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BSN Financing Co SA, et al. – ‘6-K’ for 11/12/04

On:  Friday, 11/12/04, at 7:16am ET   ·   For:  11/12/04   ·   Accession #:  1021231-4-742   ·   File #s:  333-13684, -01

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/12/04  BSN Financing Co SA               6-K        11/12/04    1:606K                                   St Ives Burrups/FA
          BSN Glasspack Sas

Document/Exhibit                   Description                      Pages   Size 

 1: 6-K         Report of a Foreign Private Issuer                  HTML    389K 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of November, 2004

BSN Glasspack S.A.
(Translation of registrant’s name into English)
31, rue Henri Rochefort, 75017 Paris, France
(Address of principle executive offices)

BSN Financing Co. S.A.
(Translation of registrant’s name into English)
31, rue Henri Rochefort, 75017 Paris, France
(Address of principle executive offices)

     [Indicate by check mark whether the registrant files annual reports under cover Form 20-F or Form 40-F.]

Form 20-F...N/A...      Form 40-F...N/A...

     [Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.]

Yes            No

SIGNATURES

     The registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Management's discussion and analysis of financial condition and results of operations

Please note that the BSN GLASSPACK consolidated financial statements as of September 30, 2004 do not include the same perimeter as of September 30, 2003. The changes in perimeter are the disposal of MSC as of December 29, 2003, and the entering in the perimeter of Renfort (not consolidated before December 31, 2003).

On June 21, 2004, Owens Illinois, an US listed company operating in the glass and plastic packaging industry acquired the ownership of BSN Glasspack SA.

The consolidated financial statements of BSN GLASSPACK have been prepared in accordance with International Financial Reporting Standards (“IFRS”), which differ in certain aspects from US GAAP.

All figures are presented in euros.

1

Nine months ended September 30, 2004
compared to nine months ended September 30, 2003

Net Sales

Net sales amounted to €961,2 million at September 30, 2004 compared to €991,7 million for the same period in 2003. Within the same perimeter, i.e. without Control equipment activity “MSC” and Renfort, net sales decreased by €6,8 million, mainly due to lower volumes in all markets except in wine market partially compensated by a global average selling price increase. Break down by country is as follows:

France

Beverage and food containers. Net sales in France decreased by 0,4% to €512,4 million for the nine months ended September, 30 2004 compared to €514,7 million for the nine months ended September, 30 2003. This decrease is mainly due to a lower volume in beer market, partially compensated by higher volumes in wine, non alcoholic beverages and food markets and an average selling price increase in spirit, non alcoholic beverages and beer markets.

Control equipment. Net sales of control equipment (MSC) amounted to €27,2 million as of September, 2003. MSC was sold effective December 29, 2003.

Renfort.Net sales of Renfort, whose activities consist in distribution and other services (sales of bottles and bottling in Bordeaux area), amounted to €3.5 million as of September 30, 2004.

Germany

Net sales in Germany decreased by 3,2% to €199,2 million for the nine months ended September, 30 2004 compared to €205,7 million for the nine months ended September, 30 2003, due to volume decrease in all markets except in wine market and an average selling price decrease except in non alcoholic beverages and beer markets.

The Netherlands

Net sales in the Netherlands decreased by 0,2% to €162,3 million for the nine months ended September, 30 2004, compared to €162,7 million for the nine months ended September, 30 2003, due to volume decrease except in non alcoholic beverages and beer markets, partially compensated by a global average selling price increase except in non alcoholic beverages market.

Spain

Net sales in Spain increased by 2,5% to €87,1 million for the nine months ended September, 30 2004 compared to €85,0 million for the nine months ended September, 30 2003, due to a combined effect of volume increase in all markets except in beer and non alcoholic beverages markets and a global average selling price increase.

2

Cost of goods sold

Cost of goods sold decreased by €25,8 million to €799,3 million for the nine months ended September, 30 2004 compared to €825,1 million for the nine months ended September, 30 2003. Costs of goods sold decreased by 3,1% for the nine months ended September 30, 2004 compared to the same period in 2003, in line with net sales decrease of 3,1%.

Under the same perimeter, i.e. without MSC and Renfort, costs of goods sold decreased by €12,0 million and represented respectively 83,4% and 84,0% of net sales for the nine months ended September 30, 2004 and 2003.

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses decreased by €2,4 million to €67,6 million for the nine months ended September, 30 2004 compared to €70,0 million for the nine months ended September, 30 2003, mainly due to administrative expenses reduction for the nine months ended September, 30 2004 versus 2003.

Research and Development Expenses

Research and development expenses decreased by €1,9 million to €4,8 million in 2004 compared to €6,7 million in 2003.

Restructuring expenses

There is no restructuring expenses for the nine months ended September, 30 2004 compared to €22,0 million for the nine months ended September, 30 2003. During the nine months ended September, 30 2003, restructuring expenses were mainly related to a new legal agreement (“CATS”) signed for French entities (VMC and BSN Glasspack) which enables a maximum of 674 employees to leave between 2003 and 2006, after 57 years old, with a partial state compensation.

Other income and expenses

Other income and expenses improved by €2,3 million to expenses of €3,6 million in 2004 compared to expenses of €5,9 million in 2003, mainly due to the disposal of a Spanish land during the first semester 2004.

Interest expenses

Interest expenses decreased by €0,3 million to €51,8 million for the nine months ended September, 30 2004 compared to €52,1 million for the nine months ended September, 30 2003.

Income tax expenses

Income tax expense increased by €9,1 million to €12,5 million for the nine months ended September, 30 2004 compared to €3,4 million for the nine months ended September, 30 2003. In the nine months ended September, 30 2004, the profit before income taxes is higher by €24,3 million compared to 2003 because there is no restructuring expenses in 2004.

3

Net income

Net income increased by €15,2 million to a net income of €21,3 million for the nine months ended September, 30 2004 compared to a net income of €6,1 million for the nine months ended September, 30 2003, as a result of the above factors.

Impact of Inflation

The impact of inflation on BSN Glasspack's costs and ability to pass on cost increases in the form of increased sales prices are dependent upon market conditions. While inflation can affect the price of energy, BSN Glasspack enters into hedging arrangements with respect to its energy needs to limit its exposure to such fluctuations. Soda ash may also be subject to price fluctuations, including inflation, while the price of BSN Glasspack's main raw material, cullet, is regulated. Inflation has not had a material impact on BSN Glasspack's results of operations during the past three years since the inflation rates in its principal markets during that period have been, on an overall basis, relatively low.

Liquidity and Capital Resources

BSN Glasspack's liquidity requirements arise primarily from the need to fund capital expenditures to maintain its manufacturing facilities, to service its debt, to expand its business and to fund working capital requirements.

Due principally to the seasonal nature of the beverage industry, in particular the beer and non-alcoholic beverage markets, in which demand is stronger during the summer months and during periods of warm weather, BSN Glasspack's shipment volume is typically higher in the second and third quarters. Consequently, BSN Glasspack builds inventory during the fourth and first quarters in anticipation of seasonal demands during the second and third quarters. As a result, there are generally negative cash flows and greater working capital requirements in the second and third quarters of the year as inventory is transformed into trade receivables. These seasonal effects are partly offset by the countervailing seasonal effects in the spirits industry, which is characterized by higher winter consumption, and the wine industry, which generates greater bottling activity in the first and third quarters. In addition, BSN Glasspack generally tries to schedule shutdowns of its plants for furnace rebuilds and machine repairs in the fourth quarter of the year. These shutdowns and seasonal sales patterns adversely affect profitability during the first and fourth quarters. As a result of these factors, BSN Glasspack's borrowing needs are greatest in the second and third quarters.

Cash flow from operating activities decreased by €8,7 million to €32,2 million for the nine months ended September 30, 2004, compared to €40,9 million for the nine months ended September 30, 2003. The level of operating cash flow is lower than last year, mainly due to unfavorable change in current working capital as of September 30, 2004, consequently of lower decrease of inventories for nine months ended September 30, 2004 compared to the nine months ended September 30, 2003, and higher financial interests paid during the nine months ended September 30, 2004 due to the change of financial debt structure till June 21, 2004.

Cash flow used in investing activities decreased by €44,5 million during the nine months ended September 30, 2004 compared to the nine months ended September 30,2003, mainly due to important projects finished in the first quarter 2003 and delayed projects in 2004.

Cash flow from financing activities decreased by €9,8 million for the nine months ended September 30, 2004 compared to the nine months ended September 30, 2003, mainly due to the change of financial debt structure as of June 21, 2004.

4

We believe that our operating cash flow, together with available borrowings, will be sufficient for our operating needs, other than any future acquisitions, and debt service requirements as they become due for at least the next several years.

Environmental Matters

On an ongoing basis, we incur capital and operating costs relating to environmental compliance. We do not believe that we will be required under either existing or anticipated future environmental, occupational health and safety and other governmental laws and regulations to expend amounts, which will have a material adverse effect on our financial condition or results of operations as a whole. However, the requirements of such laws and regulations have become stricter in recent years, and the costs of responding to future changes may be substantial and are not predictable.

Forward-looking Statements

This Management’s discussion and analysis of financial conditions and results of operations contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that includes, among others, statements of our future performance, and other statements of expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. Our management cautions the reader that these forward-looking statements are subject to risks and uncertainties, including financial, regulatory environment, industry growth and trend projections, that could cause actual events or results to differ materially from those expressed or implied by the statements.

5

Three months ended September 30, 2004
compared to three months ended September 30, 2003

Net Sales

Net Sales decreased by 20,4 million or 6,3% to 303,7 million for the three months ended September 30, 2004 compared with 324,1 million for the same period in 2003.

Within the same perimeter, i.e. without Control equipment activity “MSC” and Renfort, net sales decreased by €13,8 million or 4,4% to €302,6 million for the three months ended September 30, 2004 from €316,4 million to the same period in 2003. Lower volumes in beer, non-alcoholic beverages and spirit markets are partially compensated by an average selling price increases in all markets except for wine. Break down by country is as follows:

France

Beverage and food containers

Net sales of France decreased by 5,8% to €157,1 million for the three months ended September 30, 2004 compared to €166,7 million for the same period in 2003. This decrease is mainly due to volume decrease in beer market for the three months ended September 30, 2004, partially compensated by a global average selling prices increase.

Control equipment

Net sales of control equipment (MSC) amounted to €7,6 million for the three months ended September 30, 2003. MSC was sold effective December 29, 2003.

Renfort

Net sales of Renfort, whose activities consist in distribution and other services (sales of bottles and bottling in Bordeaux area), amounted to €1,2 million for the three months ended September 30, 2004.

Germany

Net sales in Germany decreased by 9,3% to €61,7 million for the three months ended September 30, 2004 compared to €68,0 million for the same period in 2003, due to a combined effect of a volume decrease in all markets except in wine and food markets, and also a decrease in average selling prices in all markets except in non-alcoholic beverage and beer markets.

The Netherlands

Net sales in the Netherlands increased by 1,3% to €56,0 million for the three months ended September 30, 2004, compared to €55,3 million for the same period in 2003, due to a global average selling prices increase partially offset by volume decrease in spirit and wine markets.

Spain

Net sales in Spain increased by 0,4% to €28,2 million for the three months ended September 30, 2004 compared to €28,1 million for the same period in 2003. Net sales increase in Spain is due to a global average selling price increase partially offset by volume decrease in beer and non-alcoholic beverage markets.

6

Cost of goods sold

Cost of goods sold decreased by €12,0 million to €256,8 million for the three months ended September 30, 2004 compared to €268,8 million for the same period in 2003. Under the same perimeter, i.e. without MSC and Renfort, costs of goods sold decreased by €9,6 million, for the three months ended September 30, 2004 compared to the same period in 2003 and represented respectively 84,8% and 84,1% of net sales for the three months ended September 30, 2004 and 2003.

Selling general and administrative expenses

Selling, General and Administrative Expenses decreased by €0,8 million to €21,0 million for the three months ended September 30, 2004, compared to €21,8 million for the same period in 2003.

Research and Development Expenses

Research and development expenses decreased by €0,7 million to €1,5 million for the three months ended September 30, 2004 compared to €2,2 million for the same period in 2003.

Restructuring expenses

There is no restructuring expenses for the third quarter-year of 2004. For the three months ended June 30, 2003, restructuring expenses amounted to €0,8 million.

Other incomes and expenses

Other income and expenses decreased by €1,3 million to €2,4 million for the three months ended September 30, 2004 compared to €3,7 million for the same period in 2003, mainly due to specific expenses related to Royal Leerdam disposal.

Interest expenses

Interest expenses decreased by €3,2 million to €15,6 million for the three months ended September 30, 2004 compared to €18,8 million for the same period in 2003, mainly due to the change of financial debt structure as of June 21, 2004.

Income tax expenses

Income tax expenses increased by €0,7 million to an expense of €2,6 million at June 2004 compared to €1,9 million in2003.

Net income

Net income decreased by €2,2 million to a net incomes of €3,8 million for the three months ended September 30, 2004 compared to €6,0 million for the same period in 2003. Under the same perimeter, i.e. without MSC and Renfort, the net income between 2004 and 2003 decreased by €0,3 million.

7

BSN Glasspack, SA
CONSOLIDATED STATEMENTS OF INCOME

8

BSN GLASSPACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-1

BSN GLASSPACK AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of the Consolidated Financial Statements

F-2

BSN GLASSPACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of the Consolidated Financial Statements

F-3

BSN GLASSPACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS – Details

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-4

BSN GLASSPACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF GROUP NET EQUITY

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-5

BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in millions of euros (€) unless otherwise specified)

NOTE 1 – GENERAL NOTE AND DESCRIPTION OF BUSINESS

     BSN Glasspack and subsidiaries ("BSN Glasspack", the "Company", “BSN Glasspack Group”, “the Group”) is a producer of glass containers for the beverage and food industries and operates 40 glass furnaces in 19 manufacturing facilities in France, Germany, The Netherlands and Spain. The Company employs approximately 6,200 people. The parent company, BSN Glasspack, a French "société anonyme" (SA), employs approximately 2,400 people. The address of the registered office is: 64 Boulevard du 11 Novembre 1918, 69100 Villeurbanne, France.

On June 21, 2004, Owens Illinois, an US listed company operating in the glass and plastic packaging industry acquired the ownership of BSN Glasspack . All operations are centralized under a new single European management within Owens Illinois organization.

NOTE 2 – LIST OF CONSOLIDATED COMPANIES

The consolidated companies as of September 30, 2004 are as follows:

The consolidated financial statements are derived from the stand-alone financial statements of the above entities, which are each separate legal entities.

F-6

BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

F-7

BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The net gain on MSC disposal amounts to:
(In Millions)

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Accounting Principles

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board (“IASB”).

Financial Instruments: recognition and measurement.

Following the introduction of IAS 39, Financial Instruments: Recognition and Measurement, available for sale investments are carried at their fair values and all derivative financial instruments have been recognized as assets or liabilities. The opening balance of equity (retained earnings and hedging reserve) as of January 1, 2001 has been adjusted by € 1.0 million. Changes in fair values in period ended September 30, 2004 and December 31, 2003, 2002, 2001 have resulted, respectively, in a net profit of €3.1 a net profit of € 2.0, a net profit of € 3.6 million and in a net loss of € 9.9 million, recorded as a change in a separate component of equity (see consolidated statement of net equity).

Use of estimates

The preparation of financial statements in conformity with IFRS formulated by the IASB requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Foreign currency translation and presentation of accounts in euros

a. Transactions denominated in foreign currencies

F-8

BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accounts receivable and payable denominated in foreign currencies are recorded at the year-end exchange rate. Foreign exchange gains and losses resulting from the remeasurement of accounts receivable and payable stated in foreign currencies and from the settlement of such balances during the year are recognized in the statement of operations.

b. Translation of financial accounts expressed in foreign currencies and presentation of accounts in euros

All the group entities are located in the euro area.

Fiscal year

The fiscal year end is December 31.

Principles of consolidation

Subsidiaries in which BSN Glasspack has, directly or indirectly, an interest of more than one half of the voting rights or otherwise has power to exercise control over the operations have been consolidated. BSN Glasspack’s investments in less than 20% owned companies, and for which the Company does not exercise significant influence, are accounted for as available for sale investments (at their fair market values). BSN Glasspack has no investment in entities in which it exercises a significant influence.

The subsidiaries Champagne Emballage and BSN Distribution Sud Ouest, in which BSN Glasspack has a 50% interest, have been fully consolidated, as they are distribution entities over which BSN Glasspack has power to exercise full control.

All significant year-end balances and transactions between consolidated companies have been eliminated.

Cash and cash equivalents

Cash equivalents consist of highly liquid investments with maturity of three months or less at issuance date. Cash equivalents are carried at cost, which approximates fair value.

Trade accounts and notes receivables, net

Receivables are stated at the fair value of the consideration to be received and are carried at amortized cost, after provision for impairment. An estimate is made for doubtful receivables based on a review of all outstanding amounts at year-end. Bad debts are written off during the year in which they are identified.

Inventories, net

Inventories are stated at the lower of cost or net realizable value. Raw materials and packaging are valued using the weighted average cost method. Work in progress and finished goods are stated at their manufacturing costs, which include the direct costs of manufacturing products as well as certain depreciation and overhead costs related to manufacturing. Appropriate provisions are recorded when inventory cost exceeds its net realizable value.

F-9

BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Spare Parts

Spare parts and servicing equipment are carried in inventory and recognized as an expense as consumed. However, spare parts and servicing equipment are included in property plant and equipment when they can only be used in connection with an item of property, plant and equipment or their use is in more than one period. These spare parts are depreciated over a time period not exceeding the useful life of the related asset.

Moulds

In 2001, the Company implemented a new IT system enabling the Company to track specific mould utilization thereby improving the accuracy of the estimated remaining useful life of individual moulds. In prior periods, the cost of moulds was expensed over an average estimate useful life (and not on a mould per mould basis).

Beginning in 2001, the valuation of moulds is now able to be determined based on specific mould statistics using past consumption and future potential utilization of each mould. As a consequence, the cost of goods sold for the year ended December 31, 2001 has decreased by € 12.4 million, and moulds inventory as of December 31, 2001 has been increased by € 12.4 million.

Property, plant and equipment, net

Property, plant and equipment are stated at their historical costs of purchase or construction, and are depreciated on a straight-line basis over their estimated useful lives, as follows:

Certain furnaces need to be partially or completely overhauled approximately every 6 to 14 years. Accordingly, the Company has identified separate components of the furnaces, which are depreciated to reflect the different corresponding useful lives, and capitalizes the costs of overhaul when incurred. Expenditures incurred after the fixed assets have been put into operation, such as repairs and maintenance are normally charged to income in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as an additional cost of property, plant and equipment

Interest costs on borrowings to finance the construction of property, plant and equipment are capitalized on significant projects, during the period of time that is required to complete and prepare the property for its intended use, as part of the cost of the asset (see below borrowing costs).

Start-up costs

Any start-up and similar pre-production costs are expensed as incurred unless they are included in the cost of an item of property plant and equipment under IAS 16.

F-10

BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accounting for leases

Leases of property, plant and equipment where the Company assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalized at the estimated present value of the underlying lease payments, which equals the fair value of assets. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in financial debts. The interest element of the finance charge is charged to the statement of operations over the lease period. The property, plant and equipment acquired under finance leasing contracts are depreciated over the useful life of the asset.

Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the statement of operations on a straight-line basis over the period of the lease.

Investments

Investments are classified into the following categories: held-to-maturity, trading and available-for-sale. Investments with fixed or determinable payments and fixed maturity that the Company has the positive intent and ability to hold to maturity other than loans and receivables originated by the Company are classified as held-to-maturity investments. Investments acquired principally for the purpose of generating a profit from short-term fluctuations in price are classified as trading. All other investments, other than loans and receivables originated by the Company, are classified as available-for-sale. Available-for-sale instruments are classified as long-term investments if management intends to realize them within more than 12 months. Investments are initially measured at cost. Available-for-sale and trading investments are subsequently carried at fair value.

Gains or losses on measurement to fair value of available-for-sale investments are recognized directly in the fair value reserve in shareholders’ equity, until the investment is sold or otherwise disposed of, or until it is determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is included in net profit or loss for the period.

Intangible assets, net

Goodwill related to the acquisition of companies that occurred prior to January 1, 1995, totaling € 104.4 million, was charged in full to net equity.

Goodwill on acquisitions occurring on or after January 1, 1995 is reported in the balance sheet as an intangible asset and is amortized over its estimated useful life, not exceeding 20 years. The carrying amount of goodwill is reviewed annually and written down for permanent impairment when necessary.

Other intangible assets, consisting primarily of purchased computer software, are recorded at cost and amortized on a straight-line basis over their estimated useful lives of typically 3 to 4 years, except for SAP capitalized costs which are being amortized over 7 years.

Impairment of long-lived assets

The Company periodically assesses whether there is any indication that an asset may be impaired. When an asset’s recoverable amount (i.e. the higher of the assets’ net selling price and value in use) is lower than its carrying amount, the asset is impaired, and therefore, written down to its net recoverable amount.

F-11

BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revenue recognition

Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of revenue can be measured reliably. Sales are recognized net of VAT and discounts. Revenue from sales of goods is recognized upon shipment of products to customers and transfer of title of ownership under standard commercial terms (FOB shipping is used). The Group offers rebates, calculated as a percentage of sales, to some of its customers when the customer reaches its specified sales and volume objective. At each closing period, the Group estimates accruals for rebates based on actual sales and estimated yearly sales.

Government grants

Grants related to depreciable assets are initially recorded as deferred income, which is recognized as income over the periods and in the proportions in which depreciation on those assets is charged.

Research and development

Expenditure for research is recognized as an expense when incurred. Expenditure on development is charged against income in the period incurred except for project development costs which comply strictly with all of the following criteria: (a) the product or process is clearly defined and costs are separately identified and measured reliably; (b) the technical feasibility of the product is demonstrated; (c) the product or process will be sold or used in-house; (e) the assets will generate future economic benefits (e.g. a potential market exists for the product or its usefulness in case of internal use is demonstrated); and (f) adequate technical, financial and other resources required for completion of the project are available.

Capitalization of costs starts when the above criteria are first met. Expenditure recognized as an expense in previous accounting periods is not reinstated. Capitalized development costs are amortized on a straight-line basis over their expected useful lives. The period of amortization does not normally exceed five years.

The Company currently has no such capitalized development costs.

Restructuring

A provision is recognized when, and only when, the Company has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. As far as restructuring is concerned, a constructive obligation to restructure arises when the Company has a detailed formal plan for the restructuring identifying the business or part of a business concerned; the principal locations affected; the location, function, and approximate number of employees who will be compensated for terminating their services; the expenditures that will be undertaken; and when the plan will be implemented; and has raised a valid expectation to those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it. A restructuring provision includes only the direct expenditure arising from the restructuring that is both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.

Segment information

The group is managed on a geographical basis and operates in different European countries: France, the Netherlands, Germany and Spain.

F-12

BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Retirement indemnities and pension obligations

The Company operates a number of defined benefit and defined contribution plans throughout its legal European entities, the assets of which are, in The Netherlands, held in separate trustee-managed funds.

The Company’s projected benefit obligations relating to defined benefit pension schemes and to retirement indemnity, other post-retirement and medical schemes are calculated using actuarial assumptions that reflect the legal, economic and monetary circumstances in each related country. For these plans, pension or other scheme costs are assessed using the projected unit credit method. Under this method, pension cost, which was determined with the advice of qualified actuaries who performed a full valuation as of December 31, 2001, December 31, 2002 and December 31, 2003, is charged to income over the service lives of employees. For each individual plan, actuarial gains and losses are deferred and recognized over the average remaining service lives of employees participating in that plan for the part exceeding 10% of the higher of the present value of the Defined Benefit Obligation (PBO) and the fair value of plan assets.

The Company’s contributions to the defined contribution pension plans are charged to the statement of operations in the year to which they relate.

The Company adopted IAS 19 (revised 1998) effective January 1, 1999. The effect of the change, called transitional obligation, and which represents unrecognized amounts at January 1, 1999 under IAS 19 (revised 1993), has been amortized to 1999 income for Ex Groupe Danone subsidiaries. For Gerresheimer subsidiaries, acquired as of August 5, 1999, the adoption of IAS 19 (revised 1998) was effective January 1, 1998.

Financial instruments

With respect to foreign exchange exposure relating to forecasted sales, interest rate exposure relating to financing activities, and energy cost exposure arising from forecasted purchases, the Company may enter into the following derivative contracts:

Third party banks have assessed the fair value of derivatives at the respective balance sheet date. Such values correspond to the amount of cash the Company would receive or pay to settle the contracts.

Deferred income taxes

Deferred income tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values in the consolidated balance sheet. Currently enacted tax rates applicable to future periods are used to calculate year-end deferred income taxes.

F-13

BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred tax assets for companies which have carry forward unused tax losses are recognized to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilized.

Borrowing costs

Borrowing costs generally are expensed when incurred. Borrowing costs are capitalized if they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalization of borrowing costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are being incurred. Borrowing costs are capitalized until the assets are substantially ready for their intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.

Short-term and long-term debt

Short and long-term debts are carried on the balance sheet at their outstanding capital amount. The outstanding capital is computed taking into account financing fees related to obtaining the long-term borrowings using the effective interest method.

Accounting standards issued but not yet effective

On December 17, 2003, IASB issued revised standard on financial instruments:

On December 18, 2003, IASB published improvements to the following standards :

These news standards become effective for annual periods beginning on or after January 1, 2005. Early application is allowed. The Company started to assess the impact of the revisions made on its net profit or loss and financial position, but did book no impact within financial statements as of September 30, 2004.

NOTE 4 – RELATED PARTY TRANSACTIONS

On June 21, 2004, Owens Illinois, an US listed company operating in the glass and plastic packaging industry acquired the ownership of BSN Glasspack.

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BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Transactions and balances with previous BSN Glasspack’s parent Glasspack Participations and BSN Glasspack’s parent Owens Illinois (for the period beginning as of June 21,2004 and closing as of September 30, 2004) are as follows:

NOTE 5 – INVENTORIES, NET

Inventories, net are as follows:

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BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET

The net book value of property, plant and equipment, is as follows:

The gross book value of property, plant and equipment is as follows:

F-16

BSN GLASSPACK AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The accumulated depreciation of property, plant and equipment is as follows: