Exhibit 1
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Client: |
AMERICAN ISRAELI
PAPER MILLS LTD.
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Agency Contact: |
PHILIP Y. SARDOFF |
American Israeli Paper
Mills Ltd.
Reports Financial Results for Fiscal Year Ended December 31, 2007
Hadera, Israel, March 11, 2008
American Israeli Paper Mills Ltd. (AMEX:AIP) (the Company or AIPM)
today reported its financial results for the year ended December 31, 2007. The Company,
its subsidiaries and associated companies are referred to hereinafter as the
Group.
Since the Companys share in the
earnings of associated companies constitutes a material component in the Companys
statement of income (primarily on account of its share in the earnings of Mondi Hadera
Paper Ltd. (Mondi Hadera) and Hogla-Kimberly Ltd.(H-K)),
before the presentation of the consolidated data below, the aggregate data which includes
the results of all the companies in the AIPM Group (including the associated companies
whose results appear in the financial statements under earnings from associated
companies), is being presented without considering the rate of holding therein and
net of mutual sales:
Aggregate sales totaled NIS 3,124.3
million in 2007, as compared with NIS 2,830.5 million in 2006 net of TMM Integrated
Recycling Industries Ltd. (TMM). Aggregate sales in 2005 amounted to NIS
2,613.7 million.
The aggregate operating profit in
2007 totaled NIS 189.4 million, as compared with NIS 103.1 million in 2006. The operating
profit in 2005 amounted to NIS 115.8 million.
The Consolidated data set forth below
does not include the results of operation of the associated companies: Mondi Hadera, H-K
and Carmel Container Systems Ltd. (Carmel), which are included in the
Companys share in results of associated companies.
Consolidated sales totaled NIS 583.6
million in 2007, as compared with NIS 530.1 million in 2006.
Consolidated operating profit
amounted to NIS 75.4 million in 2007, as compared with NIS 50.5 million in 2006.
The increase in operating profit in
2007, by 49% in relation to 2006, originated from the increase in sales of packaging paper
and recycling, primarily on account of the improvement in selling prices and the
efficiency measures, that were partially offset by rising energy prices, coupled with the
improvement in the operating profit of the marketing of office supplies activity as a
result of efficiency measures and the reorganization that the company initiated in the
past several years.
Financial expenses amounted to NIS
19.6 million in 2007, as compared with NIS 31.1 million in 2006.
Net profit in 2007 totaled NIS 31.4
million, as compared with NIS 13.3 million in 2006 and NIS 45.7 million in 2005. Net
profit in 2007 was affected by the growth in the Companys share in the losses of the
operations in Turkey (KCTR), amounting to approximately NIS 11.8 million, as compared with
the preceding year.
Basic earnings per share amounted to
NIS 7.61 per share in 2007 ($1.98 per share), as compared with NIS 3.31 per share ($0.78
per share) in 2006 and as compared with NIS 11.43 per share ($2.48 per share) in 2005.
The inflation rate in 2007 amounted
to 3.4%, as compared with an inflation rate of 0% in 2006.
Commenting on the years
results, Mr. Avi Brener, Chief Executive Officer of the Company said that The
positive global trends in the paper industry, primarily in Europe, due to the decline in
the gap between paper supply and demand, have affected the group companies active in
Israel. Moreover, the growth trend in developing markets, primarily in Asia, as reflected
by relatively high growth rates, is creating high demand for pulp and paper waste, as well
as for paper products.
The Company acted to convert its
boilers systems at its main site in Hadera from the use of fuel oil to natural gas. The
laying of the gas pipeline and its connection to the plant facilities has been completed
and the flow of natural gas to the Company by Israel Natural Gas Lines Ltd. started in
late August, and in October the Company converted to full production of steam using
natural gas, while discontinuing the use of fuel oil in October. The conversion of the
central boiler to full production using natural gas was completed in the fourth quarter.
In 2007, Kimberly Clark Turkey, KCTR
(an affiliated company in Turkey), continued to implement its strategic plan GBP
(Global Business Plan) that was formulated together with the international partner,
Kimberly Clark, designated to introduce Kimberly Clarks global brands to Turkey,
based on local manufacturing. The KCTR turnover amounted to approximately $63 million in
2007. The implementation of business and strategic plan, the strengthening of brands and
the gradual growth of using the Unilever sales and distribution platform, coupled with the
reduction of costs at the diaper plant, have led to improved gross profitability in the
first quarter, while significantly curtailing the operating loss from a sum of NIS 27
million in the first quarter of 2007, NIS 19.3 million in the second quarter and NIS 15
million in the third quarter, to NIS 12.5 million in the fourth quarter of 2007.
The Companys share in the earnings (losses) of associated companies amounted to losses
of NIS (2.9) million in 2007, as compared with losses of NIS (26.7) million in 2006 and
earnings of NIS 16.4 million in 2005.
2
The following principal changes were
recorded in the Companys share in the earnings of associated companies, compared
with 2006:
|
The
Companys share in the net profit of Mondi Hadera (49.9%) increased by NIS 12.9
million this year. Most of the change in profit originated from the companys highly
improved profitability, the transition from an operating loss of NIS 2.1 million last
year to an operating profit of NIS 33.6 million this year, primarily as a result of the
improved trading conditions that allowed for higher selling prices that led to an
improved gross margin, coupled with a decrease in certain raw material costs as a result
of the lower dollar exchange rate, primarily in the course of the second half of the
year, coupled with a significant improvement in the efficiency of the companys
operational array. The sharp improvement in profit was somewhat offset as a result of the
rise in the net financial expenses, which originated primarily from working capital
requirements due to the rise in the volumes of operation and the impact of changes in the
exchange rate. |
|
The
Companys share in the net profit of Hogla-Kimberly Israel (49.9%) increased by NIS
5.4 million in 2007, as compared with 2006. The operating profit of Hogla grew from NIS
127.0 million to NIS 135.4 million this year. The improved operating profit originated
from a quantitative increase in sales, improved selling prices and the continuing trend
of raising the proportion of some of the premium products out of the products basket.
This improvement was partially offset by the continuing rise in raw material prices. The
net profit was also affected by the increase in financial expenses of NIS -1.7 million,
as compared with financial revenues of NIS 1 million last year, as a result of the
financing needs of the operations in Turkey. The net profit of Hogla-Kimberly Israel last
year was influenced by non-recurring tax expenses of NIS 4.5 million (our share was
approximately NIS 2.2 million). |
|
The
Companys share in the losses of KCTR (formerly: Ovisan) (49.9%) grew by
approximately NIS 11.8 million in 2007, as compared with 2006. The operating loss
decreased by approximately NIS 9.4 million in 2007 in relation to last year, due to the
continuing growth in the penetration rate of brands and their strengthened position in the
market. A non-recurring loss of approximately NIS 6 million ($1.5 million) was included on
account of the termination of trade agreements with distributors due to the transition to
distribution by Unilever, of which our share was approximately NIS 3 million. Moreover,
the tax asset that was recorded in previous years in Turkey, in the sum of approximately
NIS 26 million ($6.4 million) was reduced, of which our share is NIS approximately 13.3
million. Last year, the loss included a non-recurring expenditure of approximately NIS 16
million, of which our share was approximately NIS 8 million, primarily as a result of the
devaluation of the Turkish lira and the amortization of a tax asset in the sum of
approximately NIS 6.7 million, of which our share was approximately NIS 3.3 million. |
|
The
Companys share in the net profit of Carmel (36.21%) increased by NIS 2.1 million in
2007 as compared with 2006. The factors that affected the growth in the companys
share in the net profit of Carmel, originated inter alia from the improvement in the
operating profitability at Carmel primarily in the second half of the year. This
improvement originated primarily from higher prices and was partially offset by the sharp
rise in raw material prices. In the course of the second quarter, the companys
holding rate in Carmel rose from 26.25% to 36.21% due to Carmels self purchase of
some of the minority shareholders holdings. As a result of the acquisition, a
negative surplus cost of NIS 4.9 million was created at the company, of which a sum of
NIS 2.4 million was allocated to the statement of income this year and served to increase
the companys share in the Carmel profits in 2007. In 2006, Carmels net profit
included capital gains from the sale of a real-estate asset, of which the Companys
share was approximately NIS 1 million. |
3
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In
2006, the Companys share in the earnings of associated companies included the
Companys share in the losses of TMM, in the amount of NIS 14.8 million. As
mentioned above, the Company sold its holdings in TMM in early 2007 and this item is
therefore not included in the Companys share in the earnings of associated
companies this year. The Companys share in the earnings of associated companies
from current operations in Israel (excluding Turkey and TMM) grew by NIS 20.7 million
this year and amounted to NIS 60.9 million. |
In July 2006, the Israel Accounting
Standards Board issued Israel Accounting Standard No. 29 Adoption of
International Reporting Financial Standards (IFRS) (Standard 29).
Pursuant to the Standard, companies that are subject to the provisions of the Securities
Law, and that are required to report according to the regulations published thereunder,
are to prepare their financial statements in accordance with IFRS starting from the period
commencing on January 1, 2008. The company will implement the IFRS standards starting with
the financial statements for the period commencing January 1, 2008.
This press release contains various
forward-looking statements based upon the Companys present expectations and
estimates regarding the operations and plans of the Group and its business environment.
The Company does not guarantee that the future results of operations will coincide with
the forward-looking statements and these may in fact differ considerably from the present
forecasts as a result of factors that may change in the future, such as changes in costs
and market conditions, failure to achieve projected goals, failure to achieve anticipated
efficiencies and other factors which lie outside the control of the Company. The Company
undertakes no obligation for publicly updating the said forward-looking statements,
regardless of whether these updates originate from new information, future events or any
other reason.
4
AMERICAN ISRAELI PAPER MILLS LTD.
SUMMARY OF RESULTS
(AUDITED)
NIS IN THOUSANDS(1)
except per share amounts
|
2007
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2006
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|
|
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Net sales |
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|
| 583,650 |
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| 530,109 |
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| | |
Net earnings | | |
| 31,447 |
(1) |
| 13,330 |
(2) |
| | |
Earnings per share | | |
| 7.61 |
(1) |
| 3.31 |
(2) |
(1) |
The
net profit in 2007 was affected by the growth in the Companys share in
the losses of the operations in Turkey (KCTR), amounting to approximately
NIS 11.8 million (from NIS 52.0 million last year to NIS 63.8 million this
year), as compared with the preceding year (see Strategic Investment in
Turkey, above, and Section C7, below). |
|
In
2007, the net profit included earnings from the realization of surplus cost at an
associated company in the amount of NIS 2.5 million, a loss from the amortization of a
tax asset at an associated company in the sum of NIS 13.4 million and a capital loss from
the sale of cardboard machines (machine 6) and hub machines in the sum of NIS 2.4
million. |
(2) |
The
net profit in 2006 included net capital gains from the sale of real estate
at Atidim in the sum of NIS 28.5 million, while also including
non-recurring expenses (net of tax influence) of NIS 18 million, primarily
on account of a provision for impairment at an associated company (in the
third quarter of the year) and the impact of the devaluation and modified
tax rates in Turkey (in the second quarter of the year- approximately NIS
8 million included in the loss of the operations in Turkey). |
|
The
representative exchange rate at December 31, 2007 was NIS 3.846=$1.00 |
5
Exhibit 2
Translation from Hebrew
March 10, 2008
MANAGEMENT DISCUSSION
We are honored to present the
consolidated financial statements of the American Israeli Paper Mills Ltd. Group
(AIPM or The Company) for the year 2007. The Company, its
consolidated subsidiaries and its associated companies hereinafter: The
Group.
A. |
Description
of the Companys Business |
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AIPM
deals in the manufacture and sale of packaging paper, in the recycling of paper waste and
in the marketing of office supplies through subsidiaries. The Company also holds
associated companies that deal in the manufacture and marketing of fine paper, in the
manufacture and marketing of household paper products, hygiene products, disposable
diapers and complementary kitchen products, corrugated board containers and packaging for
consumer goods. |
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The
Companys securities are traded on the Tel Aviv Stock Exchange and on the American
Stock Exchange, AMEX. |
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A. |
The
Operations In Israel |
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1. |
The
Business Environment |
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2007
was characterized by continued growth in the Israeli economy of 4.7% , while the high
demand in consumer spending persisted. Moreover, 2007 was characterized by the continued
revaluation of the NIS against the US dollar, which amounted to 9%, in addition to a
revaluation of 8.2% in 2006. |
|
The
positive global trends in the paper industry, primarily in Europe, due to the decline in
the gap between paper supply and demand, have affected the group companies active in
Israel. Moreover, the growth trend in developing markets, primarily in Asia, as reflected
by relatively high growth rates, is creating high demand for pulp and paper waste, as
well as for paper products. |
|
These
demands are causing a continuing rise in input prices primarily fibers and
chemicals in parallel to a rise in global paper prices since the end of the
previous year both in fine paper and in packaging paper. |
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These
trends enable the Group companies to realize price hikes in most paper and paper products
areas, thereby compensating for the high input prices, while improving profitability. |
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The
above information pertaining to trends in the paper market constitutes forward-looking
information as defined in the securities law, based on the companys estimates at
the date of this report. These estimates may not materialize in whole or in part
or may materialize in a different manner, inter alia on account of factors that lie
outside the control of the company, such as changes in global raw material prices,
changes in supply and demand of global paper products. |
|
Energy
prices (primarily fuel oil) that were at their lowest point in two years during the first
quarter this year, have reversed their trend in the second quarter of 2007 and have
started climbing back toward the high prices that prevailed in 2006. The trend of rising
fuel prices that began in the second quarter of the year, accelerated in the second half
of the year and amounted to 40%, as compared with the level of prices at the beginning of
the year. Due to the gradual transition to the use of natural gas in the course of the
fourth quarter of the year, the Group saved NIS 12 million in energy operation costs.
These savings are attributed to the transition to natural gas and to the fuel oil price
level during 2007. |
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Electricity
prices rose by an average of 13% at the end of 2007. |
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The
inflation rate in 2007 amounted to 3.4%, as compared with an inflation rate of 0% in
2006. |
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2. |
Current
Operations in Israel |
|
Most
Group companies continued to grow both quantitatively and in terms of their sales
turnover during the reported period while raising prices across most areas
of operation, in parallel to the successful implementation of the efficiency plan.
The
Group consequently recorded a significant improvement in the volume of sales and in the
operating profit from the Israeli operations in 2007, in relation to 2006. |
|
3. |
Implementation
and Assimilation of Organization-Wide Processes |
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In
the course of the reported period, the Group companies continued to successfully
implement and assimilate organization-wide processes that were intended to empower Group
operations and support continued growth and increased profitability: |
|
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Empowering
organizational development while placing an emphasis on management by objectives and the
development of the organization's middle management |
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Continuing
reorganization of the Groups purchasing network, while exploiting synergy opposite
the organizations suppliers. |
2
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Assimilation
of the Centerlining process at the operational levels of the various companies to a
gradual and continuing improvement in the efficiency of the primary manufacturing arrays. |
|
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Accelerating
processes for encouraging innovation at the companies for the development of new products
and to create competitive differentiation for improving profitability. |
|
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Formulating
and assimilating B2B marketing methodologies, for improving perceived quality and service
among company clients. |
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Establishing
expense-cutting measures at the organization in order to improve savings anywhere
and anytime. |
|
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Social
responsibility Formulating a multi-annual plan that will be launched in early 2008
and will empower the organizations activities in this area. |
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In
parallel to the ongoing operations, the Company is working to successfully implement the
strategic plans that will lead to continued growth in operations and improved
profitability over the coming years: |
|
1. |
Converting
the boiler system from fuel oil to natural gas |
|
As
mentioned previously, as part of the Companys endeavors for cutting manufacturing
costs and for additional environmental improvements, the Company is continuing the
energy-generation plant project in Hadera, using natural gas. |
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As
a first stage, the Company acted to convert its boilers systems from the use of fuel oil
to natural gas. The laying of the gas pipeline and its connection to the plant facilities
has been completed and the flow of natural gas to the Company by Israel Natural Gas Lines
Ltd. started in late August. Acceptance tests were conducted at the Hadera site through
September and in October the Company converted to full production of steam using natural
gas, while discontinuing the use of fuel oil in October. The conversion of the central
boiler to full production using natural gas was completed in the fourth quarter. |
|
The
gas that serves as a replacement for the fuel oil is purchased from the Yam Tethys Group,
with whom the Company signed a natural gas purchase agreement in London on July 29, 2005,
that is intended to provide the companys needs over the next few years (until July
1, 2011), in terms of the operation of the existing energy generation system, by
cogeneration at the Hadera site. The total financial volume of this transaction is
approximately $35 million over the term of the agreement. |
|
Subsequent
to the termination of the agreement with Yam Tethys, the company intends to rely on
natural gas that will be purchased from EMG on the basis of the principles agreement
signed in May 2007. |
|
The
transition to natural gas resulted in an improvement of the air quality. The company
estimates that given the level of fuel oil and gas prices in the third quarter of 2007
and while operating the energy generation system at full capacity using natural gas, the
full impact of the savings on the net income will amount to NIS 25 million, annually. |
3
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The
above information pertaining to the impact of the conversion to natural gas on the
Company constitutes forward-looking information as defined in the securities law, based
on the companys estimates at the date of this report. These estimates may not
materialize in whole or in part or may materialize in a different manner,
inter alia on account of factors that lie outside the control of the company, such as
changes in fuel oil and gas prices and the gas and transportation suppliers to the Hadera
site. |
|
2. |
Expanding
the manufacturing network of recycled packaging paper |
|
The
investment budget in the project was increased to NIS 690 million ($170 million) and was
approved on October 15, 2007 by the Companys Board of Directors. The Company
selected the most advanced technologies in this field and the leading suppliers in the
sector. |
|
The
implementation of the project is advancing as planned and the Company signed a supply
agreement with the main equipment supplier VOITH at the end of December. Moreover, the
Company is promoting agreements with the building contractor and suppliers of equipment,
electrical systems and additional auxiliary systems that are meant to be signed these
days. |
|
In
parallel, Amnir Recycling Industries Ltd. (Amnir), is continuing preparations
for the expansion of the collection of cardboard and newspaper waste and has started to
accumulate inventories toward the planned operation of the new machine commencing during
2009. |
|
As
part of the preparations for financing the project, following approval from the Board of
Directors, the Company has completed the raising of approximately NIS 211 million in
capital, net of issuing expenses, by way of a private placement of shares to the
controlling shareholders and institutional and/or private investors (additional details
appear in the immediate reports published October 16, 2007 and November 25, 2007). The
Company is also examining additional ways to raise the financing for the project. |
|
The
power plant project that is intended to provide steam and electricity for the
manufacturing operations in Hadera and to sell surplus electricity to Israel Electric
Company (IEC) and/or to private customers, is currently at the final configuration
definition stages and feasibility studies on the basis of a license for a plant that will
generate 230 mega-watts, to be built on an area that was acquired for the project, in
proximity to the Companys site in Hadera. |
|
The
company is awaiting the publication of the updated sales prices by the Electrical
Authority and on this basis, upon completing the examination of the station and its
feasibility, the business plan will be formulated, along with possible means of finance. |
|
The
Company plans for the said power plant to consume natural gas that will be provided by
EMG, on the basis of the principles agreement that was signed in May this year. |
4
|
B. |
The
Strategic Investment in Turkey |
|
In
2007, Kimberly Clark Turkey, KCTR, a wholly-owned Hogla Kimberly subsidiary (49.9% of
which is held by the Company) continued to implement its strategic plan GBP (Global
Business Plan) that was formulated together with the international partner, Kimberly
Clark. The plan is designated to introduce Kimberly Clarks global brands to Turkey,
on the basis of local manufacturing. If the plan will be fully implemented, KCTR whould
grow to become a dominant and profitable company by 2015, with annual sales in the area
of $300 million. The KCTR turnover amounted to approximately $63 million in 2007. |
|
In
the course of 2007, KCTR continued its marketing innovation and launched new product
lines under the Huggies® and Pedo® brands, manufactured at KCTRs advanced
manufacturing plant. The company also launched an advanced KOTEX® product (feminine
hygiene) that was well-received by the market. |
|
The
companys continuing marketing and advertising operations are being felt in the
gradual strengthening of the brands, as expressed by consumer studies that are being
conducted regularly. |
|
As
part of the strategic plan, the Company intends to continue its marketing and sales
promotion efforts, while launching new products that will support the establishment of
the brands and the creation of customer loyalty. A strategic cooperation agreement was
signed in the first quarter of the year between KCTR and Unilever in Turkey. Pursuant to
this agreement, Unilever will conduct the sales, distribution and collection on behalf of
KCTR in the entire Turkish market, except for nationwide large marketing chains that
represent approximately 30% of the market potential, wherein KCTR intends to continue to
operate directly. |
|
In
the course of the first half of 2007, KCTR continued to promote the collaboration with
Unilever and expanded the number of points of sale in the Turkish market that sell KCTR
brands. |
|
The
level of competition in the markets where the company is working to penetrate and empower
its brands is high and calls for low prices level in the market and regular and
significant investments in advertising and sales promotion. |
|
All
of the expenses detailed above associated with the penetration of brands, advertising,
expansion of the distribution network and more are regularly recorded as an
expenditure in the KCTR statements of income. The operating loss of KCTR in the reported
period this year amounted to approximately NIS 74 million ($18.0 million), as compared
with an operating loss of approximately NIS 83 million ($18.6 million) in 2006. The loss
included a non-recurring expenditure of approximately NIS 6 million ($1.5 million),
recorded in the first quarter, on account of the closing of commercial agreements with
the previous distributors, following the implementation of the agreement with Unilever
and also on account of the upgrading of brands on the Turkish market. |
5
|
As
to the reduction of the tax asset in Turkey this year, see Chapter 4 (7) Company
Share in Earnings of Associated Companies. |
|
The
Company is continuing to implement the business and strategic plan. The strengthening
brands and the gradual growth of the Unilever sales and distribution platform, coupled
with the reduction of costs at the diaper plant, have led to improved gross profitability
in the first quarter, while significantly curtailing the operating loss from a sum of NIS
27 million in the first quarter, NIS 19.3 million in the second quarter and NIS 15
million in the third quarter, to NIS 12.5 million in the fourth quarter of 2007. |
|
The
above information pertaining to the KCTR business plans and their implementation
constitutes forward-looking information as defined in the securities law, based on the
companys estimates at the date of this report. These estimates may not materialize
in whole or in part or may materialize in a different manner, inter alia on
account of factors that lie outside the control of the company, such as market
conditions, legislation and various costs. |
B. |
Analysis
of the Companys Financial Situation |
|
|
The
cash and cash equivalents item rose from NIS 13.6 million on December, 31, 2006 to NIS
167.7 million on December 31, 2007. This increase is primarily attributed to some of the
proceeds in the amount of approximately NIS 110 million, received from a private
placement in a total amount of approximately NIS 211 million, to the shareholders , sums
received as proceeds from the sale of land approximately NIS 30 million and
from the realization of approximately NIS 27 million investment in TMM. |
|
|
The
accounts receivable item rose from NIS 168.1 million as at December 31, 2006 to NIS 178.8
million as at December 31, 2007. This increase is primarily attributed to the growth in
the volume of operations, with no significant change in customer credit days. |
|
|
The
other accounts receivables decreased from NIS 146.7 million on December 31, 2006 to NIS
105.1 million on December 31, 2007. This decrease is primarily attributed to the payment
of debt from the sale of land in late 2006 in the sum of approximately NIS 30 million. |
|
|
The
inventories item rose from NIS 62.1 million on December 31, 2006 to NIS 69.6 million on
December 31, 2007. This increase originates primarily from an increase in the paper waste
inventories, due to Amnir preparations in anticipation of the future operation of the new
packaging paper machine (see also 2a 4(2), above). |
|
|
Investments
in associated companies decreased from NIS 375.5 million on December 31, 2006 to NIS
346.2 million on December 31, 2007. The principal components of the said decrease
included the Companys net share in the losses of associated companies during the
reported period, coupled with the realization of an investment in TMM in return for its
book value of approximately NIS 27 million. |
|
|
Short-term
credit fell from NIS 203.0 million on December 31, 2006 to NIS 143.0 million on December
31, 2007. The decrease in this item is primarily attributed to repayment from proceeds
obtained from the private placement to shareholders, the positive cash flows from
operating activities, net of investments in fixed assets. |
6
|
|
The
other payables item decreased from NIS 103.7 million on December 31, 2006 to NIS 87.2
million on December 31, 2007. The decrease is primarily attributed to the payment of
income tax on account of NIS 12 million in betterment taxes, originating from the
transaction for the sale of land in late 2006. |
|
|
The
companys shareholders equity increased from NIS 430.8 million on December 31,
2006 to NIS 678.1 million on December 31, 2007. The change is primarily attributed to the
issue of shares by private placement to the shareholders, net of issuing expenses, in the
sum of approximately NIS 211.6 million, from net profit this year of NIS 31.4
million, and the decrease in the negative capital surplus from translation differences at
an associated company. |
|
1. |
Investments
in Fixed Assets |
|
The
investments in fixed assets amounted to NIS 86 million in 2007, as compared with NIS 53.1
million in 2006. The investments in 2007 included payments for the acquisition of an
reservesteam boiler and the completion of the conversion of the energy system to natural
gas, along with the necessary infrastructure. The Company also made current investments
in environmental issues (sewage treatment) and current investments in equipment renewal,
means of transportation and in the maintenance of buildings at the Hadera site. The
investments in 2006 included payments for converting the energy system to natural gas,
improving the material preparation system so as to improve the quality of packaging paper
and the treatment of waste water, as part of the environmental investments. The Company
also invested regularly in equipment renewal and transportation. |
|
The
long-term liabilities (including current maturities) amounted to NIS 261.7 million as at
December 31, 2007, as compared with NIS 297.9 million as at December 31, 2006. The
long-term liabilities decreased by NIS 36 million as a result of the repayment of
debentures in 2007 in the sum of NIS 37 million, the repayment of long-term loans in the
sum of NIS 5 million, net of the increase from the evaluation of CPI-linked debenture
balances. |
|
The
long-term liabilities include primarily two series of debentures and the following
long-term bank loans: |
|
Series
1 NIS 14.1 million, for repayment until 2009 by private placement to
institutional investors. |
|
Series
2 NIS 182.1 million, for repayment until 2013 by private placement to
institutional investors. |
|
Long-term
loans from banks NIS 33.5 million. |
|
The
balance of short-term credit from banks, as at December 31, 2007, amounted to NIS 143.0
million, as compared with NIS 203.0 million at December 31, 2006. |
7
|
Since
the Companys share in the earnings of associated companies constitutes a material
component in the Companys statement of income (primarily on account of its share in
the earnings of Mondi Business Hadera Paper Ltd. [Mondi Hadera] and Hogla-Kimberly
Ltd.), before the presentation of the consolidated data below, the aggregate data which
include the results of all the companies in the AIPM Group (including the associated
companies whose results appear in the financial statements under earnings from
associated companies), is being presented without considering the rate of holding
therein and net of mutual sales. |
|
Regarding
the consolidated data, see Section (2) below. |
|
A. |
Aggregate
Data from Israeli Operations |
|
In
early 2007, the Company sold its holdings in TMM Integrated Recycling Industries Ltd. (TMM)
(43.02% directly and indirectly), as part of an agreement with Veolia Israel and in
response to a tender offer for the acquisition of TMM shares from the public, by Veolia
Israel. The aggregate sales and operating profit figures for the preceding year are
consequently presented net of the TMM results. |
|
The
aggregate sales in Israel totaled NIS 2,864.1 million in 2007, as compared with
approximately NIS 2,614.7 million in 2006, representing growth of 9.5%. The aggregate
sales in 2005 amounted to NIS 2,425.9 million. |
|
The
aggregate operating profit in Israel totaled approximately NIS 263.1 million in 2007, as
compared with NIS 177.7 million in 2006, representing growth of 48%. Net of TMM (that was
sold at the beginning of 2007), the operating profit rose from NIS 186.2 million in 2006,
to NIS 263.1 million in 2007, representing growth of 41.3%. The operating profit in 2005
amounted to NIS 142.3 million. |
|
The
significant improvement in the operating profitability in Israel is attributed to the
raising of prices in most of the Groups areas of operation, the growth in
quantitative sales and the continuing efficiency measures and group synergy. This
improvement was partially offset by the continuing rise in raw material prices. |
|
B. |
Aggregate
Data (including Turkey) |
|
The
aggregate sales amounted to NIS 3,124.3 million in 2007, as compared with NIS 2,830.5
million in 2006 net of TMM representing growth of 10.4%. The aggregate
sales in 2005 amounted to NIS 2,613.7 million. |
|
The
aggregate operating profit in 2007 amounted to NIS 189.4 million, as compared with NIS
103.1 million in 2006. The operating profit in 2005 amounted to NIS 115.8 million. |
8
|
The
increase in the aggregate operating profitability in 2007 is primarily attributed to the
raising of prices in most areas of operation, the rise in quantitative sales and the
reduction of the operating loss in Turkey by NIS 9.4 million, originating from the
continued trend of improvement in the Turkish results, despite the cost of introducing
the international Kimberly Clark brands to Turkey, that began in 2006, along with the
price war as part of the battle over competing market share in the market. |
|
For
the operations in Turkey see Section C7 below Companys share in the
earnings of associated companies. |
|
Excluding
the results of operation of the associated companies: Mondi Hadera, Hogla-Kimberly and
Carmel Container Systems Ltd. (Carmel). |
|
The
consolidated sales totaled NIS 583.6 million in 2007, as compared with NIS 530.1 million
in 2006, representing growth of 10.1%. |
|
The
consolidated operating profit amounted to NIS 75.4 million in 2007, as compared with NIS
50.5 million in 2006, representing growth of approximately 49.3%. |
|
Total
revenues for the paper and recycling activity amounted to NIS 464.7 million, NIS 408.0
million and NIS 368.9 million in 2007, 2006 and 2005, respectively. |
|
Gross
profit for the paper and recycling activity amounted to NIS 110.3 million (24% of
turnover) in 2007, NIS 78.7 million (19% of turnover) in 2006 and NIS 69.8 million (19%
of turnover) in 2005. |
|
Total
revenues for the marketing of office supplies activity amounted to NIS 119 million in
2007, as compared with NIS 122.1 million and NIS 113.6 million in 2006 and 2005. |
|
Gross
profit for the marketing of office supplies activity amounted to NIS 32.9 million (28% of
turnover) in 2007, compared with NIS 32.7 million (27% of turnover) in 2006 and NIS 29.4
million (26% of turnover) in 2005. |
|
3. |
Net
Profit and Earnings Per Share |
|
The
net profit in 2007 amounted to NIS 31.4 million, as compared with NIS 13.3 million in
2006 and NIS 45.7 million in 2005. |
|
The
net profit in 2007 was affected by the growth in the Companys share in the losses
of the operations in Turkey (KCTR), amounting to approximately NIS 11.8 million (from NIS
52.0 million last year to NIS 63.8 million this year), as compared with the preceding
year (see Strategic Investment in Turkey, above, and Section C7, below). |
|
In
2007, the net profit included earnings from the realization of surplus cost at an
associated company in the amount of NIS 2.5 million, a loss from the amortization of a
tax asset at an associated company in the sum of NIS 13.4 million and a capital loss from
the sale of cardboard machines (machine 6) and hub machines in the sum of NIS 2.4 million. |
9
|
The
net profit in 2006 included net capital gains from the sale of real estate at Atidim in
the sum of NIS 28.5 million, while also including non-recurring expenses (net of tax
influence) of NIS 18 million, primarily on account of a provision for impairment at an
associated company (in the third quarter of the year) and the impact of the devaluation
and modified tax rates in Turkey (in the second quarter of the year). (Approximately NIS
8 million included in the above loss from Turkey). |
|
The
net profit in 2005 included capital gains of NIS 4.4 million plus a tax benefit of NIS 8
million (including the companys share in the benefit at the consolidated
subsidiaries) on account of the impact of the tax law reforms that were passed by the
Knesset (Israeli parliament) on July 25, 2005, that serve to gradually lower the
corporate tax rate to a level of 25% by 2010. |
|
The
basic earnings per share amounted to NIS 7.61 per share in 2007 ($1.98 per share), as
compared with NIS 3.31 per share ($0.78 per share) in 2006 and as compared with NIS 11.43
per share ($2.48 per share) in 2005. |
|
The
diluted earnings per share amounted to NIS 7.60 per share in 2007 ($1.98 per share), as
compared with NIS 3.28 per share in 2006 ($0.77 per share) and NIS 11.35 per share in
2005 ($2.46 per share). |
|
4. |
Analysis
of Operations and Profitability |
|
The
analysis set forth below is based on the consolidated data. |
|
The
consolidated sales amounted to NIS 583.6 million in 2007, as compared with NIS 530.1
million in 2006 and NIS 482.5 million in 2005. |
|
The
increase in the turnover in 2007 originated primarily from the growth in sales of
packaging paper and recycling as a result of the possibility of realizing price hikes in
accordance with prevailing global conditions in the paper market. |
|
Sales
of the packaging paper and recycling activity amounted to NIS 464.7 million in 2007, as
compared with NIS 408.0 million in the corresponding period last year. |
|
The
growth in the sales turnover of the packaging paper and recycling activity originated
primarily from the raising of the selling prices. |
|
Sales
of the marketing of office supplies marketing activity amounted to NIS 119.0 million in
the reported period, as compared with NIS 122.1 million last year. Most of the decrease
in sales is attributed to the impact of not winning the Accountant General tender in
early 2007, a fact that was somewhat compensated for by an increase in sales to other
customers, at better margins. |
|
The
change in the turnover in 2006 in relation to 2005 originated primarily from a certain
increase in sales of packaging paper and recycling and a marginal decrease in sales of
the office supplies sector in light of a change in the customer mix toward a more
profitable one. |
10
|
The
cost of sales amounted to NIS 440.9 million in 2007, representing 75.5% of sales, as
compared with NIS 418.7 million, or 79.0% of sales in 2006 and as compared with NIS 383.2
million, or 79.4% of sales in 2005. |
|
The
gross profit as a percentage of sales grew in 2007 to reach 24.5%, as compared with 21.0%
in 2006 and 20.6% in 2005. |
|
The
increase in the gross profit originated primarily from the improved selling prices and
the quantitative growth in the local market, coupled with the savings in energy costs,
primarily on account of the transition to natural gas in the last quarter. On the other
hand, an increase was recorded in other manufacturing costs as a result of the increase
of the volume of operations, including growth in collection by Amnir and the rise in
diesel prices. |
|
The
labor wages in the cost of sales, in selling expenses and in General and Administrative
expenses, amounted to approximately NIS 174.8 million in 2007, as compared with NIS 160.6
million in 2006 and NIS 149.7 million in 2005. |
|
The
change in payroll costs in relation to the corresponding period last year reflects a 5%
increase in personnel especially at Amnir, as part of preparations for increasing
paper waste collection in anticipation of the future operation of the new packaging paper
machine along with a nominal increase of 3.5% in the wages. The wage expenses (in
General and Administrative) also included non-recurring expenditures, primarily on
account of the employment agreement with the Companys CEO. See Note 9D to the
financial statements. |
|
3. |
Selling,
General and Administrative Expenses |
|
The
selling, general and administrative expenses (including wages) amounted to NIS 67.4
million in 2007 (11.6% of sales), as compared with NIS 60.9 million (11.5% of sales), in
2006 and NIS 55.9 million in 2005 (11.6% of sales). |
|
The
increase in selling, general and administrative expenses originated primarily from growth
in labor expenses, including non-recurring influences, as stated above in the Labor Wages
section. |
|
The
operating profit amounted to NIS 75.4 million in 2007, representing 49% growth in
relation to 2006, 13.0% of sales, as compared with NIS 50.5 million, or 9.5% of sales in
2006 and as compared with NIS 43.3 million, or 9.0% of sales in 2005. |
|
The
increase in operating profit in 2007, by 49% in relation to 2006, originated from the
increase in sales of packaging paper and recycling, primarily on account of the
improvement in selling prices and the efficiency measures, that were partially offset by
rising energy prices, coupled with the improvement in the operating profit of the
marketing of office supplies activity as a result of efficiency measures and the
reorganization that the company initiated in the past several years. |
|
In
the marketing of office supplies activity, the trend of maintaining the operating profit
of NIS 0.4 million in 2007, was attributed to the reorganization in the sector,
accompanied by far-reaching efficiency measures and steps to increase sales, following
the transition to an operating profit in 2006 as compared with a loss in 2005 (NIS 0.2
million in 2006, as compared with NIS -0.9 million in 2005). |
11
|
Financial
expenses amounted to NIS 19.6 million in 2007, as compared with NIS 31.1 million in 2006. |
|
The
total average of the Companys net, interest-bearing liabilities grew by an average
of approximately NIS 10 million between the years 2007 and 2006. The increase is
primarily attributed to investments in fixed assets, net of positive cash flows from
operating activities. |
|
Despite
the said increase in the obligo, the financial expenses in 2007 were cut back in relation
to the preceding year by NIS 11.5 million. |
|
The
said decrease in financial expenses originated from the decrease in the average interest
rate on short-term credit (by approximately 1.2%), the lower expenses on account of
CPI-linked notes, despite the sharp rise in the inflation rate in relation to 2006, on
account of the lowering of the cost of hedging the CPI-linked notes against a rise in the
CPI that fell from 1.8% in 2006, to 1.3% in 2007 and resulted in a approximately NIS 1.1
million decrease in note-related costs. |
|
As
a result of currency hedging transactions made by the company on the dollar/euro ratio,
the company recorded financial revenues of NIS 4.6 million in the last quarter of the
year. (These revenues, on account of hedging the expected cash flows for the new
packaging paper Machine were allocated to the statement of income pursuant to accounting
principles since the agreement with the machines supplier VOITH was only signed in
late December 2007). |
|
Due
to the decrease in the dollar exposure this year in relation to the preceding year, the
financial expenses decreased this year by NIS 4.7 million in relation to last year on
account of currency rate differential revenues on account of the assets in foreign
currency. |
|
Expenses
for taxes on income from current operations totaled NIS 18.4 million in 2007, as compared
with NIS 5.5 million in 2006 and NIS 10.2 million in 2005. |
|
The
principal factors responsible for the increase in tax expenses from operating activities
in 2007 as compared with 2006, included the increase in operating profit before taxes
this year, despite the impact of the lower tax rate on current and deferred taxes this
year, in relation to last year. In addition, the tax expenses this year grew by NIS 2
million as a result of the sharp rise in the CPI this year by 3.4% in relation to last
year. |
|
Moreover,
the tax expenses in 2007 included an additional tax expense of NIS 0.9 million in 2007
from taxes on previous years as a result of the completion of tax assessments for the
years 2002-2005. An additional tax expense of NIS 11.2 million was recorded in 2006,
primarily on account of betterment tax on the sale of real estate. A tax benefit of NIS
4.2 million was recorded in 2005 on account of the impact of the tax reforms that were
passed by the Knesset in July 2005 (gradually lowering the corporate tax rate to 25% by
2010) on the companys deferred taxes. |
12
|
Total
tax expenses amounted to NIS 19.3 million in 2007, as compared with NIS 5.5 million in
2006 and NIS 6.0 million in 2005. |
|
7. |
Companys
Share in Earnings of Associated Companies |
|
The
companies whose earnings are reported under this item (according to AIPMs holdings
therein), include primarily: Mondi Hadera, Hogla-Kimberly, Carmel and TMM. |
|
The
Companys share in the earnings (losses) of associated companies amounted to NIS
(2.9) million in 2007, as compared with losses of NIS (26.7) million in 2006 and earnings
of NIS 16.4 million in 2005. |
|
The
following principal changes were recorded in the Companys share in the earnings of
associated companies, in relation to 2006: |
|
|
The
Companys share in the net profit of Mondi Hadera (49.9%) increased by NIS 12.9
million this year. Most of the change in profit originated from the companys highly
improved profitability, the transition from an operating loss of NIS 2.1 million last
year to an operating profit of NIS 33.6 million this year primarily as a result of
the improved trading conditions that allowed for higher selling prices that led to an
improved gross margin, coupled with a decrease in certain raw material costs as a result
of the lower dollar exchange rate, primarily in the course of the second half of the
year, coupled with a significant improvement in the efficiency of the companys
operational array. This said improvement was rendered possible as a result of the said
recovery in the European paper industry, coupled with the quantitative increase in sales
to the local market. This improvement began in the second quarter of the year,
accelerated in the second quarter and preserved the same trend in the second half of the
year. The sharp improvement in profit was somewhat offset as a result of the rise in the
net financial expenses, which originated primarily from working capital requirements due
to the rise in the volumes of operation and the impact of changes in the exchange rate. |
|
|
The
Companys share in the net profit of Hogla-Kimberly Israel (49.9%) increased by NIS
5.4 million in 2007, as compared with 2006. The operating profit of Hogla grew from NIS
127.0 million to NIS 135.4 million this year. The improved operating profit originated
from a quantitative increase in sales, improved selling prices and the continuing trend
of raising the proportion of some of the premium products out of the products basket.
This improvement was partially offset by the continuing rise in raw material prices. The
net profit was also affected by the increase in financial expenses of NIS -1.7 million,
as compared with financial revenues of NIS 1 million last year, as a result of the
financing needs of the operations in Turkey. The net profit of Hogla-Kimberly Israel last
year was influenced by non-recurring tax expenses of NIS 4.5 million (our share was
approximately NIS 2.2 million). |
13
|
Companys
share in the losses of KCTR (formerly: Ovisan) (49.9%) grew by approximately
NIS 11.8 million in 2007, as compared with 2006. The operating loss decreased by
approximately NIS 9.4 million in 2007 in relation to last year, due to the continuing
growth in the penetration rate of brands and their strengthened position in the market.
The launch process of premium KC products in the Turkish market (Kotex® and Huggies®),
that began in the second quarter last year and was accompanied by fierce competition over
shelf space, primarily against P&G coupled with the erosion of selling prices to
the lowest levels in the world for same-quality disposable diapers. In the course
of 2007, a non-recurring loss of approximately NIS 6 million ($1.5 million) was included
on account of the termination of trade agreements with distributors due to the transition
to distribution by Unilever, of which our share was approximately NIS 3 million.
Moreover, the tax asset that was recorded in previous years in Turkey, in the sum of
approximately approximately NIS 26 million ($6.4 million) was reduced, of which our share
is NIS approximately 13.3 million. Last year, the loss included a non-recurring
expenditure of approximately NIS 16 million, of which our share was approximately NIS 8
million, primarily as a result of the devaluation of the Turkish lira and the
amortization of a tax asset in the sum of approximately NIS 6.7 million, of which our
share was approximately NIS 3.3 million. |
|
|
The
Companys share in the net profit of Carmel (36.21%) increased by NIS 2.1 million in
2007 as compared with 2006. The factors that affected the growth in the companys
share in the net profit of Carmel, originated inter alia from the improvement in the
operating profitability at Carmel primarily in the second half of the year. This
improvement originated primarily from higher prices and was partially offset by the sharp
rise in raw material prices. In the course of the second quarter, the companys
holding rate in Carmel rose from 26.25% to 36.21% due to Carmels self purchase of
some of the minority shareholders holdings. As a result of the acquisition, a
negative surplus cost of NIS 4.9 million was created at the company, of which a sum of
NIS 2.4 million was allocated to the statement of income this year and served to increase
the companys share in the Carmel profits in 2007. In 2006, Carmels net profit
included capital gains from the sale of a real-estate asset in Netanya in the amount of
NIS 3.9 million, of which the Companys share was approximately NIS 1 million. |
|
In
2006, the Companys share in the earnings of associated companies included the
Companys share in the losses of TMM, in the amount of NIS 14.8 million. As
mentioned above, the Company sold its holdings in TMM in early 2007 and this item is
therefore not included in the Companys share in the earnings of associated
companies this year. |
|
The
Companys share in the earnings of associated companies from current operations in
Israel (excluding Turkey and TMM) grew by NIS 20.7 million this year and amounted to NIS
60.9 million. |
|
The
cash flows from operating activities in 2007 amounted to NIS 69.5 million, as compared
with NIS 53.1 million in 2006. The change in the cash flows from operating activities in
2007 originated primarily from the increase in current operations and in profit. |
|
The
cash flows from operating activities in 2005 amounted to NIS 88.6 million. |
14
|
The
dividend that was declared in December 2005, in the amount of NIS 50 million, was paid in
January 2006. Additional dividend of NIS 100 million was distributed in July 2006. |
|
See
Section B2 Financial Liabilities. |
|
In
November 2007, the Company performed a private placement of 1,012,585 ordinary shares of
NIS 0.01 par value of the Company (hereinafter: Ordinary Shares) which, as of
the date of issuance, accounted for 20% of the issued share capital of the Company
(hereinafter in this section: The Shares) against an investment in the total
sum of NIS 213 million (hereinafter in this section: the raised amount).
About 60% of the shares (607,551 shares) were issued to the controlling shareholders in
the Company, Clal Industries and Investments and Discount Investments (hereinafter: the
special offerees), in accordance with the pro-rata holdings in the Company, and 40%
of the shares (405,034 shares) were offered by way of a tender to institutional entities
and private entities (whose number did not exceed 35) (hereinafter in this section: The
Ordinary Offerees). The price per share for the ordinary offerees, as determined by
tender was NIS 210. Accordingly, the price per share for the special offerees,
considering the amount of shares offered to the special offerees, was set at NIS 211.05
(the price per share in the tender plus a rate of 0.5%). The Company paid the
distributors a rate of 1.2% of the total consideration received from the ordinary
offerees, that is, a sum of NIS 1,020,686. The consideration received in respect of the
allotment of the shares offered as aforesaid, shall be used for the partial financing of
the acquisition of the new packaging paper machine . |
F. |
Exposure
and Management of Market Risks |
|
The
Company conducts periodical discussions regarding market risks and exposure to exchange
rate and interest rate fluctuations, with the participation of the relevant factors, so
as to reach decisions in this matter. The individual responsible for the implementation
of market risk management policy at the Company is Israel Eldar, that serves as the
Companys Comptroller since 1981, and as a director in subsidiaries of the Company . |
|
2. |
Market
Risks to which the Company is Exposed |
|
Description
of Market Risks |
|
The
market risks reflect the risk of changes in the value of financial instruments affected
by changes in the interest rate, in the Consumer Price Index and in exchange rates. |
|
Approximately
half of the Companys sales are denominated in US dollars, whereas a significant
share of its expenses and liabilities are in NIS. The Company is therefore exposed to
exchange rate fluctuations of the NIS vis-à-vis the US dollar. |
15
|
In
September this year the Company entered into dollar-euro hedging transactions for a
period of up to 4 months, in the amount of 13.4 million. |
|
Consumer
Price Index Risks |
|
The
Company is exposed to changes in the Consumer Price Index, pertaining to bank and other
loans and to the bonds issued by the Company, in the total sum of NIS 196 million.
In
early 2008, the Company entered into hedging transactions for a period of one year, to
protect itself against a rise in the CPI, in the amount of NIS 140 million, pursuant to
previous transactions that were made in December 2006 and January 2007 and terminated at
the end of 2007. |
|
The
Company is exposed to changes in interest rates, primarily on account of notes, in the
sum of NIS 196 million. |
|
Most
of the Groups sales are made in Israel to a large number of customers and the
exposure to customer-related credit risks is consequently generally limited. The Group
regularly analyzes through credit committees that operate within the various
companies the quality of the customers, their credit limits and the relevant
collateral required, as the case may be. |
|
The
financial statements include provisions for doubtful debts, based on the existing risks
on the date of the statements. |
Sensitivity Analysis Tables for Sensitive Instruments, According to Changes in Market Elements
|
Sensitivity to Interest Rates
|
|
Sensitive Instruments
|
Profit (loss) from changes
|
Fair value As at Dec-31-07
|
Profit (loss) from changes
|
|
|
Interest rise 10%
|
Interest rise 5%
|
Interest decrease 10%
|
Interest decrease 5%
|
|
In NIS thousands
|
|
|
|
|
|
|
|
|
Series 1 Debentures |
|
|
| 54 |
|
| 27 |
|
| 14,336 |
|
| (54 |
) |
| (27 |
) |
|
Series 2 Debentures | | |
| 2,370 |
|
| 1,191 |
|
| 191,537 |
|
| (2,417 |
) |
| (1,203 |
) |
|
Other liabilities | | |
| 121 |
|
| 60 |
|
| 31,510 |
|
| (122 |
) |
| (61 |
) |
|
Long-term loans and capital notes - granted | | |
| (186 |
) |
| (93 |
) |
| (48,644 |
) |
| 188 |
|
| 94 |
|
|
The
fair value of the loans is based on a calculation of the present value of the cash flows,
according to the generally-accepted interest rate on loans with similar characteristics
(4% in 2007). |
|
Regarding
the terms of the debentures and other liabilities See Note 4 to the financial
statements. |
|
Regarding
long-term loans and capital notes granted See Note 2 to the financial statements. |
16
|
Sensitivity of linked instruments to changes in the(euro)exchange rate
|
|
Sensitive Instruments
|
Profit (loss) from changes
|
Fair value As at Dec-31-07
|
Profit (loss) from changes
|
|
|
Revaluation of 10%
|
Revaluation of 5%
|
Devaluation of 10%
|
Devaluation of 5%
|
|
In NIS thousands
|
|
|
|
|
|
|
|
|
NIS-forward transaction |
|
|
| 6,038 |
|
| 4,028 |
|
| 994 |
|
| (8,439 |
) |
| (3,741 |
) |
|
See
Note 12a to the financial statements. |
|
Sensitivity to the US Dollar Exchange Rate
|
|
Sensitive Instruments
|
Profit (loss) from changes
|
Fair value As at Dec-31-07
|
Profit (loss) from changes
|
|
|
Revaluation of $ 10%
|
Revaluation of $ 5%
|
Devaluation of $ 10%
|
Devaluation of $ 5%
|
|
In NIS thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Accounts Receivable |
|
|
| 1,272 |
|
| 636 |
|
| 12,720 |
|
| (1,272 |
) |
| (636 |
) |
|
Capital note | | |
| 242 |
|
| 121 |
|
| 2,421 |
|
| (242 |
) |
| (121 |
) |
|
Accounts Payable | | |
| (1,036 |
) |
| (518 |
) |
| (10,363 |
) |
| 1,036 |
|
| 518 |
|
|
Other
accounts receivable reflect primarily short-term customer debts. |
|
Capital
note See Note 2b to the financial statements. |
|
Accounts
payable reflect primarily short-term liabilities to suppliers. |
17
|
Below
are the balance sheet items, according to linkage bases, as at December 31, 2007: |
In NIS Millions
|
Unlinked
|
CPI-linked
|
In foreign
currency, or
linked thereto
(primarily US$)
|
Non-Monetary
Items
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | |
Cash and cash equivalents | | |
| 2.5 |
|
| |
|
| 165.2 |
|
| |
|
| 167.7 |
|
Other Accounts Receivable | | |
| 259.0 |
|
| 0.4 |
|
| 12.7 |
|
| 11.8 |
|
| 283.9 |
|
Inventories | | |
| |
|
| |
|
| |
|
| 69.6 |
|
| 69.6 |
|
Investments in Associated Companies | | |
| 52.2 |
|
| |
|
| 2.4 |
|
| 291.6 |
|
| 346.2 |
|
Deferred taxes on income | | |
| |
|
| |
|
| |
|
| 6.1 |
|
| 6.1 |
|
Fixed assets, net | | |
| |
|
| |
|
| |
|
| 445.6 |
|
| 445.6 |
|
Deferred expenses, net of accrued | | |
amortization | | |
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
| |
| |
| |
| |
Total Assets | | |
| 313.7 |
|
| 0.4 |
|
| 180.3 |
|
| 824.7 |
|
| 1,319.1 |
|
|
| |
| |
| |
| |
| |
| | |
Liabilities | | |
Credit from Banks | | |
| 143.0 |
|
| |
|
| |
|
| |
|
| 143.0 |
|
Other Accounts Payable | | |
| 185.3 |
|
| |
|
| 10.4 |
|
| |
|
| 195.7 |
|
Deferred taxes on income | | |
| |
|
| |
|
| |
|
| 40.5 |
|
| 40.5 |
|
Long-Term Loans | | |
| 33.5 |
|
| |
|
| |
|
| |
|
| 33.5 |
|
Notes (bonds) | | |
| |
|
| 195.5 |
|
| |
|
| |
|
| 195.5 |
|
Other liabilities - including current | | |
maturities | | |
| 32.8 |
|
| |
|
| |
|
| |
|
| 32.8 |
|
Equity, funds and reserves | | |
| |
|
| |
|
| |
|
| 678.1 |
|
| 678.1 |
|
|
| |
| |
| |
| |
| |
Total liabilities and equity | | |
| 394.6 |
|
| 195.5 |
|
| 10.4 |
|
| 718.6 |
|
| 1,319.1 |
|
|
| |
| |
| |
| |
| |
Surplus financial assets (liabilities) as at | | |
December 31, 2007 | | |
| (80.9 |
) |
| (195.1 |
) |
| 169.9 |
|
| 106.1 |
|
| |
|
18
|
Below
are the balance sheet items, according to linkage bases, as at December 31, 2006: |
In NIS Millions
|
Unlinked
|
CPI-linked
|
In foreign
currency, or
linked thereto
(primarily US$)
|
Non-Monetary
Items
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | |
Cash and cash equivalents | | |
| 5.0 |
|
| |
|
| 8.6 |
|
| |
|
| 13.6 |
|
Other Accounts Receivable | | |
| 243.1 |
|
| 0.2 |
|
| 59.8 |
|
| 11.7 |
|
| 314.8 |
|
Inventories | | |
| |
|
| |
|
| |
|
| 62.1 |
|
| 62.1 |
|
Investments in Associated Companies | | |
| 63.7 |
|
| |
|
| 6.3 |
|
| 305.5 |
|
| 375.5 |
|
Deferred taxes on income | | |
| |
|
| |
|
| |
|
| 6.5 |
|
| 6.5 |
|
Fixed assets, net | | |
| |
|
| |
|
| |
|
| 400.8 |
|
| 400.8 |
|
|
| |
| |
| |
| |
| |
Total Assets | | |
| 311.8 |
|
| 0.2 |
|
| 74.7 |
|
| 786.6 |
|
| 1,173.3 |
|
|
| |
| |
| |
| |
| |
| | |
Liabilities | | |
Credit from Banks | | |
| 203.0 |
|
| |
|
| |
|
| |
|
| 203.0 |
|
Other Accounts Payable | | |
| 191.5 |
|
| |
|
| 8.4 |
|
| |
|
| 199.9 |
|
Deferred taxes on income | | |
| |
|
| |
|
| |
|
| 41.7 |
|
| 41.7 |
|
Long-Term Loans | | |
| 38.7 |
|
| |
|
| |
|
| |
|
| 38.7 |
|
Notes (bonds) | | |
| |
|
| 226.4 |
|
| |
|
| |
|
| 226.4 |
|
Other liabilities - including current | | |
maturities | | |
| 32.8 |
|
| |
|
| |
|
| |
|
| 32.8 |
|
Equity, funds and reserves | | |
| |
|
| |
|
| |
|
| 430.8 |
|
| 430.8 |
|
Total liabilities and equity | | |
| 466.0 |
|
| 226.4 |
|
| 8.4 |
|
| 472.5 |
|
| 1,173.3 |
|
|
| |
| |
| |
| |
| |
Surplus financial assets (liabilities) as at | | |
December 31, 2006 | | |
| (154.2 |
) |
| (226.2 |
) |
| 66.3 |
|
| 314.1 |
|
| |
|
|
AIPM
is exposed to various risks associated with operations in Turkey, where Hogla-Kimberly is
active through its subsidiary, KCTR. These risks originate from concerns regarding the
economic instability, high devaluation and elevated interest rates that have
characterized the Turkish economy in the past and that may recur and harm the KCTR
operations. |
G. |
Forward-Looking
Statements |
|
This
report contains various forward-looking statements, based upon the Board of Directors present
expectations and estimates regarding the operations of the Group and its business
environment. The Company does not guarantee that the future results of operations will
coincide with the forward-looking statements and these may in fact differ considerably
from the present forecasts as a result of factors that may change in the future, such as
changes in costs and market conditions, failure to achieve projected goals, failure to
achieve anticipated efficiencies and other factors which lie outside the control of the
Company. The Company undertakes no obligation to publicly update such forward-looking
statements, regardless of whether these updates originate from new information, future
events or any other reason. |
19
H. |
Donations
and Contributions |
|
The
AIPM Group, within the framework of its business and social commitment, invests efforts
and funds in community assistance and support, while focusing on providing help to the
weaker echelons of Israeli society and primarily teenagers. |
|
As
part of this policy, the company makes contributions to various institutions active in
the said areas. The Groups contributions amounted to NIS 350 thousand in 2007. |
|
In
parallel, through its employees, the Company also participates in volunteer activity in
the community, for promoting these same objectives. |
|
This
year the company focused on donations to youth clubs, community centers operating in the
afternoons with the intention of fortifying and enriching teenagers while granting
them a proper opportunity.
The company has also contracted an external company to conduct
social mapping and intends to begin implementing the new program this year. |
|
Moreover
the company is active in the granting of student scholarships, through the Shenkar
Foundation, that was established by the company together with its Austrian strategic
partner in Mondi Hadera. Assistance was also provided to two projects: A womens
club in Um-el-Fahem and a childrens club in the Eastern Worker neighborhood of
Hadera, as well as for the purchase of computers for the youth center in Hadera. The
total contributions of the company through the Shenkar Foundation amounted to NIS 102
thousand. |
I. |
Members
of the Board of Directors Possessing Financial Skills and Qualifications |
|
The
minimum number of company directors possessing accounting and financial qualifications
and skills was determined to be two for the company, in consideration of the nature of
the accounting and financial issues that are raised in the preparation of the companys
financial statements, in view of the companys areas of operation and in
consideration of the composition of the board of directors as a whole, that includes
individuals possessing business, management and professional experience that enables them
to deal effectively with the tasks of managing the company, including reporting duties. |
|
The
members of the companys board of directors who possess accounting and financial
qualifications and skills are: |
|
Avi Yehezkel |
|
Holds a degree in Economics from Tel Aviv University and a Law degree
from Bar-Ilan University. External director at Bank
Yahav. Served as a Knesset member between 1992-2003,
also served as Chairman of the Economics Committee, Chairman of the Defense
Budget Committee, Chairman of the Capital Market
Sub-Committee, Chairman of the Banking Sub-Committee and
member of the Finance Committee. |
|
Ari Bronshtein |
|
Holds a Bachelor's degree in Management and Economics from Tel Aviv
University and a Master's degree in Management,
Accounting and Finance from Tel Aviv University. Serves
as VP of Discount Investments Ltd.; Director at Elron
Electronic Industries Ltd. Former VP of Economics and
Business Development and Director of Finance and Investments at
Bezeq - The Israel Telecommunications Company Ltd. |
|
Itzhak Manor |
|
Holds an MBA from Hebrew University. Serves as director at various
publicly-traded and privately-held companies within the
IDB Group; Chairman of companies in the David Lubinsky
Group Ltd.; member of the Balance Sheet Committee at Israel Union Bank Ltd. |
20
|
Amos Mar-Haim |
|
Holds a BA in economics and an MBA from Hebrew University. Formerly served
and currently serves as Chairman or Deputy Chairman at
publicly-traded or privately-held companies. Member of
the Israeli Accounting Standards Board. |
|
Amir Makov |
|
Holds a Law degree from Hebrew University and an Engineering degree
from the Haifa Technion. Served as CEO of Haifa Chemicals
Ltd., Sonol Israel Ltd.. Served and serves as a director
of various publicly-traded and privately-held companies including Bank
Leumi Ltd., Dead Sea Works Ltd., Dead Sea Bromine Ltd. and
more. |
J. |
The
Companys Internal Auditor |
|
A. |
Auditors
Name: Eli Greenbaum |
|
In
the position since: July 16, 2006 |
|
B. |
The
Auditor is employed by the Company. |
|
C. |
The
Companys Audit Committee has approved the appointment of the Auditor on
Mar-7-06. The Auditor is a CPA by training and has dealt in Treasury positions
at the Company for 20 years and consequently possesses the necessary skills for
the job. |
|
D. |
The
Internal Auditor is supervised by the General Manager. |
|
E. |
The
work plan for internal auditing is annual. The work plan is determined on the
basis of: A five-year plan, covering numerous issues that were approved by the
Audit Committee according to the auditing needs of the Company and covers
issues that the Internal Auditor believes warrant his examination and
consideration in the course of the current year. The work plan is determined by
the Internal Auditor and the Audit Committee. The work plan is approved by the
Audit Committee. The judgment of the Internal Auditor in terms of deviations
from the audit program, subject to the approval of the Companys Audit
Committee. |
|
F. |
The
Internal Auditing program includes auditing topics in corporations that
constitute significant holdings of the Company. |
|
G. |
Scope
of employment: Full-time job as Auditor, plus an assistant. The auditing hours
number a total of 416 monthly hours, totaling 4,100 hours annually, divided
equally between the corporation and its investee companies: |
|
Audited body
|
Estimated hours of audit annually
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal auditing at the Company |
370 hours |
|
Auditing at investee companies |
3,730 hours |
|
Total hours |
4,100 hours |
21
|
The
Internal Auditor conducts the audit according to generally-accepted professional
standards of internal auditing in Israel and worldwide, and to the estimation of the
Companys Board of Directors, based on the Companys Audit Committee
assessment, the audit is conducted according to the standards requirements. |
|
H. |
The
Company declares that it has granted the Internal Auditor free, constant and
direct access to all the information at its disposal and at the disposal of the
held companies. |
|
I. |
Audit
reports were submitted in writing and discussed on the following dates: |
|
Submitted
|
Discussed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.3.07 |
7.3.07 |
|
6.5.07 |
6.5.07 |
|
2.8.07 |
6.8.07 |
|
4.11.07 |
7.11.07 |
|
J. |
The
scope of employment of the Internal Auditor is determined according to a cycle
that renders it possible to audit all the significant topics at the Company,
once every few years.
This scope of activity, the nature, the continuity of
operation and the work plan of the Internal Auditor are reasonable according
to the estimation of the Companys Audit Committee, while rendering it
possible to realize the Internal Audit objectives of the organization. |
|
K. |
The
Auditor is employed by the Company. The Board of Directors believes that the
compensation received by the Internal Auditor does not influence his
professional judgment. |
K. |
Senior
Employee Compensation |
|
In
determining the compensation and bonuses of senior employees, the directors and
Compensation Committee took into consideration the position and standing of each
executive and his contribution to the operations and business of the Company. |
|
In
January 2008, the board of directors decided to adopt a senior employee stock option
plan. The total general expenditure from the option plan amounts to approximately NIS 27
million. The option plans influence on the consolidated financial reports amounts
to approximately NIS 22 million |
|
The
professional fees for the Companys auditing CPA, covering auditing services,
including auditing of the internal control on the financial reports, amounted to $312
thousand in 2007, as compared with $150 thousand in 2006. The hours invested by the
auditing CPAs on account of these services amounted to 7,800 hours and 9,700 hours in the
years 2007 and 2006, respectively. |
22
|
Follows
all-inclusive fees details of the Companys and subsidiaries auditing CPA in the
reported year and in the previous year: |
|
|
2007
|
2006
|
|
|
Thousands of $
|
hours
|
Thousands of $
|
hours
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auditing and tax services |
|
|
| 150,000 |
|
| 4,510 |
|
| 150,000 |
|
| 9,700 |
|
|
Auditing of internal control | | |
| 120,000 |
|
| 2,400 |
|
| - |
|
| - |
|
|
Auditing of IFRS | | |
| 22,000 |
|
| 440 |
|
| - |
|
| - |
|
|
Differentials | | |
| 20,000 |
|
| 450 |
|
| - |
|
| - |
|
|
Total | | |
| 312,000 |
|
| 7,800 |
|
| 150,000 |
|
| 9,700 |
|
M. |
Adoption
of Accounting Standard No. 29 Adoption of International Financial Reporting
Standards (IFRS) |
|
In
July 2006, the Israel Accounting Standards Board issued Israel Accounting Standard No. 29
Adoption of International Reporting Financial Standards (IFRS)(hereinafter
the standard or Standard 29).
Pursuant to the Standard,
companies that are subject to the provisions of the Securities Law, 5728-1968, and that
are required to report according to the regulations published thereunder, are to prepare
their financial statements in accordance with IFRS starting from the period commencing on
January 1, 2008. The standard allows for early adoption starting with the financial
statements published after July 31, 2006. The above does not apply to entities subject to
the Securities regulations (periodical and immediate reports of external corporations)
and whose financial statements are formulated not in accordance with generally accepted
accounting principles in Israel. Moreover, companies that are not subject to the
provisions of the Securities Law, 5728-1968, and that are not required to report
according to the regulations published thereunder, are also eligible to prepare their
financial statements in accordance with IFRS starting from the financial statements
published subsequent to July 31, 2006. |
|
The
initial adoption of IFRS standards shall be made according to the instructions of IFRS 1,
Initial Adoption of IFRS Standards for the purposes of the transition. |
|
According
to the Standard, the Company is required to include in a note to the annual financial
statements as of December 31, 2007, a balance sheet as of December 31, 2007, and a
statement of income for the year then ended, that have been prepared based on the
recognition, measurement and presentation criteria of IFRS. The company will implement
the IFRS standards starting with the financial statements for the period commencing
January 1, 2008. |
|
For
impact of international standards on the companys financial statements see
Note 16 to the financial statements. |
23
N. |
Detailed
processes undertaken by the companys supreme supervisors, prior
to the approval of the financial statements |
|
The
Companys Board of Directors has appointed the Companys Audit Committee to
serve as a Balance Sheet Committee and to supervise the completeness of the financial
statements and the work of the CPAs and to offer recommendations regarding the approval
of the financial statements and the discussion thereof prior to said approval. |
|
The
Committee consists of three directors, of which two possess accounting and financial
expertise. The meetings of the Balance Sheet Committee, as well as the Board meetings
during which the financial statements are discussed and approved, are attended by the
Companys auditing CPA, who is instructed to present the principal findings if
there are any that surfaced during the audit or review process, as well as by the
Internal Auditor. |
|
The
Committee conducts its examination via detailed presentations from Company executives and
others, including: CEO Avi Brenner; CFO Shaul Gliksberg. The material
issues in the financial reports, including any extraordinary transactions if any,
the material assessments and critical estimates implemented in the financial statements,
the reasonability of the data, the financial policy implemented and the changes therein,
as well as the implementation of proper disclosure in the financial statements and the
accompanying information. The Committee examines various aspects of risk assessment and
control, as reflected in the financial statements (such as reporting of financial risks),
as well as those affecting the reliability of the financial statements. In case
necessary, the Committee demands to receive comprehensive reviews of matters with
especially relevant impact, such as the implementation of international standards. |
|
The
approval of the financial statements involves several meetings, as necessary: The first,
held at the Audit Committee several days before the approval date of the financial
statements, is held to discuss the material reporting issues in depth and at great
length, whereas the second, held in proximity to the approval date, by the Board of
Directors, to discuss the actual results. As to the supreme supervision regarding the
impact of the transition to international financial reporting standards, the Committee
held a detailed discussion regarding the said disclosure and the accounting policy
implemented in its respect. |
|
|
|
|
|
|
|
|
|
|
|
|
Tzvika Livnat |
Avi Brenner |
Chairman of the Board of Directors |
General Manager |
24
Exhibit 3
AMERICAN ISRAELI PAPER
MILLS LIMITED
2007 CONSOLIDATED
FINANCIAL STATEMENTS
AMERICAN ISRAELI PAPER
MILLS LIMITED
2007 CONSOLIDATED
FINANCIAL STATEMENTS
TABLE OF CONTENTS
Report of Independent
Registered Public Accounting Firm
To the shareholders of
AMERICAN ISRAELI PAPER
MILLS LIMITED
We have audited the consolidated
balance sheet of American Israeli Paper Mills Limited (hereafter - the Company) and
its subsidiaries as of December 31, 2007 and the consolidated statement of income,
changes in shareholders equity and cash flows for the year ended December 31,
2007. These financial statements are the responsibility of the Companys board of
directors and management. Our responsibility is to express an opinion on these financial
statements based on our audits.
The financial statements of the
company for the years ended December 2006 and 2005 have been audited by other independent
auditors who expressed their unqualified opinion as of March 7, 2007.
We did not audit the financial
statements of certain associated companies, the Companys interest in which as
reflected in the balance sheets as of December 31, 2007 is NIS 66.5 million, and
the Companys share in excess of profits over losses of which is a net amount of NIS
2.9 million, for the year ended December 31, 2007. The financial statements of those
companies were audited by other Independent registered Public Accounting Firms whose
reports have been furnished to us, and our opinion, insofar as it relates to amounts
included for those companies, is based solely on the reports of the other independent
auditors.
We conducted our audits in accordance
with auditing standards generally accepted in Israel including those prescribed by the
Israeli Auditors (Mode of Performance) Regulations, 1973 and the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates
made by the Companys board of directors and management, as well as evaluating the
overall financial statement presentation. We believe that our audits and the reports of
the other independent auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits
and the reports of the other independent auditors, the financial statements referred to
above present fairly, in all material respects, the consolidated financial position of the
Company and its subsidiaries as of December 31, 2007 and the consolidated results of
operations, changes in shareholders equity and cash flows for the year ended
December 31, 2007 in conformity with accounting principles generally accepted
(GAAP) in Israel. Furthermore, in our opinion, the financial statements
referred to above have been prepared in accordance with the Israeli Securities
(Preparation of Annual Financial Statements) Regulations, 1993.
As explained in note 1b, the
financial statements referred to above are presented in new Israeli shekels, in conformity
with accounting standards issued by the Israel Accounting Standards Board.
Brightman Almagor & Co.
Certified Public Accountants
A Member Firm of Deloitte Touche Tohmatsu
Tel-Aviv, Israel
March 10, 2008
F - 2
AMERICAN ISRAELI PAPER
MILLS LIMITED
CONSOLIDATED BALANCE
SHEETS
|
|
December 31
|
|
Note
|
2007
|
2006
|
|
|
NIS in thousands (see note 1b.)
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
| |
|
| |
|
CURRENT ASSETS: | | |
| 8 | |
| |
|
| |
|
Cash and cash equivalents | | |
| 1u | |
| 167,745 |
|
| 13,621 |
|
| | |
Accounts receivable: | | |
| 10a | |
| |
|
| |
|
Trade | | |
| | |
| 178,771 |
|
| 168,050 |
|
Other | | |
| | |
| 105,109 |
|
| 146,684 |
|
Inventories | | |
| 10b | |
| 69,607 |
|
| 62,109 |
|
|
|
| |
| |
Total current assets | | |
| | |
| 521,232 |
|
| 390,464 |
|
|
|
| |
| |
INVESTMENTS AND LONG-TERM | | |
RECEIVABLES: | | |
Investments in associated companies | | |
| 2;8 | |
| 346,186 |
|
| 375,510 |
|
Deferred income taxes | | |
| 7f | |
| 6,083 |
|
| 6,490 |
|
|
|
| |
| |
| | |
| | |
| 352,269 |
|
| 382,000 |
|
|
|
| |
| |
FIXED ASSETS: | | |
| 3 |
|
|
|
|
|
|
|
Cost | | |
| | |
| 1,164,847 |
|
| 1,109,239 |
|
Less - accumulated depreciation | | |
| | |
| 719,281 |
|
| 708,416 |
|
|
|
| |
| |
| | |
| | |
| 445,566 |
|
| 400,823 |
|
|
|
| |
| |
DEFERRED CHARGES, | | |
net of accumulated amortization | | |
| 1i | |
| |
|
| |
|
|
|
| |
| |
Total assets | | |
| | |
| 1,319,067 |
|
| 1,173,287 |
|
|
|
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
) Chairman of the |
|
_____________________________________________ |
|
|
Zvi Livnat |
) Board of Directors |
|
|
|
|
) |
|
_____________________________________________ |
|
|
Avi Brener |
) Chief Executive Officer |
|
|
|
|
) |
|
_____________________________________________ |
|
|
Shaul Gliksberg |
) Chief Financial and Business |
|
|
Development Officer |
Date of approval of the financial
statements: 10 March 2008
The accompanying notes
are an integral part of the financial statements
F - 3
|
|
December 31
|
|
Note
|
2007
|
2006
|
|
NIS in thousands (see note 1b.)
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity |
|
|
| |
|
| |
|
| |
|
CURRENT LIABILITIES: | | |
| 8 |
|
| |
|
| |
|
Credit from banks and others | | |
| 10c |
|
| 143,015 |
|
| 203,003 |
|
Current maturities of long-term notes and long term loans | | |
| 4a;b |
|
| 42,775 |
|
| 41,567 |
|
Accounts payable and accruals: | | |
| 10d |
|
| |
|
| |
|
Trade | | |
| |
|
| 108,409 |
|
| 96,273 |
|
Other | | |
| |
|
| 87,235 |
|
| 103,699 |
|
|
|
| |
| |
Total current liabilities | | |
| |
|
| 381,434 |
|
| 444,542 |
|
|
|
| |
| |
LONG-TERM LIABILITIES: | | |
Deferred income taxes | | |
| 7f |
|
| 40,515 |
|
| 41,613 |
|
Loans and other liabilities | | |
(net of current maturities): | | |
| 4;8 |
|
| |
|
| |
|
Loans from banks | | |
| 4b |
|
| 28,127 |
|
| 33,515 |
|
Notes | | |
| 4a |
|
| 158,134 |
|
| 190,005 |
|
Other liabilities | | |
| 4c |
|
| 32,770 |
|
| 32,770 |
|
|
|
| |
| |
Total long-term liabilities | | |
| |
|
| 259,546 |
|
| 297,903 |
|
|
|
| |
| |
COMMITMENTS AND CONTINGENT LIABILITIES | | |
| 9 |
|
| |
|
| |
|
|
|
| |
| |
Total liabilities | | |
| |
|
| 640,980 |
|
| 742,445 |
|
|
|
| |
| |
SHAREHOLDERS' EQUITY: | | |
| 6 |
|
| |
|
| |
|
Share capital (ordinary shares of NIS 0.01 par value: | | |
authorized - 20,000,000 shares; issued and paid: | | |
December 31, 2007 and 2006 - 5,060,774 and | | |
4,032,723 shares, respectively) | | |
| |
|
| 125,267 |
|
| 125,257 |
|
Capital surplus | | |
| |
|
| 301,695 |
|
| 90,060 |
|
Capital surplus resulting from tax benefit on exercise | | |
of employee options | | |
| |
|
| 3,397 |
|
| 2,414 |
|
Differences from translation of foreign currency | | |
financial statements of associated companies | | |
| |
|
| (5,166 |
) |
| (8,341 |
) |
Retained earnings | | |
| |
|
| 252,894 |
|
| 221,452 |
|
|
|
| |
| |
Total shareholders equity | | |
| |
|
| 678,087 |
|
| 430,842 |
|
|
|
| |
| |
Total liabilities and shareholders' equity | | |
| |
|
| 1,319,067 |
|
| 1,173,287 |
|
|
|
| |
| |
The accompanying notes are an
integral part of the financial statements.
F - 4
AMERICAN ISRAELI PAPER
MILLS LTD.
CONSOLIDATED STATEMENTS
OF INCOME
|
Note
|
2007
|
2006
|
2005
|
|
|
NIS in thousands (see note 1b.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES |
|
|
| 10e;14 |
|
| 583,650 |
|
| 530,109 |
|
| 482,461 |
|
COST OF SALES | | |
| 10f |
|
| 440,854 |
|
| 418,725 |
|
| 383,179 |
|
|
|
| |
| |
| |
GROSS PROFIT | | |
| |
|
| 142,796 |
|
| 111,384 |
|
| 99,282 |
|
|
|
| |
| |
| |
SELLING, MARKETING, ADMINISTRATIVE | | |
AND GENERAL EXPENSES: | | |
| 10g |
|
| |
|
| |
|
| |
|
Selling and marketing | | |
| |
|
| 31,367 |
|
| 31,366 |
|
| 30,482 |
|
Administrative and general | | |
| |
|
| 36,060 |
|
| 29,517 |
|
| 25,462 |
|
|
|
| |
| |
| |
| | |
| |
|
| 67,427 |
|
| 60,883 |
|
| 55,944 |
|
|
|
| |
| |
| |
INCOME FROM ORDINARY OPERATIONS | | |
| |
|
| 75,369 |
|
| 50,501 |
|
| 43,338 |
|
FINANCIAL EXPENSES - net | | |
| 10h |
|
| 19,558 |
|
| 31,111 |
|
| 12,490 |
|
OTHER INCOME (EXPENSES) - net | | |
| 10i |
|
| (2,178 |
) |
| 37,305 |
|
| 4,444 |
|
|
|
| |
| |
| |
INCOME BEFORE TAXES ON INCOME | | |
| |
|
| 53,633 |
|
| 56,695 |
|
| 35,292 |
|
TAXES ON INCOME | | |
| 7 |
|
| 19,307 |
|
| 16,702 |
|
| 5,991 |
|
|
|
| |
| |
| |
INCOME FROM OPERATIONS OF THE | | |
COMPANY AND ITS SUBSIDIARIES | | |
| |
|
| 34,326 |
|
| 39,993 |
|
| 29,301 |
|
SHARE IN PROFITS (LOSSES) OF ASSOCIATED | | |
COMPANIES - net | | |
| 2 |
|
| (2,884 |
) |
| (26,202 |
) |
| 16,414 |
|
| | |
INCOME BEFORE CUMULATIVE EFFECT, | | |
AT BEGINNING OF YEAR, OF AN ACCOUNTING | | |
| |
|
| |
|
| |
|
| |
|
|
|
| |
| |
| |
CHANGE IN ASSOCIATED COMPANIES | | |
| |
|
| 31,442 |
|
| 13,791 |
|
| 45,715 |
|
| | |
CUMULATIVE EFFECT, AT BEGINNING OF | | |
YEAR, OF AN ACCOUNTING CHANGE IN AN ASSOCIATED COMPANY | | |
| 1m |
|
| - |
|
| (461 |
) |
| - |
|
|
|
| |
| |
| |
NET INCOME FOR THE YEAR | | |
| |
|
| 31,442 |
|
| 13,330 |
|
| 45,715 |
|
|
|
| |
| |
| |
| | |
|
|
(See note 1b)NIS
|
| | |
EARNINGS PER SHARE: | | |
| 1v;11 |
|
| |
|
| |
|
| |
|
Primary: | | |
Before cumulative effect of a change in accounting policy | | |
| |
|
| 7.61 |
|
| 3.42 |
|
| 11.43 |
|
Cumulative effect, at beginning of year, of a change in accounting | | |
policy of an associated company | | |
| |
|
| - |
|
| (0.11 |
) |
| - |
|
|
|
| |
| |
| |
Net income per share | | |
| |
|
| 7.61 |
|
| 3.31 |
|
| 11.43 |
|
|
|
| |
| |
| |
Fully diluted: | | |
Before cumulative effect of a change in accounting policy | | |
| |
|
| 7.60 |
|
| 3.39 |
|
| 11.35 |
|
Cumulative effect, at beginning of year, of a change in accounting | | |
policy of an associated company | | |
| |
|
| - |
|
| (0.11 |
) |
| - |
|
|
|
| |
| |
| |
Net income per share | | |
| |
|
| 7.60 |
|
| 3.28 |
|
| 11.35 |
|
|
|
| |
| |
| |
Number of shares used to compute the primary earnings per share | | |
| |
|
| 4,132,728 |
|
| 4,025,181 |
|
| 3,999,867 |
|
|
|
| |
| |
| |
Number of shares used to compute the fully diluted earnings per share | | |
| |
|
| 4,139,533 |
|
| 4,058,610 |
|
| 4,028,107 |
|
|
|
| |
| |
| |
The accompanying notes are an
integral part of the financial statements.
F - 5
AMERICAN ISRAELI PAPER
MILLS LIMITED
STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY
|
Share capital
|
Capital
surpluses
|
Capital surplus resulting from
tax benefit on exercise of employee options
|
Differences from currency translation
resulting from financial statements of associated companies
|
Retained earnings
|
Total
|
|
N I S i n t h o u s a n d s (see note 1b.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT JANUARY 1, 2005 |
|
|
| 125,257 |
|
| 90,060 |
|
| - |
|
| (2,807 |
) |
| 362,803 |
|
| 575,313 |
|
CHANGES IN 2005: | | |
Net income | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 45,715 |
|
| 45,715 |
|
Dividend paid*** | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (100,039 |
) |
| (100,039 |
) |
Exercise of employee options into shares | | |
| * |
|
| - |
|
| 401 |
|
| - |
|
| - |
|
| 401 |
|
Differences from currency translation resulting from | | |
financial statements of associated companies | | |
| - |
|
| - |
|
| - |
|
| 1,994 |
|
| - |
|
| 1,994 |
|
|
| |
| |
| |
| |
| |
| |
BALANCE AT DECEMBER 31, 2005 | | |
| 125,257 |
|
| 90,060 |
|
| 401 |
|
| (813 |
) |
| 308,479 |
|
| 523,384 |
|
CHANGES IN 2006: | | |
Net income | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 13,330 |
|
| 13,330 |
|
Dividend paid | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (100,357 |
) |
| (100,357 |
) |
Exercise of employee options into shares | | |
| * |
|
| - |
|
| 2,013 |
|
| - |
|
| - |
|
| 2,013 |
|
Differences from currency translation resulting from | | |
financial statements of associated companies | | |
| - |
|
| - |
|
| - |
|
| (7,528 |
) |
| - |
|
| (7,528 |
) |
|
| |
| |
| |
| |
| |
| |
BALANCE AT DECEMBER 31, 2006 | | |
| 125,257 |
|
| 90,060 |
|
| 2,414 |
|
| (8,341 |
) |
| 221,452 |
|
| 430,842 |
|
CHANGES IN 2007: | | |
Net income | | |
| - |
|
| - |
|
| - |
|
| - |
|
| 31,442 |
|
| 31,442 |
|
Costs Shares issuance (deduction of costs issuance in the amount of NIS 1,581 thousands)** | | |
| 10 |
|
| 211,635 |
|
| - |
|
| - |
|
| - |
|
| 211,645 |
|
Exercise of employee options into shares | | |
| * |
|
| - |
|
| 983 |
|
| - |
|
| - |
|
| 983 |
|
Differences from currency translation resulting from | | |
financial statements of associated companies | | |
| - |
|
| - |
|
| - |
|
| 3,175 |
|
| - |
|
| 3,175 |
|
|
| |
| |
| |
| |
| |
| |
BALANCE AT DECEMBER 31, 2007 | | |
| 125,267 |
|
| 301,695 |
|
| 3,397 |
|
| (5,166 |
) |
| 252,894 |
|
| 678,087 |
|
|
| |
| |
| |
| |
| |
| |
* |
Represents
an amount less than NIS 1,000. |
*** |
Includes
a dividend, declared in December 2005 and paid in January 2006, amounting to
approximately NIS 50 million. |
F - 6
AMERICAN ISRAELI PAPER
MILLS LIMITED
CONSOLIDATED STATEMENTS
OF CASH FLOWS
|
2007
|
2006
|
2005
|
|
NIS in thousands (see note 1b)
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
| |
|
| |
|
| |
|
Net income for the year | | |
| 31,142 |
|
| 13,330 |
|
| 45,715 |
|
Adjustments to reconcile net income to | | |
net cash provided by operating activities (A) | | |
| 38,096 |
|
| 39,775 |
|
| 42,845 |
|
|
| |
| |
| |
Net cash provided by operating activities | | |
| 69,538 |
|
| 53,105 |
|
| 88,560 |
|
|
| |
| |
| |
CASH FLOWS FROM INVESTING ACTIVITIES: | | |
Purchase of fixed assets | | |
| (85,959 |
) |
| (53,107 |
) |
| (71,080 |
) |
Deposit and Marketable securities | | |
| - |
|
| 11,582 |
|
| 51,003 |
|
Associated companies: | | |
Granting of loans | | |
| (318 |
) |
| - |
|
| (2,744 |
) |
Collection of loans | | |
| 2,893 |
|
| 2,112 |
|
|
|
|
Proceeds from sale of investment of associated company | | |
| 27,277 |
|
| - |
|
| - |
|
Proceeds from sale of subsidiary consolidated in the past (B) | | |
| - |
|
| - |
|
| 2,004 |
|
Proceeds from sale of fixed assets | | |
| 31,415 |
|
| 419 |
|
| 6,532 |
|
|
| |
| |
| |
Net cash used in investing activities | | |
| (24,692 |
) |
| (38,994 |
) |
| (14,285 |
) |
|
| |
| |
| |
CASH FLOWS FROM FINANCING ACTIVITIES: | | |
Proceeds gain from private shares allocating | | |
| 211,645 |
|
| - |
|
| - |
|
Receipt of long-term loans from banks | | |
| - |
|
| 40,000 |
|
| 1,746 |
|
Repayment of long-term loans from banks | | |
| (5,212 |
) |
| (1,277 |
) |
| (277 |
) |
Redemption of notes | | |
| (37,167 |
) |
| (6,913 |
) |
| (6,680 |
) |
Dividend paid | | |
| - |
|
| (150,450 |
) |
| (49,946 |
) |
Short-term credit from banks - net | | |
| (59,988 |
) |
| 109,832 |
|
| (18,613 |
) |
|
| |
| |
| |
Net cash used in financing activities | | |
| 109,278 |
|
| (8,808 |
) |
| (73,770 |
) |
|
| |
| |
| |
INCREASE IN CASH AND | | |
CASH EQUIVALENTS | | |
| 154,124 |
|
| 5,303 |
|
| 505 |
|
BALANCE OF CASH AND CASH EQUIVALENTS AT | | |
BEGINNING OF YEAR | | |
| 13,621 |
|
| 8,318 |
|
| 7,813 |
|
|
| |
| |
| |
BALANCE OF CASH AND CASH EQUIVALENTS AT | | |
END OF YEAR | | |
| 167,745 |
|
| 13,621 |
|
| 8,318 |
|
|
| |
| |
| |
The accompanying notes are an
integral part of the financial statements.
F - 7
AMERICAN ISRAELI PAPER
MILLS LIMITED
CONSOLIDATED STATEMENTS
OF CASH FLOWS
|
2007
|
2006
|
2005
|
|
NIS in thousands (see note 1b.)
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Adjustments to reconcile net income to net cash provided |
|
|
| |
|
| |
|
| |
|
by operating activities: | | |
Income and expenses not involving cash flows: | | |
Share in losses (profits) of associated companies - net | | |
| 2,884 |
|
| 26,663 |
|
| (16,414 |
) |
Capital loss from sale of investment of an associated company | | |
| 28 |
|
| - |
|
| - |
|
Dividend received from associated company | | |
| - |
|
| 19,616 |
|
| 21,761 |
|
Depreciation and amortization | | |
| 34,865 |
|
| 31,957 |
|
| 31,604 |
|
Deferred income taxes - net | | |
| (1,951 |
) |
| (5,755 |
) |
| (7,671 |
) |
Capital losses (gains) on: | | |
Sale of fixed assets - net | | |
| 1,403 |
|
| (28,823 |
) |
| (3,570 |
) |
Sale of subsidiary consolidated in the past (B) | | |
| - |
|
| - |
|
| (874 |
) |
Losses (gains) on short-term deposits and securities | | |
| - |
|
| (166 |
) |
| 45 |
|
Linkage and exchange differences (erosion) on principal of | | |
long-term loans from banks - net | | |
| - |
|
| - |
|
| (111 |
) |
Linkage differences (erosion) on principal of notes | | |
| 6,326 |
|
| (415 |
) |
| 6,171 |
|
Linkage differences (erosion) on principal of long-term loans | | |
granted to associated companies | | |
| (265 |
) |
| 178 |
|
| (975 |
) |
|
| |
| |
| |
| | |
| 43,290 |
|
| 43,255 |
|
| 29,966 |
|
|
| |
| |
| |
Changes in operating asset and liability items: | | |
Increase in trade receivables | | |
| (10,721 |
) |
| (17,641 |
) |
| (7,162 |
) |
Decrease (increase) in other receivables | | |
(excluding deferred income taxes) | | |
| 1,168 |
|
| (1,661 |
) |
| (1,587 |
) |
Decrease (increase) in inventories | | |
| (7,498 |
) |
| 1,890 |
|
| (1,612 |
) |
Increase in trade payables | | |
| 16,101 |
|
| 5,761 |
|
| 3,018 |
|
Increase (decrease) in other payables and accruals | | |
| (4,244 |
) |
| 8,171 |
|
| 20,222 |
|
|
| |
| |
| |
| | |
| (5,194 |
) |
| (3,480 |
) |
| 12,879 |
|
|
| |
| |
| |
| | |
| 38,096 |
|
| 39,775 |
|
| 42,845 |
|
|
| |
| |
| |
Supplementary disclosure of cash flow information - | | |
Payments in cash during the year: | | |
Income taxes paid | | |
| 23,415 |
|
| 23,877 |
|
| 1,559 |
|
|
| |
| |
| |
Interest paid | | |
| 26,428 |
|
| 23,714 |
|
| 15,828 |
|
|
| |
| |
| |
The accompanying notes are an
integral part of the financial statements.
F - 8
AMERICAN ISRAELI PAPER
MILLS LIMITED
CONSOLIDATED STATEMENTS
OF CASH FLOWS
|
2005
NIS in thousands
(see note 1b)
|
|
|
|
|
|
|
|
|
(B) Proceeds from sale of subsidiary consolidated in the past - |
|
|
| |
|
| | |
Assets and liabilities of the subsidiary consolidated in the | | |
past at the date of its sale: | | |
| 509 |
|
Working capital (excluding cash and cash equivalents) | | |
| 1,979 |
|
Fixed assets | | |
| (1,358 |
) |
Long-term liabilities | | |
| 874 |
|
Capital gain from the sale | | |
| 2,004 |
|
(C) Information on
activities not involving cash flows:
|
1) |
Dividend
declared by the Company in December 2005, in the amount of approximately
NIS 50 million, was paid in January 2006. |
|
2) |
Dividend
declared by an associated company in December 2005 that the Companys
share in this dividend amounts to NIS 2,650,000 was paid during 2006. |
|
3) |
In
December 2006 a land was sold in consideration of approximately NIS 40
million, net of tax, betterment levy and other accompanying selling cost.
This amount was transferred to a trustee at the date of the transaction
execution and received during January 2007 see note 10i. |
|
4) |
For
December 31, 2007 the acquisition of fixed assets on credit amounts to NIS
6,634 thousands and for December 31, 2006 amounts to NIS 10,599 thousands. |
The accompanying notes are an
integral part of the financial statements.
F - 9
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES
|
The
consolidated financial statements are drawn up in conformity with accounting principles
generally accepted in Israel and in accordance with the Israeli Securities (Preparation
of Annual Financial Statements) Regulations, 1993. The Companys financial
statements are presented separately from these consolidated financial statements. |
|
The
significant accounting policies, which, except for the changes in the accounting policy
resulting from the first-time application, in 2007, of new accounting standards of the
Israel Accounting Standards Board (hereafter - the IASB) were applied on a
consistent basis, as follows: |
|
As
to the adoption of International Financial Reporting Standards (IFRS), which is to be
carried out in reporting periods commencing on January 1, 2008 and thereafter, see
note 16 below. |
|
1) |
Activities
of the Group |
|
American
Israeli Paper Mills Limited and its subsidiaries (hereafter the Company) are
engaged in the production and sale of paper packaging, in paper recycling activities and
in the marketing of office supplies. The Company also has holdings in associated
companies that are engaged in the production and sale of paper and paper products
including the handling of solid waste (the Company and its investee companies hereafter
the Group). Most of the Groups sales are made on the local (Israeli) market.
For segment information, see note 14. |
|
2) |
Use
of estimates in the preparation of financial statements |
|
The
preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and liabilities at
the dates of the financial statements and the reported amounts of revenues and expenses
during the reporting years. Actual results could differ from those estimates. |
|
Subsidiaries
companies over which the Company has control and over 50% of the ownership, the
financial statements of which have been consolidated with the financial statements of the
Company. |
|
Associated
companies investee companies, which are not subsidiaries, over whose financial and
operational policy the Company exerts material influence, the investment in which is
presented by the equity method. Material influence is deemed to exist when the percentage
of holding in said company is 20% or more, unless there are circumstances that contradict
this assumption. |
|
Interested
parties as defined in the Israeli Securities (Preparation of Annual Financial
Statements) Regulations, 1993. |
|
Related
parties as defined by opinion No. 29 of the Institute of Certified Public
Accountants in Israel. |
F - 10
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES (continued):
|
Controlling
shareholders Until December 31, 2006, transactions between the Company and a
controlling shareholder therein were treated in accordance with the provisions of
Securities Regulations (Presentation of Transactions between a Company and a Controlling
Shareholder Therein in the Financial Statements), 1996 (hereinafter the
Regulations). |
|
As
of January 1, 2007, the Company has been implementing Accounting Standard No. 23: The
Accounting Treatment of Transactions between an Entity and the Controlling Shareholder
Therein. |
|
b. |
Basis
of presentation of the financial statements |
|
1) |
The
Company draws up and presents its financial statements in Israeli currency
(hereafter - shekels or NIS). in accordance with the provisions of
Israel Accounting Standard No. 12 Discontinuance of Adjusting
Financial Statements for Inflation of the IASB, which
establishes principles for transition to nominal reporting, commencing
January 1, 2004 (hereafter - the transition date). Accordingly,
amounts that relate to non-monetary assets (including depreciation and
amortization thereon), investments in associated companies (see also e
below) permanent investments, and equity items, which originate
from the period that preceded the transition date, are based on the data
adjusted for the changes in the exchange rate of the dollar (based on the
exchange rate of the dollar at December 31, 2003), as previously reported.
All the amounts originating from the period after the transition date are
included in the financial statements at their nominal values.
The
financial statements of group companies which are drawn up in foreign
currency, are translated into shekels or are remeasured in shekels for the
purpose of inclusion in these financial statements, as explained in e.
below. |
|
2) |
The
sums of non-monetary assets do not necessarily reflect the realization value
or an updated economic value, but rather only the reported sums of the
said assets, as stated in (1), above. The term cost in these
financial statements shall mean the cost in reported sums. |
|
c. |
Principles
of consolidation: |
|
1) |
The
consolidated financial statements include the accounts of the Company and its
subsidiaries. A list of the main subsidiaries is presented in a schedule
to the financial statements. |
|
2) |
Intercompany
transactions and balances, as well as profits on intercompany sales that have
not yet been realized outside the Group, have been eliminated. |
|
Commencing
January 1, 2007, the Company has been implementing the provisions of Accounting Standard
No. 26, Inventories. |
|
Inventories
are measured at the lower of cost or net realizable value. The cost of inventories
includes acquisition costs, fixed and varied overhead costs, as well as others costs
incurred in bringing the inventory to the current location and condition.
The net
realization value represents the selling price estimate during the ordinary course of
business, net of the estimate of completion costs and the estimate of costs required to
perform the sale. |
|
Until
December 31, 2006, inventory was presented at the lower of cost or market value. |
F - 11
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES (continued):
|
In
accordance with the Standard, when inventories are purchased under credit terms whereby
the arrangement involves a financing element, the inventories should be presented at cost
reflecting the purchase price under ordinary credit terms. The difference between the
actual purchase amount and the cost reflecting the purchase price under ordinary credit
terms, is recognized as an interest expense during the credit period. |
|
The
cost of inventory is determined on a moving average basis. |
|
The
spare parts of machinery and equipment, which are not intended for current use, are
presented under fixed assets. |
|
The
first-time application of the standard did not have any effect on the Companys
financial statements. |
|
e. |
Investments
in associated companies: |
|
1) |
The
investments in these companies are accounted for by the equity method.
According to this method, the Company records, in its statement of income,
its share in the profits and losses of these companies that were created
after acquisition, and, in its statement of changes in shareholders equity,
its share in changes in capital surpluses (mostly translation differences
relating to their investments in subsidiaries that present their financial
statements in foreign currency) that were created after acquisition. |
|
2) |
Profits
on intercompany sales, not yet realized outside the Group, have been
eliminated according to the percentage of the Companys holding in
such companies. |
|
3) |
The
Company reviews at each balance sheet date whether
any events have occurred or changes in circumstances have taken place,
which might indicate that there has been an impairment of its investments
in associated companies see i. below. |
|
4) |
The
excess of cost of the investment in associated companies over the equity in
net assets at time of acquisition (excess of cost of investment)
or the excess of equity in net assets of associated companies at time of
acquisition over the cost of their acquisition (negative excess of
cost of investment) represent the amounts attributed to specific
assets upon acquisition, at fair value. The excess of cost of investment
and the negative excess of cost of investment are presented at their net
amount and are amortized over the remaining useful life of the assets. The
average rate of amortization is 10%. |
|
5) |
In
accordance with the provisions of Standard No. 20 (As Amended), which is
applied by the group companies since January 1, 2006, as of that date,
amortization of goodwill at associated company, which until then was included
under share in profits (losses) of associated companies, was
discontinued. The amounts of amortization of goodwill, included under
share in profits (losses) of associated companies, as above, for
the year ended December 31, 2005 are NIS 4 million. |
|
These
securities are stated at market prices. |
|
The
changes in value of the above securities are carried to financial income or expense. |
F - 12
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES (continued):
|
g. |
Real
estate for investment |
|
Commencing
January 1, 2007, when the standard became effective, the Company has been implementing
Accounting Standard No. 16, Real Estate For Investment. |
|
Real
estate for investment is defined as real estate (land or a building or part of a building
or both), which is held (by the owners or under a financing lease), for the purpose of
producing rental income or realizing a capital appreciation or both, and not for the
purpose of: |
|
|
The
use of manufacture or supply of goods or services or for administrative purposes, or |
|
|
Sale
during the ordinary course of business |
|
The Company does not own any
buildings that fall under the definition of Real Estate for Investment. The Company
has several leasing rights in real estate which, in accordance with IFRS, are classified
as operating leases. Upon initial adoption of IFRS, the Company does not intend to
classify these leasehold rights as real estate held for investment. The Company has
consequently decided not to classify these leasehold rights as real estate held for
investment according to Standard 16, but rather to continue to present them at cost, as
part of fixed assets, pursuant to generally accepted accounting principles in Israel. The
initial adoption of the provisions of the Standard did not consequently have a material
impact on the Companys financial statements. |
|
Commencing
January 1, 2007, The Company has been implementing Accounting Standard No. 27 Fixed
Assets and Accounting Standard No. 28 Amendment of Transition Provisions in
Accounting Standard No. 27, Fixed Assets. |
|
A
fixed asset is a tangible item, which is held for use in the manufacture or supply of
goods or services, or leased to others, which is predicted to be used for more than one
period. The Company presents its fixed assets items according to the cost model. |
|
Under
the cost method a fixed asset item is presented at the balance sheet at cost (net
of any investment grants), less any accumulated depreciation and any accumulated
impairment losses. The cost includes the cost of the assets acquisition as well as
costs that can be directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner intended by
management. The cost of qualifying assets also includes credit costs which have to be
discounted as stated in note k. below. |
|
The
depreciation is carried out systematically by the straight line method over the expected
useful life of the items components from the date in which the asset is prepared
for its intended use. |
|
The
useful life that was used in the calculation of the assets depreciation is as
follows: |
|
|
Years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings |
10 to 50 |
(primarily 33) |
|
Machinery and equipment |
7 to 20 |
(Primarily 10 and 20) |
|
Vehicles |
5 to 7 |
(primarily 7) |
|
Office furniture & equipment (including computers) |
3 to 17 |
(primarily 4) |
F - 13
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES (continued):
|
In
accordance with the implementation of the transitional provisions of Accounting Standard
No. 28 Amendment of Transition Provisions in Accounting Standard No. 27, Fixed
Assets, as of January 1, 2007, the Company has been adopting the cost model. |
|
The
Company assesses at each balance sheet date whether any events have
occurred or changes in circumstances have taken place, which might indicate that there
has been an impairment of non-monetary assets, mainly fixed assets and investments in
associated companies. When such indicators of impairment are present, the Company
evaluates whether the carrying value of the asset is recoverable from the cash flows
expected from that asset. |
|
The
recoverable value of an asset is determined according to the higher of the net selling
price of the asset or its value in use to the Company. The value in use is determined
according to the present value of anticipated cash flows from the continued use of the
asset, including those expected at the time of its future retirement and disposal. |
|
When
it is not possible to assess whether an impairment provision is required for a particular
asset on its own, the need for such a provision is assessed in relation to the
recoverable value of the cash-generating unit to which that asset belongs.
In accordance
with the transitional provisions of Standard 22, commencing January 1, 2006, in
addition to the aforesaid, the financial statements include the following changes: |
|
The
balance of deferred issuance costs, which at December 31, 2005 amounted to NIS 946
thousands, has been reclassified and presented as a deduction from the amount of the
liabilities to which such expenses relate. Through December 31, 2005, deferred
issuance costs were included under other assets and amortized according to the
straight-line method. |
|
The
change in the amortization method of deferred issuance costs, as above, do not have a
material effect on the operating results in the reported years. |
|
Until
December 31, 2005, the deferred charges in respect of issue of debentures were displayed
in Other Assets at their cost, deduction of accumulated amortization. The above expenses
that were attributed to the debenture issuance were amortized at the straight line method
on the basis of the weighted average of the debentures in turnover, till their
redemption date. |
|
The
balance of deferred issuance costs, which at December 31, 2005 amounted to NIS 946
thousands, has been reclassified and presented as a deduction from the amount of the
liabilities to which such expenses relate. Through December 31, 2005, deferred
issuance costs were included under other assets and amortized according to the
straight-line method. |
|
The
Company has been discounting credit costs in accordance with Standard No. 3 Discounting
of Credit Costs of the Israeli Institute of Accounting Standards. |
|
Pursuant
to Standard No. 3, specific and non-specific financing costs are to be capitalized to
qualifying assets (assets under preparation or establishment, which still do not serve
their purpose and the preparation of which for their intended use or sale require
considerable time, all in accordance with the rule established in Standard No. 3).
Non-specific financing costs are capitalized to such qualifying assets, or portion
thereof, which was not financed with specific credit, by means of a rate which is the
weighted-average cost of the financing sources which were not specifically capitalized. |
F - 14
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES (continued):
|
l. |
Deferred
income taxes: |
|
The
Company and the companies in the Group allocate taxes in respect of temporary differences
between the value of assets and liabilities in the financial statements and their tax
base and in respect of losses for tax purposes, whose realization is predictable.
Deferred taxes are computed at the tax rates expected to be in effect at the time of
realization thereof, as they are known at the balance sheet date. |
|
The
current taxes, as well as the changes in the deferred tax balances, are included in the
tax expenses or income in the reporting period. |
|
Taxes
that would apply in the event of disposal of investments in subsidiaries and associated
companies have not been taken into account in computing the deferred taxes, as it is the
Companys policy to hold these investments, not to realize them. |
|
The
Group may incur an additional tax liability in the event of an intercompany dividend
distribution derived from approved enterprises profits see note 7a.
No account was taken of this additional tax, since it is the Groups policy not to
cause distribution of dividends, which would involve an additional tax liability to the
Group in the foreseeable future. |
|
In
April 2005, the IASB issued Clarification No. 7 Accounting Treatment of the
Tax Benefits, in Respect of Capital Instruments Granted to Employees, For Which No
Compensation was Recognized. The provisions of this clarification apply to such tax
benefits, which have not been allowed as a deduction through December 31, 2004. The
clarification stipulates that, commencing on January 1, 2005, the tax benefit
derived by the Company from the exercise of options granted to employees is to be carried
to shareholders equity, in the period in which the benefit to the employees is
allowed as a deduction for tax purposes. Formerly, the aforesaid tax saving was credited
to the statement of income, as part of the taxes on income item. |
|
Commencing
January 1, 2006, the company applies Israel Accounting Standard No. 25 of the
IASB Revenue, which prescribes recognition, measurement, presentation
and disclosure criteria for revenues originating from the sale of goods purchased or
manufactured by the company. |
|
Revenue
is measured, as detailed below, at the fair value of the consideration received or the
consideration that the company is entitled to receive, taking into account trade
discounts and/or bulk discounts granted by the entity: |
|
Revenue
from sale of goods is recognized when all the following conditions have been satisfied:
(a) the significant risks and rewards of ownership of the goods have been transferred to
the buyer; (b) the company retains neither continuing managerial involvement to the
degree usually associated with ownership nor effective control over the goods sold; (c)
the amount of revenue can be measured reliably; (d) it is probable that the economic
benefits associated with the transaction will flow to the company; and (e) the costs
incurred or to be incurred in respect of the transaction can be measured reliably. |
F - 15
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES (continued):
|
The
Company implements Clarification No. 8 of the Israeli Institute of Accounting Standard
regarding the reporting of revenues on a gross basis or a net basis. Accordingly, the
Companys revenues as an agency or intermediary, without bearing the risks and
returns that derive from the transaction, are presented on a net basis. |
|
Interest
income is accrued on a cumulative basis, taking into consideration the principal to be
repaid and by using the effective interest rate. |
|
Dividend
income in respect of investments is recognized on the date in which the entitlement for
said income was created for the shareholders. |
|
Upon
the application of the standard, an associated company separates the financing component
embedded in revenue from sales made on credit for periods exceeding the customary credit
period in its industry (mainly 90 days), that does not bear interest at the appropriate
rate; the financing component is determined according to the amount by which the nominal
amount of consideration for the transaction exceeds the present value of future cash
payments in respect thereof, based on the customary market interest rate applicable to
credit extended under similar terms. Revenue from the financing component is recognized
over the credit period. Through December 31, 2005, the company did not separate the
financing component in respect of sales made on credit, as above, and included within
revenue from the sale on the date of recognition of such revenue. |
|
In
accordance with the transitional provisions of the standard, on January 1, 2006 the
company recognized an expense of NIS 1.1 million as a result of presentation in
present value, resulting from the adjustment of trade receivables in respect of such
credit transactions to their present value on the effective date of the standard, the
share of the company at the adjustment effect as above was approximately NIS 0.5 million
which is presented in these financial statements under Cumulative effect, at
beginning of year, of an accounting change in an associated company. |
|
n. |
Shipping
and handling costs |
|
Shipping
and handling costs are classified as a component of selling and marketing expenses. |
|
o. |
Allowance
for doubtful accounts |
|
The
allowance is determined mainly in respect of specific debts doubtful of collection (see
note 12b). |
|
p. |
Derivate
financial instruments |
|
Gains
and losses on derivatives that are hedging existing assets or liabilities are recognized
in income commensurate with the results from those assets or liabilities. |
F - 16
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES (continued):
|
q. |
Fair
Value of Financial Instruments |
|
The
fair value of financial instruments traded in active markets is based on the quoted
prices as of the balance sheet date. The fair value of financial instruments that are not
traded in an active market will be determined on the market prices of similar financial
instruments and in the absence thereof, based on accepted valuation methods.
The Company
uses several valuation techniques, which are accompanied by assumptions based on the
existing economic conditions at each balance sheet date. |
|
The
applied valuation methods include the current value of cash flows, economic models for
the valuation of options and additional acceptable valuation methods. |
|
r. |
Offset
of Financial instruments |
|
Financial
assets and financial liabilities are presented on the balance sheet at their net amount,
only when the Company has a legally enforceable right to effect such set off, and subject
to the existence of intent to settle the asset and the liability on a net basis, or to
realize the asset and settle the liability simultaneously. |
|
Commencing
January 1, 2006, the company applies Israel Accounting Standard No. 24 of the
IASB, Share-Based Payment (hereafter - Standard 24), which prescribes
the recognition and measurement principles, as well as the disclosure requirements,
relating to share-based payment transactions. |
|
Since
the company has not granted any equity-settled awards, nor made modifications to existing
grants, subsequent to March 15, 2005, the measurement criteria of the standard do
not apply to past grants made by the company, and its application has not had any effect
on the financial statements of the Company. |
|
t. |
Transactions
between the Company and Controlling Shareholders Therein |
|
1. |
Until
December 31, 2006, transactions between the Company and a controlling
shareholder therein were treated in accordance with the provisions of
Securities Regulations (Presentation of Transactions between a Company and
a Controlling Shareholder Therein in the Financial Statements), 1996
(hereinafter the Regulations). |
|
As
of January 1, 2007, the Company has been implementing Accounting Standard No. 23: The
Accounting Treatment of Transactions between an Entity and the Controlling Shareholder
Therein. |
|
This
standard stated that the basis of valuation in transactions between an entity and the
controlling shareholder therein is the fair value. Transactions such as loans of
controlling shareholders or distribution pf dividend to controlling shareholders are not
be recorded in shareholders equity and should to be included in the operating
results of the controlled entity. The differences between the proceeds determined in the
transactions between an entity and a controlling shareholder therein and the fair value
of these transactions, shall be carried to shareholders equity. Current taxes and
deferred taxes that relate to items carried to shareholders equity in respect of
transactions with controlling shareholders, shall also be carried directly to shareholders equity.
The provisions of the standard do not apply to transactions of business combinations
under the same controlling interest.
The implementation of the standard did not have any
effect on the financial statements of the Company. |
F - 17
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES (continued):
|
2. |
Until
December 31, 2006, loans provided/received to/from a controlling shareholder,
not under market conditions, were presented in the financial statements at
their fair value only if the difference between the proceeds of the loan and
its fair value exceeded 5 percent. |
|
As
of January 1, 2007, loans provided/received are presented on the date of the initial
recognition of the fair value, while the difference between the amount of the loan and
its fair value is carried to shareholders equity. |
|
The
standard applies to transactions between an entity and a controlling shareholder therein,
which were carried out after January 1, 2007, as well as to loans provided or received
from a controlling shareholder prior to January 1, 2007, starting from this date. |
|
Pursuant
to the standard, the balance of loans that were granted by the Company to an associated
company, as at January 1, 2007, is measured at fair value.
The implementation of the
standard did not have material effect on the financial statements of the Company. |
|
The
Company considers all highly liquid investments, which include short-term bank deposits
that are not restricted as to withdrawal or use, the period to maturity of which did not
exceed three months at time of deposit, to be cash equivalents. |
|
The
computation of basic net income per share is generally based on earnings available for
distribution to holders of ordinary shares, divided by the weighted average number of
ordinary shares outstanding during the period. |
|
In
computing diluted net incomeper share, the weighted average number of shares to be
issued, assuming that all dilutive potential shares are converted into shares, is to be
added to the average number of ordinary shares used in the computation of the basic
income (loss) per share. Potential shares are taken into account, as above, only when
their effect is dilutive (reducing net income per share from continuing activities). |
|
Comparative
net income per share figures for the year 2005 included in these financial statements
reflect a retrospective application of the new standards computation directives. |
|
As
to the data used in the computation of net income per share, as above see note 11 |
|
w. |
Israel
Accounting Standard No. 29 Adoption of International Reporting
FinancialStandards (IFRS)" |
|
In
July 2006, the Israel Accounting Standards Board issued Israel Accounting Standard No. 29
Adoption of International Reporting Financial Standards (IFRS)(hereafter
the standard or Standard 29). |
|
The
standard stipulates that companies, which are subject to the Securities Law, and are
required to report pursuant to regulations issued thereunder, except for offshore
corporations, shall draw up their financial statements under International Financial
Reporting Standards (IFRS) and the clarifications thereto, which are issued by the IASB
(The International Accounting Standards Board). |
F - 18
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 SIGNIFICANT
ACCOUNTING POLICIES (continued):
|
An
entity implementing the IFRS as of January 1, 2008, which elected to report comparative
data for one year only (2007), shall be required to prepare an opening balance sheet as
of January 1, 2007 (hereafter opening balance sheet) in accordance
with IFRS provisions. |
|
The
transition to reporting under IFRS shall be conducted in accordance with the provisions
of IFRS 1, First-Time Adoption of International Financial Reporting Standards.
IFRS 1 prescribes rules on how an entity should make the transition from financial
reporting based on previous local accounting rules, to financial reporting based on
international accounting standards. IFRS 1 supersedes all the transitional provisions
established by other IFRS (including transitional provisions established in previous
local accounting standards) and states that all IFRS should be adopted retroactively in
the opening balance sheet. At the same time, IFRS 1 provides reliefs concerning mandatory
retroactive implementation with regard to certain defined topics. In addition, IFRS 1
specifies several exceptions to the principle of retrospective application of certain
aspects of other IFRS. |
|
The
Companys management has elected to adopt IFRS starting from January 1, 2008, see
Note 16 regarding reconciliations to be carried out during the transition to reporting
under IFRS and the reliefs which the Company has chosen pursuant to the provisions of
IFRS1. |
F - 19
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 2
INVESTMENTS IN ASSOCIATED COMPANIES:
|
a. |
The
Company has a number of investments in associated companies, which are held
either directly or through investee companies. The financial statements of
significant associated companies (Mondi Business Paper Hadera Ltd. formerly
Neusiedler Hadera Paper Ltd, NHP Hogla-Kimberly Ltd and Carmel container
system Ltd.) are attached to these financial statements. |
|
|
December 31
|
|
|
2007
|
2006
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
Shares: |
|
|
| |
|
| |
|
|
Cost | | |
| 7,325 |
|
| 54,241 |
|
|
Excess of cost of investment - net | | |
| 6,929 |
|
| 2,086 |
|
|
L e s s - accumulated amortization | | |
| (6,929 |
) |
| (2,086 |
) |
|
Gain on issuance of shares of an associated | | |
|
company to a third party | | |
| 40,241 |
|
| 40,241 |
|
|
Differences from translation of foreign currency | | |
|
financial statements | | |
| (5,166 |
) |
| (8,341 |
) |
|
Share in profits (after deduction of losses) accumulated since | | |
|
acquisition | | |
| 249,132 |
|
| 219,328 |
|
|
|
| |
| |
|
| | |
| 291,532 |
|
| 305,469 |
|
|
Long-term loans and capital notes * | | |
| 54,654 |
|
| 70,041 |
|
|
|
| |
| |
|
| | |
| 346,186 |
|
| 375,510 |
|
|
|
| |
| |
|
* |
Classified
by linkage terms and rate of interest, the total amounts of the loans and capital notes
are as follows: |
|
|
Weighted average interest rate at December 31, 2006
|
December 31
|
|
|
2007
|
2006
|
|
|
%
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
Capital notes in dollars |
|
|
| |
|
| 2,698 |
|
| 6,337 |
|
|
Unlinked loans and capital notes | | |
| 4.8 |
% |
| 51,956 |
|
| 63,704 |
|
|
|
| |
| |
| |
|
| | |
| |
|
| 54,654 |
|
| 70,041 |
|
|
|
|
| |
| |
|
As
of December 31, 2007, the repayment dates of the balance of the loans and capital
notes have not yet been determined. |
F - 20
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 2 INVESTMENTS IN
ASSOCIATED COMPANIES (continued):
|
c. |
The
changes in the investments during 2007 are as follows: |
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year |
|
|
| 375,510 |
|
|
|
| |
|
Changes during the year: | | |
|
Share in losses of associated companies - net | | |
| (2,884 |
) |
|
Dividend from associated companies | | |
| (14,692 |
) |
|
Adjustments resulting from translation of foreign currency | | |
|
financial statements | | |
| 3,175 |
|
|
Share in capital surplus from capital note to associated company | | |
| 464 |
|
|
Increase in balance of long-term loans and capital notes - net | | |
| (15,387 |
) |
|
|
| |
|
Balance at end of year | | |
| 376,186 |
|
|
|
| |
|
d. |
Mondi
Business Paper Hadera Ltd. (hereafter - Mondi Hadera; formerly Neusiedler
Hadera Paper Ltd. NHP): |
|
Mondi
Hadera is held to the extent of 49.9% by the Company and also by Mondi Business Paper LTD
(hereafter MBP), under an agreement dated November 21, 1999. According to the
said agreement, Mondi Hadera purchased the Groups activities in the field of
printing and writing paper, and issued to MBP 50.1% of its shares. As part of the said
agreement, Neusiedler was granted an option to sell to the Company its holdings in Mondi
Hadera, at a price that is 20% lower than the value (as defined in the agreement). The
understanding between the parties is that the option would only be exercised under
prolonged, extraordinary circumstances that preclude the operation of Mondi Hadera in
Israel. The Company believes that the likelihood of such circumstances is very remote. |
|
e. |
Hogla-Kimberly
Ltd. (hereafter Hogla-Kimberly) |
|
Hogla-Kimberly
is held to the extent of 49.9% by the Company and to the extent of 50.1% by Kimberly
Clark Corporation (hereafter- KC). |
|
f. |
Investment
in Carmel Container Systems Limited (hereafter Carmel) |
|
Carmel
Container Systems was held to the extent of 26.25% by the Company. During the second
quarter an affiliated company (Carmel Container Systems Limited hereafter Carmel)
acquired its own shares which were held by part of its minority shareholders. As a result
of this acquisition the share of holding in Carmel increased from 26.25% to 36.21%. The
increase in the share of holding yielded to the company negative excess of cost in the
amount of NIS 4,923 thousands which according to standard 20 (adjusted) was related to
non financial assets, which will be realized according to the rate of realization of
these assets. |
|
During
the period the Company included in the profits from affiliated companies, profit amount
of NIS 2,439 thousands form the realization of these asstes. |
F - 21
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 2 INVESTMENTS IN
ASSOCIATED COMPANIES (continued):
|
g. |
Investment
in T.M.M Integrated Recycling Industries Ltd. |
|
On
January 4, 2007, the Company entered into an agreement with Veolia Israel CGEA Ltd.
(hereinafter: CGEA), whereby it will sell to CGEA its holdings in Barthelemi,
along with its remaining holdings in T.M.M.Pursuant to the agreement, CGEA has
acquired all of the Companys holdings in Barthelemi.CGEA also acquired all
of the Companys holdings in T.M.M, as part of a complete tender offer and starting
February 2007, the Company is no longer a shareholder in T.M.M. |
|
The
sale of the holdings in T.M.M was made in consideration of a sum approximately similar to
the book value, after taking into account, the impairment as mention above. |
F - 22
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 FIXED ASSETS:
|
a. |
Composition
of assets and the accumulated depreciation thereon, grouped by major classifications,
and changes therein during 2007, are as follows: |
|
Cost
|
Accumulated depreciation
|
|
|
|
Balance at beginning of year
|
Additions during the year
|
Retirements during the year
|
Balance at end of year
|
Balance at beginning of year
|
Additions during the year
|
Retirements during the year
|
Balance at end of year
|
Depreciated balance
|
|
December 31
|
|
2007
|
2006
|
|
NIS in thousands
|
NIS in thousands
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and buildings thereon |
|
|
| 228,747 |
|
| 21,434 |
|
| 99 |
|
| 250,082 |
|
| 113,944 |
|
| 3,673 |
|
| 154 |
|
| 117,463 |
|
| 132,619 |
|
| 114,803 |
|
Machinery and equipment | | |
| 702,206 |
|
| 80,592 |
|
| 20,027 |
|
| 762,771 |
|
| 512,044 |
|
| 25,658 |
|
| 8,505 |
|
| 529,197 |
|
| 233,574 |
|
| 190,162 |
|
Vehicles | | |
| 35,339 |
|
| 5,228 |
|
| 5,322 |
|
| 35,245 |
|
| 23,049 |
|
| 3,409 |
|
| 5,147 |
|
| 21,311 |
|
| 13,934 |
|
| 12,290 |
|
Office furniture and equipment | | |
(including computers) | | |
| 70,913 |
|
| 2,377 |
|
| 807 |
|
| 72,483 |
|
| 59,379 |
|
| 2,125 |
|
| 10,194 |
|
| 51,310 |
|
| 21,173 |
|
| 11,534 |
|
Payments on account of | | |
machinery and equipment, net | | |
| 49,329 |
|
| (27,547 |
) |
| - |
|
| 21,782 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 21,782 |
|
| 49,329 |
|
Spare parts - not current, net | | |
| 22,705 |
|
| |
|
| 221 |
|
| 22,484 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 22,484 |
|
| 22,705 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | |
| 1,109,239 |
|
| 82,084 |
|
| 26,476 |
|
| 1,164,847 |
|
| 708,416 |
|
| 34,865 |
|
| 24,000 |
|
| 719,281 |
|
| 445,566 |
|
| 400,823 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
F - 23
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 FIXED ASSETS (continued):
|
b. |
The
item is net of investment grants in respect of investments in approved
enterprises (see notes 7a). |
|
c. |
The Companys real estate is partly owned and partly leased to the
extent of NIS 37.5 million, in respect of which lease fees of approximately
NIS 25.8 million have been capitalized. The leasehold rights are for 49-57 year
periods ending in the years 2008 to 2059, with options to extend for an
additional 49 years. |
|
d. |
As
of December 31, 2007 and 2006, the cost of fixed assets includes borrowing
costs of NIS 1,007,000 capitalized to the cost of machinery and
equipment. |
|
e. |
Depreciation expenses
amounted to NIS 34,865,000, NIS 31,957,000 and NIS 31,604,000 , for the years ended December
31, 2007, 2006 and 2005, respectively. |
NOTE 4 NOTES AND
OTHER LONG-TERM LIABILITIES:
|
The
item represents two series of notes issued to institutional investors as follows: |
|
|
December 31
|
|
|
2007
|
2006
|
|
|
NIS in thousands
|
|
|
Series II
|
Series I
|
Series II
|
Series I
|
|
|
|
|
|
|
|
Balance |
|
|
| 182,052 |
|
| 14,098 |
|
| 206,627 |
|
| 20,522 |
|
|
Less - current maturities | | |
| 30,342 |
|
| 7,049 |
|
| 29,518 |
|
| 6,841 |
|
|
|
| |
| |
| |
| |
|
| | |
| 151,710 |
|
| 7,049 |
|
| 177,109 |
|
| 13,681 |
|
|
|
| |
| |
| |
| |
|
The
balance of the notes as of December 31, 2007 is redeemable in two installments, due
in June of each of the years 2008-2009, each installment amounting to 6.66% of the
original par value of the notes, which is NIS 105,055,000, in December 2007 terms;
the unpaid balance of the notes bears annual interest of 3.8%, payable annually each
June. The notes principal and interest are linked to the Israeli known CPI
(base CPI of February 1992). |
|
2) |
Series
II December 2003 |
|
The
balance of the notes as of December 31, 2007 is redeemable in 6 equal, annual
installments due in December of each of the years 2008-2013; the unpaid balance of the
notes bears annual interest of 5.65%, payable annually each December. The notes principal
and interest are linked to the Israeli known CPI (based CPI of November 2003). |
F - 24
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 4 NOTES AND
OTHER LONG-TERM LIABILITIES:
|
3) |
As
of December 31 2007 the balance of the notes represents in deduction of
issuance costs amounts to NIS 625 thousands. As to the change from January
2006 in the presentation of deferred issuance costs see note 1j
above. |
|
The
section refers to two long-term loans that were received from banks, as detailed below: |
|
|
2007
|
2006
|
|
|
NIS Thousands
|
NIS Thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan 1 |
|
|
| 11,591 |
|
| 14,319 |
|
|
Loan 2 | | |
| 21,920 |
|
| 24,404 |
|
|
Less - current maturities | | |
| 5,384 |
|
| 5,208 |
|
|
|
| |
| |
|
| | |
| 28,127 |
|
| 33,515 |
|
|
|
| |
| |
|
In
July 2006, the Company assumed a loan of NIS 15 million.The outstanding balance as
at December 31, 2007, is scheduled for repayment in 17 quarterly installments through to
January 2012, each in the sum of NIS 0.7 million.The outstanding balance of the
loan carries a variable rate of interest, linked to the Prime lending rate. |
|
In
July 2006, the Company assumed a loan of NIS 25 million.The outstanding balance as
at December 31, 2007, is scheduled for repayment in 27 quarterly installments through to
July 2014, each in the sum of NIS 1.0 million including principal and interest component
on the outstanding balance of principal.The outstanding balance of the loan
carries a variable rate of interest, linked to the Prime lending rate. |
|
The
capital note from an associated company is unlinked and interest free. No repayment date
has been fixed, but the associated company does not intend to demand the repayment of the
capital note before January 1, 2009. |
F - 25
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 5 EMPLOYEE
RIGHTS UPON RETIREMENT:
|
a. |
Israeli
labor laws and agreements require the Company and its subsidiaries to pay
severance pay to employees dismissed or leaving their employment under certain
circumstances, computed on the basis of the number of years of service, or a
pension upon retirement. |
|
To
cover the liability for employee rights upon retirement, pursuant to labor agreements in
force and based on salary components that, in managements opinion, create
entitlement to severance pay, deposits are made by the Company and its subsidiaries with
various provident funds (including pension funds) or insurance policies for the benefit
of the employees. |
|
The
severance pay and pension liability and the amounts funded as above are not reflected in
the financial statements, as the pension and severance pay risks have been irrevocably
transferred to the pension funds and the insurance companies, as allowed by the Severance
Pay Law. |
|
b. |
The
expenses relating to employee rights upon retirement, which reflect the amounts
that were deposited during the reported years with provident funds, pension
funds and various insurance policies, are NIS 9,398,000, NIS 8,849,000 and
NIS 8,710,000 in 2007, 2006, and 2005, respectively. |
NOTE 6
SHAREHOLDERS EQUITY:
|
Composed
of ordinary registered shares of NIS 0.01 par value, as follows: |
|
|
|
December 31
|
|
|
|
2007
|
2006
|
|
|
Authorized
|
Issued and paid
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares |
|
|
| 20,000,000 |
|
| 5,060,774 |
|
| 4,032,723 |
|
|
|
| |
| |
| |
|
Amount in NIS | | |
| 200,000 |
|
| 50,608 |
|
| 40,327 |
|
|
|
| |
| |
| |
|
The
shares are traded on stock exchanges in Tel-Aviv and in the U.S. (AMEX). The
quoted prices per share, as of December 31, 2007 are NIS 249.2 and $ 65.50 (NIS 251.91),
respectively. |
|
As
part of the Companys arrangement for the financing of the acquisition of the new
machine for the manufacture of packaging paper in November 2007, the Company performed a
private allotment of 1,012,585 ordinary shares of NIS 0.01 par value of the Company,
which, as of the date of allotment, accounted for 20% of the issued share capital of the
Company against an investment in the total sum of $213 million (hereinafter in this
section: the raised amount). About 60% of the shares (607,551 shares) were
allotted to the shareholders in the Company, Clal Industries and Investments and Discount
Investments (hereinafter: the special offerees), in accordance with the
pro-rata holdings in the Company, and 40% of the shares (405,034 shares) were offered by
way of a tender to institutional entities and private entities. The price per share for
institutional entities and private entities as determined in the tender was NIS 210.
Accordingly, the price per share for Clal Industries and Investments and Discount
Investments considering the amount of shares offered to Clal Industries and Investments
and Discount Investments, was set at NIS
211.05 (the price per share in the tender plus a rate of 0.5%). The Company paid the
distributors a rate of 1.2% of the total consideration received from institutional
entities and private entities, that is, a sum of NIS 1,020,686. |
F - 26
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 6 SHAREHOLDERS
EQUITY (continued):
|
The
share capital was increased as a result from this issuance in amounts of NIS 10 thousands
and the capital surplus that divided from the issuance in deduction of cost issuance as
mentioned above amounts of NIS 211,635 thousands. |
|
b. |
Employee
stock option plans: |
|
1) |
The
2001 plan for senior officers in the Group |
|
On
April 2, 2001, the Companys board of directors approved a stock option plan
for senior officers in the Group (hereafter the 2001 plan for senior officers).
Under this plan, 194,300 options were allotted on July 5, 2001 without consideration.
Each option can be exercised to purchase one ordinary share of NIS 0.01 par value of the
Company. The options are exercisable in four equal annual batches. The blocking period of
the first batch is two years, commencing on the date of grant; the blocking period of the
second batch is three years from the date of grant, and so forth. Each batch is
exercisable within two years from the end of the blocking period. |
|
The
exercise price of the options granted as above was set at NIS 217.00, linked to the
CPI, on the basis of the known CPI on April 2, 2001. The exercise price for each
batch is determined as the lesser of the aforementioned exercise price or the average
price of the Companys shares as quoted on the Tel-Aviv Stock Exchange (hereafter -
the Stock Exchange) during the thirty trading days preceding to the effective date of
each batch, less 10%. The 2001 plan for senior officers expired during July 2007. |
|
In
2007, 2006 and 2005, 35,425, 44,998 and 13,877 options, respectively, were exercised
under the 2001 plan for senior officers, and 15,466, 24,303 and 4,307 shares of NIS 0.01,
respectively, were issued following the exercise of the options, as above. 8,250 options
expired in 2005 (from the first batch) and 10,225 options expired in 2006 (from the
second batch). In 2006 12,225 option were cancelled from the third batch and 12,225 were
cancelled from the forth batch. |
|
This
plan is designed to be governed by the terms stipulated by Section 102 of the Israeli
Income Tax Ordinance. Inter alia, these terms provide that the Company is allowed to
claim, as an expense for tax purposes, the amounts credited to the employees as a benefit
in respect of shares or options granted under the plan. |
|
The
amount allowed as an expense for tax purposes, at the time the employee utilizes such
benefit, is limited to the amount of the benefit that is liable to tax as labor income,
in the hands of the employee; all being subject to the restrictions specified in Section
102 of the Income Tax Ordinance. |
|
Since,
in accordance with Israeli accounting principles, the Company does not recognize the
expense in its accounts (with respect to the salary benefit embodied in these grants),
then under Clarification No. 7 of the IASB (See note 1j), the Company credited the tax
saving derived from the exercise of benefits by employees in the years 2005, 2006 and
2007 to capital surplus. |
F - 27
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 6 SHAREHOLDERS
EQUITY (continued):
|
2) |
The
2001 employee plan |
|
On
August 29, 2001, the Companys board of directors approved a stock option plan
for employees in the Group, according to a specification (hereafter the 2001
employee plan). Under this plan, up to 125,000 options will be allotted without
consideration. Each option can be exercised to purchase one ordinary share of NIS 0.01
par value of the Company. The blocking period of the options is two years from the date
of grant. Each option is exercisable within three years from the end of the blocking
period. |
|
On
November 4, 2001, 81,455 options were granted under the 2001 employee plan. |
|
The
exercise price of all the options granted as above was set at NIS 160.99, linked to
the CPI, on the basis of the known CPI on August 29, 2001. This price represents the
average price of the Companys shares as quoted on the Tel-Aviv Stock Exchange
during the thirty trading days prior to the date of the board of directors approval,
less 10%. The 2001 employee Plan was expired during November 2006. |
|
In
2006 and 2005 10,091 and 2,405 options, respectively, were exercised under the 2001
employee plan, and 6,215 and 1,224 shares of NIS 0.01, respectively, were issued
following the exercise of options, as above. The last of the options that were granted
and were not exercised, expired during 2006. |
|
This
plan is designed to be governed by the terms stipulated by Section 102 of the Israeli
Income Tax Ordinance. Inter alia, these terms provide that the Company is allowed
to claim, as an expense for tax purposes, the amounts credited to the employees as a benefit
in respect of shares or options granted under the plan. |
|
The
amount allowed as an expense for tax purposes, at the time the employee utilizes such
benefit, is limited to the amount of the benefit that is liable to tax as labor income,
in the hands of the employee; all being subject to the restrictions specified in Section 102
of the Income Tax Ordinance. |
|
Since,
in accordance with Israeli accounting principles, the Company does not recognize the
expense in its accounts (with respect to the salary benefit embodied in these grants),
then under Clarification No. 7 of the IASB (See note 1j), the Company credited the tax
saving derived from the exercise of benefits by employees in the years 2006 and 2005 to
capital surplus. |
|
3) |
The
2008 plan for senior officers in the Group |
|
With
regard to the 2008 plan for senior officers in the group see note 15 events
subsequent balance sheet date. |
NOTE 7 TAXES ON
INCOME:
|
a. |
Tax
benefits under the Law for the Encouragement of Capital Investments, 1959 (hereafter
the law) |
|
Under
the law, by virtue of the approved enterprise status granted to certain of
their production facilities, certain subsidiaries were entitled to various tax benefits
(mainly reduced tax rates) until 2003. |
|
During
the period of benefits mainly 7 years commencing in the first year in which the
companies earn taxable income from the approved enterprises, provided the maximum period
to which it is restricted by law has not elapsed reduced tax rates or exemption
from tax apply, as follows: |
F - 28
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 7 TAXES ON INCOME (continued):
|
1) |
Corporate
tax rate of 25%, instead of the regular tax rate (see d. below). |
|
2) |
Tax
exemption on income from certain approved enterprises in respect of which the
companies have elected the alternative benefits (involving waiver
of government guaranteed loans instead of the tax exemption); the length of the
exemption period is 4 years, after which the income from these enterprises
is taxable at the rate of 25% for 3 years. |
|
The
part of the taxable income, which is entitled to the tax benefits, is determined on the
basis of the ratio of the turnover attributed to the approved enterprise to
the total turnover of these companies, taking into account the ratio of the approved
enterprise assets to total assets of these companies. The turnover that is
attributed to the approved enterprise is generally computed on the basis of
the ratio of the increase in turnover to the basic turnover stipulated in the
instrument of approval. |
|
The
period of benefits in respect of the approved enterprises of these companies
expired at the end of 2003. |
|
The
entitlement to the above benefits is conditional upon the companies fulfilling the
conditions stipulated by the law, regulations published there under and the instruments
of approval for the specific investments in approved enterprises. In the
event of failure to comply with these conditions, the benefits may be cancelled and the
companies may be required to refund the amount of the benefits, in whole or in part, with
the addition of CPI linkage differences and interest. |
|
b. |
Measurement
of results for tax purposes under the Income Tax (Inflationary Adjustments) Law,
1985 (hereafter the inflationary adjustments law) |
|
Under
the inflationary adjustments law, results for tax purposes are measured in real terms,
having regard to the changes in the Israeli CPI. The Company and its subsidiaries are
taxed under this law. |
|
On
February 26, 2008, the Knesset ratified the third reading of the Income Tax Law
(Inflation Adjustments) (Amendment 20) (Limitation of Term of Validity) 2008
(hereinafter: The Amendment), pursuant to which the application of the
inflationary adjustment law will terminate in tax year 2007 and as of tax year 2008, the
law will no longer apply, other than transition regulations whose intention it is to
prevent distortions in tax calculations. |
|
According
to the amendment, in tax year 2008 and thereafter, the adjustment of revenues for tax
purposes will no longer be considered a real-term basis for measurement. Moreover, the
linkage to the CPI of the depreciated sums of fixed assets and carryover losses for tax
purposes will be discontinued, in a manner whereby these sums will be adjusted until the
CPI at the end of 2007 and their linkage to the CPI will end as of that date. |
|
c. |
The
Law for the Encouragement of Industry (Taxation), 1969 |
|
The
Company and certain consolidated subsidiaries are industrial companies as
defined by this law. These companies claimed depreciation at accelerated rates on
equipment used in industrial activity as stipulated by regulations published under the
inflationary adjustments law. |
|
The
Company also files consolidated tax returns with certain consolidated subsidiaries as
permitted under this law. |
F - 29
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 7 TAXES ON INCOME (continued):
|
d. |
Tax rates applicable to income not derived from approved enterprises |
|
The
income of the Company and its Israeli subsidiaries (other than income from approved
enterprises, see a. above) is taxed at the regular rate. Through to December 31,
2003, the corporate tax was 36%. In July 2004, an amendment No. 140, to the Income Tax
Ordinance was published fixing, among others that corporate tax rate is gradually reduced
from 36% to 30%. In August 2005, an additional amendment (No. 147) to the Income Tax
Ordinance was published which makes a further revision to the corporate tax rates
prescribed by Amendment No. 140. As a result of the aforementioned amendments, the tax
rates for 2004 and thereafter are as follows: 2004 35%, 2005 34%, 2006
31%, 2007 29%, 2008 27%, 2009 26% and 2010 and thereafter
25%. |
|
As
a result of the said changes in the tax rates, the Company adjusted in each of the
years 2004 and 2005 at the time the aforementioned amendments were made, its
deferred tax balances, in accordance with the tax rates expected to be in effect in the
coming years; the effect of the change has been carried to income in these years. |
|
Capital
gains (except for the real capital gain from the sale of marketable securities to
which the regular tax rates will apply) are taxed at a reduced tax rate of 25% on capital
gains that arose after January 1, 2003, and at the regular corporate tax rate on income
that arose until that date. |
|
e. |
Carryforward
tax losses |
|
Carryforward
tax losses in subsidiary companies are NIS 24,334,000 and NIS 24,036,000 as of
December 31, 2007 and 2006, respectively. |
|
The
Company examines on each balance sheet date the possibility of recording deferred taxes
in respect of carryforward tax losses based on an assessment of all evidence, both
positive and negative, regarding the likelihood of their being taxable income in the
foreseeable future. Under the inflationary adjustments law, carryforward losses are
linked to the Israeli CPI, and may be utilized indefinitely. |
F - 30
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 7 TAXES ON INCOME (continued):
|
The
composition of the deferred taxes at balance sheet dates, and the changes therein during
the years 2007 and 2006, are as follows: |
|
In respect of balance sheet items
|
|
|
|
|
|
Provisions for employee rights
|
|
|
|
|
|
Depreciable
fixed
assets
|
Inventories
|
Severance
pay
|
Vacation
and
recreation
pay
|
Doubtful
accounts
|
In respect of
carryforward tax
losses
(see above)
|
Total
|
|
N I S i n t h o u s a n d s
|
|
|
|
|
|
|
|
|
Balance at January 1, 2006 |
|
|
| 45,783 |
|
| 2,551 |
|
| 526 |
|
| (4,079 |
) |
| (5,962 |
) |
| (5,797 |
) |
| 33,022 |
|
Changes in 2006 - | | |
amounts carried to income | | |
| (4,170 |
) |
| (1,404 |
) |
| 26 |
|
| 36 |
|
| 450 |
|
| (693 |
) |
| (5,755 |
) |
|
| |
| |
| |
| |
| |
| |
| |
Balance at December 31, 2006 | | |
| 41,613 |
|
| 1,147 |
|
| 552 |
|
| (4,043 |
) |
| (5,512 |
) |
| (6,490 |
) |
| 27,267 |
|
Changes in 2007 - | | |
amounts carried to income | | |
| (1,098 |
) |
| (875 |
) |
| (721 |
) |
| (42 |
) |
| 378 |
|
| 407 |
|
| (1,951 |
) |
|
| |
| |
| |
| |
| |
| |
| |
Balance at December 31, 2007 | | |
| 40,515 |
|
| 272 |
|
| (169 |
) |
| (4,085 |
) |
| (5,134 |
) |
| (6,083 |
) |
| 25,316 |
|
|
| |
| |
| |
| |
| |
| |
| |
|
The
deferred taxes are computed at the rate of 25%-27%. |
|
Deferred
taxes are presented in the balance sheets as follows: |
|
December 31
|
|
2007
|
2006
|
|
NIS in thousands
|
|
|
|
|
|
|
Among current assets |
|
|
| (9,116 |
) |
| (7,856 |
) |
Among long-term asset balances | | |
| (6,083 |
) |
| (6,490 |
) |
Among long-term liabilities | | |
| 40,515 |
|
| 41,613 |
|
|
| |
| |
Balance - liability - net | | |
| 25,316 |
|
| 27,267 |
|
|
| |
| |
F - 31
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 7 TAXES ON INCOME (continued):
|
g. |
Taxes
on income included in the income statements: |
|
|
2007
|
2006
|
2005
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the reported year: |
|
|
| |
|
| |
|
| |
|
|
Current | | |
| 20,408 |
|
| 22,457 |
|
| 13,662 |
|
|
Previous years | | |
| 850 |
|
| |
|
| |
|
|
Deferred, see f. above: | | |
|
In respect of changes to tax rates, | | |
|
see d. above | | |
| - |
|
| - |
|
| (4,166 |
) |
|
In respect of the reporting period | | |
| (1,951 |
) |
| (5,755 |
) |
| (3,505 |
) |
|
|
| |
| |
| |
|
| | |
| 19,307 |
|
| 16,702 |
|
| 5,991 |
|
|
|
| |
| |
| |
|
Current
taxes in 2007 were computed at an average tax rate of 29%, 2006 31% and 2005- 34%,
see (2) below. |
|
2) |
Following
is a reconciliation of the theoretical tax expense, assuming all
income is taxed at the regular rate applicable to companies in Israel, as
stated in d. above, and the actual tax expense: |
|
2007
|
2006
|
2005
|
|
%
|
NIS in
thousands
|
%
|
NIS in
thousands
|
%
|
NIS in
thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes on income, as reported |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
in the statements of income | | |
| 100 |
|
| 53,633 |
|
| 100.0 |
|
| 56,695 |
|
| 100.0 |
|
| 35,292 |
|
|
| |
| |
| |
| |
| |
| |
Theoretical tax on the above amount | | |
| 29.0 |
|
| 15,554 |
|
| 31.0 |
|
| 17,575 |
|
| 34.0 |
|
| 11,999 |
|
| | |
Decrease in taxes resulting from computation | | |
of deferred taxes at a rate which is | | |
different from the theoretical rate | | |
| (1.6 |
) |
| (859 |
) |
| (2.1 |
) |
| (1,196 |
) |
| (0.9 |
) |
| (324 |
) |
Decrease in taxes resulting from adjustment to | | |
deferred tax balances due to changes | | |
in tax rates, see d. above | | |
| - |
|
| - |
|
| - |
|
| - |
|
| (11.8 |
) |
| (4,166 |
) |
Differences at equity and non financial assets definition for the purpose of tax | | |
| 4.5 |
|
| 2,400 |
|
| - |
|
| - |
|
| - |
|
| - |
|
Previous years tax | | |
| 1.6 |
|
| 850 |
|
| - |
|
| - |
|
| - |
|
| - |
|
Nondeductible expenses | | |
| 0.3 |
|
| 170 |
|
| - |
|
| - |
|
| - |
|
| - |
|
Other - net | | |
| 2.2 |
|
| 1,192 |
|
| 0.6 |
|
| 323 |
|
| (4.3 |
) |
| (1,518 |
) |
|
| |
| |
| |
| |
| |
| |
Taxes on income for the reported year | | |
| 36.0 |
|
| 19,307 |
|
| 29.5 |
|
| 16,702 |
|
| 17.0 |
|
| 5,991 |
|
|
| |
| |
| |
| |
| |
| |
|
The
Company and most of its subsidiaries have received final tax assessments through the year
ended December 31, 2005. |
F - 32
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued):
NOTE 8 LINKAGE
TERMS OF MONETARY BALANCES:
|
December 31, 2007
|
December 31, 2006
|
|
In, or linked
to, foreign
currency
(mainly dollar)
|
Linked to the
Israeli CPI
|
Unlinked
|
In, or linked
to, foreign
currency
(mainly dollar)
|
Linked to the
Israeli CPI
|
Unlinked
|
|
NIS in thousands
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current assets: | | |
Cash and cash equivalents | | |
| 165,189 |
|
| - |
|
| 2,556 |
|
| 8,573 |
|
| - |
|
| 5,048 |
|
Receivables | | |
| 12,720 |
|
| 439 |
|
| 258,882 |
|
| 59,849 |
|
| 244 |
|
| 243,049 |
|
Investments in associated companies - long-term | | |
loans and capital notes | | |
| 2,421 |
|
| - |
|
| 52,233 |
|
| 6,337 |
|
| - |
|
| 63,704 |
|
|
| |
| |
| |
| |
| |
| |
| | |
| 180,330 |
|
| 439 |
|
| 313,671 |
|
| 74,759 |
|
| 244 |
|
| 311,801 |
|
|
| |
| |
| |
| |
| |
| |
Liabilities: | | |
Current liabilities: | | |
Short-term credit from banks | | |
| - |
|
| - |
|
| 143,015 |
|
| - |
|
| - |
|
| 203,003 |
|
Accounts payables and accruals | | |
| 10,363 |
|
| - |
|
| 185,281 |
|
| 8,422 |
|
| - |
|
| 191,551 |
|
Long-term liabilities (including current maturities): | | |
Long -term loans | | |
| - |
|
| - |
|
| 33,511 |
|
| |
|
| |
|
| 38,723 |
|
Notes | | |
| - |
|
| 195,525 |
|
| - |
|
| - |
|
| 226,364 |
|
|
|
|
Other liability | | |
| - |
|
| - |
|
| 32,770 |
|
| - |
|
| - |
|
| 32,770 |
|
|
| |
| |
| |
| |
| |
| |
| | |
| 10,363 |
|
| 195,525 |
|
| 394,577 |
|
| 8,422 |
|
| 226,364 |
|
| 466,047 |
|
|
| |
| |
| |
| |
| |
| |
As to exposures relating to fluctuations in foreign currency exchange rates and the use of
derivatives for hedging purposes see note 12a. |
F - 33
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 8 LINKAGE TERMS OF MONETARY BALANCES (continued):
|
b. |
Data
regarding the exchange rate and the Israeli CPI: |
|
|
Exchange rate of
one dollar
|
CPI*
|
|
|
NIS
|
Points
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At end of year: |
|
|
| |
|
| |
|
|
2007 | | |
| 3.846 |
|
| 191.2 |
|
|
2006 | | |
| 4.225 |
|
| 184.9 |
|
|
2005 | | |
| 4.603 |
|
| 185.0 |
|
|
| | |
|
Change in the year: | | |
|
2007 | | |
| (9.0 |
)% |
| 3.4 |
% |
|
2006 | | |
| (8.2 |
)% |
| - |
|
|
2005 | | |
| 6.8 |
% |
| 2.4 |
% |
|
* |
Based
on the index for the month ending on each balance sheet date, on the basis of 1993 average = 100. |
NOTE 9
COMMITMENTS, CONTINGENT LIABILITIES:
|
a. |
Subsidiaries
provided guarantees to various entities, in connection with tenders, in
the aggregate amount of approximately NIS 2,902,000. |
|
b. |
On
May 7, 2001, the Companys board of directors resolved to carry out
a plan, which was approved by the shareholders meeting, to
remunerate the Companys former chairman of the board of directors.
According to the plan, remuneration will be granted, equal to the increase
in the value of 50,000 shares of the Company in the period from May 7,
2001 (share price NIS 194.37, linked to the terms of the plan)
to May 7, 2008. The remuneration will be spread over the period
commencing two years from the resolution of the board of directors, until
the end of seven years from said resolution or until the time of
termination of duty in certain conditions, the earlier. Up to December 31
2006, all of the remuneration was exercised. |
|
c. |
In
accordance with the Companies Law, 1999, the Company issued new letters of
indemnity to its officers in 2004, pursuant to which the Company
undertakes to indemnify the officers for any liability or expense, for
which indemnification may be paid under the law, that may be incurred by
the officers in connection with actions performed by them as part of their
duties as officers in the Company, which are directly or indirectly
related to the events specified in the addendum to the letters of
indemnity, provided that the total amount of indemnification payable to
the officers, shall not exceed 25% of the Companys shareholders equity
as per its latest financial statements published prior to the actual
indemnification. The liability of officers in connection with the
performance of their duties, as above, is partly covered by an insurance
policy. |
F - 34
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 9 COMMITMENTS, CONTINGENT LIABILITIES: (continued)
|
d. |
On
May 13, 2007, the Companys Audit Committee and Board of Directors
approved an employment contract with the Companys General Manager.
The employment contract is not time-limited and consists of the following
principal terms of employment: Monthly wages of NIS 95,000, linked to the
Consumer Price Index (CPI) starting in 2007, an annual bonus equal to 6-9
monthly paychecks, to be determined at the discretion of the Companys
Board of Directors. Retirement conditions In addition to the
liberation of the funds accrued in the Managers Insurance, upon
leaving his position, the general manager will receive a retirement bonus
equal to his last monthly paycheck prior to leaving his position
multiplied by the number of years during which he was employed by
the Company (starting August 1998), including advanced notice of 6 months
in the event of termination or resignation and additional auxiliary
conditions. It has to be noted that the amounts transferred to managerial insurance policies in respect of severance
pay, will include current completion on basis of last monthly salary for each year of work in the Group. |
|
It
should be noted that in proximity to the appointment of the General Manager, who entered
his position in January 2005, a brief memorandum was drafted regarding the said
employment, with terms similar to those mentioned above. This memorandum was not approved
by the Companys Board of Directors and the Companys management, based on the
opinion of legal counsel, is doubtful whether it is legally binding. The impact of the
agreement will be expressed in the second quarter results and will amount to NIS 1.3
million (net, after taxes) on account of the retirement terms. |
|
e. |
The
Company converted during October 2007 its energy-generation plant in Hadera
to using natural gas, instead of fuel oil. |
|
In
this capacity, the Company signed an agreement in London on July 29, 2005, with the
Thetis Sea Group, for the purchase of natural gas. The gas that will be purchased is
intended to fulfill the Companys requirements in the coming years, for the
operation of the existing energy generation plants using cogeneration at the Hadera
plant, when it will be converted for the use of natural gas, instead of the current use
of fuel oil. The overall financial scope of the transaction totals $ 35 million over
the term of the agreement (5 years from the initial supply of gas, but no later than July
1, 2011). |
|
In
this capacity the Company also contracted with Alstom Power Boiler Service gmbh, a
manufacturer of equipment in the energy industry, in an agreement worth approximately
1.74 million, for the purchase of the systems needed for the conversion and
assistance with their installation at the plant in Hadera. Up to December 31, 2007 the
remainder of the agreement was worth approximately 0.6 million. |
|
f. |
In
the beginning of 2008, the Company has engaged in a contract with the main
equipment suppliers for the new manufacturing facility of packaging
papers, for the total sum of 48.4 million. Some of the equipment
will be supplied during 2008 and the rest will be supplied in the
beginning of 2009. |
|
g. |
In
the last quarter of 2007, the Company signed an agreement with a gas company
for the transmission of gas for a period of 6 years with a two-year
extension option. The total financial value of the transaction is NIS 13.8
million. |
|
h. |
In
November 2006, the Environmental Protection Ministry announced that, even
though the company plant at Hadera has made considerable investments in
sewage treatment and environmental protection issues, an investigation may
be launched against it to review deviations from certain emission
standards into the air. Based on the opinion of its legal advisors, the
Company anticipates that the investigation will not materially impact its
operations. |
F - 35
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 9 COMMITMENTS, CONTINGENT LIABILITIES AND LIABILITIES: (continued)
|
i. |
On
October 21, 2007, the tax authorities issued a demand for payment of a
betterment levy in the amount of NIS 8 million in respect of change of
land use, which is designed for the construction of a new production line
for the manufacture of packaging papers.
The Company contested the amount
of the levy through counter-assessment in the sum of NIS 400,000. In
addition, it should be noted that as a result, these financial statements
do not include a provision for said demand. When the levy is recognized in
the financial statements, it will be included in the cost of the land and
therefore will not have any effect on the operating results of the
Company. |
F - 36
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 10
SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION:
|
|
December 31
|
|
|
2007
|
2006
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
1) Trade: |
|
|
| |
|
| |
|
|
Open accounts | | |
| 164,032 |
|
| 152,944 |
|
|
Checks collectible | | |
| 14,739 |
|
| 15,106 |
|
|
|
| |
| |
|
| | |
| 178,771 |
|
| 168,050 |
|
|
|
| |
| |
|
The item is: | | |
|
Net of allowance for doubtful accounts | | |
| 17,171 |
|
| 16,791 |
|
|
|
| |
| |
|
Includes associated companies | | |
| 37,255 |
|
| 36,967 |
|
|
|
| |
| |
|
2) Other: | | |
|
Employees and employee institutions | | |
| 2,218 |
|
| 2,451 |
|
|
Associated companies - current debt | | |
| 80,054 |
|
| 72,467 |
|
|
Prepaid expenses | | |
| 2,719 |
|
| 3,732 |
|
|
Advances to suppliers | | |
| 2,303 |
|
| 2,617 |
|
|
Deferred income taxes, see note 7f | | |
| 9,116 |
|
| 7,856 |
|
|
Proceeds from sale of land in trustee's control (see note 10i) | | |
| - |
|
| 51,936 |
|
|
Accounts Receivable | | |
| 4,953 |
|
| - |
|
|
Sundry | | |
| 3,746 |
|
| 5,625 |
|
|
|
| |
| |
|
| | |
| 105,109 |
|
| 146,684 |
|
|
|
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For industrial activities: |
|
|
| |
|
| |
|
|
Finished goods | | |
| 19,824 |
|
| 16,998 |
|
|
Raw materials and supplies | | |
| 7,630 |
|
| 7,884 |
|
|
|
| |
| |
|
| | |
| 27,454 |
|
| 24,882 |
|
|
For commercial activities - purchased products | | |
| 19,280 |
|
| 14,348 |
|
|
|
| |
| |
|
| | |
| 46,734 |
|
| 39,230 |
|
|
Maintenance and spare parts * | | |
| 22,873 |
|
| 22,879 |
|
|
|
| |
| |
|
| | |
| 69,607 |
|
| 62,109 |
|
|
|
| |
| |
* Including inventories for the use
of associated companies.
|
|
Weighted average Interest rate on December 31, 2007
|
December 31
|
|
|
2007
|
2006
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
Unlinked |
|
|
| 5.3 |
% |
| 143,015 |
|
| 203,003 |
|
F - 37
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 10 SUPPLEMENTARY
FINANCIAL STATEMENT INFORMATION (continued):
|
d. |
Accounts
payable and accruals other: |
|
|
December 31
|
|
|
2007
|
2006
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
1) Trade: |
|
|
| |
|
| |
|
|
Open accounts | | |
| 104,301 |
|
| 91,932 |
|
|
Checks payable | | |
| 4,108 |
|
| 4,341 |
|
|
|
| |
| |
|
| | |
| 108,409 |
|
| 96,273 |
|
|
|
| |
| |
|
| | |
|
2) Other: | | |
|
Payroll and related expenses | | |
| 43,902 |
|
| 42,553 |
|
|
Institutions in respect of employees | | |
| 22,057 |
|
| 15,775 |
|
|
Income tax authority | | |
| 908 |
|
| 19,824 |
|
|
Customs and value added tax authorities | | |
| 322 |
|
| 8,814 |
|
|
Accrued interest | | |
| 1,679 |
|
| 2,104 |
|
|
Accrued expenses | | |
| 17,697 |
|
| 14,100 |
|
|
Sundry | | |
| 670 |
|
| 529 |
|
|
|
| |
| |
|
| | |
| 87,235 |
|
| 103,699 |
|
|
|
| |
| |
|
|
|
2007
|
2006
|
2005
|
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
e. |
Sales
- net (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial operations (2) |
|
|
| 462,634 |
|
| 404,030 |
|
| 364,539 |
|
|
|
Commercial operations | | |
| 121,016 |
|
| 126,079 |
|
| 117,922 |
|
|
|
|
| |
| |
| |
|
|
| | |
| 583,650 |
|
| 530,109 |
|
| 482,461 |
|
|
|
|
| |
| |
| |
|
|
(1) Including sales to associated companies | | |
| 159,627 |
|
| 149,173 |
|
| 115,262 |
|
|
|
|
| |
| |
| |
|
|
(2) Including sales to export | | |
| 48,669 |
|
| 47,886 |
|
| 43,356 |
|
|
|
|
| |
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial operations: |
|
|
| |
|
| |
|
| |
|
|
Materials consumed | | |
| 93,260 |
|
| 85,617 |
|
| 80,740 |
|
|
Payroll and related expenses | | |
| 115,773 |
|
| 104,880 |
|
| 96,370 |
|
|
Depreciation | | |
| 30,906 |
|
| 27,886 |
|
| 27,396 |
|
|
Other manufacturing costs | | |
| 114,400 |
|
| 106,387 |
|
| 94,517 |
|
|
Decrease (increase) in inventory of | | |
|
finished goods | | |
| (2,826 |
) |
| (420 |
) |
| (4,894 |
) |
|
|
| |
| |
| |
|
| | |
| 351,513 |
|
| 324,350 |
|
| 294,129 |
|
|
Commercial operations - cost of products sold | | |
| 89,341 |
|
| 94,375 |
|
| 89,050 |
|
|
|
| |
| |
| |
|
| | |
| 440,854 |
|
| 418,725 |
|
| 383,179 |
|
|
|
| |
| |
| |
|
Including purchases from associated | | |
|
companies | | |
| 31,220 |
|
| 39,900 |
|
| 37,747 |
|
|
|
| |
| |
| |
F - 38
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 10 SUPPLEMENTARY
FINANCIAL STATEMENT INFORMATION (continued):
|
|
|
2007
|
2006
|
2005
|
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
g. |
Selling,
marketing, administrative and general expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing: |
|
|
| |
|
| |
|
| |
|
|
|
Payroll and related expenses | | |
| 13,454 |
|
| 13,954 |
|
| 13,641 |
|
|
|
Packaging, transport and shipping | | |
| 9,712 |
|
| 9,243 |
|
| 7,866 |
|
|
|
Commissions | | |
| 1,869 |
|
| 2,121 |
|
| 2,699 |
|
|
|
Depreciation | | |
| 1,403 |
|
| 1,331 |
|
| 1,145 |
|
|
|
Other | | |
| 4,929 |
|
| 4,717 |
|
| 5,131 |
|
|
|
|
| |
| |
| |
|
|
| | |
| 31,367 |
|
| 31,366 |
|
| 30,482 |
|
|
|
|
| |
| |
| |
|
|
| | |
|
|
Administrative and general: | | |
|
|
Payroll and related expenses | | |
| 45,527 |
|
| 43,407 |
|
| 39,727 |
|
|
|
Office supplies, rent and maintenance | | |
| 1,214 |
|
| 1,593 |
|
| 1,241 |
|
|
|
Professional fees | | |
| 1,789 |
|
| 1,167 |
|
| 991 |
|
|
|
Depreciation | | |
| 3,159 |
|
| 3,128 |
|
| 2,903 |
|
|
|
Doubtful accounts and bad debts | | |
| 738 |
|
| (122 |
) |
| 840 |
|
|
|
Other | | |
| 9,997 |
|
| 7,022 |
|
| 4,201 |
|
|
|
|
| |
| |
| |
|
|
| | |
| 62,424 |
|
| 56,195 |
|
| 49,903 |
|
|
|
L e s s - rent and participation from | | |
|
|
associated companies | | |
| 26,364 |
|
| 26,678 |
|
| 24,441 |
|
|
|
|
| |
| |
| |
|
|
| | |
| 36,060 |
|
| 29,517 |
|
| 25,462 |
|
|
|
|
| |
| |
| |
|
h. |
Financial
expenses - net*: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
| |
|
| |
|
| |
|
|
In respect of long-term loans | | |
| 1,907 |
|
| 1,196 |
|
| - |
|
|
In respect of notes - including amortization of deferred | | |
|
charges and net of related hedges | | |
| 15,642 |
|
| 17,013 |
|
| 16,516 |
|
|
In respect of increase in value of operating monetary balance-net | | |
| 2,227 |
|
| 4,771 |
|
| - |
|
|
In respect of short-term balances | | |
| 10,430 |
|
| 11,590 |
|
| 3,559 |
|
|
|
| |
| |
| |
|
| | |
| 30,206 |
|
| 34,570 |
|
| 20,075 |
|
|
|
| |
| |
| |
|
Income: | | |
|
In respect of long-term loans | | |
| 4,289 |
|
| 579 |
|
| 385 |
|
|
In respect of increase in value of operating monetary balances | | |
| - |
|
| - |
|
| 3,294 |
|
|
In respect of short-term balances | | |
| 6,359 |
|
| 2,880 |
|
| 3,906 |
|
|
|
| |
| |
| |
|
| | |
| 10,648 |
|
| 3,459 |
|
| 7,585 |
|
|
|
| |
| |
| |
|
| | |
| (19,558 |
) |
| (31,111 |
) |
| (12,490 |
) |
|
|
| |
| |
| |
|
** Including financial income (expenses) in respect | | |
|
of loans to associated companies | | |
| 2,655 |
|
| 2,280 |
|
| 3,401 |
|
|
|
| |
| |
| |
F - 39
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE
10 SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (continued):
|
|
2007
|
2006
|
2005
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of land |
|
|
| - |
|
| *40,641 |
|
| 3,260 |
|
|
Capital gain from sale of fixed assets | | |
| (2,150 |
) |
| 317 |
|
| 310 |
|
|
Gains (losses) from sale of the operation in Switzerland | | |
| | |
| (3,653 |
) |
| 874 |
|
|
Capital loss from sale of associated company | | |
| (28 |
) |
| - |
|
| - |
|
|
|
| |
| |
| |
|
| | |
| (2,178 |
) |
| 37,305 |
|
| 4,444 |
|
|
|
| |
| |
| |
|
* |
On
December 31, 2006, the Company sold a land estate. As a result of this sale, the Company
recorded a capital gain in the amount of approximately NIS 28.5 million, net of tax,
betterment levy, and expenses related to the sale. The proceeds of the sale, in the
amount of NIS 43 million, were deposited on December 31, 2006 with a trustee in order to
secure the liabilities of the Company. At the beginning of January 2007, the balance in
the amount of approximately NIS 30 million was received, and in during the course of
February this balance was transferred from the trustee to the Company. |
NOTE 11 NET
INCOME PER SHARE
|
Following
are data relating to the net income and the number of shares (including adjustments to
such data) used for the purpose of computing the basic and fully diluted net income per
ordinary share. (The data for the year 2005 are after retroactive application of the
provisions of Accounting Standard No. 21 of the IASB, see note 1v): |
|
|
Net income
Year ended December 31
|
|
|
2007
|
2006
|
2005
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period, as reported in the |
|
|
| |
|
| |
|
| |
|
|
income statements, used in computation of | | |
|
basic net income per share | | |
| 31,442 |
|
| 13,330 |
|
| 45,715 |
|
|
|
| |
| |
| |
|
Total net income for the purpose of computing | | |
|
diluted income per share | | |
| 31,442 |
|
| 13,330 |
|
| 45,715 |
|
|
|
| |
| |
| |
|
|
Number of shares
Year ended December 31
|
|
|
2007
|
2006
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used for |
|
|
| |
|
| |
|
| |
|
|
computing the basic income per share | | |
| 4,132,728 |
|
| 4,025,181 |
|
| 3,999,867 |
|
|
Adjustment in respect of incremental shares of warrants | | |
| 6,805 |
|
| 33,429 |
|
| 28,240 |
|
|
|
| |
| |
| |
|
Weighted average number of shares used for | | |
|
computing the diluted income per share | | |
| 4,139,533 |
|
| 4,058,610 |
|
| 4,028,107 |
|
|
|
| |
| |
| |
F - 40
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 12 FINANCIAL
INSTRUMENTS AND RISK MANAGEMENT:
|
a. |
Derivative
financial instruments |
|
The
Company has limited involvement with derivative financial instruments. The Company uses
these instruments as hedges. The Company utilizes derivatives, mainly forward exchange
contracts, to protect its expected cash flows in respect of existing assets and
liabilities denominated in currencies other than the functional currency of the Company
or that are linked to the CPI. As the counter-parties to these derivatives are Israeli
banks, the Company considers the inherent credit risks remote. |
|
In
December 2006 the Company entered into forward transactions for a period of one year, in
order to hedge an amount of NIS 100 million against increases in the CPI, following
the termination of the 2005 transaction that was finalized.
In January 2007, the Company
entered into forward transactions for a period of one year, in order to hedge an amount
of NIS 120 million against increases in the CPI, following the termination of the 2005
transaction that was finalized. |
|
In
January 2008, the Company entered into forward transactions for a period of one year, in
order to hedge an amount of NIS 90 million against increases in the CPI, following
the termination of the aforementioned transaction.
In February 2008, the Company entered
into additional forward transactions for a period of one year, in order to hedge an
amount of NIS 50 million against increases in the CPI, following the termination of
the aforementioned transaction. |
|
The
Company and its subsidiaries cash and cash equivalents as of December 31, 2007 and
2006 are deposited mainly with major banks. The Company and its subsidiaries consider the
credit risks in respect of these balances to be remote. |
|
Most
of these companies sales are made in Israel, to a large number of customers. The
exposure to credit risks relating to trade receivables is limited due to the relatively
large number of customers. The Group performs ongoing credit evaluations of its customers
to determine the required amount of allowance for doubtful accounts. An appropriate
allowance for doubtful accounts is included in the financial statements. |
|
Approximately
half of the Companys sales are nominated in US dollars, while a substantial part of
its expenditures and its liabilities are in NIS, and as a result, the Company has an
exposure to the changes in the rate of exchange of the NIS against the US dollar. This
exposure includes an economic exposure (resulting from the excess of receipts over
payments, in foreign currency or linked to it) and reporting exposure (relating to the
excess of dollar linked assets over liabilities). |
|
The
Company has trade receivables balances linked to the US dollar see note 8(a). |
F - 41
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 12 FINANCIAL
INSTRUMENTS AND RISK MANAGEMENT (continued):
|
d. |
Fair
value of financial instruments |
|
The
following table specifies the carrying amount and fair value of financial instrument
groups that are not presented in the financial statements at their value: |
|
|
Carrying Amount
|
Fair Value
|
|
|
December 31, 2007 NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets |
|
|
| |
|
| |
|
|
Long term loans and capital note | | |
| 51,956 |
|
| 50,590 |
|
|
|
| |
| |
|
Financial Liabilities | | |
|
Notes - series 1* | | |
| 14,098 |
|
| 14,336 |
|
|
Notes - series 2* | | |
| 182,052 |
|
| 191,537 |
|
|
Other liability* | | |
| 32,770 |
|
| 31,510 |
|
|
|
| |
| |
|
| | |
| 228,920 |
|
| 237,383 |
|
|
|
| |
| |
|
* |
The
above carrying amounts are based on the computation of the present value of cash flows at
interest rates applicable to similar characterized loans (in 2007 4%). |
NOTE 13
INTERESTED PARTIES TRANSACTIONS AND BALANCES:
|
|
2007
|
2006
|
2005
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
| 57,050 |
|
| 47,803 |
|
| 46,396 |
|
|
|
| |
| |
| |
|
Costs and expenses | | |
| (16,956 |
) |
| (20,175 |
) |
| (13,997 |
) |
|
|
| |
| |
| |
|
Financial expenses | | |
| 2,128 |
|
| 2,191 |
|
| 1,731 |
|
|
|
| |
| |
| |
|
The
amounts presented above represent transactions that the Company carried out in the
ordinary course of business with interested parties (companies which are held by the
Companys principal shareholder), at terms and prices similar to those applicable to
non-affiliated customers and suppliers. |
F - 42
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 13 INTERESTED PARTIES
TRANSACTIONS AND BALANCES (continued):
|
2) |
Benefits
to interested parties: |
|
|
2007
|
2006
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll to interested parties employed |
|
|
| |
|
| |
|
| |
|
|
by the Company - NIS in thousands | | |
| *2,643 |
|
| *8,094 |
|
| *5,181 |
|
|
|
| |
| |
| |
|
Number of people to whom the benefits relate | | |
| 1 |
|
| 2 |
|
| 2 |
|
|
|
| |
| |
| |
|
Remuneration of directors who are not | | |
|
employed by the Company - | | |
|
NIS in thousands | | |
| 601 |
|
| 504 |
|
| 485 |
|
|
|
| |
| |
| |
|
Number of people to whom | | |
|
the benefits relate | | |
| 11 |
|
| 11 |
|
| 12 |
|
|
|
| |
| |
| |
|
* |
In 2007 because of the payroll of
CEO. In 2006 includes the payroll of CEO and of the former Chairman of the Board of
Directors and, in addition a payment to the former chairman of the Board of directors as a
result of exercise of a bonus according to a remuneration plan. In 2005 including the CEO
and the former Chairman of the Board of Directors. 2005 includes a special bonus to the
Chairman of the Board of Directors, in a sum of NIS 800,000. |
|
3) |
During
2007, an interested party employed by the Company (the CEO) held 1,975 options
under the 2001 plan for senior employees in the group (see note 6b(1)). As of
December 31, 2007 all the options were exercised. |
|
4) |
As
to the plan for the remuneration of the Companys former chairman of the
Board of Directors see note 9b. |
|
b. |
Balances
with interested parties: |
|
|
December 31
|
|
|
2007
|
2006
|
|
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
Accounts receivable - commercial operations* |
|
|
| 20,710 |
|
| 18,825 |
|
|
|
| |
| |
|
Accounts payables and accruals | | |
| 1,589 |
|
| 4,930 |
|
|
|
| |
| |
|
Notes | | |
| 34,216 |
|
| 38,871 |
|
|
|
| |
| |
|
* |
There
were no significant changes in the balance during the year. |
NOTE 14 SEGMENT
INFORMATION:
|
a. |
Activities
of the Company and its subsidiaries: |
|
1) |
Manufacturing
and marketing of packaging paper, including collection and recycling of paper
waste. The manufacturing of paper relies mainly on paper waste as raw material. |
|
2) |
Marketing
of office supplies and paper, mainly to institutions.
Most of the sales are on
the local (Israeli) market and most of the assets are located in Israel. |
F - 43
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE
14 SEGMENT INFORMATION (continued):
|
b. |
Business
segment data: |
|
Paper and recycling
|
Marketing of office supplies
|
T o t a l
|
|
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
2007
|
2006
|
2005
|
|
N I S i n t h o u s a n d s
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales - net(1) |
|
|
| 464,653 |
|
| 408,045 |
|
| 368,884 |
|
| 118,997 |
|
| 122,064 |
|
| 113,577 |
|
| 583,650 |
|
| 530,109 |
|
| 482,461 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Income (loss) from ordinary operations | | |
| 74,936 |
|
| 50,359 |
|
| 44,218 |
|
| 433 |
|
| 142 |
|
| (880 |
) |
| 75,369 |
|
| 50,501 |
|
| 43,338 |
|
Financial expenses, net | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 19,558 |
|
| 31,111 |
|
| 12,490 |
|
Other income | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| (2,178 |
) |
| 37,305 |
|
| 4,444 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Income before taxes on income | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 53,633 |
|
| 56,695 |
|
| 35,292 |
|
Taxes on income | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 19,307 |
|
| 16,702 |
|
| 5,991 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Income from operations of the Company and its subsidiaries | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 34,326 |
|
| 39,993 |
|
| 29,301 |
|
Share in profits of associated companies - net | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| (2,884 |
) |
| (26,663 |
) |
| 16,414 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Net income | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 31,442 |
|
| 13,330 |
|
| 45,715 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| | |
Segment assets (at end of year) | | |
| 630,435 |
|
| 574,319 |
|
| 536,965 |
|
| 63,509 |
|
| 56,663 |
|
| 57,377 |
|
| 693,944 |
|
| 630,982 |
|
| 594,342 |
|
Unallocated corporate assets (at end of year) (2) | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 625,123 |
|
| 542,305 |
|
| 561,416 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Consolidated total assets (at end of year) | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 1,319,067 |
|
| 1,173,287 |
|
| 1,155,758 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Segment liabilities (at end of year) | | |
| 79,116 |
|
| 69,923 |
|
| 57,754 |
|
| 29,293 |
|
| 26,350 |
|
| 32,758 |
|
| 108,409 |
|
| 96,273 |
|
| 90,512 |
|
Unallocated corporate liabilities (at end of year) | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 532,571 |
|
| 646,172 |
|
| 541,862 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Consolidated total liabilities (at end of year) | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 640,980 |
|
| 742,445 |
|
| 632,374 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Depreciation and amortization | | |
| 33,267 |
|
| 30,137 |
|
| 29,795 |
|
| 1,596 |
|
| 1,820 |
|
| 1,809 |
|
| 34,863 |
|
| 31,957 |
|
| 31,604 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
Investments in fixed assets | | |
| 80,431 |
|
| 51,380 |
|
| 70,014 |
|
| 1,653 |
|
| 1,727 |
|
| 1,066 |
|
| 82,084 |
|
| 53,107 |
|
| 71,080 |
|
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
(1) |
Represents
sales to external customers. |
(2) |
Including
investments in associated companies. |
F - 44
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued):
NOTE 15 EVENTS SUBSEQUENT
BALANCE SHEET DATE
|
On January 14, 2008, the
Companys Board of Directors approved, pursuant to approval by the Audit Committee,
adoption of a compensation plan for senior employees of the Company and/or its
subsidiaries and/or associated companies, whereby up to 285,750 stock options, each of
which is exercisable into one ordinary share of the company of NIS 0.01 par value, would
be allocated to senior employees and officers of the Group, including the Company CEO,
which at the time of approval of said allocation comprised 5.65% of the Companys
issued share capital. The offerees in the said plan are not interested parties in the
company, except for the CEO who is an interested party by virtue of his position. Pursuant
to the conditions of the said option warrants, the offerees who will exercise the option
warrants will not be allocated all of the shares derived there from, but only a quantity
of shares that reflects the sum of the financial benefit that is inherent to the option
warrants at the exercise date only. As at the reported date, the said option warrants have
yet to be allocated. |
|
The total expenditure that will be
recorded by the Group companies on account of the granting of the said option warrants was
estimated at NIS 27 million. The influence of the plan at the consolidated financial
statements was estimated at NIS 22 million. |
|
The
option warrants are not registered for trade. The company has obtained approval from the
stock exchange and from AMEX to register for trade the ordinary shares that shall be
allocated to the offerees upon exercise of the option warrants. |
F - 45
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 16 DISCLOSURE
REGARDING THE ADOPTION OF IFRS
|
Following
the publication of Account Standard No. 29, the Adoption of International Financial
Reporting Standards (IFRS) in July 2006, the Company plans to adopt IFRS starting
from January 1, 2008. |
|
Pursuant
to the provisions of IFRS1, which deals with the first-time adoption of IFRS, and
considering the date in which the Company elected to adopt these standards for the first
time, the financial statements which the Company must draw up in accordance with IFRS
rules, are the consolidated financial statement as of December 31, 2008, and for the year
ended on that date. The date of transition of the Company to reporting under IFRS, as it
is defined in IFRS 1, is January 1, 2007 (hereinafter: the transition date),
with an opening balance sheet as of January 1, 2007 (hereinafter: Opening Balance).
The Companys interim financial statements for 2008 will also be drawn up in
accordance with IFRS, and shall include comparative figures for the year. |
|
Under
the opening balance sheet, the Company performed the following reconciliations: |
|
|
Recognition
of all assets and liabilities whose recognition is required by IFRS. |
|
|
De-recognition
of assets and liabilities if IFRS do not permit such recognition. |
|
|
Classification
of assets, liabilities and components of equity according to IFRS. |
|
|
Application
of IFRS in the measurement of all recognized assets and liabilities. |
|
IFRS
1 states that all IFRS shall be adopted retroactively for the opening balance sheet. At
the same time, IFRS 1 includes 14 reliefs, in respect of which the mandatory retroactive
implementation does not apply. As to the reliefs implemented by the Company, see section
f. below. |
|
Changes
in the accounting policy which the Company implemented retroactively in the opening
balance sheet under IFRS, compared to the accounting policy in accordance with Generally
Accepted Accounting Principles in Israel, were recognized directly under Retained
Earnings or another item of Shareholders Equity, as the case may be.
This note is
formulated on the basis of International Financial Reporting Standards and the notes
thereto as they stand today, that have been published and shall enter into force or that
may be adopted earlier as at the Groups first annual reporting date according to
IFRS, December 31, 2008. Pursuant to the above, the Companys management has made
assumptions regarding the anticipated financial reporting regulations that are expected
to be implemented when the first annual financial statements are prepared according to
IFRS, for the year ended December 31, 2008.
The IFRS standards that will be in
force or that may be adopted in the financial statements for the year ended December 31,
2008 are subject to changes and the publication of additional þclarifications.
Consequently, the financial reporting standards that shall be applied to the represented
periods, will be determined finally only upon preparation of the first financial
statements according to IFRS, as at December 31, 2008. |
|
Listed
below are the Companys consolidated balance sheets as of January 1, 2007 and
December 31, 2007, the consolidated statement of income for the year ended on December
31, 2007, and the Companys shareholders equity prepared in accordance with
International Accounting Standards. In addition, the table presents the material
reconciliations required for the transition from reporting under Israeli GAAP to
reporting under IFRS. |
F - 46
AMERICAN ISRAELI PAPER MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued):
NOTE 16 DISCLOSURE
REGARDING THE ADOPTION OF IFRS (Cont.)
|
According
to IFRS 1, the adoption of IFRS in the opening balance sheet as of the transition date
will be done retrospectively. |
|
a. |
Reconciliation
of balance sheets from Israeli GAAP to IFRS: |
|
December 31, 2007
|
January 1, 2007
|
|
|
Israeli GAAP
|
Effect of transition to IFRS
|
IFRS
|
Israeli GAAP
|
Effect of transition to IFRS
|
IFRS
|
|
Note
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents | | |
| |
|
| 167,745 |
|
| - |
|
| 167,745 |
|
| 13,621 |
|
| - |
|
| 13,621 |
|
Accounts receivables | | |
Trade | | |
| |
|
| 178,771 |
|
| (218 |
) |
| 178,553 |
|
| 168,050 |
|
| (218 |
) |
| 167,832 |
|
Other receivable | | |
| e1 |
|
| 105,109 |
|
| (9,116 |
) |
| 95,993 |
|
| 146,684 |
|
| (7,856 |
) |
| 138,828 |
|
Inventories | | |
| |
|
| 69,607 |
|
| - |
|
| 69,607 |
|
| 62,109 |
|
| - |
|
| 62,109 |
|
|
|
| |
| |
| |
| |
| |
| |
| | |
| |
|
| 521,232 |
|
| (9,334 |
) |
| 511,898 |
|
| 390,464 |
|
| (8,074 |
) |
| 382,390 |
|
|
|
| |
| |
| |
| |
| |
| |
| | |
INVESTMENTS ONLONG TERM RECEIVABLES | | |
Investments in associated | | |
companies | | |
| e6 |
|
| 346,186 |
|
| 1,777 |
|
| 347,963 |
|
| 375,510 |
|
| (402 |
) |
| 375,108 |
|
Deferred taxes | | |
| e1 |
|
| 6,083 |
|
| 14,539 |
|
| 20,622 |
|
| 6,490 |
|
| 12,233 |
|
| 18,723 |
|
|
|
| |
| |
| |
| |
| |
| |
Loan to related party | | |
| |
|
| 352,269 |
|
| 16,316 |
|
| 368,585 |
|
| 382,000 |
|
| 11,831 |
|
| 393,831 |
|
|
|
| |
| |
| |
| |
| |
| |
| | |
Fixed assets, net | | |
| |
|
| 445,566 |
|
| (37,535 |
) |
| 408,031 |
|
| 400,823 |
|
| (37,576 |
) |
| 363,247 |
|
|
|
| |
| |
| |
| |
| |
| |
| | |
Deferred expenses | | |
| e2 |
|
| - |
|
| 32,100 |
|
| 32,100 |
|
| - |
|
| 32,785 |
|
| 32,785 |
|
|
|
| |
| |
| |
| |
| |
| |
| | |
Total assets | | |
| |
|
| 1,319,067 |
|
| 1,547 |
|
| 1,320,614 |
|
| 1,173,287 |
|
| (1,034 |
) |
| 1,172,253 |
|
|
|
| |
| |
| |
| |
| |
| |
F - 47
AMERICAN ISRAELI PAPER
MILLS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 16 DISCLOSURE
REGARDING THE ADOPTION OF IFRS (Cont.)
|
|
December 31, 2007
|
January 1, 2007
|
|
|
Israeli GAAP
|
Effect of transition to IFRS
|
IFRS
|
Israeli GAAP
|
Effect of transition to IFRS
|
IFRS
|
|
Note
|
NIS in thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
| |
|
| |
|
| |
|
| |
|