0.100
100.000
Dideco S.p.A.
Nominees
99.997
0.003
100.000
100.000
100.000
Sorin Biomedica UK Ltd.
100.000
100.000
Dideco S.p.A.
Nominees
100.000
SNIA S.p.A.
100.000
100.000
SNIA S.p.A.
100.000
99.998
0.002
99.998
Biofin Holding Inter.N.V.
99.998
50.000
SNIA S.p.A.
50.000
33.333
33.333
10.006
Hemoline S.p.A.
10.006
33.332
Dideco S.p.A.
Bellco S.p.A.
16.666
16.666
30.000
SNIA S.p.A.
30.000
111
% of the
voting
stock held
Company
Registered office
Currency
Capital
stock
at
12/31/00
Par value
per share or
partnership
interest
Nuova Rayon S.p.A.
Milan
EUR
5,874,000
1
Spondon Derby (Great Britain)
GBP
23,600,102
1
89,165,760,000
634
by the proportional method
Novaceta Limited
Novaceta S.p.A.
Novaceta France S.A.
Milan
ITL
Lyon (France)
FRF
500,000
100
Dusseldorf (Germany)
EUR
25,000
25,000
Coventry (Great Britain)
GBP
21,683,394
1
Nylstar N.V.
Amsterdam (Netherlands)
NLG
75,000,000
1,000
Amfibe Inc.
Ridgeway (Virginia, USA)
USD
400,000
66.67/100
Barcelona (Spain)
ESP
550,000,000
495,000,000(*)
Novaceta GmbH
Novaceta U.K. Ltd.
FIBREL A.I.E.
Nylstar Nordfaser GmbH
Neumunster (Germany)
DEM
20,000,000
20,000,000
Nordfaser Textil GmbH
DEM
50,000
50,000
Freiburg (Germany)
DEM
53,550,000
53,550,000
Cesano Maderno (Milan)
EUR
18,054,000
0.51
Freiburg (Germany)
DEM
50,000,000
50,000,000
Nylstar Inc.
Greensboro N.C. (USA)
USD
250,000
10
Nylstar Ltd.
Watford (Great Britain)
GBP
100,000
1
Nylstar S.A.
Barcelona (Spain)
ESP
7,208,081,400
650
Nylstar S.A.
Arras (France)
FRF
688,534,500
100
Nylstar Deutschland GmbH
Nylstar Centro
Direzionale S.p.A.
Nylstar GmbH
(*)
Investment held by Nylstar S.A. (E).
112
Consolidated
% interest
held by
the Group
Name
INVESTOR COMPANY
% interest
% of the
held
common voting
shares held
100.000
SNIA S.p.A.
100.000
50.000
SNIA S.p.A.
50.000
50.000
Novaceta Limited
SNIA S.p.A.
94.312
2.844
50.000
Novaceta U.K.Ltd.
Nominees
99.880
0.120
50.000
Novaceta S.p.A.
100.000
50.000
Novaceta S.p.A.
100.000
50.000
SNIA S.p.A.
50.000
50.000
Nylstar Inc.
100.000
45.000
Nylstar S.A. (E)
90.000
50.000
Nylstar GmbH
100.000
50.000
Nylstar Nordfaser GmbH
100.000
50.000
Nylstar N.V.
100.000
50.000
Nylstar S.p.A.
Nylstar N.V.
Nylstar S.A. (F)
Nylstar S.A. (E)
50.000
100.000
50.000
Nylstar N.V.
100.000
50.000
Nylstar N.V.
100.000
50.000
Nylstar N.V.
100.000
50.000
Nylstar N.V.
Nominees
99.999
0.001
98.870
0.565
0.282
0.282
113
% of the
voting
stock held
TEXTILE FILAMENTS SECTOR (continued)
Company
Nylstar S.p.A.
Registered office
Rhotex SAS
Capital
stock
at
12/31/00
Par value
per share or
partnership
interest
EUR
72,748,000
0.52
Milan
EUR
10,330
10,330
Cottbus (Germany)
DEM
500,000
500,000
Rhotex S.r.l.
Rhotex Texturgarne GmbH
Currency
Arras (France)
FRF
10,250,000
100
Gorzow (Poland)
PLN
25,890,070
17.86
Humenne (Slovakia)
SKK
1,275,221,000
1,275,221,000
Amstelveen (Netherlands)
NLG
22,500,000
1,000
Venissieux (France)
FRF
51,100,000
100
St.Laurent Blangy (France)
FRF
150,000
100
Nylstar UAB
Kaunas (Lithuania)
USD
25,000
1
Nylstar Hong Kong Ltd
Hong Kong (China)
HKD
10,000
10
ITL
26,888,589
3,841,227
SKK
50,000,000
Zaklady Wlokien Chemicznych Stilon S.A. (*)
Nylstar Slovakia A.S.
Rhodia Slovakia Holding N.V. (**)
Companies valued by
the equity method
Rhodia Polyammide Engineering S.a.S.
SCI du Buisson Dampeterain
Consorzio Novafibre
Twista Spol. S.r.o.
(*)
Milan
Humenne (Slovakia)
Only the Textile Filaments operations.
(**) The consolidation of Nylstar Slovakia A.S. entailed the
derecognition of the investment in Rhodia Slovakia
Holding N.V., which controls Nylstar Slovakia A.S.
(***) Investment held by Nylstar Slovakia A.S.
114
6,500,000 (***)
Consolidated
% interest
held by
the Group
Name
INVESTOR COMPANY
% interest
% of the
held
common voting
shares held
50.000
Nylstar N.V.
100.000
50.000
Nylstar S.p.A.
100.000
50.000
100.000
50.000
Nylstar SA (F)
99.999
0.001
36.670
Nylstar N.V.
Nylstar S.p.A.
Nylstar S.A. (F)
14.205
32.967
26.167
29.000
Rhodia Slovakia Holding N.V.
100.000
29.000
Nylstar N.V.
42.000
16.000
17.500
Nylstar Centro Direzionale S.p.A.
35.000
16.667
Nylstar S.A. (F)
33.333
50.000
Nylstar N.V.
100.000
25.000
Nylstar N.V.
50.000
28.572
Nylstar S.p.A.
Novaceta S.p.A.
Nuova Rayon S.p.A.
14.286
14.286
14.286
13.000
4.950
115
20.939
6.032
38.571
% of the
voting
stock held
7.230
60.867
15.318
Company
Registered office
Currency
Capital
stock
at
12/31/00
Par value
per share or
partnership
interest
CHEMICALS AND ENERGY SECTOR
Companies consolidated on a line-by-line basis
Caffaro S.p.A.
Milan
EUR
118,904,069
0.52
SIAPA Società Italo Americana
Prodotti Antiparassitari S.r.l.
Milan
EUR
10,330
10,330
Madrid (Spain)
ESP
20,000,000
5,000
Caffaro Espana S.L.
Caffaro Deutschland GmbH
Caffaro France S.A.R.L.
Emblem Europe S.p.A.
Wuppertal (Germany)
DEM
350,000
100
Antony (France)
EUR
650,000
650
22,411,179,350
518
Pisticci Scalo (Matera)
Caffaro Flexible Packaging S.p.A.
ITL
Milan
EUR
30,000,000
1
Milan
EUR
25,822,846
12,911,423
Caffaro Energia Trasmissione S.r.l.
Milan
EUR
1,800,000
1,800,000
Wilmington (Delaware, USA)
USD
2
0.01
EUR
500,000
250,000
Milan
EUR
37,186
18,593
Milan
ITL
200,000,000
100,000,000
Colleferro (Rome)
ITL
-
-
by the proportional method
Companies valued by
the equity method
Nylon Corporation of America Inc.
Vischim S.r.l.
Derechim S.r.l.
Siamer S.r.l.
Consorzio Servizi Colleferro
Consorzio Servizi Elettrici Varedo
Milan
EUR
6,000
3,000
Consorzio Servizi Elettrici Ceriano
Milan
EUR
6,000
3,000
116
Consolidated
% interest
held by
the Group
Name
INVESTOR COMPANY
% interest
% of the
held
common voting
shares held
100.000
SNIA S.p.A.
100.000
100.000
Caffaro S.p.A.
100.000
100.000
Caffaro S.p.A.
SIAPA S.r.l.
99.975
0.025
100.000
100.000
Caffaro S.p.A.
SIAPA S.r.l.
99.900
0.100
66.666
66.666
100.000
100.000
SNIA S.p.A.
100.000
50.000
SNIA S.p.A.
50.000
50.000
50.000
SNIA S.p.A.
50.000
50.000
Caffaro S.p.A.
50.000
50.000
Caffaro S.p.A.
50.000
50.000
Caffaro S.p.A.
50.000
40.000
Caffaro S.p.A.
40.000
50.000
Caffaro S.p.A.
Nylstar S.p.A.
33.333
33.333
50.000
50.000
100.000
117
% of the
voting
stock held
Company
Registered office
Currency
Capital
stock
at
12/31/00
Par value
per share or
partnership
interest
25,048,160
25,048,160
520,000,000
1,000
Immobiliare Snia S.r.l.
M.V.V. Meccanico Vittorio Veneto S.p.A.
Milan
EUR
ITL
Companies valued by
the equity method
Sniaricerche Società
Consortile per Azioni
EUR
4,080,000
0.51
Milan
EUR
104,000
0.52
Rio de Janeiro (Brazil)
BRL
11,500,131
1
Nysam S.A. in liquidation
Saint-Quentin (France)
FRF
55,547,160
120
Milan
EUR
4,849,902
1
Milan
EUR
104,000
1
CTP Snia S.p.A.
Oto Brasil Limitada
Cesano Servizi Elettrici S.c.p.A
118
Consolidated
% interest
held by
the Group
Name
INVESTOR COMPANY
% interest
% of the
held
common voting
shares held
100.000
SNIA S.p.A.
100.000
100.000
SNIA S.p.A.
100.000
55.000
SNIA S.p.A.
Dideco S.p.A.
20.000
35.000
100.000
SNIA S.p.A.
100.000
20.000
SNIA S.p.A.
20.000
Immobiliare Snia S.r.l.
Nominees
99.999
0.001
SNIA S.p.A.
50.000
SNIA S.p.A.
Caffaro S.p.A.
Novaceta S.p.A.
Nylstar S.p.A.
0.020
4.210
10.000
9.100
100.000
50.000
13.780
119
% of the
voting
stock held
CHANGE IN THE SCOPE OF CONSOLIDATION
(COMPANIES INCLUDED LINE-BY-LINE AND
PROPORTIONALLY) IN 2000
COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION
Company
Registered office
Currency
Capital stock
at 12/31/00
Consolidated % int.
held by the Group
Gorzow (Poland)
Milan
PLZ
EUR
25,890,070
1,800,000
36.670
50.000
Humenne (Slovakia)
SKK
1,275,221,000
29.000
Ridgeway (Virginia, USA)
USD
400,000
50.000
Companies formerly valued by the equity
method or at cost and consolidated on
a line-by-line basis for the first time
Zaklady Wlokien Chemicznych Stilon S.A.
Caffaro Energia Trasmissione S.r.l.
(1)
Newly established companies
(2)
Acquired companies
Amfibe Inc.
(1)
(2)
Only the Textile Filaments operations.
Demerged from Chemlon A.S.
120
COMPANIES REMOVED FROM THE SCOPE OF CONSOLIDATION
Company
Registered office
Currency
Capital stock
at 12/31/00
Consolidated % int.
held by the Group
Humenne (Slovakia)
SKK
1,678,364,000
38.074
Milan
Milan
Milan
Dusseldorf (Germany)
DEM
ITL
ITL
ITL
ITL
DEM
50,000
15,034,989,000
297,502,391,000
152,880,000,000
72,609,000,000
5,350,000
45.000
35.546
59.244
75.000
75.000
75.000
ITL
ITL
55,000,000,000
99,000,000
100.000
100.000
ITL
ITL
10,000,000,000
2,500,000,000
59.244
75.000
ITL
ITL
8,000,000,000
200,000,000
72.910
100.000
Lugano (Switzerland)
São Paulo (Brazil)
CHF
BRL
1,000,000
20,808,482
75.000
74.998
Dissolved companies
Chemlon A.S.
(1)
Merged companies
Nordfaser Industrieverwaltung GmbH
STP Tecnopolimeri Sud S.r.l. (3)
Caffaro S.p.A. (4)
Sorin Biomedica S.p.A. (4)
Old Bellco S.r.l. (4)
Sorin Biomedica Deutschland A.G. (5)
SIFI S.p.A. Società per le Iniziative
Finanziarie e Immobiliari (4)
SGS Servizi Gruppo SNIA S.r.l. (4)
(2)
Milan
Milan
Sold companies
Biomateriali S.r.l.
(6)
Brindisi
Companies valued by the equity method
Sniaricerche S.c.p.A.
CTP Snia S.p.A.
(7)
Dormant companies
Sorin Biomedica Industrial Ltda
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Dissolved after being demerged. The consolidated data refer only to the Textile Filaments operations.
Merged into and absorbed by Nylstar Nordfaser GmbH.
Merged into and absorbed by Emblem Europe S.p.A.
Merged into and absorbed by SNIA S.p.A.
Merged into and absorbed by Stöckert Instrumente GmbH.
A 50% interest was sold to outsiders. The remaining 50% interest is valued by the equity method.
A 45% interest in this company was sold to outsiders in 2000, followed by the sale of a further 35% in 2001.
Milan, March 30 2001
121
REPORT OF THE INDEPENDENT AUDITORS
ON THE CONSOLIDATED FINANCIAL STATEMENTS
122
123
This report contains extracts from the Italian Annual
Report of SNIA S.p.A. and the consolidated financial
statements of the Group at December 31, 2000.
For further information and in the event of any conflict of
interpretation, reference should be made to the original
Italian version.
125
BELLCO
M.V.V. Meccanico Vittorio Veneto
Via Camurana, 1
I-41037 Mirandola (Modena)
Tel. +39-0535-29111
www.bellcospa.it
Via Marinotti, 45
I-31029 Vittorio Veneto (Treviso)
Tel. +39-0438-940300
CAFFARO
NYLSTAR
Via Friuli, 55
I-20031 Cesano Maderno (Milan)
Tel. +39-0362-5141
www.caffarochem.com
www.caffaroagro.com
Viale Friuli, 55
Tel. +39-0362-5141
www.nylstar.com
CAFFARO ENERGIA
NOVACETA
Via Friuli, 55
Tel. +39-0362-5141
Viale Piemonte, 66
I-20013 Magenta (Milan)
Tel. +39-02-979621
www.novaceta.com
CAFFARO FLEXIBLE PACKAGING
NUOVA RAYON
Via Friuli, 55
Tel. +39-0362-5141
Via Friuli, 55
Tel. +39-0362-5141
www.nuovarayon.com
COBE CARDIOVASCULAR
SNIA
14401 West 65th Way
USA-Arvada, Colorado 80004 -3599
Tel. 001-303.425.5508
001-800.221.7943
www.cobecv.com
Via Borgonuovo, 14
I-20121 Milan
Tel. +39-02-63321
www.snia.it
DIDECO
SORIN BIOMEDICA CARDIO
Via Statale 12 Nord, 86
I-41037 Mirandola (Modena)
Tel. +39-0535-29811
www.dideco.it
Via Crescentino
I-13040 Saluggia (Vercelli)
Tel. +39-0161-4871
www.sorincardio.it
ELA MEDICAL
STÖCKERT INSTRUMENTE
Centre d'affaires La Boursidière
F-92357 Le Plessis Robinson Cedex
Tel. +33146013333
www.elamedical.com
Lindbergstr. 25
D-80939 München
Tel. +4989323010
www.stoeckert.de
IMMOBILIARE SNIA
Via Borgonuovo, 14
I-20121 Milan
Tel. +39-02-63321
126

SNIA GROUP 2000 ANNUAL REPORT FISCAL YEAR

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